EXHIBIT 4.c
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PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N585FE)
Dated as of June 15, 1998
among
FEDERAL EXPRESS CORPORATION,
Lessee and Initial 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. 48481, REGISTRATION NO. N585FE
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TABLE OF CONTENTS
Page
Initial Recitals........................................................... 1
ARTICLE 1
DEFINITIONS............................................................. 3
ARTICLE 2
ISSUANCE OF PASS THROUGH CERTIFICATES;
ISSUANCE AND PURCHASE OF CERTIFICATES
Section 2.01. Transfer of Funds........................................ 3
Section 2.02. (a) Certificates.......................................... 4
(b) Transfer of Beneficial Interest..................................... 5
Section 2.03. Amendments on Delivery Date or Transfer Date............. 5
Section 2.04. Event of Loss Prior to Delivery Date..................... 6
ARTICLE 3
PARTICIPATION IN INVESTMENT ON DELIVERY DATE;
DELIVERY OF AIRCRAFT
Section 3.01. Lessee's Notice of Delivery Date......................... 7
Section 3.02. Commitments to Participate in Purchase Price............. 7
Section 3.03. Postponement of Delivery Date............................ 9
Section 3.04. Closing.................................................. 11
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent (Certificate Closing Date).......... 11
Section 4.02. Conditions Precedent (Delivery Date)..................... 18
Section 4.03. Opinion of Special Aviation Counsel Upon Registration.... 27
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations............. 28
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties.................. 28
Section 6.02. Offering by Lessee....................................... 34
Section 6.03. Certain Covenants of Lessee.............................. 34
Section 6.04. Survival of Representations and Warranties............... 42
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in Lessor's
Estate................................................... 42
Section 7.02. Citizenship.............................................. 43
Section 7.03. Representations, Warranties and Covenants of Owner
Participant.............................................. 44
Section 7.04. Representations, Covenants and Warranties of SSB and the
Owner Trustee............................................ 47
Section 7.05. Representations, Warranties and Covenants of the
Indenture Trustee........................................ 50
Section 7.06. Indenture Trustee's Notice of Default.................... 51
Section 7.07. Releases from Indenture.................................. 51
Section 7.08. Covenant of Quiet Enjoyment.............................. 52
Section 7.09. Pass Through Trustee's Representations and Warranties.... 52
Section 7.10. Survival of Representations, Warranties and Covenants.... 53
Section 7.11. Lessee's Assumption of the Certificates.................. 53
Section 7.12. Indebtedness of Owner Trustee............................ 55
Section 7.13. Compliance with Trust Agreement, Etc..................... 55
Section 7.14. Subordination Agent's Representations, Warranties and
Covenants................................................ 56
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes......................... 57
Section 8.02. After-Tax Basis.......................................... 62
Section 8.03. Time of Payment.......................................... 63
Section 8.04. Contests................................................. 63
Section 8.05. Refunds.................................................. 65
Section 8.06. Lessee's Reports......................................... 66
Section 8.07. Survival of Obligations.................................. 66
Section 8.08. Payment of Taxes......................................... 66
Section 8.09. Reimbursements by Indemnitees Generally.................. 67
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally................................................ 67
Section 9.02. After-Tax Basis.......................................... 70
Section 9.03. Subrogation.............................................. 71
Section 9.04. Notice and Payment....................................... 71
Section 9.05. Refunds.................................................. 72
Section 9.06. Defense of Claims........................................ 72
Section 9.07. Survival of Obligations.................................. 73
Section 9.08. Effect of Other Indemnities.............................. 73
Section 9.09. Interest................................................. 73
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs....................... 73
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee.................. 76
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant.................... 78
Section 12.02. Interest of Holders of Certificates..................... 78
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents.................... 78
Section 13.02. Further Assurances...................................... 79
Section 13.03. Pass Through Trustee's and Subordination Agent's
Acknowledgment.......................................... 79
ARTICLE 14
NOTICES
Section 14.01. Notices................................................. 79
ARTICLE 15
REFINANCING
Section 15.01. Refinancing............................................. 80
ARTICLE 16
[RESERVED]
ARTICLE 17
MISCELLANEOUS
Section 17.01. [Reserved].............................................. 83
Section 17.02. Collateral Account...................................... 83
Section 17.03. Counterparts............................................ 85
Section 17.04. No Oral Modifications................................... 85
Section 17.05. Captions................................................ 86
Section 17.06. Successors and Assigns.................................. 86
Section 17.07. Concerning the Owner Trustee, Indenture Trustee and
the Pass Through Trustee................................ 86
Section 17.08. Severability............................................ 86
Section 17.09. Public Release of Information........................... 87
Section 17.10. Certain Limitations on Reorganization................... 87
Section 17.11. GOVERNING LAW........................................... 87
Section 17.12. Section 1110 Compliance................................. 88
Section 17.13. Reliance of Liquidity Providers......................... 88
ARTICLE 18
CONFIDENTIALITY
Section 18.01. Confidentiality......................................... 88
SCHEDULE I Certificate Information
SCHEDULE II Definitions
SCHEDULE III Permitted Country List
SCHEDULE IV Certain Amounts
SCHEDULE V Mandatory Document Terms
SCHEDULE VI Mandatory Economic Terms
EXHIBIT A(1)(a)(i) Opinion of Lessee's Counsel
(Certificate Closing Date)
EXHIBIT A(1)(a)(ii) Opinion of Lessee's Counsel
(Delivery Date)
EXHIBIT A(1)(b)(i) Opinion of Lessee's Special Counsel
(Certificate Closing Date)
EXHIBIT A(1)(b)(ii) Opinion of Lessee's Special Counsel
(Delivery Date)
EXHIBIT A(2) Opinion of Indenture Trustee's Special Counsel
EXHIBIT A(3)(i) Opinion of Owner Trustee's Special Counsel
(Certificate Closing Date)
EXHIBIT A(3)(ii) Opinion of Owner Trustee's Special Counsel
(Delivery Date)
EXHIBIT A(4) Opinion of Pass Through Trustee's and Subordination
Agent's Special Counsel
EXHIBIT A(5)(a) Opinion of Liquidity Provider's Counsel
EXHIBIT A(5)(b) Opinion of LC Bank's Counsel
EXHIBIT A(5)(c) Opinion of Liquidity Provider's Special Counsel
EXHIBIT A(5)(d) Opinion of LC Bank's Special Counsel
EXHIBIT A(6) Opinion of Engine Manufacturer's Counsel
EXHIBIT A(7) Opinion of Special Aviation Counsel
EXHIBIT B Form of Lease Agreement
EXHIBIT C Form of Indenture
EXHIBIT D Form of Trust Agreement
EXHIBIT E Form of Engine Warranty Assignment and Engine Consent
PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N585FE)
PARTICIPATION AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO.
N585FE) dated as of June 15, 1998 (this "Agreement") among FEDERAL EXPRESS
CORPORATION, a Delaware corporation (herein, together with its successors and
permitted assigns, the "Lessee" and the "Initial 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").
W I T N E S S E T H :
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article 1 hereof.
WHEREAS, the Initial Owner Participant has entered into the Trust
Agreement with the Owner Trustee in its individual capacity, substantially in
the form of Exhibit D hereto, pursuant to which Trust Agreement the Owner
Trustee agrees, among other things, to hold the Lessor's Estate for the
benefit of the 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 will occur with
respect to the public offering of Pass Through Certificates issued by each Pass
Through Trust, an allocable amount of the proceeds of which offering will be
used by the Pass Through Trustee to purchase for each such Pass Through Trust
the Certificates of the Series and Maturity applicable thereto.
WHEREAS, on the Certificate Closing Date, the Owner Trustee and the
Indenture Trustee will enter into the Indenture for the benefit of the Pass
Through Trustee, pursuant to which the Owner Trustee is issuing 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 will be deposited by the Indenture
Trustee on behalf of the Owner Trustee in the Collateral Account.
WHEREAS, concurrently with the execution and delivery hereof, (i) the
Liquidity Provider will enter 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 will
enter into the Intercreditor Agreement.
WHEREAS, the Certificates will be 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, all of the outstanding Certificates will be secured by the
Liquid Collateral prior to the Delivery Date, and any Series C Certificates
outstanding after the Delivery Date that are subject to prepayment on the
Series C Prepayment Date will be secured by the Liquid Collateral up to and
including the Series C Prepayment Date.
WHEREAS, pursuant to the terms of the Trust Agreement, the Owner
Trustee will be authorized and directed by the Initial Owner Participant:
(a) on the Delivery Date, to purchase the Aircraft from the Lessee;
(b) on the Certificate Closing Date, to execute and deliver the
Lease substantially in the form of Exhibit B hereto, pursuant to which,
subject to the terms and conditions set forth in said Lease, the Owner
Trustee agrees to lease to the Lessee, and the Lessee agrees to lease from
the Owner Trustee, the Aircraft on the Delivery Date, such lease to be
effected by the execution and delivery on the Delivery Date of a Lease
Supplement, in the form of Exhibit A to the Lease, covering the Aircraft
and incorporating by reference all of the terms of the Lease;
(c) on the Certificate Closing Date, to execute and deliver the
Indenture, substantially in the form of Exhibit C hereto, for the benefit
of the Holders from time to time of the Certificates, pursuant to which the
Owner Trustee agrees, among other things, (A) to deposit, mortgage and
pledge with the Indenture Trustee, as part of the Trust Indenture Estate,
all of the Lessor's Estate but not Excepted Payments, (B) on the
Certificate Closing Date, to issue Certificates substantially in the form
set forth in Exhibit B to the Indenture, the proceeds of the sale of which
will be held by the Indenture Trustee on behalf of the Owner Trustee in the
Collateral Account until released in accordance with the terms hereof and of
the Indenture, and (C) on the Delivery Date, to execute and deliver the
Indenture and Security Agreement Supplement, substantially in the form of
Exhibit A to the Indenture, covering the Aircraft and supplementing the
Indenture; and
(e) on the Delivery Date, to execute and deliver the Engine Warranty
Assignment, whereby the Lessee assigns to the Owner Trustee certain of the
Lessee's rights and interests under the GTA to the extent that the same
relate to the Engines (except to the extent reserved in the Engine Warranty
Assignment), which Engine Warranty Assignment is to include as an annex an
Engine Consent executed by the Engine Manufacturer, said Engine Warranty
Assignment and Engine Consent to be substantially in the form of Exhibit E
hereto.
WHEREAS, on the Delivery Date pursuant to and subject to the terms and
conditions of this Agreement, the Engine Warranty Assignment and the Bills of
Sale, the Owner Trustee will purchase, and receive title to, the Aircraft from
the Lessee and lease the Aircraft to the Lessee pursuant to the Lease.
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Unless otherwise specifically provided herein, the definitions set
forth in Schedule II hereto are incorporated herein for all purposes of this
Agreement and shall be equally applicable to both the singular and the plural
forms of the terms so defined.
ARTICLE 2
ISSUANCE OF PASS THROUGH CERTIFICATES;
ISSUANCE AND PURCHASE OF CERTIFICATES
Section 2.01. Transfer of Funds.
(a) On or before the Pass Through Closing Date, the Pass Through
Trustee and the Lessee, in accordance with the Pass Through Agreement, shall
enter into the Series Supplements, and, subject to the terms and conditions
set forth therein, on the Pass Through Closing Date (i) the Lessee shall
direct the Underwriters to execute a wire transfer or intra-bank transfer to
the Pass Through Trustee in the amount of the total proceeds payable pursuant
to the Underwriting Agreement with respect to the Pass Through Certificates
and (ii) the Pass Through Trustee shall deliver the Pass Through Certificates
to the Underwriters upon receipt by the Pass Through Trustee of such proceeds.
(b) Subject to the satisfaction or waiver of the conditions set
forth herein, on the Certificate Closing Date, on behalf of each Pass Through
Trust, from an allocable amount of the proceeds of the sale of the related
Pass Through Certificates, the Pass Through Trustee shall purchase the
Certificates specified for such Pass Through Trust on Schedule I hereto. For
each Pass Through Trust, the Pass Through Trustee shall pay an amount equal to
the principal amount of Certificates of the Series and Maturity that relates
to such Pass Through Trust, which amounts in the aggregate shall equal the
aggregate principal amount of the Certificates as specified in Section 2.04 of
the Indenture. The aggregate amount payable by the Pass Through Trustee
pursuant to this Section 2.01(b) shall be payable by wire transfer or
intra-bank transfer to the Indenture Trustee on behalf of the Owner Trustee.
(c) On the Certificate Closing Date, the Indenture Trustee shall,
on behalf of the Owner Trustee, deposit, by wire transfer or intra-bank
transfer, the amounts received by it pursuant to Section 2.01(b) hereof in the
Collateral Account pursuant to the Indenture.
(d) On the Certificate Closing Date, the LC Bank shall issue the
Letter of Credit.
(e) On the Certificate Closing Date concurrently with the events
specified in Section 2.01(b) hereof, the parties hereto shall execute and
deliver, to the extent they are parties thereto, and consent to the execution
and delivery of (if they are not parties thereto), the Lease (other than the
Lease Supplement), the Indenture (other than the Indenture and Security
Agreement Supplement), and the other documents listed in Section 4.01(d)
hereof, and the Owner Trustee shall execute and deliver to the Indenture
Trustee for authentication, and the Indenture Trustee shall authenticate and
deliver to the Subordination Agent on behalf of the Pass Through Trustee for
each of the Pass Through Trusts, upon the request of the Owner Trustee, the
Certificates as provided in Section 2.02 hereof.
(f) The Closings shall take place at the offices of Davis Polk &
Wardwell, 450 Lexington Avenue, New York, New York 10017.
Section 2.02. (a) Certificates. Subject to the satisfaction or
waiver of the conditions set forth herein, on the Certificate Closing Date,
the Initial Owner Participant will instruct the Owner Trustee to execute and
deliver to the Indenture Trustee, and the Indenture Trustee shall authenticate
and deliver, upon the request of the Owner Trustee, to the Subordination Agent
on behalf of the Pass Through Trustee for each of the Pass Through Trusts, the
Certificates specified for such Pass Through Trust on Schedule I attached
hereto, which (i) shall be issued in the principal amount and in the Series
and Maturity set forth for such Certificate in Schedule I hereto, (ii) shall
bear interest at the interest rate set forth for such Certificate in Schedule
I hereto, (iii) shall be issued in such form and on such terms as are
specified in the Indenture, (iv) shall be dated and authenticated on the
Certificate Closing Date and shall bear interest from the Certificate Closing
Date and (v) shall be registered in the name of the Subordination Agent on
behalf of the Pass Through Trustee for such Pass Through Trust.
(b) Transfer of Beneficial Interest. If on a date prior to the
Delivery Date, the Lessee shall have identified one or more Owner Participants
ready, willing and able to acquire the Beneficial Interest of the Initial
Owner Participant in consideration for such Owner Participant's or Owner
Participants' agreement to participate in the Lessor's payment of the Purchase
Price for the Aircraft on the Delivery Date, the Initial Owner Participant
shall transfer its Beneficial Interest to such Owner Participant or Owner
Participants on such date (the "Transfer Date"). On the Transfer Date, the
document amendments contemplated by Section 2.03(a) hereof (subject to the
limitations set forth in such Section) shall be effected and such amended
documents delivered.
Section 2.03. Amendments on Delivery Date or Transfer Date. (a)
Amendment and Restatement of Certain Documents. Upon any transfer by the
Initial Owner Participant of its Beneficial Interest on the Delivery Date (as
contemplated by Section 3.02(a) hereof (or, if earlier, the Transfer Date),
the parties hereto shall enter into amendments and restatements of the Trust
Agreement, the Lease, the Indenture and this Agreement, which amendments and
restatements shall reflect such changes as shall have been requested by the
Owner Participant, agreed to by the Lessee and, if modified in any material
respect, as to which Rating Agency Confirmation shall have been obtained from
each Rating Agency by the Lessee (to be delivered by the Lessee to the Pass
Through Trustee on or before the Delivery Date or the Transfer Date, as the
case may be); provided, however, that in any event such amended and restated
documents shall not vary the Mandatory Economic Terms and shall contain the
Mandatory Document Terms.
The Lessee agrees to furnish to each Liquidity Provider and to
Milbank, Tweed, Hadley & McCloy (the initial Liquidity Provider's special New
York counsel) at its New York office, attention: Drew S. Fine, as soon as
practicable but in no event less than 7 Business Days prior to the estimated
Delivery Date (or, if earlier, the estimated Transfer Date), true and complete
copies of drafts of any such amended and restated Participation Agreement,
amended and restated Lease Agreement and amended and restated Indenture. The
Lessee further agrees to furnish to each Liquidity Provider and to the counsel
identified in the preceding sentence (i) each and every subsequent draft of
such documents and (ii) promptly following the execution thereof, true and
complete copies of such documents.
(b) Amendments to Certain Schedules. The percentages of Basic Rent,
Stipulated Loss Value and Termination Value set forth on Schedules II, III and
IV, respectively, of the Lease, the EBO Price and the schedule of principal
payments on the Certificates set forth in Section 6.06 of the Indenture and
Schedule I to each Certificate on the Certificate Closing Date have been
calculated based upon a hypothetical owner's economic return and certain
assumptions regarding the Delivery Date, Transaction Costs, tax law, Basic
Term and certain other items (the "Assumptions"). If the Initial Owner
Participant transfers its Beneficial Interest to one or more Owner
Participants on the Delivery Date (as contemplated by Section 3.02(a) hereof
(or, if earlier, the Transfer Date), then, no later than 20 days following the
Delivery Date (the "Reoptimization Date"), the Owner Trustee may elect to amend
such Schedules to reflect the actual Owner's or Owners' Economic Return and any
changes to the Assumptions. In connection with any such amendments, the Owner
Trustee may increase or decrease the aggregate principal amount of the Series C
Certificates pursuant to Section 2.19 of the Indenture, and may prepay part of
the remaining Series C Certificates on the Series C Prepayment Date.
The Lessee, on behalf of the Owner Trustee, shall provide written
notice to the Indenture Trustee on the Reoptimization Date and any Adjustment
Date of any increase or decrease in the principal amount of the Series C
Certificates pursuant to Section 2.19 of the Indenture and of the aggregate
principal amount of the Series C Certificates, if any, which shall then be
subject to prepayment on the Series C Prepayment Date pursuant to this Section
2.03(b). On the Reoptimization Date, any Adjustment Date, and on the Series C
Prepayment Date in the event of any prepayment of such Series C Certificates,
the Owner Trustee shall deliver and the Subordination Agent on behalf of the
Pass Through Trustee of each Pass Through Trust shall accept delivery of an
amended Schedule I to each Certificate containing such changed principal
installments.
The Owner Trustee will give not less than 10 days' notice of the
Reoptimization Date. Any amendment to such Schedules shall not vary the
Mandatory Economic Terms and on the Reoptimization 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. If the Reoptimization Date or any
Adjustment Date occurs later than the Delivery Date, the Lessee shall cause
any required filing and recording of the affected documents with the
Aeronautics Authority to be effected on such date.
Section 2.04. Event of Loss Prior to Delivery Date. If, prior to
delivery of the initial Lease Supplement, an Event of Loss occurs with respect
to the Airframe initially contemplated to be sold by the Lessee to the Owner
Trustee as provided herein and to be leased under the Lease, the Lessee shall
have the right at any time up to and including the Cut-Off Date by written
notice to the Lessor and the Indenture Trustee to elect to substitute such
Airframe with another airframe (the "Pre-Delivery Replacement Airframe"),
provided, that the Pre-Delivery Replacement Airframe shall be a McDonnell
Douglas MD-11F airframe having a value, remaining useful life and utility at
least equal to the Airframe with respect to which such Event of Loss has
occurred. Upon the Lessee's election to replace the Airframe suffering an
Event of Loss with the Pre-Delivery Replacement Airframe, the Pre-Delivery
Replacement Airframe shall become the Airframe for purposes of the Operative
Agreements.
ARTICLE 3
PARTICIPATION IN INVESTMENT ON DELIVERY DATE;
DELIVERY OF AIRCRAFT
Section 3.01. Lessee's Notice of Delivery Date. The Lessee agrees
to give the Owner Participant, the Indenture Trustee, the Owner Trustee and
the Pass Through Trustee at least three (3) Business Days' written or
facsimile notice prior to the Delivery Date (which notice shall be effective
only if received not later than 10:00 a.m. (New York City time) on the date
that is at least three (3) Business Days prior to the Delivery Date), which
Delivery Notice shall specify the amount of the Purchase Price, the amount of
the Owner Participant's Commitment, the Debt Portion, the Delivery Date for
the Aircraft, the serial number of the Airframe and each Engine, and the
Aeronautics Authority registration number for the Aircraft.
Section 3.02. Commitments to Participate in Purchase Price. (a)
Participation in Purchase Price. Subject to the terms and conditions of this
Agreement, on the Delivery Date, (i) subject to the proviso to this Section
3.02(a), the Indenture Trustee agrees to release the Debt Portion or such
lesser amount as may then be held in the Collateral Account together with the
Lessee Shortfall (as defined in clause (iii) below), if any, to the Owner
Trustee for application to the Purchase Price as provided below, (ii) unless
previously transferred on the Transfer Date, 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 in Ancillary Agreement I, (iii)
subject to the proviso to this Section 3.02(a), the Lessee agrees to pay to
the Indenture Trustee the excess, if any, of (I) the Debt Portion over (II)
such amount as may then be held in the Collateral Account (the "Lessee
Shortfall") as provided in Section 17.02(a) hereof, 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) by the Owner Trustee to
the Lessee, an amount equal to the Purchase Price, or such lesser amount
referred to in the proviso to this Section 3.02(a), and (B) by the Indenture
Trustee, on behalf of the Owner Trustee, if the Indenture Trustee is so
instructed by the Lessee, to one or more Outstanding C Accounts, the excess
(or a portion of the excess) of any amounts then held in the Collateral
Account over the Debt Portion; provided, however, that if (1) the Delivery
Date has been postponed, (2) the investments contemplated by Section 2.14(b)
of the Indenture have been made, (3) such investments do not mature on the
rescheduled Delivery Date and (4) the Lessee elects not to break such
investments, then the Indenture Trustee shall not release amounts in the
Collateral Account to the Owner Trustee and the Lessee shall accept as payment
of the Purchase Price by the Owner Trustee an amount equal to the Owner
Participant's Commitment and the Indenture Trustee shall pay to the Lessee at
the end of the applicable investment period referred to in Section 2.14(b) of
the Indenture an amount equal to the Debt Portion or such lesser amount as may
then be held in the Collateral Account. After the Delivery Date, any amounts
remaining in the Collateral Account shall secure the Secured Obligations
relating to any Series C Certificates outstanding after the Delivery Date that
are subject to prepayment on the Series C Prepayment Date pursuant to Section
6.02(a)(viii) of the Indenture.
(b) 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.
(ii) Subject to the provisions of Section 3.03 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 the Cut-Off Date, whereupon the Owner
Participant's Commitment hereunder shall terminate. On such third Business
Day (or such earlier date) or the Cut-Off Date, as the case may be, or the
earliest practicable Business Day thereafter, the Owner Trustee shall return
the amounts held by it hereunder to the Owner Participant, provided that the
Owner Trustee shall have had a reasonable time to liquidate any Permitted
Investments it has been authorized to invest in pursuant to the preceding
paragraph and to obtain the proceeds therefrom in funds of the type originally
received, and the Lessee shall pay interest on such funds to the Owner
Participant at the full-term implicit lease rate (which rate shall not be less
than the Owner Participant's cost of funds), such interest to be payable for
the period from and including such Scheduled Delivery Date to but excluding
the date such funds are returned to the Owner Participant in accordance with
the terms hereof; provided that if any such funds are returned to the Owner
Participant after 2:00 p.m. (New York City time) on any such date, such funds
shall be deemed for purposes of this paragraph to have been returned on the
next succeeding Business Day.
The Lessee shall reimburse the Owner Trustee on demand for any loss
incurred by the Owner Trustee as a result of the investment of funds by the
Owner Trustee in accordance with the terms of this Section 3.02(b). Further,
the Lessee shall indemnify the Owner Trustee and hold it harmless from and
against any cost or expense the Owner Trustee may incur as a result of any
investment of funds or transfer of funds referred to herein in accordance with
the terms hereof. The Owner Trustee shall not be liable for failure to invest
such funds except as otherwise provided herein or for any losses incurred on
such investments except for any losses arising out of its own gross negligence
or willful misconduct.
Section 3.03. Postponement of Delivery Date. (a) If no Owner
Participant has committed to participate in the transactions contemplated to
occur on the Scheduled Delivery Date or if an 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 3.02
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. If no Owner Participant has committed to
participate or an Owner Participant shall for any reason fail or refuse to
make the full amount of its Commitment available in accordance with the terms
of Section 3.02 hereof on such postponed Delivery Date, the Lessee shall
endeavor during such period to identify another equity investor to whom it can
assign its Beneficial Interest. If the Lessee identifies an equity investor,
the Lessee shall assign its interest in the Lessor's Estate as provided above.
In case of any such conveyance (but subject to the satisfaction of the
conditions precedent specified herein), the Indenture Trustee shall release
the Debt Portion or such lesser amount as may then be held in the Collateral
Account for application to the payments contemplated in the last sentence of
Section 3.02(a) hereof, subject to the proviso to Section 3.02(a) hereof.
(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, there being no Owner Participant committed to
participate in the transactions contemplated to occur on the Delivery Date 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 3.02 hereof and
no transferee Owner Participant having been identified pursuant to Section
3.03(a) 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 the Lessee shall provide, no later than
the Cut-Off Date, notice of prepayment to the Indenture Trustee and the
Certificates shall be prepaid on the 15th day following the Cut-Off Date as
provided in Section 6.02(a)(vi) of the Indenture and Section 17.02(c) hereof
and provided further, that (i) the Lessee's obligation to indemnify such
parties to the extent provided in such documents, shall not be diminished or
modified in any respect and (ii) the obligations of the Owner Trustee, the
Indenture Trustee and the Lessee to return funds and pay interest, costs,
expenses and other amounts thereon or in respect thereof as provided in
Section 3.02 hereof shall continue. In addition to the foregoing rights of
the Lessee to provide a notice of prepayment, if the Lessee receives a
commitment from a prospective owner participant pursuant to which the Lessee
would have the right not to enter into the lease if, as a result of a change
in tax law prior to the Delivery Date, the Net Present Value of Rents would
increase above a specified amount, then in the event that such a change in tax
law does so increase the Net Present Value of Rents, the Lessee shall have the
right to provide the notice of prepayment referred to in the first proviso to
the preceding sentence.
(c) Optional Postponement. Without limiting the provisions of
Section 3.02(b) 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 3.03(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 3.04. Closing. The closing with respect to the purchase and
lease of the Aircraft on the Delivery Date shall take place at the offices of
Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017.
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent (Certificate Closing Date). The
obligations of the Owner Trustee, the 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 Certificate Closing
Date are subject to the fulfillment to the satisfaction of such party (or
waiver by such party), prior to or on the Certificate Closing Date, of the
following conditions precedent (it being understood that receipt by the Lessee
of any of the following documents shall not be a condition precedent to the
obligations of any party):
(a) Certificates. (i) On the Certificate Closing Date, there shall
have been duly issued and delivered by the Owner Trustee to the
Subordination Agent on behalf of the Pass Through Trustee for each Pass
Through Trust, against payment therefor, a Certificate, substantially in
the form set forth in Exhibit B to the Indenture, duly authenticated, dated
the Certificate Closing Date and registered in the name of the
Subordination Agent, in the principal amounts, Series and Maturity, bearing
the interest rate and the other economic terms specified in the Series
Supplements and otherwise as provided in Section 2.04 of the Indenture.
(ii) The Pass Through Certificates shall be registered under the Securities
Act, any applicable state securities laws shall have been complied with,
and the Pass Through Agreement shall have been qualified under the Trust
Indenture Act, and on the Certificate Closing Date, the "Certificates" (as
defined in each of the Related Indentures) have been duly issued and
delivered by the "Owner Trustee" (as defined in each of the Related
Indentures) to the Subordination Agent on behalf of the Pass Through
Trustee for each Pass Through Trust.
(b) Legal Investment. On the Certificate Closing Date, no fact or
condition shall exist under applicable laws or regulations, or
interpretations of any such laws or regulations by applicable regulatory
authorities, which, in the opinion of the Pass Through Trustee, the
Subordination Agent or the Indenture Trustee or their special counsel,
would make it illegal for the Initial 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 such Initial Owner Participant, the
Lessee, the Owner Trustee, the Pass Through Trustee, the Subordination
Agent or the Indenture Trustee, to participate in the transactions to be
consummated on the Certificate Closing Date; and no action or proceeding
shall have been instituted nor shall governmental action before any court,
governmental authority or agency be threatened which in the opinion of
counsel for the Indenture Trustee, the Subordination Agent or the Pass
Through Trustee is not frivolous, nor shall any order have been issued or
proposed to be issued by any court, or governmental authority or agency, as
of the Certificate Closing Date, to set aside, restrain, enjoin or prevent
the consummation of any of the transactions contemplated by this Agreement
or by any of the other Operative Agreements.
(c) Underwriters. The Underwriters shall have transferred the funds
specified in Section 2.01(a) hereof and all conditions thereunder shall
have been satisfied or waived.
(d) Documents. This Agreement and the following documents shall have
been duly authorized, executed and delivered by the respective party or
parties thereto, shall each be satisfactory in form and substance to the LC
Bank, the Lessee, the Owner Trustee, the Indenture Trustee and the Pass
Through Trustee (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 LC Bank, the Lessee, the Owner
Trustee, the Indenture Trustee, the Pass Through Trustee or the
Subordination Agent, as the case may be, of such documents shall have been
delivered to the LC Bank, the Lessee, the Indenture Trustee, the Pass
Through Trustee, the Subordination Agent and the Owner Trustee (provided
that the sole chattel-paper original of each of the Lease and each
Ancillary Agreement amendatory of the Lease, shall be delivered to the
Indenture Trustee):
(i) the Lease;
(ii) the Indenture;
(iii) the Modification Agreement;
(iv) the GTA;
(v) the Trust Agreement;
(vi) the Intercreditor Agreement;
(vii) the Liquidity Facility for each of the Pass Through Trusts for
the Series A Certificates and the Series B Certificates;
(viii) the Collateral Agreement; and
(ix) the Letter of Credit (the original of such document to be
delivered to the beneficiaries of the Letter of Credit only).
(e) Approvals. All approvals and consents of any trustees or
holders of any indebtedness or obligations of the Lessee, which in the
opinion of the Pass Through Trustee or the Indenture Trustee are required
in connection with any transaction contemplated by this Agreement, shall
have been duly obtained.
(f) Financing Statements. UCC financing statements covering all the
security interests (and other interests) intended to be created by or
pursuant to the Granting Clause of the Indenture shall have been executed
and delivered by the Owner Trustee, as debtor, and by the Indenture
Trustee, as secured party, for and on behalf of the Holders, and such
financing statements shall have been duly filed or duly submitted for
filing in the State of Connecticut, and all other actions shall have been
taken which, in the opinion of the Pass Through Trustee and the
Underwriters, are necessary to perfect and protect such security interests
and other interests.
(g) Corporate Documents. Except when such Person is the delivering
party, the LC Bank, the Owner Trustee, the Pass Through Trustee, the Lessee
and the Indenture Trustee (acting directly or by authorization to its
counsel) shall have received the following, in each case in form and
substance satisfactory to it:
(i) a copy of the certificate of incorporation and by-laws of the
Lessee, certified by the Secretary or an Assistant Secretary of the
Lessee as of the Certificate Closing Date, and a copy of the minutes
of the regular meeting of the board of directors of the Lessee,
certified as such as of the Certificate Closing Date by such
Secretary or Assistant Secretary, duly authorizing the lease by the
Lessee of the Aircraft under the Lease and the execution, delivery
and performance by the Lessee of this Agreement, the Lease, the Pass
Through Agreement, the Series Supplements, the other Operative
Agreements to which the Lessee is or is to be a party and each other
document to be executed and delivered by the Lessee in connection
with the transactions contemplated hereby;
(ii) a copy of the articles of association and by-laws and other
instruments of the Owner Trustee, certified by the Secretary or an
Assistant Secretary of the Owner Trustee as of the Certificate
Closing Date (or other like instruments satisfactory to the Lessee)
and 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;
(iii) 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 Certificate
Closing Date (or other like instruments satisfactory to the Lessee)
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;
(iv) 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
Certificate Closing Date (or other like instruments satisfactory to
the Lessee) 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;
(v) 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
Certificate Closing Date (or other like instruments satisfactory to
the Lessee) 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
(vi) such other documents, evidences, materials, and information
with respect to the Lessee, the Owner Trustee, the Indenture Trustee
and the Pass Through Trustee as the Indenture Trustee, the Pass
Through Trustee or the LC Bank may reasonably request in order to
establish the consummation of the transactions contemplated by this
Agreement.
(h) Officer's Certificate of Lessee. On the Certificate Closing
Date, the following statements shall be true, and the LC Bank, the Owner
Trustee, the Pass Through Trustee and the Indenture Trustee shall have
received a certificate signed by the Vice President and Treasurer or any
other duly authorized officer of the Lessee, dated the Certificate Closing
Date, stating that:
(i) the representations and warranties of the Lessee contained in
the Operative Agreements to which it is a party and in any
certificate delivered pursuant hereto or thereto are true and correct
on and as of the Certificate Closing Date as though made on and as of
such date (except to the extent that such representations and
warranties relate solely to an earlier date, in which case such
certificate shall state that such representations and warranties were
true and correct on and as of such earlier date);
(ii) except for the matters described (i) under "Legal
Proceedings" in the Lessee's Annual Report on Form 10-K for the
fiscal year ended May 31, 1997 (as updated by Note 7 to the financial
statements included in the Lessee's Quarterly Reports on Form 10-Q
for the fiscal quarters ended August 31, 1997, November 30, 1997 and
February 28, 1998), 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 financial
statements of the Lessee as of May 31, 1997 or the unaudited
consolidated financial statements of the Lessee as of February 28,
1998 and nothing has occurred which will, in the judgment of such
officer, materially adversely affect the ability of the Lessee to
carry on its business or to perform its obligations under this
Agreement and each other Operative Agreement to which it is or is to
be a party; and
(iii) no event has occurred and is continuing, or would result
from the purchase, sale, mortgage, or lease of the Aircraft, which
constitutes an Event of Loss (or event which with the passage of time
would become an Event of Loss) with respect to the Airframe or any
Engine, or a Default or an Event of Default under the Lease.
(i) Other Officer's Certificates. On the Certificate Closing Date,
the following statements shall be true, and the Lessee, the LC Bank, 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 LC Bank, the Pass Through
Trustee, the Subordination Agent and the Indenture Trustee), FSB and the
Indenture Trustee (in the case of the Lessee, the LC Bank, the Pass Through
Trustee, the Subordination Agent and the Owner Trustee), FSB and the Pass
Through Trustee (in the case of the Lessee, the LC Bank, the Indenture
Trustee, the Subordination Agent and the Owner Trustee), and FSB and the
Subordination Agent (in the case of the Lessee, the LC Bank, the Pass
Through Trustee, the Indenture Trustee and the Owner Trustee), signed by a
duly authorized officer of SSB and FSB, respectively, dated the Certificate
Closing 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 Certificate
Closing Date as though made on and as of such date (except to the
extent that such representations and warranties relate solely to an
earlier date, in which case such certificate shall state that such
representations and warranties were true and correct on and as of such
earlier date);
(ii) to the best of its knowledge, no event has occurred and is
continuing, which constitutes or which, but for the lapse of time or
the giving of notice, or both, would constitute, due to any action or
omission on the part of 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.
(j) Legal Opinions. The Underwriters, the Lessee, the Owner
Trustee, the Pass Through Trustee and the Indenture Trustee (acting
directly or by authorization to its special counsel) shall have received
from the following counsel their respective legal opinions in each case
satisfactory to the Underwriters, the Lessee, the Owner Trustee, the Pass
Through Trustee or the Indenture Trustee, as the case may be, as to scope
and substance (and covering such other matters as the recipient may
reasonably request) and dated the Certificate Closing Date:
(i) Karen M. Clayborne, Senior Vice President and General Counsel
of the Lessee, in the form of Exhibit A(1)(a)(i) hereto and addressed
to the Underwriters, the Owner Trustee, the Pass Through Trustee,
each Liquidity Provider and the Indenture Trustee;
(ii) Ray, Quinney & Nebeker, special counsel for the Indenture
Trustee, in the form of Exhibit A(2) hereto and addressed to the
Underwriters, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee, each Liquidity Provider and the Lessee;
(iii) Bingham Dana LLP, special counsel for the Owner Trustee, in
the form of Exhibit A(3)(i) hereto and addressed to the Underwriters,
the Indenture Trustee, the Owner Trustee, the Pass Through Trustee,
each Liquidity Provider and the Lessee;
(iv) Davis Polk & Wardwell, special counsel for the Lessee, in the
form of Exhibit A(1)(b)(i) hereto and addressed to the Underwriters,
the Indenture Trustee, the Owner Trustee, the Pass Through Trustee,
each Liquidity Provider and the Lessee;
(v) Ray, Quinney & Nebeker, special counsel for the Pass Through
Trustee and the Subordination Agent, in the form of Exhibit A(4)
hereto and addressed to the Underwriters, the Indenture Trustee, the
Owner Trustee, the Pass Through Trustee, each Liquidity Provider and
the Lessee; and
(vi) Ruediger Sass, General Counsel to the Liquidity Providers, in
the form of Exhibit A(5)(a) hereto, Ruediger Sass, General Counsel to
the LC Bank, in the form of Exhibit A(5)(b) hereto, Milbank, Tweed,
Hadley & McCloy, special counsel for the Liquidity Providers, in the
form of Exhibit A(5)(c) hereto, and Milbank, Tweed, Hadley & McCloy,
special counsel for the LC Bank in the form of Exhibit A(5)(d)
hereto, each addressed to the Pass Through Trustee, the Subordination
Agent, each Liquidity Provider and the Lessee.
(k) No Indenture Event of Default. No Indenture Event of Default or
Indenture Default has occurred and is continuing.
(l) Event of Default; Default; Event of Loss. No Default or Event
of Default under the Lease or Event of Loss or event, which with the
passage of time or if continued unremedied or unaltered would constitute an
Event of Loss, shall have occurred or be in existence.
(m) Other Agreements. The Lessee and the Pass Through Trustee shall
have entered into the Pass Through Agreement and the Series Supplements, all
conditions to the effectiveness of each thereof shall have been satisfied
or waived, and the Pass Through Certificates shall have been issued
pursuant to the Series Supplements. The Lessee and the Underwriters shall
have entered into the Underwriting Agreement, all conditions to the
effectiveness thereof shall have been satisfied or waived, and the Pass
Through Certificates shall have been delivered pursuant to the Underwriting
Agreement. All conditions to the effectiveness of each Liquidity Facility
shall have been satisfied or waived.
(n) Payment of Taxes. (A) All taxes, fees, charges, assessments,
costs and other expenses then due and payable in connection with the
execution, delivery, recording and filing of all financing statements
referred to in subparagraph (f) of this Section 4.01, or in connection with
the issuance of the Certificates shall have been duly paid or caused to be
paid in full; and (B) all sales or use taxes and duties related to the
consummation of the transactions contemplated by the Operative Agreements
on the Certificate Closing Date which are then due and payable shall have
been duly paid in full.
(o) Governmental Compliance. All appropriate action required to
have been taken by the FAA, the SEC, or any governmental or political
agency, subdivision or instrumentality of the United States, prior to the
Certificate Closing Date in connection with the transactions contemplated
by this Agreement shall have been taken, and all orders, permits, waivers,
authorizations, exemptions and approvals (collectively "permits") of such
entities required to be in effect on the Certificate Closing Date in
connection with the transactions contemplated by this Agreement shall have
been issued, and all such permits shall be in full force and effect on the
Certificate Closing Date.
(p) 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.
Section 4.02. Conditions Precedent (Delivery Date). Subject to the
last paragraph of this Section 4.02, 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 Delivery Date.
(b) Legal Investment. No change shall have occurred after the date
which is two days prior to the Certificate Closing Date in applicable laws
or regulations, or interpretations of any such laws or regulations by
applicable regulatory authorities, which, in the opinion of the Owner
Participant or its special counsel, the Pass Through Trustee, 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 transactions to be consummated on the
Delivery Date; and no action or proceeding shall have been instituted nor
shall governmental action before any court, governmental authority or
agency be threatened which in the opinion of counsel for the Owner
Participant, the Indenture Trustee, the Subordination Agent or the Pass
Through Trustee is not frivolous, nor shall any order have been issued or
proposed to be issued by any court, or governmental authority or agency, as
of the Delivery Date, to set aside, restrain, enjoin or prevent the
consummation of any of the transactions contemplated by this Agreement or
by any of the other Operative Agreements.
(c) Documents. The documents referred to in Section 4.01(d) hereof
shall each be in full force and effect and the following documents shall
have been duly authorized, executed and delivered by the respective party
or parties thereto, shall each be satisfactory in form and substance to the
LC Bank, 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 LC Bank, 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 LC
Bank, the Owner Participant, the Lessee, the Indenture Trustee, the Pass
Through Trustee and the Owner Trustee (provided that the sole chattel-paper
original of the amended and restated Lease (whether delivered on the
Transfer Date or the Delivery Date), the Lease Supplement and the Ancillary
Agreement I shall be delivered to the Indenture Trustee):
(i) this Agreement, as amended and restated as of the Delivery Date;
(ii) the Lease, as amended and restated as of the Delivery Date;
(iii) the Trust Agreement, as amended and restated as of the Delivery
Date;
(iv) the Indenture, as amended and restated as of the Delivery Date;
(v) the Lease Supplement covering the Aircraft, dated the Delivery
Date;
(vi) the Indenture and Security Agreement Supplement covering the
Aircraft, dated the Delivery Date;
(vii) in the case of the Owner Participant only, the Tax Indemnity
Agreement (unless delivered on the Transfer Date);
(viii) the Ancillary Agreement I;
(ix) the Invoice;
(x) the Engine Warranty Assignment;
(xi) the Engine Consent; and
(xii) the Bills of Sale;
unless, in the case of each of the documents listed in clauses (i) through
(iv) above they shall have been amended and restated as of and delivered on
the Transfer Date.
(d) Legal Opinions. The Owner Participant, the Underwriters, the
Lessee, the Owner Trustee, the Pass Through Trustee and the Indenture
Trustee (acting directly or by authorization to its special counsel) shall
have received from the following counsel their respective legal opinions in
each case satisfactory to the Owner Participant, the Underwriters, the
Lessee, the Owner Trustee, the Pass Through Trustee or the Indenture
Trustee, as the case may be, as to scope and substance (and covering such
other matters as the recipient may reasonably request) and dated the
Delivery Date:
(i) Karen M. Clayborne, Senior Vice President and General Counsel
of the Lessee, in the form of Exhibit A(1)(a)(ii) hereto and
addressed to the Underwriters, the Owner Participant, the Owner
Trustee, the Pass Through Trustee, each Liquidity Provider and the
Indenture Trustee;
(ii) Davis Polk & Wardwell, special counsel for the Lessee, in the
form of Exhibit A(1)(b)(ii) hereto and addressed to the Underwriters,
the Owner Participant, the Indenture Trustee, the Owner Trustee, the
Pass Through Trustee, each Liquidity Provider and the Lessee;
(iii) Bingham Dana LLP, special counsel for the Owner Trustee, in
the form of Exhibit A(3)(ii) 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) Special counsel for the Owner Participant, and in-house
counsel for the Owner Participant, each addressed to the
Underwriters, the Owner Participant, the Indenture Trustee, the Owner
Trustee, the Pass Through Trustee, each Liquidity Provider and the
Lessee;
(v) 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;
(vi) Daugherty, Fowler & Peregrin, special aviation counsel, 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; and
(vii) in the case of the Owner Participant only, special tax
counsel to the Owner Participant, addressed to the Owner Participant,
with respect to certain tax matters.
(e) Title, Airworthiness and Registration. On the Delivery Date, the
following statements shall be true, and the Owner Participant, the Indenture
Trustee, the Pass Through Trustee and the Owner Trustee shall have received
evidence from the Lessee reasonably satisfactory to the Owner Participant,
the Indenture Trustee, the Pass Through Trustee and the Owner Trustee to
the effect that:
(i) the Owner Trustee has good and marketable title (subject to
filing and recording of 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 amended and restated Lease and the
Lease Supplement covering the Aircraft, the amended and restated
Indenture and the Indenture and Security Agreement Supplement
covering the Aircraft and the amended and restated Trust Agreement
shall have been duly filed for recordation (or shall be in the
process of being so duly filed for recordation) with the Aeronautics
Authority pursuant to the Transportation Code; and
(iv) application to the Aeronautics Authority for registration of
the Aircraft in the name of the Owner Trustee shall have been duly
made and the Lessee shall have temporary or permanent authority to
operate the Aircraft.
(f) Financing Statements. (i) a form UCC-3 financing statement to
amend and restate each financing statement referred to in Section 4.01(f)
hereof 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 (ii) a UCC notice filing describing the Lease as a lease
shall have been executed and delivered by the Owner Trustee, as lessor, and
the Lessee, as lessee (which filing shall name the Indenture Trustee as
assignee of the Owner Trustee), and shall have been duly filed in the State
of Tennessee.
(g) Payments. The Owner Participant shall have made available its
Commitment to the Owner Trustee and the other payments contemplated by
Section 3.02 hereof shall have been made.
(h) Report of Aircraft Expert. The Owner Participant shall have
received a report prepared by BK Associates, Inc. addressed to the Owner
Participant (with an abbreviated report to the Lessee) which report shall
be in form and substance satisfactory to the Owner Participant.
(i) Insurance. Each of the Indenture Trustee, the Pass Through
Trustee, the Owner Trustee and the Owner Participant shall have received
such evidence as it deems appropriate, including, without limitation, an
independent insurance broker's report, together with certificates of
insurance from such broker, in form and substance satisfactory to the
Indenture Trustee, the Pass Through Trustee, the Owner Trustee and the
Owner Participant to establish that the insurance required by Article 13 of
the Lease is in effect.
(j) Payment of Taxes. (A) All taxes, fees, charges, assessments,
costs and other expenses then due and payable in connection with the
execution, delivery, recording and filing of all financing statements and
the documents and instruments referred to in subparagraphs (e) and (f) of
this Section 4.02, or in connection with the purchase of the Aircraft by
the Owner Trustee and the making by the Owner Participant of its equity
investment shall have been duly paid or caused to be paid in full; and (B)
all sales or use taxes and duties related to the consummation of the
transactions contemplated by the Operative Agreements on the Delivery Date
which are then due and payable shall have been duly paid in full.
(k) No Indenture Event of Default. No Indenture Event of Default or
Indenture Default has occurred and is continuing.
(l) Event of Default; Default; Event of Loss. No Default or Event
of Default under the Lease (assuming, for this purpose, that the provisions
of Article 16 of the Lease had become operative on the Certificate Closing
Date and not the Delivery Date) or Event of Loss or event, which with the
passage of time or if continued unremedied or unaltered would constitute an
Event of Loss, shall have occurred or be in existence.
(m) Governmental Compliance. All appropriate action required to
have been taken by the FAA, the SEC, or any governmental or political
agency, subdivision or instrumentality of the United States, prior to the
Delivery Date in connection with the transactions contemplated by this
Agreement shall have been taken, and all orders, permits, waivers,
authorizations, exemptions and approvals (collectively "permits") of such
entities required to be in effect on the Delivery Date in connection with
the transactions contemplated by this Agreement shall have been issued, and
all such permits shall be in full force and effect on the Delivery Date.
(n) Officer's Certificate of Lessee. On the Delivery Date, the
following statements shall be true, and the LC Bank, 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 (as updated by Note 7 to the financial
statements included in the Lessee's Quarterly Reports on Form 10-Q
for the fiscal quarters ended August 31, 1997, November 30, 1997 and
February 28, 1998), 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 financial
statements of the Lessee as of May 31, 1997 or the unaudited
consolidated financial statements of the Lessee as of February 28,
1998 and nothing has occurred which will, in the judgment of such
officer, materially adversely affect the ability of the Lessee to
carry on its business or to perform its obligations under this
Agreement and each other Operative Agreement to which it is or is to
be a party; and
(iii) no event has occurred and is continuing, or would result
from the purchase, sale, mortgage, or lease of the Aircraft, which
constitutes an Event of Loss (or event which with the passage of time
would become an Event of Loss) with respect to the Airframe or any
Engine, or a Default or an Event of Default under the Lease.
(o) Certificates of Owner Participant. (a) On the Delivery Date,
the LC Bank, the Owner Trustee, the Pass Through Trustee, the Lessee and
the Indenture Trustee (acting directly or by authorization to its counsel)
shall have received the following in form and substance satisfactory to it:
(i) a copy of the articles of incorporation and bylaws of the
Owner Participant, certified by the Secretary or an Assistant
Secretary of the Owner Participant as of the Delivery Date, and a
copy of the resolutions of the board of directors of the Owner
Participant, certified as such as of the Delivery Date by such
Secretary or an Assistant Secretary, authorizing the execution and
delivery by the Owner Participant of this Agreement, the Tax
Indemnity Agreement, the Trust Agreement and the other Operative
Agreements to which the Owner Participant is or is to be a party and
each other document to be executed and delivered by the Owner
Participant in connection with the transactions contemplated hereby.
(b) On the Delivery Date, the following statements shall be true,
and the LC Bank, the Lessee, the Pass Through Trustee, the Owner Trustee
and the Indenture Trustee shall have received a certificate from the Owner
Participant, signed by a duly authorized officer of the Owner Participant
dated the Delivery Date, stating that:
(i) the representations and warranties of the Owner Participant
contained in this Agreement, the Trust Agreement and any other
Operative Agreement (excluding the Tax Indemnity Agreement) to which
it is a party and in any certificate delivered pursuant hereto or
thereto, are true and correct on and as of the Delivery Date as
though made on and as of such date (except to the extent that such
representations and warranties relate solely to an earlier date, in
which case such certificate shall state that such representations and
warranties were true and correct on and as of such earlier date);
(ii) no Lessor's Liens attributable to the Owner Participant
exist; and
(iii) no event has occurred and is continuing which constitutes
or, with notice or lapse of time or both would constitute, due to any
action or omission on the part of the Owner Participant, an Indenture
Event of Default other than an Indenture Event of Default
attributable to a Lease Event of Default.
(p) Other Officer's Certificates. On the Delivery Date, the
following statements shall be true, and the LC Bank, 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 LC Bank, 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
LC Bank, 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 LC Bank, 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 LC Bank, 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.
(q) Release of Debt Portion. Except as set forth in the proviso to
Section 3.02(a) hereof, the Indenture Trustee shall have released the Debt
Portion from (or such lesser amount as may then be held in) the Collateral
Account.
(r) Outstanding C Accounts. Any amount withdrawn by the Indenture
Trustee from the Collateral Account and not used to pay the Debt Portion of
the Purchase Price of the Aircraft shall be deposited into one or more
Outstanding C Accounts.
(s) Officer's Certificate of Lessee Regarding Mandatory Economic
Terms and Mandatory Document Terms. On the Delivery Date, or if earlier,
the Transfer Date, in connection with the amendments contemplated by
Section 2.03(a) hereof, 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 or the Transfer Date, as the case may be, 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 or any Liquidity Provider and such
certification shall be true and correct.
Notwithstanding anything else to the contrary in this Section 4.02, 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
4.02(n) and (o) 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 4.03. Opinion of Special Aviation Counsel Upon Registration.
Promptly upon the registration of the Aircraft and the filing and, where
appropriate, recordation pursuant to the Transportation Code, of 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 amended and restated Trust
Agreement, the amended and restated Lease (with such Lease Supplement, the
amended and restated Indenture and such Indenture and Security Agreement
Supplement attached as exhibits), and the amended and restated Indenture (with
such Indenture and Security Agreement Supplement attached as an exhibit), and
(iii), subject to customary qualifications, the lack of any intervening
documents with respect to the Aircraft.
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations. The
Lessee's obligation to participate in the transactions contemplated hereby on
the Certificate Closing Date is subject to the conditions that, prior to or on
the Certificate Closing Date, the Lessee shall have received the certificates
and other documents which are referred to in, or the opinions to be addressed
to it under, as the case may be, paragraphs (d), (g)(ii)-(v), (i),
(j)(ii)-(vii) of Section 4.01 hereof and the Underwriters shall have made
available the amounts required to be paid by them pursuant to Section 2.01
hereof, and the Lessee's obligation to participate in the transactions
contemplated hereby on the Delivery Date is subject to the conditions that, on
or prior to the Delivery Date, the Lessee shall have received the documents
which are referred to in, or the opinions to be addressed to it under, as the
case may be, paragraphs (c) and (d)(ii)-(vii) of Section 4.02 hereof and the
Indenture Trustee shall have released the Debt Portion from (or such lesser
amount as may then be held in) the Collateral Account.
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties. The Lessee
represents and warrants to the Owner Participant, the Owner Trustee (in its
individual capacity and as Owner Trustee), the Pass Through Trustee (in its
individual capacity and as Pass Through Trustee), each Liquidity Provider and
the Indenture Trustee (in its individual capacity and as Indenture Trustee)
that, on the date hereof and as of the Certificate Closing Date and the
Delivery Date (unless any such representation is specifically made as of one
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 UCC) in Memphis, Tennessee, and is duly qualified
to do business as a foreign corporation and is in good standing in all
jurisdictions in which it has intrastate routes, or offices or major
overhaul facilities or in which other activities of the Lessee require such
qualification;
(b) the Lessee has full power, authority and legal right to conduct
its business and operations as currently conducted and to own or hold under
lease its Properties and to enter into and perform its obligations under
this Agreement, the other Operative Agreements to which it is a party, the
Pass Through Agreement and the Series Supplements (the "Lessee Documents");
(c) the Lessee is an "air carrier" within the meaning of the
Transportation Code and a holder of a certificate under Sections 41102(a)
and 41103 of the Transportation Code and a "citizen of the United States"
within the meaning of Section 40102(a)(15) of the Transportation Code
holding an "air carrier operating certificate" issued under Chapter 447 of
the Transportation Code for aircraft capable of carrying ten (10) or more
individuals or 6,000 pounds or more of cargo, and each such certificate is
in full force and effect;
(d) the Lessee possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents (collectively
"permits") which are material to the operation of the routes flown by it
and the conduct of its business and operations as currently conducted and
each such permit is in full force and effect;
(e) the execution, delivery and performance of the Lessee Documents
by the Lessee have been duly authorized by all necessary corporate action
on the part of the Lessee and do not require any stockholder approval, or
approval or consent of any trustee or holder of any indebtedness or
obligations of the Lessee, and each such document has been duly executed
and delivered or, in the case of the Operative Agreements identified in
Section 4.02(c) hereof, will on the Delivery Date be executed and delivered
by the Lessee and constitutes (or will constitute, as the case may be) the
legal, valid and binding obligations of the Lessee enforceable against it
in accordance with the terms thereof except as such enforceability may be
limited by bankruptcy, insolvency, moratorium, reorganization or other
similar laws or equitable principles of general application to or affecting
the enforcement of creditors' rights generally (regardless of whether
enforceability is considered in a proceeding in equity or at law);
(f) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body (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
4.02(d)(iii) and 4.03 hereof and except for the filings referred to in
Sections 4.01(f) and 4.02(f) hereof, all of which shall have been duly
obtained or made and shall be in full force and effect on and as of the
Certificate Closing Date or the Delivery Date, or as contemplated by said
Sections;
(g) neither the execution, delivery or performance by the Lessee of
the Lessee Documents nor compliance with the terms and provisions hereof or
thereof, conflicts or will conflict with or results or will result in a
breach or violation of any of the terms, conditions or provisions of, or
will require any consent (other than the Engine Consent which will be
executed on or prior to the Delivery Date) 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 (as updated by Note 7 to the financial statements
included in the Lessee's Quarterly Reports on Form 10-Q for the fiscal
quarters ended August 31, 1997, November 30, 1997 and February 28, 1998),
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 has filed or caused to be filed all tax returns which
are required to be filed and has paid or caused to be paid all taxes shown
to be due and payable pursuant to such returns or pursuant to any
assessment received by the Lessee (other than assessments the payment of
which is being contested in good faith by the Lessee), and the Lessee has
no knowledge of any related actual or proposed deficiency or additional
assessment which either in any case or in the aggregate would materially
adversely affect the Lessee's consolidated financial condition (other than,
in any such case, assessments, the payment of which is being contested in
good faith by the Lessee, as to which no representation is made concerning
the Lessee's liability (if any) or the effect of any adverse determination
upon the Lessee's consolidated financial condition);
(j) except for (A) the registration in the Owner Trustee's name of
the Aircraft pursuant to the Transportation Code to be accomplished by
filing with the FAA, of 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 Sections 4.01(f) and
4.02(f) hereof and (D)(x) on the Certificate Closing Date, the taking of
possession by the Indenture Trustee of the Liquid Collateral and
maintaining possession by the Indenture Trustee thereof as contemplated in
Section 2.14(a) of the Indenture and (y) on the Delivery Date, the taking
of possession by the Indenture Trustee of the original counterpart of the
Lease and the Lease Supplement covering the Aircraft, no further action,
including any filing or recording of any document, is necessary or
advisable in order (i) to establish the Owner Trustee's title to and
interest in the Aircraft and the Lessor's Estate as against the Lessee and
any third parties, or (ii) to perfect the first security interest in and
mortgage Lien on the Trust Indenture Estate in favor of the Indenture
Trustee;
(k) on the Delivery Date, the Owner Trustee has received good and
marketable title to the Aircraft, free and clear of all Liens, except the
rights of the Lessee under the Lease and the Lease Supplement, the rights
of the Indenture Trustee under the Indenture and the beneficial interest of
the Owner Participant created by the Trust Agreement;
(l) the Lessee has heretofore delivered to the Owner Participant
true and correct copies of the Lessee's Annual Report on Form 10-K for the
fiscal year ended May 31, 1997 and its Quarterly Reports on Form 10-Q for
the fiscal quarters ended August 31, 1997, November 30, 1997 and February
28, 1998, and of the audited consolidated balance sheet of the Lessee for
the fiscal year ended May 31, 1997 and the unaudited consolidated balance
sheets of the Lessee as of August 31, 1997, November 30, 1997 and February
28, 1998, and the related consolidated statements of income, changes in
common stockholders' investment and cash flows for the fiscal year and
interim reporting periods ended on such dates, accompanied (except in the
case of such interim reporting periods) by a report thereon containing
opinions without qualification, except as therein noted, by Arthur Andersen
LLP, independent public accountants; said financial statements have been
prepared in accordance with generally accepted accounting principles
consistently applied and present fairly the financial position of the
Lessee as of such dates and the results of its operations and cash flows
for such periods and such Annual Report, Quarterly Reports and financial
statements did not, as of their respective dates of filing with the SEC,
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein not misleading;
(m) with respect to ERISA:
(i) none of the Pension Plans (as defined at the end of this
Section 6.01(m)) nor their related trusts have been terminated in a
distress termination pursuant to Section 4041(c) of ERISA or by the
Pension Benefit Guaranty Corporation (together with any successor
agency or instrumentality thereto, the "PBGC") pursuant to Section
4042 of ERISA, nor have any actions been taken to so terminate any
Pension Plan or related trust and neither the Lessee nor any ERISA
Affiliate (as defined at the end of this Section 6.01(m)) has
incurred or could reasonably be expected to incur any material
liability with respect to a Pension Plan under Section 4062, 4063,
4064 or 4069 of ERISA;
(ii) there have been no "reportable events" (as such term is
defined in Section 4043(b) of ERISA) with respect to any Pension Plan
which have resulted or could reasonably be expected to result in any
material liability of the Lessee or any ERISA Affiliate;
(iii) no "accumulated funding deficiency" (as such term is defined
in Section 302 of ERISA or Section 412 of the Code) exists with
respect to any Pension Plan, whether or not waived, nor has any
request for a waiver under Section 412(d) of the Code been, or is
reasonably likely to be, filed with respect to any of the Pension
Plans;
(iv) neither the Lessee nor any ERISA Affiliate has failed to make
any contribution or payment to any Pension Plan which has resulted or
could reasonably be expected to result in the imposition of a Lien
under Section 302(f) of ERISA or Section 412(n) of the Code;
(v) all Pension Plans are in compliance in all material respects
with all applicable provisions of ERISA and the Code;
(vi) neither the Lessee nor any ERISA Affiliate has incurred or is
reasonably likely to incur any material withdrawal liability pursuant
to Section 4201 or 4204 of ERISA or any material liability under
Section 515 of ERISA;
(vii) to the best of the Lessee's knowledge, neither the Lessee
nor any ERISA Affiliate has engaged in a "prohibited transaction"
(within the meaning of Section 4975 of the Code or Section 406 of
ERISA) which could reasonably be expected to subject the Lessee to
the tax or penalties on prohibited transactions imposed by Section
4975 of the Code or Section 502 of ERISA; and
(viii) assuming the truth of the representations contained in
Section 7.03(a)(viii) hereof and compliance with Section 10.06 of the
Indenture, the execution and delivery of this Agreement and the other
Operative Agreements and the consummation of the transactions
contemplated hereby and thereby will not involve any transaction
which is prohibited by Section 406 of ERISA or in connection with
which a tax could be imposed pursuant to Section 4975 of the Code.
No part of the funds to be used by the Lessee in satisfaction of its
obligations under this Agreement or any other of the Operative
Agreements to which the Lessee is a party or to which the Lessee is
bound are the assets of any employee benefit plan subject to Title I
of ERISA, or any individual retirement account or an employee benefit
plan subject to Section 4975 of the Code;
as used in this Section 6.01(m), the term "Pension Plan" means an employee
pension benefit plan as defined in Section 3(2) of ERISA (other than a
multiemployer plan as defined in Section 4001(a)(3) of ERISA) which is
covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code and which is maintained, or contributed to,
by the Lessee or any ERISA Affiliate, and the term "ERISA Affiliate" means
any entity which together with the Lessee would be treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code;
(n) the Lessee is a Citizen of the United States;
(o) except for the filings referred to in Sections 4.01(f), 4.02(e)
and 4.02(f) hereof, no governmental approval of any kind is required of the
Owner Participant or for the Owner Participant's execution of or
performance under this Agreement or any agreement contemplated hereby by
reason of any fact or circumstance of the Lessee, the nature of the
Aircraft or the Lessee's proposed operations or use of the Aircraft;
(p) on the Delivery Date, all premiums with respect to the insurance
required to be provided by the Lessee on or prior to the Delivery Date
under Article 13 of the Lease have been paid by the Lessee;
(q) on the Delivery Date, all sales or use taxes relating to the
sale of the Aircraft by the Lessee to the Owner Trustee which are then or
were theretofore due shall have been paid;
(r) the Lessee is not in default under any mortgage, deed of trust,
indenture, lease or other instrument or agreement to which the Lessee is a
party or by which it or any of its Properties or assets may be bound, or in
violation of any applicable law, which default or violation would have a
material adverse effect on the financial condition, business or operations
of the Lessee or its ability to perform any of its obligations under the
Lessee Documents;
(s) no Default or Event of Default or Event of Loss or event, which
with the passage of time or if continued unremedied or unaltered would
constitute an Event of Loss, has occurred or exists;
(t) on the Delivery Date, the Aircraft will be in such condition so
as to enable the airworthiness certificate of such Aircraft to be in good
standing under the Transportation Code; the Aircraft will have been duly
certificated by the FAA as to type and airworthiness; there will be in
effect with respect to the Aircraft a current and valid airworthiness
certificate issued by the FAA pursuant to the Transportation Code; and
there is no fact known to the Lessee which materially adversely affects the
value, utility or condition of the Aircraft;
(u) on the Certificate Closing Date and the Delivery Date, the
Lessee shall not be in default in the performance of any term or condition
of the Modification Agreement, the Engine Warranty Assignment and the GTA
and the aggregate amount of loans shall not exceed the Debt Portion;
(v) neither the Lessee nor any subsidiary of the Lessee is an
"investment company" or a company "controlled by an investment company"
within the meaning of the Investment Company Act of 1940, as amended;
(w) 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; and
(x) 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.
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 50 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 Modification 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
take, or cause to be taken, at the Lessee's cost and expense, such action
with respect to the recording, filing, re-recording and re-filing of the
Indenture, each Indenture and Security Agreement Supplement, the Lease,
each Lease Supplement and any financing statements or other instruments as
may be necessary, or as requested by the Indenture Trustee and appropriate,
to maintain the perfection of the first security interest and the Lien
created by the Indenture, and the Owner Trustee's title to and interest in
the Aircraft and the Lessor's Estate as against the Lessee and any third
parties, or if the Lessee cannot take, or cause to be taken, such action,
will furnish to the Indenture Trustee and the Owner Trustee timely notice
of the necessity of such action, together with such instruments, in
execution form, and such other information as may be required to enable
either of them to take such action at the Lessee's cost and expense in a
timely manner.
(b) From and after the Delivery Date, the Lessee shall maintain the
certificates referred to in Section 7.01 of the Lease and shall cause the
Aircraft to be duly registered, and at all times to remain duly registered,
in the name of the Owner Trustee, under the Transportation Code; provided,
however, that the Owner Participant, the Owner Trustee and the Indenture
Trustee agree that, so long as no Default or Event of Default shall have
occurred and be continuing, if at any time after 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 in which a sublessee could be located under the
provisions of Section 7.02(a)(i) of the Lease with which the United States
then maintains normal and full diplomatic relations, upon receipt by the
Owner Participant, the Owner Trustee and the Indenture Trustee of the
assurances and opinion described below, none of them shall unreasonably
withhold their consent to such change in registration (it being agreed,
without limitation, that the inability of the Lessee to deliver such
assurances or such opinion shall constitute reasonable grounds to withhold
such consent).
As a condition to any change in the registration of the Aircraft, the
Owner Participant, the Owner Trustee in its individual and trust capacities,
and the Indenture Trustee shall have received:
(i) assurances satisfactory to them:
(A) to the effect that the insurance provisions of the Lease have
been and will be complied with and are and shall be in full force and
effect upon such change of registry;
(B) as to the continuation of the Lien of the Indenture as a
first priority, duly perfected Lien on the Aircraft;
(C) that the Owner Trustee's right, title and interest in and to
the Aircraft is recognized and fully enforceable in the new
jurisdiction of registry, that the rights of the Owner Trustee in and
to the Aircraft will not be impaired in such new jurisdiction of
registry and that the new jurisdiction of registry will give effect
to the title and registry of the Aircraft therein substantially to
the same extent as does the Government;
(D) that such new country of registry (x) would provide
substantially equivalent protection for the rights of owner
participants, lessors or lenders in similar transactions as provided
under United States law (except that, in the absence of restrictions
under the laws of such country on rights and remedies of lessors and
secured parties similar to those imposed by Sections 362 and 363 of
the Bankruptcy Code, rights and remedies similar to those available
under Section 1110 of the Bankruptcy Code shall not be required), and
(y)(i) if such change in registration is made other than in
connection with a sublease, imposes maintenance standards at least
comparable to those of the FAA, and (ii) if such change in
registration is made in connection with a sublease permitted under
Section 7.02(a)(i) of the Lease, imposes maintenance standards in
conformity with those set forth in Section 7.02(a)(i) of the Lease;
(E) that import and export certificates and any exchange permits
necessary to allow all Rent and other payments provided for under the
Lease, if required, shall have been procured at the Lessee's own cost
and expense by the Lessee;
(F) that the Lessee shall have effected or caused to be effected
at the Lessee's own cost and expense all recordings and filings that
are required to perfect the Lien of the Indenture;
(G) to the effect that the original indemnities (and any additional
indemnities for which the Lessee is then willing to enter into a
binding agreement to indemnify) in favor of the Owner Participant,
the Owner Trustee (in its individual capacity and as trustee under
the Trust Agreement), the Indenture Trustee (in its individual
capacity, and as trustee under the Indenture), the Pass Through
Trustee (in its individual capacity, and as trustee under the Pass
Through Agreement) and the other Indemnitees under this Agreement,
the Indenture, the Pass Through Agreement and (in the case of the
Owner Participant only) the Tax Indemnity Agreement, afford each such
party substantially the same protection as provided prior to such
change of registry;
(H) that such change will not result in the imposition of, or
increase in the amount of, any Tax for which the Lessee has not
agreed to indemnify the Owner Participant, the Indenture Trustee, the
Pass Through Trustee, the Owner Trustee (or any successor, assign or
Affiliate thereof) and the Trust Estate;
(I) that any value added tax, customs duty, tariff or similar
governmental charge relating to the change in jurisdiction of
registration of the Aircraft shall have been paid in full or
adequately provided for by the Lessee to the satisfaction of the
Owner Trustee, the Indenture Trustee and the Owner Participant;
(J) of the payment by the Lessee of any reasonable fees and
expenses of the Owner Participant, the Owner Trustee, the Indenture
Trustee and the Pass Through Trustee in connection with such change
of registry, including any reasonable attorneys' fees and expenses;
and
(K) that duties and tariffs, if applicable, shall have been paid
for by the Lessee;
(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)(D)(x) of this Section 6.03) in respect of the
transactions contemplated hereby, including, without limitation, the
remedies provided in the Indenture and the Lease;
(D) that there is no tort liability of the beneficial owner,
record owner, lessor or mortgagee of an aircraft not in possession
thereof under the laws of such jurisdiction, other than tort
liability which might have been imposed on such owner, lessor or
mortgagee under the laws of the United States or any state thereof
(it being understood that, in the event such latter opinion cannot be
given in a form satisfactory to the Owner Participant and the
Indenture Trustee, such opinion shall be waived, if insurance
reasonably satisfactory to the Owner Participant, the Indenture
Trustee and the Owner Trustee, in its individual capacity, is
provided, at the Lessee's expense, to cover such risk and the Lessee
undertakes to keep such insurance in full force and effect);
(E) that the laws of such jurisdiction will not impair the rights
of the Lessor in and to the Aircraft and (unless the Lessee shall
have agreed to provide insurance reasonably satisfactory to the
Indenture Trustee and the Owner Participant covering the risk of
requisition of use of the Aircraft by the government of registry of
the Aircraft) require fair compensation by the government of such
jurisdiction payable in currency freely convertible into United
States dollars for the loss of use of the Aircraft in the event of
such requisition;
(F) that the Owner Trustee's title to the Aircraft is recognized
and fully enforceable in such jurisdiction, that such jurisdiction
will give effect to the title of the Aircraft therein substantially
to the same extent as does the Government, and that the Lien of the
Indenture shall continue as a first priority, duly perfected lien on
the Aircraft; and
(G) to such further effect with respect to such other matters as
the Owner Participant, the Owner Trustee, or the Indenture Trustee may
reasonably request.
If following any reregistration of the Aircraft, the Aircraft is
located outside the United States, the Lessee shall have thirty (30) days to
relocate the Aircraft within the United States and, if unable to do so, shall
pay the reasonable incremental out-of-pocket costs of the Lessor, the Owner
Participant or their authorized representatives incurred in connection with
any inspection or appraisal required or permitted under the Operative
Agreements. Such obligation shall apply only with respect to one inspection
or appraisal in any calendar year unless an Event of Default shall have
occurred and be continuing.
(c) The Lessee shall promptly file any reports, or furnish to the
Owner Trustee and the Owner Participant such information as may be required
to enable the Owner Trustee and the Owner Participant timely to file any
reports required to be filed by the Owner Trustee as the Lessor and the
Owner Participant under the Lease with any governmental authority.
(d) The Lessee will cause the Special Aviation Counsel to file, and
where appropriate record, on the Delivery Date, the FAA Bill of Sale, the
Lease, the Lease Supplement, the Trust Agreement, the Indenture and the
Indenture and Security Agreement Supplement. The following documents shall
be filed and, where appropriate, recorded on the Delivery Date with the
Aeronautics Authority in the following order of priority: first, the FAA
Bill of Sale, second, the Application, with the Trust Agreement and the
Affidavits, third, the Indenture with the Indenture and Security Agreement
Supplement attached thereto, and fourth, the Lease with the Lease
Supplement, the Indenture and the Indenture and Security Agreement
Supplement attached thereto.
(e) The Lessee will furnish to the Owner Participant, the Owner
Trustee and the Indenture Trustee annually after the execution of this
Agreement, by March 15 of each year, commencing with the year 1999, 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.
(g) The Lessee shall not enter into any merger or consolidation, or
convey, transfer or lease all or substantially all of its assets as an
entirety to any Person, unless the surviving corporation or Person which
acquires by conveyance, transfer or lease all or substantially all of the
assets of the Lessee as an entirety (i) is a domestic corporation organized
and existing under the laws of the United States or a political subdivision
thereof, (ii) is a Citizen of the United States, (iii) is a U.S. Air
Carrier, (iv) expressly assumes by an instrument in writing in form and
substance satisfactory to the Indenture Trustee, the Owner Participant and
the Owner Trustee all of the Lessee's obligations hereunder and under the
other Operative Agreements, and each other document contemplated hereby or
thereby and the Lessee delivers such instrument to the Indenture Trustee,
the Owner Participant and the Owner Trustee, (v) provides an opinion from
outside counsel to the Lessee which counsel shall be reasonably
satisfactory to the Owner Participant and the Indenture Trustee and which
opinion shall be reasonably satisfactory to the Owner Participant and the
Indenture Trustee, and an officer's certificate, each stating that such
merger, consolidation, conveyance, transfer or lease and the instrument
noted in clause (iv) above comply with this Section 6.03(g), that such
instrument is a legal, valid and binding obligation of, and is enforceable
against, such survivor or Person, and that all conditions precedent herein
provided for relating to such transaction have been complied with, and (vi)
immediately after such merger, consolidation or conveyance, transfer or
lease, as the case may be, the surviving company is in compliance with all
of the terms and conditions of this Agreement and the Lease and each other
Operative Agreement and each other document contemplated hereby or thereby;
provided that no such merger, consolidation or conveyance, transfer or
lease shall be permitted if the same gives rise to an Event of Default.
Upon any consolidation or merger, or any conveyance, transfer or
lease of all or substantially all of the assets of the Lessee and the
satisfaction of the conditions specified in this Section 6.03(g), the
successor corporation formed by such consolidation or into which the Lessee
is merged or the Person to which such conveyance, transfer or lease is made
shall succeed to, and be substituted for, and may exercise every right and
power of, the Lessee under this Agreement and the Lease and each other
Operative Agreement and any other document contemplated hereby and thereby
to which the Lessee is a party with the same effect as if such successor
corporation had been named as the Lessee herein and therein. No such
conveyance, transfer or lease of all or substantially all of the assets of
the Lessee as an entirety shall have the effect of releasing the Lessee or
any successor corporation which shall theretofore have become such in the
manner prescribed in this Section 6.03(g) from its liability hereunder or
under the other Operative Agreements. Nothing contained herein shall
permit any lease, sublease, or other arrangement for the use, operation or
possession of the Aircraft except in compliance with the applicable
provisions of the Lease.
(h) The Lessee agrees to give prompt written notice to the Owner
Participant 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 UCC) or of any change in its corporate name.
(i) The Lessee agrees to furnish to the Owner Participant, the
Lessor and the Indenture Trustee:
(A) as soon as available, but in any event within one hundred
twenty (120) days after the end of each fiscal year of the Lessee, a
consolidated balance sheet as of the end of such fiscal year, and the
related consolidated statements of income, common stockholders'
equity, retained earnings and cash flows of the Lessee for the fiscal
year then ended as prepared and certified by the Lessee's independent
certified public accountants, including their opinion;
(B) within sixty (60) days after the end of the first, second and
third quarterly accounting periods in each fiscal year of the Lessee,
a consolidated balance sheet of the Lessee prepared by it as of the
close of the accounting period then ended, together with the related
consolidated statements of income, retained earnings and cash flows
for such accounting period certified by the chief accounting officer
or a financial vice president of the Lessee;
(C) promptly upon their general transmission, copies of all
regular and periodic reports furnished by the Lessee to its
stockholders;
(D) promptly after filing with the SEC, copies of the Lessee's
Annual Reports on Form 10-K (including all corresponding annual
reports to shareholders), Quarterly Reports on Form 10-Q and, if
requested, any registration statement or prospectus filed by the
Lessee with any securities exchange or with the SEC;
(E) promptly upon (and in any event within five (5) Business Days
after) any 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 Pass Through Trustee and the Indenture Trustee a certificate
of the Lessee, signed by any one of the President, the Chief Financial
Officer, the General Counsel, the Treasurer or the principal accounting
officer of the Lessee, stating that the signer, or an employee reporting to
same, is familiar with the relevant terms of this Agreement and the Lease and
the signer has reviewed, or has caused to be made under such Person's
supervision a review of, the activities of the Lessee and that, to the best of
his or her knowledge, there does not exist any Default or any Event of Default
or if a Default or an Event of Default exists or did exist, specifying the
nature thereof, the period of existence thereof and what action the Lessee has
taken or proposes to take with respect thereto.
Section 6.04. Survival of Representations and Warranties. The
representations and warranties of the Lessee provided in Sections 6.01 and 6.02
hereof and in any other Operative Agreement shall survive the Closings
hereunder and the expiration or other termination of this Agreement and the
other Operative Agreements.
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in Lessor's
Estate. (a) [Reserved.]
(b) Owner Participant (other than Initial Owner Participant). The
Owner Participant represents and warrants that its interest in the Lessor's
Estate and the Trust Agreement was acquired by it for its own account and not
with a view to resale or distribution thereof; provided, however, that the
disposition by the Owner Participant of its interest in the Lessor's Estate
and the Trust Agreement shall, subject to the terms and provisions of Article
5 of the Trust Agreement, at all times be within its control and the foregoing
representation shall not limit the Owner Participant's right to transfer or
sell such interests pursuant to the terms of this Agreement. The Owner
Participant nor anyone else authorized to act on its behalf has directly or
indirectly offered any interest in the Lessor's Estate or the Trust Agreement,
or in any similar security, for sale to, or solicited any offer to acquire any
of the same from, anyone. The Owner Participant further represents and
warrants that neither it nor anyone authorized to act on its behalf has made
or will make any offer, solicitation or sale of any interest in the Lessor's
Estate or the Trust Agreement in violation of the provisions of Section 5 of
the Securities Act of 1933, as amended. No representation in this Section
7.01(b) shall include any action or inaction of the Lessee, First Chicago
Leasing Corporation, the Subordination Agent, the Underwriters or any
Affiliate of any thereof whether or not purportedly on behalf of the Owner
Trustee, the Owner Participant or any of their Affiliates.
(c) Owner Trustee. The Owner Trustee represents and warrants, both
in its individual capacity and as trustee, that neither it nor anyone acting
on its behalf (i) has directly or indirectly offered or will directly or
indirectly offer any interest in the Lessor's Estate, or in any similar
security, for sale to, or solicited any offer to acquire any of the same from
anyone (other than the Owner Participant) and (ii) 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 Owner Trustee, and the Owner
Participant severally represents and warrants that it is or will be a Citizen
of the United States on the Delivery Date. If the Owner Participant or the
Owner Trustee in its individual capacity does not comply with the requirements
of this Section 7.02, the Owner Trustee, the Indenture Trustee and the Owner
Participant hereby agree that a Default or an Event of Default shall not be
deemed to have occurred and be continuing under the Lease due to
non-compliance by the Lessee with the registration requirements in the Lease
occasioned by the noncompliance of the Owner Participant or the Owner Trustee.
(b) Owner Trustee. The Owner Trustee, in its individual capacity,
covenants that if at any time it shall have actual knowledge that it has
ceased to be a Citizen of the United States, it will resign immediately as the
Owner Trustee if such citizenship is necessary under the Transportation Code
as in effect at such time or, if it is not necessary under the Transportation
Code as in effect at such time, if it is informed in writing by the Lessee,
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 when the Aircraft is registered or the
Lessee proposes to register the Aircraft in the United States (i) it shall
cease to be, or believes itself likely 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 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 15 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 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 and to each Holder any damages actually suffered
by any such other party or Holder as the result of the representation and
warranty of the Owner Participant in the first sentence of Section 7.02(a)
hereof proving to be untrue as of the Delivery Date; and (B) to the Lessee, the
Indenture Trustee and the Pass Through Trustee for any damages actually
incurred by the Lessee, the Indenture Trustee and the Pass Through Trustee as
a result of the Owner Participant's failure to comply with its obligations
pursuant to the first sentence of this Section 7.02(c). 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).
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 (other than the Initial Owner
Participant) represents and warrants as of the Delivery Date that:
(i) it is a corporation duly incorporated and validly existing in
good standing under the laws of the state of its jurisdiction and it has
full 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 bylaws, as amended, of the Owner
Participant or any order, writ, injunction or decree of any court or
governmental authority against the Owner Participant or by which it or any
of its Properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which the Owner Participant is a party or by
which it or any of its Properties is bound, or constitutes or will
constitute a default thereunder or results or will result in the imposition
of any Lien upon any of its Properties;
(iv) this Agreement, the Tax Indemnity Agreement, 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) to the best of its knowledge, 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 is not a tax resident of another country; and
(x) it has a consolidated tangible net worth of not less than
$75,000,000.
Notwithstanding the foregoing or anything else contained in this
Agreement, the Owner Participant makes no representation or warranty in this
Agreement with respect to laws, rules or regulations relating to aviation or
to the nature or use of the equipment owned by the Owner Trustee, 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 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) Indemnity for Lessor's Liens. The Owner Participant agrees to
indemnify and hold harmless the Lessee, the Indenture Trustee and the Pass
Through Trustee from and against any loss, cost, expense or damage which may
be suffered by the Lessee, the Indenture Trustee or the Pass Through Trustee
as the result of the failure of the Owner Participant to discharge and satisfy
any Lessor's Liens attributable to the Owner Participant (or an Affiliate
thereof) and required to be discharged as described in Section 7.03(b) hereof.
(d) Assignment of Interests of Owner Participant. The Owner
Participant agrees that it will not assign, convey or otherwise transfer any
of its right, title or interest in and to the Operative Agreements or the
Lessor's Estate except in accordance with the provisions of Article 5 of the
Trust Agreement, as in effect on the date hereof or as amended in accordance
with the terms of the Operative Agreements.
(e) Actions with Respect to Lessor's Estate, Etc. The Owner
Participant agrees that it will not take any action to subject the Lessor's
Estate or the trust established by the Trust Agreement, as debtor, to the
reorganization or liquidation provisions of the Bankruptcy Code or any other
applicable bankruptcy or insolvency statute.
Section 7.04. Representations, Covenants and Warranties of 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) on the date hereof and as of the
Certificate Closing Date and the Delivery Date that:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America
with its principal place of business and chief executive office (as such
terms are used in Article 9 of the UCC) at 225 Asylum Street, Goodwin
Square, Hartford, Connecticut 06103, Attention: Corporate/Muni
Administration 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 Initial Owner Participant) as the
Owner Trustee, as the case may be, to carry on its business as now
conducted, and to execute, deliver and perform this Agreement and the
Operative Agreements to which it is or is to be a party;
(ii) the execution, delivery and performance by 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, and has been duly executed and delivered
or, in the case of the Operative Agreements identified in Section 4.02(c)
hereof, will on the Delivery Date be duly executed and delivered by 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 Certificate Closing Date, the proceeds arising from the
issuance and sale of the Certificates shall be free of Lessor's Liens
attributable to SSB in its individual capacity and on the Delivery Date the
Owner Trustee shall be holding whatever title to the Aircraft as was
conveyed to it by 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 Certificate Closing Date or the Delivery Date. The
Owner Trustee, in its trust capacity, and at the cost and expense of the
Lessee, covenants that it will in its trust capacity promptly, and in any
event within 30 days after the same shall first become known to it, take such
action as may be necessary to discharge duly any Lessor's Liens attributable
to it in its trust capacity. 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) Securities Act. None of SSB, the Owner Trustee or any Person
authorized by either of them to act on its behalf has directly or indirectly
offered or sold or will directly or indirectly offer or sell any interest in
the Lessor's Estate, or in any similar security relating to the Lessor's
Estate, or in any security the offering of which for purposes of the
Securities Act of 1933, as amended, would be deemed to be part of the same
offering as the offering of the aforementioned securities to, or solicited any
offer to acquire any of the same from, any Person.
(e) 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 on the date hereof and as of the
Certificate Closing Date and 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 to be delivered on
the Certificate Closing Date;
(ii) the Indenture and this Agreement and the other Operative
Agreements to which it is or is to be a party, and the authentication of
the Certificates to be delivered on the Certificate Closing Date, have been
duly authorized by all necessary corporate action on its part, and neither
the execution and delivery thereof nor its performance of any of the terms
and provisions thereof will violate any Federal or 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 or, in the case of the Operative Agreements
identified in Section 4.02(c) hereof, will on the Delivery Date be executed
and delivered by it and, assuming that each such agreement is the legal,
valid and binding obligation of each other party thereto, is (or will be,
as the case may be), the legal, valid and binding obligation of the
Indenture Trustee, enforceable against the Indenture Trustee in accordance
with its terms except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws or equitable principles of
general application to or affecting the enforcement of creditors' rights
(regardless of whether enforceability is considered in a proceeding in
equity or at law);
(iv) neither the execution and delivery by it of the Indenture and
this Agreement and the other Operative Agreements to which it is or is to
be a party, nor the performance by it of any of the transactions
contemplated hereby or thereby, requires the consent or approval of, the
giving of notice to, the registration with, or the taking of any other
action in respect of, any Federal or state governmental authority or agency
governing its banking and trust powers; and
(v) on the Certificate Closing Date, the Indenture Trustee holds
the Liquid Collateral on behalf of the Owner Trustee and on the Delivery
Date, the Indenture Trustee will hold the original counterparts of the
Lease, the Lease Supplement and the Ancillary Agreement I.
(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 Certificate
Closing Date or, as at and following the Delivery Date, the Aircraft. The
Indenture Trustee, in its individual capacity, covenants and agrees that it
will at its own expense take such action as may be necessary to duly discharge
and satisfy in full, promptly, and in any event within 30 days, after the same
shall first become known to it, any Indenture Trustee's Liens.
(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.
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 the Owner
Participant (or the Owner Trustee, the Indenture Trustee or the Pass Through
Trustee, as the case may be) nor any Person lawfully claiming through the
Owner Participant (or the Owner Trustee, the Indenture Trustee or the Pass
Through Trustee, as the case may be) shall interfere with the Lessee's right
quietly to enjoy the Aircraft during the Term without hindrance or disturbance
by the Owner Participant (or the Owner Trustee, the Indenture Trustee or the
Pass Through Trustee as the case may be), provided, however, that the Lessor
shall not be liable for any act or omission of the Indenture Trustee or any
other Person claiming through the Indenture Trustee.
Section 7.09. Pass Through Trustee's Representations and Warranties.
The Pass Through Trustee, in its individual capacity (except with respect to
clause (iii) below), represents and warrants as of the date hereof (except as
otherwise provided), as of the Pass Through Closing Date, the Certificate
Closing Date and the Delivery Date that:
(i) it is a 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 Pass Through Agreement, the Series Supplements, the Intercreditor
Agreement and this Agreement and to execute and authenticate the Pass
Through Certificates to be delivered on the Pass Through Closing Date;
(ii) the execution, delivery and performance of this Agreement, the
Pass Through Agreement and the Series Supplements and the performance of its
obligations hereunder and thereunder (including the execution and
authentication of the Pass Through Certificates to be delivered on the Pass
Through Closing Date) have been fully authorized by all necessary corporate
action on its part, and, subject to (A) the registration of the issuance
and sale of the Pass Through Certificates under the Securities Act, (B)
compliance with any applicable state securities laws and (C) the
qualification of the Pass Through Agreement under the Trust Indenture Act,
neither the execution and delivery thereof nor its performance of any of
the terms and provisions thereof will violate any Federal or 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; and
(iii) each of this Agreement and the Pass Through Agreement has been,
and as of the Pass Through Closing Date the Series Supplements will be, duly
executed and delivered by it (in its individual and trust capacities) and,
assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is or will be, as the case may be,
the legal, valid and binding obligation of the Pass Through Trustee (in its
individual and trust capacities), enforceable in accordance with its
respective terms except as limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights generally
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
Section 7.10. Survival of Representations, Warranties and Covenants.
The representations, warranties and covenants of the Owner Participant, the
Owner Trustee (in its individual or trust capacity), the Pass Through Trustee
(in its individual or trust capacity), the Subordination Agent (in its
individual capacity or trust capacity) and the Indenture Trustee (in its
individual or trust capacity) provided for in this Article 7, and their
respective obligations under any and all of them, shall survive the Closings,
the delivery of the Aircraft and the expiration or other termination of this
Agreement, and the other Operative Agreements.
Section 7.11. Lessee's Assumption of the Certificates. (a) Subject
to compliance by the Lessee with all of its obligations under the Operative
Agreements, each of the Owner Participant, the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Lessee covenants and agrees that if
the Lessee elects to terminate the Lease and to purchase the Aircraft pursuant
to Section 4.02(a)(A), (D), (E) or (F) of the Lease, and so long as no Event
of Default shall have occurred and be continuing then, upon compliance with
the applicable provisions of said Section 4.02(a) of the Lease, the Owner
Trustee will transfer to the Lessee, without recourse or warranty (except as
to the absence of Lessor's Liens) 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, each of the parties shall execute
and deliver appropriate documentation permitting the Lessee to assume such
obligations on the basis of full recourse to the Lessee, maintaining for the
benefit of the Holders the security interest in the Aircraft created by the
Indenture, and upon compliance with the provisions of this Section 7.11
releasing the Owner Participant and the Owner Trustee from all obligations in
respect of the Certificates, the Indenture 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 UCC financing statements relating thereto, and any other
documents which shall be necessary (or reasonably requested by the
Indenture Trustee) to establish the Lessee's title to and interest in the
Aircraft or to reflect the substitution of the Lessee for the Owner Trustee
under the Operative Agreements or to continue the perfection of the
security interests in the Aircraft and the other rights, Property and
interests included in the Trust Indenture Estate for the benefit of the
Holders (or the Lessee's substituted obligations) shall be filed in such
form, manner and places as are necessary or, in the reasonable opinion of
the Indenture Trustee, advisable for such purpose;
(iii) the Indenture Trustee shall have received an insurance report
dated the effective date of such assumption of an independent insurance
broker and certificates of insurance, each in form and substance
satisfactory to the Indenture Trustee, as to the due compliance as of the
effective date of such assumption with the terms of Article 13 of the Lease
(as it relates to the Indenture Trustee) relating to the insurance with
respect to the Aircraft;
(iv) the Indenture Trustee shall have received evidence that as of
the effectiveness of the assignment on the date of such assumption the
Aircraft is free and clear of all Liens other than the Lien of the
Indenture and other Permitted Liens;
(v) the Indenture Trustee shall have received a certificate from
the Lessee that no Event of Default shall have occurred and be continuing
as of the effective date of such assumption; and
(vi) the Indenture Trustee shall have received (A) from counsel for
the Lessee (who may be the Lessee's General Counsel) a legal opinion, in
form and substance satisfactory to the Indenture Trustee (w) with respect
to the compliance of the assumption contemplated hereby with the terms,
provisions and conditions hereof, (x) with respect to the due
authorization, execution, delivery, validity and enforceability of the
instrument referred to in paragraph (i) of this Section 7.11(b), (y) with
respect to the continued perfection of the first and prior Lien and security
interest in the Aircraft for the benefit of the Holders of the Certificates
(or the Lessee's substituted obligations) referred to in paragraph (ii) of
this Section 7.11(b) and (z) with respect to the continued availability of
the benefits of Section 1110 of the Bankruptcy Code to the Indenture
Trustee for the benefit of the Holders with respect to the Aircraft after
giving effect to such assumption, (B) from counsel to the Indenture Trustee
and Special Aviation Counsel, a legal opinion comparable to the respective
opinions delivered on the Certificate Closing Date or the Delivery Date, as
the case may be, with such changes therein as may be appropriate in light
of such assumption, and (C) in the case of each opinion described in clause
(A) or (B) above, covering such additional matters as the Indenture Trustee
shall reasonably request.
(c) The Lessee shall pay all reasonable expenses (including
reasonable fees and expenses of counsel) of the Owner Participant, the Owner
Trustee and the Indenture Trustee 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 provision of the Trust Agreement in a manner that would 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 and (so long as the Indenture shall not have
been discharged) the Indenture Trustee.
Section 7.14. Subordination Agent's Representations, Warranties and
Covenants. (a) Representations and Warranties. The Subordination Agent
represents and warrants as of the date hereof (except as otherwise provided),
as of the Pass Through Closing Date, the Certificate Closing Date and the
Delivery Date that:
(i) it is a 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, the Liquidity Facilities and the
Intercreditor Agreement;
(ii) the execution, delivery and performance of this Agreement, each
of the Liquidity Facilities and the Intercreditor Agreement and the
performance of its obligations hereunder and thereunder 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) each of this Agreement, the Liquidity Facilities and the
Intercreditor 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; and
(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.
(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 shall have the meanings specified in the Intercreditor Agreement.
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes. (a) Generally. The
Lessee agrees promptly to pay when due, and to indemnify and hold each
Indemnitee harmless from all license, recording, documentary, registration and
other fees and all taxes (including, without limitation, income, gross
receipts, sales, rental, use, value added, property (tangible and intangible),
ad valorem, excise and stamp taxes), fees, levies, imposts, recording duties,
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
(whether imposed upon any Indemnitee, the Lessee, all or any part of the
Aircraft, Airframe, any Engine or any Part, the Lessor's Estate, the Trust
Indenture Estate, Rent or otherwise), 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, upon or with respect to, based upon or
measured by:
(i) the Aircraft, the Airframe, any Engine or any Part;
(ii) the location, replacement, conditioning, refinancing, control,
purchase, registration, reregistration, repossession, improvement,
maintenance, redelivery, manufacture, acquisition, purchase, financing,
mortgaging, ownership, acceptance, rejection, delivery, non-delivery,
leasing, subleasing, transport, insuring, inspection, registration,
assembly, abandonment, preparation, installment, possession, use,
operation, return, presence, storage, repair, transfer of title,
modification, rebuilding, import, export, alteration, addition, replacement,
assignment, overhaul, transfer of registration or registration, imposition
of any lien, sale or other disposition of the Aircraft, Airframe, any
Engine or any Part thereof or interest therein;
(iii) the rentals (including Basic Rent and Supplemental Rent),
receipts or earnings arising from the Operative Agreements or from the
purchase, financing, ownership, delivery, leasing, possession, use,
operation, return, storage, transfer of title, sale or other disposition of
the Aircraft, the Airframe or any part thereof or interest therein;
(iv) any or all of the Operative Agreements;
(v) the Property, or the income or other proceeds received with
respect to the Property, held by the Owner Trustee under the Trust
Agreement or after an Event of Default under the Lease, or by the Indenture
Trustee under the Indenture;
(vi) otherwise with respect to or by reason of the transactions
described in or contemplated by the Operative Agreements;
(vii) the payment of the principal or interest or other amounts
payable with respect to the Certificates;
(viii) the Certificates or the Pass Through Certificates or the
issuance, acquisition, or refinancing thereof or the beneficial interests
in the Lessor's Estate or the creation thereof under the Trust Agreement; or
(ix) any assumption by the Lessee pursuant to Section 7.11 of this
Agreement and Section 2.12 of the Indenture.
(b) Exceptions. The indemnity provided for in Section 8.01(a) shall
not extend to any of the following:
(i) With respect to an Indemnitee, Taxes based upon, measured by or
with respect to the net or gross income, items of tax preference or minimum
tax or excess profits, receipts, value added (but only to the extent such
value added tax is in the nature of an income tax), capital, franchise, net
worth or conduct of business or other similarly-based Taxes of such
Indemnitee (other than any Taxes in the nature of sales, use, transfer,
excise, rental, license, ad valorem, property or other similarly based
Taxes) (the "Income Taxes"); provided, however that the provisions of this
paragraph (b)(i) shall not exclude from the indemnity described in Section
8.01(a) hereof, any Income Taxes to the extent such Income Taxes are
imposed by any jurisdiction in which the Indemnitee would not be subject to
such Income Taxes but for, or would be subject to such Income 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 any such indemnity would be payable only to the extent of
the net harm incurred by the Indemnitee from such Income Taxes, taking into
account any incremental current Tax benefit in another tax jurisdiction
resulting from payment of such Income Taxes); provided, further, that the
provisions of this paragraph (b)(i) relating to Income Taxes shall not
exclude from the indemnity described in Section 8.01(a) hereof any Income
Taxes for which the Lessee would be required to indemnify an Indemnitee (x)
so that any payment under the Operative Agreements, otherwise required to
be made on an After-Tax Basis, is made on an After-Tax Basis or (y)
pursuant to the last sentence of Section 8.02, 8.05, 9.02 or 9.05 of this
Agreement;
(ii) [Reserved];
(iii) Taxes arising out of or measured by acts, omissions, events or
periods of time (or any combination of the foregoing) which occur after
(and are not attributable to acts, omissions or events occurring
contemporaneously with or prior to) (A) the payment in full of all amounts
payable by the Lessee pursuant to and in accordance with the Operative
Agreements, or the earlier discharge in full of the Lessee's payment
obligations under and in accordance with the Lease and the Operative
Agreements (and the Certificates in the case of the Indenture Trustee or
the Trust Indenture Estate if the Lessee shall have assumed the Certificates
pursuant to Section 7.11 of this Agreement), and (B) the earliest of (x) the
expiration of the Term of the Lease and return of the Aircraft in
accordance with Article 12 of the Lease, (y) the termination of the Lease
in accordance with the applicable provisions of the Lease and return of the
Aircraft in accordance with the Lease, or (z) the termination of the Lease
in accordance with the applicable provisions of the Lease and the transfer
of all right, title and interest in the Aircraft to the Lessee pursuant to
its exercise of any of its purchase options set forth in Section 4.02(a) of
the Lease, except that, notwithstanding anything in this Section 8.01(b) to
the contrary, Taxes incurred in connection with the exercise of any
remedies pursuant to Article 17 of the Lease following the occurrence of an
Event of Default shall not be excluded from the indemnity described in
Section 8.01(a) hereof;
(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 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);
(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, other than (A) Taxes that result
from transfers or dispositions which occur while an Event of Default under
the Lease has occurred and is continuing at the time of such transfer or
disposition or (B) Taxes that result from any transfer or disposition
pursuant to the terms of the Lease;
(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) Notwithstanding anything herein to the contrary, Taxes imposed
on a successor, assign or other transferee (including, without limitation,
a transferee which is a new lending office of an original Indemnitee) of
any entity or Person which on the Certificate Closing Date is an Indemnitee
(for purposes of this clause (vii), 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 thereof, 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 (vii) shall not apply in the case of a
succession, assignment or other transfer (1) while an Event of Default
under the Lease or the Indenture has occurred and is continuing; (2)
required by any provision of the Operative Agreements (other than pursuant
to Section 7.02 hereof) or (3) in the case of the Owner Participant, to any
Tax other than an Income Tax;
(ix) [Reserved];
(x) any Taxes which have been included in the Purchase Price;
(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
with respect to the Indenture Trustee;
(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 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; and
(xiii) Taxes imposed by any jurisdiction to the extent they 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.
(c) Withholding. The Pass Through Trustee shall withhold any Taxes
required to be withheld on payments to any holder of a Pass Through
Certificate who is a Non-U.S. Person except to the extent that such a holder
of a Pass Through Certificate has furnished evidence to the Pass Through
Trustee sufficient under applicable law to entitle such holder of a Pass
Through Certificate to any exemption from or reduction in the rate of
withholding on interest claimed by such holder of a Pass Through Certificate.
The Indenture Trustee shall withhold any Taxes required to be withheld on any
payment to a Holder pursuant to Section 5.09 of the Indenture. If the
Indenture Trustee or the Pass Through Trustee fails to withhold a Tax required
to be withheld with respect to any Holder of a Certificate or any holder of a
Pass Through Certificate or any claim is otherwise asserted by a taxing
authority against the Owner Trustee or the Owner Participant for any
withholding tax, the Lessee will indemnify the Owner Trustee and the Owner
Participant (without regard to the exclusions set forth in Section 8.01(b)
hereof) on an After-Tax Basis against any such Taxes required to be withheld
and any interest and penalties with respect thereto, along with any other
costs (including reasonable attorney's fees) incurred in connection with any
such claim. The Indenture Trustee or the Pass Through Trustee, as the case
may be, in its individual capacity (and without recourse to the Trust
Indenture Estate), shall indemnify the Lessee (without regard to the
exclusions set forth in Section 8.01(b) hereof) on an After-Tax Basis for any
payment the Lessee shall have made pursuant to the preceding sentence.
Section 8.02. After-Tax Basis. The amount which the Lessee shall be
required to pay with respect to any Tax indemnified against under Section 8.01
shall be an amount sufficient to restore the Indemnitee, on an After-Tax
Basis, to the same position such party would have been in had such Tax not
been incurred. If any Indemnitee actually realizes a permanent 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 permanent tax
benefit plus any other permanent 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 this Section 8.02 and Section 8.01
hereof 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 Section 8.01 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 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 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 disallowed or reduced in a taxable year subsequent to the
year of such payment (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 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 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 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. The
Indemnitee shall in good faith, with due diligence and at the Lessee's
expense, if timely requested in writing by the Lessee, contest (or, at the
Indemnitee's option, require the Lessee to contest in the name of the Lessee,
if permitted by law) 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.
If the Indemnitee, after reasonable discussion with the Lessee and
consideration in good faith of any suggestion made by the Lessee as to the
method of pursuing such contest, elects to conduct the contest, such
Indemnitee shall determine the manner in which to contest such Taxes, and
shall periodically or upon the Lessee's request advise the Lessee of the
progress of such contest; provided, however, that if the Indemnitee determines
in its sole discretion that such participation will not adversely affect such
Indemnitee's contest of any Taxes not indemnified hereunder, the Lessee shall
have the right to participate in such contest, including, among other rights,
the right to attend governmental or judicial conferences (to the extent
unrelated issues are not discussed) concerning such claim and the right to
review and approve all submissions to any governmental or other authority
insofar as they relate to the Tax for which indemnification is sought.
Notwithstanding the preceding sentences of this Section 8.04, such Indemnitee
shall not be required to take or continue any action unless the Lessee shall
have (i) agreed in writing to pay and shall pay the Indemnitee on demand and
on an After-Tax Basis for any liability or reasonable expense which such
Indemnitee may incur as a result of contesting such Taxes including without
limitation (y) reasonable attorneys' and accountants' fees and (z) the amount
of any interest, penalty or additions to tax which may ultimately be payable
as the result of contesting such Taxes, (ii) delivered to the Indemnitee a
written acknowledgment of the Lessee's obligation to such Indemnitee pursuant
to this Agreement to the extent that the contest is not successful and of the
inapplicability of any exclusion or defenses thereto, provided, however, that
such acknowledgement shall not preclude the Lessee from raising defenses to
liability under this Agreement if a decision in such contest is rendered which
clearly articulates the cause of such Tax and the cause, as so articulated, is
not one for which the Lessee is responsible to pay an indemnity hereunder,
(iii) 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 or the Lessee permitted to contest pursuant
to this Section 8.04 the imposition of any Tax for which the Lessee is
obligated to indemnify any Indemnitee hereunder unless (i) such Indemnitee
shall have received an opinion of independent tax counsel, at the Lessee's
expense, selected by such Indemnitee and reasonably satisfactory to the Lessee
("Tax Counsel") to the effect that a reasonable basis exists for contesting
such claim, (ii) 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 issue shall not be the same as an
issue previously contested hereunder and decided adversely, unless the
Indemnitee shall have received, at the Lessee's sole expense, a written
opinion, in form and substance reasonably satisfactory to such Indemnitee, of
Tax Counsel, to the effect that the applicable circumstances or law has
changed and, in light thereof, there is substantial authority within the
meaning of Section 6662(d) of the Code, as interpreted by the Treasury
regulations thereunder, or under similar principles of state or foreign law (as
the case may be) for contesting such claim and (vi) the amount of the indemnity
payments the Lessee would be required to make with respect to such adjustment,
when aggregated with similar adjustments that could be raised in other taxable
years of such Indemnitee is at least $50,000.
The Indemnitee shall not appeal any judicial decision unless it
receives an opinion of independent tax counsel, at the Lessee's sole expense,
selected by such Indemnitee and reasonably satisfactory to the Lessee to the
effect that a reasonable basis continues to exist for the Indemnitee's
position.
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) reasonable 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 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. The Lessee shall hold the Indemnitee harmless from
and against any liabilities, including penalties, additions to tax, fines and
interest, imposed upon or incurred by such Indemnitee to the extent directly
attributable to any insufficiency or inaccuracy in any return, statement, or
report prepared by the Lessee or information supplied by the Lessee, or
directly attributable to the Lessee's failure to supply reasonably available
information to such Indemnitee as required by this Section 8.06.
Section 8.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 8 and the Lessee's obligations under any and all of them shall survive
the expiration or other termination of the Operative Agreements.
Section 8.08. Payment of Taxes. With respect to any Tax otherwise
indemnifiable hereunder by the Lessee and applicable to the Aircraft,
Airframe, any Engine or Parts, to the extent permitted by the applicable
federal, state, local or foreign law, the Lessee shall pay such tax directly
to the relevant Taxing authority and file any returns or reports required with
respect thereto; 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 the Owner Participant are the owner of
the Aircraft, the Airframe, any Engine or any Part or which would otherwise be
inconsistent with the terms of the Lease 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. If, for any
reason, Lessee is required to make any payment with respect to any Taxes
imposed on any Indemnitee in respect of the transactions contemplated by the
Operative Agreements or on the Aircraft, the Airframe, the Engines, the Parts
of any part thereof, which Taxes are not the responsibility of the Lessee with
respect to 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 the Lessee with respect to such Taxes.
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally. (a) The Lessee agrees to indemnify each
Indemnitee against and agrees to protect, defend, save and keep harmless each
Indemnitee from any and all liabilities, obligations, losses, damages
(including if, as a result of an Indenture Event of Default described in
Section 7.01(a)(i) of the Indenture, the Indenture Trustee shall have sold all
or any portion of the Indenture Estate and the proceeds thereof were less than
an amount equal to accrued and unpaid Basic Rent on the date of sale plus the
Stipulated Loss Value as of such date, damages equal to such shortfall
together with interest thereon to the extent permitted by law at the Debt Rate
until such shortfall is paid in full), penalties, claims, actions, suits,
costs, disbursements and expenses (including reasonable 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) or Article 15 hereof) of
every kind and nature (whether or not any of the transactions contemplated by
this Agreement are consummated) (individually, an "Expense," collectively,
"Expenses"), which may be imposed on, incurred or suffered by or asserted
against any Indemnitee, in any way relating to, based on or arising out of:
(i) this Agreement, the Lease, the Indenture, the Pass Through
Agreement, the Trust Agreement, the Intercreditor Agreement, the Liquidity
Facilities, the Bills of Sale or any other Operative Agreement or any other
document entered into in connection herewith or any sublease or transfer or
any transactions contemplated hereby or thereby;
(ii) the operation, possession, use, non-use, maintenance, storage,
overhaul, delivery, non-delivery, control, repair or testing of the
Aircraft, Airframe, or any Engine or any engine used in connection with the
Airframe, or any part thereof by the Lessee, any sublessee or any other
Person whatsoever, whether or not such operation, possession, use, non-use,
maintenance, storage, overhaul, delivery, non-delivery, control, repair or
testing is in compliance with the terms of the Lease, including without
limitation, claims for death, personal injury or property damage or other
loss or harm to any Person whatsoever, including, without limitation, any
passengers, shippers or other Persons wherever located, and claims relating
to any laws, rules or regulations, including, without limitation,
environmental control, noise and pollution laws, rules or regulation;
(iii) the manufacture, design, sale, return, purchase, acceptance,
rejection, delivery, non-delivery, condition, repair, modification,
servicing, rebuilding, airworthiness, registration, reregistration, import,
export, performance, non-performance, lease, sublease, transfer,
merchantability, fitness for use, alteration, substitution or replacement
of any Airframe, Engine, or Part under the Lease, the Modification
Agreement, the GTA or the Engine Warranty Assignment or other transfer of
use or possession, or other disposition of the Aircraft, the Airframe, any
Engine or any Part including, without limitation, latent and other defects,
whether or not discoverable, strict tort liability, and any claims for
patent, trademark or copyright infringement;
(iv) any breach of or failure to perform or observe, or any other
non-compliance with, any condition, covenant or agreement to be performed,
or other obligations of the Lessee under any of the Operative Agreements,
or the falsity or inaccuracy of any representation or warranty of the
Lessee in any of the Operative Agreements (other than representations and
warranties in the Tax Indemnity Agreement);
(v) the Collateral Account and the Liquid Collateral;
(vi) the enforcement of the terms of the Operative Agreements and the
administration of the Trust Indenture Estate; and
(vii) the offer, issuance, sale or delivery of any Certificate or any
Pass Through Certificate, or any refunding or refinancing thereof, or
interest in the Lessor's Estate or the Trust Agreement or any similar
interest or in any way relating to or arising out of the Trust Agreement
and the Lessor's Estate, the Indenture or the Trust Indenture Estate
(including, without limitation, any claim arising out of the Securities Act
of 1933, as amended, the Securities Exchange Act of 1934, as amended, or
any other federal or state statute, law or regulation, or at common law or
otherwise relating to securities), or the action or inaction of the Owner
Trustee or Indenture Trustee as trustees, in the manner contemplated by
this Agreement, the Indenture, the Indenture and Security Agreement
Supplement or the Trust Agreement and in the case of the Owner Participant,
its obligations arising under Section 6.01 of the Trust Agreement.
The foregoing indemnity by the Lessee is intended to include and cover, but is
not limited to, any Expense to which the Indemnitees may be subject as a
result of their respective ownership or leasing of any interest in the
Aircraft, Airframe, any Engine or Part during the Term, whether or not in the
Lessee's possession or control, insofar as such Expense relates to any
activity or event whatsoever involving such item while it is under lease to
the Lessee (or after termination of the Lease in connection with the exercise
of remedies thereunder to the extent that such Expense is attributable to the
transactions contemplated hereby and by the other Operative Agreements), and
such Expense does not fall within any of the exceptions listed in Section
9.01(b) hereof.
(b) Exceptions. The indemnity provided for in Section 9.01(a) shall
not extend to any Expense of any Indemnitee to the extent it:
(i) would not have occurred but for the willful misconduct or gross
negligence of such Indemnitee;
(ii) after the Delivery Date, is in respect of the Aircraft, and is
attributable to acts or events which occur after the Aircraft is no longer
part of the Lessor's Estate or leased under the Lease or, if the Aircraft
remains a part of the Lessor's Estate, after the expiration of the Term and
any holdover period under Section 12.05 of the Lease (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 or the Indenture Trustee
shall be entitled to exercise remedies under such Article 17), or to acts
or events which occur after return of possession of the Aircraft by the
Lessee in accordance with the provisions of the Lease but in any such case
only to the extent not fairly attributable to acts or omissions of the
Lessee prior to expiration of the Term and any holdover period under
Section 12.05 of the Lease, including without limitation the Lessee's
failure to fully discharge all of its obligations under the Lease or the
other Operative Agreements;
(iii) is a Tax, whether or not the Lessee is required to indemnify
therefor pursuant to Article 8 hereof or pursuant to the Tax Indemnity
Agreement;
(iv) is a cost or expense required to be paid by the Owner
Participant or its permitted transferees (and not by the Lessee) pursuant
to this Agreement or any other Operative Agreement (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 terms and
provisions required to be observed and performed by it, in this Agreement,
the Lease, the Indenture, the Trust Agreement or any other Operative
Agreement to which it is a party unless such breach or default shall be a
result of the breach or default of any of the foregoing by the Lessee or
another Indemnitee;
(vi) [reserved];
(vii) in the case of the Owner Participant, Lessor's Liens to the
extent attributable to the Owner Participant; in the case of the Owner
Trustee, Lessor's Liens to the extent attributable to the Owner Trustee;
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,
to the extent attributable to the offer or sale by such Indemnitee after
the Certificate Closing Date of any interest in the Aircraft, the Lessor's
Estate or the Trust Agreement or any similar interest (including an offer
or sale resulting from bankruptcy or other proceedings for the relief of
debtors in which such Indemnitee is the debtor), unless in each case such
offer or sale shall occur (w) in connection with a Refinancing, (x) as a
result of exercise of remedies under Article 17 of 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
the Lease; or
(ix) which is incurred by 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 (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 hereof shall be an amount sufficient to restore the Indemnitee, on an
After-Tax Basis, to the same position such party would have been in had such
Expense not been incurred. If any Indemnitee actually realizes a permanent
Tax benefit by reason of the payment of such Expense paid or indemnified
against by the Lessee which was not considered in the computation thereof,
such Indemnitee shall promptly pay to the Lessee, but not before the Lessee
shall have made all payments theretofore due such Indemnitee under this
Agreement, the Tax Indemnity Agreement and any other Operative Agreement, an
amount equal to the lesser of (x) the sum of such Tax benefit plus any other
permanent Tax benefit actually realized by such Indemnitee as the result of
any payment made by such Indemnitee pursuant to this sentence and (y) the
amount of such payment pursuant to this Section 9.02 by the Lessee to such
Indemnitee plus the amount of any other payments by the Lessee to such
Indemnitee theretofore made pursuant to this Section 9.02 less the amount of
any payments by such Indemnitee to the Lessee theretofore made pursuant to
this Section 9.02 (and the excess, if any, of the amount described in clause
(x) above over the amount described in clause (y) above shall be carried
forward and applied to reduce pro tanto any subsequent obligations of the
Lessee to make payments pursuant to this Section 9.02), it being intended that
no Indemnitee should realize a net Tax benefit pursuant to this Section 9.02
unless the Lessee shall first have been made whole for any payments by it to
such Indemnitee pursuant to this Section 9.02; provided, however, that
notwithstanding the foregoing portions of this sentence, such Indemnitee shall
not be obligated to make any payment to the Lessee pursuant to this sentence
so long as an Event of Default shall have occurred and be continuing. Any
Taxes that are imposed on any Indemnitee as a result of the disallowance or
reduction of such Tax benefit referred to in the next preceding sentence in a
taxable year subsequent to the year of allowance and utilization by such
Indemnitee (including the expiration of any tax credit carryovers or
carrybacks of such Indemnitee that would not otherwise have expired) shall be
indemnifiable pursuant to the provisions of Section 8.01 hereof without regard
to Section 8.01(b) hereof.
Section 9.03. Subrogation. Upon the payment in full of any indemnity
pursuant to this Article 9 by the Lessee (but not earlier), the Lessee shall be
subrogated to any right of the Indemnitee, other than with respect to any of
such Indemnitee's insurance policies or in connection with any indemnity claim
the Person indemnified may have against any other Indemnitee in respect of the
matter against which such indemnity has been made.
Section 9.04. Notice and Payment. Each Indemnitee and the Lessee
shall give prompt written notice one to the other of any liability of which
such party has knowledge for which the Lessee is, or may be, liable under this
Article 9; provided, however, that failure to give such notice shall not
terminate any of the rights of the Indemnitees under this Article 9, except
(with respect to such Indemnitee) to the extent that the Lessee has been
materially prejudiced by the failure to provide such notice. Unless otherwise
provided in the Operative Agreements, any amount payable to an Indemnitee
pursuant to this Article 9 shall be paid within 30 days after receipt of a
written demand therefor from such Indemnitee accompanied by a written statement
describing in reasonable detail the basis for such indemnity and the
computation of the amount so payable.
Section 9.05. Refunds. If any Indemnitee shall obtain a recovery of
all or any part of any amount which the Lessee shall have paid to such
Indemnitee or for which the Lessee shall have reimbursed such Indemnitee under
this Article 9, and provided there shall not have occurred a Payment Default
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.
Section 9.06. Defense of Claims. The Lessee or its insurers shall
have the right (in each such case at the Lessee's sole expense) to investigate
or, provided that (i) the Lessee or its insurers shall not reserve the right
to dispute liability with respect to any insurance policies pursuant to which
coverage is sought, (ii) in the case of the Lessee, no Event of Default shall
have occurred and be continuing and (iii) the Lessee shall have first
acknowledged in writing to such Indemnitee the Lessee's obligation to
indemnify such Indemnitee hereunder in respect of such claim, defend any claim
covered by insurance for which indemnification is sought pursuant to this
Article 9 and each Indemnitee shall cooperate with the Lessee or its insurers
with respect thereto, and provided, further, the Lessee shall not be entitled
to assume and control the defense of any such claim if and to the extent such
Indemnitee reasonably objects to such control on the ground that an actual or
potential material conflict of interest exists where it is advisable for such
Indemnitee to be represented by separate counsel. Subject to the immediately
foregoing sentence, where the Lessee or the insurers under a policy of
insurance maintained by the Lessee undertake the defense of an Indemnitee with
respect to such a claim, no additional legal fees or expenses of such
Indemnitee in connection with the defense of such claim shall be indemnified
hereunder unless the fees or expenses were incurred at the written request of
the Lessee or such insurers. Subject to the requirement of any policy of
insurance applicable to a claim, an Indemnitee may participate at its own
expense at any judicial proceeding controlled by the Lessee or its insurers
pursuant to the preceding provisions, provided that such party's participation
does not, in the opinion of the independent counsel appointed by the Lessee or
its insurers to conduct such proceedings, interfere with such control; and
such participation shall not constitute a waiver of the indemnification
provided in this Section 9.06. No Indemnitee shall enter into any settlement
or other compromise with respect to any claim described in this Section 9.06
without the prior written consent of the Lessee, which consent shall not
unreasonably be withheld or delayed, unless such Indemnitee waives its right
to be indemnified under this Article 9 with respect to such claim.
Section 9.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 9 and the Lessee's obligations under any and all of them shall survive
the expiration or other termination of this Agreement, the Tax Indemnity
Agreement, the Trust Agreement, the Indenture, the Engine Warranty Assignment,
the Lease and the other Operative Agreements but, as to such indemnities, only
with respect to losses, liabilities, obligations, damages, penalties, claims,
actions, suits, costs, Expenses and disbursements caused by events occurring
or existing (or fairly attributable to the Lessee's acts or omissions) prior
to or incurred in the process of (i) the return or disposition of the Aircraft
under Article 12 or Article 17 of the Lease, or (ii) the termination of the
Lease or the Indenture or, if later, the return of the Aircraft.
Section 9.08. Effect of Other Indemnities. The Lessee's obligations
under the indemnities provided for in this Agreement shall be those of a
primary obligor whether or not the Person indemnified shall also be
indemnified with respect to the same matter under the terms of this Agreement,
the Lease, the Indenture, the Trust Agreement, or any other document or
instrument, and the Person seeking indemnification from the Lessee pursuant to
any provision of this Agreement may proceed directly against the Lessee
without first seeking to enforce any other right of indemnification.
Section 9.09. Interest. The Lessee will pay to each Indemnitee on
demand, to the extent permitted by applicable law, interest on any amount of
indemnity not paid when due pursuant to this Article 9 until the same shall be
paid, at the Past Due Rate.
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs. (a) Transaction
Costs. Except as otherwise provided in any amendment to this Agreement, the
Lessee (or the Owner Participant following a transfer of the Initial Owner
Participant's Beneficial Interest) shall pay all fees and expenses of the
following persons relating to the public offering of the Pass Through
Certificates contemplated by the Underwriting Agreement and related to the
transactions contemplated hereby on the Certificate Closing Date and the
Delivery Date: (i) the fees and expenses of counsel for the Owner Participant;
(ii) the fees and expenses of the transaction documentation counsel for the
Lessee and counsel for the Owner Trustee, the Indenture Trustee, the
Subordination Agent, the Pass Through Trustee, each Liquidity Provider, the LC
Bank 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, the LC Bank and
the Indenture Trustee including, without limitation, in connection with the
issuance of the Letter of Credit; (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 the
Registration Statement on Form S-3 bearing Registration No. 333-49411
(including any amendment thereto), 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, the LC Bank 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) of this paragraph shall be
allocable to the Owner Participant under this Agreement (1) to the extent
incurred specifically with respect to the Owner Participant, and (2) to the
extent such fees and expenses are incurred but are not specifically
attributable to the Owner Participant, in the proportion that the principal
amount of the Certificates bears to the total amount of the Pass Through
Certificates.
The Owner Participant, the Owner Trustee and the Lessee acknowledge
that the percentages for Basic Rent, Stipulated Loss Value and Termination
Value set forth in the Lease have been prepared assuming the aggregate amount
payable by the Owner Participant pursuant to the preceding paragraph is
1.4024691358% of the Purchase Price (the "Estimated Expense Amount");
provided, however, that in no event shall the sum of (i) the Owner
Participant's Commitment, (ii) the Transaction Costs to be paid by the Owner
Participant pursuant to Section 2.03 hereof, and (iii) the Transaction Costs
to be paid by the Owner Participant pursuant to Section 10.01 hereof exceed,
in the aggregate, $23,000,000, unless otherwise agreed by the Owner
Participant. To the extent that the payment by the Owner Participant of
Transaction Costs would cause the sum described in the immediately preceding
sentence to exceed $23,000,000, the Lessee shall be obligated to pay the
Transaction Costs constituting the First Chicago Leasing Corporation fee and
the Davis Polk & Wardwell fee to the extent of such excess and the Owner
Participant shall have no obligation to pay such excess.
(b) Continuing Expenses. The continuing fees, expenses and
disbursements (including reasonable counsel fees and expenses) of the entity
acting as Owner Trustee, as lessor under the Lease and as Owner Trustee under
the Trust Agreement with respect to the administration of the Lease and the
Lessor's Estate and the continuing fees, expenses and disbursements (including
reasonable counsel fees and expenses and initial fees relating to the
establishment of any replacement trustee) of the Indenture Trustee, as trustee
under the Indenture with respect to the administration of the Trust Indenture
Estate, 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, the Liquidity
Providers and the Pass Through Trustee all costs and expenses (including
reasonable legal fees and expenses) incurred by any of them in connection
with (a) any Default or Event of Default and any enforcement or collection
proceedings resulting therefrom, or (b) the enforcement of the obligations
of the Lessee hereunder or under the other Operative Agreements 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, including without limitation, any amendment,
supplement, waiver or consent resulting from any work-out, restructuring or
similar proceeding relating to the performance or nonperformance by the
Lessee of its obligations under the Operative Agreements or (c) any
amendment, supplement, waiver or consent (whether or not entered into)
under this Agreement, the Lease, the Indenture, the Certificates, the Tax
Indemnity Agreement 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 incurred in connection with the offer, sale or other
transfer (whether pursuant to Article 5 of the Trust Agreement or otherwise)
by the Owner Participant or the Owner Trustee after the Certificate Closing
Date of any interest in the Aircraft, the Lessor's Estate or the Trust
Agreement or any similar interest (and the Owner Participant shall be
responsible for all such fees and expenses), unless such offer, sale or
transfer shall occur (A) during a period when an Event of Default has
occurred and is continuing under the Lease, (B) during a period following
an Event of Loss or (C) in connection with the termination of the Lease or
action or direction of the Lessee pursuant to Section 4.02 or Article 10 of
the Lease; and
(ii) to pay the fees, costs and expenses of all appraisers involved
in an independent appraisal of the Aircraft to the extent required under
Section 4.03 of the Lease.
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee. (a)
Resignation and Removal. The Owner Trustee or any successor Owner Trustee may
resign or may be removed by the Owner Participant, and a successor Owner
Trustee may be appointed 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 satisfactory to the Lessee, the Owner
Participant, the Pass Through Trustee and the Indenture Trustee whereby such
successor Owner Trustee confirms that it shall be deemed a party to this
Agreement, the Trust Agreement, the Lease, the Lease Supplement, the Engine
Warranty Assignment, the Indenture, the Indenture Supplement and any other
Operative Agreement to which the Owner Trustee is a party and agrees to be
bound by all the terms of such documents applicable to the Owner Trustee and
makes the representations and warranties contained in Section 7.04 hereof
(except that it may be duly incorporated, validly existing and in good
standing under the laws of the United States of America or any State
thereof); and
(v) All filings of 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 appoint
promptly a successor Owner Trustee meeting the requirements of Section
11.01(b) hereof in the event the Owner Participant has knowledge that the
Owner Trustee at any time shall not be a Citizen of the United States.
(d) Revocation. The Owner Participant agrees not to revoke and
terminate the Trust Agreement except in accordance with Section 4.01(a) of the
Trust Agreement, as in effect on the date hereof or as amended in accordance
with the terms of the Operative Agreements.
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant. The Owner
Participant shall have no obligation or duty to the Lessee or to any Holder
with respect to the transactions contemplated by this Agreement, except those
obligations or duties expressly set forth in this Agreement, the Trust
Agreement, the Tax Indemnity Agreement, the Bills of Sale, the Lease or any
other Operative Agreement to which the Owner Participant is a party and the
Owner Participant shall not be liable for the performance by any party hereto
of such other party's obligations or duties hereunder. Under no circumstances
shall the Owner Participant as such be liable to the Lessee, nor shall the
Owner Participant be liable to any Holder, for any action or inaction on the
part of the Owner Trustee or the Indenture Trustee in connection with this
Agreement, the Indenture, the Lease, the Trust Agreement, the Engine Warranty
Assignment, any other Operative Agreement, the ownership of the Aircraft, the
administration of the Lessor's Estate or the Trust Indenture Estate or
otherwise, whether or not such action or inaction is caused by the willful
misconduct or gross negligence of the Owner Trustee or the Indenture Trustee.
Section 12.02. Interest of Holders of Certificates. A Holder of a
Certificate shall have no further interest in, or other right with respect to,
the Trust Indenture Estate when and if the principal and interest on all
Certificates held by such Holder and all other sums payable to such Holder
under this Agreement, under the Indenture and under such Certificates shall
have been paid in full.
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents. The Lessee
hereby consents in all respects to the execution and delivery of the Trust
Agreement, 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 Trust Agreement, the Indenture, the Intercreditor Agreement,
the Liquidity Facilities or the Certificates, except that prior to the
occurrence and continuance of an Event of Default, no section of the Indenture,
the Trust Agreement, the Intercreditor Agreement or 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 Indenture Trustee and the Owner Participant and that, except as otherwise
provided in the Indenture, upon an Indenture Event of Default, the Indenture
Trustee may act as the Lessor under the Lease to the exclusion of the Owner
Trustee. The Lessee further agrees to deliver to the Indenture Trustee and
the Owner Participant a copy of each notice, statement, request, report or
other communication given or required to be given to the Owner Trustee under
the Lease.
Section 13.03. Pass Through Trustee's and Subordination Agent's
Acknowledgment. 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 8.02 thereof regarding the
rights of the Owner Participant to purchase the Certificates under
circumstances specified therein.
ARTICLE 14
NOTICES
Section 14.01. Notices. All notices, demands, declarations and other
communications required by this Agreement shall be in writing and shall be
deemed received (a) if given by telecopier, when transmitted and the
appropriate telephonic confirmation received if transmitted on a Business Day
and during normal business hours of the recipient, and otherwise on the next
Business Day following transmission, (b) if given by certified mail, return
receipt requested, postage prepaid five Business Days after being deposited in
the United States mail and (c) if given by FedEx service (or, if a Default or
Event of Default shall have occurred and be continuing, by other comparable
courier service), when received or personally delivered, addressed:
(a) If to the Lessee, to its office at 2007 Corporate Avenue,
Memphis, Tennessee 38132, Attention: Vice President and Treasurer with a
copy to Senior Vice President and General Counsel at 1980 Nonconnah
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 its office at 225
Asylum Street, Goodwin Square, Hartford, Connecticut 06103, Attention:
Corporate/Muni Administration, facsimile (860) 244-1889 with a copy to
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 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
(d) If to a Liquidity Provider, to its office at Palmengartenstrasse
5-9, D-60325 Frankfurt am Main, Germany, Attention: Head of Aircraft Finance
Department KIII b 3, telephone 011-49-69-7431-0, facsimile
011-49-69-7431-2944; 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 three refinancings, in whole but not in part, of the
Certificates prior to the end of the Basic Term (a "Refinancing"), provided,
that, such Refinancing may not occur prior to the fifth anniversary of the
Refunding Date. Such Refinancings may be placed in either the private or
public markets and shall be denominated in United States dollars (or in any
other foreign currency so long as there is no foreign currency risk to the
Owner Participant), and shall be on terms that do not materially adversely
affect the Owner Participant. The Owner Participant agrees to negotiate
promptly in good faith to conclude an agreement with the Lessee as to the
terms of any such Refinancing transaction (including the terms of any debt to
be issued in connection with such refinancing and the documentation to be
executed in connection therewith). Without the consent of the applicable
Owner Participant, the prospectus and other offering materials relating to any
Refinancing in the form of a public offering shall not identify the Owner
Participant and shall not include any financial statements of the Owner
Participant or any Affiliate thereof. In connection with any such Refinancing
in the form of a public offering, the Lessee shall indemnify the Owner
Participant for any liabilities under federal, state or foreign securities
laws resulting from such offering. The aggregate principal amount of the new
Certificates issued in connection with each Refinancing shall be the same as
the aggregate principal amount outstanding on the Certificates being
refinanced.
(b) Notwithstanding anything herein to the contrary, no Refinancing
will be permitted unless the Owner Participant shall have received at least 10
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 the relevant documentation and the Owner
Participant shall have determined in good faith that neither it nor the Owner
Trustee shall suffer any loss or expense or bear any increased risk as a
result of such Refinancing (including, without limitation, any risk with
respect to taxes or other adverse consequences to the Owner Participant
including the application of Revenue Procedures 75-21 and 75-28 and Section
467 of the Code) for which it has not been or will not have been indemnified
by the Lessee in a manner reasonably satisfactory to the Owner Participant.
Prior to the consummation of any Refinancing pursuant to this Section
15.01, the Owner Participant and the Lessee shall agree upon a schedule
setting forth each installment of Basic Rent, Stipulated Loss Values and
Termination Values payable pursuant to the Lease as a result of the
Refinancing in accordance with Section 3.04 of the Lease, and thereafter the
amounts set forth in such schedule shall become the amounts payable under the
Lease. Upon the consummation of the Refinancing, the evidence of indebtedness
issued pursuant to the Refinancing shall be considered "Certificates" for
purposes of this Agreement, the Lease and the Indenture.
(c) Notwithstanding the foregoing, the Owner Participant shall have
no obligation to proceed with any Refinancing transaction as contemplated by
this Section 15.01 unless the Lessee indemnifies the Owner Trustee and the
Owner Participant by agreement in form and substance satisfactory to each of
them, for any liability, obligation (other than the obligation to pay
principal and interest in respect of the refinanced indebtedness), cost or
expense (including, without limitation, reasonable attorneys' fees and
Make-Whole Premium and any other premiums or other amounts due under the
Indenture), including any adverse tax consequences or impact, related to or
arising out of any such Refinancing transaction, except to the extent of
amounts included in Transaction Costs and payable by the Owner Participant as
provided herein.
(d) Each party agrees to take or cause to be taken all requested
action, including, without limitation, the execution and delivery of any
documents and instruments, including, without limitation, amendments or
supplements to the Lease, which may be reasonably necessary or desirable to
effect such Refinancing, including, in the case of the Owner Participant,
direction to the Owner Trustee by the Owner Participant to prepay the
Certificates then outstanding; provided, however, that such Refinancing shall
be subject to the satisfaction of each of the following conditions:
(i) Payment of principal, accrued interest, Make-Whole Premium and
breakage costs, if any, and all other sums due and owing on the Certificates
payable under the Indenture;
(ii) Payment in full of all other amounts then due and owing by the
Lessee under this Agreement, the Indenture, the Lease, the Trust Agreement,
and the Certificates then outstanding shall have been made by the Lessee;
(iii) Such party shall have received such opinions of counsel
(including, without limitation, an opinion received by the Owner
Participant from independent tax counsel reasonably satisfactory to the
Lessee that such Refinancing shall not result in any adverse tax
consequences to the Owner Participant, unless the Lessee shall have agreed
to provide an indemnity in respect thereof reasonably satisfactory in form
and substance to the Owner Participant), certificates and other documents
as it may reasonably request, each in form and substance reasonably
satisfactory to such party;
(iv) All authorizations, approvals and consents which in the
reasonable judgment of the Owner Participant are necessary for such
Refinancing shall have been obtained;
(v) The Lessee shall have provided or agreed to provide to the Owner
Participant, as Supplemental Rent under the Lease, sufficient funds to pay
any breakage costs, Make-Whole Premium and any other amounts due under the
Indenture;
(vi) The satisfaction or waiver by each other party to this
Agreement of the conditions set forth in this Section 15.01 to such party's
obligations under this Section 15.01;
(vii) No Event of Default shall have occurred and be continuing or
would occur immediately after giving effect to such Refinancing; and
(viii) The documentation relating to such Refinancing shall permit the
Lessee to place the Refinancing loan certificates with an ERISA Plan. The
Lessee shall not indemnify the Owner Participant, or any of the Owner
Participant's Affiliates, assigns, officers, directors, employees, agents
and servants, for any Taxes, within the meaning of Article 8 hereof, or
Expenses, within the meaning of Article 9 hereof, arising under or in
connection with any "prohibited transaction" within the meaning of Section
406 of ERISA or Section 4975 of the Code, if the sole underwriter or the
manager or co-manager of the underwriting syndicate or the selling or
placement agent of the Refinancing loan certificates has an exemption from
the prohibited transaction rules under Section 406 of ERISA and Section 4975
of the Code with respect to pass through certificates, such as Prohibited
Transaction Exemption 90-24 or any other comparable exemption, unless such
exemption is not available or is not valid with respect to such Refinancing
loan certificates. If such exemption is not available or is not valid,
then the Lessee shall indemnify the Owner Participant pursuant to, and to
the extent provided for, under Articles 8 and 9 hereof for Taxes and
Expenses arising under or in connection with any "prohibited transaction",
within the meaning of Section 406 of ERISA or Section 4975 of the Code,
resulting from such placement.
ARTICLE 16
[RESERVED]
ARTICLE 17
MISCELLANEOUS
Section 17.01. [Reserved].
Section 17.02. Collateral Account. (a) The Indenture Trustee shall
notify the Owner Trustee and the Lessee of any losses incurred on the
Specified Investments in the Collateral Account promptly upon the realization
thereof, as well as any fees, commissions and other costs, Taxes (other than
income taxes) and expenses, if any, incurred by the Indenture Trustee in
connection with its administration of the Collateral Account (collectively,
"Losses"). Promptly upon receipt of such notification but, in any event, no
later than the earlier of the Delivery Date (or, if later, the last day of any
investment period referred to in Section 2.14(b) of the Indenture during which
the Delivery Date occurs) and the 15th day after the Cut-Off Date, the Lessee
shall pay to the Subordination Agent, on behalf of the Owner Trustee, an
amount equal to such Losses, provided, however, that on the Delivery Date the
Lessee shall pay any such Losses to the Indenture Trustee to the extent that
the Debt Portion exceeds the amount in the Collateral Account on such date.
In addition to the foregoing, if Series C Certificates are outstanding
following the Delivery Date and are required to be prepaid on the Series C
Prepayment Date, the Lessee shall pay to the Subordination Agent, on behalf of
the Owner Trustee, promptly upon receipt of such notification but in any event
no later than the Series C Prepayment Date, an amount equal to any additional
unreimbursed Losses.
(b) The Lessee shall pay to the Subordination Agent, on behalf of the
Owner Trustee (A) on each Payment Date prior to the Delivery Date an amount
equal to the aggregate amount of interest accrued on the Certificates from
(and including) the Certificate Closing Date or previous Payment Date, as the
case may be, to, but excluding, such Payment Date, (B) on the first Payment
Date subsequent to the Delivery Date, interest accrued on the Certificates
from and including the last Payment Date (or, if none, the Certificate Closing
Date), to, but excluding, the Delivery Date and (C) on each Payment Date after
the Delivery Date but prior to the Series C Prepayment Date, interest accrued
on the Series C Certificates, if any, outstanding after the Delivery Date
which are required to be prepaid on such Series C Prepayment Date pursuant to
Section 2.03(b) hereof, in each case to the extent such interest due is in
excess of any earnings on investments in the Collateral Account for the period
of accrual of such interest. 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.
(c) If the Aircraft has not been purchased by the Owner Trustee on the
Delivery Date, the Lessee agrees to pay to the Subordination Agent, on behalf
of the Owner Trustee, on the 15th day following the Cut-Off Date the excess,
if any, of the amounts payable under Section 6.02(b)(1) of the Indenture over
the amounts released from the Collateral Account under Section 2.16 of the
Indenture.
(d) If any Series C Certificates outstanding after the Delivery Date
are subject to prepayment on the Series C Prepayment Date pursuant to Section
6.02(a)(viii) of the Indenture, the Lessee agrees to pay to the Subordination
Agent, on behalf of the Owner Trustee, on the Series C Prepayment Date the
excess, if any, of the amounts payable under Section 6.02(b)(1) of the
Indenture over the amounts released from the Collateral Account under Section
2.16 of the Indenture.
(e) All amounts payable by the Lessee pursuant to this Section 17.02
shall be paid to the Indenture Trustee or the Subordination Agent, as the case
may be, at its principal office at 79 South Main Street, Salt Lake City, Utah,
84111, Attention: Corporate Trust Department, or as the Indenture Trustee or
the Subordination Agent, as the case may be, may otherwise direct within the
United States, by wire transfer of immediately available funds in U.S. Dollars
no later than 10:30 a.m., New York City time, on the due date of such payment.
(f) Prior to the date on which the Lessee shall be obligated to make
any payment to the Subordination Agent pursuant to this Section 17.02, the
Subordination Agent shall deliver a written notice to the Lessee specifying
the amount of such payment with respect to each series of Equipment Trust
Certificates.
(g) In the event that (i) any portion of any payment to the
Subordination Agent, the Pass Through Trustee or any holder of any Pass
Through Certificate which is funded from a Specified Shortfall Payment (as
defined below) shall be avoided as a preference under Section 547 of the
Bankruptcy Code and the Subordination Agent, the Pass Through Trustee or any
holder of any Pass Through Certificate becomes liable for such portion or (ii)
(x) the Lessee shall be the subject of a voluntary or involuntary proceeding
under Chapter 7 or Chapter 11 of the Bankruptcy Code on a date less than
fifteen days prior to the expiration date of the Letter of Credit (after
giving effect to any extensions of such expiration date) and (y) any portion
of any payment to the Subordination Agent, the Pass Through Trustee or any
holder of any Pass Through Certificate which is funded from a Specified
Shortfall Payment could be avoided as a preference under Section 547 of the
Bankruptcy Code and the Subordination Agent, the Pass Through Trustee or any
holder of any Pass Through Certificate could become liable for such portion,
the Subordination Agent shall be entitled to draw under the Letter of Credit
an amount equal to the aggregate amount of such liability up to the Maximum
Stated Amount. The Letter of Credit shall expire no earlier than the date 91
days after the later of the last Specified Shortfall Payment payable under
this Section 17.02 and the last "Specified Shortfall Payment" payable under
Section 17.02 of any Related Participation Agreement. In the event of any
drawing under the Letter of Credit pursuant to clause (ii) of this subsection
(g), the proceeds of such drawing shall be applied in accordance with the
Intercreditor Agreement. For purposes of this subsection (g), "Specified
Shortfall Payment" shall mean any payment by the Lessee pursuant to this
Section 17.02 (i) in respect of any Losses which occur as a result of delivery
of the Aircraft on a date other than September 15, 1998, or (ii) in respect of
interest accrued for any applicable period on any Certificate in excess of any
earnings on investments in the Collateral Account for such period.
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 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 each of the Pass Through Trustee and the Subordination
Agent, in its capacity as a party to this Agreement and not as a Holder, shall
not be required to modify, amend or supplement this Agreement or to give any
consent, waiver, authorization or approval with respect to this Agreement
under the circumstances in which the consent of the Indenture Trustee would
not be required for such modification, amendment, supplement, consent, waiver
or approval in accordance with Section 8.01(b) of the Indenture, provided that
the Pass Through Trustee shall be entitled to receive an Opinion of Counsel
(as defined in the Pass Through Agreement) necessary, in its sole discretion,
to establish that the Indenture Trustee's consent would not be required under
such circumstances.
Section 17.05. Captions. The table of contents preceding this
Agreement and the headings of the various Articles and Sections of this
Agreement are for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions of this Agreement.
Section 17.06. Successors and Assigns. The terms of this Agreement
shall be binding upon, and shall inure to the benefit of, the Lessee and its
successors and permitted assigns, the Subordination Agent and its successors
and permitted assigns, the Owner Participant and its successors and permitted
assigns, the Owner Trustee and its successors as Owner Trustee (and any
additional owner trustee appointed), the Indenture Trustee and its successors
as Indenture Trustee (and any additional indenture trustee appointed) under
the Indenture, the Pass Through Trustee and its successors as Pass Through
Trustee (and any additional pass through trustee appointed) and the LC Bank
and its successors and assigns.
Section 17.07. Concerning the Owner Trustee, 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 the Owner Participant on account of (ii)
above, then the Indenture Trustee, as the case may be, shall promptly refund
to the Owner Participant such Recourse Amount. For purposes of this Section
17.10, "Recourse Amount" means the amount by which the portion of such payment
by the Owner Participant on account of clause (ii) above received by the
Indenture Trustee exceeds the amount which would have been received by the
Indenture Trustee if the Owner Participant had not become subject to the
recourse liability referred to in (ii) above. Nothing contained in this
Section shall prevent the Indenture Trustee from enforcing any individual
obligation (and retaining the proceeds thereof) of the Owner Participant under
this Agreement or any other Operative Agreement to the extent herein or
therein provided, for which the Owner Participant has expressly agreed by the
terms of this Agreement to accept individual responsibility.
Section 17.11. GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS AND IS BEING DELIVERED IN NEW
YORK.
Section 17.12. Section 1110 Compliance. The parties hereto agree
that the transactions contemplated by the Operative Agreements are expressly
intended to be, shall be and should be construed so as to be entitled to the
benefits and protection of Section 1110 of the Bankruptcy Code.
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 (on behalf
of itself and each of its Affiliates, agents, directors, officers, employees
and representatives) to use reasonable precautions to keep confidential, in
accordance with its customary procedures for handling confidential information
of this nature, any non-public information supplied to it pursuant to this
Agreement which is identified by the Person supplying the same as being
confidential at the time the same is delivered to such party, provided that
nothing herein shall limit the disclosure of any such information (i) to the
extent required by statute, rule, regulation or judicial process, (ii) to
counsel for any of the parties hereto, (iii) to bank examiners, auditors,
insurance regulators, accountants or similar regulatory authorities, (iv) in
connection with any litigation to which any one or more of the parties hereto
is a party relating to the transactions contemplated hereby or by any of the
Operative Agreements, (v) to 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 an agreement in writing to be bound by the provisions of this
Section 18.01 or (vii) in the case of the Owner Participant or the Owner
Trustee (in its individual or trust capacity) to the Owner Trustee (in its
individual or trust capacity) or to the Owner Participant, as the case may be.
IN WITNESS WHEREOF, the parties have caused this Participation
Agreement to be executed by their respective, duly authorized officers and this
Participation Agreement shall be effective this ____ day of _____, 1998.
LESSEE:
FEDERAL EXPRESS CORPORATION
By:__________________________________________
Name: Robert D. Henning
Title: Vice President and Treasurer
INITIAL OWNER PARTICIPANT:
FEDERAL EXPRESS CORPORATION
By:__________________________________________
Name: Robert D. Henning
Title: Vice President and Treasurer
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
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
SCHEDULE I
CERTIFICATE INFORMATION
1. Federal Express Corporation 1998-1 Pass Through Trust Class A
Federal Express Corporation Trust No. N585FE
Interest Rate: 6.720%
Maturity: July 15, 2020
Principal Amount: $31,384,000
2. Federal Express Corporation 1998-1 Pass Through Trust Class B
Federal Express Corporation Trust No. N585FE
Interest Rate: 6.845%
Maturity: January 15, 2019
Principal Amount: $13,094,000
3. Federal Express Corporation 1998-1 Pass Through Trust Class C
Federal Express Corporation Trust No. N585FE
Interest Rate: 7.020%
Maturity: January 15, 2016
Principal Amount: $16,665,000
SCHEDULE II
DEFINITIONS
(FEDERAL EXPRESS CORPORATION TRUST NO. N585FE)
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement,
the Series Supplements, 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 Section 13.01(c)(i) of the Lease.
Adjustment Date. The date of any increase or decrease in the
principal amount of the Series C Certificates pursuant to Section 2.19 of the
Indenture.
Aeronautics Authority. As appropriate, the Federal Aviation
Administration and/or the Administrator of the Federal Aviation
Administration, any successor to the former United States Civil Aeronautics
Board, or any Person, governmental department, bureau, commission or agency
located in the United States succeeding to the functions of any of the
foregoing.
Affidavits. The affidavits of citizenship of the Owner Trustee and
the Owner Participant.
Affiliate. With respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant and SSB shall not be deemed to be an
Affiliate of any of the Owner Trustee, the Lessor or 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
reduction in Taxes that would result 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
as provided in the Participation Agreement and to be leased under the Lease
(or any permitted substitute airframe thereunder) together with three Engines
(whether each is an initial Engine or a Replacement Engine) whether or not any
of such initial or Replacement Engines may from time to time be installed on
such Airframe or may be installed on any other airframe or on any other
aircraft, including any aircraft substituted pursuant to Section 11.03 of the
Lease. Subject to Section 2.04 of the Participation Agreement, prior to
delivery of the initial Lease Supplement, references in the Operative
Agreements (including Section 3.03 of the Participation Agreement) to Aircraft
shall mean the McDonnell Douglas MD-11F airframe bearing FAA Registration
Number N585FE and Manufacturer's serial number 48481, together with three
General Electric CF6-80C2-D1F engines.
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 initially and
manufacturer's serial number specified in the initial Lease Supplement,
including (i) all Parts in respect thereof and (ii) any Replacement Airframe
which may be substituted pursuant to Section 11.03 of the Lease and any
Pre-Delivery Replacement Airframe which may be substituted pursuant to Section
2.04 of the Participation Agreement.
Ancillary Agreement. Any written agreement of the Lessee to which the
Lessor is a party or to which the Lessor has consented in writing entered into
on or prior to the Delivery Date or any date thereafter in connection with the
transactions contemplated by the Operative Agreements, as such agreement may
be amended and supplemented from time to time with the consent of the Lessor
and delivered to the Owner Trustee, the Indenture Trustee, the Pass Through
Trustee, the Subordination Agent, each Liquidity Provider and the Owner
Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal Express
Corporation Trust No. N585FE), 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 fair market value
letter to the Lessee) on the Delivery Date pursuant to Section 4.02(h) 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.
Basic Rent. The 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 15, 2021, 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. Any day on which commercial banks are not authorized or
required to close in New York, New York, 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 is discharged, Boston, Massachusetts.
Certificate Closing Date. The date of the closing with respect to the
purchase of Certificates by the Pass Through Trustee contemplated by Section
2.01(b) of the Participation Agreement.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N585FE), 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. Kreditanstalt fur Wiederaufbau, a
corporation organized under the public law of the Federal Republic of Germany
together with any Replacement Liquidity Provider (as defined in the
Intercreditor Agreement).
Class B Liquidity Provider. Kreditanstalt fur Wiederaufbau, a
corporation organized under the public law of the Federal Republic of Germany
together with any Replacement Liquidity Provider (as defined in the
Intercreditor Agreement).
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
acquisition of Certificates by the Pass Through Trustee.
Code. Except as otherwise provided, the Internal Revenue Code of
1986, as amended from time to time.
Collateral Account. The deposit account established and maintained
pursuant to Section 2.13 of the Indenture.
Collateral Agreement. The Collateral Account Control Agreement
(Federal Express Corporation Trust No. N585FE) dated as of June 15, 1998,
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 as provided in
Section 3.02 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 14, 1998.
Debt Portion. The amount specified as such on Schedule IV to the
Participation Agreement.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which, with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
Delivery Date. The date on which the Aircraft is delivered and sold
by 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 3.03(c) of the Participation Agreement.
EBO Price. Has the meaning set forth 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), 10.02(c), 10.03, 11.03, 11.04 or
12.02 of the Lease, together with all Parts related thereto. Except as
otherwise provided, at such time as a Replacement Engine shall be so
substituted and the Engine for which the substitution is made shall be
released from the Lien of the Indenture, such replaced Engine shall cease to
be an "Engine" under the Lease. The term "Engines" means, as of any date of
determination, all Engines then leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of June 15, 1998,
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. N585FE), dated as of June 15, 1998, between the
Lessor and the Lessee.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. An employee benefit plan subject to Title I of ERISA, or
an individual retirement account or plan subject to Section 4975 of the Code.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of the
Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use
(A) for a period in excess of 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 to the end of the
Term, if less (unless such loss constitutes an Event of Loss under clause (ii)
of this definition) or (B) for a period in excess of 60 days due to the
destruction, damage beyond economic repair or rendition of such property
permanently unfit for normal use by Lessee for any reason whatsoever; (ii) any
damage to such property which results in an insurance settlement with respect
to such property on the basis of a total loss, or constructive or compromised
total loss; (iii) (1) condemnation, confiscation or seizure of, or requisition
of title to such property by the Government, any foreign government or
purported government or any agency or instrumentality thereof, or (2)
condemnation, confiscation, or seizure of, or requisition or taking of, use of
such property (A) by a foreign government or instrumentality or agency of any
such foreign government, for a period in excess of 180 days (or such shorter
period ending on the earlier of the expiration of the Term or on the date on
which an insurance settlement with respect to such property on the basis of a
total loss or constructive or compromised total loss shall occur) or (B) by
the Government for a period extending beyond the Term, provided that no Event
of Loss shall be deemed to have occurred, and the Term shall be extended
automatically for a period of six months (or the date of return of the
Aircraft, if shorter, so long as the Lessor receives at least six months
notice of such date of return) beyond the end of the Term in the event that
the Aircraft, the Airframe or any Engine is requisitioned by the Government
pursuant to an activation as part of the CRAF Program described in Section
7.02(a)(iv) of the Lease; and (iv) as a result of any law, rule, regulation,
order or other action by the Aeronautics Authority or other governmental body
having jurisdiction, the use of the Aircraft or Airframe in the normal course
of air transportation of cargo shall have been prohibited by virtue of a
condition affecting all 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. The date of such Event of Loss shall be (s) the 31st day or the
91st day, as the case may be, following loss of such property or its use due
to theft or disappearance (or the end of the Term, if earlier); (t) the 61st
day following the date of any destruction, damage beyond economic repair or
rendition of such property permanently unfit for normal use; (u) the date of
any insurance settlement on the basis of a total loss or constructive or
compromised total loss; (v) the date of any condemnation, confiscation,
seizure or requisition of title of such property; (w) the 181st day following
condemnation, confiscation, seizure or requisition for use of such property by
a foreign government referred to in clause (iii)(2)(A) above (or the end of
the Term or the date of any insurance settlement described therein, if earlier
than such 181st day); (x) the last day of the Term in the case of requisition
for use of such property by the Government; (y) the last day of the 6 month or
12 month period, referred to in clause (iv) above. An Event of Loss with
respect to the Aircraft shall be deemed to have occurred if any Event of Loss
occurs with respect to the Airframe.
Excepted Payments. Collectively, (i) indemnity or other payments (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) maintained in accordance with
the provisions of 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) the payment of
incremental out-of-pocket expenses of the Owner Trustee, the Owner Participant
or their respective authorized representatives payable by the Lessee under
Section 6.03(b) of the Participation Agreement or Section 14.01 of the Lease
following any reregistration of the Aircraft and (vii) proceeds of, and any
right to demand, collect or otherwise receive and enforce the payment of any
amount described in clauses (i) through (vii) above.
Expense; Expenses. Have the meaning specified in Section 9.01(a) of
the Participation Agreement.
FAA. The United States Federal Aviation Administration and any
successor agency or agencies thereto.
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
such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and equal
in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease. Fair Market Rental shall be determined
in accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and equal in
amount to, the value which would be obtained in an arm's-length transaction
between an informed and willing purchaser under no compulsion to buy and an
informed and willing seller unaffiliated with such purchaser and under no
compulsion to sell, assuming that the Aircraft (or other property) is
unencumbered by the Lease. Unless otherwise provided in the applicable
provisions of any Operative Agreement, 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. Fair Market Value shall be determined in accordance with the
provisions of Section 4.03 of the Lease.
Federal Aviation Administration. The United States Federal Aviation
Administration and any successor agency or agencies thereto.
FedEx. Federal Express Corporation.
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 Owner Participant, the Indenture Trustee, in its
individual capacity and as trustee, the Subordination Agent, in its individual
capacity and in its capacity as Subordination Agent, each Liquidity Provider,
the Owner Participant Guarantor, if any, 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. N585FE), dated as of June 15, 1998, between the
Lessor and the Indenture Trustee, as supplemented by the Indenture and
Security Agreement Supplement.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N585FE) to be dated the Delivery Date, 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 imposed against
the Indenture Trustee in its individual capacity against which the Lessee has
not indemnified (and is not obligated to indemnify) the Indenture Trustee in
such capacity.
Independent 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
June 15, 1998, 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.
LC Bank. Kreditanstalt fur Wiederaufbau, a corporation organized
under the public law of the Federal Republic of Germany.
Last Cut-Off Date. The later of (i) the Cut-Off Date and (ii) the
"Cut-Off Date" (as defined in the relevant Related Indenture) for the last
Related Aircraft to be delivered.
Last Delivery Date. The later of (i) the Delivery Date and (ii) the
"Delivery Date" (as defined in the relevant Related Indenture) for the last
Related Aircraft to be delivered.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N585FE) dated as of June 15, 1998, 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. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N585FE) to be dated the Delivery Date, substantially in
the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending at
the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation.
Lessee Documents. Has the meaning set forth in Section 6.01(b) of the
Participation Agreement.
Lessee Shortfall. Has the meaning set forth in Section 3.02(a) 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, any Ancillary Agreement, the GTA, the Engine
Warranty Assignment, the Engine Consent, any warranty with respect to the
Airframe and the Engines, all amounts of Basic Rent and Supplemental Rent,
including without limitation, insurance proceeds (other than insurance
proceeds payable to or for the benefit of the Owner Trustee in its individual
capacity, 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), and all other property of the Owner Trustee
purportedly subjected to the Lien of the Indenture by the Granting Clause
thereof; provided that in no event shall "Lessor's Estate" include any
Excepted Payment.
Lessor's Liens. Liens 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, and, in the case of the Lessor in its individual
capacity, arising from its gross negligence or willful misconduct or expressly
prohibited under the Operative Agreements and any act or omission of the Owner
Participant which is in violation of any of the terms of the Operative
Agreements, (iii) Taxes or Expenses imposed against the Lessor, in its
individual capacity or as Owner Trustee, the 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.
Letter of Credit. The Irrevocable Standby Letter of Credit, dated the
Certificate Closing Date, in the form of Exhibit F to the Participation
Agreement and with a Maximum Stated Amount equal to the amount specified under
"Letter of Credit Maximum Stated Amount" on Schedule IV to the Participation
Agreement, from the LC Bank to and for the benefit of the Subordination Agent.
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 1.1 of the
Intercreditor Agreement.
Liquidity Provider. Kreditanstalt fur Wiederaufbau, a corporation
organized under the public law of the Federal Republic of Germany together
with any Replacement Liquidity Provider (as defined in the Intercreditor
Agreement).
Losses. Has the meaning specified in Section 17.02(a) of the
Participation Agreement.
Loss Payee. Has the meaning specified in Section 13.02(b)(i) of the
Lease.
Majority in Interest of Certificate Holders. As of a particular date
of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. With respect to any Certificate, the amount (as
determined by an Independent Investment Banker reasonably acceptable to the
Indenture Trustee and the Owner Participant) by which (i) the present value of
the remaining scheduled payments of principal and interest to the Maturity of
such Certificate computed by discounting such payments on a semiannual basis
on each Payment Date (assuming a 360-day year of twelve 30-day months) using a
discount rate equal to the Treasury Yield exceeds (ii) the outstanding
principal amount of such Certificate plus accrued interest.
Mandatory Document Terms. The terms set forth on Schedule V to the
Participation Agreement.
Mandatory Economic Terms. The terms set forth on Schedule VI to the
Participation Agreement.
Manufacturer. McDonnell Douglas Corporation, a wholly-owned
subsidiary of The Boeing Company.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Maximum Stated Amount. The amount specified under "Letter of Credit
Maximum Stated Amount" on Schedule IV to the Participation Agreement.
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.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate equal to the Debt Rate per annum compounded semi-annually.
Non-U.S. Person. Any Person other than a U.S. Person.
Obsolete Parts. Parts which 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, any Ancillary Agreement
entered into by or with the written consent of the Indenture Trustee, which by
its terms is an Operative Agreement, the Certificates outstanding at the time
of reference, the Indenture, the Indenture and Security Agreement Supplement,
the Engine Consent, the Tax Indemnity Agreement, each Liquidity Facility, the
Intercreditor Agreement, the Collateral Agreement, the Letter of Credit and
the Reimbursement 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.
Other Indentures. Collectively, the Trust Indenture and Security
Agreement for each of Federal Express Corporation Trust Nos. N676FE, N677FE,
N678FE, N679FE, N680FE, N681FE, N682FE, N620FE, N621FE and N623FE, each dated
as of June 15, 1998, between State Street Bank and Trust Company of
Connecticut, National Association, as owner trustee and First Security Bank,
National Association, as indenture trustee.
Outstanding. When used with respect to Certificates, as of the date
of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary amount
has been theretofore deposited with the Indenture Trustee in trust
for the Holders of such Certificates pursuant to Section 14.01 of the
Indenture; provided, that if such Certificates are to be prepaid,
notice of such prepayment has been duly given pursuant to the
Indenture or provision therefor satisfactory to the Indenture Trustee
has been made; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article II
of the Indenture.
Outstanding C Account. The collateral account established and
maintained under a Related Indenture relating to an undelivered aircraft.
Owner Participant. The Person to whom on the Delivery Date (or, if
earlier, the Transfer Date) the Initial Owner Participant shall transfer its
Beneficial Interest pursuant to Section 3.02 of the Participation Agreement
and any successors thereto, and any Person to which the Owner Participant
transfers, in accordance with the Trust Agreement, its right, title and
interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Guarantor. The provider, if any, of an Owner
Participant Guaranty.
Owner Participant Guaranty. Any guaranty delivered by the Owner
Participant Guarantor.
Owner Trust. Federal Express Corporation Trust No. N585FE.
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 book yield and aggregate after-tax cash 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 and the EBO Price, as such assumptions may be
adjusted for events which have been the basis of adjustments to Rent pursuant
to Section 3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal Express
Corporation Trust No. N585FE), dated as of June 15, 1998, 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 title to which
remains vested in the Lessor pursuant to Article 8 of the Lease.
Pass Through Agreement. The Pass Through Trust Agreement dated as of
May 1, 1997, between the Lessee and the Pass Through Trustee.
Pass Through Certificates. Any of the Pass Through Certificates,
1998-1-A, the Pass Through Certificates, 1998-1-B or the Pass Through
Certificates, 1998-1-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. The Business Day on which the sale of the
Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Corporation 1998-1 Pass
Through Trust Class A, Federal Express Corporation 1998-1 Pass Through Trust
Class B and Federal Express Corporation 1998-1 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 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. Each January 15 and July 15 commencing on January 15,
1999.
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).
Pre-Delivery Replacement Airframe. Has the meaning set forth in
Section 2.04 of the Participation Agreement.
Preliminary Notice. Has the meaning specified in Section 4.01(a) of
the Lease.
Premium Termination Date. With respect to the Series A Certificates,
the scheduled maturity date of the Series A Certificates, with respect to the
Series B Certificates, the scheduled maturity date of the Series B
Certificates and with respect to the Series C Certificates, the scheduled
maturity date of the Series C Certificates.
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.
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. Has the meaning specified in Section
10.01(a) of the Lease.
Purchase Price. Has the meaning specified 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.
Reimbursement Agreement. The Standby Letter of Credit Application and
Agreement, dated the Pass Through Closing Date, between the Lessee and the LC
Bank.
Related Aircraft. Each of the aircraft relating to a Related
Indenture.
Related Indentures. Collectively, the Trust Indenture and Security
Agreement for each of Federal Express Corporation Trust Nos. N676FE, N677FE,
N678FE, N679FE, N680FE, N681FE, N682FE, N620FE, N621FE and N623FE, each dated
as of June 15, 1998, between State Street Bank and Trust Company of
Connecticut, National Association, as owner trustee and First Security Bank,
National Association, as indenture trustee, the Trust Indenture and Security
Agreement for Federal Express Corporation Trust No. N590FE, dated as of May 1,
1998, as amended and restated as of June 15, 1998, between State Street Bank
and Trust Company of Connecticut, National Association, as owner trustee and
First Security Bank, National Association, as indenture trustee, and the Trust
Indenture and Security Agreement for Federal Express Corporation Trust No.
N675FE, dated as of June 1, 1998, as amended and restated as of June 15, 1998,
between State Street Bank and Trust Company of Connecticut, National
Association, as owner trustee and First Security Bank, National Association,
as indenture trustee.
Related Participation Agreements. Collectively, with respect to each
Related Indenture, the "Participation Agreement" as defined therein.
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. Each January 15 and July 15 commencing on January
15, 1999.
Reoptimization Date. Has the meaning specified in Section 2.03(b) of
the Participation Agreement.
Replacement Aircraft. Any aircraft substituted for the Aircraft
pursuant to Section 11.03(a) of the Lease.
Replacement Airframe. Has the meaning set forth in Section 11.03 of
the Lease.
Replacement Engine. A General Electric CF6-80C2-D1F engine (or an
engine of the same or another manufacturer) of the same or of equal or greater
value, remaining useful life and utility as the Engine being replaced,
together with all Parts relating to such engine; provided, however, that if
such replacement engine is not a General Electric CF6-80C2-D1F engine, such
replacement engine must then be commonly used in the commercial aviation
industry on McDonnell Douglas MD-11 airframes.
Responsible Officer. With respect to the Owner Trustee (except for
purposes of the Trust Agreement in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate
officer or (except in the case of the Owner Participant) other employee of a
party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant,
agreement or obligation of such party pursuant to any Operative Agreement,
would have responsibility for and knowledge of such matter and the
requirements of any Operative Agreement with respect thereto.
S&P. Standard & Poor's Ratings Group.
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 C Prepayment Date. July 15, 1999 or any other date designated
by the Lessee, but in no event later than the fifteenth day after the Last
Cut-Off Date.
Series Supplement or Series Supplements. The Series Supplement
1998-1-A to be executed and delivered by the Lessee and the Pass Through
Trustee, the Series Supplement 1998-1-B to be executed and delivered by the
Lessee and the Pass Through Trustee or the Series Supplement 1998-1-C to be
executed and delivered by 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.
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 or any successor Owner Trustee in
its individual capacity.
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 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.
Subordination Agent. First Security Bank, National Association, a
national banking association, not in its individual capacity but solely as
Subordination Agent.
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 Price and amounts calculated by reference to Termination Value and
all amounts required to be paid by Lessee under the agreements, covenants and
indemnities contained in the Lease or in the Participation Agreement or the
Tax Indemnity Agreement or any other Operative Agreement, but excluding Basic
Rent 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. Shall have the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Tax Indemnity Agreement (Federal
Express Corporation Trust No. N585FE), dated as of June 15, 1998, between the
Lessee and the Owner Participant.
Term. The Basic Term of the lease for the Aircraft under the Lease
and, if renewed pursuant to Section 4.01 of the Lease, each Renewal Term for
the Aircraft for which the Lease is renewed, or such earlier date on which the
Lease is terminated pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that is
on or after December 31, 2005 in the case of Article 10 of the Lease, and in
the case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date falling
on July 15, 2013 or July 15, 2019, as the case may be, (ii) Section 4.02(a)(D)
or (E) of the Lease, a Rent Payment Date that is on or after the eighth
anniversary of the Delivery Date and (iii) Section 4.02(a)(F) of the Lease,
January 15, 2016.
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.
Transfer Date. Has the meaning set forth in Section 2.02(b) 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. N585FE), dated as of June 15, 1998, 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, and the Letter of
Credit and any rights thereunder.
UCC. Uniform Commercial Code.
Underwriters. Morgan Stanley & Co. Incorporated, Chase Securities
Inc., Citicorp Securities, Inc., Credit Suisse First Boston Corporation and
J.P. Morgan Securities Inc.
Underwriting Agreement. The Underwriting Agreement dated June 30,
1998, among the Lessee and the Underwriters.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there is
in force a certificate issued pursuant to Section 41102(a) or Section 41103 of
the Transportation Code, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Transportation
Code and Part 121 of the regulations under such Transportation Code, for
aircraft capable of carrying ten (10) or more individuals or 6,000 pounds or
more of cargo, or which may operate as an air carrier by certification or
otherwise under any successor or substitute provision thereof or in absence
thereof.
U.S. Person. A Person described in Section 7701(a)(30) of the Code.
Warranty Bill of Sale. The full warranty bill of sale covering the
Aircraft (and specifically referring to each Engine) executed by the Lessee,
as seller in favor of the Owner Trustee, as buyer, and to be dated the
Delivery Date.
SCHEDULE III
PERMITTED COUNTRY LIST
Australia Malaysia
Austria Mexico
Belgium Netherlands
Canada New Zealand
Denmark Norway
Finland Philippines
France Singapore
Germany Spain
Iceland Sweden
Ireland Switzerland
Japan United Kingdom
Luxembourg
SCHEDULE IV
CERTAIN AMOUNTS
Debt Portion $61,143,000
Letter of Credit Maximum Stated Amount $5,500,000
SCHEDULE V
MANDATORY DOCUMENT TERMS
Any amendment and restatement of the Operative Agreements on the Delivery
Date or, if earlier, the Transfer Date:
1. May not modify in any material adverse respect the Granting
Clause of the Indenture so as to deprive the Holders of a first
priority security interest in and mortgage lien on the Aircraft
and the Lease or to eliminate any of the obligations secured
thereby or otherwise modify in any material adverse respect as
regards the interests of the Holders, the Subordination Agent,
the Liquidity Providers or the Indenture Trustee the provisions
of Article II, V, VI or VIII or Section 7.01, 7.02, 7.10, 7.11,
9.08, 13.01, 13.02, 13.07 or 15.04 of the Indenture;
2. May not modify in any material adverse respect as regards the
interests of the Holders, the Subordination Agent, the Liquidity
Providers or the Indenture Trustee the provisions of Section
3.05, 3.06, 11.03(a)(x), 13.01(c)(i), the second sentence of
19.01, 20.01, 22.01, 22.03, 26.03, 27.01 or 27.02 of the Lease
or otherwise modify the terms of the Lease so as to deprive the
Indenture Trustee of rights expressly granted to the "Indenture
Trustee" therein;
3. May not modify in any material adverse respect as regards the
interests of the Holders, the Subordination Agent, the Liquidity
Providers or the Indenture Trustee the provisions of Section
4.02(e), 4.02(f), 17.02, 17.11, 17.12 or 17.13 of the
Participation Agreement or of the provisions of Section 4.02(d)
of the Participation Agreement so as to eliminate the
requirement to deliver to the Indenture Trustee the legal
opinions to be provided to such Persons thereunder (recognizing
that the lawyers rendering such opinions may be changed) or of
the provisions of Section 6.03(b) of the Participation
Agreement as regards the rights of the Indenture Trustee
thereunder or otherwise modify the terms of the Participation
Agreement to deprive the Subordination Agent, the Liquidity
Providers or the Indenture Trustee of any indemnity or right of
reimbursement in its favor for Expenses or Taxes; and
4. May not modify in any material adverse respect as regards the
interests of the holders of the Pass Through Certificates, the
Subordination Agent, the Liquidity Providers or the Indenture
Trustee, the definition of "Make-Whole Premium" or
"Supplemental Rent" in Schedule II to the Participation
Agreement.
Notwithstanding the foregoing, any such Mandatory Document Term
may be modified to correct or supplement any such provision which may
be defective or to cure any ambiguity or correct any mistake,
provided that any such action shall not materially adversely affect
the interests of the Holders, the Subordination Agent, the Liquidity
Providers, the Indenture Trustee or the holders of the Pass Through
Certificates.
SCHEDULE VI
MANDATORY ECONOMIC TERMS
Certificates:
Loan to Aircraft Value Ratio on any Payment Date (with the value of the
Aircraft set forth in Appendix IV to the Prospectus Supplement (as defined in
the Pass Through Agreement) shall be as follows:
Series A: not in excess of 40%
Series B: not in excess of 55%
Series C: not in excess of 75%
Average Life:
The average life may not be more than 15.5 years in the case of the Series A
Certificates, 13.5 years in the case of the Series B Certificates and 12.5
years in the case of the Series C Certificates (but in each case may be
decreased by any amount).
As of the first Payment Date following the Last Delivery Date, the average
life may not be more than 15.0 years in the case of the Pass Through
Certificates, 1998-1-A, 13.0 years in the case of the Pass Through
Certificates, 1998-1-B and 12.0 years in the case of the Pass Through
Certificates, 1998-1-C.
Final Maturity Date:
Series A: may not be extended beyond January 15, 2022
Series B: may not be extended beyond January 15, 2019
Series C: may not be extended beyond January 15, 2016
Debt Rate (computed on the basis of a 360-day year consisting of twelve 30-day
months, payable semi-annually in arrears) shall be as follows:
Series A: 6.720%
Series B: 6.845%
Series C: 7.020%
Past Due Rate: Debt Rate plus 2% per annum.
Payment Dates: January 15 and July 15.
Make-Whole Premium: As provided in Article V of the Indenture.
Redemption and Purchase: As provided in the Indenture.
Lease
Term: The Basic Term shall expire by its terms on or
after final maturity date of the Series A
Certificates.
Rent Payment Dates: January 15 and July 15.
Minimum Rent: Basic Rent due and payable on each Payment Date
shall be at least sufficient to pay in full, as of
such Payment Date (assuming timely payment of the
Certificates prior to such Date), the aggregate
principal amount of scheduled installments due on
the Certificates outstanding on such Payment Date.
Supplemental Rent: Shall be sufficient to cover the sums described in
the definition of such term in Schedule II to the
Participation Agreement.
Stipulated Loss Value: At all times shall be equal to or greater than the
outstanding principal amount of the Certificates
together with accrued interest thereon. The
interest rate payable with respect to Stipulated
Loss Value may not be modified.
Termination Value: At all times shall be equal to or greater than the
outstanding principal amount of the Certificates
together with accrued interest thereon. The
interest rate payable with respect to Termination
Value Date may not be modified.
All-risk hull insurance: Shall not be less than Stipulated Loss Value,
subject to Lessee's right to self-insure on terms
no more favorable to Lessee in any material respect
than those set forth in Article 13 of the Lease.
Minimum Liability
Insurance Amount: $300,000,000.
Past Due Rate: As set forth in the definition thereof in Schedule
II to the Participation Agreement.
Participation Agreement
The Indenture Trustee, the Subordination Agent and the Liquidity Providers
indemnified against Expenses and Taxes to the extent set forth in Articles 8
and 9 of the Participation Agreement as in effect on the Certificate Closing
Date.
EXHIBIT A(1)(a)(i)
[Letterhead of Federal Express]
[Certificate Closing Date]
To the Addressees Listed on Schedule A Attached
Re: Federal Express Corporation Trust No. N585FE
Ladies and Gentlemen:
I am the Senior Vice President and General Counsel of Federal Express
Corporation, a Delaware corporation ("Federal"), and am familiar with the
transactions contemplated by the Participation Agreement (Federal Express
Corporation Trust No. N585FE), dated as of June 15, 1998 (the "Participation
Agreement"), among Federal, as Lessee and Initial 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(j)(i) of the Participation Agreement.
Capitalized terms not otherwise defined herein have the meanings assigned
thereto in the Participation Agreement.
The Participation Agreement provides, among other things, for the
financing on the Delivery Date of a portion of the Owner Trustee's payment of
the Purchase Price of one 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 will be 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 will
be issued under the Indenture.
In connection with the opinions expressed below, I have examined, or
caused to be examined by attorneys under my supervision, (i) executed
counterparts of the Pass Through Agreement, the Series Supplements and the
Operative Agreements to be delivered on the Certificate Closing Date (the
"Certificate Closing Date Documents") and (ii) the forms of the Operative
Agreements to be delivered on the Delivery Date. We have relied upon
originals or copies, certified or otherwise identified to our satisfaction, of
such corporate records, documents and other instruments as in our judgment are
relevant to rendering the opinions expressed below. As to any facts material
to the opinions expressed below (other than any thereof relating to Federal),
we have relied upon the representations and warranties made in the Certificate
Closing Date Documents, the accuracy of which we have not independently
investigated or verified. In such examination, we have assumed the
genuineness of all signatures (other than the signatures of Federal) and the
authenticity of all documents submitted to us as originals and the conformity
with the originals of all documents submitted to us as copies. We have also
assumed that each of the parties to each of the Certificate Closing Date
Documents, other than Federal, has full power, authority and legal right to
enter into such Certificate Closing Date Documents and that each such
Certificate Closing Date Document has been duly authorized, executed and
delivered by each of such parties.
Based on the foregoing, it is my opinion that:
1. Federal is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, is a "citizen of
the United States" within the meaning of Section 40102(a)(15) of the
Transportation Code, and has or had, on the date of execution thereof, the
corporate power and authority to carry on its business as currently conducted
and to enter into and perform its obligations under the Certificate Closing
Date Documents to which it is a party. Federal is duly qualified to do
business and is in good standing in the State of Tennessee and each other state
of the United States in which its operations or the nature of its business
requires Federal to so qualify, except where the failure to so qualify would
not have a material adverse impact on Federal or its business.
2. Federal possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents which are material to
the operation of the routes flown by it and the conduct of its business and
operations as currently conducted, and each such certificate, franchise,
license, permit, right and concession and consent is in full force and effect.
3. Each of the Certificate Closing Date Documents to which Federal
is a party has or had, on the date of execution thereof, been duly authorized,
executed and delivered by Federal and each constitutes the legal, valid and
binding obligation of Federal enforceable against Federal in accordance with
its terms. Each of the Certificate Closing Date Documents to which Federal is
to be a party and which are to be executed on the Delivery Date has been duly
authorized by Federal.
4. Neither the execution and delivery by Federal of the Certificate
Closing Date Documents to which Federal is a party, nor the consummation of
any of the transactions by Federal contemplated thereby, nor the performance
of the obligations thereunder by Federal, did at the time of execution and
delivery, or does presently (a) require any stockholder approval or violate
the certificate of incorporation or by-laws of Federal or (b) conflict with or
contravene the provisions of, or constitute a default under, or result in the
creation of any Lien (other than Liens permitted under Section 6.01(a) of the
Lease) upon the property of Federal under any law, governmental rule or
regulation, or the charter or bylaws of Federal or any order, writ, injunction
or decree of any court or governmental authority against Federal or by which
any of its properties may be bound or any indenture, mortgage, contract or
other agreement known to me to which Federal is a party or by which it may be
bound or, require the approval or consent of any trustee or the holders of any
indebtedness or obligations of Federal.
5. Neither the execution and delivery by Federal of the Certificate
Closing Date Documents to which it is a party, nor the consummation of any
transactions by Federal contemplated thereby, nor the performance of the
obligations thereunder by Federal, did or does, as the case may be, (a)
require the consent or approval of, the giving of notice to, or (except as
described or contemplated in the Participation Agreement and the Lease, all of
which are required to be performed on or prior to the Certificate Closing Date
and which shall have been accomplished on or prior to the Certificate Closing
Date) the registration with, or the taking of any other action in respect of,
the Aeronautics Authority, the Securities and Exchange Commission or any other
authority or agency of the federal government or of the State of Tennessee
other than (i) the registration of the issuance and sale of the Pass Through
Certificates under the Securities Act and (ii) compliance with the securities
laws of each applicable state, or (b) contravene any judgment or order
applicable to or binding on Federal or any law or governmental rule or
regulation of the United States or of the State of Tennessee.
6. There is no pending or, to my knowledge, threatened action or
proceeding before any court or administrative agency which individually (or in
the aggregate in the case of any group of related lawsuits) is expected to
have a material adverse effect on (A) 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 (as updated
by Note 7 to the financial statements included in Federal's Quarterly Reports
on Form 10-Q for the fiscal quarters ended August 31, 1997, November 30, 1997
and February 28, 1998), and (b) in Federal's Current Report on Form 8-K dated
June 11, 1997, as to all of 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 Certificate Closing Date Documents.
7. Federal is a duly certificated "air carrier" within the meaning
of the Transportation Code, and a holder of a certificate under Sections
41102(a) and 41103 of the Transportation Code, and an "air carrier operating
certificate" issued under Chapter 447 of the Transportation Code for aircraft
capable of carrying ten (10) or more individuals or 6,000 pounds or more of
cargo, and each such certificate is in full force and effect.
8. Federal's principal place of business and chief executive
office (as such term is defined in the Uniform Commercial Code in effect in
the State of Tennessee) are located at 2005 Corporate Avenue, Memphis, Shelby
County, Tennessee.
9. Federal is not, and is not directly or indirectly controlled by
or acting on behalf of any Person which is, an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
The opinions expressed in paragraph 3 above as to the enforceability
of the Certificate Closing Date Documents to which Federal is a party are
based upon the assumption for purposes of such opinions and without
independent analysis that, notwithstanding the respective choice of laws
clauses in the Certificate Closing Date Documents, the governing law with
respect to each of the Certificate Closing Date Documents is identical in all
relevant respects to the law of the State of Tennessee. Insofar as the
foregoing opinion relates to the enforceability of any instrument, such
enforceability is subject to applicable bankruptcy, insolvency and other
similar laws affecting the enforcement of creditors' rights generally (whether
such enforceability is considered in a proceeding in equity or at law). The
enforceability of the remedies provided under the Lease may also be limited by
applicable laws which may affect the remedies provided therein but which do
not in my opinion affect the validity of the Lease or make such remedies
inadequate for the practical realization of the benefits intended to be
provided thereby.
I do not express any opinion as to matters governed by any law other
than the Federal laws of the United States of America, the corporation law of
the State of Delaware and the laws of the State of Tennessee.
This opinion is delivered to you solely for your use in connection
with the transaction described herein, and may not be used for any other
purpose, and may not be relied upon by any other person, without my prior
written consent.
Very truly yours,
SCHEDULE A
Owner Trustee
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
First Security Bank, National Association
Underwriters
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
Kreditanstalt fur Wiederaufbau
EXHIBIT A(1)(a)(ii)
[Letterhead of Federal Express]
[Delivery Date]
To the Addressees Listed on Schedule A Attached
Re: Federal Express Corporation Trust No. N585FE
Ladies and Gentlemen:
I am the Senior Vice President and General Counsel of Federal Express
Corporation, a Delaware corporation ("Federal"), and am familiar with the
transactions contemplated by the Participation Agreement (Federal Express
Corporation Trust No. N585FE), dated as of June 15, 1998, as amended and
restated as of ________________ (the "Participation Agreement"), among
Federal, as Lessee and Initial Owner Participant, ____________________, 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
4.02(d)(i) of the Participation Agreement. Capitalized terms not otherwise
defined herein have the meanings assigned thereto in the Participation
Agreement.
The Participation Agreement provides, among other things, for the
financing on the Delivery Date of a portion of the Owner Trustee's payment of
the Purchase Price of one 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, the Pass Through Agreement and each Series
Supplement (the "Transaction Agreements"). We have relied upon originals or
copies, certified or otherwise identified to our satisfaction, of such
corporate records, documents and other instruments as in our judgment are
relevant to rendering the opinions expressed below. As to any facts material
to the opinions expressed below (other than any thereof relating to Federal),
we have relied upon the representations and warranties made in the Transaction
Agreements, the accuracy of which we have not independently investigated or
verified. In such examination, we have assumed the genuineness of all
signatures (other than the signatures of Federal) and the authenticity of all
documents submitted to us as originals and the conformity with the originals of
all documents submitted to us as copies. We have also assumed that each of the
parties to each of the Transaction Agreements, other than Federal, has full
power, authority and legal right to enter into such Transaction Agreements and
that each such Transaction Agreement has been duly authorized, executed and
delivered by each of such parties.
Based on the foregoing, it is my opinion that:
1. Federal is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, is a "citizen of
the United States" within the meaning of Section 40102(a)(15) of the
Transportation Code, and has or had, on the date of execution thereof, the
corporate power and authority to carry on its business as currently conducted
and to enter into and perform its obligations under the Transaction Agreements
to which it is a party. Federal is duly qualified to do business and is in
good standing in the State of Tennessee and each other state of the United
States in which its operations or the nature of its business requires Federal
to so qualify, except where the failure to so qualify would not have a
material adverse impact on Federal or its business.
2. Federal possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents which are material to
the operation of the routes flown by it and the conduct of its business and
operations as currently conducted, and each such certificate, franchise,
license, permit, right and concession and consent is in full force and effect.
3. Each of the Transaction Agreements to which Federal is a party
has or had, on the date of execution thereof, been duly authorized, executed
and delivered by Federal and each constitutes the legal, valid and binding
obligation of Federal enforceable against Federal in accordance with its terms.
4. Neither the execution and delivery by Federal of the Transaction
Agreements to which Federal is a party, nor the consummation of any of the
transactions by Federal contemplated thereby, nor the performance of the
obligations thereunder by Federal, did at the time of execution and delivery,
or does presently (a) require any stockholder approval or violate the
certificate of incorporation or by-laws of Federal or (b) conflict with or
contravene the provisions of, or constitute a default under, or result in the
creation of any Lien (other than Liens permitted under Section 6.01(a) of the
Lease) upon the property of Federal under any law, governmental rule or
regulation, or the charter or bylaws of Federal or any order, writ, injunction
or decree of any court or governmental authority against Federal or by which
any of its properties may be bound or any indenture, mortgage, contract or
other agreement known to me to which Federal is a party or by which it may be
bound or, require the approval or consent of any trustee or the holders of any
indebtedness or obligations of Federal.
5. Neither the execution and delivery by Federal of the Transaction
Agreements to which it is a party, nor the consummation of any transactions by
Federal contemplated thereby, nor the performance of the obligations
thereunder by Federal, did or does, as the case may be, (a) require the
consent or approval of, the giving of notice to, or (except as described or
contemplated in the Participation Agreement and the Lease, all of which were
or are required to be performed on or prior to the Delivery Date and which
were or shall have been accomplished on or prior to the Delivery Date) the
registration with, or the taking of any other action in respect of, the
Aeronautics Authority, the Securities and Exchange Commission or any other
authority or agency of the federal government or of the State of Tennessee
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 (as updated
by Note 7 to the financial statements included in Federal's Quarterly Reports
on Form 10-Q for the fiscal quarters ended August 31, 1997, November 30, 1997
and February 28, 1998), and (b) in Federal's Current Report on Form 8-K dated
June 11, 1997, as to all of 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 Transaction Agreements, or (ii) involves the Aircraft.
7. Except for the registration in the Owner Trustee's name of the
Aircraft pursuant to the Transportation Code, and except for the filing and,
where appropriate, recording, pursuant to the Transportation Code of (A) 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 Transaction Agreements to which Federal is a party are based upon the
assumption for purposes of such opinions and without independent analysis
that, notwithstanding the respective choice of laws clauses in the Transaction
Agreements, the governing law with respect to each of the Transaction
Agreements is identical in all relevant respects to the law of the State of
Tennessee. Insofar as the foregoing opinion relates to the enforceability of
any instrument, such enforceability is subject to applicable bankruptcy,
insolvency and other similar laws affecting the enforcement of creditors'
rights generally (whether such enforceability is considered in a proceeding in
equity or at law). The enforceability of the remedies provided under the
Lease may also be limited by applicable laws which may affect the remedies
provided therein but which do not in my opinion affect the validity of the
Lease or make such remedies inadequate for the practical realization of the
benefits intended to be provided thereby.
I do not express any opinion as to matters governed by any law other
than the Federal laws of the United States of America, the corporation law of
the State of Delaware and the laws of the State of Tennessee.
As to the matters referred to in paragraphs 5, 7 and 9, I have relied
on the opinion of Daugherty, Fowler & Peregrin of even date herewith, to the
extent such matters are addressed in such counsel's opinion and subject to the
assumptions and qualifications expressed therein.
This opinion is delivered to you solely for your use in connection
with the transaction described herein, and may not be used for any other
purpose, and may not be relied upon by any other person, without my prior
written consent.
Very truly yours,
SCHEDULE A
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
[name of owner participant]
EXHIBIT A(1)(b)(i)
[Letterhead of Davis Polk & Wardwell]
[Certificate Closing Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N585FE
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. N585FE), dated as of June 15, 1998 (the "Participation Agreement"), among
Federal Express, as Lessee and Initial 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(j)(iv) 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
will be issued by separate Pass Through Trusts, each formed to acquire, among
other securities, the Certificates bearing a particular interest rate and
having a particular Maturity that will be issued under the Indenture.
In connection with the opinions expressed below, we have examined
executed counterparts of the Operative Agreements, the Pass Through
Certificates, the Pass Through Agreement and each Series Supplement (the
"Certificate Closing Date Documents"). We have also examined originals, or
copies certified to our satisfaction, of such other agreements, documents,
certificates and statements of governmental officials and corporate officers
as we have deemed necessary or advisable as a basis for such opinions. In
such examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity
with the originals of all documents submitted to us as copies.
As to any facts material to our opinions expressed below, we have,
with your consent, relied on the representations and warranties made in or
pursuant to the Participation Agreement and the other documents referred to
therein, the accuracy of which we have not independently verified. In
addition, we have, when relevant facts were not independently established by
us, relied, to the extent we deemed such reliance proper, upon certificates of
public officials and certificates, telegrams and other written or telephoned
statements of officers of the parties referred to herein.
Based on the foregoing, it is our opinion that:
1. Assuming (i) the due authorization, execution and delivery of
the Certificate Closing Date Documents by each of the parties to each such
document (other than Federal Express), (ii) each such party has full power and
legal right to enter into and perform its respective obligations under the
Certificate Closing Date Documents, (iii) that the execution, delivery and
performance by each of the Certificate Closing Date Documents by each of the
parties thereto will not violate the respective parties' constituent
documents, (iv) the due authorization, execution, issuance and delivery by the
Owner Trustee, and the due authentication by the Indenture Trustee, of the
Certificates to be issued under the Indenture in accordance with the terms of
the Indenture, (v) the due authorization, execution, issuance, delivery and
authentication by the Pass Through Trustee of the Pass Through Certificates to
be issued under the Pass Through Agreement and the Series Supplement relating
to such Pass Through Certificates, in each case in accordance with the terms
of the Pass Through Agreement and such Series Supplement, and (vi) that the
form of each Certificate Closing Date Document is in compliance with all
applicable laws and governmental rules and regulations (other than the laws of
the United States and the State of New York), then: (A) to the extent governed
by New York law, each Certificate Closing Date Document in form constitutes a
legal, valid and binding agreement of each party thereto enforceable against
each such party in accordance with its terms; (B) the Indenture creates, for
the benefit of the Holders, the security interest in the Trust Indenture
Estate that it purports to create, except that no opinion is given with respect
to perfection of such security interest on the date hereof; (C) the
Certificates, when issued to and acquired by the Pass Through Trustee, will be
legal, valid and binding obligations of the Owner Trustee enforceable against
the Owner Trustee in accordance with their terms and the terms of the
Indenture and will be entitled to the benefits of the Indenture, including the
benefit of the security interest created thereby, except that no opinion is
given with respect to perfection of such security interest on the date hereof;
(D) the Pass Through Certificates, when issued to and acquired by the
Underwriters in accordance with the Underwriting Agreement, will be legal,
valid and binding obligations of the Pass Through Trustee enforceable against
the Pass Through Trustee in accordance with their terms and will be entitled
to the benefits of the Pass Through Agreement and the Series Supplement
relating thereto; and (E) the beneficial interest of the Initial Owner
Participant under the Trust Agreement in and to the properties which are part
of the Trust Indenture Estate is subject, to the extent provided in the
Indenture, to the Lien of the Indenture in favor of the Holders.
2. (a) Each of the Certificate Closing Date Documents to which
Federal Express is a party has been duly authorized, executed and delivered by
Federal Express. Each of the Operative Agreements to which Federal Express is
to be a party and which are to be delivered on the Delivery Date has been
authorized by Federal Express.
(b) The execution, delivery and performance by Federal Express of
each of the Certificate Closing Date Documents to which Federal Express is a
party do not, or did not on the date of execution thereof, violate, and fully
comply, or did fully comply on the date of execution thereof, with, any laws
and governmental rules and regulations of the State of New York that may be
applicable to Federal Express. The opinion set forth in this paragraph 2(b)
is rendered without regard to the taking of any action or the conduct of any
other business by Federal Express in the State of New York other than the
transactions contemplated by the Certificate Closing Date Documents.
3. The execution, delivery and performance of the Certificate
Closing Date Documents (other than the Certificates) by the Owner Trustee in
its individual or trust capacity, as the case may be, and the issuance,
execution, delivery and performance of the Certificates by the Owner Trustee
in its trust capacity do not violate, and fully comply with, any laws and
governmental rules and regulations of the State of New York that may be
applicable to the Owner Trustee in its individual or trust capacity, as the
case may be. The opinion set forth in this paragraph 3 is rendered without
regard to the effect, if any, on such issuance (in the case of the
Certificates), execution, delivery or performance, of the taking of any
action, the conduct of any business or the exercise of any other powers by
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 Certificate Closing Date Documents. 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.
4. It is not necessary, in connection with the creation of the
beneficial interest of the Initial 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 or the Indenture under the Trust
Indenture Act of 1939, as amended.
The foregoing opinions are subject to the following qualifications:
(a) We have relied, with your consent, without independent
investigation and verification and subject to the assumptions and
qualifications contained therein, upon the opinion of Karen M. Clayborne,
Senior Vice President and General Counsel of Federal Express to be
delivered to you and dated the date hereof, for purposes of the matters
covered thereby.
(b) We are qualified to practice law in the State of New York, and
we do not purport to be experts on, or to express any opinion herein
concerning, any laws other than the laws of the State of New York, the laws
of the United States and the General Corporation Law of the State of
Delaware.
(c) The opinion contained in paragraph 1(A) above as to
enforceability is subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity which may
affect the remedies provided in the agreements referred to in said
opinions, which laws and principles, however, do not in our opinion make
the remedies provided in said agreements inadequate for the practical
realization of the benefits of the security intended to be provided thereby.
(d) This opinion is rendered solely to you at Federal Express's
request in connection with the above matter. This opinion may not be
relied upon by you for any other purpose or relied upon by any other Person
without our prior written consent.
Very truly yours,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(1)(b)(ii)
[Letterhead of Davis Polk & Wardwell]
[Delivery Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N585FE
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. N585FE), dated as of June 15, 1998, as amended and restated as of
___________ (the "Participation Agreement"), among Federal Express, as Lessee
and Initial Owner Participant, _________________, 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 4.02(d)(ii) of the Participation
Agreement. Capitalized terms not otherwise defined herein have the meanings
assigned thereto in the Participation Agreement.
The Participation Agreement provides, among other things, for the
financing on the Delivery Date of the Owner Trustee's payment of a portion of
the Purchase Price of one 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, the Pass Through
Certificates, the Pass Through Agreement and each Series Supplement (the
"Transaction Agreements"). We have also examined originals, or copies
certified to our satisfaction, of such other agreements, documents,
certificates and statements of governmental officials and corporate officers
as we have deemed necessary or advisable as a basis for such opinions. In
such examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity
with the originals of all documents submitted to us as copies.
As to any facts material to our opinions expressed below, we have,
with your consent, relied on the representations and warranties made in or
pursuant to the Participation Agreement and the other documents referred to
therein, the accuracy of which we have not independently verified. In
addition, we have, when relevant facts were not independently established by
us, relied, to the extent we deemed such reliance proper, upon certificates of
public officials and certificates, telegrams and other written or telephoned
statements of officers of the parties referred to herein.
Based on the foregoing, it is our opinion that:
1. With respect to that portion, if any, of the Aircraft and the
other property included in the Lessor's Estate as may not be covered by the
recording system established by the FAA pursuant to Section 44107 of the
Transportation Code, no filing or recording of any document or other action
was or is necessary in order to establish the Owner Trustee's title thereto
and interest therein as against Federal Express and any third parties.
2. Subject to execution and delivery of the Lease Supplement and
the Indenture and Security Agreement Supplement for the Aircraft and to the
registration of the Aircraft with the FAA in the name of the Owner Trustee,
the Lease, as supplemented, will create a valid leasehold interest in the
Aircraft, the entitlement thereof to the benefits of recordation under the
Transportation Code being subject to the due and timely filing and, where
appropriate, recording of (A) 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 Transaction Agreements by each of the parties to each such document (other
than Federal Express), (ii) each such party has full power and legal right to
enter into and perform its respective obligations under the Transaction
Agreements, (iii) that the execution, delivery and performance by each of the
Transaction Agreements by each of the parties thereto will not violate the
respective parties' constituent documents, (iv) the due authorization,
execution, issuance and delivery by the Owner Trustee, and the due
authentication by the Indenture Trustee, of the Certificates issued under the
Indenture in accordance with the terms of the Indenture, (v) the due
authorization, execution, issuance, delivery and authentication by the Pass
Through Trustee of the Pass Through Certificates issued under the Pass Through
Agreement and the Series Supplement relating to such Pass Through
Certificates, in each case in accordance with the terms of the Pass Through
Agreement and such Series Supplement, and (vi) that the form of each
Transaction Agreement is in compliance with all applicable laws and
governmental rules and regulations (other than the laws of the United States
and the State of New York), then: (A) to the extent governed by New York law,
each Transaction Agreement in form constitutes a legal, valid and binding
agreement of each party thereto enforceable against each such party in
accordance with its terms; (B) the Indenture creates, for the benefit of the
Holders, the security interest in the Trust Indenture Estate that it purports
to create; (C) the Certificates are legal, valid and binding obligations of
the Owner Trustee enforceable against the Owner Trustee in accordance with
their terms and the terms of the Indenture and are entitled to the benefits of
the Indenture, including the benefit of the security interest created thereby;
and (D) the beneficial interest of the Owner Participant under the Trust
Agreement in and to the properties which are part of the Trust Indenture
Estate is subject, to the extent provided in the Indenture, as supplemented by
the Indenture and Security Agreement Supplement, to the Lien of the Indenture
in favor of the Holders. The opinions set forth in this paragraph 3 are
subject to the due filing and, where appropriate, recording with the FAA of
the documents referred to in paragraph 2 above.
4. (a) Each of the Transaction Agreements to which Federal Express
is a party has been duly authorized, executed and delivered by Federal Express.
(b) The execution, delivery and performance by Federal Express of
each of the Transaction Agreements to which Federal Express is a party do not,
or did not on the date of execution thereof, violate, and fully comply, or did
fully comply on the date of execution thereof, with, any laws and governmental
rules and regulations of the State of New York that may be applicable to
Federal Express. The opinion set forth in this paragraph 4(b) is rendered
without regard to the taking of any action or the conduct of any other
business by Federal Express in the State of New York other than the
transactions contemplated by the Transaction Agreements.
5. The execution, delivery and performance of the Transaction
Agreements (other than the Certificates) by the Owner Trustee in its
individual or trust capacity, as the case may be, and the issuance, execution,
delivery and performance of the Certificates by the Owner Trustee in its trust
capacity do not violate, and fully comply with, any laws and governmental
rules and regulations of the State of New York that may be applicable to the
Owner Trustee in its individual or trust capacity, as the case may be. The
opinion set forth in this paragraph 5 is rendered without regard to the
effect, if any, on such issuance (in the case of the Certificates), execution,
delivery or performance, of the taking of any action, the conduct of any
business or the exercise of any other powers by 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 Transaction Agreements. 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 statement referred to in Section 4.02(f) of the Participation
Agreement), and the beneficial interest of the Owner Participant under the
Trust Agreement in and to such properties is subject, to the extent provided
in the Indenture, to the Lien of the Indenture in favor of the Holders of the
Certificates issued and to be issued under the Indenture.
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 or the Indenture under the Trust
Indenture Act of 1939, as amended.
10. The Indenture Trustee on behalf of the holders of the
Certificates will be entitled to the benefits of Section 1110 of the United
States Bankruptcy Code with respect to the Aircraft in the event of a case
under Chapter 11 of the United States Bankruptcy Code in which Federal Express
is a debtor. We note that a recent decision by the United States District
Court for the District of Colorado in connection with the Western Pacific
Airlines, Inc. bankruptcy suggests that the protections of Section 1110 become
unavailable to the lessor or security interest holder once the bankruptcy
trustee or debtor-in-possession, within the 60 day period following the date of
commencement of the reorganization proceedings, agrees to perform the debtor's
obligations that become due on or after such date and cures outstanding
defaults, with the result, among others, that the ability of a lessor or
security interest holder to exercise remedies based on a subsequent default
would be subject to the automatic stay. We believe that this holding is
erroneous because it is inconsistent with the overriding purpose of Section
1110 to protect lessors of, and creditors secured by, qualifying aircraft
against being stayed from exercising their rights while defaults under their
leases or financing agreements remain uncured.
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 Karen M. Clayborne, Senior Vice President and General Counsel
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,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
- -----------------
[name of owner participant]
EXHIBIT A(2)
[Letterhead of Ray, Quinney & Nebeker]
[Certificate Closing Date]
To the Persons Listed in Schedule A Attached Hereto
Re: Federal Express Corporation Trust No. N585FE
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.
N585FE), dated as of June 15, 1998 (the "Participation Agreement"), among
Federal Express Corporation, as Lessee and Initial 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. N585FE (the "Aircraft")
is being financed. This opinion is furnished pursuant to Section 4.01(j)(ii)
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 Collateral Account Control Agreement; 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 or had, on the date of execution thereof,
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 Certificate
Closing 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 Certificate Closing 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 Initial 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,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(3)(a)(i)
[Letterhead of Bingham Dana LLP]
[Certificate Closing Date]
To Each of the Parties Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N585FE
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. N585FE) dated as of June 15, 1998 between State Street and Federal Express
Corporation, as Initial Owner Participant ("Initial Owner Participant") (the
"Trust Agreement") in connection with the transactions contemplated by that
certain Participation Agreement (Federal Express Corporation Trust No. N585FE)
dated as of June 15, 1998 (the "Participation Agreement") by and among Federal
Express Corporation, as Lessee (the "Lessee"); the Initial Owner Participant;
the Owner Trustee; and First Security Bank, National Association, in its
individual capacity and as Indenture Trustee (the "Indenture Trustee"), Pass
Through Trustee and 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(j)(iii) 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) the certificates
delivered to us by the management of State Street and have assumed, without
independent inquiry, the accuracy of those representations and certificates.
We have examined each 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 Initial
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 of each other party thereto (except,
with respect to the Trust Agreement, the Initial Owner Participant);
(ii) except as otherwise set forth in our opinions in
paragraphs 13 and 14 below, the enforceability of any obligation of State
Street, the Owner Trustee and the Initial 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 Initial 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. 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 13 and 14 below, we have
assumed that the Initial 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 Initial 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 Documents
and to issue, execute, deliver and perform its obligations under the
Certificates.
2. 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.
3. The Owner Trustee is duly authorized under the Trust Agreement to
execute, deliver and perform each of the Owner Trustee Documents and each
such Owner Trustee Document 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, 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.
4. Assuming the due authorization, execution and delivery of the
Trust Agreement by the Initial Owner Participant and that the Initial 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 Initial Owner
Participant, enforceable against the Initial Owner Participant in
accordance with the terms thereof.
5. 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, which filing has been duly effected,
and the filing of continuation statements with respect thereto required to
be filed at periodic intervals under the UCC.
6. The Trust Agreement duly creates a legal and valid trust under
Connecticut law; the trust created by the Trust Agreement exists for the
benefit of the Initial Owner Participant as provided therein and creates
for the benefit of the Initial 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.
7. 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.
8. 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.
9. 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.
10. 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, (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 Initial
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
Initial 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.
11. 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.
12. 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 Initial 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.
13. 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 Initial 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.
14. 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 Initial 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,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
[Letterhead of Bingham Dana LLP]
[Certificate Closing Date]
To Each of the Parties Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N585FE
Ladies and Gentlemen:
We have acted as special Connecticut counsel to the Owner Trustee in
connection with the Trust Indenture and Security Agreement (Federal Express
Corporation Trust No. N585FE) dated as of June 15, 1998 (the "Indenture")
between First Security Bank, National Association (the "Indenture Trustee"),
and State Street Bank and Trust Company of Connecticut, National Association,
not in its individual capacity, but solely as Owner Trustee (the "Owner
Trustee"), and the Collateral Account Control Agreement (Federal Express
Corporation Trust No. N585FE) dated as of June 15, 1998 (the "Control
Agreement"), among the Owner Trustee, the Indenture Trustee and State Street
Bank and Trust Company, as Custodian (the "Custodian").
We are issuing this opinion solely in our capacity as counsel to the
Owner Trustee under the circumstances set forth in this paragraph and solely
as to the matters set forth herein. Pursuant to the Indenture, the Owner
Trustee purports to grant to the Indenture Trustee a security interest, inter
alia, in those securities and instruments, presently owned or hereafter
acquired by the Owner Trustee, that are from time to time credited to an
account numbered ______ (the "Collateral Account") established by the Owner
Trustee with the Custodian and which securities and instruments the Owner
Trustee has directed the Custodian to identify on the books and records of the
Custodian as being subject to a security interest in favor of the Indenture
Trustee to secure the payment to the Indenture Trustee of the Owner Trustee's
obligations (the "Obligations") under the Indenture. Those securities and
instruments which the Owner Trustee has directed the Custodian to so identify
on the books of the Custodian as being subject to such security interest, and
which, at the time of reference thereto, have been so identified and have not
been substituted by other property or otherwise withdrawn from such
identification or the Collateral Account, are hereinafter referred to,
collectively, as the "Liquid Collateral." We have assumed with your
permission for purposes of this opinion that the Liquid Collateral consists
solely of assets constituting (a) a "security" or "security entitlement," as
each such term is defined in Section 8-102 of the Uniform Commercial Code as
currently in effect in the State of Connecticut (the "Connecticut UCC"), (b) a
"securities account" (as such term is defined in Section 8-501 of the
Connecticut UCC), (c) a "financial asset," (as such term is defined in Section
8-102 of the Connecticut UCC), held in a securities account and (d) "general
intangibles" (as such term is defined in Section 9-106 of the Connecticut
UCC).
For purposes of this opinion, we have examined the Indenture, the
Control Agreement and such other documents and instruments as are referred to
as having been examined by us for purposes of our opinion letter dated the
date hereof, addressed to the parties listed on Schedule A hereto.
As to all matters of fact, we have examined and have relied entirely
upon the representations and warranties contained in and made pursuant to the
Indenture and the Control Agreement, without any independent investigation of
any kind.
We have assumed the genuineness of all signatures (other than those on
behalf of the Owner Trustee and the Custodian), 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 the Owner Trustee and the Custodian).
For purposes of this opinion, we have made such examination of law as
we have deemed necessary. This opinion is limited solely to the internal
substantive laws of the State of Connecticut as applied by courts located in
the State of Connecticut and, where applicable, the federal laws of the United
States of America, in each case without regard to choice of law. No opinion
is given as to the choice of law which any tribunal may apply to the
transactions referred to herein.
Our opinion is further subject to the following exceptions,
qualifications and assumptions, all of which we understand to be acceptable to
you:
(a) We have assumed without any independent investigation that each
party to the transactions contemplated by the Indenture or the Control
Agreement at all times relevant thereto (other than the Owner Trustee) was
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it was incorporated or organized, and had and has the
full power, authority and legal right under its certificate of
incorporation, articles of organization and other governing documents,
corporate or other enterprise legislation and applicable laws, as the case
may be, to execute and deliver and perform its obligations under all
documents executed by it in connection with those transactions.
(b) We have assumed without any independent investigation (i) the
due authorization, execution and delivery of each of the Indenture and the
Control Agreement by the Indenture Trustee, (ii) that the execution,
delivery and performance by the Indenture Trustee of each of the Indenture
and the Control Agreement does not and will not conflict with, or result in
a breach of, the terms, conditions or provisions of, or result in a
violation of, or constitute a default or require any consent (other than
such consents as have been duly obtained) under, any organizational
document, any order, judgment, arbitration award or stipulation, or any
agreement, to which the Indenture Trustee is a party or is subject or by
which any of the properties or assets of the Indenture Trustee is bound,
(iii) that the Owner Trustee has received "value," as defined under the
Connecticut UCC, for the incurrence of the Obligations, (iv) that, whenever
the Custodian receives instructions from the Owner Trustee for the
Custodian to note on its books and records that any securities or
instruments credited to the Collateral Account are to be subject to a
security interest in favor of the Indenture Trustee to secure the payment
of the Obligations, such instructions will have been duly authorized by or
on behalf of the Owner Trustee and (v) that, when the Indenture Trustee is
to act in connection with any of the transactions contemplated by the
Indenture, it is acting in its capacity as Indenture Trustee.
(c) We have made no examination of, and no opinion is given herein
as to, the Owner Trustee's title to or other ownership rights in, or the
existence of any liens, charges or encumbrances on, or adverse claims
against, the Liquid Collateral, other than the security interest in favor
of the Indenture Trustee as contemplated by the Indenture and the Control
Agreement, and have assumed that the Owner Trustee has, or at the time of
any purported attachment of the security interest in the relevant Liquid
Collateral will have, rights in the Liquid Collateral.
(d) We point out that, pursuant to Part 357 of Title 31 of the
United States Code of Federal Regulations ("CFR"), with respect to United
States "book-entry Treasury securities" maintained by a Federal Reserve
Bank and, pursuant to other relevant sections of the CFR, with respect to
various other securities issued or guaranteed by the federal government of
the United States or an agency thereof or a corporation sponsored thereby
and maintained by a Federal Reserve Bank, the perfection of security
interests granted by commercial, non-governmental parties in book-entry
Treasury securities, or such other federal securities, as the case may be,
held in a securities account of a participant financial institution, such
as the Custodian, maintaining such account with such Federal Reserve Bank,
will be governed by the law of the jurisdiction determined in accordance
with Section 357.11 of Title 31 of the CFR. If that jurisdiction has not
adopted Revised Article 8, then such jurisdiction will be deemed to have
adopted Revised Article 8 for purposes of determining the law governing
such perfection. We confirm that Revised Article 8 has been enacted by
Connecticut as part of the Connecticut UCC and that Revised Article 8 is
currently in effect in Connecticut.
(e) We have also assumed that (i) any securities comprised in the
Liquid Collateral and held by Depository Trust Company or another clearing
corporation will be held by Depository Trust Company or such other clearing
corporation for the direct account of the Custodian and not for the account
of the Custodian through any other securities intermediary, and (ii) any
securities comprised in the Liquid Collateral consisting of "book-entry
Treasury securities" or other uncertificated federal securities will be
credited to a direct account of the Custodian with a Reserve Bank (as such
term is defined in the relevant section of the CFR) and not for the account
of the Custodian through a securities intermediary.
(f) We do not express any opinion as to the attachment or
perfection of any security interest in (i) any securities that are
maintained with, or held on the system of, Cedel S.A., or any like
maintenance, clearing or settlement system operating outside of the United
States of America, (ii) the Collateral Account, to the extent that the
Collateral Account constitutes an asset, other than general intangibles,
separate from the property credited thereto, (iii) any Liquid Collateral
which, at the time of reference thereto, is no longer identified as subject
to a security interest in favor of the Indenture Trustee or has otherwise
been withdrawn from the Collateral Account, or (iv) any identifiable
proceeds of any Liquid Collateral following the lapse of the ten day period
set forth in Section 9-306(3) of the Connecticut UCC, to the extent that
such proceeds do not constitute securities, security entitlements,
financial assets or general intangibles in which a security interest is
perfected in the manner contemplated by this opinion, as if such proceeds
were original Liquid Collateral.
(g) We express no opinion as to the priority of such security
interest over any other or competing interest in or claims against such
Liquid Collateral.
(h) We have assumed that (i) the Custodian, in the ordinary course
of business, accepts for deposit securities as a service for its customers,
maintains securities accounts in the names of such customers reflecting
ownership of or interests in such securities, and, in regard to the
transactions contemplated by the Indenture, is acting in such capacity,
(ii) all securities or other financial assets from time to time credited to
the Collateral Account and to be comprised in the Liquid Collateral will
have been credited to the Collateral Account in such a way as to create
security entitlements in favor of the Owner Trustee, (iii) the records of
the Custodian indicate and will, at the time of reference thereto, indicate
that the aggregate amount of each security or other financial assets
comprised in the Liquid Collateral, together with all other such securities
or other financial assets carried by the Custodian for its customers and
for its proprietary account, is at least equal to the aggregate amount of
such security or other financial assets carried by it for its customers and
for its proprietary account, (iv) the books and records of the Custodian
indicate and will, at the time of reference thereto, indicate that the
securities or other financial assets to be comprised in the Liquid
Collateral are registered on the books and records of the Custodian as
being for the beneficial account of the Owner Trustee, subject to, as
identified on such books and records, the security interest therein in
favor of the Indenture Trustee, and (v) the assumptions contained in this
paragraph are in accordance with laws and regulations currently in effect
as applicable to the Custodian.
(j) In so far as our opinion relates to the enforceability of any
obligations of the Owner Trustee, the enforcement of such obligations may
be limited by bankruptcy, insolvency, reorganization, moratorium,
marshalling or other laws and rules of law affecting the enforcement
generally of creditors' rights and remedies (including such as may deny
giving effect to waivers of debtors' or guarantors' rights); and we express
no opinion as to (i) the status under Section 548 of the Bankruptcy Code
and applicable state fraudulent conveyance laws of the obligations of the
Owner Trustee under the Indenture or interests purported to be granted
pursuant to the Indenture, (ii) the enforceability of any particular
provision of the Indenture relating to remedies after default or as to the
availability of any specific or equitable relief of any kind (and we point
out that the enforcement of any of your rights may in all cases be subject
to an implied duty of good faith and fair dealing and to general principles
of equity, regardless of whether such enforceability is considered in a
proceeding at law or in equity, and, as to any of your rights to collateral
security, will be subject to a duty to act in a commercially reasonable
manner), (iii) the enforceability of any particular provision of the
Indenture relating to (A) waivers of defenses, of rights to trial by jury,
or rights to object to jurisdiction or venue and other rights or benefits
bestowed by operation of law, (B) the effect of suretyship defenses, or
defenses in the nature thereof, with respect to obligations of any
applicable guarantor, joint obligator or surety, (C) waivers of provisions
which are not capable of waiver under Sections 1-102(3) and 9-501(3) of the
Connecticut UCC, (D) the grant of powers of attorney to the Indenture
Trustee, (E) exculpation clauses, indemnity clauses and clauses relating
to releases or waivers of unmatured claims or rights, (F) interest or other
charges that may be usurious under applicable law, or (G) the collection of
interest on overdue interest or providing for a penalty rate of interest or
late charges on overdue or defaulted obligations, or (iv) as to the
availability of any specific or equitable relief of any kind. However,
notwithstanding the qualification set forth in the foregoing clause (ii),
and excluding the parenthetical in that clause, subject to the other
exceptions, qualifications and limitations set forth in this opinion
(including the parenthetical in clause (ii)) and subject to the fact that
there may be economic consequences arising out of any procedural or other
delay on account of the limitation or unenforceability of any particular
provision of the Indenture relating to remedies after default, such
limitation or unenforceability does not, in our judgment, render the
provisions of the Indenture and the Control Agreement relating to remedies
after default, taken as a whole, inadequate for the practical realization
of the benefits of enforcement of a security interest in the Liquid
Collateral following the receipt by the Custodian of an enforcement notice
properly given under the Indenture and the Control Agreement by the
Indenture Trustee to the Custodian with respect to such Liquid Collateral.
(k) With respect to property as to which the security interest
purported to be granted pursuant to the Indenture attaches after the date
hereof, we call to your attention that Section 552 of the Bankruptcy Code
limits the extent to which assets acquired by a debtor after the
commencement of a case under the United States Bankruptcy Code may be
subject to a security interest arising from a security agreement entered
into by the debtor before the commencement of such case. We further call
to your attention that under Section 547 of the Bankruptcy Code, a security
interest that attaches within the relevant period set forth in Section
547(b)(4) of the Bankruptcy Code may be avoidable under certain
circumstances.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Indenture Trustee has, under the terms of the Connecticut
UCC and, in the case of book-entry Treasury securities, under the CFR, a
perfected security interest in the Liquid Collateral that constitutes a
"security," "security entitlement" or "financial asset" (as each such term
is defined in the Connecticut UCC), and in the identifiable proceeds
thereof to secure the payment of the Obligations.
2. The Indenture creates, under the terms of the Connecticut UCC, a
valid security interest in such of the Liquid Collateral that constitutes
"general intangibles" (as such term is defined in Section 9-106 of the
Connecticut UCC) and in the identifiable proceeds thereof to secure the
payment of the Obligations. Upon the filing of a financing statement on
form UCC-1 pursuant to the Connecticut UCC with the Secretary of State of
the State of Connecticut naming the Owner Trustee as Debtor and the
Indenture Trustee as Secured Party and accurately describing the Liquid
Collateral and the Collateral Account, which filing has been duly effected,
such security interest will be perfected (to the extent that the perfection
of a security interest in the Liquid Collateral can be accomplished by the
filing in Connecticut of financing statements under the Connecticut UCC).
We point out that:
(a) The effectiveness of a financing statement will lapse (i) on
the expiration of a five-year period from their dates of filing, or (if
later) five years from the last date as to which such financing statements
were effective following the proper filing of continuation statements with
respect thereto, unless continuation statements are filed within six months
prior to the expiration of the applicable five-year period, (ii) with
respect to general intangibles in which a security interest has been
perfected by the filing of a financing statement in the jurisdiction of the
location of the debtor, for a period of more than four months after the
debtor has changed its location from that jurisdiction to a new
jurisdiction unless such security is perfected in the new jurisdiction
within the earlier to occur of the end of such four month period or the
date on which such financing statement would have otherwise lapsed, and
(iii) with respect to "investment property," under and as defined in
Revised Article 8, in which a security interest has been perfected by the
filing of a financing statement in the jurisdiction of the location of the
debtor, from the time that the debtor changes its location from that
jurisdiction to a new jurisdiction unless such security interest is
perfected in the new jurisdiction on or before the time of such change of
location.
(b) If any debtor changes its name, identity or corporate structure
such that any financing statement becomes misleading, such financing
statement will be ineffective to perfect a security interest in any
collateral acquired by such debtor more than four months after such change.
We assume no obligation to update this opinion as a result of any
change in any fact, circumstance or statute or other rule of law occurring
after the date hereof.
This opinion is delivered to you solely in connection with the
transactions referred to herein and for your sole use and no other person or
entity may rely on this opinion without our express written consent.
Very truly yours,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(3)(a)(ii)
[Letterhead of Bingham Dana LLP]
[Delivery Date]
To Each of the Parties Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N585FE
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. N585FE) dated as of June 15, 1998, as amended and restated as of
______________ between State Street and ___________________, as Owner
Participant ("Owner Participant") (the "Trust Agreement") in connection with
the transactions contemplated by that certain Participation Agreement (Federal
Express Corporation Trust No. N585FE) dated as of June 15, 1998, as amended
and restated as of ______________ (the "Participation Agreement") by and among
Federal Express Corporation, as Lessee (the "Lessee") and the Initial Owner
Participant; the Owner Participant; the Owner Trustee; and First Security
Bank, National Association, in its individual capacity and as Indenture Trustee
(the "Indenture Trustee"), Pass Through Trustee and 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 4.02(d)(iii) 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) the certificates
delivered to us by the management of State Street and have assumed, without
independent inquiry, the accuracy of those representations and certificates.
We have examined each 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 of each other party thereto (except,
with respect to the Trust Agreement, the Owner Participant);
(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.
Except as set forth in paragraph 12 below, which opinion is based
solely upon our review of Uniform Commercial Code search reports conducted
with the Secretary of the State of the State of Connecticut, 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. 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 or had, on the date of execution
thereof, 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 Documents 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 or had, on the date of execution thereof, 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 Documents and each
such Owner Trustee Document 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, 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, which filing has been duly effected,
and the filing of continuation statements with respect thereto required to
be filed at periodic intervals under the UCC.
7. 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, (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,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
- -----------------
[name of owner participant]
EXHIBIT A(4)
[Letterhead of Ray, Quinney & Nebeker]
[Certificate Closing Date]
To the Persons Listed in Schedule A Attached Hereto
Re: Federal Express Corporation Trust No. N585FE
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 the
date hereof 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 1998-1-A, 1998-1-B and 1998-1-C,
respectively (the "Series Supplements") and the Participation Agreement
(Federal Express Corporation Trust No. N585FE), dated as of June 15, 1998 (the
"Participation Agreement"), among Federal Express Corporation, as Lessee and
Initial 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.
N585FE (the "Aircraft") is being financed. This opinion is furnished pursuant
to Section 4.01(j)(v) 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) are being
collectively referred to as the "Pass Through Trustee Documents" and each of
the documents identified in paragraphs (d) through (f) 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 below, 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. 333-49411 (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 the Owner Participant, nor the
Owner Trustee, 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), governmental fee or other similar charge under the laws of
the State of Utah or any political subdivision thereof (other than taxes
imposed on the fees received by First Security 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),
governmental fee or other similar 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 Pass Through 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 Pass Through 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 Pass Through
Trustee, of the Pass Through 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 Pass
Through 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,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(5)(a)
[Letterhead of Kreditanstalt fur Wiederaufbau]
[Certificate Closing Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation 1998-1 Pass Through Trusts
Ladies and Gentlemen:
In my capacity as General Counsel of Kreditanstalt fur Wiederaufbau
("KfW") I am rendering this opinion in connection with (i) the Irrevocable
Revolving Credit Agreement Class A Pass Through Certificates, dated as of June
15, 1998 (the "Class A Liquidity Agreement"), between KfW and First Security
Bank, National Association, a national banking association, as Subordination
Agent under the Intercreditor Agreement (as defined below), and as agent and
trustee for the Federal Express Corporation 1998-1-A Pass Through Trust, (ii)
the Irrevocable Revolving Credit Agreement Class B Pass Through Certificates,
dated as of June 15, 1998 (the "Class B Liquidity Agreement" and, together
with the Class A Liquidity Agreement, the "Liquidity Agreements"), between KfW
and First Security Bank, National Association, a national banking association,
as Subordination Agent under the Intercreditor Agreement, and as agent and
trustee for the Federal Express Corporation 1998-1-B Pass Through Trust, and
(iii) the Intercreditor Agreement, dated as of June 15, 1998 (the
"Intercreditor Agreement"), among KfW, First Security Bank, National
Association, a national banking association, as Pass Through Trustee and as
Subordination Agent (the Liquidity Agreements and the Intercreditor Agreement
are hereinafter collectively referred to as the "Relevant Documents").
Capitalized terms herein which are undefined have the meanings
assigned thereto in the Relevant Documents.
For purposes of this legal opinion, I have examined a copy of each of
the Relevant Documents and such other certificates, documents, agreements and
instruments as I have deemed necessary as a basis for the opinions expressed
below.
In giving this opinion, I have assumed the genuineness of all
signatures, the authenticity of all agreements, certificates, instruments and
documents submitted to me as originals, and the conformity to the originals of
all agreements, certificates, instruments and documents submitted to me as
copies. As to questions of fact material to the opinions expressed below, I
have, when relevant facts were not independently established by me, examined
and relied upon representations of officers of KfW.
Based upon and subject to the foregoing examination and assumptions,
and subject to the qualifications set forth below, I am of the opinion that:
1. KfW is duly organized and validly existing as a corporation under
the public law of the Federal Republic of Germany and has full power and
authority (corporate and otherwise) to execute, deliver and perform the
Relevant Documents.
2. Mr. Scheer and Mr. Behler, acting together, are both duly
authorized by KfW to execute and deliver the Relevant Documents for and on
behalf of KfW.
3. The governing-law clause, subjecting the Relevant Documents to New
York law, is valid under German law.
(i) Under German law, New York law will be applied to an agreement,
such as the Relevant Documents, which under German law has been
validly subjected to New York law.
(ii) (a) None of the terms of the Relevant Documents is
irreconcilable with important principles of German law, and (b) there
are no mandatory provisions of German law which must be applied to
the transactions covered by the Relevant Documents.
4. No notice to or filing with, any governmental, administrative or
other authority or court of the Federal Republic of Germany is required for
the execution or delivery of the Relevant Documents by KfW or for the
performance by KfW of the Relevant Documents.
5. Assuming the validity under New York law of the Relevant
Documents:
(i) The Relevant Documents constitute legal, valid and binding
obligations of KfW enforceable against KfW in accordance with their
respective terms.
(ii) A judgment obtained against KfW in the courts of the State of
New York in any suit, action or proceeding arising out of the
Relevant Documents will be enforceable against KfW in the courts of
Germany without further litigation or examination on the merits of
such suit, action or proceeding, provided that conditions in terms
of Section 328 of the German Zivilprozeordnung (Code of Civil
Procedure) - notably (a) if reciprocity is not guaranteed; (b) if
according to German law the foreign venue is improper, and if
procedural rules have not been observed by the court to the
disadvantage of the defendant; (c) if the judgment obtained is
irreconcilable with important principles of German law or would
conflict with German basic rights (see 3(ii) above) - do not bar the
judgment from recognition.
(iii) The obligations of KfW under the Relevant Documents rank at
least equal in priority of payment and in all other respects with its
obligations to pay any other unsecured and unsubordinated obligations
of KfW for borrowed money, including deposit liabilities, that are
not expressly preferred by law.
6. The waiver of immunity set forth in Section 7.11(c) of each of the
Liquidity Agreements and Section 10.11(c) of the Intercreditor Agreement is
valid under German law.
The foregoing opinions are subject to the following qualifications:
(i) The opinion in paragraph (5) with respect to enforceability is
subject to the effect of any bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws affecting creditors' rights
generally, applicable to KfW and to any law or general principle of
law from time to time in effect in the Federal Republic of Germany
that could be considered by the German Courts as a provision of
public policy.
(ii) No opinion is expressed with respect to the law of any
jurisdiction other than the laws of the Federal Republic of Germany.
This opinion is being furnished to you solely for your benefit in
connection with the transactions described above and may not be used,
circulated, quoted or otherwise referred to for any other purpose without my
express written consent.
Very truly yours,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
EXHIBIT A(5)(b)
[Letterhead of Kreditanstalt fur Wiederaufbau]
[Certificate Closing Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation 1998-1 Pass Through Trusts
Ladies and Gentlemen:
In my capacity as General Counsel of Kreditanstalt fur Wiederaufbau
("KfW") I am rendering this opinion in connection with (i) Letter of Credit
No. ______________ dated July ___, 1998 (the "Letter of Credit") issued by KfW
in favor of First Security Bank, National Association, as Subordination Agent
(the "Subordination Agent") under the Intercreditor Agreement dated as of June
15, 1998 among First Security Bank, National Association, as Pass Through
Trustee, KfW, as Class A Liquidity Provider and Class B Liquidity Provider,
and the Subordination Agent, (ii) the Reimbursement Agreement dated July ___,
1998 (the "Reimbursement Agreement") between KfW and Federal Express
Corporation and (iii) the letter dated July ___, 1998 (the "Letter Agreement"
and, together with the Letter of Credit and the Reimbursement Agreement, the
"Relevant Documents") from KfW to the Subordination Agent.
Capitalized terms herein which are undefined have the meanings
assigned thereto in the Relevant Documents.
For purposes of this legal opinion, I have examined a copy of each of
the Relevant Documents and such other certificates, documents, agreements and
instruments as I have deemed necessary as a basis for the opinions expressed
below.
In giving this opinion, I have assumed the genuineness of all
signatures, the authenticity of all agreements, certificates, instruments and
documents submitted to me as originals, and the conformity to the originals of
all agreements, certificates, instruments and documents submitted to me as
copies. As to questions of fact material to the opinions expressed below, I
have, when relevant facts were not independently established by me, examined
and relied upon representations of officers of KfW.
Based upon and subject to the foregoing examination and assumptions,
and subject to the qualifications set forth below, I am of the opinion that:
1. KfW is duly organized and validly existing as a corporation under
the public law of the Federal Republic of Germany and has full power and
authority (corporate and otherwise) to execute, deliver and perform the
Relevant Documents.
2. Mr. Scheer and Mr. Behler, acting together, are both duly
authorized by KfW to execute and deliver the Relevant Documents for and on
behalf of KfW.
3. The governing-law clause, subjecting the Relevant Documents to New
York law, is valid under German law.
(i) Under German law, New York law will be applied to an agreement,
such as the Relevant Documents, which under German law has been
validly subjected to New York law.
(ii) (a) None of the terms of the Relevant Documents is
irreconcilable with important principles of German law, and (b) there
are no mandatory provisions of German law which must be applied to
the transactions covered by the Relevant Documents.
4. No notice to or filing with, any governmental, administrative or
other authority or court of the Federal Republic of Germany is required for
the execution or delivery of the Relevant Documents by KfW or for the
performance by KfW of the Relevant Documents.
5. Assuming the validity under New York law of the Relevant
Documents:
(i) The Relevant Documents constitute legal, valid and binding
obligations of KfW enforceable against KfW in accordance with their
respective terms.
(ii) A judgment obtained against KfW in the courts of the State of
New York in any suit, action or proceeding arising out of the
Relevant Documents will be enforceable against KfW in the courts of
Germany without further litigation or examination on the merits of
such suit, action or proceeding, provided that conditions in terms
of Section 328 of the German Zivilprozeordnung (Code of Civil
Procedure) - notably (a) if reciprocity is not guaranteed; (b) if
according to German law the foreign venue is improper, and if
procedural rules have not been observed by the court to the
disadvantage of the defendant; (c) if the judgment obtained is
irreconcilable with important principles of German law or would
conflict with German basic rights (see 3(ii) above) - do not bar the
judgment from recognition.
(iii) The obligations of KfW under the Relevant Documents rank at
least equal in priority of payment and in all other respects with its
obligations to pay any other unsecured and unsubordinated obligations
of KfW for borrowed money, including deposit liabilities, that are
not expressly preferred by law.
The foregoing opinions are subject to the following qualifications:
(i) The opinion in paragraph (5) with respect to enforceability is
subject to the effect of any bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws affecting creditors' rights
generally, applicable to KfW and to any law or general principle of
law from time to time in effect in the Federal Republic of Germany
that could be considered by the German Courts as a provision of
public policy.
(ii) No opinion is expressed with respect to the law of any
jurisdiction other than the laws of the Federal Republic of Germany.
This opinion is being furnished to you solely for your benefit in
connection with the transactions described above and may not be used,
circulated, quoted or otherwise referred to for any other purpose without my
express written consent.
Very truly yours,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
EXHIBIT A(5)(c)
[Letterhead of Milbank, Tweed, Hadley & McCloy]
[Certificate Closing Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation 1998-1 Pass Through Trusts
Ladies and Gentlemen:
We have acted as special New York counsel to Kreditanstalt fur
Wiederaufbau (herein called "KfW") in connection with the transactions
contemplated by (i) the Irrevocable Revolving Credit Agreement Class A Pass
Through Certificates, dated as of June 15, 1998 (the "Class A Liquidity
Agreement"), between KfW and First Security Bank, National Association, as
Subordination Agent under the Intercreditor Agreement, as defined below, as
agent and trustee for the Federal Express Corporation 1998-1-A Pass Through
Trust, (ii) the Irrevocable Revolving Credit Agreement Class B Pass Through
Certificates, dated as of June 15, 1998 (the "Class B Liquidity Agreement"
and, together with the Class A Liquidity Agreement, the "Liquidity
Agreements"), between KfW and First Security Bank, National Association, as
Subordination Agent under the Intercreditor Agreement, as defined below, as
agent and trustee for the Federal Express Corporation 1998-1-B Pass Through
Trust and (iii) the Intercreditor Agreement, dated as of June 15, 1998 (the
"Intercreditor Agreement" and, together with the Liquidity Agreements, the
"Relevant Documents"), among KfW and First Security Bank, National
Association, as Pass Through Trustee and as Subordination Agent. Capitalized
terms used herein but not otherwise defined herein shall have the meanings
provided in the Relevant Documents.
In rendering the opinion expressed below, we have examined the
Relevant Documents, the opinion dated the date hereof of Ruediger Sass,
General Counsel of KfW, and such other documents as we have deemed necessary.
In our examination, we have assumed the authenticity of all documents
submitted to us as originals and the conformity with authentic original
documents of all documents submitted to us as copies. When relevant facts
were not independently established, we have relied upon representations made
in or pursuant to the Relevant Documents.
In rendering the opinion expressed below, we have assumed, with
respect to each Relevant Document, that:
(i) it has been duly authorized by, has been duly executed and
delivered by, and (except to the extent set forth in the opinion
below as to KfW) constitutes legal, valid, binding and enforceable
obligations of all of the parties thereto;
(ii) all signatories thereto have been duly authorized; and
(iii) all of the parties thereto are duly organized and validly existing
and have the power and authority (corporate, partnership, trust or
otherwise) to execute, deliver and perform thereunder.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinion
expressed below, we are of the opinion that each Relevant Document constitutes
the legal, valid and binding obligation of KfW, enforceable against KfW in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or transfer or other similar
laws relating to or affecting the rights of creditors generally and except as
the enforceability of such Relevant Document is subject to the application of
general principles of equity (regardless of whether considered in a proceeding
in equity or at law), including, without limitation, (a) the possible
unavailability of specific performance, injunctive relief or any other
equitable remedy and (b) concepts of materiality, reasonableness, good faith
and fair dealing.
The foregoing opinion is subject to the following comments and
qualifications:
(A) The enforceability of provisions in the Relevant Documents to
the effect that terms may not be waived or modified except in writing
may be limited under certain circumstances.
(B) We express no opinion as to (i) the effect of the laws of any
jurisdiction in which KfW is located (other than New York) that limit
the interest, fees or other charges KfW may impose for the loan or use
of money or other credit, (ii) Section 7.11(a)(i) of each Liquidity
Agreement and Section 10.11(a)(i) of the Intercreditor Agreement,
insofar as such Sections relate to the subject matter jurisdiction of a
Federal court sitting in New York, New York to adjudicate any
controversy related to the Relevant Documents, (iii) the waiver of
inconvenient forum set forth in Section 7.11(a)(ii) of each Liquidity
Agreement and Section 10.11(a)(ii) of the Intercreditor Agreement with
respect to proceedings in a Federal court sitting in New York, New York
and a State court of the State of New York and (iv) the waiver of
immunity set forth in Section 7.11(c) of each Liquidity Agreement and
Section 10.11(c) of the Intercreditor Agreement with respect to
proceedings in a Federal court sitting in New York, New York and a State
court of the State of New York.
The foregoing opinion is limited to matters involving the Federal
laws of the United States of America and the law of the State of New York, and
we do not express any opinion as to the laws of any other jurisdiction. In
particular, we do not express any opinion as to the laws of Germany and, to
the extent such laws may be relevant to the opinion expressed herein, we have,
with your permission, relied upon the aforementioned opinion of Ruediger Sass,
Esq., General Counsel of KfW, without independently considering the matters
covered thereby, and our opinion is subject to all limitations, exceptions and
qualifications contained therein as if set forth herein in full.
At the request of KfW, this opinion letter is provided to you by
us in our capacity as special New York counsel to KfW, and this opinion letter
may not be relied upon by any Person for any purpose other than in connection
with the transactions contemplated by the Relevant Documents without, in each
instance, our prior written consent.
Very truly yours,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(5)(d)
[Letterhead of Milbank, Tweed, Hadley & McCloy]
[Certificate Closing Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation 1998-1 Pass Through Trusts
Ladies and Gentlemen:
We have acted as special New York counsel to Kreditanstalt fur
Wiederaufbau (herein called "KfW") in connection with (i) Letter of Credit No.
______________ dated July ___, 1998 (the "Letter of Credit") issued by KfW in
favor of First Security Bank, National Association, as Subordination Agent
(the "Subordination Agent") under the Intercreditor Agreement dated as of June
15, 1998 among First Security Bank, National Association, as Pass Through
Trustee, KfW, as Class A Liquidity Provider and Class B Liquidity Provider,
and the Subordination Agent, (ii) the Reimbursement Agreement dated July ___,
1998 (the "Reimbursement Agreement") between KfW and Federal Express
Corporation, and (iii) the letter dated July ___, 1998 (the "Letter Agreement"
and, together with the Letter of Credit and the Reimbursement Agreement, the
"Relevant Documents") from KfW to the Subordination Agent.
In rendering the opinions expressed below, we have examined each of
the Relevant Documents, the opinion dated the date hereof of Ruediger Sass,
General Counsel of KfW, and such other documents as we have deemed necessary
as a basis for the opinions expressed below.
In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity with authentic original documents of all documents submitted to
us as copies. When relevant facts were not independently established, we have
relied upon statements of governmental officials and upon certificates of
appropriate representatives of KfW.
In rendering the opinions expressed below, we have assumed, with
respect to all of the documents referred to in this opinion letter, that:
(i) such documents been duly authorized by, have been duly executed and
delivered by, and (except to the extent set forth in the opinion
below as to KfW) constitute legal, valid, binding and enforceable
obligations of, all of the parties to such documents;
(ii) all signatories to such documents have been duly authorized; and
(iii) all of the parties to such documents are duly organized and validly
existing and have the power and authority (corporate, trust or
otherwise) to execute, deliver and perform such documents.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinions
expressed below, we are of the opinion that each of the Relevant Documents
constitutes valid and binding obligations of KfW enforceable against KfW in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, conservatorship, receivership, moratorium or other similar
laws relating to or affecting the rights of creditors generally (as such laws
would apply in the event of the insolvency, liquidation, reorganization,
conservatorship or receivership of, or other similar occurrence with respect
to, KfW) and except as the enforceability of such Relevant Document is subject
to the application of general principles of equity (regardless of whether
considered in a proceeding in equity or at law), including, without limitation,
(a) the possible unavailability of specific performance, injunctive relief or
any other equitable remedy and (b) concepts of materiality, reasonableness,
good faith and fair dealing.
The foregoing opinion is subject to the following comments and
qualifications:
(A) The enforceability of any provision in any of the Relevant
Documents to the effect that the terms thereof may not be waived or
modified except in writing may be limited as provided in Section
15-301(1) of the New York General Obligations Law and Section 1-205(3)
of the New York Uniform Commercial Code.
(B) With respect to our opinion above as it pertains to the
Letter of Credit, we call your attention to Wysko Investment Co. v.
Great American Bank, 131 B.R. 146 (D. Ariz. 1991), which holds that a
bankruptcy court may enjoin payment under a letter of credit pursuant to
Section 105 of the United States Bankruptcy Code, 11 U.S.C. Section 105,
in unusual circumstances. Id. at 147. In that case, the unusual
circumstance was a bankruptcy court finding that the injunction was
necessary for the reorganization. Id. at 148. In addition, In re
Delaware River Stevedores, Inc., 129 B.R. 38 (Bankr. E.D. Pa. 1991),
suggests that "an injunction prohibiting payment on a L/C could
conceivably be appropriate" if certain factors relating to issuing
Section 105(a) injunctions "generally weighed in the debtor's favor."
Id. at 42, citing In re Guy C. Long, Inc., 74 B.R. 939 (Bankr. E.D. Pa.
1987). To the extent that the rationale of Wysko Investment Co. or
Delaware River Stevedores would support the issuance of a permanent
injunction against payment under the Letter of Credit, we are of the
opinion that those cases do not reflect a correct statement of the law
in respect of letters of credit and are not controlling precedent in any
court exercising bankruptcy jurisdiction outside of Arizona or the
Eastern District of Pennsylvania, as the case may be.
(C) We express no opinion as to whether a court exercising
bankruptcy jurisdiction might issue a temporary restraining order or
other interim relief in order to preserve the status quo concerning the
Letter of Credit pending a review of the merits of any request to enjoin
payment under the Letter of Credit.
The foregoing opinions are limited to matters involving the
Federal laws of the United States and the law of the State of New York, and we
do not express any opinion as to the laws of any other jurisdiction. In
particular, we do not express any opinion as to the laws of Germany and, to
the extent such laws may be relevant to the opinion expressed herein, we have,
with your permission, relied upon the aforementioned opinion of Ruediger Sass,
Esq., General Counsel of KfW, without independently considering the matters
covered thereby, and our opinion is subject to all limitations, exceptions and
qualifications contained therein as if set forth herein in full.
This opinion letter is provided to you by us in our capacity as
special New York counsel to KfW and may not be relied upon by any other person
or entity or by you for any purpose other than in connection with the Relevant
Documents without, in each instance, our prior written consent.
Very truly yours,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(6)
[Letterhead of General Electric Company]
[Delivery Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N585FE
Reference is made to (i) that certain Participation Agreement (Federal
Express Corporation Trust No. N585FE), dated as of June 15, 1998, as amended
and restated as of _______________ (the "Participation Agreement") by and
among Federal Express Corporation, as Lessee and Initial Owner Participant
("Fed Ex"), ________________________, 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. N585FE), dated as of June 15, 1998, as amended and
restated as of _______________ (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. N585FE), dated as of June 15, 1998, as amended
and restated as of ______________ (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. N585FE), dated as of June 15, 1998, as
amended and restated as of ______________ (the "Trust Agreement") between SSB
(not in its individual capacity), as Owner Trustee and
________________________, 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. N585FE) (the "Engine
Warranty Assignment"). The Consent and the Engine Warranty Assignment covers
three GE CF6-80C2-D1F series engines bearing Engine Manufacturer's serial
numbers ___-___, ___-___ and ___-___, 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.
6-6327A, dated as of June 28, 1991 between the Engine Manufacturer and
American Airlines, Inc. (the "General Terms Agreement"), the Engine Product
Support Plan forming a part thereof (the "Engine Product Support Plan"), the
Participation Agreement, the Purchase Agreement Assignment, the Lease, the
Trust Indenture and the Trust Agreement.
In making such examinations, I have relied upon the accuracy of original,
certified, conformed, photocopied or telecopied copies of such records,
agreements, certificates and other documents as I have deemed necessary or
appropriate to enable me to render the opinions expressed herein. In all such
examinations, I have assumed the genuineness of signatures on original
documents and the conformity to such original documents of all copies
submitted to me as certified, conformed, photocopied or telecopied copies, and
as to certificates and telegraphic and telephonic confirmations given by
public officials, I have assumed the same to have been properly given and to
be accurate. As to various questions of fact material to such opinions, I
have relied, when such relevant facts were not independently established by
me, solely upon the accuracy of the statements, representations and warranties
made in the Participation Agreement, the Purchase Agreement Assignment, the
Lease, the Trust Indenture and the Trust Agreement.
With your consent, and for the purposes of this opinion, I have assumed
(other than with respect to the Engine Manufacturer), the accuracy of the
following matters, but I have not made any independent investigation or
inquiry with respect thereto and I render no opinion on such matters:
(a) each of the Participation Agreement, the Purchase Agreement
Assignment, the Lease, the Trust Indenture, and the Trust Agreement have
been duly and validly authorized, executed and delivered by all parties
thereto and constitutes the legal, valid and binding obligations of each
of such parties in accordance with the respective terms thereof; and
(b) the respective parties to the Participation Agreement, the
Purchase Agreement Assignment, the Lease, the Trust Indenture, and the
Trust Agreement have obtained, and there are in full force and effect,
any and all federal, state, local or foreign governmental agencies and
authorities in connection with the transactions contemplated thereby, to
the extent necessary for the legality, validity and binding effect or
enforceability of the Consent and the Engine Warranty Assignment.
Based upon the foregoing, and subject to the specific assumptions,
qualifications and reliances herein set forth, and on the basis of my
consideration of such facts and law as I have deemed necessary for purposes of
this letter, it is my opinion that:
(1) The Engine Manufacturer has the full corporate power,
authority and the legal right to enter into and perform its obligations
under the General Terms Agreement, the Consent and the Engine Warranty
Assignment. The execution, delivery and performance by the Engine
Manufacturer of each of the General Terms Agreement, the Consent and the
Engine Warranty Assignment was duly authorized by all necessary
corporate action on the part of the Engine Manufacturer.
(2) Each of the General Terms Agreement, the Consent and Engine
Warranty Assignment has been duly authorized, executed and delivered by
and constitutes a legal, valid and binding obligation of the Engine
Manufacturer, enforceable against the Engine Manufacturer in accordance
with the respective terms thereof, except as the enforceability thereof
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally
and by general equity principles.
(3) The Engine Product Support Plan insofar as it relates to the
Engine Warranties (as such term is defined in the Engine Warranty
Assignment), constitutes a legal, valid and binding obligation of the
Engine Manufacturer, enforceable against the Engine Manufacturer in
accordance with the terms thereof, except as the enforceability thereof
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally
and by general equity principles.
The foregoing opinions are limited to the laws of the State of
Washington 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,
SCHEDULE A
Lessee
- ------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
- -----------------
[name of owner participant]
EXHIBIT A(7)
[Letterhead of Daugherty, Fowler & Peregrin]
[Delivery Date]
To the Parties Named on Schedule A attached hereto
Re: Federal Express Corporation Trust No. N585FE
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 4.02(d)(vii)
of the Participation Agreement (Federal Express Corporation Trust No. N585FE),
dated as of June 15, 1998, as amended and restated as of _____________ (the
"Participation Agreement") among Federal Express Corporation, as Lessee (the
"Lessee") and Initial Owner Participant, _________________, 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._.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._.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._.T.;
(d) executed counterpart of Trust Agreement (Federal Express
Corporation Trust No. N585FE) dated as of June 15, 1998, as
amended and restated as of ____________ (the "Trust
Agreement") between the Owner Participant and the Owner
Trustee, which Trust Agreement was filed at ____ _.m.,
C._.T.;
(e) executed counterpart of Trust Indenture and Security
Agreement (Federal Express Corporation Trust No. N585FE)
dated as of June 15, 1998, as amended and restated as of
_____________ (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. N585FE) 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._.T.; and,
(f) executed counterpart of Lease Agreement (Federal Express
Corporation Trust No. N585FE) dated as of June 15, 1998, as
amended and restated as of ______________ (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. N585FE) 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._.T.
The Confidential Omissions were intentionally omitted from the FAA
filing counterparts of the Lease and the Trust Indenture as containing
confidential financial information.
Based upon our examination of the above described instruments and
of such records of the FAA as we deemed necessary to render this opinion, it
is our opinion that:
1. the FAA Bill of Sale, the Trust Indenture with the Trust
Indenture Supplement attached and the Lease with the Lease
Attachments attached are in due form for recordation by and
have been duly filed for recordation with the FAA pursuant
to and in accordance with the provisions of 49 U.S.C.
Section 44107;
2. the Aircraft Registration Application, the Owner Trustee
Affidavit with the Owner Participant Affidavit attached and
the Trust Agreement are in due form for filing and have been
duly filed with the FAA pursuant to and in accordance with
the provisions of 49 U.S.C. Section 44103(a) and Section
47.7(c) of the Federal Aviation Regulations;
3. the Airframe is eligible for registration under 49 U.S.C.
Section 44102 in the name of the Owner Trustee and the
filing with the FAA of the FAA Bill of Sale, the Aircraft
Registration Application, the Owner Trustee Affidavit with
the Owner Participant Affidavit attached and the Trust
Agreement will cause the FAA to register the Airframe, in
due course, in the name of the Owner Trustee and to issue to
the Owner Trustee an AC Form 8050-3 Certificate of Aircraft
Registration for the Airframe, and the Airframe will be duly
registered pursuant to and in accordance with the provisions
of 49 U.S.C. Section 44103(a);
4. the Owner Trustee has valid legal title to the Airframe and
the Aircraft is free and clear of all Liens, except (i) the
security interest created by the Trust Indenture, as
supplemented by the Trust Indenture Supplement, and (ii) the
rights of the parties under the Lease, as supplemented by
the Lease Supplement;
5. the rights of the Owner Trustee and the Lessee under the
Lease, as supplemented by the Lease Supplement, with respect
to the Aircraft, are perfected;
6. the Trust Indenture, as supplemented by the Trust Indenture
Supplement, constitutes a duly perfected first priority
security interest in the Aircraft and a duly perfected first
assignment of all the right, title and interest of the Owner
Trustee in, to and under the Lease and the Lease Supplement
(insofar as such assignment affects an interest covered by
the recording system established by the FAA pursuant to 49
U.S.C. Section 44107), and no other registration of the
Airframe or filings other than filings with the FAA (which
have been duly effected) are necessary in order to perfect
in any applicable jurisdiction in the United States (A) the
Owner Trustee's title to the Airframe or (B) such security
interest and assignment (insofar as such assignment affects
an interest covered by the recording system established by
the FAA pursuant to 49 U.S.C. Section 44107), it being
understood that no opinion is herein expressed as to the
validity, priority or enforceability of such security
interest and assignment under local law or as to the
recognition of the perfection of such security interest and
assignment as against third parties in any legal proceeding
outside the United States;
7. no authorization, approval, consent, license or order of, or
registration with, or the giving of notice to, the FAA is
required for the valid authorization, delivery and
performance of the Lease, as supplemented by the Lease
Supplement, the Trust Indenture, as supplemented by the
Trust Indenture Supplement, or the Trust Agreement except
for such filings as are referred to above; and,
8. neither the execution and delivery by the Owner Participant
of the Participation Agreement or the Trust Agreement, nor
other consummation of the transactions contemplated thereby
by the Owner Participant, requires the consent or approval
of, or the giving of notice to, or the registration of, or
the taking of any other action in respect of the FAA, except
(x) the registration of the Airframe, including the
submission of the Aircraft Registration Application, the
Owner Trustee Affidavit, the Owner Participant Affidavit and
the Trust Agreement to the FAA and (y) the filings for
recordation specified elsewhere in this opinion.
No opinion is expressed as to the Airframe during any period or
periods of time during which it has not been subject to United States
registration.
No opinion is expressed as to laws other than Federal laws of the
United States. In rendering this opinion, we were subject to the accuracy of
the FAA, its employees and agents, in the filing, indexing and recording of
instruments filed with the FAA and in the search for encumbrance
cross-reference index cards for the Engines. Further, in rendering this
opinion we are assuming the validity and enforceability of the above described
instruments under local law. Since our examination was limited to records
maintained by the FAA, our opinion does not cover liens which are perfected
without the filing of notice thereof with the FAA, such as federal tax liens,
liens arising under Section 1368(a) of Title 29 of the United States Code,
possessory artisan's liens, or matters of which the parties have 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,
Annex I
Certain Definitions
Airframe, Engines and Aircraft
One (1) McDonnell Douglas MD-11F aircraft bearing manufacturer's
serial number 48481 and U.S. Registration No. N585FE (the "Airframe") and
three (3) General Electric CF6-80C2-D1F aircraft engines bearing
manufacturer's serial numbers ___-___, ___-___ and ___-___ (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) of the Lease set forth in Ancillary Agreement II, which was not
attached to the FAA filing counterpart of the Lease or otherwise filed with
the FAA for recordation.
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
- -----------------
[name of owner participant]
EXHIBIT B
[Form of Lease Agreement - See Exhibit 4.e to this Form 8K]
EXHIBIT C
[Form of Indenture - See Exhibit 4.b.1 to this Form 8K]
EXHIBIT D
[Form of Trust Agreement - See Exhibit 4.d to this Form 8K]
EXHIBIT E
ENGINE WARRANTY ASSIGNMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N585FE)
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 __________, 1998.
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 ___-___, ___-___ and ___-___,
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. N585FE), dated as of June 15, 1998 (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. N585FE), dated as of June 15, 1998 (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: Vice President and Treasurer
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. N585FE)
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. N585FE), dated as of June 15, 1998 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. N585FE), dated as of June 15, 1998 (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 ___-___, ___-___ and ___-___, respectively, (the "Engines") as
installed on the McDonnell Douglas MD-11F series aircraft bearing
Manufacturer's serial number 48481 (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:
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PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N590FE)
Dated as of May 1, 1998
Amended and Restated as of June 15, 1998
among
FEDERAL EXPRESS CORPORATION,
Lessee
BMO LEASING (U.S.), INC.,
Owner Participant
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
Original Loan 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. 48505, REGISTRATION NO. N590FE
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TABLE OF CONTENTS
Page
----
Initial Recitals........................................................ 1
ARTICLE 1
DEFINITIONS............................................................. 3
ARTICLE 2
Section 2.01. Transfer of Funds. ...................................... 4
Section 2.02. Certificates............................................. 7
Section 2.03. Owner Participant's Instructions to Owner Trustee........ 7
ARTICLE 3
EXTENT OF INTEREST OF ORIGINAL LOAN PARTICIPANT
Section 3.01. Extent of Interest of Original Loan Participant. ........ 7
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent..................................... 8
Section 4.02. Opinion of Special Aviation Counsel...................... 18
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations............. 19
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties.................. 19
Section 6.02. Offering by Lessee....................................... 25
Section 6.03. Certain Covenants of Lessee.............................. 25
Section 6.04. Survival of Representations and Warranties............... 33
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in Lessor's
Estate................................................... 33
Section 7.02. Citizenship. ............................................ 34
Section 7.03. Representations, Warranties and Covenants of Owner
Participant......................................... 36
Section 7.04. Representations, Covenants and Warranties of SSB and
the Owner Trustee................................... 39
Section 7.05. Representations, Warranties and Covenants of the
Indenture Trustee................................... 42
Section 7.06. Indenture Trustee's Notice of Default.................... 43
Section 7.07. Releases from Indenture.................................. 43
Section 7.08. Covenant of Quiet Enjoyment.............................. 43
Section 7.09. Original Loan Participant's and Pass Through Trustee's
Representations and Warranties. .................... 44
Section 7.10. Survival of Representations, Warranties and Covenants.... 45
Section 7.11. Lessee's Assumption of the Certificates.................. 45
Section 7.12. Indebtedness of Owner Trustee............................ 47
Section 7.13. Compliance with Trust Agreement, Etc..................... 47
Section 7.14. Subordination Agent's Representations, Warranties and
Covenants. ......................................... 48
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes......................... 50
Section 8.02. After-Tax Basis.......................................... 55
Section 8.03. Time of Payment.......................................... 56
Section 8.04. Contests................................................. 56
Section 8.05. Refunds.................................................. 58
Section 8.06. Lessee's Reports......................................... 59
Section 8.07. Survival of Obligations.................................. 59
Section 8.08. Payment of Taxes......................................... 59
Section 8.09. Reimbursements by Indemnitees Generally.................. 60
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally................................................ 60
Section 9.02. After-Tax Basis.......................................... 63
Section 9.03. Subrogation.............................................. 64
Section 9.04. Notice and Payment....................................... 64
Section 9.05. Refunds.................................................. 65
Section 9.06. Defense of Claims........................................ 65
Section 9.07. Survival of Obligations.................................. 66
Section 9.08. Effect of Other Indemnities.............................. 66
Section 9.09. Interest................................................. 66
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs....................... 67
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee.................. 70
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant.................... 71
Section 12.02. Interest of Holders of Certificates..................... 71
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents.................... 72
Section 13.02. Further Assurances...................................... 72
Section 13.03. No Retroactive Application. ............................ 72
Section 13.04. Pass Through Trustee's and Subordination Agent's
Acknowledgement.................................... 72
ARTICLE 14
NOTICES
Section 14.01. Notices................................................. 73
ARTICLE 15
REFINANCING/REOPTIMIZATION
Section 15.01. Refinancing............................................. 74
Section 15.02. Reoptimization.......................................... 77
ARTICLE 16
[RESERVED]
ARTICLE 17
MISCELLANEOUS
Section 17.01. Owner for Federal Tax Purposes.......................... 79
Section 17.02. [Reserved].............................................. 79
Section 17.03. Counterparts............................................ 79
Section 17.04. No Oral Modifications................................... 79
Section 17.05. Captions................................................ 80
Section 17.06. Successors and Assigns.................................. 80
Section 17.07. Concerning the Owner Trustee, Indenture Trustee and
the Pass Through Trustee........................... 80
Section 17.08. Severability............................................ 80
Section 17.09. Public Release of Information........................... 81
Section 17.10. Certain Limitations on Reorganization................... 81
Section 17.11. GOVERNING LAW........................................... 81
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 Certificate Information
SCHEDULE II Definitions
SCHEDULE III Permitted Country List
EXHIBIT A(1)(a) Opinion of Lessee's Counsel
EXHIBIT A(1)(b) Opinion of Lessee's Special Counsel
EXHIBIT A(2)(a) Opinion of Owner Participant's and Owner Participant
Guarantor's Special Counsel
EXHIBIT A(2)(b) Opinion of Owner Participant's and Owner Participant
Guarantor's Counsel
EXHIBIT A(3) Opinion of Indenture Trustee's Special Counsel
EXHIBIT A(4) Opinion of Owner Trustee's Special Counsel
EXHIBIT A(5) Opinion of Pass Through Trustee's and Subordination
Agent's Special Counsel
EXHIBIT A(6)(a) Opinion of Liquidity Provider's Counsel
EXHIBIT A(6)(b) Opinion of Liquidity Provider's Special Counsel
EXHIBIT A(7) Opinion of Special Aviation Counsel
EXHIBIT B Form of Lease Agreement
EXHIBIT C Form of Indenture
EXHIBIT D Form of Trust Agreement
PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N590FE)
PARTICIPATION AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO.
N590FE) dated as of May 1, 1998, as amended and restated as of June 15, 1998
(this "Agreement") among FEDERAL EXPRESS CORPORATION, a Delaware corporation
(herein, together with its successors and permitted assigns, the "Lessee"), BMO
LEASING (U.S.), INC., a Delaware corporation (herein, together with its
successors and permitted assigns, the "Owner Participant"), MORGAN GUARANTY
TRUST COMPANY OF NEW YORK (together with its successors and permitted assigns,
the "Original Loan 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").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article 1 hereof.
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, the
Original Loan Participant and the Indenture Trustee entered into the Original
Participation Agreement, providing for the sale and lease of the Aircraft that
was delivered on the Delivery Date;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Participant entered into the
Original Trust Agreement relating to the Aircraft with SSB in its individual
capacity, pursuant to which SSB agreed, among other things, to hold the Lessor's
Estate in trust for the benefit of the Owner Participant;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Trustee and the Indenture Trustee
entered into the Original Indenture, for the benefit of the Original Loan
Participant, pursuant to which the Owner Trustee issued to the Original Loan
Participant the Original Loan Certificates as evidence of the loans made by the
Original Loan Participant to the Owner Trustee, the proceeds of which were used
by the Owner Trustee to pay a portion of the Purchase Price for the Aircraft;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Trustee and the Lessee entered into
the Original Lease relating to the Aircraft, whereby, subject to the terms and
conditions set forth in said Lease, the Owner Trustee agreed to lease the
Aircraft to the Lessee, and the Lessee agreed to lease the Aircraft from the
Owner Trustee, such lease of the Aircraft being evidenced by the execution and
delivery of the Lease Supplement;
WHEREAS, Article 15 of the Original Participation Agreement
permits a Refinancing of the Original Loan Certificates subject to the
satisfaction of the conditions specified in Section 15.01 thereof, and Section
3.04 of the Original Lease contemplates the adjustment of the percentages for
Basic Rent, Stipulated Loss Value, EBO Price and Termination Value in the event
of such a Refinancing, and the Lessee has requested that the Owner Trustee
effect such a Refinancing and adjustment;
WHEREAS, in order to facilitate such Refinancing, the Lessee is
concurrently entering into an Underwriting Agreement, which relates to three
series of Pass Through Certificates that will be issued by the Pass Through
Trusts formed to acquire, among other securities, the Certificates bearing a
particular Series and having a particular Maturity that will be issued under the
Indenture;
WHEREAS, on the Pass Through Closing Date, a closing will occur
with respect to the public offering of the Pass Through Certificates issued by
each Pass Through Trust, an allocable amount of the proceeds of which offering
will be used by the Pass Through Trustee to purchase for each such Pass Through
Trust the Certificates of the Series and Maturity applicable thereto, the
proceeds of which purchase in turn will be applied to the Refinancing in full of
the outstanding principal amount of the Original Loan Certificates;
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, the
Original Loan Participant and the Indenture Trustee have agreed, subject to the
terms and conditions hereinafter provided, to amend and restate, and to add each
of the Pass Through Trustee and the Subordination Agent as a party to, the
Original Participation Agreement;
WHEREAS, concurrently with the execution and delivery hereof, (i)
the Liquidity Provider will enter 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 will
enter into the Intercreditor Agreement;
WHEREAS, the Certificates will be 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, the Lessee, the Owner Participant, the Owner Trustee, the
Original Loan Participant and the Indenture Trustee have agreed, to the extent
they are parties thereto and, subject to the terms and conditions hereinafter
provided, to amend and restate the Original Indenture, to amend and restate the
Original Lease, to amend and restate the Original Ancillary Agreement I, to
amend the Original Tax Indemnity Agreement and to amend and restate the Original
Trust Agreement, each such amendment and restatement to be executed and
delivered simultaneously with the purchase of the Certificates by the Pass
Through Trustee for the Pass Through Trusts and the Refinancing in full of the
Original Loan Certificates; and
WHEREAS, FSC is an Affiliate of the Owner Participant, and is a
foreign sales corporation, as defined in Section 922 of the Code, acting as a
commission agent on behalf of the Owner Participant with respect to the Lease.
NOW, THEREFORE, in consideration of the mutual covenants contained
in this Agreement and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto agree, subject to the terms and
conditions hereinafter provided, that the Original Participation Agreement be
and the same is hereby amended and restated in its entirety as follows:
ARTICLE 1
DEFINITIONS
Unless otherwise specifically provided herein, the definitions set
forth in Schedule II hereto are incorporated herein for all purposes of this
Agreement and shall be equally applicable to both the singular and the plural
forms of the terms so defined.
ARTICLE 2
ISSUANCE OF PASS THROUGH CERTIFICATES;
REFUNDING THE ORIGINAL LOAN CERTIFICATES
Section 2.01. Transfer of Funds.
(a) On or before the Pass Through Closing Date, the Pass Through
Trustee and the Lessee, in accordance with the Pass Through Agreement, shall
enter into the Series Supplements, and, subject to the terms and conditions set
forth therein, on the Pass Through Closing Date (i) the Lessee shall direct the
Underwriters to execute a wire transfer or intra-bank transfer to the Pass
Through Trustee in the amount of the total proceeds payable pursuant to the
Underwriting Agreement with respect to the Pass Through Certificates and (ii)
the Pass Through Trustee shall deliver the Pass Through Certificates to the
Underwriters upon receipt by the Pass Through Trustee of such proceeds.
(b) Subject to the satisfaction or waiver of the conditions set
forth herein, on the Refunding Date the following events shall occur in the
order set forth below:
(i) the Lessee shall on behalf of the Owner Trustee execute a wire
transfer or intra-bank transfer in favor of the Agent (as a prepayment of
the portion of Basic Rent allocable to the period from the Closing Date
through the Refunding Date) in the amount of all accrued and unpaid
interest on the Original Loan Certificates to but excluding the Refunding
Date, which transfer shall constitute the payment of all such accrued and
unpaid interest;
(ii) the Lessee shall on behalf of the Owner Trustee execute a
wire transfer or intra-bank transfer in favor of the Agent as Supplemental
Rent in the amount of any Breakage Costs required to be paid pursuant to
the Original Indenture which transfer shall constitute the payment of all
such Breakage Costs;
(iii) for each Pass Through Trust, from an allocable amount of the
proceeds of the sale of the related Pass Through Certificates, the Pass
Through Trustee shall pay on behalf of the Owner Trustee in the manner
specified in paragraph (iv) below, an amount equal to the principal amount
of Certificates of the Series and Maturity that relates to such Pass
Through Trust, which amounts in the aggregate shall equal the aggregate
principal amount of the Certificates as specified in Section 2.04 of the
Indenture;
(iv) the aggregate amount payable by the Pass Through Trustee
pursuant to paragraph (iii) above shall be payable by wire transfer or
intra-bank transfer in favor of the Agent on behalf of the Owner Trustee in
the amount of the outstanding principal amount of the Original Loan
Certificates;
(v) the Agent shall apply the amounts received by it under
paragraphs (i), (ii) and (iv) of this subsection (b) to prepay the Original
Loan Certificates in full in accordance with Sections 2.06 and 2.10 of the
Original Indenture; and
(vi) the Owner Trustee shall cause the Certificates to be
delivered to the applicable Pass Through Trustee in accordance with Section
2.02 hereof.
On the Refunding Date concurrently with the events specified in
clauses (iii) through (v) of this Section 2.01(b), the parties hereto shall
execute and deliver, to the extent they are parties thereto, and consent to the
execution and delivery of (if they are not a party thereto), the Indenture, the
Lease and the Trust Agreement, and the Owner Trustee shall execute and deliver
to the Indenture Trustee for authentication, and the Indenture Trustee shall
authenticate and deliver to the Subordination Agent on behalf of the Pass
Through Trustee for each of the Pass Through Trusts, upon the request of the
Owner Trustee, the Certificates as provided in Section 2.02 hereof. The Owner
Participant hereby requests and directs the Owner Trustee to execute and deliver
this Agreement and, subject to the terms hereof, to take the actions specified
herein. The Original Loan Participant by its execution and delivery hereof,
requests and directs the Indenture Trustee to execute and deliver this Agreement
and concurrently with the events specified in clauses (iii) through (v) of this
Section 2.01(b) and subject to the terms and conditions hereof to take the
actions contemplated herein. The parties hereto, including, without limitation,
the Original Loan Participant, confirm that, as provided in Section 2.06 of the
Original Indenture, upon payment in full of the principal amount, Breakage
Costs, if any, and interest on the Original Loan Certificates and all other sums
then payable to the Original Loan Participant under the Original Agreements to
the extent specified in subsection (c) below, the Original Loan Participant
shall have no further interest in, or other right or obligation with respect to,
the Trust Indenture Estate, the Original Agreements or the Operative Agreements
(it being understood that the foregoing shall not limit or detract from any
claim that the Original Loan Participant may have under Article 8 or 9 or
Section 10.01(a)(ii) hereof or of the Original Participation Agreement) and,
accordingly, have no obligation to, and will not attempt to direct any future
actions of the Indenture Trustee with respect to the Trust Indenture Estate,
provided that the rights and obligations of the Original Loan Participant shall,
until the payment in full of such amounts to the Agent on behalf of the Original
Loan Participant on the Refunding Date, be governed by the Original
Participation Agreement and the other Operative Agreements contemplated thereby
or in effect immediately prior to the effectiveness of this Agreement and shall,
upon such payment and thereafter, be governed by this Agreement. The Lessee
hereby consents to the foregoing.
(c) Not less than three (3) Business Days prior to the Refunding
Date, the Agent on behalf of the Original Loan Participant shall give notice in
writing to the parties hereto of the principal amount, Breakage Costs, if any,
and interest on and all other amounts due on the Refunding Date under the
Original Loan Certificates and all other sums payable on the Refunding Date to
the Original Loan Participant under the Original Agreements, such notice to be
deemed final and binding on the Original Loan Participant as to the respective
amounts of principal, Breakage Costs, if any, and interest when given; provided
that the expected Refunding Date, at the time such notice is given, is the same
as the Refunding Date.
(d) On the Refunding Date, subject to (i) the giving of the
written notice referred to in Section 2.01(c) above to the Indenture Trustee and
the Original Loan Participant, (ii) the receipt by the Original Loan Participant
of the funds referred to in Section 2.01(b)(v) above and (iii) compliance with
the provisions of Article 15 of the Original Participation Agreement and Section
2.10(c) of the Original Indenture (including the Refinancing in full of the
Original Loan Certificates), the Original Loan Participant shall deliver the
Original Loan Certificates to the Indenture Trustee for cancellation and
delivery to the Owner Trustee.
(e) The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
Refinancing of the Original Loan Certificates (together, the "Closings") shall
take place at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, New
York, New York 10017.
(f) All payments pursuant to this Section 2.01 shall be made in
immediately available funds.
(g) In the event that the Refunding Date and the actions
contemplated to occur on such date pursuant to subsection (d) of this Section
2.01 do not occur on or before July 30, 1998, then the rights and obligations of
the parties to the Original Participation Agreement, including, without
limitation, the Original Loan Participant and the Indenture Trustee, shall be
governed by the Original Participation Agreement and the other Operative
Agreements contemplated thereby or in effect immediately prior to the
effectiveness of this Agreement and this Agreement shall be of no further force
and effect, except that the Lessee shall be obligated hereby to pay all fees and
expenses of the Original Loan Participant, the Indenture Trustee, the Owner
Participant, the Owner Participant Guarantor, the Owner Trustee, the Pass
Through Trustee and their respective counsel relating to the transactions
contemplated hereby. Each of the parties hereto agrees to execute and deliver to
the other parties such documents and instruments as may be necessary to give
effect to the foregoing provisions of this subsection (g).
Section 2.02. Certificates. Subject to the satisfaction or waiver
of the conditions set forth herein, on the Refunding Date, the Owner Participant
will instruct the Owner Trustee to execute and deliver to the Indenture Trustee,
and the Indenture Trustee shall authenticate and deliver, upon the request of
the Owner Trustee, to the Subordination Agent on behalf of the Pass Through
Trustee for each of the Pass Through Trusts, the Certificates specified for such
Pass Through Trust on Schedule I attached hereto, which (i) shall be issued in
the principal amount and in the Series and Maturity set forth for such
Certificate in Schedule I hereto, (ii) shall bear interest at the interest rate
set forth for such Certificate in Schedule I hereto, (iii) shall be issued in
such form and on such terms as are specified in the Indenture, (iv) shall be
dated and authenticated on the Refunding Date and shall bear interest from the
Refunding Date and (v) shall be registered in the name of the Subordination
Agent on behalf of the Pass Through Trustee for such Pass Through Trust.
Section 2.03. Owner Participant's Instructions to Owner Trustee.
The Owner Participant agrees that the issuance of Certificates in accordance
with the terms hereof shall constitute, without further act, authorization and
direction by the Owner Participant to the Owner Trustee to take the action
specified in Section 1.01 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.
ARTICLE 3
EXTENT OF INTEREST OF ORIGINAL LOAN PARTICIPANT
Section 3.01. Extent of Interest of Original Loan Participant.
Delivery of the Original Loan Certificates by the Original Loan Participant to
the Indenture Trustee for cancellation on the Refunding Date shall be conclusive
evidence of receipt by the Original Loan Participant of all amounts then due and
payable to the Original Loan Participant in respect of principal of, Breakage
Costs, if any, and interest on the Original Loan Certificates under the Original
Agreements (it being understood that the foregoing shall not limit or detract
from any claim the Original Loan Participant may have under Article 8 or 9 or
Section 10.01(a)(ii) hereof or of the Original Participation Agreement).
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent. The obligations of the Owner
Trustee, the Owner Participant, the Indenture Trustee, the Subordination Agent
and the Pass Through Trustee on behalf of each Pass Through Trust to participate
in the transactions contemplated hereby are subject to the fulfillment to the
satisfaction of such party (or waiver by such party), prior to or on the
Refunding Date, of the following conditions precedent (it being understood that
receipt by the Lessee of any of the following documents shall not be a condition
precedent to the obligations of any party):
(a) Certificates. (i) On the Refunding Date, there shall have been
duly issued and delivered by the Owner Trustee to the Subordination Agent
on behalf of the Pass Through Trustee for each Pass Through Trust, against
payment therefor, a Certificate, substantially in the form set forth in
Exhibit B to the Indenture, duly authenticated, dated the Refunding Date
and registered in the name of the Subordination Agent, in the principal
amounts, Series and Maturity, bearing the interest rate and the other
economic terms specified in the Series Supplements and otherwise as
provided in Section 2.04 of the Indenture. (ii) The Pass Through
Certificates shall be registered under the Securities Act, any applicable
state securities laws shall have been complied with, and the Pass Through
Agreement shall have been qualified under the Trust Indenture Act, and on
the Refunding Date, the "Certificates" (as defined in each of the Related
Indentures) have been duly issued and delivered by the "Owner Trustee" (as
defined in each of the Related Indentures) to the Subordination Agent on
behalf of the Pass Through Trustee for each Pass Through Trust.
(b) Legal Investment. No change shall have occurred after 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 or its special counsel, 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
transactions to be consummated on the Refunding Date; and no action or
proceeding shall have been instituted nor shall governmental action before
any court, governmental authority or agency be threatened which in the
opinion of counsel for the Owner Participant, the Indenture Trustee, the
Subordination Agent or the Pass Through Trustee is not frivolous, nor shall
any order have been issued or proposed to be issued by any court, or
governmental authority or agency, as of the Refunding Date, to set aside,
restrain, enjoin or prevent the consummation of any of the transactions
contemplated by this Agreement or by any of the other Operative Agreements.
(c) Underwriters. The Underwriters shall have transferred the
funds specified in Section 2.01(a) hereof and all conditions thereunder
shall have been satisfied or waived.
(d) Refunding Documents. This Agreement and the following
documents shall have been duly authorized, executed and delivered by the
respective party or parties thereto, shall each be satisfactory in form and
substance to the Lessee, the Owner Trustee, the Indenture Trustee, the Pass
Through Trustee and the Owner Participant (each acting directly or by
authorization to its special counsel) and shall each be in full force and
effect; there shall not have occurred any default thereunder, or any event
which with the lapse of time or the giving of notice or both would be a
default thereunder, and copies executed or certified as requested by the
Lessee, the Owner Trustee, the Indenture Trustee, the Pass Through Trustee,
the Subordination Agent 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 and the Owner Trustee (provided that the sole chattel-paper original
of each of the Lease and each Ancillary Agreement amendatory of the Lease
shall be delivered to the Indenture Trustee):
(i) the Lease;
(ii) the Indenture;
(iii) in the case of the Owner Participant only, Amendment No. 1
to the Original Tax Indemnity Agreement;
(iv) the Trust Agreement;
(v) each Ancillary Agreement;
(vi) the Owner Participant Guaranty;
(vii) the Owner Trustee Guaranty;
(viii) the Intercreditor Agreement; and
(ix) the Liquidity Facility for each of the Pass Through Trusts
for the Series A Certificates and the Series B
Certificates.
(e) Insurance. Each of the Indenture Trustee, the Pass Through
Trustee, the Owner Trustee, each Liquidity Provider and the Owner
Participant shall have received such evidence as it deems appropriate,
including, without limitation, an independent insurance broker's report,
together with certificates of insurance from such broker, in form and
substance satisfactory to the Indenture Trustee, the Pass Through Trustee,
the Owner Trustee, each Liquidity Provider and the Owner Participant to
establish that the insurance required by Article 13 of the Lease is in
effect.
(f) Financing Statements. (i) UCC financing statements covering
all the security interests (and other interests) created by or pursuant to
the Granting Clause of the Original Indenture shall have been executed and
delivered by the Owner Trustee, as debtor, and by the Indenture Trustee, as
secured party, for and on behalf of the Original Loan Participant, and such
financing statements shall have been duly filed in the State of
Connecticut; (ii) a form UCC-3 financing statement to amend and restate
each financing statement referred to in the immediately preceding sentence
shall have been executed and delivered by the Owner Trustee, as debtor, and
by the Indenture Trustee as secured party, and a form UCC-1 financing
statement covering all the security interests (and other interests) created
by or pursuant to the Granting Clause of the Indenture shall have been
executed and delivered by the Owner Trustee, as debtor, and by the
Indenture Trustee, as secured party, for and on behalf of the Holders, and
concurrently with the Refinancing of the Original Loan Certificates such
UCC-3 financing statement and UCC-1 financing statement shall have been
duly filed or duly submitted for filing in the State of 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; (iii) a UCC notice
filing describing the Original Lease as a lease shall have been executed
and delivered by the Owner Trustee, as lessor, and the Lessee, as lessee
(which filing shall name the Indenture Trustee as assignee of the Owner
Trustee), and shall have been duly filed in the State of Tennessee; and
(iv) a form UCC-3 financing statement to amend and restate the UCC notice
filing referred to in the immediately preceding clause (iii) shall have
been executed and delivered by the Owner Trustee, as lessor, and by the
Lessee, as lessee (which filing shall name the Indenture Trustee as
assignee of the Owner Trustee), and such notice filing shall concurrently
with the Refinancing of the Original Loan Certificates have been duly filed
in the State of Tennessee, and all other actions shall have been taken
which, in the opinion of the Owner Participant, the Pass Through Trustee
and the Underwriters, are necessary to perfect and protect such security
interests and other interests created by or pursuant to the Granting Clause
of the Indenture.
(g) Corporate Documents. Except when such Person is the delivering
party, the Owner Participant, the Owner Trustee, the Original Loan
Participant, the Pass Through Trustee, the Subordination Agent, the Lessee
and the Indenture Trustee (acting directly or by authorization to its
counsel) shall have received the following, in each case in form and
substance satisfactory to it:
(i) a copy of the certificate of incorporation and by-laws
of the Lessee, certified by the Secretary or an Assistant
Secretary of the Lessee as of the Refunding Date, and a copy of
the minutes of the regular meeting of the board of directors of
the Lessee, certified as such as of the Refunding Date by such
Secretary or Assistant Secretary, duly authorizing the lease by
the Lessee of the Aircraft under the Lease and the execution,
delivery and performance by the Lessee of the Original Agreements
to which it is a party, this Agreement, the Lease, the Tax
Indemnity Agreement, the Pass Through Agreement, the Series
Supplements, the other Operative Agreements to which the Lessee is
or is to be a party and each other document to be executed and
delivered by the Lessee in connection with the transactions
contemplated hereby;
(ii) a copy of the articles of incorporation and bylaws of
the Owner Participant and the Owner Participant Guarantor,
certified by the Secretary or an Assistant Secretary of the Owner
Participant or the Owner Participant Guarantor as of the Refunding
Date, and a copy of the resolutions of the board of directors of
the Owner Participant, certified as such as of the Refunding Date
by such Secretary or an Assistant Secretary, authorizing the
execution and delivery by the Owner Participant of the Original
Agreements to which it is a party, this Agreement, the Tax
Indemnity Agreement, the Trust Agreement and the other Operative
Agreements to which the Owner Participant is or is to be a party
and each other document to be executed and delivered by the Owner
Participant in connection with the transactions contemplated
hereby;
(iii) a copy of the articles of association and by-laws and
other instruments of the Owner Trustee and the Owner Trustee
Guarantor, certified by the Secretary or an Assistant Secretary of
the Owner Trustee or the Owner Trustee Guarantor as of the
Refunding Date (or other like instruments satisfactory to the
Lessee and the Owner Participant) and evidence authorizing (i) the
execution, delivery and performance by the Owner Trustee in its
individual capacity or as Owner Trustee, as the case may be, of
the Original Agreements to which it is a party, this Agreement,
the Trust Agreement and each of the other Operative Agreements to
which it is or is to be a party, whether in its individual
capacity or as Owner Trustee, and each other document to be
executed and delivered by the Owner Trustee in connection with the
transactions contemplated hereby and (ii) the execution, delivery
and performance by the Owner Trustee Guarantor in its individual
capacity or as Owner Trustee Guarantor, as the case may be, of the
Original Agreements to which it is a party, the Owner Trustee
Guaranty 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 Guarantor, and each other document to be executed
and delivered by the Owner Trustee Guarantor 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 Refunding Date (or other like instruments satisfactory to the
Lessee and the Owner Participant) and evidence authorizing the
execution, delivery and performance by the Indenture Trustee of
each of the Original Agreements to which it is party, this
Agreement, the Indenture and each of the other Operative
Agreements to which it is or is to be a party, and each other
document to be executed and delivered by the Indenture Trustee in
connection with the transactions contemplated hereby;
(v) a copy of the 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 Refunding Date (or other like instruments satisfactory to
the Lessee and the Owner Participant) and evidence authorizing the
execution, delivery and performance by the Pass Through Trustee of
this Agreement, the Pass Through Agreement, the Series Supplements
and each of the other Operative Agreements to which it is or is to
be a party, and each other document to be executed and delivered
by the Pass Through Trustee in connection with the transactions
contemplated hereby;
(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 Certificate Closing Date (or other like instruments
satisfactory to the Lessee and the Owner Participant) and evidence
authorizing the execution, delivery and performance by the
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, the Owner
Participant, the Owner Trustee Guarantor and the Owner Participant
Guarantor as the Indenture Trustee, the Pass Through Trustee or
the Owner Participant may reasonably request in order to establish
the consummation of the transactions contemplated by this
Agreement.
(h) Title, Airworthiness and Registration. On the Refunding Date,
the following statements shall be true, and the Owner Participant, the
Owner Trustee, the Pass Through Trustee and the Indenture Trustee shall
have received evidence from the Lessee reasonably satisfactory to each such
Person to the effect that:
(i) the Owner Trustee has good and marketable title to the
Aircraft, free and clear of Liens, except the rights of the Owner
Trustee and the Lessee under the Lease and the Lease Supplement
covering the Aircraft, the rights of the Indenture Trustee under
the Indenture and the beneficial interest of the Owner Participant
created by the Trust Agreement and the interest of the Holders
created by the Indenture and the Indenture and Security Agreement
Supplement covering the Aircraft;
(ii) the Aircraft has been duly certificated by the
Aeronautics Authority as to type and airworthiness in accordance
with the terms of the Operative Agreements;
(iii) the Lease, the Indenture and the Trust Agreement
concurrently with the Refinancing of the Original Loan
Certificates have been duly filed for recordation (or shall be in
the process of being so duly filed for recordation) with the
Aeronautics Authority pursuant to the Transportation Code; and
(iv) the Aircraft is registered in the name of the Owner
Trustee.
(i) Officer's Certificate of Lessee. On the Refunding Date, the
following statements shall be true, and the Owner Participant, the Owner
Trustee, the Pass Through Trustee and the Indenture Trustee shall have
received a certificate signed by the Vice President and Treasurer or any
other duly authorized officer of the Lessee, dated the Refunding Date,
stating that:
(i) the representations and warranties of the Lessee
contained in the Operative Agreements to which it is a party
(excluding the Tax Indemnity Agreement) and in any certificate
delivered at the closing pursuant hereto or thereto are true and
correct on and as of the Refunding Date as though made on and as
of such date (except to the extent that such representations and
warranties relate solely to an earlier date, in which case such
certificate shall state that such representations and warranties
were true and correct on and as of such earlier date);
(ii) except for the matters described (i) under "Legal
Proceedings" in the Lessee's Annual Report on Form 10-K for the
fiscal year ended May 31, 1997 (as updated by Note 7 to the
financial statements included in the Lessee's Quarterly Reports on
Form 10-Q for the fiscal quarters ended August 31, 1997, November
30, 1997 and February 28, 1998), 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 unaudited consolidated financial statements of the Lessee as
of February 28, 1998 and nothing has occurred which will,
in the judgment of such officer, materially adversely affect the
ability of the Lessee to carry on its business or to perform its
obligations under this Agreement and each other Operative
Agreement to which it is or is to be a party; and
(iii) no event has occurred and is continuing, or would
result from the purchase, sale, mortgage, or lease of the
Aircraft, which constitutes an Event of Loss (or event which with
the passage of time would become an Event of Loss) with respect to
the Airframe or any Engine, or a Default or an Event of Default
under the Lease.
(j) Officer's Certificates of Owner Participant and Owner
Participant Guarantor. On the Refunding Date, the following statements
shall be true, and the Lessee, the Pass Through Trustee, the Owner Trustee
and the Indenture Trustee shall have received a certificate from (i) the
Owner Participant, signed by a duly authorized officer of the Owner
Participant dated the Refunding Date, stating that:
(A) the representations and warranties of the Owner
Participant contained in this Agreement, the Trust Agreement and
any other Operative Agreement to which it is a party (excluding
the Tax Indemnity Agreement) and in any certificate delivered at
the closing pursuant hereto or thereto, are true and correct on
and as of the Refunding Date as though made on and as of such date
(except to the extent that such representations and warranties
relate solely to an earlier date, in which case such certificate
shall state that such representations and warranties were true and
correct on and as of such earlier date);
(B) no Lessor's Liens attributable to the Owner Participant
exist; and
(C) 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;
and (ii) from the Owner Participant Guarantor, signed by a duly authorized
officer of the Owner Participant Guarantor dated the Refunding Date,
stating that the representations and warranties of the Owner Participant
Guarantor contained in the Owner Participant Guaranty and in any
certificate delivered at the closing pursuant thereto are true and correct
on and as of the Refunding Date as though made on and as of such date
(except to the extent that such representations and warranties relate
solely to an earlier date, in which case such certificate shall state that
such representations and warranties were true and correct on and as of such
earlier date).
(k) Other Officer's Certificates. On the Refunding Date, the
following statements shall be true, and the Lessee, the Owner Participant,
the Pass Through Trustee, the Owner Trustee, the Subordination Agent and
the Indenture Trustee shall have received a certificate from (i) each of
SSB and the Owner Trustee (in the case of the Lessee, the Owner
Participant, the Pass Through Trustee, the Subordination Agent and the
Indenture Trustee), FSB and the Indenture Trustee (in the case of the
Lessee, the Owner Participant, the Pass Through Trustee, the Subordination
Agent and the Owner Trustee), FSB and the Pass Through Trustee (in the case
of the Lessee, the Owner Participant, the Indenture Trustee, the
Subordination Agent and the Owner Trustee) and FSB and the Subordination
Agent (in the case of the Lessee, the Owner Participant, the Pass Through
Trustee, the Indenture Trustee and the Owner Trustee), signed by a duly
authorized officer of SSB and FSB, respectively, dated the Refunding 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:
(A) 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 at the closing pursuant hereto or thereto
are true and correct on and as of the Refunding Date as though
made on and as of such date (except to the extent that such
representations and warranties relate solely to an earlier date,
in which case such certificate shall state that such
representations and warranties were true and correct on and as of
such earlier date);
(B) 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
(C) there are no Lessor's Liens attributable to the Owner
Trustee or SSB and no Indenture Trustee's Liens;
and (ii) from the Owner Trustee Guarantor, signed by a duly authorized
officer of the Owner Trustee Guarantor dated the Refunding Date, stating
that the representations and warranties of the Owner Trustee Guarantor
contained in the Owner Trustee Guaranty and in any certificate delivered at
the closing pursuant thereto are true and correct on and as of the
Refunding Date as though made on and as of such date (except to the extent
that such representations and warranties relate solely to an earlier date,
in which case such certificate shall state that such representations and
warranties were true and correct on and as of such earlier date).
(l) Legal Opinions. The Owner Participant, the Agent, the Original
Loan Participant, the Underwriters, the Lessee, the Owner Trustee, the Pass
Through Trustee and the Indenture Trustee (acting directly or by
authorization to its special counsel) shall have received from the
following counsel their respective legal opinions in each case satisfactory
to the Owner Participant, the Agent, the Original Loan Participant, the
Underwriters, the Lessee, the Owner Trustee, the Pass Through Trustee or
the Indenture Trustee, as the case may be, as to scope and substance (and
covering such other matters as the recipient may reasonably request) and
dated the Refunding Date:
(i) Karen M. Clayborne, Senior Vice President and General
Counsel of the Lessee, in the form of Exhibit A(1)(a) hereto and
addressed to the Agent, the Original Loan Participant, the
Underwriters, the Owner Participant, the Owner Trustee, the Pass
Through Trustee, each Liquidity Provider and the Indenture
Trustee;
(ii) Davis Polk & Wardwell, special counsel for the Lessee,
in the form of Exhibit A(1)(b) hereto and addressed to the Agent,
the Original Loan Participant, the Underwriters, the Owner
Participant, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee, each Liquidity Provider and the Lessee;
(iii) Winston & Strawn, special counsel for the Owner
Participant and the Owner Participant Guarantor, in the form of
Exhibit A(2)(a) hereto and the General Counsel's Office of the
Owner Participant and the Owner Participant Guarantor, in the form
of Exhibit A(2)(b) hereto, each addressed to the Agent, the
Original Loan Participant, 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 Agent, the Original Loan Participant, the
Underwriters, the Owner Participant, the Indenture Trustee, the
Owner Trustee, the Pass Through Trustee, each
Liquidity Provider and the Lessee;
(v) Bingham Dana LLP, special counsel for the Owner Trustee
and the Owner Trustee Guarantor, in the form of Exhibit A(4)
hereto and addressed to the Agent, the Original Loan Participant,
the Underwriters, the Owner Participant, the Indenture Trustee,
the Owner Trustee, the Pass Through Trustee, each Liquidity
Provider and the Lessee;
(vi) Ray, Quinney & Nebeker, special counsel for the Pass
Through Trustee and the Subordination Agent, in the form of
Exhibit A(5) hereto and addressed to the Agent, the Original Loan
Participant, the Underwriters, the Owner Participant, the
Indenture Trustee, the Owner Trustee, the Pass Through Trustee,
each Liquidity Provider and the Lessee;
(vii) Ruediger Sass, General Counsel to the Liquidity
Providers, in the form of Exhibit A(6)(a) hereto, and Milbank,
Tweed, Hadley & McCloy, special counsel for the Liquidity
Providers, in the form of Exhibit A(6)(b) hereto, each addressed
to the Pass Through Trustee, the Subordination Agent, each
Liquidity Provider and the Lessee; and
(viii) Daugherty, Fowler & Peregrin, special aviation
counsel, in the form of Exhibit A(7) hereto and addressed to the
Agent, the Original Loan Participant, the Underwriters, the Owner
Participant, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee, each Liquidity Provider and the Lessee.
(m) 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 (f) and (h) of
this Section 4.01 shall have been duly paid or caused to be paid in full;
and (B) all sales or use taxes and duties related to the consummation of
the transactions contemplated by the Operative Agreements then due and
payable shall have been duly paid in full.
(n) No Indenture Event of Default. No Indenture Event of Default
or Indenture Default has occurred and is continuing.
(o) 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.
(p) Cancellation. Following the Refinancing of the Original Loan
Certificates, the Original Loan Certificates shall have been duly delivered
by the Original Loan Participant to the Indenture Trustee for cancellation
and delivery to the Owner Trustee.
(q) Other Agreements. The Lessee and the Pass Through Trustee
shall have entered into the Pass Through Agreement and the Series
Supplements, all conditions to the effectiveness of each thereof shall have
been satisfied or waived, and the Pass Through Certificates shall have been
issued pursuant to the Series Supplements. The Lessee and the Underwriters
shall have entered into the Underwriting Agreement, all conditions to the
effectiveness thereof shall have been satisfied or waived, and the Pass
Through Certificates shall have been delivered pursuant to the Underwriting
Agreement. All conditions to the effectiveness of each Liquidity Facility
shall have been satisfied or waived.
(r) Tax Law Change. In the opinion of the Owner Participant and
its special counsel, no Change in Tax Law shall have occurred on or before
the Refunding Date which would adversely affect the Owner's Economic
Return.
Section 4.02. Opinion of Special Aviation Counsel. Promptly upon
the filing and, where appropriate, recording of the documents specified in
4.01(h)(iii) hereof, pursuant to the Transportation Code the Lessee shall cause
Special Aviation Counsel to deliver to the Owner Participant, the Owner Trustee,
the Pass Through Trustee and the Indenture Trustee an opinion as to (i) the due
recording of such documents and the documents identified in Section 4.01(i) of
the Original Participation Agreement and (ii), subject to customary
qualifications, the lack of any intervening documents with respect to the
Aircraft.
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations. The
Lessee's obligation to participate in the transactions contemplated hereby is
subject to the conditions that, prior to or on the Refunding Date, the Lessee
shall have received the certificates and other documents which are referred to
in, or the opinions to be addressed to it under, as the case may be, paragraphs
(d), (g)(ii)-(vii), (h)(ii)-(iv), (j), (k) and (l)(ii)-(viii) of Section 4.01
hereof and the Underwriters shall have made available the amounts required to be
paid by them pursuant to Section 2.01 hereof.
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, on the date hereof and as of the Refunding Date:
(a) the Lessee is a corporation duly organized and validly
existing and is in good standing under the laws of the State of Delaware
with its principal place of business and chief executive office (as such
terms are used in Article 9 of the UCC) 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(l)(viii) and 4.02 hereof and except for the filings referred to in
Section 4.01(f) hereof, all of which shall have been duly obtained or made
and shall be in full force and effect on and as of the Refunding Date or as
contemplated by said Sections;
(g) neither the execution, delivery or performance by the Lessee
of the Lessee Documents nor compliance with the terms and provisions hereof
or thereof, conflicts or will conflict with or results or will result in a
breach or violation of any of the terms, conditions or provisions of, or
will require any consent or approval under, any law, governmental rule or
regulation or the charter documents, as amended, or bylaws, as amended, of
the Lessee or any order, writ, injunction or decree of any court or
governmental authority against the Lessee or by which it or any of its
Properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which the Lessee is a party or by which it or
any of its Properties is bound, or constitutes or will constitute a default
thereunder or results or will result in the imposition of any Lien upon any
of its Properties;
(h) there are no pending or, to the knowledge of the Lessee,
threatened actions, suits, investigations or proceedings (whether or not
purportedly on behalf of the Lessee) against or affecting the Lessee or
any of its Property before or by any court or administrative agency which
(A) involve the Aircraft, (B) except for the matters described (i) under
"Legal Proceedings" in the Lessee's Annual Report on Form 10-K for the
fiscal year ended May 31, 1997 (as updated by Note 7 to the financial
statements included in the Lessee's Quarterly Reports on Form 10-Q for the
fiscal quarters ended August 31, 1997, November 30, 1997 and February 28,
1998), 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 has filed or caused to be filed all tax returns
which are required to be filed and has paid or caused to be paid all taxes
shown to be due and payable pursuant to such returns or pursuant to any
assessment received by the Lessee (other than assessments the payment of
which is being contested in good faith by the Lessee), and the Lessee has
no knowledge of any related actual or proposed deficiency or additional
assessment which either in any case or in the aggregate would materially
adversely affect the Lessee's consolidated financial condition (other than,
in any such case, assessments, the payment of which is being contested in
good faith by the Lessee, as to which no representation is made concerning
the Lessee's liability (if any) or the effect of any adverse determination
upon the Lessee's consolidated financial condition);
(j) except for (A) the filing with and, where appropriate,
recordation pursuant to the Transportation Code of the Indenture, the Trust
Agreement and the Lease, (B) the filing of the financing statements
referred to in Section 4.01(f) hereof and (C) the taking of possession by
the Indenture Trustee of the original counterpart of the Lease and
maintaining possession of the original counterpart of the Lease Supplement
delivered on the Delivery Date, no further action, including any filing or
recording of any document, is necessary or advisable in order (i) to
establish the Owner Trustee's title to and interest in the Aircraft and the
Lessor's Estate as against the Lessee and any third parties, or (ii) to
perfect the first security interest in and mortgage Lien on the Trust
Indenture Estate in favor of the Indenture Trustee;
(k) on the Delivery Date, the Owner Trustee received good and
marketable title to the Aircraft, free and clear of all Liens, except the
rights of the Owner Trustee and the Lessee under the Original Lease, the
rights of the Indenture Trustee under the Original Indenture, the
beneficial interest of the Owner Participant created by the Original Trust
Agreement and the interest of the Original Loan Participant created by the
Original Indenture and the Indenture and Security Agreement Supplement
covering the Aircraft;
(l) the Lessee has heretofore delivered to the Owner Participant
true and correct copies of the Lessee's Annual Report on Form 10-K for the
fiscal year ended May 31, 1997, its Quarterly Reports on Form 10-Q for the
fiscal quarters ended August 31, 1997, November 30, 1997 and February 28,
1998 and its Current Report on Form 8-K dated June 11, 1997, and of the
audited consolidated balance sheet of the Lessee for the fiscal year ended
May 31, 1997 and the unaudited consolidated balance sheets of the Lessee as
of August 31, 1997, November 30, 1997 and February 28, 1998, and the
related consolidated statements of income, changes in common stockholders'
investment and cash flows for the fiscal year and interim reporting periods
ended on such dates, accompanied (except in the case of such interim
reporting periods) by a report thereon containing opinions without
qualification, except as therein noted, by Arthur Andersen LLP, independent
public accountants; said financial statements have been prepared in
accordance with generally accepted accounting principles consistently
applied and present fairly the financial position of the Lessee as of such
dates and the results of its operations and cash flows for such periods and
such Annual Report, Quarterly Reports and financial statements did not, as
of their respective dates of filing with the SEC, contain any untrue
statement of a material fact or omit a material fact necessary to make the
statements contained therein not misleading;
(m) with respect to ERISA, except as otherwise disclosed:
(i) none of the Pension Plans 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 or any ERISA Affiliate;
(iii) no "accumulated funding deficiency" (as such term is
defined in Section 302 of ERISA or Section 412 of the Code) exists
with respect to any Pension Plan, whether or not waived, nor has
any request for a waiver under Section 412(d) of the Code been, or
is reasonably likely to be, filed with respect to any of the
Pension Plans;
(iv) neither the Lessee nor any ERISA Affiliate has failed
to make any contribution or payment to any Pension Plan which has
resulted or could reasonably be expected to result in the
imposition of a Lien under Section 302(f) of ERISA or Section
412(n) of the Code;
(v) all Pension Plans are in compliance in all material
respects with all applicable provisions of ERISA and the Code;
(vi) neither the Lessee nor any ERISA Affiliate has incurred
or is reasonably likely to incur any material withdrawal liability
pursuant to Section 4201 or 4204 of ERISA or any material
liability under Section 515 of ERISA;
(vii) to the best of the Lessee's knowledge, neither the
Lessee nor any ERISA Affiliate has engaged in a "prohibited
transaction" (within the meaning of Section 4975 of the Code or
Section 406 of ERISA) which could reasonably be expected to
subject the Lessee to the tax or penalties on prohibited
transactions imposed by Section 4975 of the Code or Section 502 of
ERISA; and
(viii) assuming the truth of the representations contained
in Section 7.03(a)(viii) hereof and compliance with Section 10.06
of the Indenture, the execution and delivery of this Agreement and
the other Operative Agreements and the consummation of the
transactions contemplated hereby and thereby will not involve any
transaction which is prohibited by Section 406 of ERISA or in
connection with which a tax could be imposed pursuant to Section
4975 of the Code. No part of the funds to be used by the Lessee in
satisfaction of its obligations under this Agreement or any other
of the Operative Agreements to which the Lessee is a party or to
which the Lessee is bound are the assets of any employee benefit
plan subject to Title I of ERISA, or any individual retirement
account or a plan subject to Section 4975 of the Code.
As used in this Section 6.01(m), the term "Pension Plan" means an employee
pension benefit plan as defined in Section 3(2) of ERISA (other than a
multiemployer plan as defined in Section 4001(a)(3) of ERISA) which is
covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code and which is maintained, or contributed to,
by the Lessee or any ERISA Affiliate, and the term "ERISA Affiliate" means
any entity which together with the Lessee would be treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code;
(n) the Lessee is a Citizen of the United States;
(o) except for the filings referred to in Sections 4.01(f) 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 Refunding Date, all premiums with respect to the
insurance required to be provided by the Lessee on or prior to the
Refunding Date under Article 13 of the Lease shall have been paid by the
Lessee;
(q) on the Refunding Date, all sales or use taxes relating to the
sale of the Aircraft by the Lessee to the Owner Trustee which are then or
were theretofore due shall have been paid;
(r) the Lessee is not in default under any mortgage, deed of
trust, indenture, lease or other instrument or agreement to which the
Lessee is a party or by which it or any of its Properties or assets may be
bound, or in violation of any applicable law, which default or violation
would have a material adverse effect on the financial condition, business
or operations of the Lessee or its ability to perform any of its
obligations under the Lessee Documents;
(s) no Default or Event of Default or Event of Loss or event,
which with the passage of time or if continued unremedied or unaltered
would constitute an Event of Loss, has occurred or exists;
(t) the Aircraft has been duly certificated by the FAA as to type
and airworthiness; there is in effect with respect to the Aircraft a
current and valid airworthiness certificate issued by the FAA pursuant to
the Transportation Code; and there is no fact known to the Lessee which
materially adversely affects the value, utility or condition of the
Aircraft;
(u) on the Refunding Date, the Lessee shall not be in default in
the performance of any term or condition of the Engine Warranty Assignment
and the GTA;
(v) neither the Lessee nor any subsidiary of the Lessee is an
"investment company" or a company "controlled by an investment company"
within the meaning of the Investment Company Act of 1940, as amended;
(w) the Aircraft is fully equipped to operate in commercial
service and will comply with all governmental requirements governing such
service;
(x) 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 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 Delivery Date (except to the extent such representations expressly
related solely to a specified earlier date, in which case such warranties
and representations were correct on and as of such earlier date).
Section 6.02. Offering by Lessee. The Lessee represents and
warrants that it has authorized no one to act on its behalf in connection with
the offer or sale of any interest in the Lessor's Estate or the Trust Agreement
other than First Chicago Leasing Corporation. The Lessee represents and warrants
that neither it, nor, based on representations of First Chicago Leasing
Corporation, First Chicago Leasing Corporation acting on its behalf, has taken
or will take any action which would subject the issuance or sale of any interest
in the Lessor's Estate or the Trust Agreement to the provisions of Section 5 of
the Securities Act of 1933, as amended. 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 5 other institutional investors (as such term is defined in Regulation
D promulgated under the Securities Act of 1933, as amended).
Section 6.03. Certain Covenants of Lessee. The Lessee covenants
and agrees with the Owner Participant, the Owner Trustee (in its individual
capacity and as Owner Trustee), the Pass Through Trustee (in its individual
capacity and as Pass Through Trustee) and the Indenture Trustee (in its
individual capacity and as Indenture Trustee) as follows:
(a) The Lessee will cause to be done, executed, acknowledged and
delivered, at the Lessee's cost and expense, all such further acts,
conveyances and assurances as the Owner Trustee, the Indenture Trustee, the
Pass Through Trustee or the Owner Participant shall reasonably require for
accomplishing the purposes of this Agreement, the Trust Agreement, the
Indenture, the Tax Indemnity Agreement, the Lease and the other Operative
Agreements to which it is a party. Without limiting the generality of this
Section 6.03(a), the Lessee will take, or cause to be taken, at the
Lessee's cost and expense, such action with respect to the recording,
filing, re-recording and re-filing of the Indenture, each Indenture and
Security Agreement Supplement, the Lease, each Lease Supplement and any
financing statements or other instruments as may be necessary, or as
requested by the Indenture Trustee and appropriate, to maintain the
perfection of the first security interest and the Lien created by the
Indenture, and the Owner Trustee's title to and interest in the Aircraft
and the Lessor's Estate as against the Lessee and any third parties or if
the Lessee cannot take, or cause to be taken, such action, will furnish to
the Indenture Trustee and the Owner Trustee timely notice of the necessity
of such action, together with such instruments, in execution form, and such
other information as may be required to enable either of them to take such
action at the Lessee's cost and expense in a timely manner.
(b) The Lessee shall maintain the certificates referred to in
Section 7.01 of the Lease and shall cause the Aircraft to remain duly
registered in the name of the Owner Trustee, under the Transportation Code;
provided, however, that the Owner Participant, the Owner Trustee and the
Indenture Trustee agree that, so long as no Default or Event of Default
shall have occurred and be continuing, if at any time after December 31,
2005 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 in which a sublessee could be located under
the provisions of Section 7.02(a)(i) of the Lease with which the United
States then maintains normal and full 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:
(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, that the rights of the Owner Trustee in
and to the Aircraft will not be impaired in such new jurisdiction
of registry and that the new jurisdiction of registry will give
effect to the title and registry of the Aircraft therein
substantially to the same extent as does the Government;
(C) that such new country of registry (x) would provide
substantially equivalent protection for the rights of owner
participants, lessors or lenders in similar transactions as
provided under United States law (except that, in the absence of
restrictions under the laws of such country on rights and remedies
of lessors and secured parties similar to those imposed by
Sections 362 and 363 of the Bankruptcy Code, rights and remedies
similar to those available under Section 1110 of the Bankruptcy
Code shall not be required), and (y)(i) if such change in
registration is made other than in connection with a sublease,
imposes maintenance standards at least comparable to those of the
FAA, and (ii) if such change in registration is made in connection
with a sublease permitted under Section 7.02(a)(i) of the Lease,
imposes maintenance standards in conformity with those set forth
in Section 7.02(a)(i) of the Lease;
(D) that import and export certificates and any exchange
permits necessary to allow all Rent and other payments provided
for under the Lease, if required, shall have been procured at the
Lessee's own cost and expense by the Lessee;
(E) that the Lessee shall have effected or caused to be
effected at the Lessee's own cost and expense all recordings and
filings that are required to perfect the Lien of the Indenture;
(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;
(G) that such change will not result in the imposition of,
or increase in the amount of, any Tax for which the Lessee has not
agreed to indemnify the Owner Participant, the Indenture Trustee,
the Pass Through Trustee, the Owner Trustee (or any successor,
assign or Affiliate thereof) and the Trust Estate in a manner
satisfactory to such parties;
(H) that any value added tax, customs duty, tariff or
similar governmental charge relating to the change in jurisdiction
of registration of the Aircraft shall have been paid in full or
adequately provided for by the Lessee to the satisfaction of the
Owner Trustee, the Indenture Trustee and the Owner Participant;
(I) 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;
(J) that duties and tariffs, if applicable, shall have been
paid for by the Lessee;
(K) as to the continuation of the Lien of the Indenture as a
first priority, duly perfected Lien on the Aircraft and the Trust
Indenture Estate, that all recordings and filings required to so
perfect the Lien of the Indenture have been duly effected, and
that no Liens (except Liens permitted under Section 6.01 of the
Lease) shall arise by reason of such registration; and
(L) that appropriate deregistration powers of attorney in
favor of the Owner Trustee and the Indenture Trustee have been
executed and delivered by the Lessee and any sublessee and, if
necessary or desirable for the effectiveness thereof, filed with
the relevant aeronautics authority; and
(ii) a favorable opinion of counsel (reasonably satisfactory to
the Owner Trustee, the Indenture Trustee and the Owner Participant) in the
new jurisdiction of registry, addressed and reasonably satisfactory to such
parties in scope, form and substance, to the effect:
(A) that the terms (including, without limitation, the
governing law, service-of-process and jurisdictional-submission
provisions thereof) of the Lease and the Indenture are legal,
valid, binding and enforceable in such jurisdiction against the
Lessee, any sublessee, the Owner Trustee and the Indenture
Trustee, respectively;
(B) that it is not necessary for the Owner Participant, the
Owner Trustee, the Indenture Trustee or the Pass Through Trustee
to register or qualify to do business or meet other requirements
not already met in such jurisdiction in connection with the
registration in the new jurisdiction (and the filing and/or
recordation therein of the Indenture or 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 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 will not impair the
rights of the Lessor in and to the Aircraft and (unless the Lessee
shall have agreed to provide insurance reasonably satisfactory to
the Indenture Trustee and the Owner Participant covering the risk
of requisition of use of the Aircraft by the government of
registry of the Aircraft) require fair compensation by the
government of such jurisdiction payable in currency freely
convertible into United States dollars for the loss of use of the
Aircraft in the event of such requisition;
(F) that the Owner Trustee's title to the Aircraft is
recognized and fully enforceable in such jurisdiction, that such
jurisdiction will give effect to the title of the Aircraft therein
substantially to the same extent as does the Government, and that
the Lien of the Indenture shall continue as a first priority, duly
perfected lien on the Aircraft;
(G) to such further effect with respect to such other
matters as the Owner Participant, the Owner Trustee or the
Indenture Trustee may reasonably request; and
(H) the Lien of the Indenture continues to constitute a
first priority, duly perfected Lien on the Aircraft.
If following any reregistration of the Aircraft, the Aircraft is
located outside the United States, the Lessee shall have thirty (30) days to
relocate the Aircraft within the United States and, if unable to do so, shall
pay the reasonable incremental out-of-pocket costs of the Lessor, the Owner
Participant or their authorized representatives incurred in connection with any
inspection or appraisal required or permitted under the Operative Agreements.
Such obligation shall apply only with respect to one inspection or appraisal in
any calendar year unless an Event of Default shall have occurred and be
continuing.
(c) The Lessee shall promptly file any reports, or furnish to the
Owner Trustee and the Owner Participant such information as may be required
to enable the Owner Trustee and the Owner Participant timely to file any
reports required to be filed by the Owner Trustee as the Lessor and the
Owner Participant under the Lease with any governmental authority.
(d) The Lessee will cause the Special Aviation Counsel to file,
and where appropriate record, on the Refunding Date, the Lease, the Trust
Agreement and the Indenture. The following documents shall be filed and,
where appropriate, recorded on the Refunding Date with the Aeronautics
Authority in the following order of priority: first, the Trust Agreement,
second, the Indenture and third, the Lease with the Indenture attached
thereto.
(e) The Lessee will furnish to the Owner Participant, the Owner
Trustee and the Indenture Trustee annually after the execution of this
Agreement, by March 15 of each year, commencing with the year 1999, 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 or the ability of the Lessee to perform
its obligations under the Operative Agreements.
(g) The Lessee shall not enter into any merger or consolidation,
or convey, transfer or lease all or substantially all of its assets as an
entirety to any Person, unless the surviving corporation or Person which
acquires by conveyance, transfer or lease all or substantially all of the
assets of the Lessee as an entirety (i) is a domestic corporation organized
and existing under the laws of the United States or a political subdivision
thereof, (ii) is a Citizen of the United States, (iii) is a U.S. Air
Carrier, (iv) expressly assumes by an instrument in writing in form and
substance satisfactory to the Owner Participant, the Indenture Trustee and
the Owner Trustee all of the Lessee's obligations hereunder and under the
other Operative Agreements, and each other document contemplated hereby or
thereby and the Lessee delivers such instrument to the Indenture Trustee,
the Owner Participant and the Owner Trustee, (v) provides an opinion from
outside counsel to the Lessee which counsel shall be reasonably
satisfactory to the Owner Participant and the Indenture Trustee and which
opinion shall be reasonably satisfactory to the Owner Participant and the
Indenture Trustee, and an officer's certificate, each stating that such
merger, consolidation, conveyance, transfer or lease and the instrument
noted in clause (iv) above comply with this Section 6.03(g), that such
instrument is a legal, valid and binding obligation of, and is enforceable
against, such survivor or Person, and that all conditions precedent herein
provided for relating to such transaction have been complied with, and (vi)
immediately after such merger, consolidation or conveyance, transfer or
lease, as the case may be, the surviving company is in compliance with all
of the terms and conditions of this Agreement and the Lease and each other
Operative Agreement and each other document contemplated hereby or thereby;
provided that no such merger, consolidation or conveyance, transfer or
lease shall be permitted if the same gives rise to an Event of Default.
Upon any consolidation or merger, or any conveyance, transfer or
lease of all or substantially all of the assets of the Lessee and the
satisfaction of the conditions specified in this Section 6.03(g), the
successor corporation formed by such consolidation or into which the Lessee
is merged or the Person to which such conveyance, transfer or lease is made
shall succeed to, and be substituted for, and may exercise every right and
power of, the Lessee under this Agreement and the Lease and each other
Operative Agreement and any other document contemplated hereby and thereby
to which the Lessee is a party with the same effect as if such successor
corporation had been named as the Lessee herein and therein. No such
conveyance, transfer or lease of all or substantially all of the assets of
the Lessee as an entirety shall have the effect of releasing the Lessee or
any successor corporation which shall theretofore have become such in the
manner prescribed in this Section 6.03(g) from its liability hereunder or
under the other Operative Agreements. Nothing contained herein shall permit
any lease, sublease, or other arrangement for the use, operation or
possession of the Aircraft except in compliance with the applicable
provisions of the Lease.
(h) The Lessee agrees to give prompt written notice to the Owner
Participant, the Owner Trustee and the Indenture Trustee of any change in
the address of its chief executive office (as such term is used in Section
9-103(3) of the Tennessee UCC) or of any change in its corporate name.
(i) The Lessee agrees to furnish to the Owner Participant, the
Lessor and the Indenture Trustee:
(A) as soon as available, but in any event within one
hundred twenty (120) days after the end of each fiscal year of the
Lessee, a consolidated balance sheet as of the end of such fiscal
year, and the related consolidated statements of income, common
stockholders' equity, retained earnings and cash flows of the
Lessee for the fiscal year then ended as prepared and certified by
the Lessee's independent certified public accountants, including
their opinion;
(B) within sixty (60) days after the end of the first,
second and third quarterly accounting periods in each fiscal year
of the Lessee, a consolidated balance sheet of the Lessee prepared
by it as of the close of the accounting period then ended,
together with the related consolidated statements of income,
retained earnings and cash flows for such accounting period
certified by the chief accounting officer or a financial vice
president of the Lessee;
(C) promptly upon their general transmission, copies of all
regular and periodic reports furnished by the Lessee to its
stockholders;
(D) promptly after filing with the SEC, copies of the
Lessee's Annual Reports on Form 10-K (including all corresponding
annual reports to shareholders), Quarterly Reports on Form 10-Q
and, if requested, any registration statement or prospectus filed
by the Lessee with any securities exchange or with the SEC;
(E) promptly upon (and in any event within five (5) Business
Days after) any 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.
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 to which it is or is to be a party
shall survive the Closings hereunder and the expiration or other termination of
this Agreement and the other Operative Agreements.
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in Lessor's
Estate. (a) [Reserved]
(b) Owner Participant. The Owner Participant represents and
warrants that its interest in the Lessor's Estate and the Trust Agreement was
acquired by it for its own account and not with a view to resale or distribution
thereof; provided, however, that the disposition by the Owner Participant of its
interest in the Lessor's Estate and the Trust Agreement shall, subject to the
terms and provisions of Article 5 of the Trust Agreement, at all times be within
its control and the foregoing representation shall 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 acting on
its behalf (i) has directly or indirectly offered or will directly or indirectly
offer any Certificates or any interest in the Lessor's Estate, or in any similar
security, for sale to, or solicited any offer to acquire any of the same from
anyone (other than the Owner Participant) and (ii) shall own Certificates.
Section 7.02. Citizenship. (a) Generally. The Owner Trustee, in
its individual capacity and as Owner Trustee, represents and warrants that it is
or will be a Citizen of the United States on the Refunding Date. If the Owner
Trustee in its individual capacity does not comply with the requirements of this
Section 7.02, the Owner Trustee, the Indenture Trustee and the Owner Participant
hereby agree that a Default or an Event of Default shall not be deemed to have
occurred and be continuing under the Lease due to non-compliance by the Lessee
with the registration requirements in the Lease occasioned by the noncompliance
of the Owner Trustee.
(b) Owner Trustee. The Owner Trustee, in its individual capacity,
covenants that if at any time it shall have actual knowledge that it has ceased
to be a Citizen of the United States, it will resign immediately as the Owner
Trustee if such citizenship is necessary under the Transportation Code as in
effect at such time or, if it is not necessary under the Transportation Code as
in effect at such time, if it is informed in writing by the Lessee, 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 represents, warrants
and covenants that (i) although it is not a Citizen of the United States, it has
entered into the Trust Agreement, pursuant to which it has transferred to the
Owner Trustee by virtue of Section 6.13 thereof, to the extent set forth
therein, the power to manage and control the ownership and operation of the
Aircraft to ensure, as more fully set forth therein, that such ownership and
operation of the Aircraft will be controlled by the Owner Trustee and that the
Owner Participant shall have no power to influence or limit the exercise of the
Owner Trustee's authority in respect thereof under Section 6.13 of the Trust
Agreement; (ii) the Owner Participant agrees not to amend the provisions of
Section 6.13 of the Trust Agreement; (iii) if the Owner Participant shall become
a Citizen of the United States, its obligations not to amend Section 6.13 of the
Trust Agreement shall cease, except that such Section 6.13 may not be terminated
unless prior thereto the Lessee and, so long as the Indenture remains in effect,
the Indenture Trustee receives an affidavit of citizenship from the Owner
Participant; and (iv) if the Owner Participant fails with respect to its
obligations above or in Section 6.13 of the Trust Agreement and, as a result of
such failure, the Aircraft is subject to deregistration under the Transportation
Code, the Owner Participant shall promptly at its own expense comply with any of
clauses (x), (y) or (z) of the next sentence. If the Owner Participant shall, at
any time when the Aircraft is registered or the Lessee proposes to register the
Aircraft in the United States and the Owner Participant has become a Citizen of
the United States, (i) cease to be, or believe itself likely 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 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 15 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 the United States registration, of the Aircraft. It
is agreed that the Owner Participant shall be liable to pay promptly on request
to the Lessee, the Indenture Trustee and the Pass Through Trustee for any
damages actually incurred by the Lessee, the Indenture Trustee and the Pass
Through Trustee as a result of the Owner Participant's failure to comply with
its obligations pursuant to the first sentence of this Section 7.02(c). 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).
Section 7.03. Representations, Warranties and Covenants of Owner
Participant. (a) Representations, Warranties and Covenants. In addition to and
without limiting its other representations and warranties provided for in this
Article 7, the Owner Participant represents and warrants on the date hereof and
as of the Refunding Date that:
(i) it is a corporation duly incorporated and validly existing in
good standing under the laws of the State of Delaware and it has full
corporate power, authority and legal right to carry on its present business
and operations, to own or lease its Properties and to enter into and to
carry out the transactions contemplated by the Original Agreements to which
it is a party, this Agreement and the other Operative Agreements to which
it is or is to be a party;
(ii) the execution, delivery and performance by it of the Original
Agreements to which it is a party, this Agreement and the other Operative
Agreements to which it is or is to be a party 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 the Original Agreements to which it
is party, this 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 bylaws, as amended, of the Owner Participant or any order,
writ, injunction or decree of any court or governmental authority against
the Owner Participant or by which it or any of its Properties is bound or
any indenture, mortgage or contract or other agreement or instrument to
which the Owner Participant is a party or by which it or any of its
Properties is bound, or constitutes or will constitute a default thereunder
or results or will result in the imposition of any Lien upon any of its
Properties;
(iv) the Original Agreements to which it is a party, this
Agreement and the other Operative Agreements to which it is or is to be a
party have been or on the Refunding Date will be duly executed and
delivered by the Owner Participant and constitute or on the Refunding Date
will constitute the legal, valid and binding obligation of the Owner
Participant enforceable against it in accordance with their terms except as
such enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights;
(v) it is not in default under any mortgage, deed of trust,
indenture, lease or other instrument or agreement to which the Owner
Participant is a party or by which it or any of its Properties may be
bound, or in violation of any applicable law, which default or violation
would have a material adverse effect on the financial condition, business
or operations of the Owner Participant or an adverse effect on the ability
of the Owner Participant to perform its obligations under the Original
Agreements to which it is a party, this Agreement and the other Operative
Agreements to which it is or is to be a party;
(vi) there are no pending or, to the knowledge of the Owner
Participant, threatened actions, suits, investigations or proceedings
against the Owner Participant before any court, administrative agency or
tribunal which are expected to materially adversely affect the ability of
the Owner Participant to perform its obligations under any of the Original
Agreements to which it is a party, this Agreement and the other Operative
Agreements to which it is or is to be a party and the Owner Participant
knows of no pending or threatened actions or proceedings before any court,
administrative agency or tribunal involving it in connection with the
transactions contemplated by the Operative Agreements;
(vii) neither the execution and delivery by it of the Original
Agreements to which it is a party, this Agreement or the other Operative
Agreements to which it is 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 furnish to each Certificate Holder an indemnity, in form and
substance reasonably satisfactory to such Certificate Holder, for any
withholding taxes imposed by any foreign government or taxing authority on
any payment due under any of the Operative Agreements that may be imposed
as a result of the Owner Participant's failure to be such a "U.S. Person",
to the extent that such withholding taxes reduce the amount of any payment
to the Indenture Trustee; and
(x) the representations and warranties of the Owner Participant
set forth in the Original Agreements to which it is a party were correct on
and as of the Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
warranties and representations were correct on and as of such earlier
date).
Notwithstanding the foregoing or anything else contained in this
Agreement, the Owner Participant makes no representation or warranty in this
Agreement with respect to laws, rules or regulations relating to aviation or to
the nature or use of the equipment owned by the Owner Trustee, other than such
laws, rules or regulations relating to the citizenship requirements of the Owner
Participant under applicable aviation law.
(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 Refunding Date. The Owner Participant agrees
with and for the benefit of the Lessee, the Owner Trustee, the Indenture Trustee
and the Pass Through Trustee that the Owner Participant will, at its own cost
and expense, take such action as may be necessary (by bonding or otherwise, so
long as neither the Lessee's operation and use of the Aircraft nor the validity
and priority of the Lien of the Indenture is impaired) to duly discharge and
satisfy in full, promptly after the same first becomes known to the Owner
Participant, any Lessor's Lien 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) Indemnity for Lessor's Liens. The Owner Participant agrees to
indemnify and hold harmless the Lessee, the Indenture Trustee, the Pass Through
Trustee, the Subordination Agent and each Certificate Holder from and against
any loss, cost, expense or damage which may be suffered by the Lessee, the
Indenture Trustee, the Pass Through Trustee, the Subordination Agent and each
Certificate Holder as the result of the failure of the Owner Participant to
discharge and satisfy any Lessor's Liens attributable to the Owner Participant
(or an Affiliate thereof) and required to be discharged as described in Section
7.03(b) hereof.
(d) Assignment of Interests of Owner Participant. The Owner
Participant agrees that it will not assign, convey or otherwise transfer any of
its right, title or interest in and to the Operative Agreements or the Lessor's
Estate except in accordance with the provisions of Article 5 of the Trust
Agreement, as in effect on the date hereof or as amended in accordance with the
terms of the Operative Agreements.
(e) Actions with Respect to Lessor's Estate, Etc. The Owner
Participant agrees that it will not take any action to subject the Lessor's
Estate or the trust established by the Trust Agreement, as debtor, to the
reorganization or liquidation provisions of the Bankruptcy Code or any other
applicable bankruptcy or insolvency statute.
Section 7.04. Representations, Covenants and Warranties of 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) on the date hereof and as of the Refunding 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 UCC) at 225 Asylum Street, Goodwin
Square, Hartford, Connecticut 06103, Attention: Corporate/Muni
Administration 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 the Original Agreements to which it is a
party, this Agreement and the 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 the
Original Agreements to which it is a party, 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 the Original
Agreements to which it is a party, this Agreement and the other Operative
Agreements to which it is or is to be a party 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, and each of the
Original Agreements to which it is a party does, 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, and each of the Original
Agreements to which it is a party does, to the extent each such document is
entered into by the Owner Trustee in its trust capacity, constitute the
legal, valid and binding obligation of the Owner Trustee enforceable
against it in such capacity in accordance with its respective terms, except
as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights
(regardless of whether enforceability is considered in a proceeding in
equity or at law), and the performance by the Owner Trustee of any of its
obligations thereunder does not contravene any lease, regulation or
contractual restriction binding on the Owner Trustee;
(iv) there are no pending or, to its knowledge, threatened actions
or proceedings against 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 Original Agreements and 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;
(vii) on the Refunding Date the Owner Trustee shall be holding
whatever title to the Aircraft as was conveyed to it by the Lessee on the
Delivery Date, the Aircraft shall be free of Lessor's Liens attributable to
SSB in its individual capacity and SSB in its individual capacity is a
Citizen of the United States; and
(viii) the representations and warranties of the Owner Trustee set
forth in the Original Agreements to which it is a party were correct on and
as of the Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
warranties and representations were correct on and as of such earlier
date).
(b) Lessor's Liens. 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 Refunding Date. The Owner Trustee, in its trust capacity, and at
the cost and expense of the Lessee, covenants that it will in its trust capacity
promptly, and in any event within 30 days after the same shall first become
known to it, take such action as may be necessary to discharge duly any Lessor's
Liens attributable to it in its trust capacity. 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) Securities Act. None of SSB, the Owner Trustee or any Person
authorized by either of them to act on its behalf has directly or indirectly
offered or sold or will directly or indirectly offer or sell any interest in the
Lessor's Estate, or in any similar security relating to the Lessor's Estate, or
in any security the offering of which for purposes of the Securities Act of
1933, as amended, would be deemed to be part of the same offering as the
offering of the aforementioned securities to, or solicited any offer to acquire
any of the same from, any Person.
(e) 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 on the date hereof and as of the
Refunding 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 Original Agreements to which it is a party, this
Agreement and the other Operative Agreements to which it is or is to be a
party and to authenticate the Certificates to be delivered on the Refunding
Date;
(ii) the Original Agreements to which it is a party, this
Agreement and the other Operative Agreements to which it is or is to be a
party, and the authentication of the Certificates to be delivered on the
Refunding Date, have been duly authorized by all necessary corporate action
on its part, and neither the execution and delivery thereof nor its
performance of any of the terms and provisions thereof will violate any
Federal or 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 Original Agreements to which it is a party, this
Agreement and the other Operative Agreements to which it is or is to be a
party 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 Original
Agreements to which it is a party, this Agreement and the other Operative
Agreements to which it is or is to be a party, 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 Refunding Date, the Indenture Trustee will hold the
original counterparts of the Lease, the Lease Supplement and each Ancillary
Agreement; 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 Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
warranties and representations were correct on and as of such earlier
date).
(b) 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 Refunding Date. The
Indenture Trustee, in its individual capacity, covenants and agrees that it will
at its own expense take such action as may be necessary to duly discharge and
satisfy in full, promptly, and in any event within 30 days, after the same shall
first become known to it, any Indenture Trustee's Liens.
(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 the Owner
Participant (or the Owner Trustee, the Indenture Trustee or the Pass Through
Trustee, as the case may be) nor any Person lawfully claiming through the Owner
Participant (or the Owner Trustee, the Indenture Trustee or the Pass Through
Trustee, as the case may be) shall interfere with the Lessee's right quietly to
enjoy the Aircraft during the Term without hindrance or disturbance by the Owner
Participant (or the Owner Trustee, the Indenture Trustee or the Pass Through
Trustee, as the case may be), provided, however, that neither the Lessor nor the
Owner Participant shall be liable for any act or omission of the Indenture
Trustee or the Pass Through Trustee or any other Person claiming through the
Indenture Trustee or the Pass Through Trustee.
Section 7.09. Original Loan Participant's and Pass Through
Trustee's Representations and Warranties. (a) The Original Loan Participant
represents and warrants that the representations and warranties made by it in
Sections 7.01(a) and 7.06 of the Original Participation Agreement were correct
on and as of the Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
representations and warranties were correct on and as of such earlier date).
(b) The Pass Through Trustee, in its individual capacity (except
with respect to clause (iii) below), represents and warrants as of the date
hereof (except as otherwise provided), as of the Pass Through Closing Date and
as of the Refunding Date that:
(i) it is a 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 Pass Through Agreement, the Series Supplements, the
Intercreditor Agreement and this Agreement and to execute and authenticate
the Pass Through Certificates to be delivered on the Pass Through Closing
Date;
(ii) the execution, delivery and performance of this Agreement,
the Pass Through Agreement and the Series Supplements and the performance
of its obligations hereunder and thereunder (including the execution and
authentication of the Pass Through Certificates to be delivered on the Pass
Through Closing Date) have been fully authorized by all necessary corporate
action on its part, and, subject to (A) the registration of the issuance
and sale of the Pass Through Certificates under the Securities Act, (B)
compliance with any applicable state securities laws and (C) the
qualification of the Pass Through Agreement under the Trust Indenture Act,
neither the execution and delivery thereof nor its performance of any of
the terms and provisions thereof will violate any Federal or 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; and
(iii) each of this Agreement and the Pass Through Agreement has
been, and as of the Pass Through Closing Date the Series Supplements will
be, duly executed and delivered by it (in its individual and trust
capacities) and, assuming that each such agreement is the legal, valid and
binding obligation of each other party thereto, is or will be, as the case
may be, the legal, valid and binding obligation of the Pass Through Trustee
(in its individual and trust capacities), enforceable in accordance with
its respective terms except as limited by bankruptcy, insolvency,
moratorium, reorganization or other similar laws or equitable principles of
general application to or affecting the enforcement of creditors' rights
generally (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
Section 7.10. Survival of Representations, Warranties and
Covenants. The representations, warranties and covenants of the Owner
Participant, the Owner Trustee (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 and all of them, shall survive the Closings and the
expiration or other termination of this Agreement, and the other Operative
Agreements.
Section 7.11. Lessee's Assumption of the Certificates. (a) Subject
to compliance by the Lessee with all of its obligations under the Operative
Agreements, each of the Owner Participant, the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Lessee covenants and agrees that if
the Lessee elects to terminate the Lease and to purchase the Aircraft pursuant
to Section 4.02(a)(A), (D), (E) or (F) of the Lease, and so long as no Event of
Default shall have occurred and be continuing then, upon compliance with the
applicable provisions of said Section 4.02(a) of the Lease, the Owner Trustee
will transfer to the Lessee, without recourse or warranty (except as to the
absence of Lessor's Liens attributable to the Owner Trustee) but subject to the
Lien of the Indenture, all of the Owner Trustee's right, title and interest in
and to the Aircraft, and if the Lessee, in connection with such purchase, elects
pursuant to Section 4.02(a)(A), (D), (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, then the Lessee shall so notify
the Indenture Trustee (such notice to be given at least 30 and not more than 60
days prior to the effective date of such assumption), and each of the parties
shall execute and deliver appropriate documentation permitting the Lessee to
assume such obligations on the basis of full recourse to the Lessee, maintaining
for the benefit of the Holders the security interest in the Aircraft created by
the Indenture, and upon compliance with the provisions of this Section 7.11
releasing the Owner Participant and the Owner Trustee from all obligations in
respect of the Certificates, the Indenture, this Agreement and the other
Operative Agreements, except any obligations relating to the period prior to
such assumption and take all such other actions 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 UCC 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 (A)
Section 2.01, 2.03, 2.04, 3.03, 3.11 or 3.12, Article 4 or 5 or Section 6.02 or
6.06 of the Trust Agreement without the prior written consent of such party
(which consent will not be unreasonably withheld), or (B) any other provision of
the Trust Agreement in a manner that would 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 date hereof (except as otherwise provided),
as of the Pass Through Closing 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, the Liquidity Facilities and the
Intercreditor Agreement;
(ii) the execution, delivery and performance of this Agreement,
each of the Liquidity Facilities and the Intercreditor Agreement and the
performance of its obligations hereunder and thereunder 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) each of this Agreement, the Liquidity Facilities and the
Intercreditor 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; and
(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.
(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
shall have the meanings specified in the Intercreditor Agreement.
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes. (a) Generally. The
Lessee agrees promptly to pay when due, and to indemnify and hold each
Indemnitee harmless from all license, recording, documentary, registration and
other fees and all taxes (including, without limitation, income, gross receipts,
sales, rental, use, value added, property (tangible and intangible), ad valorem,
excise and stamp taxes), fees, levies, imposts, recording duties, 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
(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), 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, upon or with respect to, based upon or
measured by:
(i) the Aircraft, the Airframe, any Engine or any Part;
(ii) the location, replacement, conditioning, refinancing,
control, purchase, registration, reregistration, repossession, improvement,
maintenance, redelivery, manufacture, acquisition, purchase, financing,
mortgaging, ownership, acceptance, rejection, delivery, non-delivery,
leasing, subleasing, transport, insuring, inspection, registration,
assembly, abandonment, preparation, installment, possession, use,
operation, return, presence, storage, repair, transfer of title,
modification, rebuilding, import, export, alteration, addition,
replacement, assignment, overhaul, transfer of registration or
registration, imposition of any lien, sale or other disposition of the
Aircraft, Airframe, any Engine or any Part thereof or interest therein;
(iii) the rentals (including Basic Rent and Supplemental Rent),
receipts or earnings arising from the Operative Agreements or from the
purchase, financing, ownership, delivery, leasing, possession, use,
operation, return, storage, transfer of title, sale or other disposition of
the Aircraft, the Airframe or any part thereof or interest therein;
(iv) any or all of the Operative Agreements;
(v) the Property, or the income or other proceeds received with
respect to the Property, held by the Owner Trustee under the Trust
Agreement or after an Event of Default under the Lease, by the Indenture
Trustee under the Indenture;
(vi) otherwise with respect to or by reason of the transactions
described in or contemplated by the Operative Agreements or the Original
Agreements;
(vii) the payment of the principal or interest or other amounts
payable with respect to the Original Loan Certificates, the Pass Through
Certificates or the Certificates;
(viii) the Original Loan Certificates, the Pass Through
Certificates or the Certificates or the issuance, acquisition, or
refinancing thereof or the beneficial interests in the Trust Estate or the
creation thereof under the Trust Agreement; or
(ix) any assumption by the Lessee pursuant to Section 7.11 of this
Agreement and Section 2.11 of the Indenture.
(b) Exceptions. The indemnity provided for in Section 8.01(a)
hereof shall not extend to any of the following:
(i) With respect to an Indemnitee other than an Original Loan
Participant, Taxes based upon, measured by or with respect to the net or
gross income, items of tax preference or minimum tax or excess profits,
receipts, value added (but only to the extent such value added tax is in
the nature of an income tax), capital, franchise, net worth or conduct of
business or other similarly-based Taxes of such Indemnitee (other than any
Taxes in the nature of sales, use, transfer, excise, rental, license, ad
valorem, property or other similarly based Taxes) (the "Income Taxes");
provided, however that the provisions of this paragraph (b)(i) shall not
exclude from the indemnity described in Section 8.01(a) hereof, any Income
Taxes to the extent such Income Taxes are imposed by any jurisdiction in
which the Indemnitee would not be subject to such Income Taxes but for, or
would be subject to such Income 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 any such
indemnity would be payable only to the extent of the net harm incurred by
the Indemnitee from such Income Taxes, taking into account any incremental
current Tax benefit in another tax jurisdiction resulting from payment of
such Income Taxes); provided, further, that the provisions of this
paragraph (b)(i) relating to Income Taxes shall not exclude from the
indemnity described in Section 8.01(a) hereof any Income Taxes for which
the Lessee would be required to indemnify an Indemnitee (x) so that any
payment under the Operative Agreements or the Original Agreements,
otherwise required to be made on an After-Tax Basis, is made on an
After-Tax Basis or (y) pursuant to the last sentence of Section 8.02, 8.05,
9.02 or 9.05 of this Agreement;
(ii) With respect to an Original Loan Participant, Income Taxes
except to the extent such Income Tax is imposed (including by way of
increase) (A) as a result of the operation, registration, location,
presence, basing or use of the Aircraft, Airframe any Engine or any Part
thereof, in such jurisdiction (it being understood that (I) the incremental
Income Taxes described in this clause (A) shall not include any U.S.
Federal income taxes and (II) that to the extent such incremental Income
Taxes give rise to any incremental current Tax benefit in another tax
jurisdiction, that such incremental benefit shall offset and decrease the
incremental Income Taxes determined under this clause (A)) or (B) solely as
a result of the place of incorporation, principal office, corporate
domicile or the activities of the Lessor, Owner Participant, the Owner
Trustee, the Indenture Trustee, the Lessee or any sublessee in such
jurisdiction (it being understood that to the extent that any Income Taxes
described under this clause (B) give rise to any incremental current Tax
benefit in another tax jurisdiction or another tax period, that such
incremental Tax benefit shall offset and decrease the Income Taxes
determined under this clause (B)); provided, however, that the provisions
of this paragraph (b)(ii) relating to Income Taxes shall not exclude from
the indemnity described in Section 8.01(a) any Income Taxes for which the
Lessee would be required to indemnify an Indemnitee (x) so that any payment
under the Operative Agreements, otherwise required to be made on an
After-Tax Basis, is made on an After-Tax Basis or (y) pursuant to the last
sentence of Section 8.02 of this Agreement;
(iii) Taxes arising out of or measured by acts, omissions, events
or periods of time (or any combination of the foregoing) which occur after
(and are not attributable to acts, omissions or events occurring
contemporaneously with or prior to) (A) the payment in full of all amounts
payable by the Lessee pursuant to and in accordance with the Operative
Agreements, or the earlier discharge in full of the Lessee's payment
obligations under and in accordance with the Lease and the Operative
Agreements (and the Original Loan Certificates in the case of an Original
Loan Participant, the Indenture Trustee or the Trust Indenture Estate if
the Lessee shall have assumed the Certificates pursuant to Section 7.11 of
this Agreement), and (B) the earliest of (x) the expiration of the Term of
the Lease and return of the Aircraft in accordance with Article 12 of the
Lease, (y) the termination of the Lease in accordance with the applicable
provisions of the Lease and return of the Aircraft in accordance with the
Lease, or (z) the termination of the Lease in accordance with the
applicable provisions of the Lease and the transfer of all right, title and
interest in the Aircraft to the Lessee pursuant to its exercise of any of
its purchase options set forth in Section 4.02(a) of the Lease, except
that, notwithstanding anything in this Section 8.01(b) to the contrary,
Taxes incurred in connection with the exercise of any remedies pursuant to
Article 17 of the Lease following the occurrence of an Event of Default
shall not be excluded from the indemnity described in Section 8.01(a)
hereof;
(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 trustee under the Original Trust Agreement or the Trust
Agreement or, as to the Indenture Trustee, Taxes imposed against the
Indenture Trustee upon or with respect to any fees received by it for
services rendered in its capacity as trustee under the Original Indenture
or the Indenture;
(v) Taxes imposed on an Indemnitee that would not have been
imposed but for the willful misconduct or gross negligence of such
Indemnitee (other than gross negligence or willful misconduct not actually
committed by but instead imputed to such Indemnitee by reason of such
Indemnitee's participation in the transactions contemplated by the
Operative Agreements or the Original Agreements) or the breach by such
Indemnitee of any representation, warranty or covenant contained in the
Operative Agreements or the Original Agreements or any document delivered
in connection therewith (unless attributable to a breach of representation,
warranty or covenant of the Lessee);
(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, other than (A) Taxes
that result from transfers or dispositions which occur while an Event of
Default under the Lease has occurred and is continuing at the time of such
transfer or disposition or (B) Taxes that result from any transfer or
disposition pursuant to the terms of the Lease;
(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) Notwithstanding anything herein to the contrary, Taxes
imposed on a successor, assign or other transferee (including, without
limitation, a transferee which is a new lending office of an original
Indemnitee) of any entity or Person which on the Delivery Date is an
Indemnitee (for purposes of this clause (vii), an "original Indemnitee") or
such original Indemnitee to the extent that such Taxes exceed the amount of
Taxes that would have been imposed (in the case of a Loan Participant,
immediately after giving effect to such succession, assignment or other
transfer) 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 thereof, 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 (vii) shall
not apply in the case of a succession, assignment or other transfer (1)
while an Event of Default under the Lease or the Indenture has occurred and
is continuing; (2) required by any provision of the Operative Agreements
(other than pursuant to Section 7.02 hereof) or (3) in the case of the
Owner Participant, to any Tax other than an Income Tax;
(ix) [Reserved];
(x) Any Taxes which have been included in the Purchase Price;
(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 with respect to a Loan Participant;
(xii) Taxes imposed on the Owner Participant or any person who is
a "disqualified person", within the meaning of Section 4975(e)(2) of the
Code, or a "party in interest", within the meaning of Section 3(14) of
ERISA, by virtue of such person's relationship to the Owner Participant, as
the result of any prohibited transaction, within the meaning of Section 406
of ERISA or Section 4975(c)(1) of the Code, occurring with respect to the
purchase or holding of any 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 similar nondiscretionary capacity), or
(ii) by an employee benefit plan, within the meaning of Section 3(3) of
ERISA, or individual retirement account or plan subject to Section 4975 of
the Code with respect to which the Owner Participant (or any Affiliate
thereof) is a "plan sponsor", within the meaning of Section 3(16)(B) of
ERISA; and
(xiii) Taxes imposed on the Lessor in its individual capacity or
on the Owner Participant by any jurisdiction to the extent they 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.
(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 the Owner
Participant or any of their Affiliates for or on account of any amount required
to be withheld from a payment in respect of a Certificate or a Pass Through
Certificate, the Lessee will indemnify the Owner Trustee and the Owner
Participant (without regard to the exclusions set forth in Section 8.01(b)
hereof) on an After-Tax Basis against any 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 hereof 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. If any Indemnitee actually realizes a permanent 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 permanent tax benefit plus any
other permanent 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 this Section 8.02 and Section 8.01 hereof 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 Section
8.01 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 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 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 disallowed or reduced in a
taxable year subsequent to the year of such payment (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 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 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 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. The Indemnitee shall in good
faith, with due diligence and at the Lessee's expense, if timely requested in
writing by the Lessee, contest (or, at the Indemnitee's option, require the
Lessee to contest in the name of the Lessee, if permitted by law) 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.
If the Lessee so elects, the Lessee shall control the conduct of any contest (a
"Lessee-Controlled Contest") and shall determine the method of pursuing such
contest; provided that the Lessee shall not be entitled to control the contest
or determine the method of pursuing any contest unless (i) the contest does not
involve Income Taxes, (ii) the contest involves only Taxes for which the Lessee
is liable (and for which the Lessee shall have acknowledged its liability) and
(iii) the Indemnitee reasonably determines that allowing the Lessee to control
such contest could not have an adverse effect on such Indemnitee or its
Affiliates. The Lessee shall consider in good faith any suggestion made by the
Indemnitee concerning the conduct of a Lessee-Controlled Contest. If the
Indemnitee, after reasonable discussion with the Lessee and consideration in
good faith of any suggestion made by the Lessee as to the method of pursuing
such contest, elects to conduct the contest, such Indemnitee shall determine the
manner in which to contest such Taxes, and shall periodically or upon the
Lessee's request advise the Lessee of the progress of such contest; provided,
however, that if the Indemnitee determines in its sole discretion that such
participation will not adversely affect such Indemnitee's contest of any Taxes
not indemnified hereunder, the Lessee shall have the right to participate in
such contest, including, among other rights, the right to attend governmental or
judicial conferences (to the extent unrelated issues are not discussed)
concerning such claim and the right to review and approve all submissions to any
governmental or other authority insofar as they relate to the Tax for which
indemnification is sought. Notwithstanding the preceding sentences of this
Section 8.04, such Indemnitee shall not be required to take or continue any
action unless the Lessee shall have (i) agreed in writing to pay and shall pay
the Indemnitee on demand and on an After-Tax Basis for any liability or
reasonable expense which such Indemnitee may incur as a result of contesting
such Taxes including without limitation (y) reasonable attorneys' and
accountants' fees and (z) the amount of any interest, penalty or additions to
tax which may ultimately be payable as the result of contesting such Taxes, (ii)
delivered to the Indemnitee a written acknowledgment of the Lessee's obligation
to such Indemnitee pursuant to this Agreement to the extent that the contest is
not successful and of the inapplicability of any exclusion or defenses thereto,
provided, however, that such acknowledgement shall not preclude the Lessee from
raising defenses to liability under this Agreement if a decision in such contest
is rendered which clearly articulates the cause of such Tax and the cause, as so
articulated, is not one for which the Lessee is responsible to pay an indemnity
hereunder and (iii) 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 or the Lessee permitted to contest
pursuant to this Section 8.04 the imposition of any Tax for which the Lessee is
obligated to indemnify any Indemnitee hereunder unless (i) such Indemnitee shall
have received an opinion of independent tax counsel, at the Lessee's expense,
selected by such Indemnitee and reasonably satisfactory to the Lessee ("Tax
Counsel") to the effect that a reasonable basis exists for contesting such
claim, (ii) 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 issue shall not be the same as an issue previously contested
hereunder and decided adversely, unless the Indemnitee shall have received, at
the Lessee's sole expense, a written opinion, in form and substance reasonably
satisfactory to such Indemnitee, of Tax Counsel, to the effect that the
applicable circumstances or law has changed and, in light thereof, there is
substantial authority within the meaning of Section 6662(d) of the Code, as
interpreted by the Treasury regulations thereunder, or under similar principles
of state or foreign law (as the case may be) for contesting such claim and (vi)
the amount of the indemnity payments the Lessee would be required to make with
respect to such adjustment, when aggregated with similar adjustments that could
be raised in other taxable years of such Indemnitee is at least $50,000.
The Indemnitee shall not appeal any judicial decision unless it
receives an opinion of independent tax counsel, at the Lessee's sole expense,
selected by such Indemnitee and reasonably satisfactory to the Lessee to the
effect that a reasonable basis continues to exist for the Indemnitee's position.
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) reasonable 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 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
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. The Lessee shall hold the
Indemnitee harmless from and against any liabilities, including penalties,
additions to tax, fines and interest, imposed upon or incurred by such
Indemnitee to the extent directly attributable to any insufficiency or
inaccuracy in any return, statement, or report prepared by the Lessee or
information supplied by the Lessee, or directly attributable to the Lessee's
failure to supply reasonably available information to such Indemnitee as
required by this Section 8.06.
Section 8.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 8 and the Lessee's obligations under any and all of them shall survive
the making available by the Participants of their respective Commitments and 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;
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 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. If, for any
reason, Lessee is required to make any payment with respect to any Taxes imposed
on any Indemnitee in respect of the transactions contemplated by the Operative
Agreements or on the Aircraft, the Airframe, the Engines, the Parts of any part
thereof, which Taxes are not the responsibility of Lessee with respect to such
Indemnitee, then such Indemnitee shall pay to Lessee within 30 days of Lessee's
demand therefor an amount which equals the amount actually paid by Lessee with
respect to such Taxes.
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally. (a) The Lessee agrees to indemnify each
Indemnitee against and agrees to protect, defend, save and keep harmless each
Indemnitee from any and all liabilities, obligations, losses, damages (including
if, as a result of an Indenture Event of Default described in Section 7.01(a)(i)
of the Indenture, the Indenture Trustee shall have sold all or any portion of
the Indenture Estate and the proceeds thereof were less than an amount equal to
accrued and unpaid Basic Rent on the date of sale plus the Stipulated Loss Value
as of such date, damages equal to such shortfall together with interest thereon
to the extent permitted by law at the Debt Rate until such shortfall is paid in
full), penalties, claims, actions, suits, costs, disbursements and expenses
(including reasonable legal fees and expenses and all costs and expenses
relating to amendments, supplements, adjustments, consents, refinancings and
waivers under the Operative Agreements and the Original Agreements except as
otherwise provided in Section 10.01(c)(i) or Article 15 hereof) of every kind
and nature, including without limitation Make-Whole Premium (unless excluded
pursuant to Section 3.03 of the Lease) (whether or not any of the transactions
contemplated by this Agreement are consummated) (individually, an "Expense,"
collectively, "Expenses"), which may be imposed on, incurred or suffered by or
asserted against any Indemnitee, in any way relating to, based on or arising out
of:
(i) the Original Agreements, this Agreement, the Lease, the
Indenture, the Trust Agreement, the 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 any sublease or transfer or any transactions contemplated
hereby or thereby;
(ii) the operation, possession, use, non-use, maintenance,
storage, overhaul, delivery, non-delivery, control, repair or testing of
the Aircraft, Airframe, or any Engine or any engine used in connection with
the Airframe, or any part thereof by the Lessee, any sublessee or any other
Person whatsoever, whether or not such operation, possession, use, non-use,
maintenance, storage, overhaul, delivery, non-delivery, control, repair or
testing is in compliance with the terms of the Lease, including without
limitation, claims for death, personal injury or property damage or other
loss or harm to any Person whatsoever, including, without limitation, any
passengers, shippers or other Persons wherever located, and claims relating
to any laws, rules or regulations, including, without limitation,
environmental control, noise and pollution laws, rules or regulation;
(iii) the manufacture, design, sale, return, purchase, acceptance,
rejection, delivery, non-delivery, condition, repair, modification,
servicing, rebuilding, airworthiness, registration, reregistration, import,
export, performance, non-performance, lease, sublease, transfer,
merchantability, fitness for use, alteration, substitution or replacement
of any Airframe, Engine, or Part under the Lease, the GTA or the Engine
Warranty Assignment or other transfer of use or possession, or other
disposition of the Aircraft, the Airframe, any Engine or any Part
including, without limitation, latent and other defects, whether or not
discoverable, strict tort liability, and any claims for patent, trademark
or copyright infringement;
(iv) any breach of or failure to perform or observe, or any other
non-compliance with, any condition, covenant or agreement to be performed,
or other obligations of the Lessee under any of the Operative Agreements or
the Original Agreements, or the falsity or inaccuracy of any representation
or warranty of the Lessee in any of the Operative Agreements or the
Original Agreements (other than representations and warranties in the Tax
Indemnity Agreement);
(v) the enforcement of the terms of the Operative Agreements or
the Original Agreements and the administration of the Trust Indenture
Estate; and
(vi) the offer, issuance, sale or delivery of any Certificate or
any Pass Through Certificate or any Original Loan Certificate, or any
refunding or refinancing thereof, or interest in the Lessor's Estate or the
Trust Agreement or the Original Trust Agreement or any similar interest or
in any way relating to or arising out of the Trust Agreement or the
Original Trust Agreement and the Lessor's Estate, the Indenture or the
Original Indenture or the Trust Indenture Estate (including, without
limitation, any claim arising out of the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, or any other
federal or state statute, law or regulation, or at common law or otherwise
relating to securities), or the action or inaction of the Owner Trustee or
Indenture Trustee as trustees, in the manner contemplated by this
Agreement, the Original Participation Agreement, the Indenture, the
Original Indenture, the Indenture and Security Agreement Supplement, the
Trust Agreement or the Original Trust Agreement and in the case of the
Owner Participant, its obligations arising under Section 6.01 of the Trust
Agreement or the Original Trust Agreement.
The foregoing indemnity by the Lessee is intended to include and cover, but is
not limited to, any Expense to which the Indemnitees may be subject as a result
of their respective ownership or leasing of any interest in or holding of any
Lien on the Aircraft, Airframe, any Engine or Part during the Term, whether or
not in the Lessee's possession or control, insofar as such Expense relates to
any activity or event whatsoever involving such item while it is under lease to
the Lessee (or after termination of the Lease in connection with the exercise of
remedies thereunder to the extent that such Expense is attributable to the
transactions contemplated hereby and by the other Operative Agreements and the
Original Agreements), and such Expense does not fall within any of the
exceptions listed in Section 9.01(b) hereof.
(b) Exceptions. The indemnity provided for in Section 9.01(a)
shall not extend to any Expense of any Indemnitee to the extent it:
(i) would not have occurred but for the willful misconduct or
gross negligence of such Indemnitee;
(ii) in respect of the Aircraft to the extent attributable to acts
or events which occur after the Aircraft is no longer part of the Lessor's
Estate or leased under the Lease (except provided that this exclusion shall
not apply to the extent that the Lessee has assumed the Certificates
pursuant to Section 7.11 hereof) or, if the Aircraft remains a part of the
Lessor's Estate, after the expiration of the Term and any holdover period
under Section 12.05 of the Lease (other than pursuant to Article 17 of the
Lease, in which case the indemnity provided in Section 9.01(a) hereof shall
survive for so long as Lessor shall be entitled to exercise remedies under
such Article 17), or to acts or events which occur after return of
possession of the Aircraft by the Lessee in accordance with the provisions
of the Lease but in any such case only to the extent not fairly
attributable to acts or omissions of the Lessee prior to expiration of the
Term and any holdover period under Section 12.05 of the Lease, including
without limitation the Lessee's failure to fully discharge all of its
obligations under the Lease, the other Operative Agreements or the Original
Agreements;
(iii) is a Tax, whether or not the Lessee is required to indemnify
therefor pursuant to Article 8 hereof or pursuant to the Tax Indemnity
Agreement;
(iv) is a cost or expense required to be paid by the Owner
Participant or its permitted transferees (and not by the Lessee) pursuant
to this Agreement or any other Operative Agreement (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 terms and
provisions required to be observed and performed by it, in this Agreement,
the Engine Warranty Assignment, the Lease, the Indenture, the Trust
Agreement, the Original Agreements or any other Operative Agreement to
which it is a party unless such breach or default shall be a result of the
breach or default of any of the foregoing by the Lessee or another
Indemnitee;
(vi) [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 the Owner
Trustee, Lessor's Liens to the extent attributable to the Owner Trustee; 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, to the extent attributable to the offer or sale by such Indemnitee
after the Delivery Date of any interest in the Aircraft, the Lessor's
Estate or the Trust Agreement or any similar interest (including an offer
or sale resulting from bankruptcy or other proceedings for the relief of
debtors in which such Indemnitee is the debtor), unless in each case such
offer or sale shall occur (w) in connection with a Refinancing, (x) as a
result of exercise of remedies under Article 17 of 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
the Lease; and
(ix) is, 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 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 similar nondiscretionary capacity), or
(ii) by an employee benefit plan, within the meaning of Section 3(3) of
ERISA, or individual retirement account or plan subject to Section 4975 of
the Code with respect to which the Owner Participant (or any Affiliate
thereof) is a "plan sponsor", within the meaning of Section 3(16)(B) of
ERISA.
Section 9.02. After-Tax Basis. The amount which the Lessee shall
be required to pay with respect to any Expense indemnified against under Section
9.01 shall be an amount sufficient to restore the Indemnitee, on an After-Tax
Basis, to the same position such party would have been in had such Expense not
been incurred. If any Indemnitee actually realizes a permanent Tax benefit by
reason of the payment of such Expense paid or indemnified against by the Lessee
which was not considered in the computation thereof, such Indemnitee shall
promptly pay to the Lessee, but not before the Lessee shall have made all
payments theretofore due such Indemnitee under this Agreement, the Tax Indemnity
Agreement, the Original Agreements and any other Operative Agreement, an amount
equal to the lesser of (x) the sum of such Tax benefit plus any other permanent
Tax benefit actually realized by such Indemnitee as the result of any payment
made by such Indemnitee pursuant to this sentence and (y) the amount of such
payment pursuant to this Section 9.02 by the Lessee to such Indemnitee plus the
amount of any other payments by the Lessee to such Indemnitee theretofore made
pursuant to this Section 9.02 less the amount of any payments by such Indemnitee
to the Lessee theretofore made pursuant to this Section 9.02 (and the excess, if
any, of the amount described in clause (x) above over the amount described in
clause (y) above shall be carried forward and applied to reduce pro tanto any
subsequent obligations of the Lessee to make payments to such Indemnitee
pursuant to this Section 9.02), it being intended that no Indemnitee should
realize a net Tax benefit pursuant to this Section 9.02 unless the Lessee shall
first have been made whole for any payments by it to such Indemnitee pursuant to
this Section 9.02; provided, however, that notwithstanding the foregoing
portions of this sentence, such Indemnitee shall not be obligated to make any
payment to the Lessee pursuant to this sentence so long as an Event of Default
shall have occurred and be continuing. Any Taxes that are imposed on any
Indemnitee as a result of the disallowance or reduction of such Tax benefit
referred to in the next preceding sentence in a taxable year subsequent to the
year of allowance and utilization by such Indemnitee (including the expiration
of any tax credit carryovers or carrybacks of such Indemnitee that would not
otherwise have expired) shall be indemnifiable pursuant to the provisions of
Section 8.01 hereof without regard to Section 8.01(b) hereof.
Section 9.03. Subrogation. Upon the payment in full of any
indemnity pursuant to this Article 9 by the Lessee (but not earlier), the Lessee
shall be subrogated to any right of the Indemnitee, other than with respect to
any of such Indemnitee's insurance policies or in connection with any indemnity
claim the Person indemnified may have against any other Indemnitee in respect of
the matter against which such indemnity has been made.
Section 9.04. Notice and Payment. Each Indemnitee and the Lessee
shall give prompt written notice one to the other of any liability of which such
party has knowledge for which the Lessee is, or may be, liable under this
Article 9; provided, however, that failure to give such notice shall not
terminate any of the rights of the Indemnitees under this Article 9, except
(with respect to such Indemnitee) to the extent that the Lessee has been
materially prejudiced by the failure to provide such notice. Unless otherwise
provided in the Operative Agreements, any amount payable to an Indemnitee
pursuant to this Article 9 shall be paid within 30 days after receipt of a
written demand therefor from such Indemnitee accompanied by a written statement
describing in reasonable detail the basis for such indemnity and the computation
of the amount so payable.
Section 9.05. Refunds. If any Indemnitee shall obtain a recovery
of all or any part of any amount which the Lessee shall have paid to such
Indemnitee or for which the Lessee shall have reimbursed such Indemnitee under
this Article 9, and provided there shall not have occurred a Payment Default 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.
Section 9.06. Defense of Claims. The Lessee or its insurers shall
have the right (in each such case at the Lessee's sole expense) to investigate
or, provided that (i) the Lessee or its insurers shall not reserve the right to
dispute liability with respect to any insurance policies pursuant to which
coverage is sought, (ii) in the case of the Lessee, no Event of Default shall
have occurred and be continuing and (iii) the Lessee shall have first
acknowledged in writing to such Indemnitee the Lessee's obligation to indemnify
such Indemnitee hereunder in respect of such claim, defend any claim covered by
insurance for which indemnification is sought pursuant to this Article 9 and
each Indemnitee shall cooperate with the Lessee or its insurers with respect
thereto, and provided, further, the Lessee shall not be entitled to assume and
control the defense of any such claim if and to the extent such Indemnitee
reasonably objects to such control on the ground that an actual or potential
material conflict of interest exists where it is advisable for such Indemnitee
to be represented by separate counsel. Subject to the immediately foregoing
sentence, where the Lessee or the insurers under a policy of insurance
maintained by the Lessee undertake the defense of an Indemnitee with respect to
such a claim, no additional legal fees or expenses of such Indemnitee in
connection with the defense of such claim shall be indemnified hereunder unless
the fees or expenses were incurred at the written request of the Lessee or such
insurers. Subject to the requirement of any policy of insurance applicable to a
claim, an Indemnitee may participate at its own expense at any judicial
proceeding controlled by the Lessee or its insurers pursuant to the preceding
provisions, provided that such party's participation does not, in the opinion of
the independent counsel appointed by the Lessee or its insurers to conduct such
proceedings, interfere with such control; and such participation shall not
constitute a waiver of the indemnification provided in this Section 9.06. No
Indemnitee shall enter into any settlement or other compromise with respect to
any claim described in this Section 9.06 without the prior written consent of
the Lessee, which consent shall not unreasonably be withheld or delayed, unless
such Indemnitee waives its right to be indemnified under this Article 9 with
respect to such claim. The Lessee shall not enter into any settlement or
compromise which admits any criminal violation, gross negligence or willful
misconduct on the part of any Indemnitee without the prior written consent of
such Indemnitee.
Section 9.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 9 and the Lessee's obligations under any and all of them shall survive
the expiration or other termination of this Agreement, the Tax Indemnity
Agreement, the Trust Agreement, the Indenture, the Engine Warranty Assignment,
the Lease and the other Operative Agreements but, as to such indemnities, only
with respect to losses, liabilities, obligations, damages, penalties, claims,
actions, suits, costs, Expenses and disbursements caused by events occurring or
existing (or fairly attributable to the Lessee's acts or omissions) prior to
such termination or expiration or incurred in the process of (i) the return or
disposition of the Aircraft under Article 12 or Article 17 of the Lease, or (ii)
the termination of the Lease or the Indenture or, if later, the return of the
Aircraft.
Section 9.08. Effect of Other Indemnities. The Lessee's
obligations under the indemnities provided for in this Agreement shall be those
of a primary obligor whether or not the Person indemnified shall also be
indemnified with respect to the same matter under the terms of this Agreement,
the Lease, the Indenture, the Trust Agreement, or any other document or
instrument, and the Person seeking indemnification from the Lessee pursuant to
any provision of this Agreement may proceed directly against the Lessee without
first seeking to enforce any other right of indemnification.
Section 9.09. Interest. The Lessee will pay to each Indemnitee on
demand, to the extent permitted by applicable law, interest on any amount of
indemnity not paid when due pursuant to this Article 9 until the same shall be
paid, at the Past Due Rate.
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs. (a) Transaction
Costs. The Owner Participant shall (as soon as practicable upon receipt of
appropriate bills or invoices) furnish the Owner Trustee funds in an amount
equal to the amount of the Transaction Costs for which the Owner Trustee is
liable pursuant to this Section 10.01. The Owner Trustee shall pay (or reimburse
the Lessee if the Lessee shall have previously made such payment), in addition
to those items set forth in Section 10.01(a) of the Original Participation
Agreement (other than clause (v) thereof) all fees and expenses of the following
persons relating to the public offering of the Pass Through Certificates
contemplated by the Underwriting Agreement and related to the transactions
contemplated hereby: (i) the fees and expenses of counsel for the Owner
Participant; (ii) the fees and expenses of the transaction documentation counsel
for the Lessee and counsel for the Owner Trustee, the Indenture Trustee, the
Subordination Agent, the Pass Through Trustee, each Liquidity Provider, the
Original Loan Participant 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 initial 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
the Registration Statement on Form S-3 bearing Registration No. 333-49411
(including any amendment thereto), 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
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; (xi) reimbursement to the Owner Participant, the Owner
Participant Guarantor, 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; (xii) printing and
duplicating expenses and all fees, taxes and other charges payable in connection
with the recording or filing on or before the Refunding Date of the instruments
described in this Agreement, and the fees and expenses (including computer
time-sharing charges) of First Chicago Leasing Corporation, financial advisor to
the Lessee; (xiii) 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; (xiv) out-of-pocket expenses of Cornerstone Financial Advisors
Limited Partnership, the Owner Participant's economic advisor (including up to
$10,000 of computer time-sharing costs); and (xv) any other amounts approved by
the Lessee and the Owner Participant. Notwithstanding the foregoing, the fees
and expenses described in clauses (ii) through (xv) of this paragraph shall be
allocable to and payable by the Owner Participant under this Agreement (1) to
the extent incurred specifically with respect to the Owner Participant or the
refunding of the Original Loan Certificates, and (2) to the extent such fees and
expenses are incurred but are not specifically attributable to the Owner
Participant or the refunding of the Original Loan Certificates, only 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, EBO Price, Stipulated Loss
Value and Termination Value set forth in the Lease have been prepared assuming
the aggregate amount payable by the Owner Participant pursuant to the preceding
paragraph and Section 10.01 of the Original Participation Agreement is
1.6506666667% of the Purchase Price (the "Estimated Expense Amount"); provided,
however, that in no event shall the sum of (i) the Owner Participant's
Commitment (as such term is defined in the Original Participation Agreement),
(ii) the Transaction Costs to be paid by the Owner Participant pursuant to
Section 2.03 of the Original Participation Agreement and (iii) the amount with
respect to Transaction Costs to be paid by the Owner Participant pursuant to
Section 10.01 hereof, exceed $19,500,000. To the extent that the payment by the
Owner Participant with respect to Transaction Costs would cause the sum
described in the immediately preceding sentence to exceed $19,500,000, the
Lessee shall be obligated to pay the Transaction Costs constituting the First
Chicago Leasing Corporation fee and the Davis Polk & Wardwell fee to the extent
of such excess and the Owner Participant shall have no obligation to pay such
excess.
(b) Continuing Expenses. The continuing fees, expenses and
disbursements (including reasonable counsel fees and expenses) of the entity
acting as Owner Trustee, as lessor under the Lease and as Owner Trustee under
the Trust Agreement with respect to the administration of the Lease and the
Lessor's Estate and the continuing fees, expenses and disbursements (including
reasonable counsel fees and expenses and initial fees relating to the
establishment of any replacement trustee) of the Indenture Trustee, as trustee
under the Indenture with respect to the administration of the Trust Indenture
Estate, 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 Owner Participant Guarantor, the Indenture Trustee, the
Subordination Agent, the Liquidity Providers and the Pass Through Trustee
all costs and expenses (including reasonable legal fees and expenses)
incurred by any of them in connection with (a) any Default or Event of
Default and any enforcement or collection proceedings resulting therefrom,
or (b) the enforcement of the obligations of the Lessee hereunder or under
the other Operative Agreements, including, without limitation, the entering
into or giving or withholding of any amendments or supplements or waivers
or consents, including without limitation, any amendment, supplement,
waiver or consent resulting from any work-out, restructuring or similar
proceeding relating to the performance or nonperformance by the Lessee of
its obligations under the Operative Agreements or (c) any amendment,
supplement, waiver or consent (whether or not entered into) under the
Original Agreements, this Agreement, the Lease, the Indenture, the
Certificates, the Tax Indemnity Agreement, the 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 (including any
adjustment pursuant to Section 3.04 of the Lease) or is requested by the
Lessee or necessitated by the action or inaction of the Lessee; provided,
however, that the Lessee shall not be responsible for fees and expenses
incurred in connection with the offer, sale or other transfer (whether
pursuant to Article 5 of the Trust Agreement or otherwise) by the Owner
Participant after the Delivery Date of any interest in the Aircraft, the
Lessor's Estate, the Beneficial Interest or the Trust Agreement or any
similar interest (and the Owner Participant shall be responsible for all
such fees and expenses), unless such offer, sale or transfer shall occur
(A) 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 8, 9
or 10 of the Lease; and
(ii) to pay the fees, costs and expenses of all appraisers
involved in an independent appraisal of the Aircraft to the extent required
under Section 4.03 of the Lease.
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee. (a)
Resignation and Removal. The Owner Trustee or any successor Owner Trustee may
resign or may be removed by the Owner Participant, and a successor Owner Trustee
may be appointed 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 satisfactory to the Lessee, the Owner
Participant, the Pass Through Trustee and the Indenture Trustee whereby
such successor Owner Trustee confirms that it shall be deemed a party to
this Agreement, the Trust Agreement, the Lease, the Lease Supplement, the
Engine Warranty Assignment, the Indenture, the Indenture Supplement and any
other Operative Agreement to which the Owner Trustee is a party and agrees
to be bound by all the terms of such documents applicable to the Owner
Trustee and makes the representations and warranties contained in Section
7.04 hereof (except that it may be duly incorporated, validly existing and
in good standing under the laws of the United States of America or any
State thereof); and
(v) All filings of 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 appoint promptly
a successor Owner Trustee meeting the requirements of Section 11.01(b) hereof in
the event the Owner Participant has knowledge that the Owner Trustee at any time
shall not be a Citizen of the United States.
(d) Revocation. The Owner Participant agrees not to revoke and
terminate the Trust Agreement except in accordance with Section 4.01(a) of the
Trust Agreement, as in effect on the date hereof or as amended in accordance
with the terms of the Operative Agreements.
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant. The Owner
Participant shall not 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 and the Tax Indemnity Agreement to which the Owner Participant
is a party and the Owner Participant shall not be liable for the performance by
any party hereto of such other party's obligations or duties hereunder. Under no
circumstances shall the Owner Participant as such be liable to the Lessee, nor
shall the Owner Participant be liable to any Holder, for any action or inaction
on the part of the Owner Trustee or the Indenture Trustee in connection with
this Agreement, the Indenture, the Lease, the Bills of Sale, the Trust
Agreement, the Engine Warranty Assignment, any other Operative Agreement, any
Original Agreement, the ownership of the Aircraft, the administration of the
Lessor's Estate or the Trust Indenture Estate or otherwise, whether or not such
action or inaction is caused by the willful misconduct or gross negligence of
the Owner Trustee or the Indenture Trustee.
Section 12.02. Interest of Holders of Certificates. A Holder of a
Certificate shall have no further interest in, or other right with respect to,
the Trust Indenture Estate when and if the principal, any Make-Whole Premium and
interest on all Certificates held by such Holder and all other sums payable to
such Holder under this Agreement, under the Indenture and under such
Certificates shall have been paid in full.
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents. The Lessee
hereby consents in all respects to the execution and delivery of the Trust
Agreement, the Intercreditor Agreement, the Liquidity Facilities and the
Indenture and to all of the terms of said documents, and the Lessee acknowledges
receipt of an executed counterpart of each 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
Trust Agreement, the Indenture, the Intercreditor Agreement, the Liquidity
Facilities or the Certificates, except that prior to the occurrence and
continuance of an Event of Default, no section of the Indenture, the
Intercreditor Agreement, the Liquidity Facilities or the Trust Agreement shall
be amended or modified in any manner materially adverse to the Lessee without
its consent.
Section 13.02. Further Assurances. The Lessee hereby confirms to
the Owner Participant its covenants set forth in and obligations under the
Lease. The Lessee agrees that, except as otherwise provided in the Indenture,
the Owner Trustee may not enter into any amendment, modification or supplement
of, or give any waiver or consent with respect to, or approve any matter or
document as being satisfactory under the Lease without the prior consent of the
Indenture Trustee and the Owner Participant and that, except as otherwise
provided in the Indenture, upon an Indenture Event of Default, the Indenture
Trustee may act as the Lessor under the Lease to the exclusion of the Owner
Trustee. The Lessee further agrees to deliver to the Indenture Trustee and the
Owner Participant a copy of each notice, statement, request, report or other
communication given or required to be given to the Owner Trustee under the
Lease.
Section 13.03. No Retroactive Application. This Agreement, the
Lease, the Indenture, the Ancillary Agreement I and the Trust Agreement each
amend and restate, and the Tax Indemnity Agreement amends, the respective
original agreements with no intention of retroactive application. The applicable
original agreements have been restated for the convenience of the parties and
such amendments and restatements, and such amendment in the case of the Tax
Indemnity Agreement, are not intended to waive or modify the obligations of any
party which accrued or were to have been performed on or prior to the Refunding
Date under such unamended agreements (or, in the case of this Agreement, the
effective date hereof) or to deprive any party of its rights and remedies in
respect thereof.
Section 13.04. 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 8.02 thereof regarding the
rights of the Owner Participant to purchase the Certificates under circumstances
specified therein.
ARTICLE 14
NOTICES
Section 14.01. Notices. All notices, demands, declarations and
other communications required by this Agreement shall be in writing and shall be
deemed received (a) if given by telecopier, when transmitted and the appropriate
telephonic confirmation received if transmitted on a Business Day and during
normal business hours of the recipient, and otherwise on the next Business Day
following transmission, (b) if given by certified mail, return receipt
requested, postage prepaid five Business Days after being deposited in the
United States mail and (c) if given by FedEx service (or, if a Default or Event
of Default shall have occurred and be continuing, by other comparable courier
service), when received or personally delivered, addressed:
(a) If to the Lessee, to its office at 2007 Corporate Avenue,
Memphis, Tennessee 38132, Attention: Vice President and Treasurer with a
copy to Senior Vice President and General Counsel at 1980 Nonconnah
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 its office at 225
Asylum Street, Goodwin Square, Hartford, Connecticut 06103, Attention:
Corporate/Muni Administration, facsimile (860) 244-1889 with a copy to
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 it c/o Bank of Montreal, 115
South LaSalle Street, Chicago, IL 60603, Attention: BMO Leasing (U.S.),
Inc., telephone (312) 750-3791, facsimile: (312) 658-4616; 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 Pass Through Trustee or the
Subordination Agent, 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, Pass Through Trustee or the Subordination Agent, 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
Palmengartenstrasse 5-9, D- 60325 Frankfurt am Main, Germany, Attention:
Head of Aircraft Finance Department KIII b 3, telephone 011-49-69-7431-0,
facsimile 011-49-69-7431- 2944; 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/REOPTIMIZATION
Section 15.01. Refinancing. (a) Subject to the terms and
conditions of this Section 15.01, the Lessee may request the Owner Participant
to participate in up to three refinancings (including the refinancing
contemplated by this Agreement on the Refunding Date) in whole but not in part,
of the Certificates prior to the end of the Basic Term (a "Refinancing"). Such
Refinancings may be placed in either the private or public markets and shall be
denominated in United States dollars (or in any other foreign currency so long
as there is no foreign currency risk to the Owner Participant), and shall be on
terms that do not materially adversely affect the Owner Participant. The Owner
Participant agrees to negotiate promptly in good faith to conclude an agreement
with the Lessee as to the terms of any such Refinancing transaction (including
the terms of any debt to be issued in connection with such refinancing and the
documentation to be executed in connection therewith). Without the consent of
the Owner Participant, the prospectus and other offering materials relating to
any Refinancing in the form of a public offering shall not identify the Owner
Participant and shall not include any financial statements of the Owner
Participant or any Affiliate thereof. In connection with any such Refinancing in
the form of a public offering, the Lessee shall indemnify the Owner Participant
for any liabilities under federal, state or foreign securities laws resulting
from such offering. The aggregate principal amount of the new Certificates
issued in connection with each Refinancing shall be the same as the aggregate
principal amount outstanding on the Certificates being refinanced.
(b) Notwithstanding anything herein to the contrary, no
Refinancing will be permitted unless the Owner Participant and the Indenture
Trustee shall have received at least 10 Business Days' prior written notice of
the scheduled closing date of such Refinancing, the Owner Participant shall have
been provided such longer period required for a reasonable opportunity to review
the relevant documentation and the Owner Participant shall have determined in
good faith that neither it nor the Owner Trustee shall suffer any loss or
expense or bear any increased risk as a result of such Refinancing (including,
without limitation, any risk with respect to taxes or other adverse consequences
to the Owner Participant including the application of Revenue Procedures 75-21
and 75-28 and Section 467 of the Code) for which it has not been or will not
have been indemnified by the Lessee in a manner reasonably satisfactory to the
Owner Participant.
Prior to the consummation of any Refinancing pursuant to this
Section 15.01, the Owner Participant and the Lessee shall agree upon a schedule
setting forth each installment of Basic Rent and setting forth Stipulated Loss
Values and Termination Values payable pursuant to the Lease as a result of the
Refinancing in accordance with Section 3.04 of the Lease, and thereafter the
amounts set forth in such schedule shall become the amounts payable under the
Lease. Upon the consummation of the Refinancing, the evidence of indebtedness
issued pursuant to the Refinancing shall be considered "Certificates" for
purposes of this Agreement, the Lease and the Indenture.
(c) Notwithstanding the foregoing, the Owner Participant shall
have no obligation to proceed with any Refinancing transaction as contemplated
by this Section 15.01 unless the Lessee indemnifies the Owner Trustee and the
Owner Participant by agreement in form and substance satisfactory to each of
them, for any liability, obligation (other than the obligation to pay principal
and interest in respect of the refinanced indebtedness), cost or expense
(including, without limitation, reasonable attorneys' fees and Make-Whole
Premium and any other premiums or other amounts due under the Indenture),
including any adverse tax consequences or impact, related to or arising out of
any such Refinancing transaction, except to the extent of amounts included in
Transaction Costs and payable by the Owner Participant as provided herein.
(d) Each party agrees to take or cause to be taken all requested
action, including, without limitation, the execution and delivery of any
documents and instruments, including, without limitation, amendments or
supplements to the Lease, which may be reasonably necessary or desirable to
effect such Refinancing, including, in the case of the Owner Participant,
direction to the Owner Trustee by the Owner Participant to prepay the
Certificates then outstanding; provided, however, that such Refinancing shall be
subject to the satisfaction of each of the following conditions:
(i) Payment of principal, accrued interest, Make-Whole Premium and
Breakage Costs, if any, and all other sums due and owing on the
Certificates payable under the Indenture;
(ii) Payment in full of all other amounts then due and owing by
the Lessee under this Agreement, the Indenture, the Lease, the Trust
Agreement, and the Certificates then outstanding shall have been made by
the Lessee;
(iii) Such party shall have received such opinions of counsel
(including, without limitation, an opinion received by the Owner
Participant from independent tax counsel reasonably satisfactory to the
Lessee that such Refinancing shall not result in any adverse tax
consequences to the Owner Participant, unless the Lessee shall have agreed
to provide an indemnity in respect thereof reasonably satisfactory in form
and substance to the Owner Participant), certificates and other documents
as it may reasonably request, each in form and substance reasonably
satisfactory to such party;
(iv) All authorizations, approvals and consents which in the
reasonable judgment of the Owner Participant are necessary for such
Refinancing shall have been obtained;
(v) The Lessee shall have provided or agreed to provide to the
Owner Participant, as Supplemental Rent under the Lease, sufficient funds
to pay any Breakage Costs, Make-Whole Premium and any other amounts due
under the Indenture;
(vi) The satisfaction or waiver by each other party to this
Agreement of the conditions set forth in this Section 15.01 to such party's
obligations under this Section 15.01;
(vii) No Event of Default shall have occurred and be continuing or
would occur immediately after giving effect to such Refinancing;
(viii) In the event the Lessee shall not prohibit the purchase of
the Refinancing loan certificates (or pass through certificates, if the
placement is in the form of pass through 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 or pass through certificates, as the case may
be, with an ERISA Plan only if purchasers of the Refinancing loan
certificates or holders of pass through certificate holders, as the case
may be, 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 or pass through certificates, as the case may
be, and, if such purchasers or holders represent that they are using funds
of an ERISA Plan in acquiring the Refinancing loan certificates or pass
through certificates, as the case may be, 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 or pass through certificates, as the case
may be, 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 or pass through certificates, as the
case may be, 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 the exemption referred to in this paragraph (viii) is not valid
or applicable in any respect to the purchase and holding of the Refinancing
loan certificates or pass through certificates, as the case may be, or if
the representation in 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 Articles 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 the
representations set forth in 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; and
(ix) The Lessee shall pay all costs and expenses (including legal
fees) incurred in connection with any proposed or actually consummated
Refinancing.
Section 15.02. Reoptimization. (a) If a Change in Tax Rate occurs
prior to the end of the Basic Term, then, subject to the terms and conditions of
this Section 15.02 and Section 3.04 of the Lease, the Owner Participant may,
upon 30 days' prior notice to the Lessee, the Indenture Trustee, the Owner
Trustee and the Holders, jointly elect to modify the schedule of payments of
principal of the certificates issued ("Refinancing Certificates") in connection
with any Refinancing effected after the Refunding Date using private debt (not
including debt issued pursuant to an exemption from registration under the
Securities Act relying on Rule 144A promulgated thereunder but otherwise
marketed in a manner substantially similar to securities registered under the
Securities Act, and not including debt issued in connection with any offering of
securities registered under the Securities Act) due on each remaining Rent
Payment Date on or commencing on the Rent Payment Date next succeeding the date
mutually agreed to by the Owner Participant, the Lessee and the Indenture
Trustee on which the Owner Participant shall make such modification (the
"Reoptimization Date"). Promptly after making such modification, the Owner
Participant shall furnish each party hereto written notice of the amounts so
recalculated.
(b) Adjustments to Refinancing Certificates. On the Reoptimization
Date, subject to the satisfaction on or before the Reoptimization Date of the
conditions set forth in Section 15.02(c), the Owner Trustee will issue and
deliver and the Indenture Trustee will authenticate, and each holder of a
Refinancing Certificate will accept delivery of, a new Refinancing Certificate
or Refinancing Certificates (in replacement of each Refinancing Certificate then
held by such holder, which Refinancing Certificates shall be surrendered to the
Indenture Trustee for cancellation) containing such changed principal
installments (expressed as a percentage of the original principal amount of such
Refinancing Certificate) as shall have been recalculated by the Owner
Participant, but in the same principal amount as, and containing terms identical
to, except as otherwise contemplated by Section 15.02(d) hereof, the Refinancing
Certificates originally issued in connection with the Operative Agreements.
(c) Conditions to the Obligations of the Holders of the
Refinancing Certificates on the Reoptimization Date. The obligation of each
holder of a Refinancing Certificate to accept delivery of a new Refinancing
Certificate on the Reoptimization Date, and to surrender on such Reoptimization
Date any Refinancing Certificate then held by it, is subject to the following
conditions precedent having been satisfied on or before the Reoptimization Date:
(i) the requirements of Section 15.02(d) hereof shall have been
satisfied;
(ii) the following documents, in form and substance satisfactory
to such Holder, shall have been duly authorized, executed and delivered by
the party or parties thereto and shall be in full force and effect: (A) if
the payments of Basic Rent, Stipulated Loss Values and Termination Values
with respect to the Term have been changed, an amendment to the Lease,
dated the Reoptimization Date, (B) an amendment to the Indenture setting
forth any changed repayment schedule to the Refinancing Certificates, dated
the Reoptimization Date and duly filed (or in the process of being so duly
filed) for recordation with the Aeronautics Authority and (C) replacement
Refinancing Certificates; and
(iii) in connection with any Reoptimization the Owner Participant
shall pay or agree to pay all reasonable costs and expenses incurred by the
Lessee, the Owner Trustee, the Indenture Trustee and each Holder of a
Refinancing Certificate (including, without limitation, reasonable legal
fees and expenses) in connection with any such reoptimization.
(d) Payment Schedules. Except as otherwise provided in this
Section 15.02 as long as the Refinancing Certificates remain outstanding, the
payment schedules for the Refinancing Certificates shall not be modified.
ARTICLE 16
[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 for Federal income tax purposes the Owner
Participant will be the owner of the Aircraft and the Lessee will be the lessee
of the Aircraft.
Section 17.02. [Reserved].
Section 17.03. Counterparts. This Agreement may be executed by the
parties in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
Section 17.04. No Oral Modifications. Neither this Agreement nor
any of its terms may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by the party against which
the enforcement of the termination, amendment, supplement, waiver or
modification is sought. No such written termination, amendment, supplement,
waiver or modification shall be effective unless a signed copy shall have been
delivered to and executed by the Owner Trustee and the Indenture Trustee. A copy
of each such termination, amendment, supplement, waiver or modification shall
also be delivered to each other party to this Agreement other than the Original
Loan Participant.
The consent of each of the Pass Through Trustee and the
Subordination Agent, in its capacity as a party to this Agreement and not as a
Holder, shall not be required to modify, amend or supplement this Agreement or
to give any consent, waiver, authorization or approval with respect to this
Agreement under the circumstances in which the consent of the Indenture Trustee
would not be required for such modification, amendment, supplement, consent,
waiver or approval in accordance with Section 8.01(b) of the Indenture, provided
that the Pass Through Trustee shall be entitled to receive an Opinion of Counsel
(as defined in the Pass Through Agreement) necessary, in its sole discretion, to
establish that the Indenture Trustee's consent would not be required under such
circumstances.
Section 17.05. Captions. The table of contents preceding this
Agreement and the headings of the various Articles and Sections of this
Agreement are for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions of this Agreement.
Section 17.06. Successors and Assigns. The terms of this Agreement
shall be binding upon, and shall inure to the benefit of, the Lessee and its
successors and permitted assigns, the Owner Participant and its successors and
permitted assigns, the Owner Trustee and its successors as Owner Trustee (and
any additional owner trustee appointed) under the Trust Agreement, the Indenture
Trustee and its successors as Indenture Trustee (and any additional indenture
trustee appointed) under the Indenture, the Subordination Agent and its
successors and permitted assigns, including without limitation each Holder of a
Certificate, and the Pass Through Trustee and its successors as Pass Through
Trustee (and any additional pass through trustee appointed).
Section 17.07. Concerning the Owner Trustee, Indenture Trustee and
the Pass Through Trustee. Each of 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
Participant or the Owner Trustee becomes, all or any part of the Lessor's
Estate or the trust created by the Trust Agreement becomes the property of, a
debtor subject to the reorganization provisions of the Bankruptcy Code or any
other applicable bankruptcy or insolvency statutes, (ii) pursuant to any such
reorganization provisions, the Owner Participant is held to have recourse
liability to the debtor, the Owner Trustee or the trustee of the debtor
directly or indirectly on account of any amount payable as Make-Whole Premium,
principal or interest on the Certificates, or any other amount payable on any
Certificate that is provided in the Operative Agreements to be nonrecourse to
the Owner Participant and (iii) the Indenture Trustee actually receives any
Recourse Amount which reflects any payment by the Owner Participant on account
of (ii) above, then the Indenture Trustee, as the case may be, shall promptly
refund to the Owner Participant such Recourse Amount. For purposes of this
Section 17.10, "Recourse Amount" means the amount by which the portion of such
payment by the Owner Participant on account of clause (ii) above received by
the Indenture Trustee exceeds the amount which would have been received by the
Indenture Trustee if the Owner Participant had not become subject to the
recourse liability referred to in (ii) above. Nothing contained in this Section
shall prevent the Indenture Trustee from enforcing any individual obligation
(and retaining the proceeds thereof) of the Owner Participant under this
Agreement or any other Operative Agreement to the extent herein or therein
provided, for which the Owner Participant has expressly agreed by the terms of
this Agreement to accept individual responsibility.
Section 17.11. GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS AND IS BEING DELIVERED IN NEW
YORK.
Section 17.12. Section 1110 Compliance. The parties hereto agree
that the transactions contemplated by the Operative Agreements are expressly
intended to be, shall be and should be construed so as to be entitled to the
benefits and protection of Section 1110 of the Bankruptcy Code.
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 (on
behalf of itself and each of its Affiliates, agents, directors, officers,
employees and representatives) to use reasonable precautions to keep
confidential, in accordance with its customary procedures for handling
confidential information of this nature, any non-public information supplied to
it pursuant to this Agreement which is identified by the Person supplying the
same as being confidential at the time the same is delivered to such party,
provided that nothing herein shall limit the disclosure of any such information
(i) to the extent required by statute, rule, regulation or judicial process,
(ii) to counsel for any of the parties hereto, (iii) to bank examiners,
auditors, insurance regulators, accountants or similar regulatory authorities,
(iv) in connection with any litigation to which any one or more of the parties
hereto is a party relating to the transactions contemplated hereby or by any of
the Operative Agreements, (v) to 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 and this
Participation Agreement shall be effective this _____ day of _____, 1998.
LESSEE:
FEDERAL EXPRESS CORPORATION
By:_____________________________________
Name: Robert D. Henning
Title: Vice President and Treasurer
OWNER PARTICIPANT:
BMO LEASING (U.S.), INC.
By:_____________________________________
Name:
Title:
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
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
ORIGINAL LOAN PARTICIPANT:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK,
as Agent and as Original Loan Participant
By:__________________________________________
Name:
Title:
SCHEDULE I
CERTIFICATE INFORMATION
1. Federal Express Corporation 1998-1 Pass Through Trust Class A
Federal Express Corporation Trust No. N590FE
--------------------------------------------
Interest Rate: 6.720%
Maturity: January 15, 2020
Principal Amount: $30,775,000
2. Federal Express Corporation 1998-1 Pass Through Trust Class B
Federal Express Corporation Trust No. N590FE
--------------------------------------------
Interest Rate: 6.845%
Maturity: January 15, 2019
Principal Amount: $12,122,000
3. Federal Express Corporation 1998-1 Pass Through Trust Class C
Federal Express Corporation Trust No. N590FE
--------------------------------------------
Interest Rate: 7.020%
Maturity: January 15, 2016
Principal Amount: $14,736,000
SCHEDULE II
DEFINITIONS
(FEDERAL EXPRESS CORPORATION TRUST NO. N590FE)
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement,
the Series Supplements, 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 and except in the case of the
Original Agreements, (i) references to agreements shall be deemed to mean and
include such agreements as amended and supplemented from time to time, and
(ii) references to parties to agreements shall be deemed to include the
successors and permitted assigns of such parties.
DEFINED TERMS:
Additional Insured. As defined in Article 13 of the Lease.
Aeronautics Authority. As appropriate, the Federal Aviation
Administration and/or the Administrator of the Federal Aviation
Administration, any successor to the former United States Civil Aeronautics
Board, or any Person, governmental department, bureau, commission or agency
located in the United States succeeding to the functions of any of the
foregoing.
Affiliate. With respect to any Person, any other Person directly
or indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant.
After-Tax Basis. A basis such that any payment 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 reduction in Taxes that would result 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.
Agent. Morgan Guaranty Trust Company of New York and its
successors and permitted assigns as Agent for the Original Loan Participant
pursuant to Article 16 of the Original Participation Agreement.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier"
(as defined in the Transportation Code) as to which there is in force a permit
granted under Section 41302 of the Transportation Code.
Aircraft. The Airframe (or any permitted substitute airframe
thereunder) together with three Engines (whether each is an initial Engine or
a Replacement Engine) whether or not any of such initial or Replacement
Engines may from time to time be installed on such Airframe or may be
installed on any other airframe or on any other aircraft, including any
aircraft substituted pursuant to Section 11.03 of the Lease.
Airframe. The McDonnell Douglas MD-11F aircraft (excluding the
Engines or engines from time to time installed thereon) leased by the Lessor
to the Lessee pursuant to the Lease and the initial Lease Supplement and
having the United States FAA Registration Number initially and manufacturer's
serial number specified in the initial Lease Supplement, including (i) all
Parts in respect thereof and (ii) any Replacement Airframe which may be
substituted pursuant to Section 11.03 of the Lease.
Amendment No. 1 to the Original Tax Indemnity Agreement. Amendment
No. 1 to the Original Tax Indemnity Agreement (Federal Express Corporation
Trust No. N590FE), dated as of June 15, 1998, between the Lessee and the Owner
Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal Express
Corporation Trust No. N590FE), dated the Delivery Date, as amended and
restated on the Refunding Date, among the Lessee, the Owner Trustee, not in
its individual capacity, but solely as Owner Trustee, the Owner Participant
and the Indenture Trustee not in its individual capacity, but solely as
Indenture Trustee, as originally executed or as amended, modified or
supplemented with the consent of all the parties thereto.
Ancillary Agreements. Any written agreement of the Lessee to
which the Lessor is a party or to which the Lessor has consented in writing
entered into on the Delivery Date or the Refunding Date or any date thereafter
in connection with the transactions contemplated by the Operative Agreements,
as such agreement may be amended and supplemented from time to time with the
consent of the Lessor and delivered to the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee, the Subordination Agent, each Liquidity
Provider and the Owner Participant.
Appraisal. The report prepared by BK Associates, Inc. and
delivered to the Owner Participant (with an abbreviated report to the Lessee)
on the Delivery Date pursuant to Section 4.01(n) of the Original Participation
Agreement.
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.
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 September 27, 2020, or
such earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant under
the Trust Agreement.
Bills of Sale. Collectively, the FAA Bill of Sale and the
Warranty Bill of Sale.
Breakage Costs. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Business Day. Any day on which commercial banks are not
authorized or required to close in New York, New York, Chicago, Illinois,
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 is discharged,
Boston, Massachusetts.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N590FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Law. Any change to the Code or the Treasury
regulations promulgated thereunder or the publication of any revenue ruling,
revenue procedure or any informational release by the Internal Revenue Service
or the Department of Treasury either of which would change or would allow a
change in the tax assumptions or structure upon which the lease economics were
based, provided that the Owner Participant or the Lessee has notified the
other party of such change in writing on or prior to the Refunding Date.
Change in Tax Rate. Any amendment, modification, deletion,
addition, or change to the Code which is enacted into law after the Delivery
Date which changes the highest marginal statutory rate of Federal income tax
applicable to the Owner Participant (other than a change which is in the
nature of a minimum tax).
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Transportation Code, or any analogous
part of any successor or substituted legislation or regulation at the time in
effect.
Class A Liquidity Provider. Kreditanstalt fur Wiederaufbau, a
corporation organized under the public law of the Federal Republic of Germany
together with any Replacement Liquidity Provider (as defined in the
Intercreditor Agreement).
Class B Liquidity Provider. Kreditanstalt fur Wiederaufbau, a
corporation organized under the public law of the Federal Republic of Germany
together with any Replacement Liquidity Provider (as defined in the
Intercreditor Agreement).
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
refunding of the Original Loan Certificates.
Code. Except as otherwise provided, the Internal Revenue Code of
1986, as amended from time to time.
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.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which, with the lapse of time or
the giving of notice, or both, would constitute an Event of Default.
Delivery Date. May 27, 1998.
EBO Price. Has the meaning set forth in Section 4.02(a)(F) of the
Lease.
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 May 1, 1998,
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. N590FE), dated as of May 1, 1998,
between the Lessor and the Lessee.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. As defined in Section 8.01(b)(ix) of the Participation
Agreement.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of
the Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A)
for a period in excess of 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 to the end of the Term,
if less (unless such loss constitutes an Event of Loss under clause (ii) of
this definition) or (B) for a period in excess of 60 days due to the
destruction, damage beyond economic repair or rendition of such property
permanently unfit for normal use by Lessee for any reason whatsoever; (ii) any
damage to such property which results in an insurance settlement with respect
to such property on the basis of a total loss, or constructive or compromised
total loss; (iii) (1) condemnation, confiscation or seizure of, or requisition
of title to such property by the Government, any foreign government or
purported government or any agency or instrumentality thereof, or (2)
condemnation, confiscation, or seizure of, or requisition or taking of, use of
such property (A) by a foreign government or instrumentality or agency of any
such foreign government, for a period in excess of 180 days (or such shorter
period ending on the earlier of the expiration of the Term or on the date on
which an insurance settlement with respect to such property on the basis of a
total loss or constructive or compromised total loss shall occur) or (B) by
the Government for a period extending beyond the Term, provided that no Event
of Loss shall be deemed to have occurred, and the Term shall be extended
automatically for a period of six months (or the date of return of the
Aircraft, if shorter, so long as the Lessor receives at least six months
notice of such date of return) beyond the end of the Term in the event that
the Aircraft, the Airframe or any Engine is requisitioned by the Government
pursuant to an activation as part of the CRAF Program described in Section
7.02(a)(iv) of the Lease and (iv) as a result of any law, rule, regulation,
order or other action by the Aeronautics Authority or other governmental body
having jurisdiction, the use of the Aircraft or Airframe in the normal course
of air transportation of cargo shall have been prohibited by virtue of a
condition affecting all 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. The date of such Event of Loss shall be (s) the 31st day or the
91st day, as the case may be, following loss of such property or its use due
to theft or disappearance (or the end of the Term, if earlier); (t) the 61st
day following the date of any destruction, damage beyond economic repair or
rendition of such property permanently unfit for normal use; (u) the date of
any insurance settlement on the basis of a total loss or constructive or
compromised total loss; (v) the date of any condemnation, confiscation,
seizure or requisition of title of such property; (w) the 181st day following
condemnation, confiscation, seizure or requisition for use of such property by
a foreign government referred to in clause (iii)(2)(A) above (or the end of
the Term or the date of any insurance settlement described therein, if earlier
than such 181st day); (x) the last day of the Term in the case of requisition
for use of such property by the Government; (y) the last day of the 6 month or
12 month period, referred to in clause (iv) above. An Event of Loss with
respect to the Aircraft shall be deemed to have occurred if any Event of Loss
occurs with respect to the Airframe. If an Event of Loss described in any of
clauses (i) (A), (iii), (iv) or (v) 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) maintained in accordance with
the provisions of 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)
the payment of incremental out-of-pocket expenses of the Owner Trustee, the
Owner Participant or their respective authorized representatives payable by
the Lessee under Section 6.03(b) of the Participation Agreement or Section
14.01 of the Lease following any reregistration of the Aircraft and (viii) any
right to demand, collect or otherwise receive and enforce the payment of any
amount described in clauses (i) through (vii) above.
Expense; Expenses. Have the meaning specified in Section 9.01(a)
of the Participation Agreement.
FAA. The United States Federal Aviation Administration and any
successor agency or agencies thereto.
FAA Bill of Sale. The bill of sale for the Airframe on AC Form
8050-2, or such other form as may be approved by the Aeronautics Authority,
executed by the Lessee in favor of the Owner Trustee and dated the Delivery
Date.
Fair Market Renewal Term. A term with respect to which the Lessee
has exercised its option to renew the Lease pursuant to the second paragraph
of Section 4.01(a) thereof and with respect to which the conditions set forth
in such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and
equal in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease. Fair Market Rental shall be determined in
accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and
equal in amount to, the value which would be obtained in an arm's-length
transaction between an informed and willing purchaser under no compulsion to
buy and an informed and willing seller unaffiliated with such purchaser and
under no compulsion to sell, assuming that the Aircraft (or other property) is
unencumbered by the Lease. Unless otherwise provided in the applicable
provisions of any Operative Agreement, 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. Fair Market Value shall be determined in accordance with the
provisions of Section 4.03 of the Lease.
Federal Aviation Administration. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
FedEx. Federal Express Corporation.
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 lesser of (i) Fair Market Rental as determined as of
the commencement of such Fixed Renewal Term and (ii) 50% of the average actual
semi-annual Basic Rent payable during the Basic Term.
Fixed Renewal Term. The term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the first paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
FSB. First Security Bank, National Association, a national banking
association.
FSC. Global Capital Solutions Ltd., a Barbados corporation.
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 Agent (to the extent set forth in Articles 8 and 9 of
the Original Participation Agreement), the Subordination Agent, in its
individual capacity and in its capacity as Subordination Agent, each Liquidity
Provider, the Owner Participant, the Original Loan Participant (to the extent
set forth in Articles 8 and 9 of the Original Participation Agreement), the
Indenture Trustee, in its individual capacity and as trustee, the Owner
Participant Guarantor, and any successor (including any trustee which may
succeed to the Lessor's interest under the Lease), Affiliate, assign, officer,
director, employee, agent and servant of any of the foregoing, the Lessor's
Estate and the Trust Indenture Estate. 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. N590FE), dated as of May 1, 1998, as amended and
restated as of June 15, 1998, between the Lessor and the Indenture Trustee, as
supplemented by the Indenture and Security Agreement Supplement.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N590FE), dated May 27, 1998, 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.
Intercreditor Agreement. The Intercreditor Agreement dated as of
May 1, 1998, 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.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N590FE) dated as of May 1, 1998, as amended and restated as of June 15, 1998,
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. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N590FE), dated May 27, 1998, substantially in the form of
Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending
at the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation.
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 Aircraft, the Lease, any Lease Supplement, the
Participation Agreement, the Bills of Sale, the Modification Agreement, any
Ancillary Agreement, the GTA, the Engine Warranty Assignment, the Engine
Consent, any warranty with respect to the Airframe and the Engines, all
amounts of Basic Rent and Supplemental Rent, including without limitation,
insurance proceeds (other than insurance proceeds payable to or for the
benefit of the Owner Trustee in its individual capacity or the Owner
Participant) and requisition, indemnity or other payments of any kind for or
with respect to the Aircraft (except amounts owing to the Owner Participant,
to the Indenture Trustee, to the Owner Trustee in its individual capacity, or
to any of their respective directors, officers, employees and agents pursuant
to Articles 8 and 9 of the Participation Agreement), and all other property of
the Owner Trustee purportedly subjected to the Lien of the Indenture by the
Granting Clause thereof; provided that in no event shall "Lessor's Estate"
include any Excepted Payment.
Lessor's Liens. Liens 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, and, in the case of the Lessor
in its individual capacity, arising from its gross negligence or willful
misconduct or expressly prohibited under the Operative Agreements and any act
or omission of the Owner Participant which is in violation of any of the terms
of the Operative Agreements, (iii) Taxes or Expenses imposed against the
Lessor, in its individual capacity or as Owner Trustee, Owner Participant,
Lessor's Estate or the trust created by the Trust Agreement which are not
required to be indemnified against by the Lessee pursuant to the Participation
Agreement by reason of Section 8.01(b) or 9.01(b) thereof 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.
Liquidity Facility. Has the meaning specified in Section 1.1 of
the Intercreditor Agreement.
Liquidity Provider. Kreditanstalt fur Wiederaufbau, a corporation
organized under the public law of the Federal Republic of Germany together
with any Replacement Liquidity Provider (as defined in 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 or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. With respect to any Certificate, the amount
(as determined by an Independent Investment Banker reasonably acceptable to the
Indenture Trustee and the Owner Participant) by which (i) the present value of
the remaining scheduled payments of principal and interest to the Maturity of
such Certificate computed by discounting such payments on a semiannual basis
on each Payment Date (assuming a 360-day year of twelve 30-day months) using a
discount rate equal to the Treasury Yield exceeds (ii) the outstanding
principal amount of such Certificate plus accrued interest.
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.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate equal to the Debt Rate per annum compounded semi-annually.
Non-U.S. Person. Any Person other than (i) a citizen or resident
of the United States, as defined in Section 7701(a)(30) of the Code, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof or therein, or
(iii) any estate or trust that is subject to United States federal income
taxation regardless of the source of its income.
Obsolete Parts. Parts which the Lessee in good faith determines
to be obsolete or no longer suitable or appropriate for use on the Airframe or
any Engine.
Officer's Certificate. When delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each
such certificate shall include the statements provided for in Section 15.07 of
the Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, the Bills of Sale, the Modification Agreement, the GTA, the Engine
Warranty Assignment, the Lease, the Lease Supplement, the Owner Participant
Guaranty, the Owner Trustee Guaranty, any Ancillary Agreement entered into by
or with the written consent of the Indenture Trustee, which by its terms is an
Operative Agreement, the Certificates outstanding at the time of reference,
the Indenture, the Indenture and Security Agreement Supplement, the Engine
Consent, the Tax Indemnity Agreement, each Liquidity Facility and the
Intercreditor 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 Delivery Date in connection with the transactions contemplated by the
Original Participation Agreement.
Original Ancillary Agreement I. The Ancillary Agreement I (Federal
Express Corporation Trust No. N590FE), dated the Delivery Date, among the
Lessee, the Owner Participant, the Indenture Trustee and the Owner Trustee as
it was originally executed on May 27, 1998.
Original Indenture. The Trust Indenture, Mortgage and Security
Agreement (Federal Express Corporation Trust No. N590FE), dated as of May 1,
1998, between the Owner Trustee and the Indenture Trustee, which together with
the Indenture and Security Agreement Supplement No. 1 (Federal Express
Corporation Trust No. N590FE), dated May 27, 1998 attached thereto was
recorded as one instrument by the FAA on June 1, 1998 and assigned Conveyance
Number X136036.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N590FE), dated as of May 1, 1998, between the Owner Trustee as
lessor, and the Lessee, which together with Lease Supplement No. 1 (Federal
Express Corporation Trust No. N590FE), dated May 27, 1998 attached thereto was
recorded as one instrument by the FAA on June 1, 1998 and assigned Conveyance
Number X136037.
Original Loan Certificates. The loan certificates issued on the
Delivery Date to the Original Loan Participant.
Original Loan Participant. The entity listed on Schedule I to the
Original Participation Agreement and its successors and assigns (other than
any assignees in connection with the Refunding Date).
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N590FE), dated as of May 1, 1998, among
the Lessee, the Owner Participant, the Indenture Trustee, the Owner Trustee
and the Original Loan Participant as it was originally executed on May 27,
1998.
Original Tax Indemnity Agreement. The Tax Indemnity Agreement
(Federal Express Corporation Trust No. N590FE), dated as of May 1, 1998,
between the Lessee and the Owner Participant as it was originally executed on
May 27, 1998.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N590FE), dated as of May 1, 1998, between the Owner
Participant and the Owner Trustee as it was originally executed and filed with
the FAA on May 27, 1998.
Outstanding. When used with respect to Certificates, as of the
date of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary
amount has been theretofore deposited with the Indenture Trustee
in trust for the Holders of such Certificates pursuant to Section
14.01 of the Indenture; provided, that if such Certificates are to
be prepaid, notice of such prepayment has been duly given pursuant
to the Indenture or provision therefor satisfactory to the
Indenture Trustee has been made; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article
II of the Indenture.
Owner Participant. The trustor originally named in the Trust
Agreement and any successor thereto, and any Person to which the Owner
Participant transfers, in accordance with the Trust Agreement, its right,
title and interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Guarantor. Bankmont Financial Corp., a Delaware
corporation, and any other provider of an Owner Participant Guaranty.
Owner Participant Guaranty. The Owner Participant Guaranty dated
the Delivery Date, as amended and restated as of the Refunding Date, by the
Owner Participant Guarantor in favor of the Lessee, the Owner Trustee, the
Indenture Trustee and the Pass Through Trustee, and any guaranty delivered in
compliance with Article 5 of the Trust 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. State Street Bank and Trust Company, a
Massachusetts trust company, and any other provider of an Owner Trustee
Guaranty.
Owner Trustee Guaranty. The Owner Trustee Guaranty dated the
Delivery Date, as amended and restated as of the Refunding Date, by the Owner
Trustee Guarantor in favor of the Lessee, the Owner Participant, the Indenture
Trustee and the Pass Through Trustee, and any guaranty delivered in compliance
with Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's (i) nominal
after-tax yield and aggregate after-tax cash flow during the Basic Term and
(ii) nominal after-tax yield and aggregate after-tax cash flow assumed to be
realized through the date on which the option under Section 4.02(a)(F) of the
Lease may be exercised, in each case, utilizing the multiple investment
sinking fund method of analysis, computed on the basis of the same methodology
and assumptions as were utilized by the Owner Participant in determining Basic
Rent, Stipulated Loss Value and Termination Value percentages and the EBO
Price, as such assumptions may be adjusted for events which have been the
basis of adjustments to Rent pursuant to Section 3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal
Express Corporation Trust No. N590FE), dated as of May 1, 1998, as amended and
restated as of June 15, 1998, among the Lessee, the Original Loan Participant,
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,
1998-1-A, the Pass Through Certificates, 1998-1-B or the Pass Through
Certificates, 1998-1-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. The Business Day on which the sale of
the Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Corporation 1998-1 Pass
Through Trust Class A, Federal Express Corporation 1998-1 Pass Through Trust
Class B and Federal Express Corporation 1998-1 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 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. Each January 15 and July 15 commencing on January
15, 1999.
Payment Default. Any event specified in Section 16.01(a) or
16.01(b) of the Lease which with the giving of notice or lapse of time or both
would constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local,
foreign or any agency, instrumentality, division or body thereof).
Preliminary Notice. Has the meaning specified in Section 4.01(a)
of the Lease.
Premium Termination Date. With respect to the Series A
Certificates, the scheduled maturity date of the Series A Certificates, with
respect to the Series B Certificates, the scheduled maturity date of the
Series B Certificates and with respect to the Series C Certificates, the
scheduled maturity date of the Series C Certificates.
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.
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. Has the meaning specified in Ancillary Agreement
I.
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.
Refunding Date. A Business Day on which the refunding of the
Original Loan Certificates occurs, the expected date thereof having been
specified by the Lessee in a written notice given to the parties to the
Participation Agreement and the Underwriters at least three (3) Business Days
prior to such expected Refunding Date.
Register. Has the meaning set forth in Section 3.02 of the
Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Regulation D. Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
Related Indentures. Collectively, the Trust Indenture and Security
Agreement for each of Federal Express Corporation Trust Nos. N676FE, N677FE,
N678FE, N679FE, N680FE, N681FE, N682FE, N585FE, N620FE, N621FE and N623FE,
each dated as of June 15, 1998, between State Street Bank and Trust Company of
Connecticut, National Association, as owner trustee and First Security Bank,
National Association, as indenture trustee, and the Trust Indenture and
Security Agreement for Federal Express Corporation Trust No. N675FE, dated as
of June 1, 1998, as amended and restated as of June 15, 1998, between State
Street Bank and Trust Company of Connecticut, National Association, as owner
trustee and First Security Bank, National Association, as indenture trustee.
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. July 7, 1998, September 27, 2020 and each
January 15 and July 15 commencing on July 15, 1998.
Reoptimization Date. Has the meaning specified in Section
15.02(a) of the Participation Agreement.
Replacement Aircraft. Any aircraft substituted for the Aircraft
pursuant to Section 11.03(a) of the Lease.
Replacement Airframe. Has the meaning set forth in Section 11.03
of the Lease.
Replacement Engine. A General Electric CF6-80C2-D1F engine (or an
engine of the same or another manufacturer) of equal or greater value,
remaining useful life and utility as the Engine being replaced, together with
all Parts relating to such engine; provided, however, that if such replacement
engine is not a General Electric CF6-80C2-D1F engine, such replacement engine
must then be commonly used in the commercial aviation industry on McDonnell
Douglas MD-11 airframes.
Responsible Officer. With respect to the Owner Trustee (except for
purposes of the Trust Agreement in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, 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.
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 Supplement or Series Supplements. The Series Supplement
1998-1-A to be executed and delivered by the Lessee and the Pass Through
Trustee, the Series Supplement 1998-1-B to be executed and delivered by the
Lessee and the Pass Through Trustee or the Series Supplement 1998-1-C to be
executed and delivered by 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.
SSB. State Street Bank and Trust Company of Connecticut, National
Association, a national banking association or any successor Owner Trustee in
its individual capacity.
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."
Subordination Agent. First Security Bank, National Association, a
national banking association, not in its individual capacity but solely as
Subordination Agent.
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 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 Price and amounts calculated by reference to Termination Value, any
amounts of Make-Whole Premium payable under the Indenture to the extent
provided in Section 3.03 of the Lease, and all amounts required to be paid by
Lessee under the agreements, covenants and indemnities contained in the Lease
or in the Participation Agreement or the Tax Indemnity Agreement or any other
Operative Agreement, but excluding Basic Rent 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. Has the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Original Tax Indemnity Agreement as
amended by Amendment No. 1 to the Original Tax Indemnity Agreement.
Term. The Basic Term of the lease for the Aircraft under the
Lease and, if renewed pursuant to Section 4.01 of the Lease, each Renewal Term
for the Aircraft for which the Lease is renewed, or such earlier date on which
the Lease is terminated pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that
is on or after July 15, 2006 in the case of Article 10 of the Lease, and in
the case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date falling
on July 15, 2011 and January 15, 2014, as the case may be, (ii) Section
4.02(a)(D) or (E) of the Lease, a Rent Payment Date that is on or after the
fifth anniversary of the Delivery Date and (iii) Section 4.02(a)(F) of the
Lease, January 15, 2016.
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. N590FE), dated as of May 1, 1998, as amended and restated as of June
15, 1998, 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.
UCC. Uniform Commercial Code.
Underwriters. Morgan Stanley & Co. Incorporated, Chase Securities
Inc., Citicorp Securities, Inc., Credit Suisse First Boston Corporation and
J.P. Morgan Securities Inc.
Underwriting Agreement. The Underwriting Agreement dated June 30,
1998, among the Lessee and the Underwriters.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there
is in force a certificate issued pursuant to Section 41102(a) or Section 41103
of the Transportation Code, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Transportation
Code and Part 121 of the regulations under such Transportation Code, for
aircraft capable of carrying ten (10) or more individuals or 6,000 pounds or
more of cargo, or which may operate as an air carrier by certification or
otherwise under any successor or substitute provision thereof or in absence
thereof.
U.S. Person. A Person described in Section 7701(a)(30) of the
Code.
Warranty Bill of Sale. The full warranty bill of sale covering
the Aircraft (and specifically referring to each Engine) executed by the
Lessee as owner of the Aircraft in favor of the Owner Trustee and to be dated
the Delivery Date.
SCHEDULE III
PERMITTED COUNTRY LIST
Australia Luxembourg
Austria Malaysia
Belgium Mexico
Brazil Netherlands
Canada New Zealand
Denmark Norway
Finland Philippines
France Singapore
Germany Spain
Iceland Sweden
Ireland Switzerland
Japan Thailand
United Kingdom
EXHIBIT A(1)(a)
[Letterhead of Federal Express]
[Refunding Date]
To the Addressees Listed on Schedule A Attached
Re: Federal Express Corporation Trust No. N590FE
--------------------------------------------
Ladies and Gentlemen:
I am the Senior Vice President and General Counsel of Federal Express
Corporation, a Delaware corporation ("Federal"), and am familiar with the
transactions contemplated by the Participation Agreement (Federal Express
Corporation Trust No. N590FE), dated as of May 1, 1998, as amended and
restated as of June 15, 1998 (the "Participation Agreement"), among Federal,
as Lessee, BMO Leasing (U.S.), Inc., as Owner Participant, Morgan Guaranty
Trust Company of New York, as Original Loan 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(l)(i) 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
refinancing in full of the Original Loan Certificates evidencing the Original
Loan Participants' participation in the payment of the Purchase Price of one
McDonnell Douglas MD-11F aircraft (the "Aircraft"), using the proceeds from
the public offering of the Pass Through Certificates. Three Classes of Pass
Through Certificates will be 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 will be 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, the Pass Through Agreement and each Series
Supplement (the "Transaction Agreements"). We have relied upon originals or
copies, certified or otherwise identified to our satisfaction, of such
corporate records, documents and other instruments as in our judgment are
relevant to rendering the opinions expressed below. As to any facts material
to the opinions expressed below (other than any thereof relating to Federal),
we have relied upon the representations and warranties made in the Transaction
Agreements, the accuracy of which we have not independently investigated or
verified. In such examination, we have assumed the genuineness of all
signatures (other than the signatures of Federal) and the authenticity of all
documents submitted to us as originals and the conformity with the originals of
all documents submitted to us as copies. We have also assumed that each of the
parties to each of the Transaction Agreements, other than Federal, has full
power, authority and legal right to enter into such Transaction Agreements and
that each such Transaction Agreement has been duly authorized, executed and
delivered by each of such parties.
Based on the foregoing, it is my opinion that:
1. Federal is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, is a "citizen of
the United States" within the meaning of Section 40102(a)(15) of the
Transportation Code, and has or had, on the date of execution thereof, the
corporate power and authority to carry on its business as currently conducted
and to enter into and perform its obligations under the Transaction Agreements
to which it is a party. Federal is duly qualified to do business and is in
good standing in the State of Tennessee and each other state of the United
States in which its operations or the nature of its business requires Federal
to so qualify, except where the failure to so qualify would not have a
material adverse impact on Federal or its business.
2. Federal possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents which are material to
the operation of the routes flown by it and the conduct of its business and
operations as currently conducted, and each such certificate, franchise,
license, permit, right and concession and consent is in full force and effect.
3. Each of the Transaction Agreements to which Federal is a party
has or had, on the date of execution thereof, been duly authorized, executed
and delivered by Federal and each constitutes the legal, valid and binding
obligation of Federal enforceable against Federal in accordance with its terms.
4. Neither the execution and delivery by Federal of the Transaction
Agreements to which Federal is a party, nor the consummation of any of the
transactions by Federal contemplated thereby, nor the performance of the
obligations thereunder by Federal, did at the time of execution and delivery,
or does presently (a) require any stockholder approval or violate the
certificate of incorporation or by-laws of Federal or (b) conflict with or
contravene the provisions of, or constitute a default under, or result in the
creation of any Lien (other than Liens permitted under Section 6.01(a) of the
Lease) upon the property of Federal under any law, governmental rule or
regulation, or the charter or bylaws of Federal or any order, writ, injunction
or decree of any court or governmental authority against Federal or by which
any of its properties may be bound or any indenture, mortgage, contract or
other agreement known to me to which Federal is a party or by which it may be
bound or, require the approval or consent of any trustee or the holders of any
indebtedness or obligations of Federal.
5. Neither the execution and delivery by Federal of the Transaction
Agreements to which it is a party, nor the consummation of any transactions by
Federal contemplated thereby, nor the performance of the obligations
thereunder by Federal, did or does, as the case may be, (a) require the
consent or approval of, the giving of notice to, or (except as described or
contemplated in the Participation Agreement and the Lease, all of which were
or are required to be performed on or prior to the Refunding Date and which
were or shall have been accomplished on or prior to the Refunding Date) the
registration with, or the taking of any other action in respect of, the
Aeronautics Authority, the Securities and Exchange Commission or any other
authority or agency of the federal government or of the State of Tennessee
other than (i) the registration of the issuance and sale of the Pass Through
Certificates under the Securities Act, (ii) compliance with the securities
laws of each applicable state and (iii) the 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 (as updated
by Note 7 to the financial statements included in Federal's Quarterly Reports
on Form 10-Q for the fiscal quarters ended August 31, 1997, November 30, 1997
and February 28, 1998), and (b) in Federal's Current Report on Form 8-K dated
June 11, 1997, as to all of 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 Transaction Agreements, or (ii) involves the Aircraft.
7. Except for the filing and, where appropriate, recording,
pursuant to the Transportation Code of the Lease, the Indenture, the Trust
Agreement, the filing of the financing statements referred to in Section
4.01(f) of the Participation Agreement and the taking of possession by the
Indenture Trustee of the original counterpart of the Lease and maintaining
possession of the original counterpart of the Lease Supplement delivered on
the Delivery Date, no further action, including any filing or recording of any
document is necessary or advisable in order to establish and perfect the Owner
Trustee's title to and interest in the Aircraft as against Federal and any
third parties, or to perfect the first mortgage lien on the Aircraft in favor
of the Indenture Trustee in each case with respect to such portion of the
Aircraft as is covered by the recording system established by the
Transportation Code.
8. Federal is a duly certificated "air carrier" within the meaning
of the Transportation Code, and a holder of a certificate under Sections
41102(a) and 41103 of the Transportation Code, and an "air carrier operating
certificate" issued under Chapter 447 of the Transportation Code for aircraft
capable of carrying ten (10) or more individuals or 6,000 pounds or more of
cargo, and each such certificate is in full force and effect.
9. On the Delivery Date the Owner Trustee received good and valid
title to the Aircraft free and clear of all liens on file with the FAA, except
for Liens permitted under Section 6.01(a) of the Lease. Pursuant to the
Original Participation Agreement the Aircraft was duly delivered to the Owner
Trustee. Federal, as Lessee, duly accepted the Aircraft under the Original
Lease and the Lease Supplement and the Term commenced on the Delivery Date.
10. Federal's principal place of business and chief executive
office (as such term is defined in the Uniform Commercial Code in effect in
the State of Tennessee) are located at 2005 Corporate Avenue, Memphis, Shelby
County, Tennessee.
11. Federal is not, and is not directly or indirectly controlled by
or acting on behalf of any Person which is, an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
The opinions expressed in paragraph 3 above as to the enforceability
of the Transaction Agreements to which Federal is a party are based upon the
assumption for purposes of such opinions and without independent analysis
that, notwithstanding the respective choice of laws clauses in the Transaction
Agreements, the governing law with respect to each of the Transaction
Agreements is identical in all relevant respects to the law of the State of
Tennessee. Insofar as the foregoing opinion relates to the enforceability of
any instrument, such enforceability is subject to applicable bankruptcy,
insolvency and other similar laws affecting the enforcement of creditors'
rights generally (whether such enforceability is considered in a proceeding in
equity or at law). The enforceability of the remedies provided under the
Lease may also be limited by applicable laws which may affect the remedies
provided therein but which do not in my opinion affect the validity of the
Lease or make such remedies inadequate for the practical realization of the
benefits intended to be provided thereby.
I do not express any opinion as to matters governed by any law other
than the Federal laws of the United States of America, the corporation law of
the State of Delaware and the laws of the State of Tennessee.
As to the matters referred to in paragraphs 5, 7 and 9, I have relied
on the opinion of Daugherty, Fowler & Peregrin of even date herewith, to the
extent such matters are addressed in such counsel's opinion and subject to the
assumptions and qualifications expressed therein.
This opinion is delivered to you solely for your use in connection
with the transaction described herein, and may not be used for any other
purpose, and may not be relied upon by any other person, without my prior
written consent.
I rendered an opinion dated May 27, 1998 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. I hereby consent and
agree that the addressees hereto who were not addressees to the Delivery Date
Opinion may rely on the Delivery Date Opinion as fully and with the same force
and effect as if such addressees were originally named therein on the date of
the Delivery Date Opinion.
Very truly yours,
SCHEDULE A
----------
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Agent and Original Loan Participant
- -----------------------------------
Morgan Guaranty Trust Company of New York
Owner Participant
- -----------------
BMO Leasing (U.S.), Inc.
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(1)(b)
[Letterhead of Davis Polk & Wardwell]
[Refunding Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N590FE
--------------------------------------------
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. N590FE), dated as of May 1, 1998, as amended and restated as of June 15,
1998 (the "Participation Agreement"), among Federal Express, as Lessee, BMO
Leasing (U.S.), Inc., as Owner Participant, Morgan Guaranty Trust Company of
New York, as Original Loan 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(l)(ii) of the Participation Agreement.
Capitalized terms not otherwise defined herein have the meanings assigned
thereto in the Participation Agreement.
Pursuant to the Original Participation Agreement, the Owner
Participant and the Original Loan Participant participated in the payment of
the Purchase Price of one McDonnell Douglas MD-11F Aircraft which was
purchased by the Owner Trustee pursuant to the Bills of Sale, subjected to the
Lien of the Original Indenture and leased to Federal Express under the
Original Lease. The Participation Agreement provides, among other things, for
the refinancing of the Original Loan Certificates using the proceeds from the
public offering of the Pass Through Certificates. Three Classes of Pass
Through Certificates will be issued by three separate Pass Through Trusts, each
formed to acquire, among other securities, the Certificates bearing a
particular interest rate and having a particular Maturity that will be issued
under the Indenture.
In connection with the opinions expressed below, we have examined
executed counterparts of the Operative Agreements, the Pass Through
Certificates, the Pass Through Agreement and each Series Supplement (the
"Transaction Agreements"). We have also examined originals, or copies
certified to our satisfaction, of such other agreements, documents,
certificates and statements of governmental officials and corporate officers
as we have deemed necessary or advisable as a basis for such opinions. In
such examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity
with the originals of all documents submitted to us as copies.
As to any facts material to our opinions expressed below, we have,
with your consent, relied on the representations and warranties made in or
pursuant to the Participation Agreement and the other documents referred to
therein, the accuracy of which we have not independently verified. In
addition, we have, when relevant facts were not independently established by
us, relied, to the extent we deemed such reliance proper, upon certificates of
public officials and certificates, telegrams and other written or telephoned
statements of officers of the parties referred to herein.
Based on the foregoing, it is our opinion that:
1. With respect to that portion, if any, of the Aircraft and the
other property included in the Lessor's Estate as may not be covered by the
recording system established by the FAA pursuant to Section 44107 of the
Transportation Code, no filing or recording of any document or other action
was or is necessary in order to establish the Owner Trustee's title thereto
and interest therein as against Federal Express and any third parties.
2. The Lease creates a valid leasehold interest in the Aircraft,
the entitlement thereof to the benefits of recordation under the
Transportation Code being subject to the due and timely filing and, where
appropriate, recording of (A) the Lease (with the Indenture attached as an
exhibit), (B) the Indenture and (C) the Trust Agreement.
3. Assuming (i) the due authorization, execution and delivery of
the Transaction Agreements by each of the parties to each such document (other
than Federal Express), (ii) each such party has full power and legal right to
enter into and perform its respective obligations under the Transaction
Agreements, (iii) that the execution, delivery and performance by each of the
Transaction Agreements by each of the parties thereto will not violate the
respective parties' constituent documents, (iv) the due authorization,
execution, issuance and delivery by the Owner Trustee, and the due
authentication by the Indenture Trustee, of the Certificates to be issued
under the Indenture in accordance with the terms of the Indenture, (v) that
the Original Loan Certificate is delivered by the Original Loan Participant to
the Indenture Trustee for cancellation and is cancelled, (vi) the due
authorization, execution, issuance, delivery and authentication by the Pass
Through Trustee of the Pass Through Certificates to be issued under the Pass
Through Agreement and the Series Supplement relating to such Pass Through
Certificates, in each case in accordance with the terms of the Pass Through
Agreement and such Series Supplement, and (vii) that the form of each
Transaction Agreement is in compliance with all applicable laws and
governmental rules and regulations (other than the laws of the United States
and the State of New York), then: (A) to the extent governed by New York law,
each Transaction Agreement in form constitutes a legal, valid and binding
agreement of each party thereto enforceable against each such party in
accordance with its terms; (B) the Original Indenture created, and the
Indenture creates, for the benefit of the Holders, the security interest in
the Trust Indenture Estate that they purport to create; (C) the Certificates,
when issued to and acquired by the Pass Through Trustee, will be legal, valid
and binding obligations of the Owner Trustee enforceable against the Owner
Trustee in accordance with their terms and the terms of the Indenture and will
be entitled to the benefits of the Indenture, including the benefit of the
security interest created thereby; (D) the Pass Through Certificates, when
issued to and acquired by the Underwriters in accordance with the Underwriting
Agreement, will be legal, valid and binding obligations of the Pass Through
Trustee enforceable against the Pass Through Trustee in accordance with their
terms and will be entitled to the benefits of the Pass Through Agreement and
the Series Supplement relating thereto; and (E) the beneficial interest of the
Owner Participant under the Trust Agreement in and to the properties which are
part of the Trust Indenture Estate is subject, to the extent provided in the
Indenture, to the Lien of the Indenture in favor of the Holders. The opinions
set forth in this paragraph 3 are subject to the due filing and, where
appropriate, recording with the FAA of the documents referred to in paragraph
2 above.
4. (a) Each of the Transaction Agreements to which Federal Express
is a party has been duly authorized, executed and delivered by Federal Express.
(b) The execution, delivery and performance by Federal Express of
each of the Transaction Agreements to which Federal Express is a party do not,
or did not on the date of execution thereof, violate, and fully comply, or did
fully comply on the date of execution thereof, with, any laws and governmental
rules and regulations of the State of New York that may be applicable to
Federal Express. The opinion set forth in this paragraph 4(b) is rendered
without regard to the taking of any action or the conduct of any other
business by Federal Express in the State of New York other than the
transactions contemplated by the Transaction Agreements.
5. The execution, delivery and performance of the Participation
Agreement, the Trust Agreement, the Indenture and the Lease by the Owner
Trustee in its individual or trust capacity, as the case may be, and the
issuance, execution, delivery and performance of the Certificates by the Owner
Trustee in its trust capacity do not violate, and fully comply with, any laws
and governmental rules and regulations of the State of New York that may be
applicable to the Owner Trustee in its individual or trust capacity, as the
case may be. The opinion set forth in this paragraph 5 is rendered without
regard to the effect, if any, on such issuance (in the case of the
Certificates), execution, delivery or performance, of the taking of any
action, the conduct of any business or the exercise of any other powers by
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 Transaction Agreements. 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(f) of the Participation
Agreement), and the beneficial interest of the Owner Participant under the
Trust Agreement in and to such properties is subject, to the extent provided
in the Indenture, to the Lien of the Indenture in favor of the Holders of the
Certificates issued and to be issued under the Indenture.
7. The Indenture creates, as security for the Certificates duly
issued and to be issued under the Indenture, the first priority security
interest in the Aircraft it purports to create, the perfection and rank
thereof being subject to the registration with the FAA of the Aircraft in the
name of the Owner Trustee and the due filing and, where appropriate, recording
in accordance with the Transportation Code of the documents referred to in
paragraph 2 above. We express no opinion with respect to the status of any
security interest in any portion of the Aircraft which does not constitute an
"aircraft" or "aircraft engine", as defined in paragraphs (6) and (7) of
Section 40102(a) of the Transportation Code.
8. 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 or the Indenture under the Trust
Indenture Act of 1939, as amended.
10. The Indenture Trustee on behalf of the holders of the
Certificates will be entitled to the benefits of Section 1110 of the United
States Bankruptcy Code with respect to the Aircraft in the event of a case
under Chapter 11 of the United States Bankruptcy Code in which Federal Express
is a debtor. We note that a recent decision by the United States District
Court for the District of Colorado in connection with the Western Pacific
Airlines, Inc. bankruptcy suggests that the protections of Section 1110 become
unavailable to the lessor or security interest holder once the bankruptcy
trustee or debtor-in-possession, within the 60 day period following the date of
commencement of the reorganization proceedings, agrees to perform the debtor's
obligations that become due on or after such date and cures outstanding
defaults, with the result, among others, that the ability of a lessor or
security interest holder to exercise remedies based on a subsequent default
would be subject to the automatic stay. We believe that this holding is
erroneous because it is inconsistent with the overriding purpose of Section
1110 to protect lessors of, and creditors secured by, qualifying aircraft
against being stayed from exercising their rights while defaults under their
leases or financing agreements remain uncured.
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 Karen M. Clayborne, Senior Vice President and General Counsel
of Federal Express to be delivered to you and dated the date hereof, for
purposes of the matters covered thereby.
(b) We are qualified to practice law in the State of New York, and
we do not purport to be experts on, or to express any opinion herein
concerning, any laws other than the laws of the State of New York, the laws
of the United States and the General Corporation Law of the State of
Delaware. We express no opinion as to any matters involving aviation law.
(c) The opinion contained in paragraph 3(A) above as to
enforceability is subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity which may
affect the remedies provided in the agreements referred to in said
opinions, which laws and principles, however, do not in our opinion make
the remedies provided in said agreements inadequate for the practical
realization of the benefits of the security intended to be provided thereby.
(d) This opinion is rendered solely to you at Federal Express's
request in connection with the above matter. This opinion may not be
relied upon by you for any other purpose or relied upon by any other Person
without our prior written consent.
(e) We rendered an opinion dated May 27, 1998 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. We hereby consent
and agree that the addressees hereto who were not addressees to the
Delivery Date Opinion may rely on the Delivery Date Opinion as fully and
with the same force and effect as if such addressees were originally named
therein on the date of the Delivery Date Opinion.
Very truly yours,
SCHEDULE A
----------
Lessee
- ------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Agent and Original Loan Participant
- -----------------------------------
Morgan Guaranty Trust Company of New York
Owner Participant
- -----------------
BMO Leasing (U.S.), Inc.
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(2)(a)
[Letterhead of Winston & Strawn]
[Refunding Date]
To Each of the Addressees Listed in Schedule A Attached Hereto
Re: Federal Express Corporation Trust No. N590FE
--------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel for (i) BMO Leasing (U.S.), Inc., a
Delaware corporation (the "Owner Participant"), in connection with the
transactions contemplated by (a) the Participation Agreement (Federal Express
Corporation Trust No. N590FE), dated as of May 1, 1998, as amended and
restated as of June 15, 1998 (the "Participation Agreement"), among Federal
Express Corporation, as Lessee (the "Lessee"), the Owner Participant, Morgan
Guaranty Trust Company of New York, as Original Loan 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
(the "Owner Trustee") and First Security Bank, National Association, not in
its individual capacity, except as otherwise stated, but solely as Indenture
Trustee (the "Indenture Trustee"), Pass Through Trustee and Subordination
Agent, (b) the Trust Agreement (Federal Express Corporation Trust No. N590FE),
dated as of May 1, 1998, as amended and restated as of June 15, 1998 (the
"Trust Agreement"), by and between the Owner Participant and the Owner
Trustee, (c) the Tax Indemnity Agreement (Federal Express Corporation Trust
No. N590FE), dated as of May 1, 1998, as amended by Amendment No. 1 to the Tax
Indemnity Agreement dated as of June 15, 1998 (the "Indemnity Agreement"),
between the Owner Participants and the Lessee, and (d) Ancillary Agreement I
(Federal Express Corporation Trust No. N590FE), dated the Delivery Date, as
amended and restated on the Refunding Date ("Ancillary Agreement I"), by and
among the Lessee, the Owner Participant, the Owner Trustee, and the Indenture
Trustee, and (ii) Bankmont Financial Corp., a Delaware banking association
(the "Guarantor"), in connection with the transactions contemplated by the
Owner Participant Guaranty, dated the Delivery Date, as amended and restated
on the Refunding Date (the "Guaranty"), from the Guarantor to each of the
beneficiaries named therein. This opinion letter is delivered pursuant to
Section 4.01(l)(iii) of the Participation Agreement. Unless otherwise defined
herein, all capitalized terms used herein shall have the respective defined
meanings set forth in the Participation Agreement.
In connection with our opinions herein, we have examined executed
counterparts of the Participation Agreement, the Trust Agreement, the
Indenture, the Indemnity Agreement, the Guaranty and Ancillary Agreement I
(collectively, the "Documents"). We have further examined and relied upon the
accuracy of original, certified, conformed, photographic or telecopied copies
of such records, agreements, certificates and other documents as we have
deemed necessary or appropriate to enable us to render the opinions expressed
herein. In all such examinations, we have assumed the genuineness of
signatures on original documents and the conformity to such original documents
of all copies submitted to us as certified, conformed, photographic or
telecopied copies, and as to certificates and telegraphic and telephonic
confirmations given by public officials, we have assumed the same to have been
properly given and to be accurate. As to various questions of fact material
to our opinions, we have relied solely upon the accuracy of the statements,
representations and warranties made in the Documents, and we have made no
independent investigation or inquiry with respect to such factual matters.
With your consent, and for purposes of this opinion letter, we have
assumed the accuracy of the following matters, but we have not made any
independent investigation or inquiry with respect thereto and we render no
opinion on such matters:
(a) The Participation Agreement, the Indemnity Agreement, the Trust
Agreement and Ancillary Agreement I at the time of execution and delivery
by the Owner Participant will have been duly and validly executed and
delivered by all parties thereto other than the Owner Participant and will
constitute the legal, valid and binding obligations of such parties,
enforceable against such parties in accordance with their terms, except as
the enforceability thereof may be limited by (i) applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and (ii)
general principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).
(b) The parties to the Participation Agreement, the Indemnity
Agreement, the Trust Agreement and Ancillary Agreement I other than the
Owner Participant, at the time of execution and delivery by the Owner
Participant, have obtained, and there are in full force and effect at such
time, any and all required consents, permits, and approvals required by or
from any and all federal, state, local or foreign governmental agencies and
authorities in connection with the transactions contemplated thereby, to
the extent necessary for the legality, validity, binding effect or
enforceability of the Participation Agreement, the Indemnity Agreement, the
Trust Agreement and Ancillary Agreement I.
We have been retained as special counsel to the Owner Participant and
the Guarantor in connection with transactions contemplated by the Participation
Agreement and the Guaranty and have not generally represented the Owner
Participant or the Guarantor in their respective business activities and are
not familiar with the nature and extent of such activities. Accordingly, we
also have assumed without investigation that such other activities are not of
such a nature as to cause the transactions contemplated by the Participation
Agreement and the Guaranty to be governed by laws or regulations of the State
of New York or the United States of America applicable only because of such
activities (such as laws relating specifically to the banking, securities,
insurance or utility industries) and not applicable to business corporations
generally.
Based upon the foregoing but subject to the assumptions, limitations
and qualifications set forth herein, we are of the opinion that:
1. The Participation Agreement, the Indemnity Agreement and Ancillary
Agreement I constitute legal, valid and binding obligations of the Owner
Participant, enforceable against the Owner Participant in accordance with
their respective terms, except as the enforceability thereof may be limited
by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally, and except as enforcement thereof is subject
to general principles of equity (regardless of whether such enforceability
is considered in a proceeding at law or in equity).
2. The Guaranty constitutes the legal, valid and binding obligation
of the Guarantor, enforceable against the Guarantor in accordance with its
terms, except as the enforceability thereof may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
or similar laws affecting the enforcement of creditor's rights generally,
and except as enforcement thereof is subject to general principles of
equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity).
3. Neither the execution and delivery of the Participation
Agreement, the Trust Agreement, the Indemnity Agreement or Ancillary
Agreement I by the Owner Participant nor the consummation by the Owner
Participant of any of the transactions therein contemplated, or the
fulfillment of, or compliance with, the terms and provisions of any
thereof, (A) requires for its validity that the Owner Participant obtain
the consent or approval of, give notice to, register with, or take any
other action with respect to, any governmental authority or agency of the
State of New York or the Federal government of the United States, or (B)
contravenes any law, governmental rule or regulation of the State of New
York or the Federal government of the United States or any governmental
authority or agency thereof.
4. Neither the execution and delivery of the Guaranty by the
Guarantor nor the consummation by the Guarantor of any of the transactions
therein contemplated, or the fulfillment of, or compliance with, the terms
and provisions thereof, (A) requires for its validity that the Guarantor
obtain the consent or approval of, give notice to, register with, or take
any other action with respect to, any governmental authority or agency of
the Federal government of the United States, or (B) contravenes any law,
governmental rule or regulation of the Federal government of the United
States or any governmental authority or agency thereof.
In rendering the foregoing opinions, we have relied, with your
consent, on the opinion of even date herewith of Thomas Sizer, Esq., counsel
for the Owner Participant and the Guarantor, as to the matters set forth
therein and our opinions are subject to the same limitations and exceptions
set forth therein.
The foregoing opinions are subject, however, to the qualifications:
(a) that we express no opinion as to matters relating to the title to or
sufficiency of description of any property or collateral described in the
Documents or the creation, perfection or relative priority of any lien or
security interest intended to be created with respect to such property or
collateral thereunder; (b) certain indemnification provisions contained in the
Documents may be limited or rendered unenforceable by considerations of public
policy; (c) certain requirements in the Documents specifying that provisions
thereof may only be waived in writing may not be valid, binding or enforceable
to the extent that an oral agreement or an implied agreement by trade practice
of course of conduct has been created modifying any provision of such
document; and (d) we express no opinion as to the severability of any
provision of any Document. In addition, we express no opinion as to matters
governed by (i) any tax laws, (ii) the Federal Aviation Act of 1958, as
amended, or by any other laws, statutes, rules or regulations of the United
States particularly relating to the acquisition, ownership, registration,
leasing, use or sale of the Aircraft, the Airframe or the Engines other than
such laws relating to personal property generally, (iii) any securities laws
or (iv) laws pertaining to the Owner Participant or the Guarantor solely
because of the business activities of such Owner Participant or the Guarantor,
respectively, and which are not applicable to business corporations generally.
We are licensed to practice law in the State of New York and we
express no opinions herein as to the laws of any state or jurisdiction other
than the laws of the State of New York and the laws of the United States of
America.
This opinion letter is furnished by us at your request and at the
Owner Participant's and Guarantor's request for your sole benefit, and we
agree that you may rely on the opinions expressed herein. No other person or
entity shall be entitled to rely on the opinion expressed herein without our
express prior written consent. This opinion letter is limited to the matters
stated herein, and no opinion is implied or may be inferred beyond the matters
expressly stated herein. This opinion letter is of the date hereof and we
undertake no, and disclaim any, obligation to advise you of any changes in any
matters set forth herein.
We rendered an opinion dated May 27, 1998 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. We hereby consent and
agree that the addressees hereto who were not addressees to the Delivery Date
Opinion may rely on the Delivery Date Opinion as fully and with the same force
and effect as if such addressees were originally named therein on the date of
the Delivery Date Opinion.
Very truly yours,
SCHEDULE A
----------
Lessee
- ------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Agent and Original Loan Participant
- -----------------------------------
Morgan Guaranty Trust Company of New York
Owner Participant
- -----------------
BMO Leasing (U.S.), Inc.
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(2)(b)
[Letterhead of BMO Leasing (U.S.), Inc.]
[Refunding Date]
To Each of the Persons Listed on
Schedule A Hereto
Re: Federal Express Corporation Trust No. N590FE
--------------------------------------------
Ladies and Gentlemen:
I have acted as counsel to (i) BMO Leasing (U.S.), Inc., a Delaware
corporation (the "Owner Participant"), in connection with the transactions
contemplated by the Participation Agreement (Federal Express Corporation Trust
No. N590FE) dated as of May 1, 1998, as amended and restated as of June 15,
1998 (the "Participation Agreement") among the Owner Participant, Federal
Express Corporation, as Lessee, Morgan Guaranty Trust Company of New York, as
Original Loan Participant, State Street Bank and Trust Company of Connecticut,
National Association, not in its individual capacity, except as otherwise
expressly set forth therein, but solely as Owner Trustee and First Security
Bank, National Association, not in its individual capacity, except as
otherwise expressly set forth therein, but solely as Indenture Trustee, Pass
Through Trustee and Subordination Agent; and (ii) Bankmont Financial Corp., a
Delaware corporation (the "Guarantor"), in connection with the transactions
contemplated by the Guaranty dated the Delivery Date, as amended and restated
on the Refunding Date (the " Guaranty") made by the Guarantor in favor of the
beneficiaries named therein. For the purposes of this opinion letter, all
terms defined in the Participation Agreement, but not defined herein shall
have the same meanings when used herein.
In connection with the opinion letter, I have examined the Operative
Agreements to which the Owner Participant and the Guarantor are parties, and I
have examined originals, or copies certified or otherwise identified to my
satisfaction, of such records, documents, certificates and other instruments
as in my judgment are necessary or appropriate for purposes of this opinion
letter. In such examination I have assumed the genuineness of all signatures
(other than on behalf of the Owner Participant and the Guarantor) and the
authenticity of all documents submitted to me as originals and the conformity
with the originals of all documents submitted to me as copies. As to any
facts material to my opinions expressed below, I have relied upon the
representations and warranties contained in or made pursuant to the Operative
Agreements to which the Owner Participant and the Guarantor are parties, and
upon originals, or copies authenticated to my satisfaction, of such
certificates of the Owner Participant and Guarantor, or public officials and
such corporate records, documents and other instruments as in my judgment are
necessary or appropriate to enable me to render the opinions expressed below.
I have assumed, except with regard to the Owner Participant and the Guarantor,
the Operative Agreements to which the Owner Participant is a party and the
Guaranty have been duly authorized, executed and delivered by the parties
thereto and that they constitute the legal, valid and binding obligations of
each party thereto enforceable against each such party in accordance with
their respective terms.
Based upon the foregoing, I advise you that, in my opinion:
1. The Owner Participant is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and
has or had, on the date of execution thereof, the full corporate power and
authority to execute, deliver and perform its obligations under the
Operative Agreements to which it is a party.
2. The Guarantor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has or
had, on the date of execution thereof, the full corporate power and
authority to execute, deliver and perform its obligations under the
Guaranty.
3. Each of the Operative Agreements to which the Owner Participant
is a party and the Guaranty have been duly authorized, executed and
delivered by the Owner Participant and the Guarantor, respectively.
4. Neither the execution and delivery by the Owner Participant of
the Operative Agreements to which it is a party, nor the consummation by
the Owner Participant of any of the transactions contemplated thereby (a)
requires the consent or approval of, the giving of notice to, the
registration with, the recording or filing of any document with, or the
taking of any other action with respect to any governmental authority or
agency of the State of Delaware or of the federal government of the United
States; or (b) violates any law, governmental rule or regulation of the
State of Delaware or of the federal government of the United States.
5. Neither the execution and delivery by the Guarantor of the
Guaranty to which it is a party, nor the consummation by the Guarantor of
any of the transactions contemplated thereby (a) requires the consent or
approval of, the giving of notice to, the registration with, the recording
or filing of any document with, or the taking of any other action with
respect to any governmental authority or agency of the State of Delaware or
of the federal government of the United States; or (b) violates any law,
governmental rule or regulation of the State of Delaware or of the federal
government of the United States.
6. Neither the execution and delivery by the Owner Participant of
the Operative Agreements to which it is a party, nor the consummation by
the Owner Participant of any of these transactions contemplated thereby,
conflicts with, results in a breach of or violates any of the terms,
conditions or provisions of (i) the Certificate of Incorporation or Bylaws
of the Owner Participant, (ii) any order, writ, injunction or decree known
to me after due internal inquiry, of any court or governmental authority
against the Owner Participant or by which the Owner Participant or any of
its properties is bound or (iii) any indenture, mortgage or contract or
other material agreement or instrument known to me after due inquiry, to
which the Owner Participant is a party or by which it or any of its
properties is bound or constitutes a default thereunder or results in the
imposition of any lien upon any of its properties.
7. Neither the execution and delivery by the Guarantor of the
Guaranty, nor the consummation by the Guarantor of any of the transactions
contemplated thereby, conflicts with, results in a breach of or violates
any of the terms, conditions or provisions of (i) the Certificate of
Incorporation or By-laws of the Guarantor, (ii) any order, writ, injunction
or decree known to me after due internal inquiry, of any court or
governmental authority against the Guarantor or by which the Guarantor or
any of its properties is bound or (iii) any indenture, mortgage or contract
or other material agreement or instrument known to me after due internal
inquiry, to which the Guarantor is a party or by which it or any of its
properties is bound or constitutes a default thereunder or results in the
imposition of any lien upon any of its properties.
8. There are no actions, suits or proceedings pending or, to the
best of my knowledge, threatened against or affecting the Owner Participant
or the Guarantor before any court, administrative agency or other
governmental body or arbitration board or tribunal which, if adversely
determined, would materially and adversely affect the Owner Participant's
ability to perform its obligations under the Operative Agreements to which
the Owner Participant is a party or the Guarantor's ability to perform its
obligations under the Guaranty.
I am authorized to practice law in the State of Illinois and do not
hold myself out as an expert on the law of any state other than the State of
Illinois and the Delaware General Corporation Law. Consequently, the
foregoing opinions are limited to the federal laws of the United States of
America, the laws of the State of Illinois and the Delaware General
Corporation Law, and I express no opinion as to the laws of any other state or
jurisdiction. I express no opinion as to securities laws.
This opinion letter is rendered to you pursuant to Section
4.01(l)(iii) of the Participation Agreement and is solely for your benefit in
the transactions contemplated by the Participation Agreement. This opinion
letter may not be relied upon by you for any other purpose, or relied upon by
any other person for any purpose without my prior written consent.
We rendered an opinion dated May 27, 1998 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. We hereby consent and
agree that the addressees hereto who were not addressees to the Delivery Date
Opinion may rely on the Delivery Date Opinion as fully and with the same force
and effect as if such addressees were originally named therein on the date of
the Delivery Date Opinion.
Very truly yours,
SCHEDULE A
----------
Lessee
- ------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Agent and Original Loan Participant
- -----------------------------------
Morgan Guaranty Trust Company of New York
Owner Participant
- -----------------
BMO Leasing (U.S.), Inc.
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(3)
[Letterhead of Ray, Quinney & Nebeker]
[Refunding Date]
To the Persons Listed in Schedule A Attached Hereto
Re: Federal Express Corporation Trust No. N590FE
--------------------------------------------
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.
N590FE), dated as of May 1, 1998, as amended and restated as of June 15, 1998
(the "Participation Agreement"), among Federal Express Corporation, as Lessee,
BMO Leasing (U.S.), Inc., as Owner Participant, Morgan Guaranty Trust Company
of New York, as Original Loan 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. N590FE (the "Aircraft") is being refinanced. This opinion is
furnished pursuant to Section 4.01(l)(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 or had, on the date of execution thereof,
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 Refunding
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 Refunding 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.
We rendered an opinion dated May 27, 1998 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. We hereby consent and
agree that the addressees hereto who were not addressees to the Delivery Date
Opinion may rely on the Delivery Date Opinion as fully and with the same force
and effect as if such addressees were originally named therein on the date of
the Delivery Date Opinion.
Very truly yours,
SCHEDULE A
----------
Lessee
- ------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Agent and Original Loan Participant
- -----------------------------------
Morgan Guaranty Trust Company of New York
Owner Participant
- -----------------
BMO Leasing (U.S.), Inc.
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(4)
[Letterhead of Bingham Dana LLP]
[Refunding Date]
To Each of the Parties Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N590FE
--------------------------------------------
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. N590FE) dated as of May 1, 1998, as amended and restated as of June 15,
1998 between State Street and BMO Leasing (U.S.), Inc., as Owner Participant
("Owner Participant") (the "Trust Agreement") and to State Street Bank and
Trust Company (the "Parent Guarantor") in connection with the transactions
contemplated by that certain Participation Agreement (Federal Express
Corporation Trust No. N590FE) dated as of May 1, 1998, as amended and restated
as of June 15, 1998 (the "Participation Agreement") by and among Federal
Express Corporation, as Lessee (the "Lessee"); State Street, in its individual
capacity and Owner Trustee; the Owner Participant; First Security Bank,
National Association, in its individual capacity and as Indenture Trustee (the
"Indenture Trustee"), Pass Through Trustee and Subordination Agent; and Morgan
Guaranty Trust Company of New York, as Original Loan Participant. 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 and the Parent Guarantor has requested that we
deliver this opinion to you in accordance with Section 4.01(l)(v) of the
Participation Agreement.
Our representation of State Street and the Parent Guarantor has been
as special counsel for the purposes stated above. As to all matters of fact
(including factual conclusions and characterizations and descriptions of
purpose, intention or other state of mind), we have relied entirely upon (i)
the representations of the parties set forth in the Operative Agreements and
(ii) the certificates delivered to us by the management of State Street and
the Parent Guarantor 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 and the
Massachusetts Commissioner of Banks relating to State Street and the Parent
Guarantor, respectively, the Owner Trustee Parent Guarantee of the Parent
Guarantor dated as of the date hereof (the "Guaranty") 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, the Owner Trustee and the Parent Guarantor), 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, the Owner Trustee and the
Parent Guarantor).
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, the Parent
Guarantor 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 of each other party thereto (except,
with respect to the Trust Agreement, the Owner Participant);
(ii) except as otherwise set forth in our opinions in
paragraphs 13 and 14 below, the enforceability of any obligation of State
Street, the Owner Trustee, the Parent Guarantor 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 in paragraphs 1 through 14 are limited solely
to the internal substantive laws of the State of Connecticut and the Federal
laws of the United States of America and the opinions expressed in paragraphs
15 through 19 are limited solely to the laws of the Commonwealth of
Massachusetts and the federal laws of the United States of America. No
opinion is expressed herein as to the application or effect of federal
securities laws or as to the securities or so-called "Blue Sky" laws of any
state or other jurisdiction. In addition, 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.
Except as set forth in paragraph 11 below, which opinion is based
solely upon our review of Uniform Commercial Code search reports conducted
with the Secretary of the State of the State of Connecticut, 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. 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 13 and 14 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 or had, on the date of execution
thereof, 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 Documents and to issue, execute,
deliver and perform its obligations under the Certificates.
2. State Street has or had, on the date of execution thereof, 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.
3. The Owner Trustee is duly authorized under the Trust Agreement to
execute, deliver and perform each of the Owner Trustee Documents and each
such Owner Trustee Document 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, 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.
4. 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.
5. 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, which filing has been duly effected,
and the filing of continuation statements with respect thereto required to
be filed at periodic intervals under the UCC.
6. The Trust Agreement duly creates a legal and valid trust under
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.
7. 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.
8. 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.
9. 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.
10. 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, (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.
11. On the Delivery Date, the Owner Trustee 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.
12. 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.
13. 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.
14. 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.
15. The Parent Guarantor is a Massachusetts trust company, duly
organized, existing and in good standing with the Commissioner of Banks of
the Commonwealth of Massachusetts under the laws of the Commonwealth of
Massachusetts.
16. The Parent Guarantor has full corporate power and authority to
enter into, deliver and perform its obligations under the Guaranty, and the
Guaranty has been duly authorized, executed and delivered by the Parent
Guarantor, is a legal, valid and binding obligation of the Parent Guarantor
and is enforceable against the Parent Guarantor in accordance with its
terms.
17. The execution and delivery of the Guaranty and compliance by the
Parent Guarantor with all of the provisions thereof do not and will not
contravene (a) any provisions of any requirement of law or of any rule or
regulation or any judgement or order known to us of any court or
governmental authority applicable to or binding on the Parent Guarantor or
any of its properties, (b) any contractual obligations of the Parent
Guarantor known to us, or (c) any of the provisions of its charter
documents or by-laws.
18. No consent or authorization of, notice to, filing or
registration with, or other act by or in respect of, any federal or
Massachusetts governmental authority and, to our knowledge, no consent of
any other person (including, without limitation, any stockholder or
creditor of the Parent Guarantor) is required in connection with the
execution, delivery, performance, validity or enforceability of the
Guaranty against the Parent Guarantor.
19. To our knowledge, there are no proceedings pending or threatened
against or affecting the Parent Guarantor in or before any court or by or
before any governmental authority, administrative agency, arbitration board
or tribunal which, individually or in the aggregate, if adversely
determined, would materially adversely affect the ability of the Parent
Guarantor to perform its obligations under the Guaranty.
We rendered an opinion dated May 27, 1998 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. We hereby consent and
agree that the addressees hereto who were not addressees to the Delivery Date
Opinion may rely on the Delivery Date Opinion as fully and with the same force
and effect as if such addressees were originally named therein on the date of
the Delivery Date Opinion.
Very truly yours,
SCHEDULE A
----------
Lessee
- ------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Agent and Original Loan Participant
- -----------------------------------
Morgan Guaranty Trust Company of New York
Owner Participant
- -----------------
BMO Leasing (U.S.), Inc.
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(5)
[Letterhead of Ray, Quinney & Nebeker]
[Refunding Date]
To the Persons Listed in Schedule A Attached Hereto
Re: Federal Express Corporation Trust No. N590FE
--------------------------------------------
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 the
date hereof 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 1998-1-A, 1998-1-B and 1998-1-C,
respectively (the "Series Supplements") and the Participation Agreement
(Federal Express Corporation Trust No. N590FE), dated as of May 1, 1998, as
amended and restated as of June 15, 1998 (the "Participation Agreement"),
among Federal Express Corporation, as Lessee, BMO Leasing (U.S.), Inc., as
Owner Participant, Morgan Guaranty Trust Company of New York, as Original Loan
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. N590FE (the
"Aircraft") is being refinanced. This opinion is furnished pursuant to
Section 4.01(l)(vi) of the Participation Agreement. Capitalized terms used
herein and not otherwise defined are used as defined in the Participation
Agreement, except that references herein to any instrument shall mean such
instrument as in effect on the date hereof.
We have examined executed counterparts or copies otherwise identified
to our satisfaction of the following documents:
(a) The 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) are being
collectively referred to as the "Pass Through Trustee Documents" and each of
the documents identified in paragraphs (d) through (f) 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 below, 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. 333-49411 (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 Refunding 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 Refunding
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 the Owner Participant, nor the
Owner Trustee, 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), governmental fee or other similar charge under the laws of
the State of Utah or any political subdivision thereof (other than taxes
imposed on the fees received by First Security 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),
governmental fee or other similar 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 Pass Through 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 Pass Through 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 Pass Through
Trustee, of the Pass Through 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 Pass
Through 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,
SCHEDULE A
----------
Lessee
- ------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Agent and Original Loan Participant
- -----------------------------------
Morgan Guaranty Trust Company of New York
Owner Participant
- -----------------
BMO Leasing (U.S.), Inc.
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(6)(a)
[Letterhead of Kreditanstalt fur Wiederaufbau]
[Refunding Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation 1998-1 Pass Through Trusts
------------------------------------------------------
Ladies and Gentlemen:
In my capacity as General Counsel of Kreditanstalt fur Wiederaufbau
("KfW") I am rendering this opinion in connection with (i) the Irrevocable
Revolving Credit Agreement Class A Pass Through Certificates, dated as of June
15, 1998 (the "Class A Liquidity Agreement"), between KfW and First Security
Bank, National Association, a national banking association, as Subordination
Agent under the Intercreditor Agreement (as defined below), and as agent and
trustee for the Federal Express Corporation 1998-1-A Pass Through Trust, (ii)
the Irrevocable Revolving Credit Agreement Class B Pass Through Certificates,
dated as of June 15, 1998 (the "Class B Liquidity Agreement" and, together
with the Class A Liquidity Agreement, the "Liquidity Agreements"), between KfW
and First Security Bank, National Association, a national banking association,
as Subordination Agent under the Intercreditor Agreement, and as agent and
trustee for the Federal Express Corporation 1998-1-B Pass Through Trust, and
(iii) the Intercreditor Agreement, dated as of June 15, 1998 (the
"Intercreditor Agreement"), among KfW, First Security Bank, National
Association, a national banking association, as Pass Through Trustee and as
Subordination Agent (the Liquidity Agreements and the Intercreditor Agreement
are hereinafter collectively referred to as the "Relevant Documents").
Capitalized terms herein which are undefined have the meanings
assigned thereto in the Relevant Documents.
For purposes of this legal opinion, I have examined a copy of each of
the Relevant Documents and such other certificates, documents, agreements and
instruments as I have deemed necessary as a basis for the opinions expressed
below.
In giving this opinion, I have assumed the genuineness of all
signatures, the authenticity of all agreements, certificates, instruments and
documents submitted to me as originals, and the conformity to the originals of
all agreements, certificates, instruments and documents submitted to me as
copies. As to questions of fact material to the opinions expressed below, I
have, when relevant facts were not independently established by me, examined
and relied upon representations of officers of KfW.
Based upon and subject to the foregoing examination and assumptions,
and subject to the qualifications set forth below, I am of the opinion that:
1. KfW is duly organized and validly existing as a corporation under
the public law of the Federal Republic of Germany and has full power and
authority (corporate and otherwise) to execute, deliver and perform the
Relevant Documents.
2. Mr. Scheer and Mr. Behler, acting together, are both duly
authorized by KfW to execute and deliver the Relevant Documents for and on
behalf of KfW.
3. The governing-law clause, subjecting the Relevant Documents to New
York law, is valid under German law.
(i) Under German law, New York law will be applied to an agreement,
such as the Relevant Documents, which under German law has been
validly subjected to New York law.
(ii) (a) None of the terms of the Relevant Documents is
irreconcilable with important principles of German law, and (b) there
are no mandatory provisions of German law which must be applied to
the transactions covered by the Relevant Documents.
4. No notice to or filing with, any governmental, administrative or
other authority or court of the Federal Republic of Germany is required for
the execution or delivery of the Relevant Documents by KfW or for the
performance by KfW of the Relevant Documents.
5. Assuming the validity under New York law of the Relevant
Documents:
(i) The Relevant Documents constitute legal, valid and binding
obligations of KfW enforceable against KfW in accordance with their
respective terms.
(ii) A judgment obtained against KfW in the courts of the State of
New York in any suit, action or proceeding arising out of the
Relevant Documents will be enforceable against KfW in the courts of
Germany without further litigation or examination on the merits of
such suit, action or proceeding, provided that conditions in terms
of Section 328 of the German Zivilprozeordnung (Code of Civil
Procedure) - notably (a) if reciprocity is not guaranteed; (b) if
according to German law the foreign venue is improper, and if
procedural rules have not been observed by the court to the
disadvantage of the defendant; (c) if the judgment obtained is
irreconcilable with important principles of German law or would
conflict with German basic rights (see 3(ii) above) - do not bar the
judgment from recognition.
(iii) The obligations of KfW under the Relevant Documents rank at
least equal in priority of payment and in all other respects with its
obligations to pay any other unsecured and unsubordinated obligations
of KfW for borrowed money, including deposit liabilities, that are
not expressly preferred by law.
6. The waiver of immunity set forth in Section 7.11(c) of each of the
Liquidity Agreements and Section 10.11(c) of the Intercreditor Agreement is
valid under German law.
The foregoing opinions are subject to the following qualifications:
(i) The opinion in paragraph (5) with respect to enforceability is
subject to the effect of any bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws affecting creditors' rights
generally, applicable to KfW and to any law or general principle of
law from time to time in effect in the Federal Republic of Germany
that could be considered by the German Courts as a provision of
public policy.
(ii) No opinion is expressed with respect to the law of any
jurisdiction other than the laws of the Federal Republic of Germany.
This opinion is being furnished to you solely for your benefit in
connection with the transactions described above and may not be used,
circulated, quoted or otherwise referred to for any other purpose without my
express written consent.
Very truly yours,
SCHEDULE A
----------
Lessee
- ------
Federal Express Corporation
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
EXHIBIT A(6)(b)
[Letterhead of Milbank, Tweed, Hadley & McCloy]
[Refunding Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation 1998-1 Pass Through Trusts
------------------------------------------------------
Ladies and Gentlemen:
We have acted as special New York counsel to Kreditanstalt fur
Wiederaufbau (herein called "KfW") in connection with the transactions
contemplated by (i) the Irrevocable Revolving Credit Agreement Class A Pass
Through Certificates, dated as of June 15, 1998 (the "Class A Liquidity
Agreement"), between KfW and First Security Bank, National Association, as
Subordination Agent under the Intercreditor Agreement, as defined below, as
agent and trustee for the Federal Express Corporation 1998-1-A Pass Through
Trust, (ii) the Irrevocable Revolving Credit Agreement Class B Pass Through
Certificates, dated as of June 15, 1998 (the "Class B Liquidity Agreement"
and, together with the Class A Liquidity Agreement, the "Liquidity
Agreements"), between KfW and First Security Bank, National Association, as
Subordination Agent under the Intercreditor Agreement, as defined below, as
agent and trustee for the Federal Express Corporation 1998-1-B Pass Through
Trust and (iii) the Intercreditor Agreement, dated as of June 15, 1998 (the
"Intercreditor Agreement" and, together with the Liquidity Agreements, the
"Relevant Documents"), among KfW and First Security Bank, National
Association, as Pass Through Trustee and as Subordination Agent. Capitalized
terms used herein but not otherwise defined herein shall have the meanings
provided in the Relevant Documents.
In rendering the opinion expressed below, we have examined the
Relevant Documents, the opinion dated the date hereof of Ruediger Sass,
General Counsel of KfW, and such other documents as we have deemed necessary.
In our examination, we have assumed the authenticity of all documents
submitted to us as originals and the conformity with authentic original
documents of all documents submitted to us as copies. When relevant facts
were not independently established, we have relied upon representations made
in or pursuant to the Relevant Documents.
In rendering the opinion expressed below, we have assumed, with
respect to each Relevant Document, that:
(i) it has been duly authorized by, has been duly executed and
delivered by, and (except to the extent set forth in the opinion
below as to KfW) constitutes legal, valid, binding and enforceable
obligations of all of the parties thereto;
(ii) all signatories thereto have been duly authorized; and
(iii) all of the parties thereto are duly organized and validly existing
and have the power and authority (corporate, partnership, trust or
otherwise) to execute, deliver and perform thereunder.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinion
expressed below, we are of the opinion that each Relevant Document constitutes
the legal, valid and binding obligation of KfW, enforceable against KfW in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or transfer or other similar
laws relating to or affecting the rights of creditors generally and except as
the enforceability of such Relevant Document is subject to the application of
general principles of equity (regardless of whether considered in a proceeding
in equity or at law), including, without limitation, (a) the possible
unavailability of specific performance, injunctive relief or any other
equitable remedy and (b) concepts of materiality, reasonableness, good faith
and fair dealing.
The foregoing opinion is subject to the following comments and
qualifications:
(A) The enforceability of provisions in the Relevant Documents to
the effect that terms may not be waived or modified except in writing
may be limited under certain circumstances.
(B) We express no opinion as to (i) the effect of the laws of any
jurisdiction in which KfW is located (other than New York) that limit
the interest, fees or other charges KfW may impose for the loan or use
of money or other credit, (ii) Section 7.11(a)(i) of each Liquidity
Agreement and Section 10.11(a)(i) of the Intercreditor Agreement,
insofar as such Sections relate to the subject matter jurisdiction of a
Federal court sitting in New York, New York to adjudicate any
controversy related to the Relevant Documents, (iii) the waiver of
inconvenient forum set forth in Section 7.11(a)(ii) of each Liquidity
Agreement and Section 10.11(a)(ii) of the Intercreditor Agreement with
respect to proceedings in a Federal court sitting in New York, New York
and a State court of the State of New York and (iv) the waiver of
immunity set forth in Section 7.11(c) of each Liquidity Agreement and
Section 10.11(c) of the Intercreditor Agreement with respect to
proceedings in a Federal court sitting in New York, New York and a State
court of the State of New York.
The foregoing opinion is limited to matters involving the Federal
laws of the United States of America and the law of the State of New York, and
we do not express any opinion as to the laws of any other jurisdiction. In
particular, we do not express any opinion as to the laws of Germany and, to
the extent such laws may be relevant to the opinion expressed herein, we have,
with your permission, relied upon the aforementioned opinion of Ruediger Sass,
Esq., General Counsel of KfW, without independently considering the matters
covered thereby, and our opinion is subject to all limitations, exceptions and
qualifications contained therein as if set forth herein in full.
At the request of KfW, this opinion letter is provided to you by
us in our capacity as special New York counsel to KfW, and this opinion letter
may not be relied upon by any Person for any purpose other than in connection
with the transactions contemplated by the Relevant Documents without, in each
instance, our prior written consent.
Very truly yours,
SCHEDULE A
----------
Lessee
- ------
Federal Express Corporation
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(7)
[Letterhead of Daugherty, Fowler & Peregrin]
[Refunding Date]
To the Parties Named on Schedule A attached hereto
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 4.01(l)(viii)
of the Participation Agreement (Federal Express Corporation Trust No. N590FE),
dated as of May 1, 1998, as amended and restated as of June 15, 1998 (the
"Participation Agreement") among Federal Express Corporation, as lessee (the
"Lessee"), BMO Leasing (U.S.), Inc., as owner participant (the "Owner
Participant"), Morgan Guaranty Trust Company of New York, as original loan
participant (the "Original Loan Participant"), State Street Bank and Trust
Company of Connecticut, National Association, as owner trustee (the "Owner
Trustee"), and First Security Bank, National Association, as indenture
trustee, pass through trustee and subordination agent (the "Indenture
Trustee"), which Participation Agreement amends and restates that certain
Participation Agreement (Federal Express Corporation Trust No. N590FE), dated
as of May 1, 1998 (the "Original Participation Agreement") among the Lessee,
the Owner Participant, the Original Loan Participant, the Owner Trustee and
the Indenture Trustee, with respect to that portion of Subtitle VII of Title
49 of the United States Code relative to the recordation of instruments and
the registration of aircraft thereunder.
The capitalized terms herein shall, unless otherwise defined, have
the same meanings given them in the Participation Agreement or in Annex I
attached hereto.
We have examined and filed on this date with the Federal Aviation
Administration (the "FAA") the following described instruments at the
respective times listed below:
(a) Trust Agreement (Federal Express Corporation Trust No.
N590FE) dated as of May 1, 1998, as amended and restated as
of June 15, 1998 (the "Trust Agreement") between the Owner
Participant and the Owner Trustee, which Trust Agreement
amends and restates the Original Trust Agreement, which
Trust Agreement was filed at ____ _.m., C._.T.;
(b) Trust Indenture and Security Agreement (Federal Express
Corporation Trust No. N590FE) dated as of May 1, 1998, as
amended and restated as of June 15, 1998 (the "Indenture")
between the Owner Trustee and the Indenture Trustee, which
Indenture amends and restates the Original Indenture, which
Indenture was filed at ____ _.m., C._.T.; and,
(c) Lease Agreement (Federal Express Corporation Trust No.
N590FE) dated as of May 1, 1998, as amended and restated as
of June 15, 1998 (the "Lease") between the Owner Trustee, as
lessor, and the Lessee, as lessee, which Lease amends and
restates the Original Lease, with the Indenture attached
thereto, which Lease with the Indenture attached was filed
at ____ _.m., C._.T.
The Confidential Omissions were intentionally omitted from the FAA
filing counterparts of the Lease and the Indenture as containing confidential
financial information.
Based upon our examination of the above described instruments and
of such records of the FAA as we deemed necessary to render this opinion, it
is our opinion that:
1. AC Form 8050-2 Aircraft Bill of Sale dated May 27, 1998 (the "FAA
Bill of Sale") from the Lessee, as seller, conveying title to the
Airframe to the Owner Trustee has been duly recorded by the FAA on
__________________ and assigned Conveyance No. ______;
2. the Indenture and the Lease with the Indenture attached are in due
form for recordation by and have been duly filed for recordation
with the FAA pursuant to and in accordance with the provisions of
49 U.S.C. Section 44107;
3. the Trust Agreement is in due form for filing and has been duly
filed with the FAA pursuant to and in accordance with the
provisions of 49 U.S.C. Section 44103(a);
4. the Original Trust Agreement was duly filed with the FAA on May 27,
1998 pursuant to and in accordance with the provisions of 49 U.S.C.
Section 44103(a);
5. the Original Indenture with the Indenture and Security Agreement
Supplement attached has been duly filed with and duly recorded by
the FAA pursuant to and in accordance with the provisions of 49
U.S.C. Section 44107;
6. the Original Lease with the Lease Supplement, the Original
Indenture and the Indenture and Security Agreement Supplement
attached was duly filed with and duly recorded by the FAA pursuant
to and in accordance with the provisions of 49 U.S.C. Section
44107;
7. the Airframe is duly registered in the name of the Owner Trustee
pursuant to and in accordance with the provisions of 49 U.S.C.
Section 44103(a);
8. the Owner Trustee has valid legal title to the Airframe and the
Aircraft is free and clear of all Liens, except (i) the security
interest created by the Original Indenture, as amended and
restated by the Indenture, as supplemented by the Indenture and
Security Agreement Supplement, and (ii) the rights of the parties
under the Original Lease, as amended and restated by the Lease, as
supplemented by the Lease Supplement;
9. the Original Indenture, as amended and restated by the Indenture,
as supplemented by the Indenture and Security Agreement Supplement,
constitutes a duly perfected first priority security interest in
the Aircraft and a duly perfected first assignment of all the
right, title and interest of the Owner Trustee in, to and under
the Original Lease, as amended and restated by the Lease, as
supplemented by the Lease Supplement (insofar as such assignment
affects an interest covered by the recording system established by
the FAA pursuant to 49 U.S.C. Section 44107), and no other
registration of the Airframe or filings other than filings with
the FAA (which have been duly effected) are necessary in order to
perfect in any applicable jurisdiction in the United States (A)
the Owner Trustee's title to the Airframe or (B) such security
interest and assignment (insofar as such assignment affects an
interest covered by the recording system established by the FAA
pursuant to 49 U.S.C. Section 44107), it being understood that no
opinion is herein expressed as to the validity, priority or
enforceability of such security interest and assignment under
local law or as to the recognition of the perfection of such
security interest and assignment as against third parties in any
legal proceeding outside the United States;
10. no authorization, approval, consent, license or order of, or
registration with, or the giving of notice to, the FAA is required
for the valid authorization, delivery and performance of the
Original Lease, as amended and restated by the Lease, as
supplemented by the Lease Supplement, the Original Indenture, as
amended and restated by the Indenture, as supplemented by the
Indenture and Security Agreement Supplement, or the Original Trust
Agreement, as amended and restated by the Trust Agreement, except
for such filings as are referred to in our opinion dated May 27,
1998 (which have been duly effected) and the filings referred to
in clauses (a), (b) and (c) above; and,
11. neither the authorization, issuance and delivery of the
Certificates, the execution and delivery by the parties thereto of
the Original Trust Agreement, the Trust Agreement, the Original
Indenture, the Indenture, the Indenture and Security Agreement
Supplement, the Original Participation Agreement, the
Participation Agreement, the FAA Bill of Sale, the Original Lease,
the Lease and the Lease Supplement or the performance by the
parties thereto of: (i) the Original Trust Agreement, as amended
and restated by the Trust Agreement; (ii) the Original Indenture,
as amended and restated by the Indenture, as supplemented by the
Indenture and Security Agreement Supplement; (iii) the Original
Participation Agreement, as amended and restated by the
Participation Agreement; and (iv) the Original Lease, as amended
and restated by the Lease, as supplemented by the Lease
Supplement, in accordance with the provisions thereof, nor the
consummation by the parties thereto of any of the transactions
contemplated thereby, requires the consent or approval of, or the
giving of notice to, or the registration with, or the taking of
any other action in respect of, the FAA except for the filings,
the recordations and the filings for recordations 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 29 U.S.C. Section 1368(a), possessory artisan's liens, or
matters of which the parties have 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 for the Aeronautical Center dated ____________, 1998
and have continued to rely upon the opinion of the Assistant Chief Counsel of
the Aeronautical Center dated __________________, copies of which are attached
hereto.
Very truly yours,
SCHEDULE A
----------
Lessee
- ------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Agent and Original Loan Participant
- -----------------------------------
Morgan Guaranty Trust Company of New York
Owner Participant
- -----------------
BMO Leasing (U.S.), Inc.
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Annex I
Certain Definitions
-------------------
Airframe, Engines and Aircraft
------------------------------
One (1) McDonnell Douglas MD-11F aircraft bearing manufacturer's
serial number 48505 and U.S. Registration No. N590FE (the "Airframe") and
three (3) General Electric CF6-80C2-D1F aircraft engines bearing
manufacturer's serial number 702-302, 702-315 and 702-819 (the "Engines") (the
Airframe and the Engines are referred to collectively as the "Aircraft").
Original Trust Agreement
------------------------
Trust Agreement (Federal Express Corporation Trust No. N590FE)
dated as of May 1, 1998 between BMO Leasing (U.S.), Inc., as owner
participant, and State Street Bank and Trust Company of Connecticut, National
Association, as owner trustee, which was filed with the FAA on May 27, 1998.
Original Indenture
------------------
Trust Indenture, Mortgage and Security Agreement (Federal Express
Corporation Trust No. N590FE) dated as of May 1, 1998 between State Street Bank
and Trust Company of Connecticut, National Association, as owner trustee, and
First Security Bank, National Association, as indenture trustee, which
together with the Indenture and Security Agreement Supplement (as hereinafter
defined) attached thereto was recorded as one instrument by the FAA on
________________ and assigned Conveyance No. _______.
Indenture and Security Agreement Supplement
-------------------------------------------
Indenture and Security Agreement Supplement No. 1 (Federal Express
Corporation Trust No. N590FE) dated May 27, 1998 between State Street Bank and
Trust Company of Connecticut, National Association, as owner trustee, and First
Security Bank, National Association, as indenture trustee, with respect to the
Aircraft, which was attached to and recorded by the FAA as one instrument with
the Original Indenture.
Original Lease
--------------
Lease Agreement (Federal Express Corporation Trust No. N590FE)
dated as of May 1, 1998 between State Street Bank and Trust Company of
Connecticut, National Association, as owner trustee, as lessor, and Federal
Express Corporation, as lessee, which together with the Lease Supplement (as
hereinafter defined), the Original Indenture and the Indenture and Security
Agreement Supplement attached thereto was recorded as one instrument by the
FAA on ________________ and assigned Conveyance No. _______.
Lease Supplement
----------------
Lease Supplement No. 1 (Federal Express Corporation Trust No.
N590FE) dated May 27, 1998 between State Street Bank and Trust Company of
Connecticut, National Association, as owner trustee, as lessor, and Federal
Express Corporation, as lessee, with respect to the Aircraft, which was
attached to and recorded by the FAA as one instrument with the Original Lease.
Confidential Omissions
----------------------
The Lease was filed with the FAA, with (i) Basic Rent (Schedule
II), (ii) the Stipulated Loss Values (Schedule III), (iii) the Termination
Values (Schedule IV), (iv) the Purchase Option Schedule (Schedule V) omitted
from the FAA filing counterpart thereof as containing confidential financial
information; and (v) the purchase price under Section 4.02(a)(F) of the Lease
set forth in Ancillary Agreement I, which was not attached to the FAA filing
counterpart of the Lease or otherwise filed with the FAA for recordation.
EXHIBIT B
[Form of Lease Agreement - See Exhibit 4.e to this Form 8K]
EXHIBIT C
[Form of Indenture - See Exhibit 4.b.1 to this Form 8K]
EXHIBIT D
[Form of Trust Agreement - See Exhibit 4.d to this Form 8K]
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PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N620FE)
Dated as of June 15, 1998
among
FEDERAL EXPRESS CORPORATION,
Lessee and Initial 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. 48791, REGISTRATION NO. N620FE
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TABLE OF CONTENTS
Page
Initial Recitals........................................................... 1
ARTICLE 1
DEFINITIONS............................................................. 3
ARTICLE 2
ISSUANCE OF PASS THROUGH CERTIFICATES;
ISSUANCE AND PURCHASE OF CERTIFICATES
Section 2.01. Transfer of Funds........................................ 3
Section 2.02. (a) Certificates.......................................... 5
(b) Transfer of Beneficial Interest..................................... 5
Section 2.03. Amendments on Delivery Date or Transfer Date............. 5
Section 2.04. Event of Loss Prior to Delivery Date..................... 7
ARTICLE 3
PARTICIPATION IN INVESTMENT ON DELIVERY DATE;
DELIVERY OF AIRCRAFT
Section 3.01. Lessee's Notice of Delivery Date......................... 7
Section 3.02. Commitments to Participate in Purchase Price............. 7
Section 3.03. Postponement of Delivery Date............................ 10
Section 3.04. Closing.................................................. 11
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent (Certificate Closing Date).......... 11
Section 4.02. Conditions Precedent (Delivery Date)..................... 18
Section 4.03. Opinion of Special Aviation Counsel Upon Registration.... 27
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations............. 28
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties.................. 28
Section 6.02. Offering by Lessee....................................... 34
Section 6.03. Certain Covenants of Lessee.............................. 35
Section 6.04. Survival of Representations and Warranties............... 42
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in Lessor's
Estate................................................... 43
Section 7.02. Citizenship.............................................. 43
Section 7.03. Representations, Warranties and Covenants of Owner
Participant.............................................. 44
Section 7.04. Representations, Covenants and Warranties of SSB and the
Owner Trustee............................................ 47
Section 7.05. Representations, Warranties and Covenants of the
Indenture Trustee........................................ 50
Section 7.06. Indenture Trustee's Notice of Default.................... 52
Section 7.07. Releases from Indenture.................................. 52
Section 7.08. Covenant of Quiet Enjoyment.............................. 52
Section 7.09. Pass Through Trustee's Representations and Warranties.... 52
Section 7.10. Survival of Representations, Warranties and Covenants.... 53
Section 7.11. Lessee's Assumption of the Certificates.................. 53
Section 7.12. Indebtedness of Owner Trustee............................ 55
Section 7.13. Compliance with Trust Agreement, Etc..................... 56
Section 7.14. Subordination Agent's Representations, Warranties and
Covenants................................................ 56
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes......................... 58
Section 8.02. After-Tax Basis.......................................... 63
Section 8.03. Time of Payment.......................................... 63
Section 8.04. Contests................................................. 63
Section 8.05. Refunds.................................................. 65
Section 8.06. Lessee's Reports......................................... 66
Section 8.07. Survival of Obligations.................................. 67
Section 8.08. Payment of Taxes......................................... 67
Section 8.09. Reimbursements by Indemnitees Generally.................. 67
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally................................................ 67
Section 9.02. After-Tax Basis.......................................... 71
Section 9.03. Subrogation.............................................. 72
Section 9.04. Notice and Payment....................................... 72
Section 9.05. Refunds.................................................. 72
Section 9.06. Defense of Claims........................................ 72
Section 9.07. Survival of Obligations.................................. 73
Section 9.08. Effect of Other Indemnities.............................. 73
Section 9.09. Interest................................................. 74
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs....................... 74
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee.................. 77
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant.................... 78
Section 12.02. Interest of Holders of Certificates..................... 78
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents.................... 79
Section 13.02. Further Assurances...................................... 79
Section 13.03. Pass Through Trustee's and Subordination Agent's
Acknowledgment.......................................... 79
ARTICLE 14
NOTICES
Section 14.01. Notices................................................. 79
ARTICLE 15
REFINANCING
Section 15.01. Refinancing............................................. 80
ARTICLE 16
[RESERVED]
ARTICLE 17
MISCELLANEOUS
Section 17.01. [Reserved].............................................. 83
Section 17.02. Collateral Account...................................... 83
Section 17.03. Counterparts............................................ 85
Section 17.04. No Oral Modifications................................... 86
Section 17.05. Captions................................................ 86
Section 17.06. Successors and Assigns.................................. 86
Section 17.07. Concerning the Owner Trustee, Indenture Trustee and
the Pass Through Trustee................................ 86
Section 17.08. Severability............................................ 87
Section 17.09. Public Release of Information........................... 87
Section 17.10. Certain Limitations on Reorganization................... 87
Section 17.11. GOVERNING LAW........................................... 88
Section 17.12. Section 1110 Compliance................................. 88
Section 17.13. Reliance of Liquidity Providers......................... 88
ARTICLE 18
CONFIDENTIALITY
Section 18.01. Confidentiality......................................... 88
SCHEDULE I Certificate Information
SCHEDULE II Definitions
SCHEDULE III Permitted Country List
SCHEDULE IV Certain Amounts
SCHEDULE V Mandatory Document Terms
SCHEDULE VI Mandatory Economic Terms
SCHEDULE VII Assumed Aircraft Value
EXHIBIT A(1)(a)(i) Opinion of Lessee's Counsel
(Certificate Closing Date)
EXHIBIT A(1)(a)(ii) Opinion of Lessee's Counsel
(Delivery Date)
EXHIBIT A(1)(b)(i) Opinion of Lessee's Special Counsel
(Certificate Closing Date)
EXHIBIT A(1)(b)(ii) Opinion of Lessee's Special Counsel
(Delivery Date)
EXHIBIT A(2) Opinion of Indenture Trustee's Special Counsel
EXHIBIT A(3)(i) Opinion of Owner Trustee's Special Counsel
(Certificate Closing Date)
EXHIBIT A(3)(ii) Opinion of Owner Trustee's Special Counsel
(Delivery Date)
EXHIBIT A(4) Opinion of Pass Through Trustee's and Subordination
Agent's Special Counsel
EXHIBIT A(5)(a) Opinion of Liquidity Provider's Counsel
EXHIBIT A(5)(b) Opinion of LC Bank's Counsel
EXHIBIT A(5)(c) Opinion of Liquidity Provider's Special Counsel
EXHIBIT A(5)(d) Opinion of LC Bank's Special Counsel
EXHIBIT A(6) Opinion of Manufacturer's Counsel
EXHIBIT A(7) Opinion of Engine Manufacturer's Counsel
EXHIBIT A(8) Opinion of Special Aviation Counsel
EXHIBIT B Form of Lease Agreement
EXHIBIT C Form of Indenture
EXHIBIT D Form of Trust Agreement
EXHIBIT E Form of Purchase Agreement Assignment, Consent and
Agreement and Engine Consent and Agreement
PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N620FE)
PARTICIPATION AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO.
N620FE) dated as of June 15, 1998 (this "Agreement") among FEDERAL EXPRESS
CORPORATION, a Delaware corporation (herein, together with its successors and
permitted assigns, the "Lessee" and the "Initial 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").
W I T N E S S E T H :
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article 1 hereof.
WHEREAS, the Initial Owner Participant has entered into the Trust
Agreement with the Owner Trustee in its individual capacity, substantially in
the form of Exhibit D hereto, pursuant to which Trust Agreement the Owner
Trustee agrees, among other things, to hold the Lessor's Estate for the
benefit of the 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 will occur with
respect to the public offering of Pass Through Certificates issued by each Pass
Through Trust, an allocable amount of the proceeds of which offering will be
used by the Pass Through Trustee to purchase for each such Pass Through Trust
the Certificates of the Series and Maturity applicable thereto.
WHEREAS, on the Certificate Closing Date, the Owner Trustee and the
Indenture Trustee will enter into the Indenture for the benefit of the Pass
Through Trustee, pursuant to which the Owner Trustee is issuing 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 will be deposited by the Indenture
Trustee on behalf of the Owner Trustee in the Collateral Account.
WHEREAS, concurrently with the execution and delivery hereof, (i) the
Liquidity Provider will enter 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 will
enter into the Intercreditor Agreement.
WHEREAS, the Certificates will be 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, all of the outstanding Certificates will be secured by the
Liquid Collateral prior to the Delivery Date, and any Series C Certificates
outstanding after the Delivery Date that are subject to prepayment on the
Series C Prepayment Date will be secured by the Liquid Collateral up to and
including the Series C Prepayment Date.
WHEREAS, pursuant to the terms of the Trust Agreement, the Owner
Trustee will be authorized and directed by the Initial Owner Participant:
(a) on the Delivery Date, to purchase the Aircraft from the Lessee;
(b) on the Certificate Closing Date, to execute and deliver the
Lease substantially in the form of Exhibit B hereto, pursuant to which,
subject to the terms and conditions set forth in said Lease, the Owner
Trustee agrees to lease to the Lessee, and the Lessee agrees to lease from
the Owner Trustee, the Aircraft on the Delivery Date, such lease to be
effected by the execution and delivery on the Delivery Date of a Lease
Supplement, in the form of Exhibit A to the Lease, covering the Aircraft
and incorporating by reference all of the terms of the Lease;
(c) on the Certificate Closing Date, to execute and deliver the
Indenture, substantially in the form of Exhibit C hereto, for the benefit
of the Holders from time to time of the Certificates, pursuant to which the
Owner Trustee agrees, among other things, (A) to deposit, mortgage and
pledge with the Indenture Trustee, as part of the Trust Indenture Estate,
all of the Lessor's Estate but not Excepted Payments, (B) on the
Certificate Closing Date, to issue Certificates substantially in the form
set forth in Exhibit B to the Indenture, the proceeds of the sale of which
will be held by the Indenture Trustee on behalf of the Owner Trustee in the
Collateral Account until released in accordance with the terms hereof and of
the Indenture, and (C) on the Delivery Date, to execute and deliver the
Indenture and Security Agreement Supplement, substantially in the form of
Exhibit A to the Indenture, covering the Aircraft and supplementing the
Indenture; and
(d) on the Delivery Date, to execute and deliver the Purchase
Agreement Assignment, whereby the Lessee assigns to the Owner Trustee
certain of the Lessee's rights and interests under the Purchase Agreement
to the extent that the same relate to the Aircraft (except to the extent
reserved in said Purchase Agreement Assignment), which Purchase Agreement
Assignment is to include as an annex a Consent and Agreement executed by
the Manufacturer and an Engine Consent and Agreement executed by the Engine
Manufacturer, said Purchase Agreement Assignment, Consent and Agreement and
Engine Consent and Agreement to be substantially in the form of Exhibit E
hereto.
WHEREAS, on the Delivery Date pursuant to and subject to the terms and
conditions of this Agreement, the Purchase Agreement Assignment, the Engine
Consent and Agreement and the Bills of Sale, the Owner Trustee will purchase,
and receive title to, the Aircraft from the Lessee and lease the Aircraft to
the Lessee pursuant to the Lease.
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Unless otherwise specifically provided herein, the definitions set
forth in Schedule II hereto are incorporated herein for all purposes of this
Agreement and shall be equally applicable to both the singular and the plural
forms of the terms so defined.
ARTICLE 2
ISSUANCE OF PASS THROUGH CERTIFICATES;
ISSUANCE AND PURCHASE OF CERTIFICATES
Section 2.01. Transfer of Funds.
(a) On or before the Pass Through Closing Date, the Pass Through
Trustee and the Lessee, in accordance with the Pass Through Agreement, shall
enter into the Series Supplements, and, subject to the terms and conditions
set forth therein, on the Pass Through Closing Date (i) the Lessee shall
direct the Underwriters to execute a wire transfer or intra-bank transfer to
the Pass Through Trustee in the amount of the total proceeds payable pursuant
to the Underwriting Agreement with respect to the Pass Through Certificates
and (ii) the Pass Through Trustee shall deliver the Pass Through Certificates
to the Underwriters upon receipt by the Pass Through Trustee of such proceeds.
(b) Subject to the satisfaction or waiver of the conditions set
forth herein, on the Certificate Closing Date, on behalf of each Pass Through
Trust, from an allocable amount of the proceeds of the sale of the related
Pass Through Certificates, the Pass Through Trustee shall purchase the
Certificates specified for such Pass Through Trust on Schedule I hereto. For
each Pass Through Trust, the Pass Through Trustee shall pay an amount equal to
the principal amount of Certificates of the Series and Maturity that relates
to such Pass Through Trust, which amounts in the aggregate shall equal the
aggregate principal amount of the Certificates as specified in Section 2.04 of
the Indenture. The aggregate amount payable by the Pass Through Trustee
pursuant to this Section 2.01(b) shall be payable by wire transfer or
intra-bank transfer to the Indenture Trustee on behalf of the Owner Trustee.
(c) On the Certificate Closing Date, the Indenture Trustee shall,
on behalf of the Owner Trustee, deposit, by wire transfer or intra-bank
transfer, the amounts received by it pursuant to Section 2.01(b) hereof in the
Collateral Account pursuant to the Indenture.
(d) On the Certificate Closing Date, the LC Bank shall issue the
Letter of Credit.
(e) On the Certificate Closing Date concurrently with the events
specified in Section 2.01(b) hereof, the parties hereto shall execute and
deliver, to the extent they are parties thereto, and consent to the execution
and delivery of (if they are not parties thereto), the Lease (other than the
Lease Supplement), the Indenture (other than the Indenture and Security
Agreement Supplement), and the other documents listed in Section 4.01(d)
hereof, and the Owner Trustee shall execute and deliver to the Indenture
Trustee for authentication, and the Indenture Trustee shall authenticate and
deliver to the Subordination Agent on behalf of the Pass Through Trustee for
each of the Pass Through Trusts, upon the request of the Owner Trustee, the
Certificates as provided in Section 2.02 hereof.
(f) The Closings shall take place at the offices of Davis Polk &
Wardwell, 450 Lexington Avenue, New York, New York 10017.
Section 2.02. (a) Certificates. Subject to the satisfaction or
waiver of the conditions set forth herein, on the Certificate Closing Date,
the Initial Owner Participant will instruct the Owner Trustee to execute and
deliver to the Indenture Trustee, and the Indenture Trustee shall authenticate
and deliver, upon the request of the Owner Trustee, to the Subordination Agent
on behalf of the Pass Through Trustee for each of the Pass Through Trusts, the
Certificates specified for such Pass Through Trust on Schedule I attached
hereto, which (i) shall be issued in the principal amount and in the Series
and Maturity set forth for such Certificate in Schedule I hereto, (ii) shall
bear interest at the interest rate set forth for such Certificate in Schedule
I hereto, (iii) shall be issued in such form and on such terms as are
specified in the Indenture, (iv) shall be dated and authenticated on the
Certificate Closing Date and shall bear interest from the Certificate Closing
Date and (v) shall be registered in the name of the Subordination Agent on
behalf of the Pass Through Trustee for such Pass Through Trust.
(b) Transfer of Beneficial Interest. If on a date prior to the
Delivery Date, the Lessee shall have identified one or more Owner Participants
ready, willing and able to acquire the Beneficial Interest of the Initial
Owner Participant in consideration for such Owner Participant's or Owner
Participants' agreement to participate in the Lessor's payment of the Purchase
Price for the Aircraft on the Delivery Date, the Initial Owner Participant
shall transfer its Beneficial Interest to such Owner Participant or Owner
Participants on such date (the "Transfer Date"). On the Transfer Date, the
document amendments contemplated by Section 2.03(a) hereof (subject to the
limitations set forth in such Section) shall be effected and such amended
documents delivered.
Section 2.03. Amendments on Delivery Date or Transfer Date. (a)
Amendment and Restatement of Certain Documents. Upon any transfer by the
Initial Owner Participant of its Beneficial Interest on the Delivery Date (as
contemplated by Section 3.02(a) hereof (or, if earlier, the Transfer Date),
the parties hereto shall enter into amendments and restatements of the Trust
Agreement, the Lease, the Indenture and this Agreement, which amendments and
restatements shall reflect such changes as shall have been requested by the
Owner Participant, agreed to by the Lessee and, if modified in any material
respect, as to which Rating Agency Confirmation shall have been obtained from
each Rating Agency by the Lessee (to be delivered by the Lessee to the Pass
Through Trustee on or before the Delivery Date or the Transfer Date, as the
case may be); provided, however, that in any event such amended and restated
documents shall not vary the Mandatory Economic Terms and shall contain the
Mandatory Document Terms.
The Lessee agrees to furnish to each Liquidity Provider and to
Milbank, Tweed, Hadley & McCloy (the initial Liquidity Provider's special New
York counsel) at its New York office, attention: Drew S. Fine, as soon as
practicable but in no event less than 7 Business Days prior to the estimated
Delivery Date (or, if earlier, the estimated Transfer Date), true and complete
copies of drafts of any such amended and restated Participation Agreement,
amended and restated Lease Agreement and amended and restated Indenture. The
Lessee further agrees to furnish to each Liquidity Provider and to the counsel
identified in the preceding sentence (i) each and every subsequent draft of
such documents and (ii) promptly following the execution thereof, true and
complete copies of such documents.
(b) Amendments to Certain Schedules. The percentages of Basic Rent,
Stipulated Loss Value and Termination Value set forth on Schedules II, III and
IV, respectively, of the Lease, the EBO Price and the schedule of principal
payments on the Certificates set forth in Section 6.06 of the Indenture and
Schedule I to each Certificate on the Certificate Closing Date have been
calculated based upon a hypothetical owner's economic return and certain
assumptions regarding the Delivery Date, Transaction Costs, tax law, Basic
Term and certain other items (the "Assumptions"). If the Initial Owner
Participant transfers its Beneficial Interest to one or more Owner
Participants on the Delivery Date (as contemplated by Section 3.02(a) hereof
(or, if earlier, the Transfer Date), then, no later than 20 days following the
Delivery Date (the "Reoptimization Date"), the Owner Trustee may elect to amend
such Schedules to reflect the actual Owner's or Owners' Economic Return and any
changes to the Assumptions. In connection with any such amendments, the Owner
Trustee may increase or decrease the aggregate principal amount of the Series C
Certificates pursuant to Section 2.19 of the Indenture, and may prepay part of
the remaining Series C Certificates on the Series C Prepayment Date.
The Lessee, on behalf of the Owner Trustee, shall provide written
notice to the Indenture Trustee on the Reoptimization Date and any Adjustment
Date of any increase or decrease in the principal amount of the Series C
Certificates pursuant to Section 2.19 of the Indenture and of the aggregate
principal amount of the Series C Certificates, if any, which shall then be
subject to prepayment on the Series C Prepayment Date pursuant to this Section
2.03(b). On the Reoptimization Date, any Adjustment Date, and on the Series C
Prepayment Date in the event of any prepayment of such Series C Certificates,
the Owner Trustee shall deliver and the Subordination Agent on behalf of the
Pass Through Trustee of each Pass Through Trust shall accept delivery of an
amended Schedule I to each Certificate containing such changed principal
installments.
The Owner Trustee will give not less than 10 days' notice of the
Reoptimization Date. Any amendment to such Schedules shall not vary the
Mandatory Economic Terms and on the Reoptimization 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. If the Reoptimization Date or any
Adjustment Date occurs later than the Delivery Date, the Lessee shall cause
any required filing and recording of the affected documents with the
Aeronautics Authority to be effected on such date.
Section 2.04. Event of Loss Prior to Delivery Date. If, prior to
delivery of the initial Lease Supplement, an Event of Loss occurs with respect
to the Airframe initially contemplated to be sold by the Lessee to the Owner
Trustee as provided herein and to be leased under the Lease, the Lessee shall
have the right at any time up to and including the Cut-Off Date by written
notice to the Lessor and the Indenture Trustee to elect to substitute such
Airframe with another airframe (the "Pre-Delivery Replacement Airframe"),
provided, that the Pre-Delivery Replacement Airframe shall be a McDonnell
Douglas MD-11F airframe having a value, remaining useful life and utility at
least equal to the Airframe with respect to which such Event of Loss has
occurred. Upon the Lessee's election to replace the Airframe suffering an
Event of Loss with the Pre-Delivery Replacement Airframe, the Pre-Delivery
Replacement Airframe shall become the Airframe for purposes of the Operative
Agreements.
ARTICLE 3
PARTICIPATION IN INVESTMENT ON DELIVERY DATE;
DELIVERY OF AIRCRAFT
Section 3.01. Lessee's Notice of Delivery Date. The Lessee agrees
to give the Owner Participant, the Indenture Trustee, the Owner Trustee and
the Pass Through Trustee at least three (3) Business Days' written or
facsimile notice prior to the Delivery Date (which notice shall be effective
only if received not later than 10:00 a.m. (New York City time) on the date
that is at least three (3) Business Days prior to the Delivery Date), which
Delivery Notice shall specify the amount of the Purchase Price, the amount of
the Owner Participant's Commitment, the Debt Portion, the Delivery Date for
the Aircraft, the serial number of the Airframe and each Engine, and the
Aeronautics Authority registration number for the Aircraft.
Section 3.02. Commitments to Participate in Purchase Price. (a)
Participation in Purchase Price. Subject to the terms and conditions of this
Agreement, on the Delivery Date, (i) subject to the proviso to this Section
3.02(a), the Indenture Trustee agrees to release the Debt Portion or such
lesser amount as may then be held in the Collateral Account together with the
Lessee Shortfall (as defined in clause (iii) below), if any, to the Owner
Trustee for application to the Purchase Price as provided below, (ii) unless
previously transferred on the Transfer Date, 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 in Ancillary Agreement I, (iii)
subject to the proviso to this Section 3.02(a), the Lessee agrees to pay to
the Indenture Trustee the excess, if any, of (I) the Debt Portion over (II)
such amount as may then be held in the Collateral Account (the "Lessee
Shortfall") as provided in Section 17.02(a) hereof, 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 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) by the Owner Trustee to the Lessee, an amount equal to the Purchase
Price, or such lesser amount referred to in the proviso to this Section
3.02(a), and (B) by the Indenture Trustee, on behalf of the Owner Trustee, if
the Indenture Trustee is so instructed by the Lessee, to one or more
Outstanding C Accounts, the excess (or a portion of the excess) of any amounts
then held in the Collateral Account over the Debt Portion; provided, however,
that if (1) the Delivery Date has been postponed, (2) the investments
contemplated by Section 2.14(b) of the Indenture have been made, (3) such
investments do not mature on the rescheduled Delivery Date and (4) the Lessee
elects not to break such investments, then the Indenture Trustee shall not
release amounts in the Collateral Account to the Owner Trustee and the Lessee
shall accept as payment of the Purchase Price by the Owner Trustee an amount
equal to the Owner Participant's Commitment and the Indenture Trustee shall
pay to the Lessee at the end of the applicable investment period referred to
in Section 2.14(b) of the Indenture an amount equal to the Debt Portion or such
lesser amount as may then be held in the Collateral Account. After the
Delivery Date, any amounts remaining in the Collateral Account shall secure
the Secured Obligations relating to any Series C Certificates outstanding
after the Delivery Date that are subject to prepayment on the Series C
Prepayment Date pursuant to Section 6.02(a)(viii) of the Indenture.
(b) 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.
(ii) Subject to the provisions of Section 3.03 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 the Cut-Off Date, whereupon the Owner
Participant's Commitment hereunder shall terminate. On such third Business
Day (or such earlier date) or the Cut-Off Date, as the case may be, or the
earliest practicable Business Day thereafter, the Owner Trustee shall return
the amounts held by it hereunder to the Owner Participant, provided that the
Owner Trustee shall have had a reasonable time to liquidate any Permitted
Investments it has been authorized to invest in pursuant to the preceding
paragraph and to obtain the proceeds therefrom in funds of the type originally
received, and the Lessee shall pay interest on such funds to the Owner
Participant at the full-term implicit lease rate (which rate shall not be less
than the Owner Participant's cost of funds), such interest to be payable for
the period from and including such Scheduled Delivery Date to but excluding
the date such funds are returned to the Owner Participant in accordance with
the terms hereof; provided that if any such funds are returned to the Owner
Participant after 2:00 p.m. (New York City time) on any such date, such funds
shall be deemed for purposes of this paragraph to have been returned on the
next succeeding Business Day.
The Lessee shall reimburse the Owner Trustee on demand for any loss
incurred by the Owner Trustee as a result of the investment of funds by the
Owner Trustee in accordance with the terms of this Section 3.02(b). Further,
the Lessee shall indemnify the Owner Trustee and hold it harmless from and
against any cost or expense the Owner Trustee may incur as a result of any
investment of funds or transfer of funds referred to herein in accordance with
the terms hereof. The Owner Trustee shall not be liable for failure to invest
such funds except as otherwise provided herein or for any losses incurred on
such investments except for any losses arising out of its own gross negligence
or willful misconduct.
Section 3.03. Postponement of Delivery Date. (a) If no Owner
Participant has committed to participate in the transactions contemplated to
occur on the Scheduled Delivery Date or if an 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 3.02
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. If no Owner Participant has committed to
participate or an Owner Participant shall for any reason fail or refuse to
make the full amount of its Commitment available in accordance with the terms
of Section 3.02 hereof on such postponed Delivery Date, the Lessee shall
endeavor during such period to identify another equity investor to whom it can
assign its Beneficial Interest. If the Lessee identifies an equity investor,
the Lessee shall assign its interest in the Lessor's Estate as provided above.
In case of any such conveyance (but subject to the satisfaction of the
conditions precedent specified herein), the Indenture Trustee shall release
the Debt Portion or such lesser amount as may then be held in the Collateral
Account for application to the payments contemplated in the last sentence of
Section 3.02(a) hereof, subject to the proviso to Section 3.02(a) hereof. For
the avoidance of doubt, it is understood and agreed that if for any reason
other than the failure of the Manufacturer to deliver the Aircraft, the Lessee
does not enter into the Lease Supplement with the Owner Trustee on or prior to
the Cut-Off Date, the Lessee, the Indenture Trustee and the Pass Through
Trustee agree that the Lessee shall purchase the Aircraft and assume all of
the obligations of the Owner Trustee under the Certificates upon satisfaction
of the requirements set forth in Section 4.02 hereof, as the same may be
modified by the provisions of Section 7.11 hereof and as otherwise necessary
to reflect a full recourse secured aircraft financing of the Lessee.
(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, there being no Owner Participant committed to
participate in the transactions contemplated to occur on the Delivery Date 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 3.02 hereof and
no transferee Owner Participant having been identified pursuant to Section
3.03(a) hereof), then, in such event, the Owner Trustee shall not purchase the
Aircraft from the Lessee, and subject to the last sentence of Section 3.03(a)
hereof 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 if the last sentence of Section 3.03(a) hereof does
not apply the Lessee shall provide, no later than the Cut-Off Date, notice of
prepayment to the Indenture Trustee and the Certificates shall be prepaid on
the 15th day following the Cut-Off Date as provided in Section 6.02(a)(vi) of
the Indenture and Section 17.02(c) hereof and provided further, that (i) the
Lessee's obligation to indemnify such parties to the extent provided in such
documents, shall not be diminished or modified in any respect and (ii) the
obligations of the Owner Trustee, the Indenture Trustee and the Lessee to
return funds and pay interest, costs, expenses and other amounts thereon or in
respect thereof as provided in Section 3.02 hereof shall continue.
(c) Optional Postponement. Without limiting the provisions of
Section 3.02(b) 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 3.03(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 3.04. Closing. The closing with respect to the purchase and
lease of the Aircraft on the Delivery Date shall take place at the offices of
Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017.
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent (Certificate Closing Date). The
obligations of the Owner Trustee, the 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 Certificate Closing
Date are subject to the fulfillment to the satisfaction of such party (or
waiver by such party), prior to or on the Certificate Closing Date, of the
following conditions precedent (it being understood that receipt by the Lessee
of any of the following documents shall not be a condition precedent to the
obligations of any party):
(a) Certificates. (i) On the Certificate Closing Date, there shall
have been duly issued and delivered by the Owner Trustee to the
Subordination Agent on behalf of the Pass Through Trustee for each Pass
Through Trust, against payment therefor, a Certificate, substantially in
the form set forth in Exhibit B to the Indenture, duly authenticated, dated
the Certificate Closing Date and registered in the name of the
Subordination Agent, in the principal amounts, Series and Maturity, bearing
the interest rate and the other economic terms specified in the Series
Supplements and otherwise as provided in Section 2.04 of the Indenture.
(ii) The Pass Through Certificates shall be registered under the Securities
Act, any applicable state securities laws shall have been complied with,
and the Pass Through Agreement shall have been qualified under the Trust
Indenture Act, and on the Certificate Closing Date, the "Certificates" (as
defined in each of the Related Indentures) have been duly issued and
delivered by the "Owner Trustee" (as defined in each of the Related
Indentures) to the Subordination Agent on behalf of the Pass Through
Trustee for each Pass Through Trust.
(b) Legal Investment. On the Certificate Closing Date, no fact or
condition shall exist under applicable laws or regulations, or
interpretations of any such laws or regulations by applicable regulatory
authorities, which, in the opinion of the Pass Through Trustee, the
Subordination Agent or the Indenture Trustee or their special counsel,
would make it illegal for the Initial 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 such Initial Owner Participant, the
Lessee, the Owner Trustee, the Pass Through Trustee, the Subordination
Agent or the Indenture Trustee, to participate in the transactions to be
consummated on the Certificate Closing Date; and no action or proceeding
shall have been instituted nor shall governmental action before any court,
governmental authority or agency be threatened which in the opinion of
counsel for the Indenture Trustee, the Subordination Agent or the Pass
Through Trustee is not frivolous, nor shall any order have been issued or
proposed to be issued by any court, or governmental authority or agency, as
of the Certificate Closing Date, to set aside, restrain, enjoin or prevent
the consummation of any of the transactions contemplated by this Agreement
or by any of the other Operative Agreements.
(c) Underwriters. The Underwriters shall have transferred the funds
specified in Section 2.01(a) hereof and all conditions thereunder shall
have been satisfied or waived.
(d) Documents. This Agreement and the following documents shall have
been duly authorized, executed and delivered by the respective party or
parties thereto, shall each be satisfactory in form and substance to the LC
Bank, the Lessee, the Owner Trustee, the Indenture Trustee and the Pass
Through Trustee (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 LC Bank, the Lessee, the Owner
Trustee, the Indenture Trustee, the Pass Through Trustee or the
Subordination Agent, as the case may be, of such documents shall have been
delivered to the LC Bank, the Lessee, the Indenture Trustee, the Pass
Through Trustee, the Subordination Agent and the Owner Trustee (provided
that the sole chattel-paper original of each of the Lease and each
Ancillary Agreement amendatory of the Lease, shall be delivered to the
Indenture Trustee):
(i) the Lease;
(ii) the Indenture;
(iii) the Trust Agreement;
(iv) the Intercreditor Agreement;
(v) the Liquidity Facility for each of the Pass Through Trusts for
the Series A Certificates and the Series B Certificates;
(vi) the Collateral Agreement; and
(vii) the Letter of Credit (the original of such document to be
delivered to the beneficiaries of the Letter of Credit only).
(e) Approvals. All approvals and consents of any trustees or
holders of any indebtedness or obligations of the Lessee, which in the
opinion of the Pass Through Trustee or the Indenture Trustee are required
in connection with any transaction contemplated by this Agreement, shall
have been duly obtained.
(f) Financing Statements. UCC financing statements covering all the
security interests (and other interests) intended to be created by or
pursuant to the Granting Clause of the Indenture shall have been executed
and delivered by the Owner Trustee, as debtor, and by the Indenture
Trustee, as secured party, for and on behalf of the Holders, and such
financing statements shall have been duly filed or duly submitted for
filing in the State of Connecticut, and all other actions shall have been
taken which, in the opinion of the Pass Through Trustee and the
Underwriters, are necessary to perfect and protect such security interests
and other interests.
(g) Corporate Documents. Except when such Person is the delivering
party, the LC Bank, the Owner Trustee, the Pass Through Trustee, the Lessee
and the Indenture Trustee (acting directly or by authorization to its
counsel) shall have received the following, in each case in form and
substance satisfactory to it:
(i) a copy of the certificate of incorporation and by-laws of the
Lessee, certified by the Secretary or an Assistant Secretary of the
Lessee as of the Certificate Closing Date, and a copy of the minutes
of the regular meeting of the board of directors of the Lessee,
certified as such as of the Certificate Closing Date by such
Secretary or Assistant Secretary, duly authorizing the lease by the
Lessee of the Aircraft under the Lease and the execution, delivery
and performance by the Lessee of this Agreement, the Lease, the Pass
Through Agreement, the Series Supplements, the other Operative
Agreements to which the Lessee is or is to be a party and each other
document to be executed and delivered by the Lessee in connection
with the transactions contemplated hereby;
(ii) a copy of the articles of association and by-laws and other
instruments of the Owner Trustee, certified by the Secretary or an
Assistant Secretary of the Owner Trustee as of the Certificate
Closing Date (or other like instruments satisfactory to the Lessee)
and 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;
(iii) 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 Certificate
Closing Date (or other like instruments satisfactory to the Lessee)
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;
(iv) 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
Certificate Closing Date (or other like instruments satisfactory to
the Lessee) 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;
(v) 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
Certificate Closing Date (or other like instruments satisfactory to
the Lessee) 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
(vi) such other documents, evidences, materials, and information
with respect to the Lessee, the Owner Trustee, the Indenture Trustee
and the Pass Through Trustee as the Indenture Trustee, the Pass
Through Trustee or the LC Bank may reasonably request in order to
establish the consummation of the transactions contemplated by this
Agreement.
(h) Officer's Certificate of Lessee. On the Certificate Closing
Date, the following statements shall be true, and the LC Bank, the Owner
Trustee, the Pass Through Trustee and the Indenture Trustee shall have
received a certificate signed by the Vice President and Treasurer or any
other duly authorized officer of the Lessee, dated the Certificate Closing
Date, stating that:
(i) the representations and warranties of the Lessee contained in
the Operative Agreements to which it is a party and in any
certificate delivered pursuant hereto or thereto are true and correct
on and as of the Certificate Closing Date as though made on and as of
such date (except to the extent that such representations and
warranties relate solely to an earlier date, in which case such
certificate shall state that such representations and warranties were
true and correct on and as of such earlier date);
(ii) except for the matters described (i) under "Legal
Proceedings" in the Lessee's Annual Report on Form 10-K for the
fiscal year ended May 31, 1997 (as updated by Note 7 to the financial
statements included in the Lessee's Quarterly Reports on Form 10-Q
for the fiscal quarters ended August 31, 1997, November 30, 1997 and
February 28, 1998), 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 financial
statements of the Lessee as of May 31, 1997 or the unaudited
consolidated financial statements of the Lessee as of February 28,
1998 and nothing has occurred which will, in the judgment of such
officer, materially adversely affect the ability of the Lessee to
carry on its business or to perform its obligations under this
Agreement and each other Operative Agreement to which it is or is to
be a party; and
(iii) no event has occurred and is continuing, or would result
from the purchase, sale, mortgage, or lease of the Aircraft, which
constitutes an Event of Loss (or event which with the passage of time
would become an Event of Loss) with respect to the Airframe or any
Engine, or a Default or an Event of Default under the Lease.
(i) Other Officer's Certificates. On the Certificate Closing Date,
the following statements shall be true, and the Lessee, the LC Bank, 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 LC Bank, the Pass Through
Trustee, the Subordination Agent and the Indenture Trustee), FSB and the
Indenture Trustee (in the case of the Lessee, the LC Bank, the Pass Through
Trustee, the Subordination Agent and the Owner Trustee), FSB and the Pass
Through Trustee (in the case of the Lessee, the LC Bank, the Indenture
Trustee, the Subordination Agent and the Owner Trustee), and FSB and the
Subordination Agent (in the case of the Lessee, the LC Bank, the Pass
Through Trustee, the Indenture Trustee and the Owner Trustee), signed by a
duly authorized officer of SSB and FSB, respectively, dated the Certificate
Closing 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 Certificate
Closing Date as though made on and as of such date (except to the
extent that such representations and warranties relate solely to an
earlier date, in which case such certificate shall state that such
representations and warranties were true and correct on and as of such
earlier date);
(ii) to the best of its knowledge, no event has occurred and is
continuing, which constitutes or which, but for the lapse of time or
the giving of notice, or both, would constitute, due to any action or
omission on the part of 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.
(j) Legal Opinions. The Underwriters, the Lessee, the Owner
Trustee, the Pass Through Trustee and the Indenture Trustee (acting
directly or by authorization to its special counsel) shall have received
from the following counsel their respective legal opinions in each case
satisfactory to the Underwriters, the Lessee, the Owner Trustee, the Pass
Through Trustee or the Indenture Trustee, as the case may be, as to scope
and substance (and covering such other matters as the recipient may
reasonably request) and dated the Certificate Closing Date:
(i) Karen M. Clayborne, Senior Vice President and General Counsel
of the Lessee, in the form of Exhibit A(1)(a)(i) hereto and addressed
to the Underwriters, the Owner Trustee, the Pass Through Trustee,
each Liquidity Provider and the Indenture Trustee;
(ii) Ray, Quinney & Nebeker, special counsel for the Indenture
Trustee, in the form of Exhibit A(2) hereto and addressed to the
Underwriters, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee, each Liquidity Provider and the Lessee;
(iii) Bingham Dana LLP, special counsel for the Owner Trustee, in
the form of Exhibit A(3)(i) hereto and addressed to the Underwriters,
the Indenture Trustee, the Owner Trustee, the Pass Through Trustee,
each Liquidity Provider and the Lessee;
(iv) Davis Polk & Wardwell, special counsel for the Lessee, in the
form of Exhibit A(1)(b)(i) hereto and addressed to the Underwriters,
the Indenture Trustee, the Owner Trustee, the Pass Through Trustee,
each Liquidity Provider and the Lessee;
(v) Ray, Quinney & Nebeker, special counsel for the Pass Through
Trustee and the Subordination Agent, in the form of Exhibit A(4)
hereto and addressed to the Underwriters, the Indenture Trustee, the
Owner Trustee, the Pass Through Trustee, each Liquidity Provider and
the Lessee; and
(vi) Ruediger Sass, General Counsel to the Liquidity Providers, in
the form of Exhibit A(5)(a) hereto, Ruediger Sass, General Counsel to
the LC Bank, in the form of Exhibit A(5)(b) hereto, Milbank, Tweed,
Hadley & McCloy, special counsel for the Liquidity Providers, in the
form of Exhibit A(5)(c) hereto, and Milbank, Tweed, Hadley & McCloy,
special counsel for the LC Bank in the form of Exhibit A(5)(d)
hereto, each addressed to the Pass Through Trustee, the Subordination
Agent, each Liquidity Provider and the Lessee.
(k) No Indenture Event of Default. No Indenture Event of Default or
Indenture Default has occurred and is continuing.
(l) Event of Default; Default; Event of Loss. No Default or Event
of Default under the Lease or Event of Loss or event, which with the
passage of time or if continued unremedied or unaltered would constitute an
Event of Loss, shall have occurred or be in existence.
(m) Other Agreements. The Lessee and the Pass Through Trustee shall
have entered into the Pass Through Agreement and the Series Supplements, all
conditions to the effectiveness of each thereof shall have been satisfied
or waived, and the Pass Through Certificates shall have been issued
pursuant to the Series Supplements. The Lessee and the Underwriters shall
have entered into the Underwriting Agreement, all conditions to the
effectiveness thereof shall have been satisfied or waived, and the Pass
Through Certificates shall have been delivered pursuant to the Underwriting
Agreement. All conditions to the effectiveness of each Liquidity Facility
shall have been satisfied or waived.
(n) Payment of Taxes. (A) All taxes, fees, charges, assessments,
costs and other expenses then due and payable in connection with the
execution, delivery, recording and filing of all financing statements
referred to in subparagraph (f) of this Section 4.01, or in connection with
the issuance of the Certificates shall have been duly paid or caused to be
paid in full; and (B) all sales or use taxes and duties related to the
consummation of the transactions contemplated by the Operative Agreements
on the Certificate Closing Date which are then due and payable shall have
been duly paid in full.
(o) Governmental Compliance. All appropriate action required to
have been taken by the FAA, the SEC, or any governmental or political
agency, subdivision or instrumentality of the United States, prior to the
Certificate Closing Date in connection with the transactions contemplated
by this Agreement shall have been taken, and all orders, permits, waivers,
authorizations, exemptions and approvals (collectively "permits") of such
entities required to be in effect on the Certificate Closing Date in
connection with the transactions contemplated by this Agreement shall have
been issued, and all such permits shall be in full force and effect on the
Certificate Closing Date.
(p) 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.
Section 4.02. Conditions Precedent (Delivery Date). Subject to the
last paragraph of this Section 4.02, 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 Delivery Date.
(b) Legal Investment. No change shall have occurred after the date
which is two days prior to the Certificate Closing Date in applicable laws
or regulations, or interpretations of any such laws or regulations by
applicable regulatory authorities, which, in the opinion of the Owner
Participant or its special counsel, the Pass Through Trustee, 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 transactions to be consummated on the
Delivery Date; and no action or proceeding shall have been instituted nor
shall governmental action before any court, governmental authority or
agency be threatened which in the opinion of counsel for the Owner
Participant, the Indenture Trustee, the Subordination Agent or the Pass
Through Trustee is not frivolous, nor shall any order have been issued or
proposed to be issued by any court, or governmental authority or agency, as
of the Delivery Date, to set aside, restrain, enjoin or prevent the
consummation of any of the transactions contemplated by this Agreement or
by any of the other Operative Agreements.
(c) Documents. The documents referred to in Section 4.01(d) hereof
shall each be in full force and effect and the following documents shall
have been duly authorized, executed and delivered by the respective party
or parties thereto, shall each be satisfactory in form and substance to the
LC Bank, 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 LC Bank, 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 LC
Bank, the Owner Participant, the Lessee, the Indenture Trustee, the Pass
Through Trustee and the Owner Trustee (provided that the sole chattel-paper
original of the amended and restated Lease (whether delivered on the
Transfer Date or the Delivery Date), the Lease Supplement and the Ancillary
Agreement I shall be delivered to the Indenture Trustee):
(i) this Agreement, as amended and restated as of the Delivery Date;
(ii) the Lease, as amended and restated as of the Delivery Date;
(iii) the Trust Agreement, as amended and restated as of the Delivery
Date;
(iv) the Indenture, as amended and restated as of the Delivery Date;
(v) the Lease Supplement covering the Aircraft, dated the Delivery
Date;
(vi) the Indenture and Security Agreement Supplement covering the
Aircraft, dated the Delivery Date;
(vii) in the case of the Owner Participant only, the Tax Indemnity
Agreement (unless delivered on the Transfer Date);
(viii) the Ancillary Agreement I;
(ix) the Invoice;
(x) the Bills of Sale;
(xi) the Purchase Agreement;
(xii) the Purchase Agreement Assignment;
(xiii) the Consent and Agreement and the Engine Consent and Agreement;
unless, in the case of each of the documents listed in clauses (i) through
(iv) above they shall have been amended and restated as of and delivered on
the Transfer Date.
(d) Legal Opinions. The Owner Participant, the Underwriters, the
Lessee, the Owner Trustee, the Pass Through Trustee and the Indenture
Trustee (acting directly or by authorization to its special counsel) shall
have received from the following counsel their respective legal opinions in
each case satisfactory to the Owner Participant, the Underwriters, the
Lessee, the Owner Trustee, the Pass Through Trustee or the Indenture
Trustee, as the case may be, as to scope and substance (and covering such
other matters as the recipient may reasonably request) and dated the
Delivery Date:
(i) Karen M. Clayborne, Senior Vice President and General Counsel
of the Lessee, in the form of Exhibit A(1)(a)(ii) hereto and
addressed to the Underwriters, the Owner Participant, the Owner
Trustee, the Pass Through Trustee, each Liquidity Provider and the
Indenture Trustee;
(ii) Davis Polk & Wardwell, special counsel for the Lessee, in the
form of Exhibit A(1)(b)(ii) hereto and addressed to the Underwriters,
the Owner Participant, the Indenture Trustee, the Owner Trustee, the
Pass Through Trustee, each Liquidity Provider and the Lessee;
(iii) Bingham Dana LLP, special counsel for the Owner Trustee, in
the form of Exhibit A(3)(ii) 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) special counsel for the Owner Participant, and in-house
counsel for the Owner Participant, each addressed to the
Underwriters, the Owner Participant, the Indenture Trustee, the Owner
Trustee, the Pass Through Trustee, each Liquidity Provider and the
Lessee;
(v) counsel for the 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;
(vi) counsel for the Engine Manufacturer, in the form of Exhibit
A(7) hereto and addressed to the Underwriters, the Owner Participant,
the Indenture Trustee, the Owner Trustee, the Pass Through Trustee,
each Liquidity Provider and the Lessee;
(vii) Daugherty, Fowler & Peregrin, special aviation counsel, in
the form of Exhibit A(8) hereto and addressed to the Underwriters,
the Owner Participant, the Indenture Trustee, the Owner Trustee, the
Pass Through Trustee, each Liquidity Provider and the Lessee; and
(viii) in the case of the Owner Participant only, special tax
counsel to the Owner Participant, addressed to the Owner Participant,
with respect to certain tax matters.
(e) Title, Airworthiness and Registration. On the Delivery Date, the
following statements shall be true, and the Owner Participant, the Indenture
Trustee, the Pass Through Trustee and the Owner Trustee shall have received
evidence from the Lessee reasonably satisfactory to the Owner Participant,
the Indenture Trustee, the Pass Through Trustee and the Owner Trustee to
the effect that:
(i) the Owner Trustee has good and marketable title (subject to
filing and recording of 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 amended and restated Lease and the
Lease Supplement covering the Aircraft, the amended and restated
Indenture and the Indenture and Security Agreement Supplement
covering the Aircraft and the amended and restated Trust Agreement
shall have been duly filed for recordation (or shall be in the
process of being so duly filed for recordation) with the Aeronautics
Authority pursuant to the Transportation Code; and
(iv) application to the Aeronautics Authority for registration of
the Aircraft in the name of the Owner Trustee shall have been duly
made and the Lessee shall have temporary or permanent authority to
operate the Aircraft.
(f) Financing Statements. (i) a form UCC-3 financing statement to
amend and restate each financing statement referred to in Section 4.01(f)
hereof 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 (ii) a UCC notice filing describing the Lease as a lease
shall have been executed and delivered by the Owner Trustee, as lessor, and
the Lessee, as lessee (which filing shall name the Indenture Trustee as
assignee of the Owner Trustee), and shall have been duly filed in the State
of Tennessee.
(g) Payments. The Owner Participant shall have made available its
Commitment to the Owner Trustee and the other payments contemplated by
Section 3.02 hereof shall have been made.
(h) Report of Aircraft Expert. The Owner Participant shall have
received a report prepared by BK Associates, Inc. addressed to the Owner
Participant (with an abbreviated report to the Lessee) which report shall
be in form and substance satisfactory to the Owner Participant.
(i) Insurance. Each of the Indenture Trustee, the Pass Through
Trustee, the Owner Trustee and the Owner Participant shall have received
such evidence as it deems appropriate, including, without limitation, an
independent insurance broker's report, together with certificates of
insurance from such broker, in form and substance satisfactory to the
Indenture Trustee, the Pass Through Trustee, the Owner Trustee and the
Owner Participant to establish that the insurance required by Article 13 of
the Lease is in effect.
(j) Payment of Taxes. (A) All taxes, fees, charges, assessments,
costs and other expenses then due and payable in connection with the
execution, delivery, recording and filing of all financing statements and
the documents and instruments referred to in subparagraphs (e) and (f) of
this Section 4.02, or in connection with the purchase of the Aircraft by
the Owner Trustee and the making by the Owner Participant of its equity
investment shall have been duly paid or caused to be paid in full; and (B)
all sales or use taxes and duties related to the consummation of the
transactions contemplated by the Operative Agreements on the Delivery Date
which are then due and payable shall have been duly paid in full.
(k) No Indenture Event of Default. No Indenture Event of Default or
Indenture Default has occurred and is continuing.
(l) Event of Default; Default; Event of Loss. No Default or Event
of Default under the Lease (assuming, for this purpose, that the provisions
of Article 16 of the Lease had become operative on the Certificate Closing
Date and not the Delivery Date) or Event of Loss or event, which with the
passage of time or if continued unremedied or unaltered would constitute an
Event of Loss, shall have occurred or be in existence.
(m) Governmental Compliance. All appropriate action required to
have been taken by the FAA, the SEC, or any governmental or political
agency, subdivision or instrumentality of the United States, prior to the
Delivery Date in connection with the transactions contemplated by this
Agreement shall have been taken, and all orders, permits, waivers,
authorizations, exemptions and approvals (collectively "permits") of such
entities required to be in effect on the Delivery Date in connection with
the transactions contemplated by this Agreement shall have been issued, and
all such permits shall be in full force and effect on the Delivery Date.
(n) Officer's Certificate of Lessee. On the Delivery Date, the
following statements shall be true, and the LC Bank, 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 (as updated by Note 7 to the financial
statements included in the Lessee's Quarterly Reports on Form 10-Q
for the fiscal quarters ended August 31, 1997, November 30, 1997 and
February 28, 1998), 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 financial
statements of the Lessee as of May 31, 1997 or the unaudited
consolidated financial statements of the Lessee as of February 28,
1998 and nothing has occurred which will, in the judgment of such
officer, materially adversely affect the ability of the Lessee to
carry on its business or to perform its obligations under this
Agreement and each other Operative Agreement to which it is or is to
be a party; and
(iii) no event has occurred and is continuing, or would result
from the purchase, sale, mortgage, or lease of the Aircraft, which
constitutes an Event of Loss (or event which with the passage of time
would become an Event of Loss) with respect to the Airframe or any
Engine, or a Default or an Event of Default under the Lease.
(o) Certificates of Owner Participant. (a) On the Delivery Date,
the LC Bank, the Owner Trustee, the Pass Through Trustee, the Lessee and
the Indenture Trustee (acting directly or by authorization to its counsel)
shall have received the following in form and substance satisfactory to it:
(i) a copy of the articles of incorporation and bylaws of the
Owner Participant, certified by the Secretary or an Assistant
Secretary of the Owner Participant as of the Delivery Date, and a
copy of the resolutions of the board of directors of the Owner
Participant, certified as such as of the Delivery Date by such
Secretary or an Assistant Secretary, authorizing the execution and
delivery by the Owner Participant of this Agreement, the Tax
Indemnity Agreement, the Trust Agreement and the other Operative
Agreements to which the Owner Participant is or is to be a party and
each other document to be executed and delivered by the Owner
Participant in connection with the transactions contemplated hereby.
(b) On the Delivery Date, the following statements shall be true,
and the LC Bank, the Lessee, the Pass Through Trustee, the Owner Trustee
and the Indenture Trustee shall have received a certificate from the Owner
Participant, signed by a duly authorized officer of the Owner Participant
dated the Delivery Date, stating that:
(i) the representations and warranties of the Owner Participant
contained in this Agreement, the Trust Agreement and any other
Operative Agreement (excluding the Tax Indemnity Agreement) to which
it is a party and in any certificate delivered pursuant hereto or
thereto, are true and correct on and as of the Delivery Date as
though made on and as of such date (except to the extent that such
representations and warranties relate solely to an earlier date, in
which case such certificate shall state that such representations and
warranties were true and correct on and as of such earlier date);
(ii) no Lessor's Liens attributable to the Owner Participant
exist; and
(iii) no event has occurred and is continuing which constitutes
or, with notice or lapse of time or both would constitute, due to any
action or omission on the part of the Owner Participant, an Indenture
Event of Default other than an Indenture Event of Default
attributable to a Lease Event of Default.
(p) Other Officer's Certificates. On the Delivery Date, the
following statements shall be true, and the LC Bank, 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 LC Bank, 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
LC Bank, 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 LC Bank, 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 LC Bank, 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.
(q) Release of Debt Portion. Except as set forth in the proviso to
Section 3.02(a) hereof, the Indenture Trustee shall have released the Debt
Portion from (or such lesser amount as may then be held in) the Collateral
Account.
(r) Outstanding C Accounts. Any amount withdrawn by the Indenture
Trustee from the Collateral Account and not used to pay the Debt Portion of
the Purchase Price of the Aircraft shall be deposited into one or more
Outstanding C Accounts.
(s) Officer's Certificate of Lessee Regarding Mandatory Economic
Terms and Mandatory Document Terms. On the Delivery Date, or if earlier,
the Transfer Date, in connection with the amendments contemplated by
Section 2.03(a) hereof, 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 or the Transfer Date, as the case may be, 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 or any Liquidity Provider and such
certification shall be true and correct.
Notwithstanding anything else to the contrary in this Section 4.02, 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
4.02(n) and (o) 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 4.03. Opinion of Special Aviation Counsel Upon Registration.
Promptly upon the registration of the Aircraft and the filing and, where
appropriate, recordation pursuant to the Transportation Code, of 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 amended and restated Trust
Agreement, the amended and restated Lease (with such Lease Supplement, the
amended and restated Indenture and such Indenture and Security Agreement
Supplement attached as exhibits), and the amended and restated Indenture (with
such Indenture and Security Agreement Supplement attached as an exhibit), and
(iii), subject to customary qualifications, the lack of any intervening
documents with respect to the Aircraft.
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations. The
Lessee's obligation to participate in the transactions contemplated hereby on
the Certificate Closing Date is subject to the conditions that, prior to or on
the Certificate Closing Date, the Lessee shall have received the certificates
and other documents which are referred to in, or the opinions to be addressed
to it under, as the case may be, paragraphs (d), (g)(ii)-(v), (i),
(j)(ii)-(vii) of Section 4.01 hereof and the Underwriters shall have made
available the amounts required to be paid by them pursuant to Section 2.01
hereof, and the Lessee's obligation to participate in the transactions
contemplated hereby on the Delivery Date is subject to the conditions that, on
or prior to the Delivery Date, the Lessee shall have received the documents
which are referred to in, or the opinions to be addressed to it under, as the
case may be, paragraphs (c) and (d)(ii)-(vii) of Section 4.02 hereof and the
Indenture Trustee shall have released the Debt Portion from (or such lesser
amount as may then be held in) the Collateral Account.
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties. The Lessee
represents and warrants to the Owner Participant, the Owner Trustee (in its
individual capacity and as Owner Trustee), the Pass Through Trustee (in its
individual capacity and as Pass Through Trustee), each Liquidity Provider and
the Indenture Trustee (in its individual capacity and as Indenture Trustee)
that, on the date hereof and as of the Certificate Closing Date and the
Delivery Date (unless any such representation is specifically made as of one
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 UCC) in Memphis, Tennessee, and is duly qualified
to do business as a foreign corporation and is in good standing in all
jurisdictions in which it has intrastate routes, or offices or major
overhaul facilities or in which other activities of the Lessee require such
qualification;
(b) the Lessee has full power, authority and legal right to conduct
its business and operations as currently conducted and to own or hold under
lease its Properties and to enter into and perform its obligations under
this Agreement, the other Operative Agreements to which it is a party, the
Pass Through Agreement and the Series Supplements (the "Lessee Documents");
(c) the Lessee is an "air carrier" within the meaning of the
Transportation Code and a holder of a certificate under Sections 41102(a)
and 41103 of the Transportation Code and a "citizen of the United States"
within the meaning of Section 40102(a)(15) of the Transportation Code
holding an "air carrier operating certificate" issued under Chapter 447 of
the Transportation Code for aircraft capable of carrying ten (10) or more
individuals or 6,000 pounds or more of cargo, and each such certificate is
in full force and effect;
(d) the Lessee possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents (collectively
"permits") which are material to the operation of the routes flown by it
and the conduct of its business and operations as currently conducted and
each such permit is in full force and effect;
(e) the execution, delivery and performance of the Lessee Documents
by the Lessee have been duly authorized by all necessary corporate action
on the part of the Lessee and do not require any stockholder approval, or
approval or consent of any trustee or holder of any indebtedness or
obligations of the Lessee, and each such document has been duly executed
and delivered or, in the case of the Operative Agreements identified in
Section 4.02(c) hereof, will on the Delivery Date be executed and delivered
by the Lessee and constitutes (or will constitute, as the case may be) the
legal, valid and binding obligations of the Lessee enforceable against it
in accordance with the terms thereof except as such enforceability may be
limited by bankruptcy, insolvency, moratorium, reorganization or other
similar laws or equitable principles of general application to or affecting
the enforcement of creditors' rights generally (regardless of whether
enforceability is considered in a proceeding in equity or at law);
(f) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body (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
4.02(d)(iii) and 4.03 hereof and except for the filings referred to in
Sections 4.01(f) and 4.02(f) hereof, all of which shall have been duly
obtained or made and shall be in full force and effect on and as of the
Certificate Closing Date or the Delivery Date, or as contemplated by said
Sections;
(g) neither the execution, delivery or performance by the Lessee of
the Lessee Documents nor compliance with the terms and provisions hereof or
thereof, conflicts or will conflict with or results or will result in a
breach or violation of any of the terms, conditions or provisions of, or
will require any consent (other than the Consent and Agreement and the
Engine Consent and Agreement which will be executed on or prior to the
Delivery Date) 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 (as updated by Note 7 to the financial statements
included in the Lessee's Quarterly Reports on Form 10-Q for the fiscal
quarters ended August 31, 1997, November 30, 1997 and February 28, 1998),
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 has filed or caused to be filed all tax returns which
are required to be filed and has paid or caused to be paid all taxes shown
to be due and payable pursuant to such returns or pursuant to any
assessment received by the Lessee (other than assessments the payment of
which is being contested in good faith by the Lessee), and the Lessee has
no knowledge of any related actual or proposed deficiency or additional
assessment which either in any case or in the aggregate would materially
adversely affect the Lessee's consolidated financial condition (other than,
in any such case, assessments, the payment of which is being contested in
good faith by the Lessee, as to which no representation is made concerning
the Lessee's liability (if any) or the effect of any adverse determination
upon the Lessee's consolidated financial condition);
(j) except for (A) the registration in the Owner Trustee's name of
the Aircraft pursuant to the Transportation Code to be accomplished by
filing with the FAA, of 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 Sections 4.01(f) and
4.02(f) hereof and (D)(x) on the Certificate Closing Date, the taking of
possession by the Indenture Trustee of the Liquid Collateral and
maintaining possession by the Indenture Trustee thereof as contemplated in
Section 2.14(a) of the Indenture and (y) on the Delivery Date, the taking
of possession by the Indenture Trustee of the original counterpart of the
Lease and the Lease Supplement covering the Aircraft, no further action,
including any filing or recording of any document, is necessary or
advisable in order (i) to establish the Owner Trustee's title to and
interest in the Aircraft and the Lessor's Estate as against the Lessee and
any third parties, or (ii) to perfect the first security interest in and
mortgage Lien on the Trust Indenture Estate in favor of the Indenture
Trustee;
(k) on the Delivery Date, the Owner Trustee has received good and
marketable title to the Aircraft, free and clear of all Liens, except the
rights of the Lessee under the Lease and the Lease Supplement, the rights
of the Indenture Trustee under the Indenture and the beneficial interest of
the Owner Participant created by the Trust Agreement;
(l) the Lessee has heretofore delivered to the Owner Participant
true and correct copies of the Lessee's Annual Report on Form 10-K for the
fiscal year ended May 31, 1997 and its Quarterly Reports on Form 10-Q for
the fiscal quarters ended August 31, 1997, November 30, 1997 and February
28, 1998, and of the audited consolidated balance sheet of the Lessee for
the fiscal year ended May 31, 1997 and the unaudited consolidated balance
sheets of the Lessee as of August 31, 1997, November 30, 1997 and February
28, 1998, and the related consolidated statements of income, changes in
common stockholders' investment and cash flows for the fiscal year and
interim reporting periods ended on such dates, accompanied (except in the
case of such interim reporting periods) by a report thereon containing
opinions without qualification, except as therein noted, by Arthur Andersen
LLP, independent public accountants; said financial statements have been
prepared in accordance with generally accepted accounting principles
consistently applied and present fairly the financial position of the
Lessee as of such dates and the results of its operations and cash flows
for such periods and such Annual Report, Quarterly Reports and financial
statements did not, as of their respective dates of filing with the SEC,
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein not misleading;
(m) with respect to ERISA:
(i) none of the Pension Plans (as defined at the end of this
Section 6.01(m)) nor their related trusts have been terminated in a
distress termination pursuant to Section 4041(c) of ERISA or by the
Pension Benefit Guaranty Corporation (together with any successor
agency or instrumentality thereto, the "PBGC") pursuant to Section
4042 of ERISA, nor have any actions been taken to so terminate any
Pension Plan or related trust and neither the Lessee nor any ERISA
Affiliate (as defined at the end of this Section 6.01(m)) has
incurred or could reasonably be expected to incur any material
liability with respect to a Pension Plan under Section 4062, 4063,
4064 or 4069 of ERISA;
(ii) there have been no "reportable events" (as such term is
defined in Section 4043(b) of ERISA) with respect to any Pension Plan
which have resulted or could reasonably be expected to result in any
material liability of the Lessee or any ERISA Affiliate;
(iii) no "accumulated funding deficiency" (as such term is defined
in Section 302 of ERISA or Section 412 of the Code) exists with
respect to any Pension Plan, whether or not waived, nor has any
request for a waiver under Section 412(d) of the Code been, or is
reasonably likely to be, filed with respect to any of the Pension
Plans;
(iv) neither the Lessee nor any ERISA Affiliate has failed to make
any contribution or payment to any Pension Plan which has resulted or
could reasonably be expected to result in the imposition of a Lien
under Section 302(f) of ERISA or Section 412(n) of the Code;
(v) all Pension Plans are in compliance in all material respects
with all applicable provisions of ERISA and the Code;
(vi) neither the Lessee nor any ERISA Affiliate has incurred or is
reasonably likely to incur any material withdrawal liability pursuant
to Section 4201 or 4204 of ERISA or any material liability under
Section 515 of ERISA;
(vii) to the best of the Lessee's knowledge, neither the Lessee
nor any ERISA Affiliate has engaged in a "prohibited transaction"
(within the meaning of Section 4975 of the Code or Section 406 of
ERISA) which could reasonably be expected to subject the Lessee to
the tax or penalties on prohibited transactions imposed by Section
4975 of the Code or Section 502 of ERISA; and
(viii) assuming the truth of the representations contained in
Section 7.03(a)(viii) hereof and compliance with Section 10.06 of the
Indenture, the execution and delivery of this Agreement and the other
Operative Agreements and the consummation of the transactions
contemplated hereby and thereby will not involve any transaction
which is prohibited by Section 406 of ERISA or in connection with
which a tax could be imposed pursuant to Section 4975 of the Code.
No part of the funds to be used by the Lessee in satisfaction of its
obligations under this Agreement or any other of the Operative
Agreements to which the Lessee is a party or to which the Lessee is
bound are the assets of any employee benefit plan subject to Title I
of ERISA, or any individual retirement account or an employee benefit
plan subject to Section 4975 of the Code;
as used in this Section 6.01(m), the term "Pension Plan" means an employee
pension benefit plan as defined in Section 3(2) of ERISA (other than a
multiemployer plan as defined in Section 4001(a)(3) of ERISA) which is
covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code and which is maintained, or contributed to,
by the Lessee or any ERISA Affiliate, and the term "ERISA Affiliate" means
any entity which together with the Lessee would be treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code;
(n) the Lessee is a Citizen of the United States;
(o) except for the filings referred to in Sections 4.01(f), 4.02(e)
and 4.02(f) hereof, no governmental approval of any kind is required of the
Owner Participant or for the Owner Participant's execution of or
performance under this Agreement or any agreement contemplated hereby by
reason of any fact or circumstance of the Lessee, the nature of the
Aircraft or the Lessee's proposed operations or use of the Aircraft;
(p) on the Delivery Date, all premiums with respect to the insurance
required to be provided by the Lessee on or prior to the Delivery Date
under Article 13 of the Lease have been paid by the Lessee;
(q) on the Delivery Date, all sales or use taxes relating to the
sale of the Aircraft by the Lessee to the Owner Trustee which are then or
were theretofore due shall have been paid;
(r) the Lessee is not in default under any mortgage, deed of trust,
indenture, lease or other instrument or agreement to which the Lessee is a
party or by which it or any of its Properties or assets may be bound, or in
violation of any applicable law, which default or violation would have a
material adverse effect on the financial condition, business or operations
of the Lessee or its ability to perform any of its obligations under the
Lessee Documents;
(s) no Default or Event of Default or Event of Loss or event, which
with the passage of time or if continued unremedied or unaltered would
constitute an Event of Loss, has occurred or exists;
(t) on the Delivery Date, the Aircraft will be in such condition so
as to enable the airworthiness certificate of such Aircraft to be in good
standing under the Transportation Code; the Aircraft will have been duly
certificated by the FAA as to type and airworthiness; there will be in
effect with respect to the Aircraft a current and valid airworthiness
certificate issued by the FAA pursuant to the Transportation Code; and
there is no fact known to the Lessee which materially adversely affects the
value, utility or condition of the Aircraft;
(u) on the Certificate Closing Date and the Delivery Date, the
Lessee shall not be in default in the performance of any term or condition
of the Purchase Agreement or the Purchase Agreement Assignment and the
aggregate amount of loans shall not exceed the Debt Portion;
(v) neither the Lessee nor any subsidiary of the Lessee is an
"investment company" or a company "controlled by an investment company"
within the meaning of the Investment Company Act of 1940, as amended;
(w) 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; and
(x) 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.
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 50 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 Purchase Agreement, the Purchase
Agreement 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 take, or
cause to be taken, at the Lessee's cost and expense, such action with
respect to the recording, filing, re-recording and re-filing of the
Indenture, each Indenture and Security Agreement Supplement, the Lease,
each Lease Supplement and any financing statements or other instruments as
may be necessary, or as requested by the Indenture Trustee and appropriate,
to maintain the perfection of the first security interest and the Lien
created by the Indenture, and the Owner Trustee's title to and interest in
the Aircraft and the Lessor's Estate as against the Lessee and any third
parties, or if the Lessee cannot take, or cause to be taken, such action,
will furnish to the Indenture Trustee and the Owner Trustee timely notice
of the necessity of such action, together with such instruments, in
execution form, and such other information as may be required to enable
either of them to take such action at the Lessee's cost and expense in a
timely manner.
(b) From and after the Delivery Date, the Lessee shall maintain the
certificates referred to in Section 7.01 of the Lease and shall cause the
Aircraft to be duly registered, and at all times to remain duly registered,
in the name of the Owner Trustee, under the Transportation Code; provided,
however, that the Owner Participant, the Owner Trustee and the Indenture
Trustee agree that, so long as no Default or Event of Default shall have
occurred and be continuing, if at any time after 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 in which a sublessee could be located under the
provisions of Section 7.02(a)(i) of the Lease with which the United States
then maintains normal and full diplomatic relations, upon receipt by the
Owner Participant, the Owner Trustee and the Indenture Trustee of the
assurances and opinion described below, none of them shall unreasonably
withhold their consent to such change in registration (it being agreed,
without limitation, that the inability of the Lessee to deliver such
assurances or such opinion shall constitute reasonable grounds to withhold
such consent).
As a condition to any change in the registration of the Aircraft, the
Owner Participant, the Owner Trustee in its individual and trust capacities,
and the Indenture Trustee shall have received:
(i) assurances satisfactory to them:
(A) to the effect that the insurance provisions of the Lease have
been and will be complied with and are and shall be in full force and
effect upon such change of registry;
(B) as to the continuation of the Lien of the Indenture as a
first priority, duly perfected Lien on the Aircraft;
(C) that the Owner Trustee's right, title and interest in and to
the Aircraft is recognized and fully enforceable in the new
jurisdiction of registry, that the rights of the Owner Trustee in and
to the Aircraft will not be impaired in such new jurisdiction of
registry and that the new jurisdiction of registry will give effect
to the title and registry of the Aircraft therein substantially to
the same extent as does the Government;
(D) that such new country of registry (x) would provide
substantially equivalent protection for the rights of owner
participants, lessors or lenders in similar transactions as provided
under United States law (except that, in the absence of restrictions
under the laws of such country on rights and remedies of lessors and
secured parties similar to those imposed by Sections 362 and 363 of
the Bankruptcy Code, rights and remedies similar to those available
under Section 1110 of the Bankruptcy Code shall not be required), and
(y)(i) if such change in registration is made other than in
connection with a sublease, imposes maintenance standards at least
comparable to those of the FAA, and (ii) if such change in
registration is made in connection with a sublease permitted under
Section 7.02(a)(i) of the Lease, imposes maintenance standards in
conformity with those set forth in Section 7.02(a)(i) of the Lease;
(E) that import and export certificates and any exchange permits
necessary to allow all Rent and other payments provided for under the
Lease, if required, shall have been procured at the Lessee's own cost
and expense by the Lessee;
(F) that the Lessee shall have effected or caused to be effected
at the Lessee's own cost and expense all recordings and filings that
are required to perfect the Lien of the Indenture;
(G) to the effect that the original indemnities (and any additional
indemnities for which the Lessee is then willing to enter into a
binding agreement to indemnify) in favor of the Owner Participant,
the Owner Trustee (in its individual capacity and as trustee under
the Trust Agreement), the Indenture Trustee (in its individual
capacity, and as trustee under the Indenture), the Pass Through
Trustee (in its individual capacity, and as trustee under the Pass
Through Agreement) and the other Indemnitees under this Agreement,
the Indenture, the Pass Through Agreement and (in the case of the
Owner Participant only) the Tax Indemnity Agreement, afford each such
party substantially the same protection as provided prior to such
change of registry;
(H) that such change will not result in the imposition of, or
increase in the amount of, any Tax for which the Lessee has not
agreed to indemnify the Owner Participant, the Indenture Trustee, the
Pass Through Trustee, the Owner Trustee (or any successor, assign or
Affiliate thereof) and the Trust Estate;
(I) that any value added tax, customs duty, tariff or similar
governmental charge relating to the change in jurisdiction of
registration of the Aircraft shall have been paid in full or
adequately provided for by the Lessee to the satisfaction of the
Owner Trustee, the Indenture Trustee and the Owner Participant;
(J) of the payment by the Lessee of any reasonable fees and
expenses of the Owner Participant, the Owner Trustee, the Indenture
Trustee and the Pass Through Trustee in connection with such change
of registry, including any reasonable attorneys' fees and expenses;
and
(K) that duties and tariffs, if applicable, shall have been paid
for by the Lessee;
(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)(D)(x) of this Section 6.03) in respect of the
transactions contemplated hereby, including, without limitation, the
remedies provided in the Indenture and the Lease;
(D) that there is no tort liability of the beneficial owner,
record owner, lessor or mortgagee of an aircraft not in possession
thereof under the laws of such jurisdiction, other than tort
liability which might have been imposed on such owner, lessor or
mortgagee under the laws of the United States or any state thereof
(it being understood that, in the event such latter opinion cannot be
given in a form satisfactory to the Owner Participant and the
Indenture Trustee, such opinion shall be waived, if insurance
reasonably satisfactory to the Owner Participant, the Indenture
Trustee and the Owner Trustee, in its individual capacity, is
provided, at the Lessee's expense, to cover such risk and the Lessee
undertakes to keep such insurance in full force and effect);
(E) that the laws of such jurisdiction will not impair the rights
of the Lessor in and to the Aircraft and (unless the Lessee shall
have agreed to provide insurance reasonably satisfactory to the
Indenture Trustee and the Owner Participant covering the risk of
requisition of use of the Aircraft by the government of registry of
the Aircraft) require fair compensation by the government of such
jurisdiction payable in currency freely convertible into United
States dollars for the loss of use of the Aircraft in the event of
such requisition;
(F) that the Owner Trustee's title to the Aircraft is recognized
and fully enforceable in such jurisdiction, that such jurisdiction
will give effect to the title of the Aircraft therein substantially
to the same extent as does the Government, and that the Lien of the
Indenture shall continue as a first priority, duly perfected lien on
the Aircraft; and
(G) to such further effect with respect to such other matters as
the Owner Participant, the Owner Trustee, or the Indenture Trustee may
reasonably request.
If following any reregistration of the Aircraft, the Aircraft is
located outside the United States, the Lessee shall have thirty (30) days to
relocate the Aircraft within the United States and, if unable to do so, shall
pay the reasonable incremental out-of-pocket costs of the Lessor, the Owner
Participant or their authorized representatives incurred in connection with
any inspection or appraisal required or permitted under the Operative
Agreements. Such obligation shall apply only with respect to one inspection
or appraisal in any calendar year unless an Event of Default shall have
occurred and be continuing.
(c) The Lessee shall promptly file any reports, or furnish to the
Owner Trustee and the Owner Participant such information as may be required
to enable the Owner Trustee and the Owner Participant timely to file any
reports required to be filed by the Owner Trustee as the Lessor and the
Owner Participant under the Lease with any governmental authority.
(d) The Lessee will cause the Special Aviation Counsel to file, and
where appropriate record, on the Delivery Date, the FAA Bill of Sale, the
Lease, the Lease Supplement, the Trust Agreement, the Indenture and the
Indenture and Security Agreement Supplement. The following documents shall
be filed and, where appropriate, recorded on the Delivery Date with the
Aeronautics Authority in the following order of priority: first, the FAA
Bill of Sale, second, the Application, with the Trust Agreement and the
Affidavits, third, the Indenture with the Indenture and Security Agreement
Supplement attached thereto, and fourth, the Lease with the Lease
Supplement, the Indenture and the Indenture and Security Agreement
Supplement attached thereto.
(e) The Lessee will furnish to the Owner Participant, the Owner
Trustee and the Indenture Trustee annually after the execution of this
Agreement, by March 15 of each year, commencing with the year 1999, 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.
(g) The Lessee shall not enter into any merger or consolidation, or
convey, transfer or lease all or substantially all of its assets as an
entirety to any Person, unless the surviving corporation or Person which
acquires by conveyance, transfer or lease all or substantially all of the
assets of the Lessee as an entirety (i) is a domestic corporation organized
and existing under the laws of the United States or a political subdivision
thereof, (ii) is a Citizen of the United States, (iii) is a U.S. Air
Carrier, (iv) expressly assumes by an instrument in writing in form and
substance satisfactory to the Indenture Trustee, the Owner Participant and
the Owner Trustee all of the Lessee's obligations hereunder and under the
other Operative Agreements, and each other document contemplated hereby or
thereby and the Lessee delivers such instrument to the Indenture Trustee,
the Owner Participant and the Owner Trustee, (v) provides an opinion from
outside counsel to the Lessee which counsel shall be reasonably
satisfactory to the Owner Participant and the Indenture Trustee and which
opinion shall be reasonably satisfactory to the Owner Participant and the
Indenture Trustee, and an officer's certificate, each stating that such
merger, consolidation, conveyance, transfer or lease and the instrument
noted in clause (iv) above comply with this Section 6.03(g), that such
instrument is a legal, valid and binding obligation of, and is enforceable
against, such survivor or Person, and that all conditions precedent herein
provided for relating to such transaction have been complied with, and (vi)
immediately after such merger, consolidation or conveyance, transfer or
lease, as the case may be, the surviving company is in compliance with all
of the terms and conditions of this Agreement and the Lease and each other
Operative Agreement and each other document contemplated hereby or thereby;
provided that no such merger, consolidation or conveyance, transfer or
lease shall be permitted if the same gives rise to an Event of Default.
Upon any consolidation or merger, or any conveyance, transfer or
lease of all or substantially all of the assets of the Lessee and the
satisfaction of the conditions specified in this Section 6.03(g), the
successor corporation formed by such consolidation or into which the Lessee
is merged or the Person to which such conveyance, transfer or lease is made
shall succeed to, and be substituted for, and may exercise every right and
power of, the Lessee under this Agreement and the Lease and each other
Operative Agreement and any other document contemplated hereby and thereby
to which the Lessee is a party with the same effect as if such successor
corporation had been named as the Lessee herein and therein. No such
conveyance, transfer or lease of all or substantially all of the assets of
the Lessee as an entirety shall have the effect of releasing the Lessee or
any successor corporation which shall theretofore have become such in the
manner prescribed in this Section 6.03(g) from its liability hereunder or
under the other Operative Agreements. Nothing contained herein shall
permit any lease, sublease, or other arrangement for the use, operation or
possession of the Aircraft except in compliance with the applicable
provisions of the Lease.
(h) The Lessee agrees to give prompt written notice to the Owner
Participant 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 UCC) or of any change in its corporate name.
(i) The Lessee agrees to furnish to the Owner Participant, the
Lessor and the Indenture Trustee:
(A) as soon as available, but in any event within one hundred
twenty (120) days after the end of each fiscal year of the Lessee, a
consolidated balance sheet as of the end of such fiscal year, and the
related consolidated statements of income, common stockholders'
equity, retained earnings and cash flows of the Lessee for the fiscal
year then ended as prepared and certified by the Lessee's independent
certified public accountants, including their opinion;
(B) within sixty (60) days after the end of the first, second and
third quarterly accounting periods in each fiscal year of the Lessee,
a consolidated balance sheet of the Lessee prepared by it as of the
close of the accounting period then ended, together with the related
consolidated statements of income, retained earnings and cash flows
for such accounting period certified by the chief accounting officer
or a financial vice president of the Lessee;
(C) promptly upon their general transmission, copies of all
regular and periodic reports furnished by the Lessee to its
stockholders;
(D) promptly after filing with the SEC, copies of the Lessee's
Annual Reports on Form 10-K (including all corresponding annual
reports to shareholders), Quarterly Reports on Form 10-Q and, if
requested, any registration statement or prospectus filed by the
Lessee with any securities exchange or with the SEC;
(E) promptly upon (and in any event within five (5) Business Days
after) any 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 Pass Through Trustee and the Indenture Trustee a certificate
of the Lessee, signed by any one of the President, the Chief Financial
Officer, the General Counsel, the Treasurer or the principal accounting
officer of the Lessee, stating that the signer, or an employee reporting to
same, is familiar with the relevant terms of this Agreement and the Lease and
the signer has reviewed, or has caused to be made under such Person's
supervision a review of, the activities of the Lessee and that, to the best of
his or her knowledge, there does not exist any Default or any Event of Default
or if a Default or an Event of Default exists or did exist, specifying the
nature thereof, the period of existence thereof and what action the Lessee has
taken or proposes to take with respect thereto.
Section 6.04. Survival of Representations and Warranties. The
representations and warranties of the Lessee provided in Sections 6.01 and 6.02
hereof and in any other Operative Agreement shall survive the Closings
hereunder and the expiration or other termination of this Agreement and the
other Operative Agreements.
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in Lessor's
Estate. (a) [Reserved.]
(b) Owner Participant (other than Initial Owner Participant). The
Owner Participant represents and warrants that its interest in the Lessor's
Estate and the Trust Agreement was acquired by it for its own account and not
with a view to resale or distribution thereof; provided, however, that the
disposition by the Owner Participant of its interest in the Lessor's Estate
and the Trust Agreement shall, subject to the terms and provisions of Article
5 of the Trust Agreement, at all times be within its control and the foregoing
representation shall not limit the Owner Participant's right to transfer or
sell such interests pursuant to the terms of this Agreement. The Owner
Participant nor anyone else authorized to act on its behalf has directly or
indirectly offered any interest in the Lessor's Estate or the Trust Agreement,
or in any similar security, for sale to, or solicited any offer to acquire any
of the same from, anyone. The Owner Participant further represents and
warrants that neither it nor anyone authorized to act on its behalf has made
or will make any offer, solicitation or sale of any interest in the Lessor's
Estate or the Trust Agreement in violation of the provisions of Section 5 of
the Securities Act of 1933, as amended. No representation in this Section
7.01(b) shall include any action or inaction of the Lessee, First Chicago
Leasing Corporation, the Subordination Agent, the Underwriters or any
Affiliate of any thereof whether or not purportedly on behalf of the Owner
Trustee, the Owner Participant or any of their Affiliates.
(c) Owner Trustee. The Owner Trustee represents and warrants, both
in its individual capacity and as trustee, that neither it nor anyone acting
on its behalf (i) has directly or indirectly offered or will directly or
indirectly offer any interest in the Lessor's Estate, or in any similar
security, for sale to, or solicited any offer to acquire any of the same from
anyone (other than the Owner Participant) and (ii) 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 Owner Trustee, and the Owner
Participant severally represents and warrants that it is or will be a Citizen
of the United States on the Delivery Date. If the Owner Participant or the
Owner Trustee in its individual capacity does not comply with the requirements
of this Section 7.02, the Owner Trustee, the Indenture Trustee and the Owner
Participant hereby agree that a Default or an Event of Default shall not be
deemed to have occurred and be continuing under the Lease due to
non-compliance by the Lessee with the registration requirements in the Lease
occasioned by the noncompliance of the Owner Participant or the Owner Trustee.
(b) Owner Trustee. The Owner Trustee, in its individual capacity,
covenants that if at any time it shall have actual knowledge that it has
ceased to be a Citizen of the United States, it will resign immediately as the
Owner Trustee if such citizenship is necessary under the Transportation Code
as in effect at such time or, if it is not necessary under the Transportation
Code as in effect at such time, if it is informed in writing by the Lessee,
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 when the Aircraft is registered or the
Lessee proposes to register the Aircraft in the United States (i) it shall
cease to be, or believes itself likely 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 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 15 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 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 and to each Holder any damages actually suffered
by any such other party or Holder as the result of the representation and
warranty of the Owner Participant in the first sentence of Section 7.02(a)
hereof proving to be untrue as of the Delivery Date; and (B) to the Lessee, the
Indenture Trustee and the Pass Through Trustee for any damages actually
incurred by the Lessee, the Indenture Trustee and the Pass Through Trustee as
a result of the Owner Participant's failure to comply with its obligations
pursuant to the first sentence of this Section 7.02(c). 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).
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 (other than the Initial Owner
Participant) represents and warrants as of the Delivery Date that:
(i) it is a corporation duly incorporated and validly existing in
good standing under the laws of the state of its jurisdiction and it has
full 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 bylaws, as amended, of the Owner
Participant or any order, writ, injunction or decree of any court or
governmental authority against the Owner Participant or by which it or any
of its Properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which the Owner Participant is a party or by
which it or any of its Properties is bound, or constitutes or will
constitute a default thereunder or results or will result in the imposition
of any Lien upon any of its Properties;
(iv) this Agreement, the Tax Indemnity Agreement, 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) to the best of its knowledge, 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 is not a tax resident of another country; and
(x) it has a consolidated tangible net worth of not less than
$75,000,000.
Notwithstanding the foregoing or anything else contained in this
Agreement, the Owner Participant makes no representation or warranty in this
Agreement with respect to laws, rules or regulations relating to aviation or
to the nature or use of the equipment owned by the Owner Trustee, 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 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) Indemnity for Lessor's Liens. The Owner Participant agrees to
indemnify and hold harmless the Lessee, the Indenture Trustee and the Pass
Through Trustee from and against any loss, cost, expense or damage which may
be suffered by the Lessee, the Indenture Trustee or the Pass Through Trustee
as the result of the failure of the Owner Participant to discharge and satisfy
any Lessor's Liens attributable to the Owner Participant (or an Affiliate
thereof) and required to be discharged as described in Section 7.03(b) hereof.
(d) Assignment of Interests of Owner Participant. The Owner
Participant agrees that it will not assign, convey or otherwise transfer any
of its right, title or interest in and to the Operative Agreements or the
Lessor's Estate except in accordance with the provisions of Article 5 of the
Trust Agreement, as in effect on the date hereof or as amended in accordance
with the terms of the Operative Agreements.
(e) Actions with Respect to Lessor's Estate, Etc. The Owner
Participant agrees that it will not take any action to subject the Lessor's
Estate or the trust established by the Trust Agreement, as debtor, to the
reorganization or liquidation provisions of the Bankruptcy Code or any other
applicable bankruptcy or insolvency statute.
Section 7.04. Representations, Covenants and Warranties of 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) on the date hereof and as of the
Certificate Closing Date and the Delivery Date that:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America
with its principal place of business and chief executive office (as such
terms are used in Article 9 of the UCC) at 225 Asylum Street, Goodwin
Square, Hartford, Connecticut 06103, Attention: Corporate/Muni
Administration 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 Initial Owner Participant) as the
Owner Trustee, as the case may be, to carry on its business as now
conducted, and to execute, deliver and perform this Agreement and the
Operative Agreements to which it is or is to be a party;
(ii) the execution, delivery and performance by 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, and has been duly executed and delivered
or, in the case of the Operative Agreements identified in Section 4.02(c)
hereof, will on the Delivery Date be duly executed and delivered by 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 Certificate Closing Date, the proceeds arising from the
issuance and sale of the Certificates shall be free of Lessor's Liens
attributable to SSB in its individual capacity and on the Delivery Date the
Owner Trustee shall be holding whatever title to the Aircraft as was
conveyed to it by 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 Certificate Closing Date or the Delivery Date. The
Owner Trustee, in its trust capacity, and at the cost and expense of the
Lessee, covenants that it will in its trust capacity promptly, and in any
event within 30 days after the same shall first become known to it, take such
action as may be necessary to discharge duly any Lessor's Liens attributable
to it in its trust capacity. 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) Securities Act. None of SSB, the Owner Trustee or any Person
authorized by either of them to act on its behalf has directly or indirectly
offered or sold or will directly or indirectly offer or sell any interest in
the Lessor's Estate, or in any similar security relating to the Lessor's
Estate, or in any security the offering of which for purposes of the
Securities Act of 1933, as amended, would be deemed to be part of the same
offering as the offering of the aforementioned securities to, or solicited any
offer to acquire any of the same from, any Person.
(e) 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 on the date hereof and as of the
Certificate Closing Date and 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 to be delivered on
the Certificate Closing Date;
(ii) the Indenture and this Agreement and the other Operative
Agreements to which it is or is to be a party, and the authentication of
the Certificates to be delivered on the Certificate Closing Date, have been
duly authorized by all necessary corporate action on its part, and neither
the execution and delivery thereof nor its performance of any of the terms
and provisions thereof will violate any Federal or 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 or, in the case of the Operative Agreements
identified in Section 4.02(c) hereof, will on the Delivery Date be executed
and delivered by it and, assuming that each such agreement is the legal,
valid and binding obligation of each other party thereto, is (or will be,
as the case may be), the legal, valid and binding obligation of the
Indenture Trustee, enforceable against the Indenture Trustee in accordance
with its terms except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws or equitable principles of
general application to or affecting the enforcement of creditors' rights
(regardless of whether enforceability is considered in a proceeding in
equity or at law);
(iv) neither the execution and delivery by it of the Indenture and
this Agreement and the other Operative Agreements to which it is or is to
be a party, nor the performance by it of any of the transactions
contemplated hereby or thereby, requires the consent or approval of, the
giving of notice to, the registration with, or the taking of any other
action in respect of, any Federal or state governmental authority or agency
governing its banking and trust powers; and
(v) on the Certificate Closing Date, the Indenture Trustee holds
the Liquid Collateral on behalf of the Owner Trustee and on the Delivery
Date, the Indenture Trustee will hold the original counterparts of the
Lease, the Lease Supplement and the Ancillary Agreement I.
(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 Certificate
Closing Date or, as at and following the Delivery Date, the Aircraft. The
Indenture Trustee, in its individual capacity, covenants and agrees that it
will at its own expense take such action as may be necessary to duly discharge
and satisfy in full, promptly, and in any event within 30 days, after the same
shall first become known to it, any Indenture Trustee's Liens.
(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.
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 the Owner
Participant (or the Owner Trustee, the Indenture Trustee or the Pass Through
Trustee, as the case may be) nor any Person lawfully claiming through the
Owner Participant (or the Owner Trustee, the Indenture Trustee or the Pass
Through Trustee, as the case may be) shall interfere with the Lessee's right
quietly to enjoy the Aircraft during the Term without hindrance or disturbance
by the Owner Participant (or the Owner Trustee, the Indenture Trustee or the
Pass Through Trustee as the case may be), provided, however, that the Lessor
shall not be liable for any act or omission of the Indenture Trustee or any
other Person claiming through the Indenture Trustee.
Section 7.09. Pass Through Trustee's Representations and Warranties.
The Pass Through Trustee, in its individual capacity (except with respect to
clause (iii) below), represents and warrants as of the date hereof (except as
otherwise provided), as of the Pass Through Closing Date, the Certificate
Closing Date and the Delivery Date that:
(i) it is a 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 Pass Through Agreement, the Series Supplements, the Intercreditor
Agreement and this Agreement and to execute and authenticate the Pass
Through Certificates to be delivered on the Pass Through Closing Date;
(ii) the execution, delivery and performance of this Agreement, the
Pass Through Agreement and the Series Supplements and the performance of its
obligations hereunder and thereunder (including the execution and
authentication of the Pass Through Certificates to be delivered on the Pass
Through Closing Date) have been fully authorized by all necessary corporate
action on its part, and, subject to (A) the registration of the issuance
and sale of the Pass Through Certificates under the Securities Act, (B)
compliance with any applicable state securities laws and (C) the
qualification of the Pass Through Agreement under the Trust Indenture Act,
neither the execution and delivery thereof nor its performance of any of
the terms and provisions thereof will violate any Federal or 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; and
(iii) each of this Agreement and the Pass Through Agreement has been,
and as of the Pass Through Closing Date the Series Supplements will be, duly
executed and delivered by it (in its individual and trust capacities) and,
assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is or will be, as the case may be,
the legal, valid and binding obligation of the Pass Through Trustee (in its
individual and trust capacities), enforceable in accordance with its
respective terms except as limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights generally
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
Section 7.10. Survival of Representations, Warranties and Covenants.
The representations, warranties and covenants of the Owner Participant, the
Owner Trustee (in its individual or trust capacity), the Pass Through Trustee
(in its individual or trust capacity), the Subordination Agent (in its
individual capacity or trust capacity) and the Indenture Trustee (in its
individual or trust capacity) provided for in this Article 7, and their
respective obligations under any and all of them, shall survive the Closings,
the delivery of the Aircraft and the expiration or other termination of this
Agreement, and the other Operative Agreements.
Section 7.11. Lessee's Assumption of the Certificates. (a) Subject
to compliance by the Lessee with all of its obligations under the Operative
Agreements, each of the Owner Participant, the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Lessee covenants and agrees that if
the Lessee elects to terminate the Lease and to purchase the Aircraft pursuant
to Section 4.02(a)(A), (D), (E) or (F) of the Lease, and so long as no Event
of Default shall have occurred and be continuing then, upon compliance with
the applicable provisions of said Section 4.02(a) of the Lease, the Owner
Trustee will transfer to the Lessee, without recourse or warranty (except as
to the absence of Lessor's Liens) 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, each of the parties shall execute
and deliver appropriate documentation permitting the Lessee to assume such
obligations on the basis of full recourse to the Lessee, maintaining for the
benefit of the Holders the security interest in the Aircraft created by the
Indenture, and upon compliance with the provisions of this Section 7.11
releasing the Owner Participant and the Owner Trustee from all obligations in
respect of the Certificates, the Indenture 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 UCC financing statements relating thereto, and any other
documents which shall be necessary (or reasonably requested by the
Indenture Trustee) to establish the Lessee's title to and interest in the
Aircraft or to reflect the substitution of the Lessee for the Owner Trustee
under the Operative Agreements or to continue the perfection of the
security interests in the Aircraft and the other rights, Property and
interests included in the Trust Indenture Estate for the benefit of the
Holders (or the Lessee's substituted obligations) shall be filed in such
form, manner and places as are necessary or, in the reasonable opinion of
the Indenture Trustee, advisable for such purpose;
(iii) the Indenture Trustee shall have received an insurance report
dated the effective date of such assumption of an independent insurance
broker and certificates of insurance, each in form and substance
satisfactory to the Indenture Trustee, as to the due compliance as of the
effective date of such assumption with the terms of Article 13 of the Lease
(as it relates to the Indenture Trustee) relating to the insurance with
respect to the Aircraft;
(iv) the Indenture Trustee shall have received evidence that as of
the effectiveness of the assignment on the date of such assumption the
Aircraft is free and clear of all Liens other than the Lien of the
Indenture and other Permitted Liens;
(v) the Indenture Trustee shall have received a certificate from
the Lessee that no Event of Default shall have occurred and be continuing
as of the effective date of such assumption; and
(vi) the Indenture Trustee shall have received (A) from counsel for
the Lessee (who may be the Lessee's General Counsel) a legal opinion, in
form and substance satisfactory to the Indenture Trustee (w) with respect
to the compliance of the assumption contemplated hereby with the terms,
provisions and conditions hereof, (x) with respect to the due
authorization, execution, delivery, validity and enforceability of the
instrument referred to in paragraph (i) of this Section 7.11(b), (y) with
respect to the continued perfection of the first and prior Lien and security
interest in the Aircraft for the benefit of the Holders of the Certificates
(or the Lessee's substituted obligations) referred to in paragraph (ii) of
this Section 7.11(b) and (z) with respect to the continued availability of
the benefits of Section 1110 of the Bankruptcy Code to the Indenture
Trustee for the benefit of the Holders with respect to the Aircraft after
giving effect to such assumption, (B) from counsel to the Indenture Trustee
and Special Aviation Counsel, a legal opinion comparable to the respective
opinions delivered on the Certificate Closing Date or the Delivery Date, as
the case may be, with such changes therein as may be appropriate in light
of such assumption, and (C) in the case of each opinion described in clause
(A) or (B) above, covering such additional matters as the Indenture Trustee
shall reasonably request.
(c) The Lessee shall pay all reasonable expenses (including
reasonable fees and expenses of counsel) of the Owner Participant, the Owner
Trustee and the Indenture Trustee 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 provision of the Trust Agreement in a manner that would 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 and (so long as the Indenture shall not have
been discharged) the Indenture Trustee.
Section 7.14. Subordination Agent's Representations, Warranties and
Covenants. (a) Representations and Warranties. The Subordination Agent
represents and warrants as of the date hereof (except as otherwise provided),
as of the Pass Through Closing Date, the Certificate Closing Date and the
Delivery Date that:
(i) it is a 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, the Liquidity Facilities and the
Intercreditor Agreement;
(ii) the execution, delivery and performance of this Agreement, each
of the Liquidity Facilities and the Intercreditor Agreement and the
performance of its obligations hereunder and thereunder 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) each of this Agreement, the Liquidity Facilities and the
Intercreditor 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; and
(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.
(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 shall have the meanings specified in the Intercreditor Agreement.
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes. (a) Generally. The
Lessee agrees promptly to pay when due, and to indemnify and hold each
Indemnitee harmless from all license, recording, documentary, registration and
other fees and all taxes (including, without limitation, income, gross
receipts, sales, rental, use, value added, property (tangible and intangible),
ad valorem, excise and stamp taxes), fees, levies, imposts, recording duties,
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
(whether imposed upon any Indemnitee, the Lessee, all or any part of the
Aircraft, Airframe, any Engine or any Part, the Lessor's Estate, the Trust
Indenture Estate, Rent or otherwise), 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, upon or with respect to, based upon or
measured by:
(i) the Aircraft, the Airframe, any Engine or any Part;
(ii) the location, replacement, conditioning, refinancing, control,
purchase, registration, reregistration, repossession, improvement,
maintenance, redelivery, manufacture, acquisition, purchase, financing,
mortgaging, ownership, acceptance, rejection, delivery, non-delivery,
leasing, subleasing, transport, insuring, inspection, registration,
assembly, abandonment, preparation, installment, possession, use,
operation, return, presence, storage, repair, transfer of title,
modification, rebuilding, import, export, alteration, addition, replacement,
assignment, overhaul, transfer of registration or registration, imposition
of any lien, sale or other disposition of the Aircraft, Airframe, any
Engine or any Part thereof or interest therein;
(iii) the rentals (including Basic Rent and Supplemental Rent),
receipts or earnings arising from the Operative Agreements or from the
purchase, financing, ownership, delivery, leasing, possession, use,
operation, return, storage, transfer of title, sale or other disposition of
the Aircraft, the Airframe or any part thereof or interest therein;
(iv) any or all of the Operative Agreements;
(v) the Property, or the income or other proceeds received with
respect to the Property, held by the Owner Trustee under the Trust
Agreement or after an Event of Default under the Lease, or by the Indenture
Trustee under the Indenture;
(vi) otherwise with respect to or by reason of the transactions
described in or contemplated by the Operative Agreements;
(vii) the payment of the principal or interest or other amounts
payable with respect to the Certificates;
(viii) the Certificates or the Pass Through Certificates or the
issuance, acquisition, or refinancing thereof or the beneficial interests
in the Lessor's Estate or the creation thereof under the Trust Agreement; or
(ix) any assumption by the Lessee pursuant to Section 7.11 of this
Agreement and Section 2.12 of the Indenture.
(b) Exceptions. The indemnity provided for in Section 8.01(a) shall
not extend to any of the following:
(i) With respect to an Indemnitee, Taxes based upon, measured by or
with respect to the net or gross income, items of tax preference or minimum
tax or excess profits, receipts, value added (but only to the extent such
value added tax is in the nature of an income tax), capital, franchise, net
worth or conduct of business or other similarly-based Taxes of such
Indemnitee (other than any Taxes in the nature of sales, use, transfer,
excise, rental, license, ad valorem, property or other similarly based
Taxes) (the "Income Taxes"); provided, however that the provisions of this
paragraph (b)(i) shall not exclude from the indemnity described in Section
8.01(a) hereof, any Income Taxes to the extent such Income Taxes are
imposed by any jurisdiction in which the Indemnitee would not be subject to
such Income Taxes but for, or would be subject to such Income 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 any such indemnity would be payable only to the extent of
the net harm incurred by the Indemnitee from such Income Taxes, taking into
account any incremental current Tax benefit in another tax jurisdiction
resulting from payment of such Income Taxes); provided, further, that the
provisions of this paragraph (b)(i) relating to Income Taxes shall not
exclude from the indemnity described in Section 8.01(a) hereof any Income
Taxes for which the Lessee would be required to indemnify an Indemnitee (x)
so that any payment under the Operative Agreements, otherwise required to
be made on an After-Tax Basis, is made on an After-Tax Basis or (y)
pursuant to the last sentence of Section 8.02, 8.05, 9.02 or 9.05 of this
Agreement;
(ii) [Reserved];
(iii) Taxes arising out of or measured by acts, omissions, events or
periods of time (or any combination of the foregoing) which occur after
(and are not attributable to acts, omissions or events occurring
contemporaneously with or prior to) (A) the payment in full of all amounts
payable by the Lessee pursuant to and in accordance with the Operative
Agreements, or the earlier discharge in full of the Lessee's payment
obligations under and in accordance with the Lease and the Operative
Agreements (and the Certificates in the case of the Indenture Trustee or
the Trust Indenture Estate if the Lessee shall have assumed the Certificates
pursuant to Section 7.11 of this Agreement), and (B) the earliest of (x) the
expiration of the Term of the Lease and return of the Aircraft in
accordance with Article 12 of the Lease, (y) the termination of the Lease
in accordance with the applicable provisions of the Lease and return of the
Aircraft in accordance with the Lease, or (z) the termination of the Lease
in accordance with the applicable provisions of the Lease and the transfer
of all right, title and interest in the Aircraft to the Lessee pursuant to
its exercise of any of its purchase options set forth in Section 4.02(a) of
the Lease, except that, notwithstanding anything in this Section 8.01(b) to
the contrary, Taxes incurred in connection with the exercise of any
remedies pursuant to Article 17 of the Lease following the occurrence of an
Event of Default shall not be excluded from the indemnity described in
Section 8.01(a) hereof;
(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 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);
(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, other than (A) Taxes that result
from transfers or dispositions which occur while an Event of Default under
the Lease has occurred and is continuing at the time of such transfer or
disposition or (B) Taxes that result from any transfer or disposition
pursuant to the terms of the Lease;
(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) Notwithstanding anything herein to the contrary, Taxes imposed
on a successor, assign or other transferee (including, without limitation,
a transferee which is a new lending office of an original Indemnitee) of
any entity or Person which on the Certificate Closing Date is an Indemnitee
(for purposes of this clause (vii), 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 thereof, 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 (vii) shall not apply in the case of a
succession, assignment or other transfer (1) while an Event of Default
under the Lease or the Indenture has occurred and is continuing; (2)
required by any provision of the Operative Agreements (other than pursuant
to Section 7.02 hereof) or (3) in the case of the Owner Participant, to any
Tax other than an Income Tax;
(ix) [Reserved];
(x) any Taxes which have been included in the Purchase Price;
(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
with respect to the Indenture Trustee;
(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 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; and
(xiii) Taxes imposed by any jurisdiction to the extent they 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.
(c) Withholding. The Pass Through Trustee shall withhold any Taxes
required to be withheld on payments to any holder of a Pass Through
Certificate who is a Non-U.S. Person except to the extent that such a holder
of a Pass Through Certificate has furnished evidence to the Pass Through
Trustee sufficient under applicable law to entitle such holder of a Pass
Through Certificate to any exemption from or reduction in the rate of
withholding on interest claimed by such holder of a Pass Through Certificate.
The Indenture Trustee shall withhold any Taxes required to be withheld on any
payment to a Holder pursuant to Section 5.09 of the Indenture. If the
Indenture Trustee or the Pass Through Trustee fails to withhold a Tax required
to be withheld with respect to any Holder of a Certificate or any holder of a
Pass Through Certificate or any claim is otherwise asserted by a taxing
authority against the Owner Trustee or the Owner Participant for any
withholding tax, the Lessee will indemnify the Owner Trustee and the Owner
Participant (without regard to the exclusions set forth in Section 8.01(b)
hereof) on an After-Tax Basis against any such Taxes required to be withheld
and any interest and penalties with respect thereto, along with any other
costs (including reasonable attorney's fees) incurred in connection with any
such claim. The Indenture Trustee or the Pass Through Trustee, as the case
may be, in its individual capacity (and without recourse to the Trust
Indenture Estate), shall indemnify the Lessee (without regard to the
exclusions set forth in Section 8.01(b) hereof) on an After-Tax Basis for any
payment the Lessee shall have made pursuant to the preceding sentence.
Section 8.02. After-Tax Basis. The amount which the Lessee shall be
required to pay with respect to any Tax indemnified against under Section 8.01
shall be an amount sufficient to restore the Indemnitee, on an After-Tax
Basis, to the same position such party would have been in had such Tax not
been incurred. If any Indemnitee actually realizes a permanent 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 permanent tax
benefit plus any other permanent 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 this Section 8.02 and Section 8.01
hereof 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 Section 8.01 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 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 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 disallowed or reduced in a taxable year subsequent to the
year of such payment (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 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 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 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. The
Indemnitee shall in good faith, with due diligence and at the Lessee's
expense, if timely requested in writing by the Lessee, contest (or, at the
Indemnitee's option, require the Lessee to contest in the name of the Lessee,
if permitted by law) 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.
If the Indemnitee, after reasonable discussion with the Lessee and
consideration in good faith of any suggestion made by the Lessee as to the
method of pursuing such contest, elects to conduct the contest, such
Indemnitee shall determine the manner in which to contest such Taxes, and
shall periodically or upon the Lessee's request advise the Lessee of the
progress of such contest; provided, however, that if the Indemnitee determines
in its sole discretion that such participation will not adversely affect such
Indemnitee's contest of any Taxes not indemnified hereunder, the Lessee shall
have the right to participate in such contest, including, among other rights,
the right to attend governmental or judicial conferences (to the extent
unrelated issues are not discussed) concerning such claim and the right to
review and approve all submissions to any governmental or other authority
insofar as they relate to the Tax for which indemnification is sought.
Notwithstanding the preceding sentences of this Section 8.04, such Indemnitee
shall not be required to take or continue any action unless the Lessee shall
have (i) agreed in writing to pay and shall pay the Indemnitee on demand and
on an After-Tax Basis for any liability or reasonable expense which such
Indemnitee may incur as a result of contesting such Taxes including without
limitation (y) reasonable attorneys' and accountants' fees and (z) the amount
of any interest, penalty or additions to tax which may ultimately be payable
as the result of contesting such Taxes, (ii) delivered to the Indemnitee a
written acknowledgment of the Lessee's obligation to such Indemnitee pursuant
to this Agreement to the extent that the contest is not successful and of the
inapplicability of any exclusion or defenses thereto, provided, however, that
such acknowledgement shall not preclude the Lessee from raising defenses to
liability under this Agreement if a decision in such contest is rendered which
clearly articulates the cause of such Tax and the cause, as so articulated, is
not one for which the Lessee is responsible to pay an indemnity hereunder,
(iii) 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 or the Lessee permitted to contest pursuant
to this Section 8.04 the imposition of any Tax for which the Lessee is
obligated to indemnify any Indemnitee hereunder unless (i) such Indemnitee
shall have received an opinion of independent tax counsel, at the Lessee's
expense, selected by such Indemnitee and reasonably satisfactory to the Lessee
("Tax Counsel") to the effect that a reasonable basis exists for contesting
such claim, (ii) 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 issue shall not be the same as an
issue previously contested hereunder and decided adversely, unless the
Indemnitee shall have received, at the Lessee's sole expense, a written
opinion, in form and substance reasonably satisfactory to such Indemnitee, of
Tax Counsel, to the effect that the applicable circumstances or law has
changed and, in light thereof, there is substantial authority within the
meaning of Section 6662(d) of the Code, as interpreted by the Treasury
regulations thereunder, or under similar principles of state or foreign law (as
the case may be) for contesting such claim and (vi) the amount of the indemnity
payments the Lessee would be required to make with respect to such adjustment,
when aggregated with similar adjustments that could be raised in other taxable
years of such Indemnitee is at least $50,000.
The Indemnitee shall not appeal any judicial decision unless it
receives an opinion of independent tax counsel, at the Lessee's sole expense,
selected by such Indemnitee and reasonably satisfactory to the Lessee to the
effect that a reasonable basis continues to exist for the Indemnitee's
position.
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) reasonable 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 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. The Lessee shall hold the Indemnitee harmless from
and against any liabilities, including penalties, additions to tax, fines and
interest, imposed upon or incurred by such Indemnitee to the extent directly
attributable to any insufficiency or inaccuracy in any return, statement, or
report prepared by the Lessee or information supplied by the Lessee, or
directly attributable to the Lessee's failure to supply reasonably available
information to such Indemnitee as required by this Section 8.06.
Section 8.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 8 and the Lessee's obligations under any and all of them shall survive
the expiration or other termination of the Operative Agreements.
Section 8.08. Payment of Taxes. With respect to any Tax otherwise
indemnifiable hereunder by the Lessee and applicable to the Aircraft,
Airframe, any Engine or Parts, to the extent permitted by the applicable
federal, state, local or foreign law, the Lessee shall pay such tax directly
to the relevant Taxing authority and file any returns or reports required with
respect thereto; 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 the Owner Participant are the owner of
the Aircraft, the Airframe, any Engine or any Part or which would otherwise be
inconsistent with the terms of the Lease 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. If, for any
reason, Lessee is required to make any payment with respect to any Taxes
imposed on any Indemnitee in respect of the transactions contemplated by the
Operative Agreements or on the Aircraft, the Airframe, the Engines, the Parts
of any part thereof, which Taxes are not the responsibility of the Lessee with
respect to 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 the Lessee with respect to such Taxes.
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally. (a) The Lessee agrees to indemnify each
Indemnitee against and agrees to protect, defend, save and keep harmless each
Indemnitee from any and all liabilities, obligations, losses, damages
(including if, as a result of an Indenture Event of Default described in
Section 7.01(a)(i) of the Indenture, the Indenture Trustee shall have sold all
or any portion of the Indenture Estate and the proceeds thereof were less than
an amount equal to accrued and unpaid Basic Rent on the date of sale plus the
Stipulated Loss Value as of such date, damages equal to such shortfall
together with interest thereon to the extent permitted by law at the Debt Rate
until such shortfall is paid in full), penalties, claims, actions, suits,
costs, disbursements and expenses (including reasonable 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) or Article 15 hereof) of
every kind and nature (whether or not any of the transactions contemplated by
this Agreement are consummated) (individually, an "Expense," collectively,
"Expenses"), which may be imposed on, incurred or suffered by or asserted
against any Indemnitee, in any way relating to, based on or arising out of:
(i) this Agreement, the Lease, the Indenture, the Pass Through
Agreement, the Trust Agreement, the Intercreditor Agreement, the Liquidity
Facilities, the Bills of Sale or any other Operative Agreement or any other
document entered into in connection herewith or any sublease or transfer or
any transactions contemplated hereby or thereby;
(ii) the operation, possession, use, non-use, maintenance, storage,
overhaul, delivery, non-delivery, control, repair or testing of the
Aircraft, Airframe, or any Engine or any engine used in connection with the
Airframe, or any part thereof by the Lessee, any sublessee or any other
Person whatsoever, whether or not such operation, possession, use, non-use,
maintenance, storage, overhaul, delivery, non-delivery, control, repair or
testing is in compliance with the terms of the Lease, including without
limitation, claims for death, personal injury or property damage or other
loss or harm to any Person whatsoever, including, without limitation, any
passengers, shippers or other Persons wherever located, and claims relating
to any laws, rules or regulations, including, without limitation,
environmental control, noise and pollution laws, rules or regulation;
(iii) the manufacture, design, sale, return, purchase, acceptance,
rejection, delivery, non-delivery, condition, repair, modification,
servicing, rebuilding, airworthiness, registration, reregistration, import,
export, performance, non-performance, lease, sublease, transfer,
merchantability, fitness for use, alteration, substitution or replacement
of any Airframe, Engine, or Part under the Lease, the Purchase Agreement or
the Purchase Agreement Assignment or other transfer of use or possession,
or other disposition of the Aircraft, the Airframe, any Engine or any Part
including, without limitation, latent and other defects, whether or not
discoverable, strict tort liability, and any claims for patent, trademark or
copyright infringement;
(iv) any breach of or failure to perform or observe, or any other
non-compliance with, any condition, covenant or agreement to be performed,
or other obligations of the Lessee under any of the Operative Agreements,
or the falsity or inaccuracy of any representation or warranty of the
Lessee in any of the Operative Agreements (other than representations and
warranties in the Tax Indemnity Agreement);
(v) the Collateral Account and the Liquid Collateral;
(vi) the enforcement of the terms of the Operative Agreements and the
administration of the Trust Indenture Estate; and
(vii) the offer, issuance, sale or delivery of any Certificate or any
Pass Through Certificate, or any refunding or refinancing thereof, or
interest in the Lessor's Estate or the Trust Agreement or any similar
interest or in any way relating to or arising out of the Trust Agreement
and the Lessor's Estate, the Indenture or the Trust Indenture Estate
(including, without limitation, any claim arising out of the Securities Act
of 1933, as amended, the Securities Exchange Act of 1934, as amended, or
any other federal or state statute, law or regulation, or at common law or
otherwise relating to securities), or the action or inaction of the Owner
Trustee or Indenture Trustee as trustees, in the manner contemplated by
this Agreement, the Indenture, the Indenture and Security Agreement
Supplement or the Trust Agreement and in the case of the Owner Participant,
its obligations arising under Section 6.01 of the Trust Agreement.
The foregoing indemnity by the Lessee is intended to include and cover, but is
not limited to, any Expense to which the Indemnitees may be subject as a
result of their respective ownership or leasing of any interest in the
Aircraft, Airframe, any Engine or Part during the Term, whether or not in the
Lessee's possession or control, insofar as such Expense relates to any
activity or event whatsoever involving such item while it is under lease to
the Lessee (or after termination of the Lease in connection with the exercise
of remedies thereunder to the extent that such Expense is attributable to the
transactions contemplated hereby and by the other Operative Agreements), and
such Expense does not fall within any of the exceptions listed in Section
9.01(b) hereof.
(b) Exceptions. The indemnity provided for in Section 9.01(a) shall
not extend to any Expense of any Indemnitee to the extent it:
(i) would not have occurred but for the willful misconduct or gross
negligence of such Indemnitee;
(ii) after the Delivery Date, is in respect of the Aircraft, and is
attributable to acts or events which occur after the Aircraft is no longer
part of the Lessor's Estate or leased under the Lease or, if the Aircraft
remains a part of the Lessor's Estate, after the expiration of the Term and
any holdover period under Section 12.05 of the Lease (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 or the Indenture Trustee
shall be entitled to exercise remedies under such Article 17), or to acts
or events which occur after return of possession of the Aircraft by the
Lessee in accordance with the provisions of the Lease but in any such case
only to the extent not fairly attributable to acts or omissions of the
Lessee prior to expiration of the Term and any holdover period under
Section 12.05 of the Lease, including without limitation the Lessee's
failure to fully discharge all of its obligations under the Lease or the
other Operative Agreements;
(iii) is a Tax, whether or not the Lessee is required to indemnify
therefor pursuant to Article 8 hereof or pursuant to the Tax Indemnity
Agreement;
(iv) is a cost or expense required to be paid by the Owner
Participant or its permitted transferees (and not by the Lessee) pursuant
to this Agreement or any other Operative Agreement (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 terms and
provisions required to be observed and performed by it, in this Agreement,
the Purchase Agreement Assignment, the Lease, the Indenture, the Trust
Agreement or any other Operative Agreement to which it is a party unless
such breach or default shall be a result of the breach or default of any of
the foregoing by the Lessee or another Indemnitee;
(vi) [reserved];
(vii) in the case of the Owner Participant, Lessor's Liens to the
extent attributable to the Owner Participant; in the case of the Owner
Trustee, Lessor's Liens to the extent attributable to the Owner Trustee;
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,
to the extent attributable to the offer or sale by such Indemnitee after
the Certificate Closing Date of any interest in the Aircraft, the Lessor's
Estate or the Trust Agreement or any similar interest (including an offer
or sale resulting from bankruptcy or other proceedings for the relief of
debtors in which such Indemnitee is the debtor), unless in each case such
offer or sale shall occur (w) in connection with a Refinancing, (x) as a
result of exercise of remedies under Article 17 of 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
the Lease; or
(ix) which is incurred by 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 (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 hereof shall be an amount sufficient to restore the Indemnitee, on an
After-Tax Basis, to the same position such party would have been in had such
Expense not been incurred. If any Indemnitee actually realizes a permanent
Tax benefit by reason of the payment of such Expense paid or indemnified
against by the Lessee which was not considered in the computation thereof,
such Indemnitee shall promptly pay to the Lessee, but not before the Lessee
shall have made all payments theretofore due such Indemnitee under this
Agreement, the Tax Indemnity Agreement and any other Operative Agreement, an
amount equal to the lesser of (x) the sum of such Tax benefit plus any other
permanent Tax benefit actually realized by such Indemnitee as the result of
any payment made by such Indemnitee pursuant to this sentence and (y) the
amount of such payment pursuant to this Section 9.02 by the Lessee to such
Indemnitee plus the amount of any other payments by the Lessee to such
Indemnitee theretofore made pursuant to this Section 9.02 less the amount of
any payments by such Indemnitee to the Lessee theretofore made pursuant to
this Section 9.02 (and the excess, if any, of the amount described in clause
(x) above over the amount described in clause (y) above shall be carried
forward and applied to reduce pro tanto any subsequent obligations of the
Lessee to make payments pursuant to this Section 9.02), it being intended that
no Indemnitee should realize a net Tax benefit pursuant to this Section 9.02
unless the Lessee shall first have been made whole for any payments by it to
such Indemnitee pursuant to this Section 9.02; provided, however, that
notwithstanding the foregoing portions of this sentence, such Indemnitee shall
not be obligated to make any payment to the Lessee pursuant to this sentence
so long as an Event of Default shall have occurred and be continuing. Any
Taxes that are imposed on any Indemnitee as a result of the disallowance or
reduction of such Tax benefit referred to in the next preceding sentence in a
taxable year subsequent to the year of allowance and utilization by such
Indemnitee (including the expiration of any tax credit carryovers or
carrybacks of such Indemnitee that would not otherwise have expired) shall be
indemnifiable pursuant to the provisions of Section 8.01 hereof without regard
to Section 8.01(b) hereof.
Section 9.03. Subrogation. Upon the payment in full of any indemnity
pursuant to this Article 9 by the Lessee (but not earlier), the Lessee shall be
subrogated to any right of the Indemnitee, other than with respect to any of
such Indemnitee's insurance policies or in connection with any indemnity claim
the Person indemnified may have against any other Indemnitee in respect of the
matter against which such indemnity has been made.
Section 9.04. Notice and Payment. Each Indemnitee and the Lessee
shall give prompt written notice one to the other of any liability of which
such party has knowledge for which the Lessee is, or may be, liable under this
Article 9; provided, however, that failure to give such notice shall not
terminate any of the rights of the Indemnitees under this Article 9, except
(with respect to such Indemnitee) to the extent that the Lessee has been
materially prejudiced by the failure to provide such notice. Unless otherwise
provided in the Operative Agreements, any amount payable to an Indemnitee
pursuant to this Article 9 shall be paid within 30 days after receipt of a
written demand therefor from such Indemnitee accompanied by a written statement
describing in reasonable detail the basis for such indemnity and the
computation of the amount so payable.
Section 9.05. Refunds. If any Indemnitee shall obtain a recovery of
all or any part of any amount which the Lessee shall have paid to such
Indemnitee or for which the Lessee shall have reimbursed such Indemnitee under
this Article 9, and provided there shall not have occurred a Payment Default
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.
Section 9.06. Defense of Claims. The Lessee or its insurers shall
have the right (in each such case at the Lessee's sole expense) to investigate
or, provided that (i) the Lessee or its insurers shall not reserve the right
to dispute liability with respect to any insurance policies pursuant to which
coverage is sought, (ii) in the case of the Lessee, no Event of Default shall
have occurred and be continuing and (iii) the Lessee shall have first
acknowledged in writing to such Indemnitee the Lessee's obligation to
indemnify such Indemnitee hereunder in respect of such claim, defend any claim
covered by insurance for which indemnification is sought pursuant to this
Article 9 and each Indemnitee shall cooperate with the Lessee or its insurers
with respect thereto, and provided, further, the Lessee shall not be entitled
to assume and control the defense of any such claim if and to the extent such
Indemnitee reasonably objects to such control on the ground that an actual or
potential material conflict of interest exists where it is advisable for such
Indemnitee to be represented by separate counsel. Subject to the immediately
foregoing sentence, where the Lessee or the insurers under a policy of
insurance maintained by the Lessee undertake the defense of an Indemnitee with
respect to such a claim, no additional legal fees or expenses of such
Indemnitee in connection with the defense of such claim shall be indemnified
hereunder unless the fees or expenses were incurred at the written request of
the Lessee or such insurers. Subject to the requirement of any policy of
insurance applicable to a claim, an Indemnitee may participate at its own
expense at any judicial proceeding controlled by the Lessee or its insurers
pursuant to the preceding provisions, provided that such party's participation
does not, in the opinion of the independent counsel appointed by the Lessee or
its insurers to conduct such proceedings, interfere with such control; and
such participation shall not constitute a waiver of the indemnification
provided in this Section 9.06. No Indemnitee shall enter into any settlement
or other compromise with respect to any claim described in this Section 9.06
without the prior written consent of the Lessee, which consent shall not
unreasonably be withheld or delayed, unless such Indemnitee waives its right
to be indemnified under this Article 9 with respect to such claim.
Section 9.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 9 and the Lessee's obligations under any and all of them shall survive
the expiration or other termination of this Agreement, the Tax Indemnity
Agreement, the Trust Agreement, the Indenture, the Purchase Agreement
Assignment, the Lease and the other Operative Agreements but, as to such
indemnities, only with respect to losses, liabilities, obligations, damages,
penalties, claims, actions, suits, costs, Expenses and disbursements caused by
events occurring or existing (or fairly attributable to the Lessee's acts or
omissions) prior to or incurred in the process of (i) the return or
disposition of the Aircraft under Article 12 or Article 17 of the Lease, or
(ii) the termination of the Lease or the Indenture or, if later, the return of
the Aircraft.
Section 9.08. Effect of Other Indemnities. The Lessee's obligations
under the indemnities provided for in this Agreement shall be those of a
primary obligor whether or not the Person indemnified shall also be
indemnified with respect to the same matter under the terms of this Agreement,
the Lease, the Indenture, the Trust Agreement, or any other document or
instrument, and the Person seeking indemnification from the Lessee pursuant to
any provision of this Agreement may proceed directly against the Lessee
without first seeking to enforce any other right of indemnification.
Section 9.09. Interest. The Lessee will pay to each Indemnitee on
demand, to the extent permitted by applicable law, interest on any amount of
indemnity not paid when due pursuant to this Article 9 until the same shall be
paid, at the Past Due Rate.
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs. (a) Transaction
Costs. Except as otherwise provided in any amendment to this Agreement, the
Lessee (or the Owner Participant following a transfer of the Initial Owner
Participant's Beneficial Interest) shall pay all fees and expenses of the
following persons relating to the public offering of the Pass Through
Certificates contemplated by the Underwriting Agreement and related to the
transactions contemplated hereby on the Certificate Closing Date and the
Delivery Date: (i) the fees and expenses of counsel for the Owner Participant;
(ii) the fees and expenses of the transaction documentation counsel for the
Lessee and counsel for the Owner Trustee, the Indenture Trustee, the
Subordination Agent, the Pass Through Trustee, each Liquidity Provider, the LC
Bank 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, the LC Bank and
the Indenture Trustee including, without limitation, in connection with the
issuance of the Letter of Credit; (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 the
Registration Statement on Form S-3 bearing Registration No. 333-49411
(including any amendment thereto), 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, the LC Bank 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) of this paragraph shall be
allocable to the Owner Participant under this Agreement (1) to the extent
incurred specifically with respect to the Owner Participant, and (2) to the
extent such fees and expenses are incurred but are not specifically
attributable to the Owner Participant, in the proportion that the principal
amount of the Certificates bears to the total amount of the Pass Through
Certificates.
The Owner Participant, the Owner Trustee and the Lessee acknowledge
that the percentages for Basic Rent, Stipulated Loss Value and Termination
Value set forth in the Lease have been prepared assuming the aggregate amount
payable by the Owner Participant pursuant to the preceding paragraph is
1.4442105263% of the Purchase Price (the "Estimated Expense Amount");
provided, however, that in no event shall the sum of (i) the Owner
Participant's Commitment, (ii) the Transaction Costs to be paid by the Owner
Participant pursuant to Section 2.03 hereof, and (iii) the Transaction Costs
to be paid by the Owner Participant pursuant to Section 10.01 hereof exceed,
in the aggregate, $23,000,000, unless otherwise agreed by the Owner
Participant. To the extent that the payment by the Owner Participant of
Transaction Costs would cause the sum described in the immediately preceding
sentence to exceed $23,000,000, the Lessee shall be obligated to pay the
Transaction Costs constituting the First Chicago Leasing Corporation fee and
the Davis Polk & Wardwell fee to the extent of such excess and the Owner
Participant shall have no obligation to pay such excess.
(b) Continuing Expenses. The continuing fees, expenses and
disbursements (including reasonable counsel fees and expenses) of the entity
acting as Owner Trustee, as lessor under the Lease and as Owner Trustee under
the Trust Agreement with respect to the administration of the Lease and the
Lessor's Estate and the continuing fees, expenses and disbursements (including
reasonable counsel fees and expenses and initial fees relating to the
establishment of any replacement trustee) of the Indenture Trustee, as trustee
under the Indenture with respect to the administration of the Trust Indenture
Estate, 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, the Liquidity
Providers and the Pass Through Trustee all costs and expenses (including
reasonable legal fees and expenses) incurred by any of them in connection
with (a) any Default or Event of Default and any enforcement or collection
proceedings resulting therefrom, or (b) the enforcement of the obligations
of the Lessee hereunder or under the other Operative Agreements 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, including without limitation, any amendment,
supplement, waiver or consent resulting from any work-out, restructuring or
similar proceeding relating to the performance or nonperformance by the
Lessee of its obligations under the Operative Agreements or (c) any
amendment, supplement, waiver or consent (whether or not entered into)
under this Agreement, the Lease, the Indenture, the Certificates, the Tax
Indemnity Agreement, the Purchase Agreement Assignment or any other
Operative Agreement or document or instrument delivered pursuant to any of
them, which amendment, supplement, waiver or consent is required by any
provision of any Operative Agreement or is requested by the Lessee or
necessitated by the action or inaction of the Lessee; provided, however,
that the Lessee shall not be responsible for fees and expenses incurred in
connection with the offer, sale or other transfer (whether pursuant to
Article 5 of the Trust Agreement or otherwise) by the Owner Participant or
the Owner Trustee after the Certificate Closing Date of any interest in the
Aircraft, the Lessor's Estate or the Trust Agreement or any similar
interest (and the Owner Participant shall be responsible for all such fees
and expenses), unless such offer, sale or transfer shall occur (A) during a
period when an Event of Default has occurred and is continuing under the
Lease, (B) during a period following an Event of Loss or (C) in connection
with the termination of the Lease or action or direction of the Lessee
pursuant to Section 4.02 or Article 10 of the Lease; and
(ii) to pay the fees, costs and expenses of all appraisers involved
in an independent appraisal of the Aircraft to the extent required under
Section 4.03 of the Lease.
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee. (a)
Resignation and Removal. The Owner Trustee or any successor Owner Trustee may
resign or may be removed by the Owner Participant, and a successor Owner
Trustee may be appointed 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 satisfactory to the Lessee, the Owner
Participant, the Pass Through Trustee and the Indenture Trustee whereby such
successor Owner Trustee confirms that it shall be deemed a party to this
Agreement, the Trust Agreement, the Lease, the Lease Supplement, the
Purchase Agreement Assignment, the 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 appoint
promptly a successor Owner Trustee meeting the requirements of Section
11.01(b) hereof in the event the Owner Participant has knowledge that the
Owner Trustee at any time shall not be a Citizen of the United States.
(d) Revocation. The Owner Participant agrees not to revoke and
terminate the Trust Agreement except in accordance with Section 4.01(a) of the
Trust Agreement, as in effect on the date hereof or as amended in accordance
with the terms of the Operative Agreements.
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant. The Owner
Participant shall have no obligation or duty to the Lessee or to any Holder
with respect to the transactions contemplated by this Agreement, except those
obligations or duties expressly set forth in this Agreement, the Trust
Agreement, the Tax Indemnity Agreement, the Bills of Sale, the Lease or any
other Operative Agreement to which the Owner Participant is a party and the
Owner Participant shall not be liable for the performance by any party hereto
of such other party's obligations or duties hereunder. Under no circumstances
shall the Owner Participant as such be liable to the Lessee, nor shall the
Owner Participant be liable to any Holder, for any action or inaction on the
part of the Owner Trustee or the Indenture Trustee in connection with this
Agreement, the Indenture, the Lease, the Trust Agreement, the Purchase
Agreement Assignment, any other Operative Agreement, the ownership of the
Aircraft, the administration of the Lessor's Estate or the Trust Indenture
Estate or otherwise, whether or not such action or inaction is caused by the
willful misconduct or gross negligence of the Owner Trustee or the Indenture
Trustee.
Section 12.02. Interest of Holders of Certificates. A Holder of a
Certificate shall have no further interest in, or other right with respect to,
the Trust Indenture Estate when and if the principal and interest on all
Certificates held by such Holder and all other sums payable to such Holder
under this Agreement, under the Indenture and under such Certificates shall
have been paid in full.
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents. The Lessee
hereby consents in all respects to the execution and delivery of the Trust
Agreement, 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 Trust Agreement, the Indenture, the Intercreditor Agreement,
the Liquidity Facilities or the Certificates, except that prior to the
occurrence and continuance of an Event of Default, no section of the Indenture,
the Trust Agreement, the Intercreditor Agreement or 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 Indenture Trustee and the Owner Participant and that, except as otherwise
provided in the Indenture, upon an Indenture Event of Default, the Indenture
Trustee may act as the Lessor under the Lease to the exclusion of the Owner
Trustee. The Lessee further agrees to deliver to the Indenture Trustee and
the Owner Participant a copy of each notice, statement, request, report or
other communication given or required to be given to the Owner Trustee under
the Lease.
Section 13.03. Pass Through Trustee's and Subordination Agent's
Acknowledgment. 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 8.02 thereof regarding the
rights of the Owner Participant to purchase the Certificates under
circumstances specified therein.
ARTICLE 14
NOTICES
Section 14.01. Notices. All notices, demands, declarations and other
communications required by this Agreement shall be in writing and shall be
deemed received (a) if given by telecopier, when transmitted and the
appropriate telephonic confirmation received if transmitted on a Business Day
and during normal business hours of the recipient, and otherwise on the next
Business Day following transmission, (b) if given by certified mail, return
receipt requested, postage prepaid five Business Days after being deposited in
the United States mail and (c) if given by FedEx service (or, if a Default or
Event of Default shall have occurred and be continuing, by other comparable
courier service), when received or personally delivered, addressed:
(a) If to the Lessee, to its office at 2007 Corporate Avenue,
Memphis, Tennessee 38132, Attention: Vice President and Treasurer with a
copy to Senior Vice President and General Counsel at 1980 Nonconnah
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 its office at 225
Asylum Street, Goodwin Square, Hartford, Connecticut 06103, Attention:
Corporate/Muni Administration, facsimile (860) 244-1889 with a copy to
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 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
(d) If to a Liquidity Provider, to its office at Palmengartenstrasse
5-9, D-60325 Frankfurt am Main, Germany, Attention: Head of Aircraft Finance
Department KIII b 3, telephone 011-49-69-7431-0, facsimile
011-49-69-7431-2944; 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 three refinancings, in whole but not in part, of the
Certificates prior to the end of the Basic Term (a "Refinancing"), provided,
that, such Refinancing may not occur prior to the fifth anniversary of the
Refunding Date. Such Refinancings may be placed in either the private or
public markets and shall be denominated in United States dollars (or in any
other foreign currency so long as there is no foreign currency risk to the
Owner Participant), and shall be on terms that do not materially adversely
affect the Owner Participant. The Owner Participant agrees to negotiate
promptly in good faith to conclude an agreement with the Lessee as to the
terms of any such Refinancing transaction (including the terms of any debt to
be issued in connection with such refinancing and the documentation to be
executed in connection therewith). Without the consent of the applicable
Owner Participant, the prospectus and other offering materials relating to any
Refinancing in the form of a public offering shall not identify the Owner
Participant and shall not include any financial statements of the Owner
Participant or any Affiliate thereof. In connection with any such Refinancing
in the form of a public offering, the Lessee shall indemnify the Owner
Participant for any liabilities under federal, state or foreign securities
laws resulting from such offering. The aggregate principal amount of the new
Certificates issued in connection with each Refinancing shall be the same as
the aggregate principal amount outstanding on the Certificates being
refinanced.
(b) Notwithstanding anything herein to the contrary, no Refinancing
will be permitted unless the Owner Participant shall have received at least 10
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 the relevant documentation and the Owner
Participant shall have determined in good faith that neither it nor the Owner
Trustee shall suffer any loss or expense or bear any increased risk as a
result of such Refinancing (including, without limitation, any risk with
respect to taxes or other adverse consequences to the Owner Participant
including the application of Revenue Procedures 75-21 and 75-28 and Section
467 of the Code) for which it has not been or will not have been indemnified
by the Lessee in a manner reasonably satisfactory to the Owner Participant.
Prior to the consummation of any Refinancing pursuant to this Section
15.01, the Owner Participant and the Lessee shall agree upon a schedule
setting forth each installment of Basic Rent, Stipulated Loss Values and
Termination Values payable pursuant to the Lease as a result of the
Refinancing in accordance with Section 3.04 of the Lease, and thereafter the
amounts set forth in such schedule shall become the amounts payable under the
Lease. Upon the consummation of the Refinancing, the evidence of indebtedness
issued pursuant to the Refinancing shall be considered "Certificates" for
purposes of this Agreement, the Lease and the Indenture.
(c) Notwithstanding the foregoing, the Owner Participant shall have
no obligation to proceed with any Refinancing transaction as contemplated by
this Section 15.01 unless the Lessee indemnifies the Owner Trustee and the
Owner Participant by agreement in form and substance satisfactory to each of
them, for any liability, obligation (other than the obligation to pay
principal and interest in respect of the refinanced indebtedness), cost or
expense (including, without limitation, reasonable attorneys' fees and
Make-Whole Premium and any other premiums or other amounts due under the
Indenture), including any adverse tax consequences or impact, related to or
arising out of any such Refinancing transaction, except to the extent of
amounts included in Transaction Costs and payable by the Owner Participant as
provided herein.
(d) Each party agrees to take or cause to be taken all requested
action, including, without limitation, the execution and delivery of any
documents and instruments, including, without limitation, amendments or
supplements to the Lease, which may be reasonably necessary or desirable to
effect such Refinancing, including, in the case of the Owner Participant,
direction to the Owner Trustee by the Owner Participant to prepay the
Certificates then outstanding; provided, however, that such Refinancing shall
be subject to the satisfaction of each of the following conditions:
(i) Payment of principal, accrued interest, Make-Whole Premium and
breakage costs, if any, and all other sums due and owing on the Certificates
payable under the Indenture;
(ii) Payment in full of all other amounts then due and owing by the
Lessee under this Agreement, the Indenture, the Lease, the Trust Agreement,
and the Certificates then outstanding shall have been made by the Lessee;
(iii) Such party shall have received such opinions of counsel
(including, without limitation, an opinion received by the Owner
Participant from independent tax counsel reasonably satisfactory to the
Lessee that such Refinancing shall not result in any adverse tax
consequences to the Owner Participant, unless the Lessee shall have agreed
to provide an indemnity in respect thereof reasonably satisfactory in form
and substance to the Owner Participant), certificates and other documents
as it may reasonably request, each in form and substance reasonably
satisfactory to such party;
(iv) All authorizations, approvals and consents which in the
reasonable judgment of the Owner Participant are necessary for such
Refinancing shall have been obtained;
(v) The Lessee shall have provided or agreed to provide to the Owner
Participant, as Supplemental Rent under the Lease, sufficient funds to pay
any breakage costs, Make-Whole Premium and any other amounts due under the
Indenture;
(vi) The satisfaction or waiver by each other party to this
Agreement of the conditions set forth in this Section 15.01 to such party's
obligations under this Section 15.01;
(vii) No Event of Default shall have occurred and be continuing or
would occur immediately after giving effect to such Refinancing; and
(viii) The documentation relating to such Refinancing shall permit the
Lessee to place the Refinancing loan certificates with an ERISA Plan. The
Lessee shall not indemnify the Owner Participant, or any of the Owner
Participant's Affiliates, assigns, officers, directors, employees, agents
and servants, for any Taxes, within the meaning of Article 8 hereof, or
Expenses, within the meaning of Article 9 hereof, arising under or in
connection with any "prohibited transaction" within the meaning of Section
406 of ERISA or Section 4975 of the Code, if the sole underwriter or the
manager or co-manager of the underwriting syndicate or the selling or
placement agent of the Refinancing loan certificates has an exemption from
the prohibited transaction rules under Section 406 of ERISA and Section 4975
of the Code with respect to pass through certificates, such as Prohibited
Transaction Exemption 90-24 or any other comparable exemption, unless such
exemption is not available or is not valid with respect to such Refinancing
loan certificates. If such exemption is not available or is not valid,
then the Lessee shall indemnify the Owner Participant pursuant to, and to
the extent provided for, under Articles 8 and 9 hereof for Taxes and
Expenses arising under or in connection with any "prohibited transaction",
within the meaning of Section 406 of ERISA or Section 4975 of the Code,
resulting from such placement.
ARTICLE 16
[RESERVED]
ARTICLE 17
MISCELLANEOUS
Section 17.01. [Reserved].
Section 17.02. Collateral Account. (a) The Indenture Trustee shall
notify the Owner Trustee and the Lessee of any losses incurred on the
Specified Investments in the Collateral Account promptly upon the realization
thereof, as well as any fees, commissions and other costs, Taxes (other than
income taxes) and expenses, if any, incurred by the Indenture Trustee in
connection with its administration of the Collateral Account (collectively,
"Losses"). Promptly upon receipt of such notification but, in any event, no
later than the earlier of the Delivery Date (or, if later, the last day of any
investment period referred to in Section 2.14(b) of the Indenture during which
the Delivery Date occurs) and the 15th day after the Cut-Off Date, the Lessee
shall pay to the Subordination Agent, on behalf of the Owner Trustee, an
amount equal to such Losses, provided, however, that on the Delivery Date the
Lessee shall pay any such Losses to the Indenture Trustee to the extent that
the Debt Portion exceeds the amount in the Collateral Account on such date.
In addition to the foregoing, if Series C Certificates are outstanding
following the Delivery Date and are required to be prepaid on the Series C
Prepayment Date, the Lessee shall pay to the Subordination Agent, on behalf of
the Owner Trustee, promptly upon receipt of such notification but in any event
no later than the Series C Prepayment Date, an amount equal to any additional
unreimbursed Losses.
(b) The Lessee shall pay to the Subordination Agent, on behalf of the
Owner Trustee (A) on each Payment Date prior to the Delivery Date an amount
equal to the aggregate amount of interest accrued on the Certificates from
(and including) the Certificate Closing Date or previous Payment Date, as the
case may be, to, but excluding, such Payment Date, (B) on the first Payment
Date subsequent to the Delivery Date, interest accrued on the Certificates
from and including the last Payment Date (or, if none, the Certificate Closing
Date), to, but excluding, the Delivery Date and (C) on each Payment Date after
the Delivery Date but prior to the Series C Prepayment Date, interest accrued
on the Series C Certificates, if any, outstanding after the Delivery Date
which are required to be prepaid on such Series C Prepayment Date pursuant to
Section 2.03(b) hereof, in each case to the extent such interest due is in
excess of any earnings on investments in the Collateral Account for the period
of accrual of such interest. 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.
(c) If the Aircraft has not been purchased by the Owner Trustee on the
Delivery Date, the Lessee agrees to pay to the Subordination Agent, on behalf
of the Owner Trustee, on the 15th day following the Cut-Off Date the excess,
if any, of the amounts payable under Section 6.02(b)(1) of the Indenture over
the amounts released from the Collateral Account under Section 2.16 of the
Indenture.
(d) If any Series C Certificates outstanding after the Delivery Date
are subject to prepayment on the Series C Prepayment Date pursuant to Section
6.02(a)(viii) of the Indenture, the Lessee agrees to pay to the Subordination
Agent, on behalf of the Owner Trustee, on the Series C Prepayment Date the
excess, if any, of the amounts payable under Section 6.02(b)(1) of the
Indenture over the amounts released from the Collateral Account under Section
2.16 of the Indenture.
(e) All amounts payable by the Lessee pursuant to this Section 17.02
shall be paid to the Indenture Trustee or the Subordination Agent, as the case
may be, at its principal office at 79 South Main Street, Salt Lake City, Utah,
84111, Attention: Corporate Trust Department, or as the Indenture Trustee or
the Subordination Agent, as the case may be, may otherwise direct within the
United States, by wire transfer of immediately available funds in U.S. Dollars
no later than 10:30 a.m., New York City time, on the due date of such payment.
(f) Prior to the date on which the Lessee shall be obligated to make
any payment to the Subordination Agent pursuant to this Section 17.02, the
Subordination Agent shall deliver a written notice to the Lessee specifying
the amount of such payment with respect to each series of Equipment Trust
Certificates.
(g) In the event that (i) any portion of any payment to the
Subordination Agent, the Pass Through Trustee or any holder of any Pass
Through Certificate which is funded from a Specified Shortfall Payment (as
defined below) shall be avoided as a preference under Section 547 of the
Bankruptcy Code and the Subordination Agent, the Pass Through Trustee or any
holder of any Pass Through Certificate becomes liable for such portion or (ii)
(x) the Lessee shall be the subject of a voluntary or involuntary proceeding
under Chapter 7 or Chapter 11 of the Bankruptcy Code on a date less than
fifteen days prior to the expiration date of the Letter of Credit (after
giving effect to any extensions of such expiration date) and (y) any portion
of any payment to the Subordination Agent, the Pass Through Trustee or any
holder of any Pass Through Certificate which is funded from a Specified
Shortfall Payment could be avoided as a preference under Section 547 of the
Bankruptcy Code and the Subordination Agent, the Pass Through Trustee or any
holder of any Pass Through Certificate could become liable for such portion,
the Subordination Agent shall be entitled to draw under the Letter of Credit
an amount equal to the aggregate amount of such liability up to the Maximum
Stated Amount. The Letter of Credit shall expire no earlier than the date 91
days after the later of the last Specified Shortfall Payment payable under
this Section 17.02 and the last "Specified Shortfall Payment" payable under
Section 17.02 of any Related Participation Agreement. In the event of any
drawing under the Letter of Credit pursuant to clause (ii) of this subsection
(g), the proceeds of such drawing shall be applied in accordance with the
Intercreditor Agreement. For purposes of this subsection (g), "Specified
Shortfall Payment" shall mean any payment by the Lessee pursuant to this
Section 17.02 (i) in respect of any Losses which occur as a result of delivery
of the Aircraft on a date other than March 15, 1999, or (ii) in respect of
interest accrued for any applicable period on any Certificate in excess of any
earnings on investments in the Collateral Account for such period.
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 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 each of the Pass Through Trustee and the Subordination
Agent, in its capacity as a party to this Agreement and not as a Holder, shall
not be required to modify, amend or supplement this Agreement or to give any
consent, waiver, authorization or approval with respect to this Agreement
under the circumstances in which the consent of the Indenture Trustee would
not be required for such modification, amendment, supplement, consent, waiver
or approval in accordance with Section 8.01(b) of the Indenture, provided that
the Pass Through Trustee shall be entitled to receive an Opinion of Counsel
(as defined in the Pass Through Agreement) necessary, in its sole discretion,
to establish that the Indenture Trustee's consent would not be required under
such circumstances.
Section 17.05. Captions. The table of contents preceding this
Agreement and the headings of the various Articles and Sections of this
Agreement are for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions of this Agreement.
Section 17.06. Successors and Assigns. The terms of this Agreement
shall be binding upon, and shall inure to the benefit of, the Lessee and its
successors and permitted assigns, the Subordination Agent and its successors
and permitted assigns, the Owner Participant and its successors and permitted
assigns, the Owner Trustee and its successors as Owner Trustee (and any
additional owner trustee appointed), the Indenture Trustee and its successors
as Indenture Trustee (and any additional indenture trustee appointed) under
the Indenture, the Pass Through Trustee and its successors as Pass Through
Trustee (and any additional pass through trustee appointed) and the LC Bank
and its successors and assigns.
Section 17.07. Concerning the Owner Trustee, 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 the Owner Participant on account of (ii)
above, then the Indenture Trustee, as the case may be, shall promptly refund
to the Owner Participant such Recourse Amount. For purposes of this Section
17.10, "Recourse Amount" means the amount by which the portion of such payment
by the Owner Participant on account of clause (ii) above received by the
Indenture Trustee exceeds the amount which would have been received by the
Indenture Trustee if the Owner Participant had not become subject to the
recourse liability referred to in (ii) above. Nothing contained in this
Section shall prevent the Indenture Trustee from enforcing any individual
obligation (and retaining the proceeds thereof) of the Owner Participant under
this Agreement or any other Operative Agreement to the extent herein or
therein provided, for which the Owner Participant has expressly agreed by the
terms of this Agreement to accept individual responsibility.
Section 17.11. GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS AND IS BEING DELIVERED IN NEW
YORK.
Section 17.12. Section 1110 Compliance. The parties hereto agree
that the transactions contemplated by the Operative Agreements are expressly
intended to be, shall be and should be construed so as to be entitled to the
benefits and protection of Section 1110 of the Bankruptcy Code.
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 (on behalf
of itself and each of its Affiliates, agents, directors, officers, employees
and representatives) to use reasonable precautions to keep confidential, in
accordance with its customary procedures for handling confidential information
of this nature, any non-public information supplied to it pursuant to this
Agreement which is identified by the Person supplying the same as being
confidential at the time the same is delivered to such party, provided that
nothing herein shall limit the disclosure of any such information (i) to the
extent required by statute, rule, regulation or judicial process, (ii) to
counsel for any of the parties hereto, (iii) to bank examiners, auditors,
insurance regulators, accountants or similar regulatory authorities, (iv) in
connection with any litigation to which any one or more of the parties hereto
is a party relating to the transactions contemplated hereby or by any of the
Operative Agreements, (v) to 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 an agreement in writing to be bound by the provisions of this
Section 18.01 or (vii) in the case of the Owner Participant or the Owner
Trustee (in its individual or trust capacity) to the Owner Trustee (in its
individual or trust capacity) or to the Owner Participant, as the case may be.
IN WITNESS WHEREOF, the parties have caused this Participation
Agreement to be executed by their respective, duly authorized officers and this
Participation Agreement shall be effective this ____ day of _____, 1998.
LESSEE:
FEDERAL EXPRESS CORPORATION
By:__________________________________________
Name: Robert D. Henning
Title: Vice President and Treasurer
INITIAL OWNER PARTICIPANT:
FEDERAL EXPRESS CORPORATION
By:__________________________________________
Name: Robert D. Henning
Title: Vice President and Treasurer
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
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
SCHEDULE I
CERTIFICATE INFORMATION
1. Federal Express Corporation 1998-1 Pass Through Trust Class A
Federal Express Corporation Trust No. N620FE
--------------------------------------------
Interest Rate: 6.720%
Maturity: January 15, 2022
Principal Amount: $43,086,000
2. Federal Express Corporation 1998-1 Pass Through Trust Class B
Federal Express Corporation Trust No. N620FE
--------------------------------------------
Interest Rate: 6.845%
Maturity: January 15, 2019
Principal Amount: $16,157,000
3. Federal Express Corporation 1998-1 Pass Through Trust Class C
Federal Express Corporation Trust No. N620FE
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Interest Rate: 7.020%
Maturity: January 15, 2016
Principal Amount: $16,757,000
SCHEDULE II
DEFINITIONS
(FEDERAL EXPRESS CORPORATION TRUST NO. N620FE)
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement,
the Series Supplements, 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 Section 13.01(c)(i) of the
Lease.
Adjustment Date. The date of any increase or decrease in the
principal amount of the Series C Certificates pursuant to Section 2.19 of the
Indenture.
Aeronautics Authority. As appropriate, the Federal Aviation
Administration and/or the Administrator of the Federal Aviation
Administration, any successor to the former United States Civil Aeronautics
Board, or any Person, governmental department, bureau, commission or agency
located in the United States succeeding to the functions of any of the
foregoing.
Affidavits. The affidavits of citizenship of the Owner Trustee
and the Owner Participant.
Affiliate. With respect to any Person, any other Person directly
or indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant and SSB shall not be deemed to be an
Affiliate of any of the Owner Trustee, the Lessor or 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 reduction in Taxes that would result 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 as provided in the Participation Agreement and to be leased under the
Lease (or any permitted substitute airframe thereunder) together with three
Engines (whether each is an initial Engine or a Replacement Engine) whether or
not any of such initial or Replacement Engines may from time to time be
installed on such Airframe or may be installed on any other airframe or on any
other aircraft, including any aircraft substituted pursuant to Section 11.03
of the Lease. Subject to Section 2.04 of the Participation Agreement, prior
to delivery of the initial Lease Supplement, references in the Operative
Agreements (including Section 3.03 of the Participation Agreement) to Aircraft
shall mean the McDonnell Douglas MD-11F airframe bearing FAA Registration
Number N620FE and Manufacturer's serial number 48791, together with three
Pratt & Whitney 4462 engines.
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 initially and
manufacturer's serial number specified in the initial Lease Supplement,
including (i) all Parts in respect thereof and (ii) any Replacement Airframe
which may be substituted pursuant to Section 11.03 of the Lease and any
Pre-Delivery Replacement Airframe which may be substituted pursuant to Section
2.04 of the Participation Agreement.
Ancillary Agreement. Any written agreement of the Lessee to which
the Lessor is a party or to which the Lessor has consented in writing entered
into on or prior to the Delivery Date or any date thereafter in connection
with the transactions contemplated by the Operative Agreements, as such
agreement may be amended and supplemented from time to time with the consent
of the Lessor and delivered to the Owner Trustee, the Indenture Trustee, the
Pass Through Trustee, the Subordination Agent, each Liquidity Provider and the
Owner Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal Express
Corporation Trust No. N620FE), 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 fair market value
letter to the Lessee) on the Delivery Date pursuant to Section 4.02(h) 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.
Basic Rent. The 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 March 15, 2024, 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. Any day on which commercial banks are not
authorized or required to close in New York, New York, 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 is discharged, Boston, Massachusetts.
Certificate Closing Date. The date of the closing with respect to
the purchase of Certificates by the Pass Through Trustee contemplated by
Section 2.01(b) of the Participation Agreement.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N620FE), 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. Kreditanstalt fur Wiederaufbau, a
corporation organized under the public law of the Federal Republic of Germany
together with any Replacement Liquidity Provider (as defined in the
Intercreditor Agreement).
Class B Liquidity Provider. Kreditanstalt fur Wiederaufbau, a
corporation organized under the public law of the Federal Republic of Germany
together with any Replacement Liquidity Provider (as defined in the
Intercreditor Agreement).
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
acquisition of Certificates by the Pass Through Trustee.
Code. Except as otherwise provided, the Internal Revenue Code of
1986, as amended from time to time.
Collateral Account. The deposit account established and maintained
pursuant to Section 2.13 of the Indenture.
Collateral Agreement. The Collateral Account Control Agreement
(Federal Express Corporation Trust No. N620FE) dated as of June 15, 1998, 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 as provided in
Section 3.02 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. June 13, 1999.
Debt Portion. The amount specified as such on Schedule IV to the
Participation Agreement.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which, with the lapse of time or
the giving of notice, or both, would constitute an Event of Default.
Delivery Date. The date on which the Aircraft is delivered and
sold by 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 3.03(c) of the Participation Agreement.
EBO Price. Has the meaning set forth 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 Pratt & Whitney 4462 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), 10.02(c), 10.03, 11.03, 11.04 or 12.02 of
the Lease, together with all Parts related thereto. Except as otherwise
provided, at such time as a Replacement Engine shall be so substituted and the
Engine for which the substitution is made shall be released from the Lien of
the Indenture, such replaced Engine shall cease to be an "Engine" under the
Lease. The term "Engines" means, as of any date of determination, all Engines
then leased to the Lessee pursuant to the Lease.
Engine Consent and Agreement. The Engine Consent and Agreement
dated as of June 15, 1998, executed by the Engine Manufacturer.
Engine Manufacturer. Pratt & Whitney, a Connecticut corporation.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. An employee benefit plan subject to Title I of ERISA,
or an individual retirement account or plan subject to Section 4975 of the
Code.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of
the Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use
(A) for a period in excess of 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 to the end of the
Term, if less (unless such loss constitutes an Event of Loss under clause (ii)
of this definition) or (B) for a period in excess of 60 days due to the
destruction, damage beyond economic repair or rendition of such property
permanently unfit for normal use by Lessee for any reason whatsoever; (ii) any
damage to such property which results in an insurance settlement with respect
to such property on the basis of a total loss, or constructive or compromised
total loss; (iii) (1) condemnation, confiscation or seizure of, or requisition
of title to such property by the Government, any foreign government or
purported government or any agency or instrumentality thereof, or (2)
condemnation, confiscation, or seizure of, or requisition or taking of, use of
such property (A) by a foreign government or instrumentality or agency of any
such foreign government, for a period in excess of 180 days (or such shorter
period ending on the earlier of the expiration of the Term or on the date on
which an insurance settlement with respect to such property on the basis of a
total loss or constructive or compromised total loss shall occur) or (B) by
the Government for a period extending beyond the Term, provided that no Event
of Loss shall be deemed to have occurred, and the Term shall be extended
automatically for a period of six months (or the date of return of the
Aircraft, if shorter, so long as the Lessor receives at least six months
notice of such date of return) beyond the end of the Term in the event that
the Aircraft, the Airframe or any Engine is requisitioned by the Government
pursuant to an activation as part of the CRAF Program described in Section
7.02(a)(iv) of the Lease; and (iv) as a result of any law, rule, regulation,
order or other action by the Aeronautics Authority or other governmental body
having jurisdiction, the use of the Aircraft or Airframe in the normal course
of air transportation of cargo shall have been prohibited by virtue of a
condition affecting all 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. The date of such Event of Loss shall be (s) the 31st day or the
91st day, as the case may be, following loss of such property or its use due
to theft or disappearance (or the end of the Term, if earlier); (t) the 61st
day following the date of any destruction, damage beyond economic repair or
rendition of such property permanently unfit for normal use; (u) the date of
any insurance settlement on the basis of a total loss or constructive or
compromised total loss; (v) the date of any condemnation, confiscation,
seizure or requisition of title of such property; (w) the 181st day following
condemnation, confiscation, seizure or requisition for use of such property by
a foreign government referred to in clause (iii)(2)(A) above (or the end of
the Term or the date of any insurance settlement described therein, if earlier
than such 181st day); (x) the last day of the Term in the case of requisition
for use of such property by the Government; (y) the last day of the 6 month or
12 month period, referred to in clause (iv) above. An Event of Loss with
respect to the Aircraft shall be deemed to have occurred if any Event of Loss
occurs with respect to the Airframe.
Excepted Payments. Collectively, (i) indemnity or other payments
(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) maintained in accordance with
the provisions of 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) the payment of
incremental out-of-pocket expenses of the Owner Trustee, the Owner Participant
or their respective authorized representatives payable by the Lessee under
Section 6.03(b) of the Participation Agreement or Section 14.01 of the Lease
following any reregistration of the Aircraft and (vii) proceeds of, and any
right to demand, collect or otherwise receive and enforce the payment of any
amount described in clauses (i) through (vii) above.
Expense; Expenses. Have the meaning specified in Section 9.01(a)
of the Participation Agreement.
FAA. The United States Federal Aviation Administration and any
successor agency or agencies thereto.
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 such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and
equal in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease. Fair Market Rental shall be determined
in accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and
equal in amount to, the value which would be obtained in an arm's-length
transaction between an informed and willing purchaser under no compulsion to
buy and an informed and willing seller unaffiliated with such purchaser and
under no compulsion to sell, assuming that the Aircraft (or other property) is
unencumbered by the Lease. Unless otherwise provided in the applicable
provisions of any Operative Agreement, 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. Fair Market Value shall be determined in accordance with the
provisions of Section 4.03 of the Lease.
Federal Aviation Administration. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
FedEx. Federal Express Corporation.
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.
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 Owner Participant, the Indenture Trustee, in its
individual capacity and as trustee, the Subordination Agent, in its individual
capacity and in its capacity as Subordination Agent, each Liquidity Provider,
the Owner Participant Guarantor, if any, 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. N620FE), dated as of June 15, 1998, between the
Lessor and the Indenture Trustee, as supplemented by the Indenture and
Security Agreement Supplement.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N620FE) to be dated the Delivery Date, 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 imposed against
the Indenture Trustee in its individual capacity against which the Lessee has
not indemnified (and is not obligated to indemnify) the Indenture Trustee in
such capacity.
Independent 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
June 15, 1998, 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.
LC Bank. Kreditanstalt fur Wiederaufbau, a corporation organized
under the public law of the Federal Republic of Germany.
Last Cut-Off Date. The later of (i) the Cut-Off Date and (ii) the
"Cut-Off Date" (as defined in the relevant Related Indenture) for the last
Related Aircraft to be delivered.
Last Delivery Date. The later of (i) the Delivery Date and (ii)
the "Delivery Date" (as defined in the relevant Related Indenture) for the
last Related Aircraft to be delivered.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N620FE) dated as of June 15, 1998, 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. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N620FE) to be dated the Delivery Date, substantially in
the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending
at the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation.
Lessee Documents. Has the meaning set forth in Section 6.01(b) of
the Participation Agreement.
Lessee Shortfall. Has the meaning set forth in Section 3.02(a) 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 Purchase Agreement, the Purchase Agreement Assignment, the
Consent and Agreement, the Engine Consent and Agreement, any Ancillary
Agreement, 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), and all
other property of the Owner Trustee purportedly subjected to the Lien of the
Indenture by the Granting Clause thereof; provided that in no event shall
"Lessor's Estate" include any Excepted Payment.
Lessor's Liens. Liens 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, and, in the case of the Lessor
in its individual capacity, arising from its gross negligence or willful
misconduct or expressly prohibited under the Operative Agreements and any act
or omission of the Owner Participant which is in violation of any of the terms
of the Operative Agreements, (iii) Taxes or Expenses imposed against the
Lessor, in its individual capacity or as Owner Trustee, the 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.
Letter of Credit. The Irrevocable Standby Letter of Credit, dated
the Certificate Closing Date, in the form of Exhibit F to the Participation
Agreement and with a Maximum Stated Amount equal to the amount specified under
"Letter of Credit Maximum Stated Amount" on Schedule IV to the Participation
Agreement, from the LC Bank to and for the benefit of the Subordination Agent.
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 1.1 of
the Intercreditor Agreement.
Liquidity Provider. Kreditanstalt fur Wiederaufbau, a corporation
organized under the public law of the Federal Republic of Germany together
with any Replacement Liquidity Provider (as defined in the Intercreditor
Agreement).
Losses. Has the meaning specified in Section 17.02(a) of the
Participation Agreement.
Loss Payee. Has the meaning specified in Section 13.02(b)(i) of
the Lease.
Majority in Interest of Certificate Holders. As of a particular
date of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. With respect to any Certificate, the amount
(as determined by an Independent Investment Banker reasonably acceptable to the
Indenture Trustee and the Owner Participant) by which (i) the present value of
the remaining scheduled payments of principal and interest to the Maturity of
such Certificate computed by discounting such payments on a semiannual basis
on each Payment Date (assuming a 360-day year of twelve 30-day months) using a
discount rate equal to the Treasury Yield exceeds (ii) the outstanding
principal amount of such Certificate plus accrued interest.
Mandatory Document Terms. The terms set forth on Schedule V to the
Participation Agreement.
Mandatory Economic Terms. The terms set forth on Schedule VI to
the Participation Agreement.
Manufacturer. McDonnell Douglas Corporation, a wholly-owned
subsidiary of The Boeing Company.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Maximum Stated Amount. The amount specified under "Letter of
Credit Maximum Stated Amount" on Schedule IV to the Participation Agreement.
Moody's. Moody's Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate equal to the Debt Rate per annum compounded semi-annually.
Non-U.S. Person. Any Person other than a U.S. Person.
Obsolete Parts. Parts which 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 Purchase Agreement, the Purchase Agreement
Assignment, the Consent and Agreement, the Engine Consent and Agreement, the
Lease, the Lease Supplement, the Owner Participant Guaranty, if any, the Owner
Trustee Guaranty, if any, any Ancillary Agreement entered into by or with the
written consent of the Indenture Trustee, which by its terms is an Operative
Agreement, the Certificates outstanding at the time of reference, the
Indenture, the Indenture and Security Agreement Supplement, the Tax Indemnity
Agreement, each Liquidity Facility, the Intercreditor Agreement, the
Collateral Agreement, the Letter of Credit and the Reimbursement 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.
Other Indentures. Collectively, the Trust Indenture and Security
Agreement for each of Federal Express Corporation Trust Nos. N585FE, N676FE,
N677FE, N678FE, N679FE, N680FE, N681FE, N682FE, N621FE and N623FE, each dated
as of June 15, 1998, between State Street Bank and Trust Company of
Connecticut, National Association, as owner trustee and First Security Bank,
National Association, as indenture trustee.
Outstanding. When used with respect to Certificates, as of the
date of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary
amount has been theretofore deposited with the Indenture Trustee
in trust for the Holders of such Certificates pursuant to Section
14.01 of the Indenture; provided, that if such Certificates are to
be prepaid, notice of such prepayment has been duly given pursuant
to the Indenture or provision therefor satisfactory to the
Indenture Trustee has been made; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article
II of the Indenture.
Outstanding C Account. The collateral account established and
maintained under a Related Indenture relating to an undelivered aircraft.
Owner Participant. The Person to whom on the Delivery Date (or, if
earlier, the Transfer Date) the Initial Owner Participant shall transfer its
Beneficial Interest pursuant to Section 3.02 of the Participation Agreement
and any successors thereto, and any Person to which the Owner Participant
transfers, in accordance with the Trust Agreement, its right, title and
interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Guarantor. The provider, if any, of an Owner
Participant Guaranty.
Owner Participant Guaranty. Any guaranty delivered by the Owner
Participant Guarantor.
Owner Trust. Federal Express Corporation Trust No. N620FE.
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 book yield and aggregate after-tax cash 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 and the EBO Price, as such assumptions may be
adjusted for events which have been the basis of adjustments to Rent pursuant
to Section 3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal
Express Corporation Trust No. N620FE), dated as of June 15, 1998, 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
title to which remains vested in the Lessor pursuant to Article 8 of the Lease.
Pass Through Agreement. The Pass Through Trust Agreement dated as
of May 1, 1997, between the Lessee and the Pass Through Trustee.
Pass Through Certificates. Any of the Pass Through Certificates,
1998-1-A, the Pass Through Certificates, 1998-1-B or the Pass Through
Certificates, 1998-1-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. The Business Day on which the sale of
the Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Corporation 1998-1 Pass
Through Trust Class A, Federal Express Corporation 1998-1 Pass Through Trust
Class B and Federal Express Corporation 1998-1 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 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. Each January 15 and July 15 commencing on January
15, 1999.
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).
Pre-Delivery Replacement Airframe. Has the meaning set forth in
Section 2.04 of the Participation Agreement.
Preliminary Notice. Has the meaning specified in Section 4.01(a)
of the Lease.
Premium Termination Date. With respect to the Series A
Certificates, the scheduled maturity date of the Series A Certificates, with
respect to the Series B Certificates, the scheduled maturity date of the
Series B Certificates and with respect to the Series C Certificates, the
scheduled maturity date of the Series C Certificates.
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.
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. Has the meaning specified in Section
10.01(a) of the Lease.
Purchase Agreement. The Purchase Agreement No. A00431-B dated as
of March 17, 1998 between the Manufacturer and the Lessee, including all
exhibits, appendices and letter agreements attached thereto as originally
executed or as modified, amended or supplemented in accordance with the terms
thereof, but only to the extent that the foregoing relates to the Aircraft and
to the extent assigned pursuant to the Purchase Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N620FE), dated as of June 15, 1998
between the Lessor and the Lessee.
Purchase Price. Has the meaning specified 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.
Reimbursement Agreement. The Standby Letter of Credit Application
and Agreement, dated the Pass Through Closing Date, between the Lessee and the
LC Bank.
Related Aircraft. Each of the aircraft relating to a Related
Indenture.
Related Indentures. Collectively, the Trust Indenture and Security
Agreement for each of Federal Express Corporation Trust Nos. N585FE, N676FE,
N677FE, N678FE, N679FE, N680FE, N681FE, N682FE, N621FE and N623FE, each dated
as of June 15, 1998, between State Street Bank and Trust Company of
Connecticut, National Association, as owner trustee and First Security Bank,
National Association, as indenture trustee, the Trust Indenture and Security
Agreement for Federal Express Corporation Trust No. N590FE, dated as of May 1,
1998, as amended and restated as of June 15, 1998, between State Street Bank
and Trust Company of Connecticut, National Association, as owner trustee and
First Security Bank, National Association, as indenture trustee, and the Trust
Indenture and Security Agreement for Federal Express Corporation Trust No.
N675FE, dated as of June 1, 1998, as amended and restated as of June 15, 1998,
between State Street Bank and Trust Company of Connecticut, National
Association, as owner trustee and First Security Bank, National Association,
as indenture trustee.
Related Participation Agreements. Collectively, with respect to
each Related Indenture, the "Participation Agreement" as defined therein.
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. Each January 15 and July 15 commencing on
January 15, 1999.
Reoptimization Date. Has the meaning specified in Section 2.03(b)
of the Participation Agreement.
Replacement Aircraft. Any aircraft substituted for the Aircraft
pursuant to Section 11.03(a) of the Lease.
Replacement Airframe. Has the meaning set forth in Section 11.03
of the Lease.
Replacement Engine. A Pratt & Whitney 4462 engine (or an engine of
the same or another manufacturer) of the same or 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 Pratt & Whitney 4462 engine, such replacement engine must then
be commonly used in the commercial aviation industry on McDonnell Douglas
MD-11 airframes.
Responsible Officer. With respect to the Owner Trustee (except for
purposes of the Trust Agreement in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate
officer or (except in the case of the Owner Participant) other employee of a
party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant,
agreement or obligation of such party pursuant to any Operative Agreement,
would have responsibility for and knowledge of such matter and the
requirements of any Operative Agreement with respect thereto.
S&P. Standard & Poor's Ratings Group.
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 C Prepayment Date. July 15, 1999 or any other date
designated by the Lessee, but in no event later than the fifteenth day after
the Last Cut-Off Date.
Series Supplement or Series Supplements. The Series Supplement
1998-1-A to be executed and delivered by the Lessee and the Pass Through
Trustee, the Series Supplement 1998-1-B to be executed and delivered by the
Lessee and the Pass Through Trustee or the Series Supplement 1998-1-C to be
executed and delivered by 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.
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 or any successor Owner Trustee in
its individual capacity.
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 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.
Subordination Agent. First Security Bank, National Association, a
national banking association, not in its individual capacity but solely as
Subordination Agent.
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 Price and amounts calculated by reference to Termination Value and
all amounts required to be paid by Lessee under the agreements, covenants and
indemnities contained in the Lease or in the Participation Agreement or the
Tax Indemnity Agreement or any other Operative Agreement, but excluding Basic
Rent 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. Shall have the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Tax Indemnity Agreement (Federal
Express Corporation Trust No. N620FE), dated as of June 15, 1998, between the
Lessee and the Owner Participant.
Term. The Basic Term of the lease for the Aircraft under the
Lease and, if renewed pursuant to Section 4.01 of the Lease, each Renewal Term
for the Aircraft for which the Lease is renewed, or such earlier date on which
the Lease is terminated pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that
is on or after December 31, 2005 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, 2015 or January 15, 2020, as the case may be, (ii)
Section 4.02(a)(D) or (E) of the Lease, a Rent Payment Date that is on or
after the eighth anniversary of the Delivery Date and (iii) Section 4.02(a)(F)
of the Lease, January 15, 2018.
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.
Transfer Date. Has the meaning set forth in Section 2.02(b) 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. N620FE), dated as of June 15, 1998, 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, and the Letter of
Credit and any rights thereunder.
UCC. Uniform Commercial Code.
Underwriters. Morgan Stanley & Co. Incorporated, Chase Securities
Inc., Citicorp Securities, Inc., Credit Suisse First Boston Corporation and
J.P. Morgan Securities Inc.
Underwriting Agreement. The Underwriting Agreement dated June 30,
1998, among the Lessee and the Underwriters.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there
is in force a certificate issued pursuant to Section 41102(a) or Section 41103
of the Transportation Code, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Transportation
Code and Part 121 of the regulations under such Transportation Code, for
aircraft capable of carrying ten (10) or more individuals or 6,000 pounds or
more of cargo, or which may operate as an air carrier by certification or
otherwise under any successor or substitute provision thereof or in absence
thereof.
U.S. Person. A Person described in Section 7701(a)(30) of the
Code.
Warranty Bill of Sale. The full warranty bill of sale covering
the Aircraft (and specifically referring to each Engine) executed by the
Lessee, as seller in favor of the Owner Trustee, as buyer, and to be dated the
Delivery Date.
SCHEDULE III
PERMITTED COUNTRY LIST
Australia Malaysia
Austria Mexico
Belgium Netherlands
Canada New Zealand
Denmark Norway
Finland Philippines
France Singapore
Germany Spain
Iceland Sweden
Ireland Switzerland
Japan United Kingdom
Luxembourg
SCHEDULE IV
CERTAIN AMOUNTS
Debt Portion $76,000,000
- ------------
Letter of Credit Maximum Stated Amount $5,500,000
- --------------------------------------
SCHEDULE V
MANDATORY DOCUMENT TERMS
Any amendment and restatement of the Operative Agreements on the Delivery
Date or, if earlier, the Transfer Date:
1. May not modify in any material adverse respect the Granting
Clause of the Indenture so as to deprive the Holders of a first
priority security interest in and mortgage lien on the Aircraft
and the Lease or to eliminate any of the obligations secured
thereby or otherwise modify in any material adverse respect as
regards the interests of the Holders, the Subordination Agent,
the Liquidity Providers or the Indenture Trustee the provisions
of Article II, V, VI or VIII or Section 7.01, 7.02, 7.10, 7.11,
9.08, 13.01, 13.02, 13.07 or 15.04 of the Indenture;
2. May not modify in any material adverse respect as regards the
interests of the Holders, the Subordination Agent, the Liquidity
Providers or the Indenture Trustee the provisions of Section
3.05, 3.06, 11.03(a)(x), 13.01(c)(i), the second sentence of
19.01, 20.01, 22.01, 22.03, 26.03, 27.01 or 27.02 of the Lease
or otherwise modify the terms of the Lease so as to deprive the
Indenture Trustee of rights expressly granted to the "Indenture
Trustee" therein;
3. May not modify in any material adverse respect as regards the
interests of the Holders, the Subordination Agent, the Liquidity
Providers or the Indenture Trustee the provisions of Section
4.02(e), 4.02(f), 17.02, 17.11, 17.12 or 17.13 of the
Participation Agreement or of the provisions of Section 4.02(d)
of the Participation Agreement so as to eliminate the
requirement to deliver to the Indenture Trustee the legal
opinions to be provided to such Persons thereunder (recognizing
that the lawyers rendering such opinions may be changed) or of
the provisions of Section 6.03(b) of the Participation
Agreement as regards the rights of the Indenture Trustee
thereunder or otherwise modify the terms of the Participation
Agreement to deprive the Subordination Agent, the Liquidity
Providers or the Indenture Trustee of any indemnity or right of
reimbursement in its favor for Expenses or Taxes; and
4. May not modify in any material adverse respect as regards the
interests of the holders of the Pass Through Certificates, the
Subordination Agent, the Liquidity Providers or the Indenture
Trustee, the definition of "Make-Whole Premium" or
"Supplemental Rent" in Schedule II to the Participation
Agreement.
Notwithstanding the foregoing, any such Mandatory Document Term
may be modified to correct or supplement any such provision which may
be defective or to cure any ambiguity or correct any mistake,
provided that any such action shall not materially adversely affect
the interests of the Holders, the Subordination Agent, the Liquidity
Providers, the Indenture Trustee or the holders of the Pass Through
Certificates.
SCHEDULE VI
MANDATORY ECONOMIC TERMS
Certificates:
Loan to Aircraft Value Ratio on any Payment Date (with the value of the
Aircraft set forth in Schedule VII hereto) shall be as follows:
Series A: not in excess of 40%
Series B: not in excess of 55%
Series C: not in excess of 75%
Average Life:
The average life may not be more than 15.5 years in the case of the Series A
Certificates, 13.5 years in the case of the Series B Certificates and 12.5
years in the case of the Series C Certificates (but in each case may be
decreased by any amount).
As of the first Payment Date following the Last Delivery Date, the average
life may not be more than 15.0 years in the case of the Pass Through
Certificates, 1998-1-A, 13.0 years in the case of the Pass Through
Certificates, 1998-1-B and 12.0 years in the case of the Pass Through
Certificates, 1998-1-C.
Final Maturity Date:
Series A: may not be extended beyond January 15, 2022
Series B: may not be extended beyond January 15, 2019
Series C: may not be extended beyond January 15, 2016
Debt Rate (computed on the basis of a 360-day year consisting of twelve 30-day
months, payable semi-annually in arrears) shall be as follows:
Series A: 6.720%
Series B: 6.845%
Series C: 7.020%
Past Due Rate: Debt Rate plus 2% per annum.
Payment Dates: January 15 and July 15.
Make-Whole Premium: As provided in Article V of the Indenture.
Redemption and Purchase: As provided in the Indenture.
Lease
- -----
Term: The Basic Term shall expire by its terms on or
after final maturity date of the Series A
Certificates.
Rent Payment Dates: January 15 and July 15.
Minimum Rent: Basic Rent due and payable on each Payment Date
shall be at least sufficient to pay in full, as of
such Payment Date (assuming timely payment of the
Certificates prior to such Date), the aggregate
principal amount of scheduled installments due on
the Certificates outstanding on such Payment Date.
Supplemental Rent: Shall be sufficient to cover the sums described in
the definition of such term in Schedule II to the
Participation Agreement.
Stipulated Loss Value: At all times shall be equal to or greater than the
outstanding principal amount of the Certificates
together with accrued interest thereon. The
interest rate payable with respect to Stipulated
Loss Value may not be modified.
Termination Value: At all times shall be equal to or greater than the
outstanding principal amount of the Certificates
together with accrued interest thereon. The
interest rate payable with respect to Termination
Value Date may not be modified.
All-risk hull insurance: Shall not be less than Stipulated Loss Value,
subject to Lessee's right to self-insure on terms
no more favorable to Lessee in any material respect
than those set forth in Article 13 of the Lease.
Minimum Liability
Insurance Amount: $300,000,000.
Past Due Rate: As set forth in the definition thereof in Schedule
II to the Participation Agreement.
Participation Agreement
- -----------------------
The Indenture Trustee, the Subordination Agent and the Liquidity Providers
indemnified against Expenses and Taxes to the extent set forth in Articles 8
and 9 of the Participation Agreement as in effect on the Certificate Closing
Date.
SCHEDULE VII
ASSUMED AIRCRAFT VALUE
Assumed Aircraft Value
(in millions)
----------------------
$107,715,000
EXHIBIT A(1)(a)(i)
[Letterhead of Federal Express]
[Certificate Closing Date]
To the Addressees Listed on Schedule A Attached
Re: Federal Express Corporation Trust No. N620FE
--------------------------------------------
Ladies and Gentlemen:
I am the Senior Vice President and General Counsel of Federal Express
Corporation, a Delaware corporation ("Federal"), and am familiar with the
transactions contemplated by the Participation Agreement (Federal Express
Corporation Trust No. N620FE), dated as of June 15, 1998 (the "Participation
Agreement"), among Federal, as Lessee and Initial 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(j)(i) of the Participation Agreement.
Capitalized terms not otherwise defined herein have the meanings assigned
thereto in the Participation Agreement.
The Participation Agreement provides, among other things, for the
financing on the Delivery Date of a portion of the Owner Trustee's payment of
the Purchase Price of one 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 will be 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 will
be issued under the Indenture.
In connection with the opinions expressed below, I have examined, or
caused to be examined by attorneys under my supervision, (i) executed
counterparts of the Pass Through Agreement, the Series Supplements and the
Operative Agreements to be delivered on the Certificate Closing Date (the
"Certificate Closing Date Documents") and (ii) the forms of the Operative
Agreements to be delivered on the Delivery Date. We have relied upon
originals or copies, certified or otherwise identified to our satisfaction, of
such corporate records, documents and other instruments as in our judgment are
relevant to rendering the opinions expressed below. As to any facts material
to the opinions expressed below (other than any thereof relating to Federal),
we have relied upon the representations and warranties made in the Certificate
Closing Date Documents, the accuracy of which we have not independently
investigated or verified. In such examination, we have assumed the
genuineness of all signatures (other than the signatures of Federal) and the
authenticity of all documents submitted to us as originals and the conformity
with the originals of all documents submitted to us as copies. We have also
assumed that each of the parties to each of the Certificate Closing Date
Documents, other than Federal, has full power, authority and legal right to
enter into such Certificate Closing Date Documents and that each such
Certificate Closing Date Document has been duly authorized, executed and
delivered by each of such parties.
Based on the foregoing, it is my opinion that:
1. Federal is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, is a "citizen of
the United States" within the meaning of Section 40102(a)(15) of the
Transportation Code, and has or had, on the date of execution thereof, the
corporate power and authority to carry on its business as currently conducted
and to enter into and perform its obligations under the Certificate Closing
Date Documents to which it is a party. Federal is duly qualified to do
business and is in good standing in the State of Tennessee and each other state
of the United States in which its operations or the nature of its business
requires Federal to so qualify, except where the failure to so qualify would
not have a material adverse impact on Federal or its business.
2. Federal possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents which are material to
the operation of the routes flown by it and the conduct of its business and
operations as currently conducted, and each such certificate, franchise,
license, permit, right and concession and consent is in full force and effect.
3. Each of the Certificate Closing Date Documents to which Federal
is a party has or had, on the date of execution thereof, been duly authorized,
executed and delivered by Federal and each constitutes the legal, valid and
binding obligation of Federal enforceable against Federal in accordance with
its terms. Each of the Certificate Closing Date Documents to which Federal is
to be a party and which are to be executed on the Delivery Date has been duly
authorized by Federal.
4. Neither the execution and delivery by Federal of the Certificate
Closing Date Documents to which Federal is a party, nor the consummation of
any of the transactions by Federal contemplated thereby, nor the performance
of the obligations thereunder by Federal, did at the time of execution and
delivery, or does presently (a) require any stockholder approval or violate
the certificate of incorporation or by-laws of Federal or (b) conflict with or
contravene the provisions of, or constitute a default under, or result in the
creation of any Lien (other than Liens permitted under Section 6.01(a) of the
Lease) upon the property of Federal under any law, governmental rule or
regulation, or the charter or bylaws of Federal or any order, writ, injunction
or decree of any court or governmental authority against Federal or by which
any of its properties may be bound or any indenture, mortgage, contract or
other agreement known to me to which Federal is a party or by which it may be
bound or, require the approval or consent of any trustee or the holders of any
indebtedness or obligations of Federal.
5. Neither the execution and delivery by Federal of the Certificate
Closing Date Documents to which it is a party, nor the consummation of any
transactions by Federal contemplated thereby, nor the performance of the
obligations thereunder by Federal, did or does, as the case may be, (a)
require the consent or approval of, the giving of notice to, or (except as
described or contemplated in the Participation Agreement and the Lease, all of
which are required to be performed on or prior to the Certificate Closing Date
and which shall have been accomplished on or prior to the Certificate Closing
Date) the registration with, or the taking of any other action in respect of,
the Aeronautics Authority, the Securities and Exchange Commission or any other
authority or agency of the federal government or of the State of Tennessee
other than (i) the registration of the issuance and sale of the Pass Through
Certificates under the Securities Act and (ii) compliance with the securities
laws of each applicable state, or (b) contravene any judgment or order
applicable to or binding on Federal or any law or governmental rule or
regulation of the United States or of the State of Tennessee.
6. There is no pending or, to my knowledge, threatened action or
proceeding before any court or administrative agency which individually (or in
the aggregate in the case of any group of related lawsuits) is expected to
have a material adverse effect on (A) 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 (as updated
by Note 7 to the financial statements included in Federal's Quarterly Reports
on Form 10-Q for the fiscal quarters ended August 31, 1997, November 30, 1997
and February 28, 1998), and (b) in Federal's Current Report on Form 8-K dated
June 11, 1997, as to all of 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 Certificate Closing Date Documents.
7. Federal is a duly certificated "air carrier" within the meaning
of the Transportation Code, and a holder of a certificate under Sections
41102(a) and 41103 of the Transportation Code, and an "air carrier operating
certificate" issued under Chapter 447 of the Transportation Code for aircraft
capable of carrying ten (10) or more individuals or 6,000 pounds or more of
cargo, and each such certificate is in full force and effect.
8. Federal's principal place of business and chief executive
office (as such term is defined in the Uniform Commercial Code in effect in
the State of Tennessee) are located at 2005 Corporate Avenue, Memphis, Shelby
County, Tennessee.
9. Federal is not, and is not directly or indirectly controlled by
or acting on behalf of any Person which is, an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
The opinions expressed in paragraph 3 above as to the enforceability
of the Certificate Closing Date Documents to which Federal is a party are
based upon the assumption for purposes of such opinions and without
independent analysis that, notwithstanding the respective choice of laws
clauses in the Certificate Closing Date Documents, the governing law with
respect to each of the Certificate Closing Date Documents is identical in all
relevant respects to the law of the State of Tennessee. Insofar as the
foregoing opinion relates to the enforceability of any instrument, such
enforceability is subject to applicable bankruptcy, insolvency and other
similar laws affecting the enforcement of creditors' rights generally (whether
such enforceability is considered in a proceeding in equity or at law). The
enforceability of the remedies provided under the Lease may also be limited by
applicable laws which may affect the remedies provided therein but which do
not in my opinion affect the validity of the Lease or make such remedies
inadequate for the practical realization of the benefits intended to be
provided thereby.
I do not express any opinion as to matters governed by any law other
than the Federal laws of the United States of America, the corporation law of
the State of Delaware and the laws of the State of Tennessee.
This opinion is delivered to you solely for your use in connection
with the transaction described herein, and may not be used for any other
purpose, and may not be relied upon by any other person, without my prior
written consent.
Very truly yours,
SCHEDULE A
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(1)(a)(ii)
[Letterhead of Federal Express]
[Delivery Date]
To the Addressees Listed on Schedule A Attached
Re: Federal Express Corporation Trust No. N620FE
--------------------------------------------
Ladies and Gentlemen:
I am the Senior Vice President and General Counsel of Federal Express
Corporation, a Delaware corporation ("Federal"), and am familiar with the
transactions contemplated by the Participation Agreement (Federal Express
Corporation Trust No. N620FE), dated as of June 15, 1998, as amended and
restated as of ________________ (the "Participation Agreement"), among
Federal, as Lessee and Initial Owner Participant, ____________________, 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
4.02(d)(i) of the Participation Agreement. Capitalized terms not otherwise
defined herein have the meanings assigned thereto in the Participation
Agreement.
The Participation Agreement provides, among other things, for the
financing on the Delivery Date of a portion of the Owner Trustee's payment of
the Purchase Price of one 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, the Pass Through Agreement and each Series
Supplement (the "Transaction Agreements"). We have relied upon originals or
copies, certified or otherwise identified to our satisfaction, of such
corporate records, documents and other instruments as in our judgment are
relevant to rendering the opinions expressed below. As to any facts material
to the opinions expressed below (other than any thereof relating to Federal),
we have relied upon the representations and warranties made in the Transaction
Agreements, the accuracy of which we have not independently investigated or
verified. In such examination, we have assumed the genuineness of all
signatures (other than the signatures of Federal) and the authenticity of all
documents submitted to us as originals and the conformity with the originals of
all documents submitted to us as copies. We have also assumed that each of the
parties to each of the Transaction Agreements, other than Federal, has full
power, authority and legal right to enter into such Transaction Agreements and
that each such Transaction Agreement has been duly authorized, executed and
delivered by each of such parties.
Based on the foregoing, it is my opinion that:
1. Federal is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, is a "citizen of
the United States" within the meaning of Section 40102(a)(15) of the
Transportation Code, and has or had, on the date of execution thereof, the
corporate power and authority to carry on its business as currently conducted
and to enter into and perform its obligations under the Transaction Agreements
to which it is a party. Federal is duly qualified to do business and is in
good standing in the State of Tennessee and each other state of the United
States in which its operations or the nature of its business requires Federal
to so qualify, except where the failure to so qualify would not have a
material adverse impact on Federal or its business.
2. Federal possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents which are material to
the operation of the routes flown by it and the conduct of its business and
operations as currently conducted, and each such certificate, franchise,
license, permit, right and concession and consent is in full force and effect.
3. Each of the Transaction Agreements to which Federal is a party
has or had, on the date of execution thereof, been duly authorized, executed
and delivered by Federal and each constitutes the legal, valid and binding
obligation of Federal enforceable against Federal in accordance with its terms.
4. Neither the execution and delivery by Federal of the Transaction
Agreements to which Federal is a party, nor the consummation of any of the
transactions by Federal contemplated thereby, nor the performance of the
obligations thereunder by Federal, did at the time of execution and delivery,
or does presently (a) require any stockholder approval or violate the
certificate of incorporation or by-laws of Federal or (b) conflict with or
contravene the provisions of, or constitute a default under, or result in the
creation of any Lien (other than Liens permitted under Section 6.01(a) of the
Lease) upon the property of Federal under any law, governmental rule or
regulation, or the charter or bylaws of Federal or any order, writ, injunction
or decree of any court or governmental authority against Federal or by which
any of its properties may be bound or any indenture, mortgage, contract or
other agreement known to me to which Federal is a party or by which it may be
bound or, require the approval or consent of any trustee or the holders of any
indebtedness or obligations of Federal.
5. Neither the execution and delivery by Federal of the Transaction
Agreements to which it is a party, nor the consummation of any transactions by
Federal contemplated thereby, nor the performance of the obligations
thereunder by Federal, did or does, as the case may be, (a) require the
consent or approval of, the giving of notice to, or (except as described or
contemplated in the Participation Agreement and the Lease, all of which were
or are required to be performed on or prior to the Delivery Date and which
were or shall have been accomplished on or prior to the Delivery Date) the
registration with, or the taking of any other action in respect of, the
Aeronautics Authority, the Securities and Exchange Commission or any other
authority or agency of the federal government or of the State of Tennessee
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 (as updated
by Note 7 to the financial statements included in Federal's Quarterly Reports
on Form 10-Q for the fiscal quarters ended August 31, 1997, November 30, 1997
and February 28, 1998), and (b) in Federal's Current Report on Form 8-K dated
June 11, 1997, as to all of 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 Transaction Agreements, or (ii) involves the Aircraft.
7. Except for the registration in the Owner Trustee's name of the
Aircraft pursuant to the Transportation Code, and except for the filing and,
where appropriate, recording, pursuant to the Transportation Code of (A) 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 Transaction Agreements to which Federal is a party are based upon the
assumption for purposes of such opinions and without independent analysis
that, notwithstanding the respective choice of laws clauses in the Transaction
Agreements, the governing law with respect to each of the Transaction
Agreements is identical in all relevant respects to the law of the State of
Tennessee. Insofar as the foregoing opinion relates to the enforceability of
any instrument, such enforceability is subject to applicable bankruptcy,
insolvency and other similar laws affecting the enforcement of creditors'
rights generally (whether such enforceability is considered in a proceeding in
equity or at law). The enforceability of the remedies provided under the
Lease may also be limited by applicable laws which may affect the remedies
provided therein but which do not in my opinion affect the validity of the
Lease or make such remedies inadequate for the practical realization of the
benefits intended to be provided thereby.
I do not express any opinion as to matters governed by any law other
than the Federal laws of the United States of America, the corporation law of
the State of Delaware and the laws of the State of Tennessee.
As to the matters referred to in paragraphs 5, 7 and 9, I have relied
on the opinion of Daugherty, Fowler & Peregrin of even date herewith, to the
extent such matters are addressed in such counsel's opinion and subject to the
assumptions and qualifications expressed therein.
This opinion is delivered to you solely for your use in connection
with the transaction described herein, and may not be used for any other
purpose, and may not be relied upon by any other person, without my prior
written consent.
Very truly yours,
SCHEDULE A
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
- -----------------
[name of owner participant]
EXHIBIT A(1)(b)(i)
[Letterhead of Davis Polk & Wardwell]
[Certificate Closing Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N620FE
--------------------------------------------
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. N620FE), dated as of June 15, 1998 (the "Participation Agreement"), among
Federal Express, as Lessee and Initial 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(j)(iv) 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
will be issued by separate Pass Through Trusts, each formed to acquire, among
other securities, the Certificates bearing a particular interest rate and
having a particular Maturity that will be issued under the Indenture.
In connection with the opinions expressed below, we have examined
executed counterparts of the Operative Agreements, the Pass Through
Certificates, the Pass Through Agreement and each Series Supplement (the
"Certificate Closing Date Documents"). We have also examined originals, or
copies certified to our satisfaction, of such other agreements, documents,
certificates and statements of governmental officials and corporate officers
as we have deemed necessary or advisable as a basis for such opinions. In
such examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity
with the originals of all documents submitted to us as copies.
As to any facts material to our opinions expressed below, we have,
with your consent, relied on the representations and warranties made in or
pursuant to the Participation Agreement and the other documents referred to
therein, the accuracy of which we have not independently verified. In
addition, we have, when relevant facts were not independently established by
us, relied, to the extent we deemed such reliance proper, upon certificates of
public officials and certificates, telegrams and other written or telephoned
statements of officers of the parties referred to herein.
Based on the foregoing, it is our opinion that:
1. Assuming (i) the due authorization, execution and delivery of
the Certificate Closing Date Documents by each of the parties to each such
document (other than Federal Express), (ii) each such party has full power and
legal right to enter into and perform its respective obligations under the
Certificate Closing Date Documents, (iii) that the execution, delivery and
performance by each of the Certificate Closing Date Documents by each of the
parties thereto will not violate the respective parties' constituent
documents, (iv) the due authorization, execution, issuance and delivery by the
Owner Trustee, and the due authentication by the Indenture Trustee, of the
Certificates to be issued under the Indenture in accordance with the terms of
the Indenture, (v) the due authorization, execution, issuance, delivery and
authentication by the Pass Through Trustee of the Pass Through Certificates to
be issued under the Pass Through Agreement and the Series Supplement relating
to such Pass Through Certificates, in each case in accordance with the terms
of the Pass Through Agreement and such Series Supplement, and (vi) that the
form of each Certificate Closing Date Document is in compliance with all
applicable laws and governmental rules and regulations (other than the laws of
the United States and the State of New York), then: (A) to the extent governed
by New York law, each Certificate Closing Date Document in form constitutes a
legal, valid and binding agreement of each party thereto enforceable against
each such party in accordance with its terms; (B) the Indenture creates, for
the benefit of the Holders, the security interest in the Trust Indenture
Estate that it purports to create, except that no opinion is given with respect
to perfection of such security interest on the date hereof; (C) the
Certificates, when issued to and acquired by the Pass Through Trustee, will be
legal, valid and binding obligations of the Owner Trustee enforceable against
the Owner Trustee in accordance with their terms and the terms of the
Indenture and will be entitled to the benefits of the Indenture, including the
benefit of the security interest created thereby, except that no opinion is
given with respect to perfection of such security interest on the date hereof;
(D) the Pass Through Certificates, when issued to and acquired by the
Underwriters in accordance with the Underwriting Agreement, will be legal,
valid and binding obligations of the Pass Through Trustee enforceable against
the Pass Through Trustee in accordance with their terms and will be entitled
to the benefits of the Pass Through Agreement and the Series Supplement
relating thereto; and (E) the beneficial interest of the Initial Owner
Participant under the Trust Agreement in and to the properties which are part
of the Trust Indenture Estate is subject, to the extent provided in the
Indenture, to the Lien of the Indenture in favor of the Holders.
2. (a) Each of the Certificate Closing Date Documents to which
Federal Express is a party has been duly authorized, executed and delivered by
Federal Express. Each of the Operative Agreements to which Federal Express is
to be a party and which are to be delivered on the Delivery Date has been
authorized by Federal Express.
(b) The execution, delivery and performance by Federal Express of
each of the Certificate Closing Date Documents to which Federal Express is a
party do not, or did not on the date of execution thereof, violate, and fully
comply, or did fully comply on the date of execution thereof, with, any laws
and governmental rules and regulations of the State of New York that may be
applicable to Federal Express. The opinion set forth in this paragraph 2(b)
is rendered without regard to the taking of any action or the conduct of any
other business by Federal Express in the State of New York other than the
transactions contemplated by the Certificate Closing Date Documents.
3. The execution, delivery and performance of the Certificate
Closing Date Documents (other than the Certificates) by the Owner Trustee in
its individual or trust capacity, as the case may be, and the issuance,
execution, delivery and performance of the Certificates by the Owner Trustee
in its trust capacity do not violate, and fully comply with, any laws and
governmental rules and regulations of the State of New York that may be
applicable to the Owner Trustee in its individual or trust capacity, as the
case may be. The opinion set forth in this paragraph 3 is rendered without
regard to the effect, if any, on such issuance (in the case of the
Certificates), execution, delivery or performance, of the taking of any
action, the conduct of any business or the exercise of any other powers by
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 Certificate Closing Date Documents. 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.
4. It is not necessary, in connection with the creation of the
beneficial interest of the Initial 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 or the Indenture under the Trust
Indenture Act of 1939, as amended.
The foregoing opinions are subject to the following qualifications:
(a) We have relied, with your consent, without independent
investigation and verification and subject to the assumptions and
qualifications contained therein, upon the opinion of Karen M. Clayborne,
Senior Vice President and General Counsel of Federal Express to be
delivered to you and dated the date hereof, for purposes of the matters
covered thereby.
(b) We are qualified to practice law in the State of New York, and
we do not purport to be experts on, or to express any opinion herein
concerning, any laws other than the laws of the State of New York, the laws
of the United States and the General Corporation Law of the State of
Delaware.
(c) The opinion contained in paragraph 1(A) above as to
enforceability is subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity which may
affect the remedies provided in the agreements referred to in said
opinions, which laws and principles, however, do not in our opinion make
the remedies provided in said agreements inadequate for the practical
realization of the benefits of the security intended to be provided thereby.
(d) This opinion is rendered solely to you at Federal Express's
request in connection with the above matter. This opinion may not be
relied upon by you for any other purpose or relied upon by any other Person
without our prior written consent.
Very truly yours,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(1)(b)(ii)
[Letterhead of Davis Polk & Wardwell]
[Delivery Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N620FE
--------------------------------------------
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. N620FE), dated as of June 15, 1998, as amended and restated as of
___________ (the "Participation Agreement"), among Federal Express, as Lessee
and Initial Owner Participant, _________________, 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 4.02(d)(ii) of the Participation
Agreement. Capitalized terms not otherwise defined herein have the meanings
assigned thereto in the Participation Agreement.
The Participation Agreement provides, among other things, for the
financing on the Delivery Date of the Owner Trustee's payment of a portion of
the Purchase Price of one 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, the Pass Through
Certificates, the Pass Through Agreement and each Series Supplement (the
"Transaction Agreements"). We have also examined originals, or copies
certified to our satisfaction, of such other agreements, documents,
certificates and statements of governmental officials and corporate officers
as we have deemed necessary or advisable as a basis for such opinions. In
such examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity
with the originals of all documents submitted to us as copies.
As to any facts material to our opinions expressed below, we have,
with your consent, relied on the representations and warranties made in or
pursuant to the Participation Agreement and the other documents referred to
therein, the accuracy of which we have not independently verified. In
addition, we have, when relevant facts were not independently established by
us, relied, to the extent we deemed such reliance proper, upon certificates of
public officials and certificates, telegrams and other written or telephoned
statements of officers of the parties referred to herein.
Based on the foregoing, it is our opinion that:
1. With respect to that portion, if any, of the Aircraft and the
other property included in the Lessor's Estate as may not be covered by the
recording system established by the FAA pursuant to Section 44107 of the
Transportation Code, no filing or recording of any document or other action
was or is necessary in order to establish the Owner Trustee's title thereto
and interest therein as against Federal Express and any third parties.
2. Subject to execution and delivery of the Lease Supplement and
the Indenture and Security Agreement Supplement for the Aircraft and to the
registration of the Aircraft with the FAA in the name of the Owner Trustee,
the Lease, as supplemented, will create a valid leasehold interest in the
Aircraft, the entitlement thereof to the benefits of recordation under the
Transportation Code being subject to the due and timely filing and, where
appropriate, recording of (A) 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 Transaction Agreements by each of the parties to each such document (other
than Federal Express), (ii) each such party has full power and legal right to
enter into and perform its respective obligations under the Transaction
Agreements, (iii) that the execution, delivery and performance by each of the
Transaction Agreements by each of the parties thereto will not violate the
respective parties' constituent documents, (iv) the due authorization,
execution, issuance and delivery by the Owner Trustee, and the due
authentication by the Indenture Trustee, of the Certificates issued under the
Indenture in accordance with the terms of the Indenture, (v) the due
authorization, execution, issuance, delivery and authentication by the Pass
Through Trustee of the Pass Through Certificates issued under the Pass Through
Agreement and the Series Supplement relating to such Pass Through
Certificates, in each case in accordance with the terms of the Pass Through
Agreement and such Series Supplement, and (vi) that the form of each
Transaction Agreement is in compliance with all applicable laws and
governmental rules and regulations (other than the laws of the United States
and the State of New York), then: (A) to the extent governed by New York law,
each Transaction Agreement in form constitutes a legal, valid and binding
agreement of each party thereto enforceable against each such party in
accordance with its terms; (B) the Indenture creates, for the benefit of the
Holders, the security interest in the Trust Indenture Estate that it purports
to create; (C) the Certificates are legal, valid and binding obligations of
the Owner Trustee enforceable against the Owner Trustee in accordance with
their terms and the terms of the Indenture and are entitled to the benefits of
the Indenture, including the benefit of the security interest created thereby;
and (D) the beneficial interest of the Owner Participant under the Trust
Agreement in and to the properties which are part of the Trust Indenture
Estate is subject, to the extent provided in the Indenture, as supplemented by
the Indenture and Security Agreement Supplement, to the Lien of the Indenture
in favor of the Holders. The opinions set forth in this paragraph 3 are
subject to the due filing and, where appropriate, recording with the FAA of
the documents referred to in paragraph 2 above.
4. (a) Each of the Transaction Agreements to which Federal Express
is a party has been duly authorized, executed and delivered by Federal Express.
(b) The execution, delivery and performance by Federal Express of
each of the Transaction Agreements to which Federal Express is a party do not,
or did not on the date of execution thereof, violate, and fully comply, or did
fully comply on the date of execution thereof, with, any laws and governmental
rules and regulations of the State of New York that may be applicable to
Federal Express. The opinion set forth in this paragraph 4(b) is rendered
without regard to the taking of any action or the conduct of any other
business by Federal Express in the State of New York other than the
transactions contemplated by the Transaction Agreements.
5. The execution, delivery and performance of the Transaction
Agreements (other than the Certificates) by the Owner Trustee in its
individual or trust capacity, as the case may be, and the issuance, execution,
delivery and performance of the Certificates by the Owner Trustee in its trust
capacity do not violate, and fully comply with, any laws and governmental
rules and regulations of the State of New York that may be applicable to the
Owner Trustee in its individual or trust capacity, as the case may be. The
opinion set forth in this paragraph 5 is rendered without regard to the
effect, if any, on such issuance (in the case of the Certificates), execution,
delivery or performance, of the taking of any action, the conduct of any
business or the exercise of any other powers by 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 Transaction Agreements. 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 statement referred to in Section 4.02(f) of the Participation
Agreement), and the beneficial interest of the Owner Participant under the
Trust Agreement in and to such properties is subject, to the extent provided
in the Indenture, to the Lien of the Indenture in favor of the Holders of the
Certificates issued and to be issued under the Indenture.
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 or the Indenture under the Trust
Indenture Act of 1939, as amended.
10. The Indenture Trustee on behalf of the holders of the
Certificates will be entitled to the benefits of Section 1110 of the United
States Bankruptcy Code with respect to the Aircraft in the event of a case
under Chapter 11 of the United States Bankruptcy Code in which Federal Express
is a debtor. We note that a recent decision by the United States District
Court for the District of Colorado in connection with the Western Pacific
Airlines, Inc. bankruptcy suggests that the protections of Section 1110 become
unavailable to the lessor or security interest holder once the bankruptcy
trustee or debtor-in-possession, within the 60 day period following the date of
commencement of the reorganization proceedings, agrees to perform the debtor's
obligations that become due on or after such date and cures outstanding
defaults, with the result, among others, that the ability of a lessor or
security interest holder to exercise remedies based on a subsequent default
would be subject to the automatic stay. We believe that this holding is
erroneous because it is inconsistent with the overriding purpose of Section
1110 to protect lessors of, and creditors secured by, qualifying aircraft
against being stayed from exercising their rights while defaults under their
leases or financing agreements remain uncured.
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 Karen M. Clayborne, Senior Vice President and General Counsel
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,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
- -----------------
[name of owner participant]
EXHIBIT A(2)
[Letterhead of Ray, Quinney & Nebeker]
[Certificate Closing Date]
To the Persons Listed in Schedule A Attached Hereto
Re: Federal Express Corporation Trust No. N620FE
--------------------------------------------
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.
N620FE), dated as of June 15, 1998 (the "Participation Agreement"), among
Federal Express Corporation, as Lessee and Initial 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. N620FE (the "Aircraft")
is being financed. This opinion is furnished pursuant to Section 4.01(j)(ii)
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 Collateral Account Control Agreement; 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 or had, on the date of execution thereof,
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 Certificate
Closing 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 Certificate Closing 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 Initial 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,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(3)(a)(i)
[Letterhead of Bingham Dana LLP]
[Certificate Closing Date]
To Each of the Parties Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N620FE
--------------------------------------------
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. N620FE) dated as of June 15, 1998 between State Street and Federal Express
Corporation, as Initial Owner Participant ("Initial Owner Participant") (the
"Trust Agreement") in connection with the transactions contemplated by that
certain Participation Agreement (Federal Express Corporation Trust No. N620FE)
dated as of June 15, 1998 (the "Participation Agreement") by and among Federal
Express Corporation, as Lessee (the "Lessee"); the Initial Owner Participant;
the Owner Trustee; and First Security Bank, National Association, in its
individual capacity and as Indenture Trustee (the "Indenture Trustee"), Pass
Through Trustee and 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(j)(iii) 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) the certificates
delivered to us by the management of State Street and have assumed, without
independent inquiry, the accuracy of those representations and certificates.
We have examined each 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 Initial
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 of each other party thereto (except,
with respect to the Trust Agreement, the Initial Owner Participant);
(ii) except as otherwise set forth in our opinions in
paragraphs 13 and 14 below, the enforceability of any obligation of State
Street, the Owner Trustee and the Initial 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 Initial 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. 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 13 and 14 below, we have
assumed that the Initial 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 Initial 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 Documents
and to issue, execute, deliver and perform its obligations under the
Certificates.
2. 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.
3. The Owner Trustee is duly authorized under the Trust Agreement to
execute, deliver and perform each of the Owner Trustee Documents and each
such Owner Trustee Document 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, 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.
4. Assuming the due authorization, execution and delivery of the
Trust Agreement by the Initial Owner Participant and that the Initial 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 Initial Owner
Participant, enforceable against the Initial Owner Participant in
accordance with the terms thereof.
5. 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, which filing has been duly effected,
and the filing of continuation statements with respect thereto required to
be filed at periodic intervals under the UCC.
6. The Trust Agreement duly creates a legal and valid trust under
Connecticut law; the trust created by the Trust Agreement exists for the
benefit of the Initial Owner Participant as provided therein and creates
for the benefit of the Initial 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.
7. 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.
8. 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.
9. 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.
10. 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, (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 Initial
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
Initial 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.
11. 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.
12. 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 Initial 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.
13. 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 Initial 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.
14. 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 Initial 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,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
[Letterhead of Bingham Dana LLP]
[Certificate Closing Date]
To Each of the Parties Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N620FE
--------------------------------------------
Ladies and Gentlemen:
We have acted as special Connecticut counsel to the Owner Trustee in
connection with the Trust Indenture and Security Agreement (Federal Express
Corporation Trust No. N620FE) dated as of June 15, 1998 (the "Indenture")
between First Security Bank, National Association (the "Indenture Trustee"),
and State Street Bank and Trust Company of Connecticut, National Association,
not in its individual capacity, but solely as Owner Trustee (the "Owner
Trustee"), and the Collateral Account Control Agreement (Federal Express
Corporation Trust No. N620FE) dated as of June 15, 1998 (the "Control
Agreement"), among the Owner Trustee, the Indenture Trustee and State Street
Bank and Trust Company, as Custodian (the "Custodian").
We are issuing this opinion solely in our capacity as counsel to the
Owner Trustee under the circumstances set forth in this paragraph and solely
as to the matters set forth herein. Pursuant to the Indenture, the Owner
Trustee purports to grant to the Indenture Trustee a security interest, inter
alia, in those securities and instruments, presently owned or hereafter
acquired by the Owner Trustee, that are from time to time credited to an
account numbered ______ (the "Collateral Account") established by the Owner
Trustee with the Custodian and which securities and instruments the Owner
Trustee has directed the Custodian to identify on the books and records of the
Custodian as being subject to a security interest in favor of the Indenture
Trustee to secure the payment to the Indenture Trustee of the Owner Trustee's
obligations (the "Obligations") under the Indenture. Those securities and
instruments which the Owner Trustee has directed the Custodian to so identify
on the books of the Custodian as being subject to such security interest, and
which, at the time of reference thereto, have been so identified and have not
been substituted by other property or otherwise withdrawn from such
identification or the Collateral Account, are hereinafter referred to,
collectively, as the "Liquid Collateral." We have assumed with your
permission for purposes of this opinion that the Liquid Collateral consists
solely of assets constituting (a) a "security" or "security entitlement," as
each such term is defined in Section 8-102 of the Uniform Commercial Code as
currently in effect in the State of Connecticut (the "Connecticut UCC"), (b) a
"securities account" (as such term is defined in Section 8-501 of the
Connecticut UCC), (c) a "financial asset," (as such term is defined in Section
8-102 of the Connecticut UCC), held in a securities account and (d) "general
intangibles" (as such term is defined in Section 9-106 of the Connecticut
UCC).
For purposes of this opinion, we have examined the Indenture, the
Control Agreement and such other documents and instruments as are referred to
as having been examined by us for purposes of our opinion letter dated the
date hereof, addressed to the parties listed on Schedule A hereto.
As to all matters of fact, we have examined and have relied entirely
upon the representations and warranties contained in and made pursuant to the
Indenture and the Control Agreement, without any independent investigation of
any kind.
We have assumed the genuineness of all signatures (other than those on
behalf of the Owner Trustee and the Custodian), 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 the Owner Trustee and the Custodian).
For purposes of this opinion, we have made such examination of law as
we have deemed necessary. This opinion is limited solely to the internal
substantive laws of the State of Connecticut as applied by courts located in
the State of Connecticut and, where applicable, the federal laws of the United
States of America, in each case without regard to choice of law. No opinion
is given as to the choice of law which any tribunal may apply to the
transactions referred to herein.
Our opinion is further subject to the following exceptions,
qualifications and assumptions, all of which we understand to be acceptable to
you:
(a) We have assumed without any independent investigation that each
party to the transactions contemplated by the Indenture or the Control
Agreement at all times relevant thereto (other than the Owner Trustee) was
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it was incorporated or organized, and had and has the
full power, authority and legal right under its certificate of
incorporation, articles of organization and other governing documents,
corporate or other enterprise legislation and applicable laws, as the case
may be, to execute and deliver and perform its obligations under all
documents executed by it in connection with those transactions.
(b) We have assumed without any independent investigation (i) the
due authorization, execution and delivery of each of the Indenture and the
Control Agreement by the Indenture Trustee, (ii) that the execution,
delivery and performance by the Indenture Trustee of each of the Indenture
and the Control Agreement does not and will not conflict with, or result in
a breach of, the terms, conditions or provisions of, or result in a
violation of, or constitute a default or require any consent (other than
such consents as have been duly obtained) under, any organizational
document, any order, judgment, arbitration award or stipulation, or any
agreement, to which the Indenture Trustee is a party or is subject or by
which any of the properties or assets of the Indenture Trustee is bound,
(iii) that the Owner Trustee has received "value," as defined under the
Connecticut UCC, for the incurrence of the Obligations, (iv) that, whenever
the Custodian receives instructions from the Owner Trustee for the
Custodian to note on its books and records that any securities or
instruments credited to the Collateral Account are to be subject to a
security interest in favor of the Indenture Trustee to secure the payment
of the Obligations, such instructions will have been duly authorized by or
on behalf of the Owner Trustee and (v) that, when the Indenture Trustee is
to act in connection with any of the transactions contemplated by the
Indenture, it is acting in its capacity as Indenture Trustee.
(c) We have made no examination of, and no opinion is given herein
as to, the Owner Trustee's title to or other ownership rights in, or the
existence of any liens, charges or encumbrances on, or adverse claims
against, the Liquid Collateral, other than the security interest in favor
of the Indenture Trustee as contemplated by the Indenture and the Control
Agreement, and have assumed that the Owner Trustee has, or at the time of
any purported attachment of the security interest in the relevant Liquid
Collateral will have, rights in the Liquid Collateral.
(d) We point out that, pursuant to Part 357 of Title 31 of the
United States Code of Federal Regulations ("CFR"), with respect to United
States "book-entry Treasury securities" maintained by a Federal Reserve
Bank and, pursuant to other relevant sections of the CFR, with respect to
various other securities issued or guaranteed by the federal government of
the United States or an agency thereof or a corporation sponsored thereby
and maintained by a Federal Reserve Bank, the perfection of security
interests granted by commercial, non-governmental parties in book-entry
Treasury securities, or such other federal securities, as the case may be,
held in a securities account of a participant financial institution, such
as the Custodian, maintaining such account with such Federal Reserve Bank,
will be governed by the law of the jurisdiction determined in accordance
with Section 357.11 of Title 31 of the CFR. If that jurisdiction has not
adopted Revised Article 8, then such jurisdiction will be deemed to have
adopted Revised Article 8 for purposes of determining the law governing
such perfection. We confirm that Revised Article 8 has been enacted by
Connecticut as part of the Connecticut UCC and that Revised Article 8 is
currently in effect in Connecticut.
(e) We have also assumed that (i) any securities comprised in the
Liquid Collateral and held by Depository Trust Company or another clearing
corporation will be held by Depository Trust Company or such other clearing
corporation for the direct account of the Custodian and not for the account
of the Custodian through any other securities intermediary, and (ii) any
securities comprised in the Liquid Collateral consisting of "book-entry
Treasury securities" or other uncertificated federal securities will be
credited to a direct account of the Custodian with a Reserve Bank (as such
term is defined in the relevant section of the CFR) and not for the account
of the Custodian through a securities intermediary.
(f) We do not express any opinion as to the attachment or
perfection of any security interest in (i) any securities that are
maintained with, or held on the system of, Cedel S.A., or any like
maintenance, clearing or settlement system operating outside of the United
States of America, (ii) the Collateral Account, to the extent that the
Collateral Account constitutes an asset, other than general intangibles,
separate from the property credited thereto, (iii) any Liquid Collateral
which, at the time of reference thereto, is no longer identified as subject
to a security interest in favor of the Indenture Trustee or has otherwise
been withdrawn from the Collateral Account, or (iv) any identifiable
proceeds of any Liquid Collateral following the lapse of the ten day period
set forth in Section 9-306(3) of the Connecticut UCC, to the extent that
such proceeds do not constitute securities, security entitlements,
financial assets or general intangibles in which a security interest is
perfected in the manner contemplated by this opinion, as if such proceeds
were original Liquid Collateral.
(g) We express no opinion as to the priority of such security
interest over any other or competing interest in or claims against such
Liquid Collateral.
(h) We have assumed that (i) the Custodian, in the ordinary course
of business, accepts for deposit securities as a service for its customers,
maintains securities accounts in the names of such customers reflecting
ownership of or interests in such securities, and, in regard to the
transactions contemplated by the Indenture, is acting in such capacity,
(ii) all securities or other financial assets from time to time credited to
the Collateral Account and to be comprised in the Liquid Collateral will
have been credited to the Collateral Account in such a way as to create
security entitlements in favor of the Owner Trustee, (iii) the records of
the Custodian indicate and will, at the time of reference thereto, indicate
that the aggregate amount of each security or other financial assets
comprised in the Liquid Collateral, together with all other such securities
or other financial assets carried by the Custodian for its customers and
for its proprietary account, is at least equal to the aggregate amount of
such security or other financial assets carried by it for its customers and
for its proprietary account, (iv) the books and records of the Custodian
indicate and will, at the time of reference thereto, indicate that the
securities or other financial assets to be comprised in the Liquid
Collateral are registered on the books and records of the Custodian as
being for the beneficial account of the Owner Trustee, subject to, as
identified on such books and records, the security interest therein in
favor of the Indenture Trustee, and (v) the assumptions contained in this
paragraph are in accordance with laws and regulations currently in effect
as applicable to the Custodian.
(j) In so far as our opinion relates to the enforceability of any
obligations of the Owner Trustee, the enforcement of such obligations may
be limited by bankruptcy, insolvency, reorganization, moratorium,
marshalling or other laws and rules of law affecting the enforcement
generally of creditors' rights and remedies (including such as may deny
giving effect to waivers of debtors' or guarantors' rights); and we express
no opinion as to (i) the status under Section 548 of the Bankruptcy Code
and applicable state fraudulent conveyance laws of the obligations of the
Owner Trustee under the Indenture or interests purported to be granted
pursuant to the Indenture, (ii) the enforceability of any particular
provision of the Indenture relating to remedies after default or as to the
availability of any specific or equitable relief of any kind (and we point
out that the enforcement of any of your rights may in all cases be subject
to an implied duty of good faith and fair dealing and to general principles
of equity, regardless of whether such enforceability is considered in a
proceeding at law or in equity, and, as to any of your rights to collateral
security, will be subject to a duty to act in a commercially reasonable
manner), (iii) the enforceability of any particular provision of the
Indenture relating to (A) waivers of defenses, of rights to trial by jury,
or rights to object to jurisdiction or venue and other rights or benefits
bestowed by operation of law, (B) the effect of suretyship defenses, or
defenses in the nature thereof, with respect to obligations of any
applicable guarantor, joint obligator or surety, (C) waivers of provisions
which are not capable of waiver under Sections 1-102(3) and 9-501(3) of the
Connecticut UCC, (D) the grant of powers of attorney to the Indenture
Trustee, (E) exculpation clauses, indemnity clauses and clauses relating
to releases or waivers of unmatured claims or rights, (F) interest or other
charges that may be usurious under applicable law, or (G) the collection of
interest on overdue interest or providing for a penalty rate of interest or
late charges on overdue or defaulted obligations, or (iv) as to the
availability of any specific or equitable relief of any kind. However,
notwithstanding the qualification set forth in the foregoing clause (ii),
and excluding the parenthetical in that clause, subject to the other
exceptions, qualifications and limitations set forth in this opinion
(including the parenthetical in clause (ii)) and subject to the fact that
there may be economic consequences arising out of any procedural or other
delay on account of the limitation or unenforceability of any particular
provision of the Indenture relating to remedies after default, such
limitation or unenforceability does not, in our judgment, render the
provisions of the Indenture and the Control Agreement relating to remedies
after default, taken as a whole, inadequate for the practical realization
of the benefits of enforcement of a security interest in the Liquid
Collateral following the receipt by the Custodian of an enforcement notice
properly given under the Indenture and the Control Agreement by the
Indenture Trustee to the Custodian with respect to such Liquid Collateral.
(k) With respect to property as to which the security interest
purported to be granted pursuant to the Indenture attaches after the date
hereof, we call to your attention that Section 552 of the Bankruptcy Code
limits the extent to which assets acquired by a debtor after the
commencement of a case under the United States Bankruptcy Code may be
subject to a security interest arising from a security agreement entered
into by the debtor before the commencement of such case. We further call
to your attention that under Section 547 of the Bankruptcy Code, a security
interest that attaches within the relevant period set forth in Section
547(b)(4) of the Bankruptcy Code may be avoidable under certain
circumstances.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Indenture Trustee has, under the terms of the Connecticut
UCC and, in the case of book-entry Treasury securities, under the CFR, a
perfected security interest in the Liquid Collateral that constitutes a
"security," "security entitlement" or "financial asset" (as each such term
is defined in the Connecticut UCC), and in the identifiable proceeds
thereof to secure the payment of the Obligations.
2. The Indenture creates, under the terms of the Connecticut UCC, a
valid security interest in such of the Liquid Collateral that constitutes
"general intangibles" (as such term is defined in Section 9-106 of the
Connecticut UCC) and in the identifiable proceeds thereof to secure the
payment of the Obligations. Upon the filing of a financing statement on
form UCC-1 pursuant to the Connecticut UCC with the Secretary of State of
the State of Connecticut naming the Owner Trustee as Debtor and the
Indenture Trustee as Secured Party and accurately describing the Liquid
Collateral and the Collateral Account, which filing has been duly effected,
such security interest will be perfected (to the extent that the perfection
of a security interest in the Liquid Collateral can be accomplished by the
filing in Connecticut of financing statements under the Connecticut UCC).
We point out that:
(a) The effectiveness of a financing statement will lapse (i) on
the expiration of a five-year period from their dates of filing, or (if
later) five years from the last date as to which such financing statements
were effective following the proper filing of continuation statements with
respect thereto, unless continuation statements are filed within six months
prior to the expiration of the applicable five-year period, (ii) with
respect to general intangibles in which a security interest has been
perfected by the filing of a financing statement in the jurisdiction of the
location of the debtor, for a period of more than four months after the
debtor has changed its location from that jurisdiction to a new
jurisdiction unless such security is perfected in the new jurisdiction
within the earlier to occur of the end of such four month period or the
date on which such financing statement would have otherwise lapsed, and
(iii) with respect to "investment property," under and as defined in
Revised Article 8, in which a security interest has been perfected by the
filing of a financing statement in the jurisdiction of the location of the
debtor, from the time that the debtor changes its location from that
jurisdiction to a new jurisdiction unless such security interest is
perfected in the new jurisdiction on or before the time of such change of
location.
(b) If any debtor changes its name, identity or corporate structure
such that any financing statement becomes misleading, such financing
statement will be ineffective to perfect a security interest in any
collateral acquired by such debtor more than four months after such change.
We assume no obligation to update this opinion as a result of any
change in any fact, circumstance or statute or other rule of law occurring
after the date hereof.
This opinion is delivered to you solely in connection with the
transactions referred to herein and for your sole use and no other person or
entity may rely on this opinion without our express written consent.
Very truly yours,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(3)(a)(ii)
[Letterhead of Bingham Dana LLP]
[Delivery Date]
To Each of the Parties Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N620FE
--------------------------------------------
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. N620FE) dated as of June 15, 1998, as amended and restated as of
______________ between State Street and ___________________, as Owner
Participant ("Owner Participant") (the "Trust Agreement") in connection with
the transactions contemplated by that certain Participation Agreement (Federal
Express Corporation Trust No. N620FE) dated as of June 15, 1998, as amended
and restated as of ______________ (the "Participation Agreement") by and among
Federal Express Corporation, as Lessee (the "Lessee") and the Initial Owner
Participant; the Owner Participant; the Owner Trustee; and First Security
Bank, National Association, in its individual capacity and as Indenture Trustee
(the "Indenture Trustee"), Pass Through Trustee and 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 4.02(d)(iii) 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) the certificates
delivered to us by the management of State Street and have assumed, without
independent inquiry, the accuracy of those representations and certificates.
We have examined each 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 of each other party thereto (except,
with respect to the Trust Agreement, the Owner Participant);
(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.
Except as set forth in paragraph 12 below, which opinion is based
solely upon our review of Uniform Commercial Code search reports conducted
with the Secretary of the State of the State of Connecticut, 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. 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 or had, on the date of execution
thereof, 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 Documents 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 or had, on the date of execution thereof, 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 Documents and each
such Owner Trustee Document 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, 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, which filing has been duly effected,
and the filing of continuation statements with respect thereto required to
be filed at periodic intervals under the UCC.
7. 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, (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,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
- -----------------
[name of owner participant]
EXHIBIT A(4)
[Letterhead of Ray, Quinney & Nebeker]
[Certificate Closing Date]
To the Persons Listed in Schedule A Attached Hereto
Re: Federal Express Corporation Trust No. N620FE
--------------------------------------------
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 the
date hereof 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 1998-1-A, 1998-1-B and 1998-1-C,
respectively (the "Series Supplements") and the Participation Agreement
(Federal Express Corporation Trust No. N620FE), dated as of June 15, 1998 (the
"Participation Agreement"), among Federal Express Corporation, as Lessee and
Initial 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.
N620FE (the "Aircraft") is being financed. This opinion is furnished pursuant
to Section 4.01(j)(v) 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) are being
collectively referred to as the "Pass Through Trustee Documents" and each of
the documents identified in paragraphs (d) through (f) 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 below, 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. 333-49411 (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 the Owner Participant, nor the
Owner Trustee, 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), governmental fee or other similar charge under the laws of
the State of Utah or any political subdivision thereof (other than taxes
imposed on the fees received by First Security 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),
governmental fee or other similar 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 Pass Through 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 Pass Through 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 Pass Through
Trustee, of the Pass Through 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 Pass
Through 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,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(5)(a)
[Letterhead of Kreditanstalt fur Wiederaufbau]
[Certificate Closing Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation 1998-1 Pass Through Trusts
------------------------------------------------------
Ladies and Gentlemen:
In my capacity as General Counsel of Kreditanstalt fur Wiederaufbau
("KfW") I am rendering this opinion in connection with (i) the Irrevocable
Revolving Credit Agreement Class A Pass Through Certificates, dated as of June
15, 1998 (the "Class A Liquidity Agreement"), between KfW and First Security
Bank, National Association, a national banking association, as Subordination
Agent under the Intercreditor Agreement (as defined below), and as agent and
trustee for the Federal Express Corporation 1998-1-A Pass Through Trust, (ii)
the Irrevocable Revolving Credit Agreement Class B Pass Through Certificates,
dated as of June 15, 1998 (the "Class B Liquidity Agreement" and, together
with the Class A Liquidity Agreement, the "Liquidity Agreements"), between KfW
and First Security Bank, National Association, a national banking association,
as Subordination Agent under the Intercreditor Agreement, and as agent and
trustee for the Federal Express Corporation 1998-1-B Pass Through Trust, and
(iii) the Intercreditor Agreement, dated as of June 15, 1998 (the
"Intercreditor Agreement"), among KfW, First Security Bank, National
Association, a national banking association, as Pass Through Trustee and as
Subordination Agent (the Liquidity Agreements and the Intercreditor Agreement
are hereinafter collectively referred to as the "Relevant Documents").
Capitalized terms herein which are undefined have the meanings
assigned thereto in the Relevant Documents.
For purposes of this legal opinion, I have examined a copy of each of
the Relevant Documents and such other certificates, documents, agreements and
instruments as I have deemed necessary as a basis for the opinions expressed
below.
In giving this opinion, I have assumed the genuineness of all
signatures, the authenticity of all agreements, certificates, instruments and
documents submitted to me as originals, and the conformity to the originals of
all agreements, certificates, instruments and documents submitted to me as
copies. As to questions of fact material to the opinions expressed below, I
have, when relevant facts were not independently established by me, examined
and relied upon representations of officers of KfW.
Based upon and subject to the foregoing examination and assumptions,
and subject to the qualifications set forth below, I am of the opinion that:
1. KfW is duly organized and validly existing as a corporation under
the public law of the Federal Republic of Germany and has full power and
authority (corporate and otherwise) to execute, deliver and perform the
Relevant Documents.
2. Mr. Scheer and Mr. Behler, acting together, are both duly
authorized by KfW to execute and deliver the Relevant Documents for and on
behalf of KfW.
3. The governing-law clause, subjecting the Relevant Documents to New
York law, is valid under German law.
(i) Under German law, New York law will be applied to an agreement,
such as the Relevant Documents, which under German law has been
validly subjected to New York law.
(ii) (a) None of the terms of the Relevant Documents is
irreconcilable with important principles of German law, and (b) there
are no mandatory provisions of German law which must be applied to
the transactions covered by the Relevant Documents.
4. No notice to or filing with, any governmental, administrative or
other authority or court of the Federal Republic of Germany is required for
the execution or delivery of the Relevant Documents by KfW or for the
performance by KfW of the Relevant Documents.
5. Assuming the validity under New York law of the Relevant
Documents:
(i) The Relevant Documents constitute legal, valid and binding
obligations of KfW enforceable against KfW in accordance with their
respective terms.
(ii) A judgment obtained against KfW in the courts of the State of
New York in any suit, action or proceeding arising out of the
Relevant Documents will be enforceable against KfW in the courts of
Germany without further litigation or examination on the merits of
such suit, action or proceeding, provided that conditions in terms
of Section 328 of the German Zivilprozeordnung (Code of Civil
Procedure) - notably (a) if reciprocity is not guaranteed; (b) if
according to German law the foreign venue is improper, and if
procedural rules have not been observed by the court to the
disadvantage of the defendant; (c) if the judgment obtained is
irreconcilable with important principles of German law or would
conflict with German basic rights (see 3(ii) above) - do not bar the
judgment from recognition.
(iii) The obligations of KfW under the Relevant Documents rank at
least equal in priority of payment and in all other respects with its
obligations to pay any other unsecured and unsubordinated obligations
of KfW for borrowed money, including deposit liabilities, that are
not expressly preferred by law.
6. The waiver of immunity set forth in Section 7.11(c) of each of the
Liquidity Agreements and Section 10.11(c) of the Intercreditor Agreement is
valid under German law.
The foregoing opinions are subject to the following qualifications:
(i) The opinion in paragraph (5) with respect to enforceability is
subject to the effect of any bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws affecting creditors' rights
generally, applicable to KfW and to any law or general principle of
law from time to time in effect in the Federal Republic of Germany
that could be considered by the German Courts as a provision of
public policy.
(ii) No opinion is expressed with respect to the law of any
jurisdiction other than the laws of the Federal Republic of Germany.
This opinion is being furnished to you solely for your benefit in
connection with the transactions described above and may not be used,
circulated, quoted or otherwise referred to for any other purpose without my
express written consent.
Very truly yours,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
EXHIBIT A(5)(b)
[Letterhead of Kreditanstalt fur Wiederaufbau]
[Certificate Closing Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation 1998-1 Pass Through Trusts
------------------------------------------------------
Ladies and Gentlemen:
In my capacity as General Counsel of Kreditanstalt fur Wiederaufbau
("KfW") I am rendering this opinion in connection with (i) Letter of Credit
No. ______________ dated July ___, 1998 (the "Letter of Credit") issued by KfW
in favor of First Security Bank, National Association, as Subordination Agent
(the "Subordination Agent") under the Intercreditor Agreement dated as of June
15, 1998 among First Security Bank, National Association, as Pass Through
Trustee, KfW, as Class A Liquidity Provider and Class B Liquidity Provider,
and the Subordination Agent, (ii) the Reimbursement Agreement dated July ___,
1998 (the "Reimbursement Agreement") between KfW and Federal Express
Corporation and (iii) the letter dated July ___, 1998 (the "Letter Agreement"
and, together with the Letter of Credit and the Reimbursement Agreement, the
"Relevant Documents") from KfW to the Subordination Agent.
Capitalized terms herein which are undefined have the meanings
assigned thereto in the Relevant Documents.
For purposes of this legal opinion, I have examined a copy of each of
the Relevant Documents and such other certificates, documents, agreements and
instruments as I have deemed necessary as a basis for the opinions expressed
below.
In giving this opinion, I have assumed the genuineness of all
signatures, the authenticity of all agreements, certificates, instruments and
documents submitted to me as originals, and the conformity to the originals of
all agreements, certificates, instruments and documents submitted to me as
copies. As to questions of fact material to the opinions expressed below, I
have, when relevant facts were not independently established by me, examined
and relied upon representations of officers of KfW.
Based upon and subject to the foregoing examination and assumptions,
and subject to the qualifications set forth below, I am of the opinion that:
1. KfW is duly organized and validly existing as a corporation under
the public law of the Federal Republic of Germany and has full power and
authority (corporate and otherwise) to execute, deliver and perform the
Relevant Documents.
2. Mr. Scheer and Mr. Behler, acting together, are both duly
authorized by KfW to execute and deliver the Relevant Documents for and on
behalf of KfW.
3. The governing-law clause, subjecting the Relevant Documents to New
York law, is valid under German law.
(i) Under German law, New York law will be applied to an agreement,
such as the Relevant Documents, which under German law has been
validly subjected to New York law.
(ii) (a) None of the terms of the Relevant Documents is
irreconcilable with important principles of German law, and (b) there
are no mandatory provisions of German law which must be applied to
the transactions covered by the Relevant Documents.
4. No notice to or filing with, any governmental, administrative or
other authority or court of the Federal Republic of Germany is required for
the execution or delivery of the Relevant Documents by KfW or for the
performance by KfW of the Relevant Documents.
5. Assuming the validity under New York law of the Relevant
Documents:
(i) The Relevant Documents constitute legal, valid and binding
obligations of KfW enforceable against KfW in accordance with their
respective terms.
(ii) A judgment obtained against KfW in the courts of the State of
New York in any suit, action or proceeding arising out of the
Relevant Documents will be enforceable against KfW in the courts of
Germany without further litigation or examination on the merits of
such suit, action or proceeding, provided that conditions in terms
of Section 328 of the German Zivilprozeordnung (Code of Civil
Procedure) - notably (a) if reciprocity is not guaranteed; (b) if
according to German law the foreign venue is improper, and if
procedural rules have not been observed by the court to the
disadvantage of the defendant; (c) if the judgment obtained is
irreconcilable with important principles of German law or would
conflict with German basic rights (see 3(ii) above) - do not bar the
judgment from recognition.
(iii) The obligations of KfW under the Relevant Documents rank at
least equal in priority of payment and in all other respects with its
obligations to pay any other unsecured and unsubordinated obligations
of KfW for borrowed money, including deposit liabilities, that are
not expressly preferred by law.
The foregoing opinions are subject to the following qualifications:
(i) The opinion in paragraph (5) with respect to enforceability is
subject to the effect of any bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws affecting creditors' rights
generally, applicable to KfW and to any law or general principle of
law from time to time in effect in the Federal Republic of Germany
that could be considered by the German Courts as a provision of
public policy.
(ii) No opinion is expressed with respect to the law of any
jurisdiction other than the laws of the Federal Republic of Germany.
This opinion is being furnished to you solely for your benefit in
connection with the transactions described above and may not be used,
circulated, quoted or otherwise referred to for any other purpose without my
express written consent.
Very truly yours,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
EXHIBIT A(5)(c)
[Letterhead of Milbank, Tweed, Hadley & McCloy]
[Certificate Closing Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation 1998-1 Pass Through Trusts
------------------------------------------------------
Ladies and Gentlemen:
We have acted as special New York counsel to Kreditanstalt fur
Wiederaufbau (herein called "KfW") in connection with the transactions
contemplated by (i) the Irrevocable Revolving Credit Agreement Class A Pass
Through Certificates, dated as of June 15, 1998 (the "Class A Liquidity
Agreement"), between KfW and First Security Bank, National Association, as
Subordination Agent under the Intercreditor Agreement, as defined below, as
agent and trustee for the Federal Express Corporation 1998-1-A Pass Through
Trust, (ii) the Irrevocable Revolving Credit Agreement Class B Pass Through
Certificates, dated as of June 15, 1998 (the "Class B Liquidity Agreement"
and, together with the Class A Liquidity Agreement, the "Liquidity
Agreements"), between KfW and First Security Bank, National Association, as
Subordination Agent under the Intercreditor Agreement, as defined below, as
agent and trustee for the Federal Express Corporation 1998-1-B Pass Through
Trust and (iii) the Intercreditor Agreement, dated as of June 15, 1998 (the
"Intercreditor Agreement" and, together with the Liquidity Agreements, the
"Relevant Documents"), among KfW and First Security Bank, National
Association, as Pass Through Trustee and as Subordination Agent. Capitalized
terms used herein but not otherwise defined herein shall have the meanings
provided in the Relevant Documents.
In rendering the opinion expressed below, we have examined the
Relevant Documents, the opinion dated the date hereof of Ruediger Sass,
General Counsel of KfW, and such other documents as we have deemed necessary.
In our examination, we have assumed the authenticity of all documents
submitted to us as originals and the conformity with authentic original
documents of all documents submitted to us as copies. When relevant facts
were not independently established, we have relied upon representations made
in or pursuant to the Relevant Documents.
In rendering the opinion expressed below, we have assumed, with
respect to each Relevant Document, that:
(i) it has been duly authorized by, has been duly executed and
delivered by, and (except to the extent set forth in the opinion
below as to KfW) constitutes legal, valid, binding and enforceable
obligations of all of the parties thereto;
(ii) all signatories thereto have been duly authorized; and
(iii) all of the parties thereto are duly organized and validly existing
and have the power and authority (corporate, partnership, trust or
otherwise) to execute, deliver and perform thereunder.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinion
expressed below, we are of the opinion that each Relevant Document constitutes
the legal, valid and binding obligation of KfW, enforceable against KfW in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or transfer or other similar
laws relating to or affecting the rights of creditors generally and except as
the enforceability of such Relevant Document is subject to the application of
general principles of equity (regardless of whether considered in a proceeding
in equity or at law), including, without limitation, (a) the possible
unavailability of specific performance, injunctive relief or any other
equitable remedy and (b) concepts of materiality, reasonableness, good faith
and fair dealing.
The foregoing opinion is subject to the following comments and
qualifications:
(A) The enforceability of provisions in the Relevant Documents to
the effect that terms may not be waived or modified except in writing
may be limited under certain circumstances.
(B) We express no opinion as to (i) the effect of the laws of any
jurisdiction in which KfW is located (other than New York) that limit
the interest, fees or other charges KfW may impose for the loan or use
of money or other credit, (ii) Section 7.11(a)(i) of each Liquidity
Agreement and Section 10.11(a)(i) of the Intercreditor Agreement,
insofar as such Sections relate to the subject matter jurisdiction of a
Federal court sitting in New York, New York to adjudicate any
controversy related to the Relevant Documents, (iii) the waiver of
inconvenient forum set forth in Section 7.11(a)(ii) of each Liquidity
Agreement and Section 10.11(a)(ii) of the Intercreditor Agreement with
respect to proceedings in a Federal court sitting in New York, New York
and a State court of the State of New York and (iv) the waiver of
immunity set forth in Section 7.11(c) of each Liquidity Agreement and
Section 10.11(c) of the Intercreditor Agreement with respect to
proceedings in a Federal court sitting in New York, New York and a State
court of the State of New York.
The foregoing opinion is limited to matters involving the Federal
laws of the United States of America and the law of the State of New York, and
we do not express any opinion as to the laws of any other jurisdiction. In
particular, we do not express any opinion as to the laws of Germany and, to
the extent such laws may be relevant to the opinion expressed herein, we have,
with your permission, relied upon the aforementioned opinion of Ruediger Sass,
Esq., General Counsel of KfW, without independently considering the matters
covered thereby, and our opinion is subject to all limitations, exceptions and
qualifications contained therein as if set forth herein in full.
At the request of KfW, this opinion letter is provided to you by
us in our capacity as special New York counsel to KfW, and this opinion letter
may not be relied upon by any Person for any purpose other than in connection
with the transactions contemplated by the Relevant Documents without, in each
instance, our prior written consent.
Very truly yours,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(5)(d)
[Letterhead of Milbank, Tweed, Hadley & McCloy]
[Certificate Closing Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation 1998-1 Pass Through Trusts
------------------------------------------------------
Ladies and Gentlemen:
We have acted as special New York counsel to Kreditanstalt fur
Wiederaufbau (herein called "KfW") in connection with (i) Letter of Credit No.
______________ dated July ___, 1998 (the "Letter of Credit") issued by KfW in
favor of First Security Bank, National Association, as Subordination Agent
(the "Subordination Agent") under the Intercreditor Agreement dated as of June
15, 1998 among First Security Bank, National Association, as Pass Through
Trustee, KfW, as Class A Liquidity Provider and Class B Liquidity Provider,
and the Subordination Agent, (ii) the Reimbursement Agreement dated July ___,
1998 (the "Reimbursement Agreement") between KfW and Federal Express
Corporation, and (iii) the letter dated July ___, 1998 (the "Letter Agreement"
and, together with the Letter of Credit and the Reimbursement Agreement, the
"Relevant Documents") from KfW to the Subordination Agent.
In rendering the opinions expressed below, we have examined each of
the Relevant Documents, the opinion dated the date hereof of Ruediger Sass,
General Counsel of KfW, and such other documents as we have deemed necessary
as a basis for the opinions expressed below.
In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity with authentic original documents of all documents submitted to
us as copies. When relevant facts were not independently established, we have
relied upon statements of governmental officials and upon certificates of
appropriate representatives of KfW.
In rendering the opinions expressed below, we have assumed, with
respect to all of the documents referred to in this opinion letter, that:
(i) such documents been duly authorized by, have been duly executed and
delivered by, and (except to the extent set forth in the opinion
below as to KfW) constitute legal, valid, binding and enforceable
obligations of, all of the parties to such documents;
(ii) all signatories to such documents have been duly authorized; and
(iii) all of the parties to such documents are duly organized and validly
existing and have the power and authority (corporate, trust or
otherwise) to execute, deliver and perform such documents.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinions
expressed below, we are of the opinion that each of the Relevant Documents
constitutes valid and binding obligations of KfW enforceable against KfW in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, conservatorship, receivership, moratorium or other similar
laws relating to or affecting the rights of creditors generally (as such laws
would apply in the event of the insolvency, liquidation, reorganization,
conservatorship or receivership of, or other similar occurrence with respect
to, KfW) and except as the enforceability of such Relevant Document is subject
to the application of general principles of equity (regardless of whether
considered in a proceeding in equity or at law), including, without limitation,
(a) the possible unavailability of specific performance, injunctive relief or
any other equitable remedy and (b) concepts of materiality, reasonableness,
good faith and fair dealing.
The foregoing opinion is subject to the following comments and
qualifications:
(A) The enforceability of any provision in any of the Relevant
Documents to the effect that the terms thereof may not be waived or
modified except in writing may be limited as provided in Section
15-301(1) of the New York General Obligations Law and Section 1-205(3)
of the New York Uniform Commercial Code.
(B) With respect to our opinion above as it pertains to the
Letter of Credit, we call your attention to Wysko Investment Co. v.
Great American Bank, 131 B.R. 146 (D. Ariz. 1991), which holds that a
bankruptcy court may enjoin payment under a letter of credit pursuant to
Section 105 of the United States Bankruptcy Code, 11 U.S.C. Section 105,
in unusual circumstances. Id. at 147. In that case, the unusual
circumstance was a bankruptcy court finding that the injunction was
necessary for the reorganization. Id. at 148. In addition, In re
Delaware River Stevedores, Inc., 129 B.R. 38 (Bankr. E.D. Pa. 1991),
suggests that "an injunction prohibiting payment on a L/C could
conceivably be appropriate" if certain factors relating to issuing
Section 105(a) injunctions "generally weighed in the debtor's favor."
Id. at 42, citing In re Guy C. Long, Inc., 74 B.R. 939 (Bankr. E.D. Pa.
1987). To the extent that the rationale of Wysko Investment Co. or
Delaware River Stevedores would support the issuance of a permanent
injunction against payment under the Letter of Credit, we are of the
opinion that those cases do not reflect a correct statement of the law
in respect of letters of credit and are not controlling precedent in any
court exercising bankruptcy jurisdiction outside of Arizona or the
Eastern District of Pennsylvania, as the case may be.
(C) We express no opinion as to whether a court exercising
bankruptcy jurisdiction might issue a temporary restraining order or
other interim relief in order to preserve the status quo concerning the
Letter of Credit pending a review of the merits of any request to enjoin
payment under the Letter of Credit.
The foregoing opinions are limited to matters involving the
Federal laws of the United States and the law of the State of New York, and we
do not express any opinion as to the laws of any other jurisdiction. In
particular, we do not express any opinion as to the laws of Germany and, to
the extent such laws may be relevant to the opinion expressed herein, we have,
with your permission, relied upon the aforementioned opinion of Ruediger Sass,
Esq., General Counsel of KfW, without independently considering the matters
covered thereby, and our opinion is subject to all limitations, exceptions and
qualifications contained therein as if set forth herein in full.
This opinion letter is provided to you by us in our capacity as
special New York counsel to KfW and may not be relied upon by any other person
or entity or by you for any purpose other than in connection with the Relevant
Documents without, in each instance, our prior written consent.
Very truly yours,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(6)
[Letterhead of McDonnell Douglas Corporation]
[Delivery Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N620FE
--------------------------------------------
You have requested that McDonnell Douglas Corporation, a
wholly-owned subsidiary of The Boeing Company (the "Manufacturer") furnish you
an opinion in connection with Section 4.02(d) of the Participation Agreement
(Federal Express Corporation Trust No. N620FE), dated as of June 15, 1998, as
amended and restated as of ________________ (the "Participation Agreement"),
among Federal, as Lessee and Initial Owner Participant, ____________________,
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, with
respect to a McDonnell Douglas Model MD-11F aircraft bearing Federal Aviation
Administration registration number N620FE and Manufacturer's serial number
48791 (including the engines installed thereon but excluding equipment
furnished by the Lessee therefor, the "Aircraft").
In this regard, the Office of the General Counsel for Douglas
Aircraft Company, a division of the Manufacturer has examined and is familiar
with the Manufacturer's Articles of Incorporation and Bylaws, as amended,
including provisions thereof with respect to the Boards of Directors. In
addition, we have examined, among other things (1) Purchase Agreement No.
A00431B dated as of March 17, 1998 between the Lessee and the Manufacturer,
(2) the Manufacturer's Consent and Agreement to the Purchase Agreement
Assignment (Federal Express Corporation Trust No. N620FE) dated as of June 15,
1998 between the Lessee and the Owner Trustee and (3) the Manufacturer's
Warranty Bill of Sale and FAA Bill of Sale conveying title to the Aircraft to
the Lessee (such documents executed by the Manufacturer are hereby
collectively referred to as the "Manufacturer Documents").
Based upon the foregoing and upon statements of appropriate
Manufacturer employees as to factual matters and upon examination of the law
as it deems necessary for the purposes of this Opinion, this Office is of the
following opinion:
1. The Manufacturer is a corporation duly incorporated and
validly existing in good standing under the laws of the State of Maryland, and
is duly qualified and authorized to do business as a foreign corporation in,
among other jurisdictions, the state of California.
2. The Manufacturer has the full corporate power, authority, and
legal right to execute, deliver and perform under the Manufacturer Documents
and the execution, delivery and performance by the Manufacturer of its
obligations under the Manufacturer Documents have been duly authorized by all
necessary corporate action on the part of the Manufacturer.
3. The Manufacturer Documents have been duly executed and
delivered by, and, on the assumption that they have been duly executed and
delivered by all other parties thereto, constitute the legal, valid and
binding obligations of, the Manufacturer, enforceable in accordance with the
respective terms thereof, do not require any stockholder approval, do not, to
the best of our knowledge, require any approval or consent of any trustee or
holder of any indebtedness or obligations of the Manufacturer, and do not
contravene the Certificate of Incorporation or by-laws of the Manufacturer, or
any indenture, mortgage, contract, instrument, or other agreement, in each
case known to us, to which the Manufacturer is a party or by which it or any of
its properties is bound.
4. Good title to the Aircraft was at the time of delivery by the
Manufacturer to the Lessee vested in the Manufacturer, free and clear of all
liens, claims, encumbrances, security interests, and rights of others; and
assuming the filing for recordation of the FAA Bill of Sale in accordance with
the provisions of the Federal Aviation Act of 1958, as amended, good title to
the Aircraft was on such date duly conveyed by the Manufacturer to the Lessee,
free and clear of all liens, claims, encumbrances, security interests, and
rights of others.
5. Each of the FAA Bill of Sale and the Warranty Bill of Sale
covering the Aircraft constituted an effective instrument for the conveyance
of good title to the Aircraft to the Lessee, given the filing for recordation
of the FAA Bill of Sale for the Aircraft in accordance with the provisions of
the Federal Aviation Act of 1958 as amended.
6. The Aircraft was duly delivered by the Manufacturer to the
Lessee and (as evidenced by the Lessee's execution of a receipt for the
Aircraft) duly accepted by the Lessee pursuant to the Purchase Agreement. For
purposes of this opinion, I have assumed that the Lessee had the power and
authority to accept title to and delivery of the Aircraft on the date of
delivery and that the representative acting on behalf of the Lessee was duly
authorized to accept title to and delivery of the Aircraft on the Lessee's
behalf.
Insofar as the foregoing opinion relates to the enforceability of
any instrument, such enforceability is subject to applicable bankruptcy,
insolvency, moratorium and other similar laws affecting the enforcement of
creditors' rights generally (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
No opinion is expressed as to laws other than the corporate law of
the State of Maryland, the laws of the State of California and the Federal
laws of the United States of America.
Very truly yours,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
- -----------------
[name of owner participant]
EXHIBIT A(7)
[Letterhead of Pratt & Whitney]
[Delivery Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N620FE
--------------------------------------------
Reference is made to (i) that certain Participation Agreement (Federal
Express Corporation Trust No. N620FE), dated as of June 15, 1998, as amended
and restated as of _______________ (the "Participation Agreement") by and
among Federal Express Corporation, as Lessee and Initial Owner Participant
("Fed Ex"), ________________________, 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) and (ii) that certain Purchase Agreement Assignment
(Federal Express Corporation Trust No. N620FE), dated as of June 15, 1998 (the
"Purchase Agreement Assignment") between Fed Ex, as Lessee and SSB, as Lessor.
I am an attorney employed by Pratt & Whitney (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 Engine Consent and Agreement (the "Consent"). The Consent covers three
Pratt & Whitney 4462 series engines bearing Engine Manufacturer's serial
numbers ___-___, ___-___ and ___-___, 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.
_______, dated as of _____________ between the Engine Manufacturer and Fed Ex
(the "General Terms Agreement"), the Participation Agreement and the Purchase
Agreement Assignment.
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 and the Purchase Agreement Assignment.
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 and the Purchase
Agreement Assignment 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 and the
Purchase Agreement Assignment 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.
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 and the Consent. The execution,
delivery and performance by the Engine Manufacturer of each of the
General Terms Agreement and the Consent was duly authorized by all
necessary corporate action on the part of the Engine Manufacturer.
(2) Each of the General Terms Agreement and the Consent 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.
The foregoing opinions are limited to the laws of the State of
__________ 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,
SCHEDULE A
Lessee
- ------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
- -----------------
[name of owner participant]
EXHIBIT A(8)
[Letterhead of Daugherty, Fowler & Peregrin]
[Delivery Date]
To the Parties Named on Schedule A attached hereto
Re: Federal Express Corporation Trust No. N620FE
--------------------------------------------
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 4.02(d)(vii)
of the Participation Agreement (Federal Express Corporation Trust No. N620FE),
dated as of June 15, 1998, as amended and restated as of _____________ (the
"Participation Agreement") among Federal Express Corporation, as Lessee (the
"Lessee") and Initial Owner Participant, _________________, 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._.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._.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._.T.;
(d) executed counterpart of Trust Agreement (Federal Express
Corporation Trust No. N620FE) dated as of June 15, 1998, as
amended and restated as of ____________ (the "Trust
Agreement") between the Owner Participant and the Owner
Trustee, which Trust Agreement was filed at ____ _.m.,
C._.T.;
(e) executed counterpart of Trust Indenture and Security
Agreement (Federal Express Corporation Trust No. N620FE)
dated as of June 15, 1998, as amended and restated as of
_____________ (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. N620FE) 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._.T.; and,
(f) executed counterpart of Lease Agreement (Federal Express
Corporation Trust No. N620FE) dated as of June 15, 1998, as
amended and restated as of ______________ (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. N620FE) 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._.T.
The Confidential Omissions were intentionally omitted from the FAA
filing counterparts of the Lease and the Trust Indenture as containing
confidential financial information.
Based upon our examination of the above described instruments and
of such records of the FAA as we deemed necessary to render this opinion, it
is our opinion that:
1. the FAA Bill of Sale, the Trust Indenture with the Trust
Indenture Supplement attached and the Lease with the Lease
Attachments attached are in due form for recordation by and
have been duly filed for recordation with the FAA pursuant
to and in accordance with the provisions of 49 U.S.C.
Section 44107;
2. the Aircraft Registration Application, the Owner Trustee
Affidavit with the Owner Participant Affidavit attached and
the Trust Agreement are in due form for filing and have been
duly filed with the FAA pursuant to and in accordance with
the provisions of 49 U.S.C. Section 44103(a) and Section
47.7(c) of the Federal Aviation Regulations;
3. the Airframe is eligible for registration under 49 U.S.C.
Section 44102 in the name of the Owner Trustee and the
filing with the FAA of the FAA Bill of Sale, the Aircraft
Registration Application, the Owner Trustee Affidavit with
the Owner Participant Affidavit attached and the Trust
Agreement will cause the FAA to register the Airframe, in
due course, in the name of the Owner Trustee and to issue to
the Owner Trustee an AC Form 8050-3 Certificate of Aircraft
Registration for the Airframe, and the Airframe will be duly
registered pursuant to and in accordance with the provisions
of 49 U.S.C. Section 44103(a);
4. the Owner Trustee has valid legal title to the Airframe and
the Aircraft is free and clear of all Liens, except (i) the
security interest created by the Trust Indenture, as
supplemented by the Trust Indenture Supplement, and (ii) the
rights of the parties under the Lease, as supplemented by
the Lease Supplement;
5. the rights of the Owner Trustee and the Lessee under the
Lease, as supplemented by the Lease Supplement, with respect
to the Aircraft, are perfected;
6. the Trust Indenture, as supplemented by the Trust Indenture
Supplement, constitutes a duly perfected first priority
security interest in the Aircraft and a duly perfected first
assignment of all the right, title and interest of the Owner
Trustee in, to and under the Lease and the Lease Supplement
(insofar as such assignment affects an interest covered by
the recording system established by the FAA pursuant to 49
U.S.C. Section 44107), and no other registration of the
Airframe or filings other than filings with the FAA (which
have been duly effected) are necessary in order to perfect
in any applicable jurisdiction in the United States (A) the
Owner Trustee's title to the Airframe or (B) such security
interest and assignment (insofar as such assignment affects
an interest covered by the recording system established by
the FAA pursuant to 49 U.S.C. Section 44107), it being
understood that no opinion is herein expressed as to the
validity, priority or enforceability of such security
interest and assignment under local law or as to the
recognition of the perfection of such security interest and
assignment as against third parties in any legal proceeding
outside the United States;
7. no authorization, approval, consent, license or order of, or
registration with, or the giving of notice to, the FAA is
required for the valid authorization, delivery and
performance of the Lease, as supplemented by the Lease
Supplement, the Trust Indenture, as supplemented by the
Trust Indenture Supplement, or the Trust Agreement except
for such filings as are referred to above; and,
8. neither the execution and delivery by the Owner Participant
of the Participation Agreement or the Trust Agreement, nor
other consummation of the transactions contemplated thereby
by the Owner Participant, requires the consent or approval
of, or the giving of notice to, or the registration of, or
the taking of any other action in respect of the FAA, except
(x) the registration of the Airframe, including the
submission of the Aircraft Registration Application, the
Owner Trustee Affidavit, the Owner Participant Affidavit and
the Trust Agreement to the FAA and (y) the filings for
recordation specified elsewhere in this opinion.
No opinion is expressed as to the Airframe during any period or
periods of time during which it has not been subject to United States
registration.
No opinion is expressed as to laws other than Federal laws of the
United States. In rendering this opinion, we were subject to the accuracy of
the FAA, its employees and agents, in the filing, indexing and recording of
instruments filed with the FAA and in the search for encumbrance
cross-reference index cards for the Engines. Further, in rendering this
opinion we are assuming the validity and enforceability of the above described
instruments under local law. Since our examination was limited to records
maintained by the FAA, our opinion does not cover liens which are perfected
without the filing of notice thereof with the FAA, such as federal tax liens,
liens arising under Section 1368(a) of Title 29 of the United States Code,
possessory artisan's liens, or matters of which the parties have 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,
Annex I
Certain Definitions
Airframe, Engines and Aircraft
One (1) McDonnell Douglas MD-11F aircraft bearing manufacturer's
serial number 48791 and U.S. Registration No. N620FE (the "Airframe") and
three (3) Pratt & Whitney 4462 aircraft engines bearing manufacturer's serial
numbers ___-___, ___-___ and ___-___ (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) of the Lease set forth in Ancillary Agreement II, which was not
attached to the FAA filing counterpart of the Lease or otherwise filed with
the FAA for recordation.
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
- -----------------
[name of owner participant]
EXHIBIT B
[Form of Lease Agreement - See Exhibit 4.e to this Form 8K]
EXHIBIT C
[Form of Indenture - See Exhibit 4.b.1 to this Form 8K]
EXHIBIT D
[Form of Trust Agreement - See Exhibit 4.d to this Form 8K]
EXHIBIT E
PURCHASE AGREEMENT ASSIGNMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N620FE)
PURCHASE AGREEMENT ASSIGNMENT (FEDERAL EXPRESS CORPORATION TRUST
NO. N620FE) dated as of June 15, 1998 (the "Purchase Agreement Assignment"),
between FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Seller"),
and 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 (the "Buyer").
W I T N E S S E T H:
WHEREAS, all capitalized terms used herein shall have the meanings
assigned thereto as provided in Section 1 below;
WHEREAS, the Buyer wishes to purchase the Aircraft, and the
Seller, on the terms and conditions hereinafter set forth, is willing to sell
and transfer title to the Aircraft to the Buyer;
WHEREAS, the Buyer and the Seller are entering into the Lease
pursuant to which the Aircraft will be leased by the Buyer to the Seller; and
WHEREAS, the Seller, on the terms and conditions herein and in the
Consent and Agreement of the Manufacturer and in the Engine Consent and
Agreement of the Engine Manufacturer attached hereto, desires to assign to the
Buyer certain of the Seller's rights and interests in and under the Purchase
Agreement and the GTA relating to the Aircraft, and the Buyer desires to
accept such assignment, as hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the parties hereto
agree as follows:
Section 1. Definitions. For all purposes of this Purchase
Agreement Assignment, except as otherwise expressly provided for or unless the
context otherwise requires, the following terms shall have the following
meanings:
"Aircraft" shall mean the McDonnell Douglas MD-11F aircraft bearing
United States Registration Number N620FE and Manufacturer's Serial Number
48791, which was delivered under the Purchase Agreement, including the Engines.
"Engine Manufacturer" shall mean Pratt & Whitney, a Connecticut
corporation.
"Engines" shall mean the three (3) Pratt & Whitney 4462 turbofan
jet engines bearing Engine Manufacturer's serial numbers ___-___, ___-___ and
___-___, respectively.
"Engine Warranties" shall mean 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 the GTA.
"GTA" shall mean the General Terms Agreement dated as of
________________ between the Engine Manufacturer and the Seller but shall be
limited to applicable engine warranties, as well as all of the terms and
conditions, including the limitations, applicable hereto, as such provisions
are assignable by the terms of this Agreement.
"Lease" shall mean the Lease Agreement (Federal Express Corporation
Trust No. N620FE), dated as of June 15, 1998, between the Buyer and the
Seller, as the same may be amended, modified and supplemented, providing for
the lease of the Aircraft.
"Manufacturer" shall mean McDonnell Douglas Corporation, a
wholly-owned subsidiary of The Boeing Company, and its successors and assigns.
"Participation Agreement" shall mean the Participation Agreement
(Federal Express Corporation Trust No. N620FE), dated as of June 15, 1998, by
and among the Buyer, the Initial Owner Participant, the Indenture Trustee, the
Pass Through Trustee, the Subordination Agent and the Seller, as the same may
be amended, modified or supplemented.
"Purchase Agreement" shall mean the Purchase Agreement A00431-B
between the Seller and the Manufacturer, dated as of March 17, 1998, and as
thereafter originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the foregoing relates
to the Aircraft.
"Purchase Price" shall mean the amount stated in Ancillary
Agreement I.
All other capitalized terms used herein and not otherwise defined
shall have the meaning assigned to such term in the Lease.
Section 2. Representation. The Seller does hereby represent and
warrant that (a) it has furnished to the Buyer a true and complete copy of the
Purchase Agreement and GTA as they relate to all of the Manufacturer's
warranties and Engine Manufacturer's applicable warranties, as well as related
obligations and rights in the Purchase Agreement and GTA, respectively, as
assigned to the Buyer hereunder and (b) the Purchase Agreement and GTA are in
full force and effect and the Seller is not in default thereunder. The Seller
does hereby further represent and warrant that, to its knowledge, the Seller
has, with the authorized execution of the Consent and Agreement and the Engine
Consent and Agreement attached hereto, received all necessary consents to the
assignment and transfer contemplated herein and that such consents are in full
force and effect. The Seller does hereby further represent and warrant that
the Seller has not assigned or pledged, and hereby covenants that it shall not
assign or pledge, so long as this Purchase Agreement Assignment shall remain in
effect, the whole or any part of the rights hereby assigned or any of its
rights in respect of the Aircraft to anyone other than the Buyer. The Seller
further represents and warrants for the benefit of the Buyer and the Owner
Participant and their respective successors and assigns, as of the Delivery
Date, that it is the lawful owner of the Aircraft; and, as of the Delivery
Date that its title to the Aircraft is free and clear of all Liens, except the
rights of the Lessee under the Lease and the Lease Supplement covering the
Aircraft, the beneficial interest of the Owner Participant in the Aircraft and
the Liens permitted by clause (c) of Section 6.01 of the Lease, and that, on
the Delivery Date, the Buyer will receive good and marketable title to the
Aircraft free and clear of all Liens other than rights of the Lessee under the
Lease and the Lease Supplement, the beneficial interest of the Owner
Participant in the Aircraft and the Liens permitted by clause (c) of Section
6.01 of the Lease.
Section 3. Assignment; Rights Reserved. Subject to the
provisions of Section 5(a) hereof, the Seller does hereby sell, assign,
transfer and set over unto the Buyer, except to the extent reserved below, all
of the Seller's right, title and interest in the Purchase Agreement and the
GTA pursuant to which the Seller acquired the Aircraft from the Manufacturer
and Engine Manufacturer, as and to the extent that the same relate to the
Aircraft and the purchase and operation thereof, including, without
limitation, (a) all claims for damages in respect of the Aircraft arising as a
result of any default by the Manufacturer under the Purchase Agreement or by
the Engine Manufacturer under the GTA or by any vendor or other supplier of
aircraft engines or other parts or equipment installed on or in the Aircraft,
including, without limitation, all warranty, service life policy, aircraft
performance guarantee and indemnity provisions contained in the Purchase
Agreement and the GTA and all claims thereunder, (b) any and all rights of the
Seller to compel performance of the terms of the Purchase Agreement and the
GTA in respect of the Aircraft and (c) any and all rights of the Seller under
the Manufacturer's warranty bill of sale dated __________________ covering the
Aircraft, the original of which is to delivered to the Indenture Trustee on the
Delivery Date; reserving to the Seller, however, (i) all of the Seller's
right, title and interest in and to the Purchase Agreement and the GTA as and
to the extent that it relates to any matters other than in respect of the
Aircraft, and (ii) with respect to the Aircraft so long, and only so long, as
the Manufacturer and the Engine Manufacturer shall not have received notice
from the Buyer as set forth in Section 5(d) hereof that a Default or an Event
of Default has occurred and is continuing under the Lease, all of the Seller's
rights and interests in or arising out of any payments or deposits made
relating to the Aircraft or to be made by the Seller or amounts credited or to
be credited or paid or to be paid by the Manufacturer or Engine Manufacturer
to the Seller in respect of the Aircraft and (iii) with respect to the
Aircraft so long, and only so long, (x) as the Lease is in effect and (y) as
the Manufacturer and Engine Manufacturer shall not have received notice from
the Owner Trustee as set forth in Section 5(d) hereof that a Default or an
Event of Default has occurred and is continuing under the Lease, all rights to
demand, accept and retain all rights in and to property (other than the
Aircraft), data and services of any kind which the Manufacturer and Engine
Manufacturer are obligated to provide or do provide pursuant to the Purchase
Agreement and GTA with respect to the Aircraft.
Section 4. Acceptance of Assignment. The Buyer hereby accepts the
assignment contained in Section 3 hereof.
Section 5. Rights of the Seller in Absence of Default. (a)
Notwithstanding the foregoing, if and so long as the Manufacturer and Engine
Manufacturer shall not have received notice from the Owner Trustee as set
forth in Section 5(d) hereof that a Default or an Event of Default under the
Lease has occurred and is continuing, (i) the Buyer authorizes the Seller
during the Term on behalf of but to the exclusion of the Buyer, to exercise in
Seller's own name (A) such rights and powers of the "Buyer" under the Purchase
Agreement and GTA and (B) such rights as the Buyer may have with respect to
the Aircraft under any warranty, covenant, representation, service life
policy, aircraft performance guarantee, indemnity or product support agreement
of the Manufacturer, Engine Manufacturer or any subcontractor or vendor with
respect thereto and, subject to Section 5(c) hereof, to retain any recovery
or benefit resulting from the enforcement of any warranty, covenant,
representation, service life policy, aircraft performance guarantee, indemnity
or product support agreement of the Manufacturer, Engine Manufacturer or any
subcontractor or vendor in respect of the Aircraft, except that the Seller may
not enter into any change order or other amendment, modification or supplement
without the Buyer's prior written consent if such change order, modification
or supplement would result in any rescission, cancellation or termination of
the Purchase Agreement as to the Aircraft or GTA as to the Engines or would
otherwise materially adversely affect the Buyer's rights in the Aircraft or
Engines, and (ii) the Buyer shall, at the Seller's expense, cooperate with the
Seller and take such actions as the Seller reasonably deems necessary to
enable the Seller to enforce such rights and claims.
(b) Effective upon the receipt by the Manufacturer and Engine
Manufacturer of written notice from the Owner Trustee that a Default or an
Event of Default under the Lease has occurred and is continuing and thereafter
until the Manufacturer and Engine Manufacturer shall have received written
notice from the Owner Trustee that all Defaults or Events of Default have been
cured or waived, (i) unless the Buyer in its sole discretion shall notify the
Manufacturer and Engine Manufacturer to the contrary, the authorization given
to the Seller under Section 5(a) hereof to enforce such rights and claims
shall thenceforth cease to be effective and the Buyer and its successors and
assigns shall, to the exclusion of the Seller, be entitled to assert and
enforce such rights and claims as substitute party plaintiff or otherwise, and
the Seller shall, at the request of the Buyer or its successors or assigns and
at the Seller's expense, cooperate with and take such action as is reasonably
necessary to enable the Buyer and its successors and assigns to enforce such
rights and claims, and (ii) the Seller will be deemed to have constituted
Buyer, its successors and permitted assigns, the Seller's true and lawful
attorney, irrevocably (it being acknowledged that such appointment is coupled
with an interest, namely the Buyer's rights acquired and to be acquired
hereunder) with full power (in the name of the Seller or otherwise) to ask,
require, demand, receive, compromise, settle, compound and give acquittance
for any and all monies and claims for monies due and to become due under, or
arising out of, the Purchase Agreement in respect of the Aircraft or the GTA
in respect of the Engines, to the extent that the same have been assigned by
this Purchase Agreement Assignment, and for such period as the Buyer may
exercise rights with respect thereto under this clause (ii), to endorse any
checks or other instruments or orders in connection therewith and to file any
claims or take any action or institute (or, if previously commenced, assume
control of) any proceedings and to obtain any recovery in connection therewith
that the Buyer may deem to be necessary or advisable in the premises.
(c) Notwithstanding this Purchase Agreement Assignment and
anything contained herein to the contrary, all amounts that the Manufacturer
or Engine Manufacturer are obligated to pay to the Seller under the Purchase
Agreement and GTA with respect to the Aircraft or Engines, respectively,
including, without limitation, in respect of refunds thereunder or resulting
from the enforcement of any warranty, covenant, representation, service life
policy, aircraft performance guarantee, indemnity or product support agreement
thereunder or the enforcement or exercise of any right or power under the
Purchase Agreement (a "Manufacturer Payment") or under the GTA (an "Engine
Manufacturer Payment") (excluding, however, from the Manufacturer Payments and
Engine Manufacturer Payments any amounts the Manufacturer or Engine
Manufacturer are obligated to pay to the Seller with respect to the rights
reserved to the Seller in clauses (i) through (iii) of Section 3(b) hereof),
will be payable and applicable as follows: all the Manufacturer Payments and
Engine Manufacturer Payments shall be paid to the Seller unless and until the
Manufacturer and Engine Manufacturer shall have received written notice as set
forth in Section 5(d) from the Owner Trustee that a Default or an Event of
Default under the Lease has occurred and is continuing, whereupon the
Manufacturer and Engine Manufacturer will, until the Manufacturer and Engine
Manufacturer shall have received written notice from the Owner Trustee that
all Defaults or Events of Default under the Lease have been cured or waived,
make any and all such payments directly to the Buyer. Any amounts received by
the Buyer pursuant to the immediately preceding sentence shall, to the extent
not theretofore applied in satisfaction of sums owing to the Buyer in
accordance with the terms of the Lease, be returned to the Seller promptly
after all Defaults or Events of Default under the Lease have been cured or
waived.
(d) For all purposes of this Purchase Agreement Assignment, the
Manufacturer and Engine Manufacturer shall not be deemed to have knowledge of a
declaration of an Event of Default or Default under the Lease or of the
discontinuance or waiver of an Event of Default or Default unless and until
the Manufacturer and Engine Manufacturer shall have received written notice
thereof from the Owner Trustee addressed, in case of the Manufacturer, to 3855
Lakewood Boulevard, Long Beach, California 90846-0001, Attention: Contracts
Department, and in the case of the Engine Manufacturer, to
_________________________________________. When acting in accordance with the
terms and conditions of the Purchase Agreement, the GTA and this Purchase
Agreement Assignment, the Manufacturer and Engine Manufacturer may rely
conclusively upon any such notice.
Section 6. Certain Rights and Obligations of the Parties. (a)
Anything herein contained to the contrary notwithstanding, (i) the Seller
shall at all times remain liable to the Manufacturer and Engine Manufacturer
under the Purchase Agreement and GTA in respect of the Aircraft to perform all
of its duties and obligations of "Buyer" thereunder to the same extent as if
this Purchase Agreement Assignment had not been executed, (ii) the exercise by
the Buyer of any of the rights assigned hereunder shall not release the Seller
from any of its duties or obligations to the Manufacturer and Engine
Manufacturer under the Purchase Agreement and GTA in respect of the Aircraft
except to the extent that such exercise by the Buyer shall constitute
performance of such duties and obligations, and (iii) except as provided in
Section 6(b) hereof, neither the Buyer, the Indenture Trustee nor the Loan
Certificate Holders shall have any obligation or liability under the Purchase
Agreement or GTA by reason of, or arising out of, this Purchase Agreement
Assignment or be obligated to perform any of the obligations or duties of the
Seller under the Purchase Agreement or GTA or to make any payment or make any
inquiry as to the sufficiency of any payment received by it or to present or
to file any claim or to take any other action to collect or enforce any claim
for any payment assigned thereunder.
Notwithstanding anything in this Purchase Agreement Assignment or the attached
Engine Consent and Agreement to the contrary, the Buyer and the Seller confirm
expressly for the benefit of the Engine Manufacturer that:
(i) The Buyer 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 Seller incident to effecting the assignment herein; provided,
however, that (1) the Buyer may use, retain and disclose such
information to its special counsel and public accountants, who shall not
further disclose such terms, (2) the Buyer 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 the Seller and
to the Engine Manufacturer, and the Buyer shall afford the Seller 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, and (3) the Buyer
may disclose such information to any bona fide potential purchaser of
the Aircraft and/or the Engines (subject to 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).
(ii) Without in any way releasing the Seller from any of its
duties or obligations under the GTA, the Buyer 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 shall apply to,
and be binding upon, the Buyer to the same extent as the Seller.
(iii) It is expressly agreed that: (1) the Seller shall at all
times remain liable to the Engine Manufacturer under the GTA to perform
all the duties and obligations of the Seller thereunder to the same
extent as if this Purchase Agreement Assignment had not been executed,
(2) the exercise by the Buyer of any of the rights assigned hereunder
shall not release the Seller from any of its duties or obligations to
the Engine Manufacturer under the GTA except to the extent that such
exercise by the Buyer shall constitute performance of such duties and
obligations.
(iv) Nothing contained in this Purchase Agreement 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. No further assignment of any remaining Engine
Warranties, including but not limited to assignments for security
purposes, are permitted without the express written consent of the
Engine Manufacturer.
(v) The Engine Manufacturer shall not be deemed to have knowledge
of any change in the authority of the Seller or the Buyer, as the case
may be, to exercise the rights established hereunder until the Engine
Manufacturer has received written notice thereof. Such notice should be
sent to: ______________________________________________. Any
performance by the Engine Manufacturer that discharges its obligation
under the Engine Warranties will satisfy the respective interests of the
Seller and the Buyer. So long as the Engine Manufacturer acts in good
faith in accordance with this Purchase Agreement Assignment, the Engine
Manufacturer may rely conclusively on any such notice without inquiring
as to the accuracy of, or the entitlement of the party to give, such
notice.
(b) Without in any way releasing the Seller from any of its
duties or obligations under the Purchase Agreement or GTA, the Buyer confirms
for the benefit of the Manufacturer and Engine Manufacturer that, insofar as
the provisions of the Purchase Agreement and GTA relate to the Aircraft, each
of (i) in exercising any rights under the Purchase Agreement or GTA, or in
making any claim with respect to the Aircraft or other goods and services
delivered or to be delivered pursuant to the Purchase Agreement or GTA, the
Purchase Agreement and GTA disclosed to the Buyer in writing and (ii) the
provisions of the article of the Purchase Agreement entitled Assignment and
Transfer regarding future assignment and transfer of rights under the Purchase
Agreement, shall apply to, and be binding upon, the Buyer to the same extent
as the Seller.
(c) Nothing contained herein shall (i) subject the Manufacturer
or Engine Manufacturer to any liability to which it would not otherwise be
subject under the Purchase Agreement or GTA or (ii) modify in any respect the
Manufacturer's or Engine Manufacturer's contract rights thereunder, except as
provided in the Consent and Agreement and Engine Consent and Agreement
attached hereto.
(d) The parties hereto, the Manufacturer by its execution and
delivery of the Consent and Agreement and the Engine Manufacturer by its
execution of the Engine Consent and Agreement, agree that all of the
statements, representations, covenants and agreements made by the Buyer as
Owner Trustee (when made in such capacity) contained in this Purchase
Agreement Assignment and any agreement referred to herein or in the
Participation Agreement other than the Trust Agreement, unless expressly
otherwise stated, are made and intended only for the purpose of binding the
Lessor's Estate and establishing the existence of rights and remedies which
can be exercised and enforced against the Lessor's Estate. Therefore, anything
contained in this Purchase Agreement Assignment or such other agreements to the
contrary notwithstanding (except for any express provisions that the Buyer is
responsible for in its individual capacity), no recourse shall be had with
respect to this Purchase Agreement Assignment or such other agreements against
the Buyer in its individual capacity (or against any institution or person
which becomes a successor trustee or co-trustee), the Owner Participant, or
any officer, director, trustee, servant or direct or indirect parent or
controlling person or persons of any of them; provided, however, that this
Section 6(d) shall not be construed to prohibit any action or proceeding
against the Owner Trustee in its individual capacity for its own willful
misconduct or grossly negligent conduct; and provided, further, that nothing
contained in this Section 6(d) shall be construed to limit the exercise and
enforcement in accordance with the terms of this Purchase Agreement Assignment
or such other agreements of rights and remedies against the Lessor's Estate.
The foregoing provisions of this Section 6(d) shall survive the termination of
this Purchase Agreement Assignment and the other Operative Agreements.
(e) Nothing contained herein shall in any way diminish or limit
the provisions of the Seller's indemnities in Article 9 of the Participation
Agreement with respect to any liability of the Buyer, or any party to the
Participation Agreement, to the Manufacturer in anyway relating to or arising
out of the Purchase Agreement.
Section 7. Further Assurances. The Seller agrees that at any
time and from time to time the Seller shall promptly and duly execute and
deliver any and all such further instruments and documents and take such
further action as the Buyer may reasonably request in writing in order to
obtain the full benefits of this Purchase Agreement Assignment and of the
rights and powers herein granted.
Section 8. No Amendment of Purchase Agreement and GTA. The Buyer
agrees that it will not enter into any amendment, modification, supplement,
rescission, cancellation or termination of the Purchase Agreement or GTA
without the prior written consent of the Seller unless the Buyer shall have
notified the Manufacturer and Engine Manufacturer as set forth in Section 5(d)
hereof that a Default or an Event of Default under the Lease has occurred and
is continuing, in which event any such amendment, modification, supplement,
rescission, cancellation or termination shall relate solely to the rights
assigned hereunder.
Section 9. Binding Effect. This Purchase Agreement Assignment
shall be binding upon and shall inure to the benefit of the Seller, the Buyer
and their respective successors and permitted assigns.
Section 10. Notice. Except as otherwise expressly provided
herein, notice hereunder may be given, and shall be deemed to have been
received, as provided in Section 25.01 of the Lease.
Section 11. Simultaneous Execution. This Purchase Agreement
Assignment is executed by the Buyer and the Seller concurrently with the
execution and delivery of the Lease, the Participation Agreement and the Trust
Agreement.
Section 12. Grant of Security Interest. By the Indenture, the
Buyer has granted to the Indenture Trustee, for the benefit of the Loan
Certificate Holders, a security interest in all estate, right, title and
interest of the Buyer in and to the Purchase Agreement, the GTA and this
Purchase Agreement Assignment.
Section 13. Counterparts. This Purchase Agreement Assignment may
be executed by the parties hereto in separate counterparts, each of which when
so executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 14. GOVERNING LAW. THIS PURCHASE AGREEMENT ASSIGNMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK (BUT WITHOUT GIVING EFFECT TO ITS CONFLICTS OF LAWS PROVISIONS),
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
IN WITNESS WHEREOF, the parties hereto have caused this Purchase
Agreement Assignment to be duly executed as of the day and year first above
written.
FEDERAL EXPRESS CORPORATION,
Seller
By: _______________________________________
Name: Robert D. Henning
Title: Vice President and Treasurer
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee,
Buyer
By: _______________________________________
Name:
Title:
CONSENT AND AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N620FE)
The undersigned, MCDONNELL DOUGLAS CORPORATION, a wholly-owned
subsidiary of The Boeing Company (the "Manufacturer"), hereby acknowledges
notice of, and consents to, all of the terms of, the Purchase Agreement
Assignment (Federal Express Corporation Trust No. N620FE), dated as of June
15, 1998 (the "Purchase Agreement Assignment"; capitalized terms used herein
and not otherwise defined shall have the meaning assigned such term in the
Purchase Agreement Assignment), between Federal Express Corporation, a
Delaware corporation ("Assignor") and 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
("Assignee") and hereby confirms to the Assignor and the Assignee, and agrees,
that: (i) all representations, warranties, indemnities and agreements of the
Manufacturer under the Purchase Agreement with respect to the Aircraft to the
extent assigned by the Assignor to the Assignee, shall inure to the benefit of
the Assignee to the same extent as if originally named the "Buyer" therein,
subject to the terms and conditions of the Purchase Agreement Assignment; (ii)
the Assignee shall not be liable for any of the obligations or duties of the
Assignor under the Purchase Agreement, nor shall the Purchase Agreement
Assignment give rise to any duties or obligations whatsoever on the part of the
Assignee owing to the Manufacturer, except for the Assignee's agreement in the
Purchase Agreement Assignment to the effect that, insofar as the provisions of
the Purchase Agreement relate to the Aircraft, in exercising any rights under
the Purchase Agreement or in making any claim with respect to the Aircraft or
other goods and services delivered or to be delivered pursuant to the Purchase
Agreement and future assignment or transfer of the Aircraft to a third party,
the terms and conditions of the Purchase Agreement relating to the Aircraft
shall apply to, and be binding upon, the Assignee to the same extent as the
Assignor; provided, that no person other than the Manufacturer shall have any
rights against the Assignee with respect to the undertaking and agreement set
forth in this clause (ii); (iii) the Manufacturer consents to the lease of the
Aircraft by the Assignee to the Assignor under the Lease and agrees that the
Purchase Agreement Assignment constitutes an agreement by the Assignee
thereunder as required by Article 13 of the Purchase Agreement; (iv) the
Manufacturer will continue to pay to the Assignor all payments which the
Manufacturer may be required to make in respect to the Aircraft under the
Purchase Agreement unless and until the Manufacturer shall have received
written notice from the Assignee addressed to 3855 Lakewood Boulevard, Long
Beach, California 90846-0001, Attention: Contracts Department, that a Default
or an Event of Default under the Lease has occurred and is continuing,
whereupon the Manufacturer will make any and all payments, including warranty
and indemnity payments, which it may be required to make in respect to the
Aircraft under the Purchase Agreement (to the extent the right to receive such
payments has been assigned under the Purchase Agreement Assignment) directly
to the Assignee at 225 Asylum Street, Goodwin Square, Hartford, Connecticut
06103, Attention: Corporate/Muni Administration, with a copy to State Street
Bank and Trust Company, Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department (provided, that, as
long as the Indenture shall not have been discharged, such payment shall be
made directly to the Indenture Trustee at 79 South Main Street, Salt Lake
City, Utah 84111, Attention: Corporate Trust Department); and (v) the
Manufacturer agrees that it will not assert any liability claim against the
Aircraft or any part thereof arising with respect to or in connection with any
work performed by the Manufacturer or at its direction on the Aircraft on or
prior to the date the Manufacturer conveys title to the Assignor.
The Manufacturer hereby represents and warrants that: (i) it is a
corporation duly organized and existing in good standing under the laws of the
State of Maryland, (ii) the making and performance of the Purchase Agreement
and this Consent and Agreement have been duly authorized by all necessary
corporate action on the part of the Manufacturer, do not require any
stockholder or other approval, and do not contravene the Manufacturer's
Certificate of Incorporation or By-Laws or any indenture, credit agreement or
other contractual agreement to which Manufacturer is a party or by which it is
bound, and (iii) the making of the Purchase Agreement and this Consent and
Agreement does not contravene, and to the best of the Manufacturer's
knowledge, the Manufacturer's performance of the Purchase Agreement and this
Consent and Agreement, does not contravene any law binding on the Manufacturer;
and (iv) the Purchase Agreement constituted as of the date thereof and at all
times thereafter to and including the date of this Consent and Agreement has
continued to constitute a binding obligation of the Manufacturer enforceable
against the Manufacturer in accordance with its terms and this Consent and
Agreement constitutes a binding obligation of the Manufacturer enforceable
against the Manufacturer in accordance with its respective terms. The
Manufacturer further represents and warrants that it has received payment in
full with respect to the Aircraft. It is understood that this Consent and
Agreement is subject to the condition that the Lease shall have been entered
into by the Assignor and the Assignee.
The Manufacturer hereby represents and warrants that:
1. The Aircraft was manufactured in the United States within the
meaning of Section 927(a)(1)(A) of the Internal Revenue Code
of 1986, as amended (the "Code"), by a person or persons
other than a foreign sales corporation, as defined in
Section 922(a) of the Code; and
2. At time of delivery of the Aircraft to the Lessee, less than
50% of the fair market value of the Aircraft was
attributable to articles imported into the United States
within the meaning of Section 927(a)(1)(c) of the Code.
Dated as of June 15, 1998
McDONNELL DOUGLAS CORPORATION
By: _______________________________________
Name:
Title:
ENGINE CONSENT AND AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N611FE)
Subject to the understanding that nothing contained in this
Consent and Agreement or any other document pertaining thereto shall subject
it to any liability or duplication of obligations to which it would not
otherwise be subject under General Terms Agreement No. _______ dated as of
________________ (the "Engine Agreement") between it and Federal Express
Corporation (the "Grantor") or modify in any respect its contract right
thereunder, the undersigned, PRATT & WHITNEY, a Connecticut corporation (the
"Engine Manufacturer"), hereby acknowledges notice of, and consents to, all of
the terms of, the Purchase Agreement Assignment (Federal Express Corporation
Trust No. N620FE), dated as of June 15, 1998 (the "Purchase Agreement
Assignment"; capitalized terms used herein and not otherwise defined shall
have the meaning assigned such term in the Purchase Agreement Assignment),
between Federal Express Corporation, a Delaware corporation ("Assigner") and
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 ("Assignee") and hereby confirms to
the Assignor and the Assignee, and agrees, that: (i) all representations,
warranties, indemnities and agreements of the Engine Manufacturer under the
GTA with respect to the Engines to the extent assigned by the Assignor to the
Assignee, shall inure to the benefit of the Assignee to the same extent as if
originally named the "Airline" therein, subject to the terms and conditions of
the Purchase Agreement Assignment; (ii) the Assignee shall not be liable for
any of the obligations or duties of the Assignor under the GTA, nor shall the
Purchase Agreement Assignment give rise to any duties or obligations
whatsoever on the part of the Assignee owing to the Engine Manufacturer,
except for the Assignee's agreement in the Purchase Agreement Assignment to
the effect that, insofar as the provisions of the GTA relate to the Engines,
in exercising any rights under the GTA or in making any claim with respect to
the Engines or other goods and services delivered or to be delivered pursuant
to the GTA and future assignment or transfer of the Engines to a third party,
the terms and conditions of the GTA relating to the Aircraft shall apply to,
and be binding upon, the Assignee to the same extent as the Assignor;
provided, that no person other than the Engine Manufacturer shall have any
rights against the Assignee with respect to the undertaking and agreement set
forth in this clause (ii); (iii) the Engine Manufacturer consents to the lease
of the Engines by the Assignee to the Assignor under the Lease; (iv) the
Engine Manufacturer will continue to pay to the Assignor all payments which
the Manufacturer may be required to make in respect to the Engines under the
GTA unless and until the Engine Manufacturer shall have received written
notice from the Owner Trustee addressed to _________________________, that a
Default or an Event of Default under the Lease has occurred and is continuing,
whereupon the Engine Manufacturer will make any and all payments, including
warranty and indemnity payments, which it may be required to make in respect
to the Engines under the GTA (to the extent the right to receive such payments
has been assigned under the Purchase Agreement Assignment) directly to the
Assignee at 225 Asylum Street, Goodwin Square, Hartford, Connecticut 06103,
Attention: Corporate/Muni Administration, with a copy to State Street Bank and
Trust Company, Two International Place, 4th Floor, Boston, Massachusetts 02110,
Attention: Corporate Trust Department (provided, that, as long as the
Indenture shall not have been discharged, such payment shall be made directly
to the Indenture Trustee at 79 South Main Street, Salt Lake City, Utah 84111,
Attention: Corporate Trust Department); and (v) the Engine Manufacturer agrees
that it will not assert any liability claim against the Engines arising with
respect to or work performed by the Engine Manufacturer or at its direction on
the Engines on or prior to the date the Manufacturer transferred title to the
Assignor.
The Engine Manufacturer hereby represents and warrants that: (i) the
manufacturer is a corporation duly organized and existing in good standing
under the laws of the State of New York; (ii) the making and performance of
the GTA and this Engine Consent and Agreement have been duly authorized by all
necessary corporate action on the part of the Engine Manufacturer, do not
require any stockholder or other approval, and do not contravene the Engine
Manufacturer's Certificate of Incorporation or By-Laws or any indenture,
credit agreement or other contractual agreement to which the Engine
Manufacturer is a party or by which it is bound; (iii) the making of the GTA
and this Engine Consent and Agreement does not contravene, and to the best of
the Engines Manufacturer's knowledge, the Engine Manufacturer's performance of
the GTA and this Engine Consent and Agreement, does not contravene any law
binding on the Engine Manufacturer; (iv) the GTA constituted as of the date
thereof and at all times thereafter to and including the date of this Engine
Consent and Agreement has continued to constitute a binding obligation of the
Engine Manufacturer enforceable against the Engine Manufacturer in accordance
with its terms and this Engine Consent and Agreement constitutes a binding
obligation of the Engine Manufacturer enforceable against the Engine
Manufacturer in accordance with its respective terms and (v) it has received
payment in full with respect to the Engines. It is understood that this Engine
Consent and Agreement is subject to the condition that the Lease shall have
been entered into by the Assignor and the Assignee.
The Engine Manufacturer hereby further represents and warrants that:
1. Each Engine was manufactured in the United States within the
meaning of Section 927(a)(1)(A) of the Internal Revenue Code of
1986, as amended (the "Code"), by a person or persons other than a
foreign sales corporation, as defined in Section 922(a) of the
Code; and
2. At the time of delivery of each Engine to Lessee, less than 50% of
the fair market value of the Engine was attributable to articles
imported into the United States within the meaning of Section
927(a)(1)(c) of the Code.
Dated as of June 15, 1998
PRATT & WHITNEY
By: _______________________________________
Name:
Title:
- -------------------------------------------------------------------------------
PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N621FE)
Dated as of June 15, 1998
among
FEDERAL EXPRESS CORPORATION,
Lessee and Initial 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. 48792, REGISTRATION NO. N621FE
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
Initial Recitals........................................................... 1
ARTICLE 1
DEFINITIONS............................................................. 3
ARTICLE 2
ISSUANCE OF PASS THROUGH CERTIFICATES;
ISSUANCE AND PURCHASE OF CERTIFICATES
Section 2.01. Transfer of Funds........................................ 3
Section 2.02. (a) Certificates.......................................... 5
(b) Transfer of Beneficial Interest..................................... 5
Section 2.03. Amendments on Delivery Date or Transfer Date............. 5
Section 2.04. Event of Loss Prior to Delivery Date..................... 7
ARTICLE 3
PARTICIPATION IN INVESTMENT ON DELIVERY DATE;
DELIVERY OF AIRCRAFT
Section 3.01. Lessee's Notice of Delivery Date......................... 7
Section 3.02. Commitments to Participate in Purchase Price............. 7
Section 3.03. Postponement of Delivery Date............................ 10
Section 3.04. Closing.................................................. 11
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent (Certificate Closing Date).......... 11
Section 4.02. Conditions Precedent (Delivery Date)..................... 18
Section 4.03. Opinion of Special Aviation Counsel Upon Registration.... 27
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations............. 28
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties.................. 28
Section 6.02. Offering by Lessee....................................... 34
Section 6.03. Certain Covenants of Lessee.............................. 35
Section 6.04. Survival of Representations and Warranties............... 42
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in Lessor's
Estate................................................... 43
Section 7.02. Citizenship.............................................. 43
Section 7.03. Representations, Warranties and Covenants of Owner
Participant.............................................. 44
Section 7.04. Representations, Covenants and Warranties of SSB and the
Owner Trustee............................................ 47
Section 7.05. Representations, Warranties and Covenants of the
Indenture Trustee........................................ 50
Section 7.06. Indenture Trustee's Notice of Default.................... 52
Section 7.07. Releases from Indenture.................................. 52
Section 7.08. Covenant of Quiet Enjoyment.............................. 52
Section 7.09. Pass Through Trustee's Representations and Warranties.... 52
Section 7.10. Survival of Representations, Warranties and Covenants.... 53
Section 7.11. Lessee's Assumption of the Certificates.................. 53
Section 7.12. Indebtedness of Owner Trustee............................ 55
Section 7.13. Compliance with Trust Agreement, Etc..................... 56
Section 7.14. Subordination Agent's Representations, Warranties and
Covenants................................................ 56
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes......................... 58
Section 8.02. After-Tax Basis.......................................... 63
Section 8.03. Time of Payment.......................................... 63
Section 8.04. Contests................................................. 63
Section 8.05. Refunds.................................................. 65
Section 8.06. Lessee's Reports......................................... 66
Section 8.07. Survival of Obligations.................................. 67
Section 8.08. Payment of Taxes......................................... 67
Section 8.09. Reimbursements by Indemnitees Generally.................. 67
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally................................................ 67
Section 9.02. After-Tax Basis.......................................... 71
Section 9.03. Subrogation.............................................. 72
Section 9.04. Notice and Payment....................................... 72
Section 9.05. Refunds.................................................. 72
Section 9.06. Defense of Claims........................................ 72
Section 9.07. Survival of Obligations.................................. 73
Section 9.08. Effect of Other Indemnities.............................. 73
Section 9.09. Interest................................................. 74
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs....................... 74
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee.................. 77
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant.................... 78
Section 12.02. Interest of Holders of Certificates..................... 78
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents.................... 79
Section 13.02. Further Assurances...................................... 79
Section 13.03. Pass Through Trustee's and Subordination Agent's
Acknowledgment.......................................... 79
ARTICLE 14
NOTICES
Section 14.01. Notices................................................. 79
ARTICLE 15
REFINANCING
Section 15.01. Refinancing............................................. 80
ARTICLE 16
[RESERVED]
ARTICLE 17
MISCELLANEOUS
Section 17.01. [Reserved].............................................. 83
Section 17.02. Collateral Account...................................... 83
Section 17.03. Counterparts............................................ 85
Section 17.04. No Oral Modifications................................... 86
Section 17.05. Captions................................................ 86
Section 17.06. Successors and Assigns.................................. 86
Section 17.07. Concerning the Owner Trustee, Indenture Trustee
and the Pass Through Trustee............................ 86
Section 17.08. Severability............................................ 87
Section 17.09. Public Release of Information........................... 87
Section 17.10. Certain Limitations on Reorganization................... 87
Section 17.11. GOVERNING LAW........................................... 88
Section 17.12. Section 1110 Compliance................................. 88
Section 17.13. Reliance of Liquidity Providers......................... 88
ARTICLE 18
CONFIDENTIALITY
Section 18.01. Confidentiality......................................... 88
SCHEDULE I Certificate Information
SCHEDULE II Definitions
SCHEDULE III Permitted Country List
SCHEDULE IV Certain Amounts
SCHEDULE V Mandatory Document Terms
SCHEDULE VI Mandatory Economic Terms
SCHEDULE VII Assumed Aircraft Value
EXHIBIT A(1)(a)(i) Opinion of Lessee's Counsel
(Certificate Closing Date)
EXHIBIT A(1)(a)(ii) Opinion of Lessee's Counsel
(Delivery Date)
EXHIBIT A(1)(b)(i) Opinion of Lessee's Special Counsel
(Certificate Closing Date)
EXHIBIT A(1)(b)(ii) Opinion of Lessee's Special Counsel
(Delivery Date)
EXHIBIT A(2) Opinion of Indenture Trustee's Special Counsel
EXHIBIT A(3)(i) Opinion of Owner Trustee's Special Counsel
(Certificate Closing Date)
EXHIBIT A(3)(ii) Opinion of Owner Trustee's Special Counsel
(Delivery Date)
EXHIBIT A(4) Opinion of Pass Through Trustee's and Subordination
Agent's Special Counsel
EXHIBIT A(5)(a) Opinion of Liquidity Provider's Counsel
EXHIBIT A(5)(b) Opinion of LC Bank's Counsel
EXHIBIT A(5)(c) Opinion of Liquidity Provider's Special Counsel
EXHIBIT A(5)(d) Opinion of LC Bank's Special Counsel
EXHIBIT A(6) Opinion of Manufacturer's Counsel
EXHIBIT A(7) Opinion of Engine Manufacturer's Counsel
EXHIBIT A(8) Opinion of Special Aviation Counsel
EXHIBIT B Form of Lease Agreement
EXHIBIT C Form of Indenture
EXHIBIT D Form of Trust Agreement
EXHIBIT E Form of Purchase Agreement Assignment, Consent and
Agreement and Engine Consent and Agreement
PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N621FE)
PARTICIPATION AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO.
N621FE) dated as of June 15, 1998 (this "Agreement") among FEDERAL EXPRESS
CORPORATION, a Delaware corporation (herein, together with its successors and
permitted assigns, the "Lessee" and the "Initial 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").
W I T N E S S E T H :
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article 1 hereof.
WHEREAS, the Initial Owner Participant has entered into the Trust
Agreement with the Owner Trustee in its individual capacity, substantially in
the form of Exhibit D hereto, pursuant to which Trust Agreement the Owner
Trustee agrees, among other things, to hold the Lessor's Estate for the
benefit of the 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 will occur with
respect to the public offering of Pass Through Certificates issued by each Pass
Through Trust, an allocable amount of the proceeds of which offering will be
used by the Pass Through Trustee to purchase for each such Pass Through Trust
the Certificates of the Series and Maturity applicable thereto.
WHEREAS, on the Certificate Closing Date, the Owner Trustee and the
Indenture Trustee will enter into the Indenture for the benefit of the Pass
Through Trustee, pursuant to which the Owner Trustee is issuing 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 will be deposited by the Indenture
Trustee on behalf of the Owner Trustee in the Collateral Account.
WHEREAS, concurrently with the execution and delivery hereof, (i) the
Liquidity Provider will enter 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 will
enter into the Intercreditor Agreement.
WHEREAS, the Certificates will be 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, all of the outstanding Certificates will be secured by the
Liquid Collateral prior to the Delivery Date, and any Series C Certificates
outstanding after the Delivery Date that are subject to prepayment on the
Series C Prepayment Date will be secured by the Liquid Collateral up to and
including the Series C Prepayment Date.
WHEREAS, pursuant to the terms of the Trust Agreement, the Owner
Trustee will be authorized and directed by the Initial Owner Participant:
(a) on the Delivery Date, to purchase the Aircraft from the Lessee;
(b) on the Certificate Closing Date, to execute and deliver the
Lease substantially in the form of Exhibit B hereto, pursuant to which,
subject to the terms and conditions set forth in said Lease, the Owner
Trustee agrees to lease to the Lessee, and the Lessee agrees to lease from
the Owner Trustee, the Aircraft on the Delivery Date, such lease to be
effected by the execution and delivery on the Delivery Date of a Lease
Supplement, in the form of Exhibit A to the Lease, covering the Aircraft
and incorporating by reference all of the terms of the Lease;
(c) on the Certificate Closing Date, to execute and deliver the
Indenture, substantially in the form of Exhibit C hereto, for the benefit
of the Holders from time to time of the Certificates, pursuant to which the
Owner Trustee agrees, among other things, (A) to deposit, mortgage and
pledge with the Indenture Trustee, as part of the Trust Indenture Estate,
all of the Lessor's Estate but not Excepted Payments, (B) on the
Certificate Closing Date, to issue Certificates substantially in the form
set forth in Exhibit B to the Indenture, the proceeds of the sale of which
will be held by the Indenture Trustee on behalf of the Owner Trustee in the
Collateral Account until released in accordance with the terms hereof and of
the Indenture, and (C) on the Delivery Date, to execute and deliver the
Indenture and Security Agreement Supplement, substantially in the form of
Exhibit A to the Indenture, covering the Aircraft and supplementing the
Indenture; and
(d) on the Delivery Date, to execute and deliver the Purchase
Agreement Assignment, whereby the Lessee assigns to the Owner Trustee
certain of the Lessee's rights and interests under the Purchase Agreement
to the extent that the same relate to the Aircraft (except to the extent
reserved in said Purchase Agreement Assignment), which Purchase Agreement
Assignment is to include as an annex a Consent and Agreement executed by
the Manufacturer and an Engine Consent and Agreement executed by the Engine
Manufacturer, said Purchase Agreement Assignment, Consent and Agreement and
Engine Consent and Agreement to be substantially in the form of Exhibit E
hereto.
WHEREAS, on the Delivery Date pursuant to and subject to the terms and
conditions of this Agreement, the Purchase Agreement Assignment, the Engine
Consent and Agreement and the Bills of Sale, the Owner Trustee will purchase,
and receive title to, the Aircraft from the Lessee and lease the Aircraft to
the Lessee pursuant to the Lease.
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Unless otherwise specifically provided herein, the definitions set
forth in Schedule II hereto are incorporated herein for all purposes of this
Agreement and shall be equally applicable to both the singular and the plural
forms of the terms so defined.
ARTICLE 2
ISSUANCE OF PASS THROUGH CERTIFICATES;
ISSUANCE AND PURCHASE OF CERTIFICATES
Section 2.01. Transfer of Funds.
(a) On or before the Pass Through Closing Date, the Pass Through
Trustee and the Lessee, in accordance with the Pass Through Agreement, shall
enter into the Series Supplements, and, subject to the terms and conditions
set forth therein, on the Pass Through Closing Date (i) the Lessee shall
direct the Underwriters to execute a wire transfer or intra-bank transfer to
the Pass Through Trustee in the amount of the total proceeds payable pursuant
to the Underwriting Agreement with respect to the Pass Through Certificates
and (ii) the Pass Through Trustee shall deliver the Pass Through Certificates
to the Underwriters upon receipt by the Pass Through Trustee of such proceeds.
(b) Subject to the satisfaction or waiver of the conditions set
forth herein, on the Certificate Closing Date, on behalf of each Pass Through
Trust, from an allocable amount of the proceeds of the sale of the related
Pass Through Certificates, the Pass Through Trustee shall purchase the
Certificates specified for such Pass Through Trust on Schedule I hereto. For
each Pass Through Trust, the Pass Through Trustee shall pay an amount equal to
the principal amount of Certificates of the Series and Maturity that relates
to such Pass Through Trust, which amounts in the aggregate shall equal the
aggregate principal amount of the Certificates as specified in Section 2.04 of
the Indenture. The aggregate amount payable by the Pass Through Trustee
pursuant to this Section 2.01(b) shall be payable by wire transfer or
intra-bank transfer to the Indenture Trustee on behalf of the Owner Trustee.
(c) On the Certificate Closing Date, the Indenture Trustee shall,
on behalf of the Owner Trustee, deposit, by wire transfer or intra-bank
transfer, the amounts received by it pursuant to Section 2.01(b) hereof in the
Collateral Account pursuant to the Indenture.
(d) On the Certificate Closing Date, the LC Bank shall issue the
Letter of Credit.
(e) On the Certificate Closing Date concurrently with the events
specified in Section 2.01(b) hereof, the parties hereto shall execute and
deliver, to the extent they are parties thereto, and consent to the execution
and delivery of (if they are not parties thereto), the Lease (other than the
Lease Supplement), the Indenture (other than the Indenture and Security
Agreement Supplement), and the other documents listed in Section 4.01(d)
hereof, and the Owner Trustee shall execute and deliver to the Indenture
Trustee for authentication, and the Indenture Trustee shall authenticate and
deliver to the Subordination Agent on behalf of the Pass Through Trustee for
each of the Pass Through Trusts, upon the request of the Owner Trustee, the
Certificates as provided in Section 2.02 hereof.
(f) The Closings shall take place at the offices of Davis Polk &
Wardwell, 450 Lexington Avenue, New York, New York 10017.
Section 2.02. (a) Certificates. Subject to the satisfaction or
waiver of the conditions set forth herein, on the Certificate Closing Date,
the Initial Owner Participant will instruct the Owner Trustee to execute and
deliver to the Indenture Trustee, and the Indenture Trustee shall authenticate
and deliver, upon the request of the Owner Trustee, to the Subordination Agent
on behalf of the Pass Through Trustee for each of the Pass Through Trusts, the
Certificates specified for such Pass Through Trust on Schedule I attached
hereto, which (i) shall be issued in the principal amount and in the Series
and Maturity set forth for such Certificate in Schedule I hereto, (ii) shall
bear interest at the interest rate set forth for such Certificate in Schedule
I hereto, (iii) shall be issued in such form and on such terms as are
specified in the Indenture, (iv) shall be dated and authenticated on the
Certificate Closing Date and shall bear interest from the Certificate Closing
Date and (v) shall be registered in the name of the Subordination Agent on
behalf of the Pass Through Trustee for such Pass Through Trust.
(b) Transfer of Beneficial Interest. If on a date prior to the
Delivery Date, the Lessee shall have identified one or more Owner Participants
ready, willing and able to acquire the Beneficial Interest of the Initial
Owner Participant in consideration for such Owner Participant's or Owner
Participants' agreement to participate in the Lessor's payment of the Purchase
Price for the Aircraft on the Delivery Date, the Initial Owner Participant
shall transfer its Beneficial Interest to such Owner Participant or Owner
Participants on such date (the "Transfer Date"). On the Transfer Date, the
document amendments contemplated by Section 2.03(a) hereof (subject to the
limitations set forth in such Section) shall be effected and such amended
documents delivered.
Section 2.03. Amendments on Delivery Date or Transfer Date. (a)
Amendment and Restatement of Certain Documents. Upon any transfer by the
Initial Owner Participant of its Beneficial Interest on the Delivery Date (as
contemplated by Section 3.02(a) hereof (or, if earlier, the Transfer Date),
the parties hereto shall enter into amendments and restatements of the Trust
Agreement, the Lease, the Indenture and this Agreement, which amendments and
restatements shall reflect such changes as shall have been requested by the
Owner Participant, agreed to by the Lessee and, if modified in any material
respect, as to which Rating Agency Confirmation shall have been obtained from
each Rating Agency by the Lessee (to be delivered by the Lessee to the Pass
Through Trustee on or before the Delivery Date or the Transfer Date, as the
case may be); provided, however, that in any event such amended and restated
documents shall not vary the Mandatory Economic Terms and shall contain the
Mandatory Document Terms.
The Lessee agrees to furnish to each Liquidity Provider and to
Milbank, Tweed, Hadley & McCloy (the initial Liquidity Provider's special New
York counsel) at its New York office, attention: Drew S. Fine, as soon as
practicable but in no event less than 7 Business Days prior to the estimated
Delivery Date (or, if earlier, the estimated Transfer Date), true and complete
copies of drafts of any such amended and restated Participation Agreement,
amended and restated Lease Agreement and amended and restated Indenture. The
Lessee further agrees to furnish to each Liquidity Provider and to the counsel
identified in the preceding sentence (i) each and every subsequent draft of
such documents and (ii) promptly following the execution thereof, true and
complete copies of such documents.
(b) Amendments to Certain Schedules. The percentages of Basic Rent,
Stipulated Loss Value and Termination Value set forth on Schedules II, III and
IV, respectively, of the Lease, the EBO Price and the schedule of principal
payments on the Certificates set forth in Section 6.06 of the Indenture and
Schedule I to each Certificate on the Certificate Closing Date have been
calculated based upon a hypothetical owner's economic return and certain
assumptions regarding the Delivery Date, Transaction Costs, tax law, Basic
Term and certain other items (the "Assumptions"). If the Initial Owner
Participant transfers its Beneficial Interest to one or more Owner
Participants on the Delivery Date (as contemplated by Section 3.02(a) hereof
(or, if earlier, the Transfer Date), then, no later than 20 days following the
Delivery Date (the "Reoptimization Date"), the Owner Trustee may elect to amend
such Schedules to reflect the actual Owner's or Owners' Economic Return and any
changes to the Assumptions. In connection with any such amendments, the Owner
Trustee may increase or decrease the aggregate principal amount of the Series C
Certificates pursuant to Section 2.19 of the Indenture, and may prepay part of
the remaining Series C Certificates on the Series C Prepayment Date.
The Lessee, on behalf of the Owner Trustee, shall provide written
notice to the Indenture Trustee on the Reoptimization Date and any Adjustment
Date of any increase or decrease in the principal amount of the Series C
Certificates pursuant to Section 2.19 of the Indenture and of the aggregate
principal amount of the Series C Certificates, if any, which shall then be
subject to prepayment on the Series C Prepayment Date pursuant to this Section
2.03(b). On the Reoptimization Date, any Adjustment Date, and on the Series C
Prepayment Date in the event of any prepayment of such Series C Certificates,
the Owner Trustee shall deliver and the Subordination Agent on behalf of the
Pass Through Trustee of each Pass Through Trust shall accept delivery of an
amended Schedule I to each Certificate containing such changed principal
installments.
The Owner Trustee will give not less than 10 days' notice of the
Reoptimization Date. Any amendment to such Schedules shall not vary the
Mandatory Economic Terms and on the Reoptimization 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. If the Reoptimization Date or any
Adjustment Date occurs later than the Delivery Date, the Lessee shall cause
any required filing and recording of the affected documents with the
Aeronautics Authority to be effected on such date.
Section 2.04. Event of Loss Prior to Delivery Date. If, prior to
delivery of the initial Lease Supplement, an Event of Loss occurs with respect
to the Airframe initially contemplated to be sold by the Lessee to the Owner
Trustee as provided herein and to be leased under the Lease, the Lessee shall
have the right at any time up to and including the Cut-Off Date by written
notice to the Lessor and the Indenture Trustee to elect to substitute such
Airframe with another airframe (the "Pre-Delivery Replacement Airframe"),
provided, that the Pre-Delivery Replacement Airframe shall be a McDonnell
Douglas MD-11F airframe having a value, remaining useful life and utility at
least equal to the Airframe with respect to which such Event of Loss has
occurred. Upon the Lessee's election to replace the Airframe suffering an
Event of Loss with the Pre-Delivery Replacement Airframe, the Pre-Delivery
Replacement Airframe shall become the Airframe for purposes of the Operative
Agreements.
ARTICLE 3
PARTICIPATION IN INVESTMENT ON DELIVERY DATE;
DELIVERY OF AIRCRAFT
Section 3.01. Lessee's Notice of Delivery Date. The Lessee agrees
to give the Owner Participant, the Indenture Trustee, the Owner Trustee and
the Pass Through Trustee at least three (3) Business Days' written or
facsimile notice prior to the Delivery Date (which notice shall be effective
only if received not later than 10:00 a.m. (New York City time) on the date
that is at least three (3) Business Days prior to the Delivery Date), which
Delivery Notice shall specify the amount of the Purchase Price, the amount of
the Owner Participant's Commitment, the Debt Portion, the Delivery Date for
the Aircraft, the serial number of the Airframe and each Engine, and the
Aeronautics Authority registration number for the Aircraft.
Section 3.02. Commitments to Participate in Purchase Price. (a)
Participation in Purchase Price. Subject to the terms and conditions of this
Agreement, on the Delivery Date, (i) subject to the proviso to this Section
3.02(a), the Indenture Trustee agrees to release the Debt Portion or such
lesser amount as may then be held in the Collateral Account together with the
Lessee Shortfall (as defined in clause (iii) below), if any, to the Owner
Trustee for application to the Purchase Price as provided below, (ii) unless
previously transferred on the Transfer Date, 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 in Ancillary Agreement I, (iii)
subject to the proviso to this Section 3.02(a), the Lessee agrees to pay to
the Indenture Trustee the excess, if any, of (I) the Debt Portion over (II)
such amount as may then be held in the Collateral Account (the "Lessee
Shortfall") as provided in Section 17.02(a) hereof, 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 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) by the Owner Trustee to the Lessee, an amount equal to the Purchase
Price, or such lesser amount referred to in the proviso to this Section
3.02(a), and (B) by the Indenture Trustee, on behalf of the Owner Trustee, if
the Indenture Trustee is so instructed by the Lessee, to one or more
Outstanding C Accounts, the excess (or a portion of the excess) of any amounts
then held in the Collateral Account over the Debt Portion; provided, however,
that if (1) the Delivery Date has been postponed, (2) the investments
contemplated by Section 2.14(b) of the Indenture have been made, (3) such
investments do not mature on the rescheduled Delivery Date and (4) the Lessee
elects not to break such investments, then the Indenture Trustee shall not
release amounts in the Collateral Account to the Owner Trustee and the Lessee
shall accept as payment of the Purchase Price by the Owner Trustee an amount
equal to the Owner Participant's Commitment and the Indenture Trustee shall
pay to the Lessee at the end of the applicable investment period referred to
in Section 2.14(b) of the Indenture an amount equal to the Debt Portion or such
lesser amount as may then be held in the Collateral Account. After the
Delivery Date, any amounts remaining in the Collateral Account shall secure
the Secured Obligations relating to any Series C Certificates outstanding
after the Delivery Date that are subject to prepayment on the Series C
Prepayment Date pursuant to Section 6.02(a)(viii) of the Indenture.
(b) 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.
(ii) Subject to the provisions of Section 3.03 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 the Cut-Off Date, whereupon the Owner
Participant's Commitment hereunder shall terminate. On such third Business
Day (or such earlier date) or the Cut-Off Date, as the case may be, or the
earliest practicable Business Day thereafter, the Owner Trustee shall return
the amounts held by it hereunder to the Owner Participant, provided that the
Owner Trustee shall have had a reasonable time to liquidate any Permitted
Investments it has been authorized to invest in pursuant to the preceding
paragraph and to obtain the proceeds therefrom in funds of the type originally
received, and the Lessee shall pay interest on such funds to the Owner
Participant at the full-term implicit lease rate (which rate shall not be less
than the Owner Participant's cost of funds), such interest to be payable for
the period from and including such Scheduled Delivery Date to but excluding
the date such funds are returned to the Owner Participant in accordance with
the terms hereof; provided that if any such funds are returned to the Owner
Participant after 2:00 p.m. (New York City time) on any such date, such funds
shall be deemed for purposes of this paragraph to have been returned on the
next succeeding Business Day.
The Lessee shall reimburse the Owner Trustee on demand for any loss
incurred by the Owner Trustee as a result of the investment of funds by the
Owner Trustee in accordance with the terms of this Section 3.02(b). Further,
the Lessee shall indemnify the Owner Trustee and hold it harmless from and
against any cost or expense the Owner Trustee may incur as a result of any
investment of funds or transfer of funds referred to herein in accordance with
the terms hereof. The Owner Trustee shall not be liable for failure to invest
such funds except as otherwise provided herein or for any losses incurred on
such investments except for any losses arising out of its own gross negligence
or willful misconduct.
Section 3.03. Postponement of Delivery Date. (a) If no Owner
Participant has committed to participate in the transactions contemplated to
occur on the Scheduled Delivery Date or if an 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 3.02
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. If no Owner Participant has committed to
participate or an Owner Participant shall for any reason fail or refuse to
make the full amount of its Commitment available in accordance with the terms
of Section 3.02 hereof on such postponed Delivery Date, the Lessee shall
endeavor during such period to identify another equity investor to whom it can
assign its Beneficial Interest. If the Lessee identifies an equity investor,
the Lessee shall assign its interest in the Lessor's Estate as provided above.
In case of any such conveyance (but subject to the satisfaction of the
conditions precedent specified herein), the Indenture Trustee shall release
the Debt Portion or such lesser amount as may then be held in the Collateral
Account for application to the payments contemplated in the last sentence of
Section 3.02(a) hereof, subject to the proviso to Section 3.02(a) hereof. For
the avoidance of doubt, it is understood and agreed that if for any reason
other than the failure of the Manufacturer to deliver the Aircraft, the Lessee
does not enter into the Lease Supplement with the Owner Trustee on or prior to
the Cut-Off Date, the Lessee, the Indenture Trustee and the Pass Through
Trustee agree that the Lessee shall purchase the Aircraft and assume all of
the obligations of the Owner Trustee under the Certificates upon satisfaction
of the requirements set forth in Section 4.02 hereof, as the same may be
modified by the provisions of Section 7.11 hereof and as otherwise necessary
to reflect a full recourse secured aircraft financing of the Lessee.
(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, there being no Owner Participant committed to
participate in the transactions contemplated to occur on the Delivery Date 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 3.02 hereof and
no transferee Owner Participant having been identified pursuant to Section
3.03(a) hereof), then, in such event, the Owner Trustee shall not purchase the
Aircraft from the Lessee, and subject to the last sentence of Section 3.03(a)
hereof 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 if the last sentence of Section 3.03(a) hereof does
not apply the Lessee shall provide, no later than the Cut-Off Date, notice of
prepayment to the Indenture Trustee and the Certificates shall be prepaid on
the 15th day following the Cut-Off Date as provided in Section 6.02(a)(vi) of
the Indenture and Section 17.02(c) hereof and provided further, that (i) the
Lessee's obligation to indemnify such parties to the extent provided in such
documents, shall not be diminished or modified in any respect and (ii) the
obligations of the Owner Trustee, the Indenture Trustee and the Lessee to
return funds and pay interest, costs, expenses and other amounts thereon or in
respect thereof as provided in Section 3.02 hereof shall continue.
(c) Optional Postponement. Without limiting the provisions of
Section 3.02(b) 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 3.03(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 3.04. Closing. The closing with respect to the purchase and
lease of the Aircraft on the Delivery Date shall take place at the offices of
Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017.
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent (Certificate Closing Date). The
obligations of the Owner Trustee, the 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 Certificate Closing
Date are subject to the fulfillment to the satisfaction of such party (or
waiver by such party), prior to or on the Certificate Closing Date, of the
following conditions precedent (it being understood that receipt by the Lessee
of any of the following documents shall not be a condition precedent to the
obligations of any party):
(a) Certificates. (i) On the Certificate Closing Date, there shall
have been duly issued and delivered by the Owner Trustee to the
Subordination Agent on behalf of the Pass Through Trustee for each Pass
Through Trust, against payment therefor, a Certificate, substantially in
the form set forth in Exhibit B to the Indenture, duly authenticated, dated
the Certificate Closing Date and registered in the name of the
Subordination Agent, in the principal amounts, Series and Maturity, bearing
the interest rate and the other economic terms specified in the Series
Supplements and otherwise as provided in Section 2.04 of the Indenture.
(ii) The Pass Through Certificates shall be registered under the Securities
Act, any applicable state securities laws shall have been complied with,
and the Pass Through Agreement shall have been qualified under the Trust
Indenture Act, and on the Certificate Closing Date, the "Certificates" (as
defined in each of the Related Indentures) have been duly issued and
delivered by the "Owner Trustee" (as defined in each of the Related
Indentures) to the Subordination Agent on behalf of the Pass Through
Trustee for each Pass Through Trust.
(b) Legal Investment. On the Certificate Closing Date, no fact or
condition shall exist under applicable laws or regulations, or
interpretations of any such laws or regulations by applicable regulatory
authorities, which, in the opinion of the Pass Through Trustee, the
Subordination Agent or the Indenture Trustee or their special counsel,
would make it illegal for the Initial 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 such Initial Owner Participant, the
Lessee, the Owner Trustee, the Pass Through Trustee, the Subordination
Agent or the Indenture Trustee, to participate in the transactions to be
consummated on the Certificate Closing Date; and no action or proceeding
shall have been instituted nor shall governmental action before any court,
governmental authority or agency be threatened which in the opinion of
counsel for the Indenture Trustee, the Subordination Agent or the Pass
Through Trustee is not frivolous, nor shall any order have been issued or
proposed to be issued by any court, or governmental authority or agency, as
of the Certificate Closing Date, to set aside, restrain, enjoin or prevent
the consummation of any of the transactions contemplated by this Agreement
or by any of the other Operative Agreements.
(c) Underwriters. The Underwriters shall have transferred the funds
specified in Section 2.01(a) hereof and all conditions thereunder shall
have been satisfied or waived.
(d) Documents. This Agreement and the following documents shall have
been duly authorized, executed and delivered by the respective party or
parties thereto, shall each be satisfactory in form and substance to the LC
Bank, the Lessee, the Owner Trustee, the Indenture Trustee and the Pass
Through Trustee (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 LC Bank, the Lessee, the Owner
Trustee, the Indenture Trustee, the Pass Through Trustee or the
Subordination Agent, as the case may be, of such documents shall have been
delivered to the LC Bank, the Lessee, the Indenture Trustee, the Pass
Through Trustee, the Subordination Agent and the Owner Trustee (provided
that the sole chattel-paper original of each of the Lease and each
Ancillary Agreement amendatory of the Lease, shall be delivered to the
Indenture Trustee):
(i) the Lease;
(ii) the Indenture;
(iii) the Trust Agreement;
(iv) the Intercreditor Agreement;
(v) the Liquidity Facility for each of the Pass Through Trusts for
the Series A Certificates and the Series B Certificates;
(vi) the Collateral Agreement; and
(vii) the Letter of Credit (the original of such document to be
delivered to the beneficiaries of the Letter of Credit only).
(e) Approvals. All approvals and consents of any trustees or
holders of any indebtedness or obligations of the Lessee, which in the
opinion of the Pass Through Trustee or the Indenture Trustee are required
in connection with any transaction contemplated by this Agreement, shall
have been duly obtained.
(f) Financing Statements. UCC financing statements covering all the
security interests (and other interests) intended to be created by or
pursuant to the Granting Clause of the Indenture shall have been executed
and delivered by the Owner Trustee, as debtor, and by the Indenture
Trustee, as secured party, for and on behalf of the Holders, and such
financing statements shall have been duly filed or duly submitted for
filing in the State of Connecticut, and all other actions shall have been
taken which, in the opinion of the Pass Through Trustee and the
Underwriters, are necessary to perfect and protect such security interests
and other interests.
(g) Corporate Documents. Except when such Person is the delivering
party, the LC Bank, the Owner Trustee, the Pass Through Trustee, the Lessee
and the Indenture Trustee (acting directly or by authorization to its
counsel) shall have received the following, in each case in form and
substance satisfactory to it:
(i) a copy of the certificate of incorporation and by-laws of the
Lessee, certified by the Secretary or an Assistant Secretary of the
Lessee as of the Certificate Closing Date, and a copy of the minutes
of the regular meeting of the board of directors of the Lessee,
certified as such as of the Certificate Closing Date by such
Secretary or Assistant Secretary, duly authorizing the lease by the
Lessee of the Aircraft under the Lease and the execution, delivery
and performance by the Lessee of this Agreement, the Lease, the Pass
Through Agreement, the Series Supplements, the other Operative
Agreements to which the Lessee is or is to be a party and each other
document to be executed and delivered by the Lessee in connection
with the transactions contemplated hereby;
(ii) a copy of the articles of association and by-laws and other
instruments of the Owner Trustee, certified by the Secretary or an
Assistant Secretary of the Owner Trustee as of the Certificate
Closing Date (or other like instruments satisfactory to the Lessee)
and 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;
(iii) 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 Certificate
Closing Date (or other like instruments satisfactory to the Lessee)
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;
(iv) 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
Certificate Closing Date (or other like instruments satisfactory to
the Lessee) 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;
(v) 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
Certificate Closing Date (or other like instruments satisfactory to
the Lessee) 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
(vi) such other documents, evidences, materials, and information
with respect to the Lessee, the Owner Trustee, the Indenture Trustee
and the Pass Through Trustee as the Indenture Trustee, the Pass
Through Trustee or the LC Bank may reasonably request in order to
establish the consummation of the transactions contemplated by this
Agreement.
(h) Officer's Certificate of Lessee. On the Certificate Closing
Date, the following statements shall be true, and the LC Bank, the Owner
Trustee, the Pass Through Trustee and the Indenture Trustee shall have
received a certificate signed by the Vice President and Treasurer or any
other duly authorized officer of the Lessee, dated the Certificate Closing
Date, stating that:
(i) the representations and warranties of the Lessee contained in
the Operative Agreements to which it is a party and in any
certificate delivered pursuant hereto or thereto are true and correct
on and as of the Certificate Closing Date as though made on and as of
such date (except to the extent that such representations and
warranties relate solely to an earlier date, in which case such
certificate shall state that such representations and warranties were
true and correct on and as of such earlier date);
(ii) except for the matters described (i) under "Legal
Proceedings" in the Lessee's Annual Report on Form 10-K for the
fiscal year ended May 31, 1997 (as updated by Note 7 to the financial
statements included in the Lessee's Quarterly Reports on Form 10-Q
for the fiscal quarters ended August 31, 1997, November 30, 1997 and
February 28, 1998), 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 financial
statements of the Lessee as of May 31, 1997 or the unaudited
consolidated financial statements of the Lessee as of February 28,
1998 and nothing has occurred which will, in the judgment of such
officer, materially adversely affect the ability of the Lessee to
carry on its business or to perform its obligations under this
Agreement and each other Operative Agreement to which it is or is to
be a party; and
(iii) no event has occurred and is continuing, or would result
from the purchase, sale, mortgage, or lease of the Aircraft, which
constitutes an Event of Loss (or event which with the passage of time
would become an Event of Loss) with respect to the Airframe or any
Engine, or a Default or an Event of Default under the Lease.
(i) Other Officer's Certificates. On the Certificate Closing Date,
the following statements shall be true, and the Lessee, the LC Bank, 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 LC Bank, the Pass Through
Trustee, the Subordination Agent and the Indenture Trustee), FSB and the
Indenture Trustee (in the case of the Lessee, the LC Bank, the Pass Through
Trustee, the Subordination Agent and the Owner Trustee), FSB and the Pass
Through Trustee (in the case of the Lessee, the LC Bank, the Indenture
Trustee, the Subordination Agent and the Owner Trustee), and FSB and the
Subordination Agent (in the case of the Lessee, the LC Bank, the Pass
Through Trustee, the Indenture Trustee and the Owner Trustee), signed by a
duly authorized officer of SSB and FSB, respectively, dated the Certificate
Closing 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 Certificate
Closing Date as though made on and as of such date (except to the
extent that such representations and warranties relate solely to an
earlier date, in which case such certificate shall state that such
representations and warranties were true and correct on and as of such
earlier date);
(ii) to the best of its knowledge, no event has occurred and is
continuing, which constitutes or which, but for the lapse of time or
the giving of notice, or both, would constitute, due to any action or
omission on the part of 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.
(j) Legal Opinions. The Underwriters, the Lessee, the Owner
Trustee, the Pass Through Trustee and the Indenture Trustee (acting
directly or by authorization to its special counsel) shall have received
from the following counsel their respective legal opinions in each case
satisfactory to the Underwriters, the Lessee, the Owner Trustee, the Pass
Through Trustee or the Indenture Trustee, as the case may be, as to scope
and substance (and covering such other matters as the recipient may
reasonably request) and dated the Certificate Closing Date:
(i) Karen M. Clayborne, Senior Vice President and General Counsel
of the Lessee, in the form of Exhibit A(1)(a)(i) hereto and addressed
to the Underwriters, the Owner Trustee, the Pass Through Trustee,
each Liquidity Provider and the Indenture Trustee;
(ii) Ray, Quinney & Nebeker, special counsel for the Indenture
Trustee, in the form of Exhibit A(2) hereto and addressed to the
Underwriters, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee, each Liquidity Provider and the Lessee;
(iii) Bingham Dana LLP, special counsel for the Owner Trustee, in
the form of Exhibit A(3)(i) hereto and addressed to the Underwriters,
the Indenture Trustee, the Owner Trustee, the Pass Through Trustee,
each Liquidity Provider and the Lessee;
(iv) Davis Polk & Wardwell, special counsel for the Lessee, in the
form of Exhibit A(1)(b)(i) hereto and addressed to the Underwriters,
the Indenture Trustee, the Owner Trustee, the Pass Through Trustee,
each Liquidity Provider and the Lessee;
(v) Ray, Quinney & Nebeker, special counsel for the Pass Through
Trustee and the Subordination Agent, in the form of Exhibit A(4)
hereto and addressed to the Underwriters, the Indenture Trustee, the
Owner Trustee, the Pass Through Trustee, each Liquidity Provider and
the Lessee; and
(vi) Ruediger Sass, General Counsel to the Liquidity Providers, in
the form of Exhibit A(5)(a) hereto, Ruediger Sass, General Counsel to
the LC Bank, in the form of Exhibit A(5)(b) hereto, Milbank, Tweed,
Hadley & McCloy, special counsel for the Liquidity Providers, in the
form of Exhibit A(5)(c) hereto, and Milbank, Tweed, Hadley & McCloy,
special counsel for the LC Bank in the form of Exhibit A(5)(d)
hereto, each addressed to the Pass Through Trustee, the Subordination
Agent, each Liquidity Provider and the Lessee.
(k) No Indenture Event of Default. No Indenture Event of Default or
Indenture Default has occurred and is continuing.
(l) Event of Default; Default; Event of Loss. No Default or Event
of Default under the Lease or Event of Loss or event, which with the
passage of time or if continued unremedied or unaltered would constitute an
Event of Loss, shall have occurred or be in existence.
(m) Other Agreements. The Lessee and the Pass Through Trustee shall
have entered into the Pass Through Agreement and the Series Supplements, all
conditions to the effectiveness of each thereof shall have been satisfied
or waived, and the Pass Through Certificates shall have been issued
pursuant to the Series Supplements. The Lessee and the Underwriters shall
have entered into the Underwriting Agreement, all conditions to the
effectiveness thereof shall have been satisfied or waived, and the Pass
Through Certificates shall have been delivered pursuant to the Underwriting
Agreement. All conditions to the effectiveness of each Liquidity Facility
shall have been satisfied or waived.
(n) Payment of Taxes. (A) All taxes, fees, charges, assessments,
costs and other expenses then due and payable in connection with the
execution, delivery, recording and filing of all financing statements
referred to in subparagraph (f) of this Section 4.01, or in connection with
the issuance of the Certificates shall have been duly paid or caused to be
paid in full; and (B) all sales or use taxes and duties related to the
consummation of the transactions contemplated by the Operative Agreements
on the Certificate Closing Date which are then due and payable shall have
been duly paid in full.
(o) Governmental Compliance. All appropriate action required to
have been taken by the FAA, the SEC, or any governmental or political
agency, subdivision or instrumentality of the United States, prior to the
Certificate Closing Date in connection with the transactions contemplated
by this Agreement shall have been taken, and all orders, permits, waivers,
authorizations, exemptions and approvals (collectively "permits") of such
entities required to be in effect on the Certificate Closing Date in
connection with the transactions contemplated by this Agreement shall have
been issued, and all such permits shall be in full force and effect on the
Certificate Closing Date.
(p) 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.
Section 4.02. Conditions Precedent (Delivery Date). Subject to the
last paragraph of this Section 4.02, 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 Delivery Date.
(b) Legal Investment. No change shall have occurred after the date
which is two days prior to the Certificate Closing Date in applicable laws
or regulations, or interpretations of any such laws or regulations by
applicable regulatory authorities, which, in the opinion of the Owner
Participant or its special counsel, the Pass Through Trustee, 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 transactions to be consummated on the
Delivery Date; and no action or proceeding shall have been instituted nor
shall governmental action before any court, governmental authority or
agency be threatened which in the opinion of counsel for the Owner
Participant, the Indenture Trustee, the Subordination Agent or the Pass
Through Trustee is not frivolous, nor shall any order have been issued or
proposed to be issued by any court, or governmental authority or agency, as
of the Delivery Date, to set aside, restrain, enjoin or prevent the
consummation of any of the transactions contemplated by this Agreement or
by any of the other Operative Agreements.
(c) Documents. The documents referred to in Section 4.01(d) hereof
shall each be in full force and effect and the following documents shall
have been duly authorized, executed and delivered by the respective party
or parties thereto, shall each be satisfactory in form and substance to the
LC Bank, 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 LC Bank, 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 LC
Bank, the Owner Participant, the Lessee, the Indenture Trustee, the Pass
Through Trustee and the Owner Trustee (provided that the sole chattel-paper
original of the amended and restated Lease (whether delivered on the
Transfer Date or the Delivery Date), the Lease Supplement and the Ancillary
Agreement I shall be delivered to the Indenture Trustee):
(i) this Agreement, as amended and restated as of the Delivery Date;
(ii) the Lease, as amended and restated as of the Delivery Date;
(iii) the Trust Agreement, as amended and restated as of the Delivery
Date;
(iv) the Indenture, as amended and restated as of the Delivery Date;
(v) the Lease Supplement covering the Aircraft, dated the Delivery
Date;
(vi) the Indenture and Security Agreement Supplement covering the
Aircraft, dated the Delivery Date;
(vii) in the case of the Owner Participant only, the Tax Indemnity
Agreement (unless delivered on the Transfer Date);
(viii) the Ancillary Agreement I;
(ix) the Invoice;
(x) the Bills of Sale;
(xi) the Purchase Agreement;
(xii) the Purchase Agreement Assignment;
(xiii) the Consent and Agreement and the Engine Consent and Agreement;
unless, in the case of each of the documents listed in clauses (i) through
(iv) above they shall have been amended and restated as of and delivered on
the Transfer Date.
(d) Legal Opinions. The Owner Participant, the Underwriters, the
Lessee, the Owner Trustee, the Pass Through Trustee and the Indenture
Trustee (acting directly or by authorization to its special counsel) shall
have received from the following counsel their respective legal opinions in
each case satisfactory to the Owner Participant, the Underwriters, the
Lessee, the Owner Trustee, the Pass Through Trustee or the Indenture
Trustee, as the case may be, as to scope and substance (and covering such
other matters as the recipient may reasonably request) and dated the
Delivery Date:
(i) Karen M. Clayborne, Senior Vice President and General Counsel
of the Lessee, in the form of Exhibit A(1)(a)(ii) hereto and
addressed to the Underwriters, the Owner Participant, the Owner
Trustee, the Pass Through Trustee, each Liquidity Provider and the
Indenture Trustee;
(ii) Davis Polk & Wardwell, special counsel for the Lessee, in the
form of Exhibit A(1)(b)(ii) hereto and addressed to the Underwriters,
the Owner Participant, the Indenture Trustee, the Owner Trustee, the
Pass Through Trustee, each Liquidity Provider and the Lessee;
(iii) Bingham Dana LLP, special counsel for the Owner Trustee, in
the form of Exhibit A(3)(ii) 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) special counsel for the Owner Participant, and in-house
counsel for the Owner Participant, each addressed to the
Underwriters, the Owner Participant, the Indenture Trustee, the Owner
Trustee, the Pass Through Trustee, each Liquidity Provider and the
Lessee;
(v) counsel for the 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;
(vi) counsel for the Engine Manufacturer, in the form of Exhibit
A(7) hereto and addressed to the Underwriters, the Owner Participant,
the Indenture Trustee, the Owner Trustee, the Pass Through Trustee,
each Liquidity Provider and the Lessee;
(vii) Daugherty, Fowler & Peregrin, special aviation counsel, in
the form of Exhibit A(8) hereto and addressed to the Underwriters,
the Owner Participant, the Indenture Trustee, the Owner Trustee, the
Pass Through Trustee, each Liquidity Provider and the Lessee; and
(viii) in the case of the Owner Participant only, special tax
counsel to the Owner Participant, addressed to the Owner Participant,
with respect to certain tax matters.
(e) Title, Airworthiness and Registration. On the Delivery Date, the
following statements shall be true, and the Owner Participant, the Indenture
Trustee, the Pass Through Trustee and the Owner Trustee shall have received
evidence from the Lessee reasonably satisfactory to the Owner Participant,
the Indenture Trustee, the Pass Through Trustee and the Owner Trustee to
the effect that:
(i) the Owner Trustee has good and marketable title (subject to
filing and recording of 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 amended and restated Lease and the
Lease Supplement covering the Aircraft, the amended and restated
Indenture and the Indenture and Security Agreement Supplement
covering the Aircraft and the amended and restated Trust Agreement
shall have been duly filed for recordation (or shall be in the
process of being so duly filed for recordation) with the Aeronautics
Authority pursuant to the Transportation Code; and
(iv) application to the Aeronautics Authority for registration of
the Aircraft in the name of the Owner Trustee shall have been duly
made and the Lessee shall have temporary or permanent authority to
operate the Aircraft.
(f) Financing Statements. (i) a form UCC-3 financing statement to
amend and restate each financing statement referred to in Section 4.01(f)
hereof 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 (ii) a UCC notice filing describing the Lease as a lease
shall have been executed and delivered by the Owner Trustee, as lessor, and
the Lessee, as lessee (which filing shall name the Indenture Trustee as
assignee of the Owner Trustee), and shall have been duly filed in the State
of Tennessee.
(g) Payments. The Owner Participant shall have made available its
Commitment to the Owner Trustee and the other payments contemplated by
Section 3.02 hereof shall have been made.
(h) Report of Aircraft Expert. The Owner Participant shall have
received a report prepared by BK Associates, Inc. addressed to the Owner
Participant (with an abbreviated report to the Lessee) which report shall
be in form and substance satisfactory to the Owner Participant.
(i) Insurance. Each of the Indenture Trustee, the Pass Through
Trustee, the Owner Trustee and the Owner Participant shall have received
such evidence as it deems appropriate, including, without limitation, an
independent insurance broker's report, together with certificates of
insurance from such broker, in form and substance satisfactory to the
Indenture Trustee, the Pass Through Trustee, the Owner Trustee and the
Owner Participant to establish that the insurance required by Article 13 of
the Lease is in effect.
(j) Payment of Taxes. (A) All taxes, fees, charges, assessments,
costs and other expenses then due and payable in connection with the
execution, delivery, recording and filing of all financing statements and
the documents and instruments referred to in subparagraphs (e) and (f) of
this Section 4.02, or in connection with the purchase of the Aircraft by
the Owner Trustee and the making by the Owner Participant of its equity
investment shall have been duly paid or caused to be paid in full; and (B)
all sales or use taxes and duties related to the consummation of the
transactions contemplated by the Operative Agreements on the Delivery Date
which are then due and payable shall have been duly paid in full.
(k) No Indenture Event of Default. No Indenture Event of Default or
Indenture Default has occurred and is continuing.
(l) Event of Default; Default; Event of Loss. No Default or Event
of Default under the Lease (assuming, for this purpose, that the provisions
of Article 16 of the Lease had become operative on the Certificate Closing
Date and not the Delivery Date) or Event of Loss or event, which with the
passage of time or if continued unremedied or unaltered would constitute an
Event of Loss, shall have occurred or be in existence.
(m) Governmental Compliance. All appropriate action required to
have been taken by the FAA, the SEC, or any governmental or political
agency, subdivision or instrumentality of the United States, prior to the
Delivery Date in connection with the transactions contemplated by this
Agreement shall have been taken, and all orders, permits, waivers,
authorizations, exemptions and approvals (collectively "permits") of such
entities required to be in effect on the Delivery Date in connection with
the transactions contemplated by this Agreement shall have been issued, and
all such permits shall be in full force and effect on the Delivery Date.
(n) Officer's Certificate of Lessee. On the Delivery Date, the
following statements shall be true, and the LC Bank, 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 (as updated by Note 7 to the financial
statements included in the Lessee's Quarterly Reports on Form 10-Q
for the fiscal quarters ended August 31, 1997, November 30, 1997 and
February 28, 1998), 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 financial
statements of the Lessee as of May 31, 1997 or the unaudited
consolidated financial statements of the Lessee as of February 28,
1998 and nothing has occurred which will, in the judgment of such
officer, materially adversely affect the ability of the Lessee to
carry on its business or to perform its obligations under this
Agreement and each other Operative Agreement to which it is or is to
be a party; and
(iii) no event has occurred and is continuing, or would result
from the purchase, sale, mortgage, or lease of the Aircraft, which
constitutes an Event of Loss (or event which with the passage of time
would become an Event of Loss) with respect to the Airframe or any
Engine, or a Default or an Event of Default under the Lease.
(o) Certificates of Owner Participant. (a) On the Delivery Date,
the LC Bank, the Owner Trustee, the Pass Through Trustee, the Lessee and
the Indenture Trustee (acting directly or by authorization to its counsel)
shall have received the following in form and substance satisfactory to it:
(i) a copy of the articles of incorporation and bylaws of the
Owner Participant, certified by the Secretary or an Assistant
Secretary of the Owner Participant as of the Delivery Date, and a
copy of the resolutions of the board of directors of the Owner
Participant, certified as such as of the Delivery Date by such
Secretary or an Assistant Secretary, authorizing the execution and
delivery by the Owner Participant of this Agreement, the Tax
Indemnity Agreement, the Trust Agreement and the other Operative
Agreements to which the Owner Participant is or is to be a party and
each other document to be executed and delivered by the Owner
Participant in connection with the transactions contemplated hereby.
(b) On the Delivery Date, the following statements shall be true,
and the LC Bank, the Lessee, the Pass Through Trustee, the Owner Trustee
and the Indenture Trustee shall have received a certificate from the Owner
Participant, signed by a duly authorized officer of the Owner Participant
dated the Delivery Date, stating that:
(i) the representations and warranties of the Owner Participant
contained in this Agreement, the Trust Agreement and any other
Operative Agreement (excluding the Tax Indemnity Agreement) to which
it is a party and in any certificate delivered pursuant hereto or
thereto, are true and correct on and as of the Delivery Date as
though made on and as of such date (except to the extent that such
representations and warranties relate solely to an earlier date, in
which case such certificate shall state that such representations and
warranties were true and correct on and as of such earlier date);
(ii) no Lessor's Liens attributable to the Owner Participant
exist; and
(iii) no event has occurred and is continuing which constitutes
or, with notice or lapse of time or both would constitute, due to any
action or omission on the part of the Owner Participant, an Indenture
Event of Default other than an Indenture Event of Default
attributable to a Lease Event of Default.
(p) Other Officer's Certificates. On the Delivery Date, the
following statements shall be true, and the LC Bank, 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 LC Bank, 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
LC Bank, 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 LC Bank, 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 LC Bank, 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.
(q) Release of Debt Portion. Except as set forth in the proviso to
Section 3.02(a) hereof, the Indenture Trustee shall have released the Debt
Portion from (or such lesser amount as may then be held in) the Collateral
Account.
(r) Outstanding C Accounts. Any amount withdrawn by the Indenture
Trustee from the Collateral Account and not used to pay the Debt Portion of
the Purchase Price of the Aircraft shall be deposited into one or more
Outstanding C Accounts.
(s) Officer's Certificate of Lessee Regarding Mandatory Economic
Terms and Mandatory Document Terms. On the Delivery Date, or if earlier,
the Transfer Date, in connection with the amendments contemplated by
Section 2.03(a) hereof, 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 or the Transfer Date, as the case may be, 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 or any Liquidity Provider and such
certification shall be true and correct.
Notwithstanding anything else to the contrary in this Section 4.02, 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
4.02(n) and (o) 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 4.03. Opinion of Special Aviation Counsel Upon Registration.
Promptly upon the registration of the Aircraft and the filing and, where
appropriate, recordation pursuant to the Transportation Code, of 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 amended and restated Trust
Agreement, the amended and restated Lease (with such Lease Supplement, the
amended and restated Indenture and such Indenture and Security Agreement
Supplement attached as exhibits), and the amended and restated Indenture (with
such Indenture and Security Agreement Supplement attached as an exhibit), and
(iii), subject to customary qualifications, the lack of any intervening
documents with respect to the Aircraft.
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations. The
Lessee's obligation to participate in the transactions contemplated hereby on
the Certificate Closing Date is subject to the conditions that, prior to or on
the Certificate Closing Date, the Lessee shall have received the certificates
and other documents which are referred to in, or the opinions to be addressed
to it under, as the case may be, paragraphs (d), (g)(ii)-(v), (i),
(j)(ii)-(vii) of Section 4.01 hereof and the Underwriters shall have made
available the amounts required to be paid by them pursuant to Section 2.01
hereof, and the Lessee's obligation to participate in the transactions
contemplated hereby on the Delivery Date is subject to the conditions that, on
or prior to the Delivery Date, the Lessee shall have received the documents
which are referred to in, or the opinions to be addressed to it under, as the
case may be, paragraphs (c) and (d)(ii)-(vii) of Section 4.02 hereof and the
Indenture Trustee shall have released the Debt Portion from (or such lesser
amount as may then be held in) the Collateral Account.
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties. The Lessee
represents and warrants to the Owner Participant, the Owner Trustee (in its
individual capacity and as Owner Trustee), the Pass Through Trustee (in its
individual capacity and as Pass Through Trustee), each Liquidity Provider and
the Indenture Trustee (in its individual capacity and as Indenture Trustee)
that, on the date hereof and as of the Certificate Closing Date and the
Delivery Date (unless any such representation is specifically made as of one
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 UCC) in Memphis, Tennessee, and is duly qualified
to do business as a foreign corporation and is in good standing in all
jurisdictions in which it has intrastate routes, or offices or major
overhaul facilities or in which other activities of the Lessee require such
qualification;
(b) the Lessee has full power, authority and legal right to conduct
its business and operations as currently conducted and to own or hold under
lease its Properties and to enter into and perform its obligations under
this Agreement, the other Operative Agreements to which it is a party, the
Pass Through Agreement and the Series Supplements (the "Lessee Documents");
(c) the Lessee is an "air carrier" within the meaning of the
Transportation Code and a holder of a certificate under Sections 41102(a)
and 41103 of the Transportation Code and a "citizen of the United States"
within the meaning of Section 40102(a)(15) of the Transportation Code
holding an "air carrier operating certificate" issued under Chapter 447 of
the Transportation Code for aircraft capable of carrying ten (10) or more
individuals or 6,000 pounds or more of cargo, and each such certificate is
in full force and effect;
(d) the Lessee possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents (collectively
"permits") which are material to the operation of the routes flown by it
and the conduct of its business and operations as currently conducted and
each such permit is in full force and effect;
(e) the execution, delivery and performance of the Lessee Documents
by the Lessee have been duly authorized by all necessary corporate action
on the part of the Lessee and do not require any stockholder approval, or
approval or consent of any trustee or holder of any indebtedness or
obligations of the Lessee, and each such document has been duly executed
and delivered or, in the case of the Operative Agreements identified in
Section 4.02(c) hereof, will on the Delivery Date be executed and delivered
by the Lessee and constitutes (or will constitute, as the case may be) the
legal, valid and binding obligations of the Lessee enforceable against it
in accordance with the terms thereof except as such enforceability may be
limited by bankruptcy, insolvency, moratorium, reorganization or other
similar laws or equitable principles of general application to or affecting
the enforcement of creditors' rights generally (regardless of whether
enforceability is considered in a proceeding in equity or at law);
(f) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body (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
4.02(d)(iii) and 4.03 hereof and except for the filings referred to in
Sections 4.01(f) and 4.02(f) hereof, all of which shall have been duly
obtained or made and shall be in full force and effect on and as of the
Certificate Closing Date or the Delivery Date, or as contemplated by said
Sections;
(g) neither the execution, delivery or performance by the Lessee of
the Lessee Documents nor compliance with the terms and provisions hereof or
thereof, conflicts or will conflict with or results or will result in a
breach or violation of any of the terms, conditions or provisions of, or
will require any consent (other than the Consent and Agreement and the
Engine Consent and Agreement which will be executed on or prior to the
Delivery Date) 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 (as updated by Note 7 to the financial statements
included in the Lessee's Quarterly Reports on Form 10-Q for the fiscal
quarters ended August 31, 1997, November 30, 1997 and February 28, 1998),
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 has filed or caused to be filed all tax returns which
are required to be filed and has paid or caused to be paid all taxes shown
to be due and payable pursuant to such returns or pursuant to any
assessment received by the Lessee (other than assessments the payment of
which is being contested in good faith by the Lessee), and the Lessee has
no knowledge of any related actual or proposed deficiency or additional
assessment which either in any case or in the aggregate would materially
adversely affect the Lessee's consolidated financial condition (other than,
in any such case, assessments, the payment of which is being contested in
good faith by the Lessee, as to which no representation is made concerning
the Lessee's liability (if any) or the effect of any adverse determination
upon the Lessee's consolidated financial condition);
(j) except for (A) the registration in the Owner Trustee's name of
the Aircraft pursuant to the Transportation Code to be accomplished by
filing with the FAA, of 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 Sections 4.01(f) and
4.02(f) hereof and (D)(x) on the Certificate Closing Date, the taking of
possession by the Indenture Trustee of the Liquid Collateral and
maintaining possession by the Indenture Trustee thereof as contemplated in
Section 2.14(a) of the Indenture and (y) on the Delivery Date, the taking
of possession by the Indenture Trustee of the original counterpart of the
Lease and the Lease Supplement covering the Aircraft, no further action,
including any filing or recording of any document, is necessary or
advisable in order (i) to establish the Owner Trustee's title to and
interest in the Aircraft and the Lessor's Estate as against the Lessee and
any third parties, or (ii) to perfect the first security interest in and
mortgage Lien on the Trust Indenture Estate in favor of the Indenture
Trustee;
(k) on the Delivery Date, the Owner Trustee has received good and
marketable title to the Aircraft, free and clear of all Liens, except the
rights of the Lessee under the Lease and the Lease Supplement, the rights
of the Indenture Trustee under the Indenture and the beneficial interest of
the Owner Participant created by the Trust Agreement;
(l) the Lessee has heretofore delivered to the Owner Participant
true and correct copies of the Lessee's Annual Report on Form 10-K for the
fiscal year ended May 31, 1997 and its Quarterly Reports on Form 10-Q for
the fiscal quarters ended August 31, 1997, November 30, 1997 and February
28, 1998, and of the audited consolidated balance sheet of the Lessee for
the fiscal year ended May 31, 1997 and the unaudited consolidated balance
sheets of the Lessee as of August 31, 1997, November 30, 1997 and February
28, 1998, and the related consolidated statements of income, changes in
common stockholders' investment and cash flows for the fiscal year and
interim reporting periods ended on such dates, accompanied (except in the
case of such interim reporting periods) by a report thereon containing
opinions without qualification, except as therein noted, by Arthur Andersen
LLP, independent public accountants; said financial statements have been
prepared in accordance with generally accepted accounting principles
consistently applied and present fairly the financial position of the
Lessee as of such dates and the results of its operations and cash flows
for such periods and such Annual Report, Quarterly Reports and financial
statements did not, as of their respective dates of filing with the SEC,
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein not misleading;
(m) with respect to ERISA:
(i) none of the Pension Plans (as defined at the end of this
Section 6.01(m)) nor their related trusts have been terminated in a
distress termination pursuant to Section 4041(c) of ERISA or by the
Pension Benefit Guaranty Corporation (together with any successor
agency or instrumentality thereto, the "PBGC") pursuant to Section
4042 of ERISA, nor have any actions been taken to so terminate any
Pension Plan or related trust and neither the Lessee nor any ERISA
Affiliate (as defined at the end of this Section 6.01(m)) has
incurred or could reasonably be expected to incur any material
liability with respect to a Pension Plan under Section 4062, 4063,
4064 or 4069 of ERISA;
(ii) there have been no "reportable events" (as such term is
defined in Section 4043(b) of ERISA) with respect to any Pension Plan
which have resulted or could reasonably be expected to result in any
material liability of the Lessee or any ERISA Affiliate;
(iii) no "accumulated funding deficiency" (as such term is defined
in Section 302 of ERISA or Section 412 of the Code) exists with
respect to any Pension Plan, whether or not waived, nor has any
request for a waiver under Section 412(d) of the Code been, or is
reasonably likely to be, filed with respect to any of the Pension
Plans;
(iv) neither the Lessee nor any ERISA Affiliate has failed to make
any contribution or payment to any Pension Plan which has resulted or
could reasonably be expected to result in the imposition of a Lien
under Section 302(f) of ERISA or Section 412(n) of the Code;
(v) all Pension Plans are in compliance in all material respects
with all applicable provisions of ERISA and the Code;
(vi) neither the Lessee nor any ERISA Affiliate has incurred or is
reasonably likely to incur any material withdrawal liability pursuant
to Section 4201 or 4204 of ERISA or any material liability under
Section 515 of ERISA;
(vii) to the best of the Lessee's knowledge, neither the Lessee
nor any ERISA Affiliate has engaged in a "prohibited transaction"
(within the meaning of Section 4975 of the Code or Section 406 of
ERISA) which could reasonably be expected to subject the Lessee to
the tax or penalties on prohibited transactions imposed by Section
4975 of the Code or Section 502 of ERISA; and
(viii) assuming the truth of the representations contained in
Section 7.03(a)(viii) hereof and compliance with Section 10.06 of the
Indenture, the execution and delivery of this Agreement and the other
Operative Agreements and the consummation of the transactions
contemplated hereby and thereby will not involve any transaction
which is prohibited by Section 406 of ERISA or in connection with
which a tax could be imposed pursuant to Section 4975 of the Code.
No part of the funds to be used by the Lessee in satisfaction of its
obligations under this Agreement or any other of the Operative
Agreements to which the Lessee is a party or to which the Lessee is
bound are the assets of any employee benefit plan subject to Title I
of ERISA, or any individual retirement account or an employee benefit
plan subject to Section 4975 of the Code;
as used in this Section 6.01(m), the term "Pension Plan" means an employee
pension benefit plan as defined in Section 3(2) of ERISA (other than a
multiemployer plan as defined in Section 4001(a)(3) of ERISA) which is
covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code and which is maintained, or contributed to,
by the Lessee or any ERISA Affiliate, and the term "ERISA Affiliate" means
any entity which together with the Lessee would be treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code;
(n) the Lessee is a Citizen of the United States;
(o) except for the filings referred to in Sections 4.01(f), 4.02(e)
and 4.02(f) hereof, no governmental approval of any kind is required of the
Owner Participant or for the Owner Participant's execution of or
performance under this Agreement or any agreement contemplated hereby by
reason of any fact or circumstance of the Lessee, the nature of the
Aircraft or the Lessee's proposed operations or use of the Aircraft;
(p) on the Delivery Date, all premiums with respect to the insurance
required to be provided by the Lessee on or prior to the Delivery Date
under Article 13 of the Lease have been paid by the Lessee;
(q) on the Delivery Date, all sales or use taxes relating to the
sale of the Aircraft by the Lessee to the Owner Trustee which are then or
were theretofore due shall have been paid;
(r) the Lessee is not in default under any mortgage, deed of trust,
indenture, lease or other instrument or agreement to which the Lessee is a
party or by which it or any of its Properties or assets may be bound, or in
violation of any applicable law, which default or violation would have a
material adverse effect on the financial condition, business or operations
of the Lessee or its ability to perform any of its obligations under the
Lessee Documents;
(s) no Default or Event of Default or Event of Loss or event, which
with the passage of time or if continued unremedied or unaltered would
constitute an Event of Loss, has occurred or exists;
(t) on the Delivery Date, the Aircraft will be in such condition so
as to enable the airworthiness certificate of such Aircraft to be in good
standing under the Transportation Code; the Aircraft will have been duly
certificated by the FAA as to type and airworthiness; there will be in
effect with respect to the Aircraft a current and valid airworthiness
certificate issued by the FAA pursuant to the Transportation Code; and
there is no fact known to the Lessee which materially adversely affects the
value, utility or condition of the Aircraft;
(u) on the Certificate Closing Date and the Delivery Date, the
Lessee shall not be in default in the performance of any term or condition
of the Purchase Agreement or the Purchase Agreement Assignment and the
aggregate amount of loans shall not exceed the Debt Portion;
(v) neither the Lessee nor any subsidiary of the Lessee is an
"investment company" or a company "controlled by an investment company"
within the meaning of the Investment Company Act of 1940, as amended;
(w) 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; and
(x) 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.
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 50 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 Purchase Agreement, the Purchase
Agreement 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 take, or
cause to be taken, at the Lessee's cost and expense, such action with
respect to the recording, filing, re-recording and re-filing of the
Indenture, each Indenture and Security Agreement Supplement, the Lease,
each Lease Supplement and any financing statements or other instruments as
may be necessary, or as requested by the Indenture Trustee and appropriate,
to maintain the perfection of the first security interest and the Lien
created by the Indenture, and the Owner Trustee's title to and interest in
the Aircraft and the Lessor's Estate as against the Lessee and any third
parties, or if the Lessee cannot take, or cause to be taken, such action,
will furnish to the Indenture Trustee and the Owner Trustee timely notice
of the necessity of such action, together with such instruments, in
execution form, and such other information as may be required to enable
either of them to take such action at the Lessee's cost and expense in a
timely manner.
(b) From and after the Delivery Date, the Lessee shall maintain the
certificates referred to in Section 7.01 of the Lease and shall cause the
Aircraft to be duly registered, and at all times to remain duly registered,
in the name of the Owner Trustee, under the Transportation Code; provided,
however, that the Owner Participant, the Owner Trustee and the Indenture
Trustee agree that, so long as no Default or Event of Default shall have
occurred and be continuing, if at any time after 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 in which a sublessee could be located under the
provisions of Section 7.02(a)(i) of the Lease with which the United States
then maintains normal and full diplomatic relations, upon receipt by the
Owner Participant, the Owner Trustee and the Indenture Trustee of the
assurances and opinion described below, none of them shall unreasonably
withhold their consent to such change in registration (it being agreed,
without limitation, that the inability of the Lessee to deliver such
assurances or such opinion shall constitute reasonable grounds to withhold
such consent).
As a condition to any change in the registration of the Aircraft, the
Owner Participant, the Owner Trustee in its individual and trust capacities,
and the Indenture Trustee shall have received:
(i) assurances satisfactory to them:
(A) to the effect that the insurance provisions of the Lease have
been and will be complied with and are and shall be in full force and
effect upon such change of registry;
(B) as to the continuation of the Lien of the Indenture as a
first priority, duly perfected Lien on the Aircraft;
(C) that the Owner Trustee's right, title and interest in and to
the Aircraft is recognized and fully enforceable in the new
jurisdiction of registry, that the rights of the Owner Trustee in and
to the Aircraft will not be impaired in such new jurisdiction of
registry and that the new jurisdiction of registry will give effect
to the title and registry of the Aircraft therein substantially to
the same extent as does the Government;
(D) that such new country of registry (x) would provide
substantially equivalent protection for the rights of owner
participants, lessors or lenders in similar transactions as provided
under United States law (except that, in the absence of restrictions
under the laws of such country on rights and remedies of lessors and
secured parties similar to those imposed by Sections 362 and 363 of
the Bankruptcy Code, rights and remedies similar to those available
under Section 1110 of the Bankruptcy Code shall not be required), and
(y)(i) if such change in registration is made other than in
connection with a sublease, imposes maintenance standards at least
comparable to those of the FAA, and (ii) if such change in
registration is made in connection with a sublease permitted under
Section 7.02(a)(i) of the Lease, imposes maintenance standards in
conformity with those set forth in Section 7.02(a)(i) of the Lease;
(E) that import and export certificates and any exchange permits
necessary to allow all Rent and other payments provided for under the
Lease, if required, shall have been procured at the Lessee's own cost
and expense by the Lessee;
(F) that the Lessee shall have effected or caused to be effected
at the Lessee's own cost and expense all recordings and filings that
are required to perfect the Lien of the Indenture;
(G) to the effect that the original indemnities (and any additional
indemnities for which the Lessee is then willing to enter into a
binding agreement to indemnify) in favor of the Owner Participant,
the Owner Trustee (in its individual capacity and as trustee under
the Trust Agreement), the Indenture Trustee (in its individual
capacity, and as trustee under the Indenture), the Pass Through
Trustee (in its individual capacity, and as trustee under the Pass
Through Agreement) and the other Indemnitees under this Agreement,
the Indenture, the Pass Through Agreement and (in the case of the
Owner Participant only) the Tax Indemnity Agreement, afford each such
party substantially the same protection as provided prior to such
change of registry;
(H) that such change will not result in the imposition of, or
increase in the amount of, any Tax for which the Lessee has not
agreed to indemnify the Owner Participant, the Indenture Trustee, the
Pass Through Trustee, the Owner Trustee (or any successor, assign or
Affiliate thereof) and the Trust Estate;
(I) that any value added tax, customs duty, tariff or similar
governmental charge relating to the change in jurisdiction of
registration of the Aircraft shall have been paid in full or
adequately provided for by the Lessee to the satisfaction of the
Owner Trustee, the Indenture Trustee and the Owner Participant;
(J) of the payment by the Lessee of any reasonable fees and
expenses of the Owner Participant, the Owner Trustee, the Indenture
Trustee and the Pass Through Trustee in connection with such change
of registry, including any reasonable attorneys' fees and expenses;
and
(K) that duties and tariffs, if applicable, shall have been paid
for by the Lessee;
(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)(D)(x) of this Section 6.03) in respect of the
transactions contemplated hereby, including, without limitation, the
remedies provided in the Indenture and the Lease;
(D) that there is no tort liability of the beneficial owner,
record owner, lessor or mortgagee of an aircraft not in possession
thereof under the laws of such jurisdiction, other than tort
liability which might have been imposed on such owner, lessor or
mortgagee under the laws of the United States or any state thereof
(it being understood that, in the event such latter opinion cannot be
given in a form satisfactory to the Owner Participant and the
Indenture Trustee, such opinion shall be waived, if insurance
reasonably satisfactory to the Owner Participant, the Indenture
Trustee and the Owner Trustee, in its individual capacity, is
provided, at the Lessee's expense, to cover such risk and the Lessee
undertakes to keep such insurance in full force and effect);
(E) that the laws of such jurisdiction will not impair the rights
of the Lessor in and to the Aircraft and (unless the Lessee shall
have agreed to provide insurance reasonably satisfactory to the
Indenture Trustee and the Owner Participant covering the risk of
requisition of use of the Aircraft by the government of registry of
the Aircraft) require fair compensation by the government of such
jurisdiction payable in currency freely convertible into United
States dollars for the loss of use of the Aircraft in the event of
such requisition;
(F) that the Owner Trustee's title to the Aircraft is recognized
and fully enforceable in such jurisdiction, that such jurisdiction
will give effect to the title of the Aircraft therein substantially
to the same extent as does the Government, and that the Lien of the
Indenture shall continue as a first priority, duly perfected lien on
the Aircraft; and
(G) to such further effect with respect to such other matters as
the Owner Participant, the Owner Trustee, or the Indenture Trustee may
reasonably request.
If following any reregistration of the Aircraft, the Aircraft is
located outside the United States, the Lessee shall have thirty (30) days to
relocate the Aircraft within the United States and, if unable to do so, shall
pay the reasonable incremental out-of-pocket costs of the Lessor, the Owner
Participant or their authorized representatives incurred in connection with
any inspection or appraisal required or permitted under the Operative
Agreements. Such obligation shall apply only with respect to one inspection
or appraisal in any calendar year unless an Event of Default shall have
occurred and be continuing.
(c) The Lessee shall promptly file any reports, or furnish to the
Owner Trustee and the Owner Participant such information as may be required
to enable the Owner Trustee and the Owner Participant timely to file any
reports required to be filed by the Owner Trustee as the Lessor and the
Owner Participant under the Lease with any governmental authority.
(d) The Lessee will cause the Special Aviation Counsel to file, and
where appropriate record, on the Delivery Date, the FAA Bill of Sale, the
Lease, the Lease Supplement, the Trust Agreement, the Indenture and the
Indenture and Security Agreement Supplement. The following documents shall
be filed and, where appropriate, recorded on the Delivery Date with the
Aeronautics Authority in the following order of priority: first, the FAA
Bill of Sale, second, the Application, with the Trust Agreement and the
Affidavits, third, the Indenture with the Indenture and Security Agreement
Supplement attached thereto, and fourth, the Lease with the Lease
Supplement, the Indenture and the Indenture and Security Agreement
Supplement attached thereto.
(e) The Lessee will furnish to the Owner Participant, the Owner
Trustee and the Indenture Trustee annually after the execution of this
Agreement, by March 15 of each year, commencing with the year 1999, 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.
(g) The Lessee shall not enter into any merger or consolidation, or
convey, transfer or lease all or substantially all of its assets as an
entirety to any Person, unless the surviving corporation or Person which
acquires by conveyance, transfer or lease all or substantially all of the
assets of the Lessee as an entirety (i) is a domestic corporation organized
and existing under the laws of the United States or a political subdivision
thereof, (ii) is a Citizen of the United States, (iii) is a U.S. Air
Carrier, (iv) expressly assumes by an instrument in writing in form and
substance satisfactory to the Indenture Trustee, the Owner Participant and
the Owner Trustee all of the Lessee's obligations hereunder and under the
other Operative Agreements, and each other document contemplated hereby or
thereby and the Lessee delivers such instrument to the Indenture Trustee,
the Owner Participant and the Owner Trustee, (v) provides an opinion from
outside counsel to the Lessee which counsel shall be reasonably
satisfactory to the Owner Participant and the Indenture Trustee and which
opinion shall be reasonably satisfactory to the Owner Participant and the
Indenture Trustee, and an officer's certificate, each stating that such
merger, consolidation, conveyance, transfer or lease and the instrument
noted in clause (iv) above comply with this Section 6.03(g), that such
instrument is a legal, valid and binding obligation of, and is enforceable
against, such survivor or Person, and that all conditions precedent herein
provided for relating to such transaction have been complied with, and (vi)
immediately after such merger, consolidation or conveyance, transfer or
lease, as the case may be, the surviving company is in compliance with all
of the terms and conditions of this Agreement and the Lease and each other
Operative Agreement and each other document contemplated hereby or thereby;
provided that no such merger, consolidation or conveyance, transfer or
lease shall be permitted if the same gives rise to an Event of Default.
Upon any consolidation or merger, or any conveyance, transfer or
lease of all or substantially all of the assets of the Lessee and the
satisfaction of the conditions specified in this Section 6.03(g), the
successor corporation formed by such consolidation or into which the Lessee
is merged or the Person to which such conveyance, transfer or lease is made
shall succeed to, and be substituted for, and may exercise every right and
power of, the Lessee under this Agreement and the Lease and each other
Operative Agreement and any other document contemplated hereby and thereby
to which the Lessee is a party with the same effect as if such successor
corporation had been named as the Lessee herein and therein. No such
conveyance, transfer or lease of all or substantially all of the assets of
the Lessee as an entirety shall have the effect of releasing the Lessee or
any successor corporation which shall theretofore have become such in the
manner prescribed in this Section 6.03(g) from its liability hereunder or
under the other Operative Agreements. Nothing contained herein shall
permit any lease, sublease, or other arrangement for the use, operation or
possession of the Aircraft except in compliance with the applicable
provisions of the Lease.
(h) The Lessee agrees to give prompt written notice to the Owner
Participant 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 UCC) or of any change in its corporate name.
(i) The Lessee agrees to furnish to the Owner Participant, the
Lessor and the Indenture Trustee:
(A) as soon as available, but in any event within one hundred
twenty (120) days after the end of each fiscal year of the Lessee, a
consolidated balance sheet as of the end of such fiscal year, and the
related consolidated statements of income, common stockholders'
equity, retained earnings and cash flows of the Lessee for the fiscal
year then ended as prepared and certified by the Lessee's independent
certified public accountants, including their opinion;
(B) within sixty (60) days after the end of the first, second and
third quarterly accounting periods in each fiscal year of the Lessee,
a consolidated balance sheet of the Lessee prepared by it as of the
close of the accounting period then ended, together with the related
consolidated statements of income, retained earnings and cash flows
for such accounting period certified by the chief accounting officer
or a financial vice president of the Lessee;
(C) promptly upon their general transmission, copies of all
regular and periodic reports furnished by the Lessee to its
stockholders;
(D) promptly after filing with the SEC, copies of the Lessee's
Annual Reports on Form 10-K (including all corresponding annual
reports to shareholders), Quarterly Reports on Form 10-Q and, if
requested, any registration statement or prospectus filed by the
Lessee with any securities exchange or with the SEC;
(E) promptly upon (and in any event within five (5) Business Days
after) any 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 Pass Through Trustee and the Indenture Trustee a certificate
of the Lessee, signed by any one of the President, the Chief Financial
Officer, the General Counsel, the Treasurer or the principal accounting
officer of the Lessee, stating that the signer, or an employee reporting to
same, is familiar with the relevant terms of this Agreement and the Lease and
the signer has reviewed, or has caused to be made under such Person's
supervision a review of, the activities of the Lessee and that, to the best of
his or her knowledge, there does not exist any Default or any Event of Default
or if a Default or an Event of Default exists or did exist, specifying the
nature thereof, the period of existence thereof and what action the Lessee has
taken or proposes to take with respect thereto.
Section 6.04. Survival of Representations and Warranties. The
representations and warranties of the Lessee provided in Sections 6.01 and 6.02
hereof and in any other Operative Agreement shall survive the Closings
hereunder and the expiration or other termination of this Agreement and the
other Operative Agreements.
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in Lessor's
Estate. (a) [Reserved.]
(b) Owner Participant (other than Initial Owner Participant). The
Owner Participant represents and warrants that its interest in the Lessor's
Estate and the Trust Agreement was acquired by it for its own account and not
with a view to resale or distribution thereof; provided, however, that the
disposition by the Owner Participant of its interest in the Lessor's Estate
and the Trust Agreement shall, subject to the terms and provisions of Article
5 of the Trust Agreement, at all times be within its control and the foregoing
representation shall not limit the Owner Participant's right to transfer or
sell such interests pursuant to the terms of this Agreement. The Owner
Participant nor anyone else authorized to act on its behalf has directly or
indirectly offered any interest in the Lessor's Estate or the Trust Agreement,
or in any similar security, for sale to, or solicited any offer to acquire any
of the same from, anyone. The Owner Participant further represents and
warrants that neither it nor anyone authorized to act on its behalf has made
or will make any offer, solicitation or sale of any interest in the Lessor's
Estate or the Trust Agreement in violation of the provisions of Section 5 of
the Securities Act of 1933, as amended. No representation in this Section
7.01(b) shall include any action or inaction of the Lessee, First Chicago
Leasing Corporation, the Subordination Agent, the Underwriters or any
Affiliate of any thereof whether or not purportedly on behalf of the Owner
Trustee, the Owner Participant or any of their Affiliates.
(c) Owner Trustee. The Owner Trustee represents and warrants, both
in its individual capacity and as trustee, that neither it nor anyone acting
on its behalf (i) has directly or indirectly offered or will directly or
indirectly offer any interest in the Lessor's Estate, or in any similar
security, for sale to, or solicited any offer to acquire any of the same from
anyone (other than the Owner Participant) and (ii) 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 Owner Trustee, and the Owner
Participant severally represents and warrants that it is or will be a Citizen
of the United States on the Delivery Date. If the Owner Participant or the
Owner Trustee in its individual capacity does not comply with the requirements
of this Section 7.02, the Owner Trustee, the Indenture Trustee and the Owner
Participant hereby agree that a Default or an Event of Default shall not be
deemed to have occurred and be continuing under the Lease due to
non-compliance by the Lessee with the registration requirements in the Lease
occasioned by the noncompliance of the Owner Participant or the Owner Trustee.
(b) Owner Trustee. The Owner Trustee, in its individual capacity,
covenants that if at any time it shall have actual knowledge that it has
ceased to be a Citizen of the United States, it will resign immediately as the
Owner Trustee if such citizenship is necessary under the Transportation Code
as in effect at such time or, if it is not necessary under the Transportation
Code as in effect at such time, if it is informed in writing by the Lessee,
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 when the Aircraft is registered or the
Lessee proposes to register the Aircraft in the United States (i) it shall
cease to be, or believes itself likely 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 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 15 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 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 and to each Holder any damages actually suffered
by any such other party or Holder as the result of the representation and
warranty of the Owner Participant in the first sentence of Section 7.02(a)
hereof proving to be untrue as of the Delivery Date; and (B) to the Lessee, the
Indenture Trustee and the Pass Through Trustee for any damages actually
incurred by the Lessee, the Indenture Trustee and the Pass Through Trustee as
a result of the Owner Participant's failure to comply with its obligations
pursuant to the first sentence of this Section 7.02(c). 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).
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 (other than the Initial Owner
Participant) represents and warrants as of the Delivery Date that:
(i) it is a corporation duly incorporated and validly existing in
good standing under the laws of the state of its jurisdiction and it has
full 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 bylaws, as amended, of the Owner
Participant or any order, writ, injunction or decree of any court or
governmental authority against the Owner Participant or by which it or any
of its Properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which the Owner Participant is a party or by
which it or any of its Properties is bound, or constitutes or will
constitute a default thereunder or results or will result in the imposition
of any Lien upon any of its Properties;
(iv) this Agreement, the Tax Indemnity Agreement, 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) to the best of its knowledge, 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 is not a tax resident of another country; and
(x) it has a consolidated tangible net worth of not less than
$75,000,000.
Notwithstanding the foregoing or anything else contained in this
Agreement, the Owner Participant makes no representation or warranty in this
Agreement with respect to laws, rules or regulations relating to aviation or
to the nature or use of the equipment owned by the Owner Trustee, 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 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) Indemnity for Lessor's Liens. The Owner Participant agrees to
indemnify and hold harmless the Lessee, the Indenture Trustee and the Pass
Through Trustee from and against any loss, cost, expense or damage which may
be suffered by the Lessee, the Indenture Trustee or the Pass Through Trustee
as the result of the failure of the Owner Participant to discharge and satisfy
any Lessor's Liens attributable to the Owner Participant (or an Affiliate
thereof) and required to be discharged as described in Section 7.03(b) hereof.
(d) Assignment of Interests of Owner Participant. The Owner
Participant agrees that it will not assign, convey or otherwise transfer any
of its right, title or interest in and to the Operative Agreements or the
Lessor's Estate except in accordance with the provisions of Article 5 of the
Trust Agreement, as in effect on the date hereof or as amended in accordance
with the terms of the Operative Agreements.
(e) Actions with Respect to Lessor's Estate, Etc. The Owner
Participant agrees that it will not take any action to subject the Lessor's
Estate or the trust established by the Trust Agreement, as debtor, to the
reorganization or liquidation provisions of the Bankruptcy Code or any other
applicable bankruptcy or insolvency statute.
Section 7.04. Representations, Covenants and Warranties of 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) on the date hereof and as of the
Certificate Closing Date and the Delivery Date that:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America
with its principal place of business and chief executive office (as such
terms are used in Article 9 of the UCC) at 225 Asylum Street, Goodwin
Square, Hartford, Connecticut 06103, Attention: Corporate/Muni
Administration 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 Initial Owner Participant) as the
Owner Trustee, as the case may be, to carry on its business as now
conducted, and to execute, deliver and perform this Agreement and the
Operative Agreements to which it is or is to be a party;
(ii) the execution, delivery and performance by 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, and has been duly executed and delivered
or, in the case of the Operative Agreements identified in Section 4.02(c)
hereof, will on the Delivery Date be duly executed and delivered by 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 Certificate Closing Date, the proceeds arising from the
issuance and sale of the Certificates shall be free of Lessor's Liens
attributable to SSB in its individual capacity and on the Delivery Date the
Owner Trustee shall be holding whatever title to the Aircraft as was
conveyed to it by 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 Certificate Closing Date or the Delivery Date. The
Owner Trustee, in its trust capacity, and at the cost and expense of the
Lessee, covenants that it will in its trust capacity promptly, and in any
event within 30 days after the same shall first become known to it, take such
action as may be necessary to discharge duly any Lessor's Liens attributable
to it in its trust capacity. 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) Securities Act. None of SSB, the Owner Trustee or any Person
authorized by either of them to act on its behalf has directly or indirectly
offered or sold or will directly or indirectly offer or sell any interest in
the Lessor's Estate, or in any similar security relating to the Lessor's
Estate, or in any security the offering of which for purposes of the
Securities Act of 1933, as amended, would be deemed to be part of the same
offering as the offering of the aforementioned securities to, or solicited any
offer to acquire any of the same from, any Person.
(e) 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 on the date hereof and as of the
Certificate Closing Date and 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 to be delivered on
the Certificate Closing Date;
(ii) the Indenture and this Agreement and the other Operative
Agreements to which it is or is to be a party, and the authentication of
the Certificates to be delivered on the Certificate Closing Date, have been
duly authorized by all necessary corporate action on its part, and neither
the execution and delivery thereof nor its performance of any of the terms
and provisions thereof will violate any Federal or 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 or, in the case of the Operative Agreements
identified in Section 4.02(c) hereof, will on the Delivery Date be executed
and delivered by it and, assuming that each such agreement is the legal,
valid and binding obligation of each other party thereto, is (or will be,
as the case may be), the legal, valid and binding obligation of the
Indenture Trustee, enforceable against the Indenture Trustee in accordance
with its terms except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws or equitable principles of
general application to or affecting the enforcement of creditors' rights
(regardless of whether enforceability is considered in a proceeding in
equity or at law);
(iv) neither the execution and delivery by it of the Indenture and
this Agreement and the other Operative Agreements to which it is or is to
be a party, nor the performance by it of any of the transactions
contemplated hereby or thereby, requires the consent or approval of, the
giving of notice to, the registration with, or the taking of any other
action in respect of, any Federal or state governmental authority or agency
governing its banking and trust powers; and
(v) on the Certificate Closing Date, the Indenture Trustee holds
the Liquid Collateral on behalf of the Owner Trustee and on the Delivery
Date, the Indenture Trustee will hold the original counterparts of the
Lease, the Lease Supplement and the Ancillary Agreement I.
(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 Certificate
Closing Date or, as at and following the Delivery Date, the Aircraft. The
Indenture Trustee, in its individual capacity, covenants and agrees that it
will at its own expense take such action as may be necessary to duly discharge
and satisfy in full, promptly, and in any event within 30 days, after the same
shall first become known to it, any Indenture Trustee's Liens.
(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.
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 the Owner
Participant (or the Owner Trustee, the Indenture Trustee or the Pass Through
Trustee, as the case may be) nor any Person lawfully claiming through the
Owner Participant (or the Owner Trustee, the Indenture Trustee or the Pass
Through Trustee, as the case may be) shall interfere with the Lessee's right
quietly to enjoy the Aircraft during the Term without hindrance or disturbance
by the Owner Participant (or the Owner Trustee, the Indenture Trustee or the
Pass Through Trustee as the case may be), provided, however, that the Lessor
shall not be liable for any act or omission of the Indenture Trustee or any
other Person claiming through the Indenture Trustee.
Section 7.09. Pass Through Trustee's Representations and Warranties.
The Pass Through Trustee, in its individual capacity (except with respect to
clause (iii) below), represents and warrants as of the date hereof (except as
otherwise provided), as of the Pass Through Closing Date, the Certificate
Closing Date and the Delivery Date that:
(i) it is a 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 Pass Through Agreement, the Series Supplements, the Intercreditor
Agreement and this Agreement and to execute and authenticate the Pass
Through Certificates to be delivered on the Pass Through Closing Date;
(ii) the execution, delivery and performance of this Agreement, the
Pass Through Agreement and the Series Supplements and the performance of its
obligations hereunder and thereunder (including the execution and
authentication of the Pass Through Certificates to be delivered on the Pass
Through Closing Date) have been fully authorized by all necessary corporate
action on its part, and, subject to (A) the registration of the issuance
and sale of the Pass Through Certificates under the Securities Act, (B)
compliance with any applicable state securities laws and (C) the
qualification of the Pass Through Agreement under the Trust Indenture Act,
neither the execution and delivery thereof nor its performance of any of
the terms and provisions thereof will violate any Federal or 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; and
(iii) each of this Agreement and the Pass Through Agreement has been,
and as of the Pass Through Closing Date the Series Supplements will be, duly
executed and delivered by it (in its individual and trust capacities) and,
assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is or will be, as the case may be,
the legal, valid and binding obligation of the Pass Through Trustee (in its
individual and trust capacities), enforceable in accordance with its
respective terms except as limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights generally
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
Section 7.10. Survival of Representations, Warranties and Covenants.
The representations, warranties and covenants of the Owner Participant, the
Owner Trustee (in its individual or trust capacity), the Pass Through Trustee
(in its individual or trust capacity), the Subordination Agent (in its
individual capacity or trust capacity) and the Indenture Trustee (in its
individual or trust capacity) provided for in this Article 7, and their
respective obligations under any and all of them, shall survive the Closings,
the delivery of the Aircraft and the expiration or other termination of this
Agreement, and the other Operative Agreements.
Section 7.11. Lessee's Assumption of the Certificates. (a) Subject
to compliance by the Lessee with all of its obligations under the Operative
Agreements, each of the Owner Participant, the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Lessee covenants and agrees that if
the Lessee elects to terminate the Lease and to purchase the Aircraft pursuant
to Section 4.02(a)(A), (D), (E) or (F) of the Lease, and so long as no Event
of Default shall have occurred and be continuing then, upon compliance with
the applicable provisions of said Section 4.02(a) of the Lease, the Owner
Trustee will transfer to the Lessee, without recourse or warranty (except as
to the absence of Lessor's Liens) 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, each of the parties shall execute
and deliver appropriate documentation permitting the Lessee to assume such
obligations on the basis of full recourse to the Lessee, maintaining for the
benefit of the Holders the security interest in the Aircraft created by the
Indenture, and upon compliance with the provisions of this Section 7.11
releasing the Owner Participant and the Owner Trustee from all obligations in
respect of the Certificates, the Indenture 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 UCC financing statements relating thereto, and any other
documents which shall be necessary (or reasonably requested by the
Indenture Trustee) to establish the Lessee's title to and interest in the
Aircraft or to reflect the substitution of the Lessee for the Owner Trustee
under the Operative Agreements or to continue the perfection of the
security interests in the Aircraft and the other rights, Property and
interests included in the Trust Indenture Estate for the benefit of the
Holders (or the Lessee's substituted obligations) shall be filed in such
form, manner and places as are necessary or, in the reasonable opinion of
the Indenture Trustee, advisable for such purpose;
(iii) the Indenture Trustee shall have received an insurance report
dated the effective date of such assumption of an independent insurance
broker and certificates of insurance, each in form and substance
satisfactory to the Indenture Trustee, as to the due compliance as of the
effective date of such assumption with the terms of Article 13 of the Lease
(as it relates to the Indenture Trustee) relating to the insurance with
respect to the Aircraft;
(iv) the Indenture Trustee shall have received evidence that as of
the effectiveness of the assignment on the date of such assumption the
Aircraft is free and clear of all Liens other than the Lien of the
Indenture and other Permitted Liens;
(v) the Indenture Trustee shall have received a certificate from
the Lessee that no Event of Default shall have occurred and be continuing
as of the effective date of such assumption; and
(vi) the Indenture Trustee shall have received (A) from counsel for
the Lessee (who may be the Lessee's General Counsel) a legal opinion, in
form and substance satisfactory to the Indenture Trustee (w) with respect
to the compliance of the assumption contemplated hereby with the terms,
provisions and conditions hereof, (x) with respect to the due
authorization, execution, delivery, validity and enforceability of the
instrument referred to in paragraph (i) of this Section 7.11(b), (y) with
respect to the continued perfection of the first and prior Lien and security
interest in the Aircraft for the benefit of the Holders of the Certificates
(or the Lessee's substituted obligations) referred to in paragraph (ii) of
this Section 7.11(b) and (z) with respect to the continued availability of
the benefits of Section 1110 of the Bankruptcy Code to the Indenture
Trustee for the benefit of the Holders with respect to the Aircraft after
giving effect to such assumption, (B) from counsel to the Indenture Trustee
and Special Aviation Counsel, a legal opinion comparable to the respective
opinions delivered on the Certificate Closing Date or the Delivery Date, as
the case may be, with such changes therein as may be appropriate in light
of such assumption, and (C) in the case of each opinion described in clause
(A) or (B) above, covering such additional matters as the Indenture Trustee
shall reasonably request.
(c) The Lessee shall pay all reasonable expenses (including
reasonable fees and expenses of counsel) of the Owner Participant, the Owner
Trustee and the Indenture Trustee 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 provision of the Trust Agreement in a manner that would 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 and (so long as the Indenture shall not have
been discharged) the Indenture Trustee.
Section 7.14. Subordination Agent's Representations, Warranties and
Covenants. (a) Representations and Warranties. The Subordination Agent
represents and warrants as of the date hereof (except as otherwise provided),
as of the Pass Through Closing Date, the Certificate Closing Date and the
Delivery Date that:
(i) it is a 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, the Liquidity Facilities and the
Intercreditor Agreement;
(ii) the execution, delivery and performance of this Agreement, each
of the Liquidity Facilities and the Intercreditor Agreement and the
performance of its obligations hereunder and thereunder 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) each of this Agreement, the Liquidity Facilities and the
Intercreditor 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; and
(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.
(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 shall have the meanings specified in the Intercreditor Agreement.
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes. (a) Generally. The
Lessee agrees promptly to pay when due, and to indemnify and hold each
Indemnitee harmless from all license, recording, documentary, registration and
other fees and all taxes (including, without limitation, income, gross
receipts, sales, rental, use, value added, property (tangible and intangible),
ad valorem, excise and stamp taxes), fees, levies, imposts, recording duties,
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
(whether imposed upon any Indemnitee, the Lessee, all or any part of the
Aircraft, Airframe, any Engine or any Part, the Lessor's Estate, the Trust
Indenture Estate, Rent or otherwise), 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, upon or with respect to, based upon or
measured by:
(i) the Aircraft, the Airframe, any Engine or any Part;
(ii) the location, replacement, conditioning, refinancing, control,
purchase, registration, reregistration, repossession, improvement,
maintenance, redelivery, manufacture, acquisition, purchase, financing,
mortgaging, ownership, acceptance, rejection, delivery, non-delivery,
leasing, subleasing, transport, insuring, inspection, registration,
assembly, abandonment, preparation, installment, possession, use,
operation, return, presence, storage, repair, transfer of title,
modification, rebuilding, import, export, alteration, addition, replacement,
assignment, overhaul, transfer of registration or registration, imposition
of any lien, sale or other disposition of the Aircraft, Airframe, any
Engine or any Part thereof or interest therein;
(iii) the rentals (including Basic Rent and Supplemental Rent),
receipts or earnings arising from the Operative Agreements or from the
purchase, financing, ownership, delivery, leasing, possession, use,
operation, return, storage, transfer of title, sale or other disposition of
the Aircraft, the Airframe or any part thereof or interest therein;
(iv) any or all of the Operative Agreements;
(v) the Property, or the income or other proceeds received with
respect to the Property, held by the Owner Trustee under the Trust
Agreement or after an Event of Default under the Lease, or by the Indenture
Trustee under the Indenture;
(vi) otherwise with respect to or by reason of the transactions
described in or contemplated by the Operative Agreements;
(vii) the payment of the principal or interest or other amounts
payable with respect to the Certificates;
(viii) the Certificates or the Pass Through Certificates or the
issuance, acquisition, or refinancing thereof or the beneficial interests
in the Lessor's Estate or the creation thereof under the Trust Agreement; or
(ix) any assumption by the Lessee pursuant to Section 7.11 of this
Agreement and Section 2.12 of the Indenture.
(b) Exceptions. The indemnity provided for in Section 8.01(a) shall
not extend to any of the following:
(i) With respect to an Indemnitee, Taxes based upon, measured by or
with respect to the net or gross income, items of tax preference or minimum
tax or excess profits, receipts, value added (but only to the extent such
value added tax is in the nature of an income tax), capital, franchise, net
worth or conduct of business or other similarly-based Taxes of such
Indemnitee (other than any Taxes in the nature of sales, use, transfer,
excise, rental, license, ad valorem, property or other similarly based
Taxes) (the "Income Taxes"); provided, however that the provisions of this
paragraph (b)(i) shall not exclude from the indemnity described in Section
8.01(a) hereof, any Income Taxes to the extent such Income Taxes are
imposed by any jurisdiction in which the Indemnitee would not be subject to
such Income Taxes but for, or would be subject to such Income 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 any such indemnity would be payable only to the extent of
the net harm incurred by the Indemnitee from such Income Taxes, taking into
account any incremental current Tax benefit in another tax jurisdiction
resulting from payment of such Income Taxes); provided, further, that the
provisions of this paragraph (b)(i) relating to Income Taxes shall not
exclude from the indemnity described in Section 8.01(a) hereof any Income
Taxes for which the Lessee would be required to indemnify an Indemnitee (x)
so that any payment under the Operative Agreements, otherwise required to
be made on an After-Tax Basis, is made on an After-Tax Basis or (y)
pursuant to the last sentence of Section 8.02, 8.05, 9.02 or 9.05 of this
Agreement;
(ii) [Reserved];
(iii) Taxes arising out of or measured by acts, omissions, events or
periods of time (or any combination of the foregoing) which occur after
(and are not attributable to acts, omissions or events occurring
contemporaneously with or prior to) (A) the payment in full of all amounts
payable by the Lessee pursuant to and in accordance with the Operative
Agreements, or the earlier discharge in full of the Lessee's payment
obligations under and in accordance with the Lease and the Operative
Agreements (and the Certificates in the case of the Indenture Trustee or
the Trust Indenture Estate if the Lessee shall have assumed the Certificates
pursuant to Section 7.11 of this Agreement), and (B) the earliest of (x) the
expiration of the Term of the Lease and return of the Aircraft in
accordance with Article 12 of the Lease, (y) the termination of the Lease
in accordance with the applicable provisions of the Lease and return of the
Aircraft in accordance with the Lease, or (z) the termination of the Lease
in accordance with the applicable provisions of the Lease and the transfer
of all right, title and interest in the Aircraft to the Lessee pursuant to
its exercise of any of its purchase options set forth in Section 4.02(a) of
the Lease, except that, notwithstanding anything in this Section 8.01(b) to
the contrary, Taxes incurred in connection with the exercise of any
remedies pursuant to Article 17 of the Lease following the occurrence of an
Event of Default shall not be excluded from the indemnity described in
Section 8.01(a) hereof;
(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 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);
(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, other than (A) Taxes that result
from transfers or dispositions which occur while an Event of Default under
the Lease has occurred and is continuing at the time of such transfer or
disposition or (B) Taxes that result from any transfer or disposition
pursuant to the terms of the Lease;
(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) Notwithstanding anything herein to the contrary, Taxes imposed
on a successor, assign or other transferee (including, without limitation,
a transferee which is a new lending office of an original Indemnitee) of
any entity or Person which on the Certificate Closing Date is an Indemnitee
(for purposes of this clause (vii), 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 thereof, 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 (vii) shall not apply in the case of a
succession, assignment or other transfer (1) while an Event of Default
under the Lease or the Indenture has occurred and is continuing; (2)
required by any provision of the Operative Agreements (other than pursuant
to Section 7.02 hereof) or (3) in the case of the Owner Participant, to any
Tax other than an Income Tax;
(ix) [Reserved];
(x) any Taxes which have been included in the Purchase Price;
(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
with respect to the Indenture Trustee;
(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 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; and
(xiii) Taxes imposed by any jurisdiction to the extent they 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.
(c) Withholding. The Pass Through Trustee shall withhold any Taxes
required to be withheld on payments to any holder of a Pass Through
Certificate who is a Non-U.S. Person except to the extent that such a holder
of a Pass Through Certificate has furnished evidence to the Pass Through
Trustee sufficient under applicable law to entitle such holder of a Pass
Through Certificate to any exemption from or reduction in the rate of
withholding on interest claimed by such holder of a Pass Through Certificate.
The Indenture Trustee shall withhold any Taxes required to be withheld on any
payment to a Holder pursuant to Section 5.09 of the Indenture. If the
Indenture Trustee or the Pass Through Trustee fails to withhold a Tax required
to be withheld with respect to any Holder of a Certificate or any holder of a
Pass Through Certificate or any claim is otherwise asserted by a taxing
authority against the Owner Trustee or the Owner Participant for any
withholding tax, the Lessee will indemnify the Owner Trustee and the Owner
Participant (without regard to the exclusions set forth in Section 8.01(b)
hereof) on an After-Tax Basis against any such Taxes required to be withheld
and any interest and penalties with respect thereto, along with any other
costs (including reasonable attorney's fees) incurred in connection with any
such claim. The Indenture Trustee or the Pass Through Trustee, as the case
may be, in its individual capacity (and without recourse to the Trust
Indenture Estate), shall indemnify the Lessee (without regard to the
exclusions set forth in Section 8.01(b) hereof) on an After-Tax Basis for any
payment the Lessee shall have made pursuant to the preceding sentence.
Section 8.02. After-Tax Basis. The amount which the Lessee shall be
required to pay with respect to any Tax indemnified against under Section 8.01
shall be an amount sufficient to restore the Indemnitee, on an After-Tax
Basis, to the same position such party would have been in had such Tax not
been incurred. If any Indemnitee actually realizes a permanent 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 permanent tax
benefit plus any other permanent 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 this Section 8.02 and Section 8.01
hereof 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 Section 8.01 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 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 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 disallowed or reduced in a taxable year subsequent to the
year of such payment (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 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 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 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. The
Indemnitee shall in good faith, with due diligence and at the Lessee's
expense, if timely requested in writing by the Lessee, contest (or, at the
Indemnitee's option, require the Lessee to contest in the name of the Lessee,
if permitted by law) 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.
If the Indemnitee, after reasonable discussion with the Lessee and
consideration in good faith of any suggestion made by the Lessee as to the
method of pursuing such contest, elects to conduct the contest, such
Indemnitee shall determine the manner in which to contest such Taxes, and
shall periodically or upon the Lessee's request advise the Lessee of the
progress of such contest; provided, however, that if the Indemnitee determines
in its sole discretion that such participation will not adversely affect such
Indemnitee's contest of any Taxes not indemnified hereunder, the Lessee shall
have the right to participate in such contest, including, among other rights,
the right to attend governmental or judicial conferences (to the extent
unrelated issues are not discussed) concerning such claim and the right to
review and approve all submissions to any governmental or other authority
insofar as they relate to the Tax for which indemnification is sought.
Notwithstanding the preceding sentences of this Section 8.04, such Indemnitee
shall not be required to take or continue any action unless the Lessee shall
have (i) agreed in writing to pay and shall pay the Indemnitee on demand and
on an After-Tax Basis for any liability or reasonable expense which such
Indemnitee may incur as a result of contesting such Taxes including without
limitation (y) reasonable attorneys' and accountants' fees and (z) the amount
of any interest, penalty or additions to tax which may ultimately be payable
as the result of contesting such Taxes, (ii) delivered to the Indemnitee a
written acknowledgment of the Lessee's obligation to such Indemnitee pursuant
to this Agreement to the extent that the contest is not successful and of the
inapplicability of any exclusion or defenses thereto, provided, however, that
such acknowledgement shall not preclude the Lessee from raising defenses to
liability under this Agreement if a decision in such contest is rendered which
clearly articulates the cause of such Tax and the cause, as so articulated, is
not one for which the Lessee is responsible to pay an indemnity hereunder,
(iii) 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 or the Lessee permitted to contest pursuant
to this Section 8.04 the imposition of any Tax for which the Lessee is
obligated to indemnify any Indemnitee hereunder unless (i) such Indemnitee
shall have received an opinion of independent tax counsel, at the Lessee's
expense, selected by such Indemnitee and reasonably satisfactory to the Lessee
("Tax Counsel") to the effect that a reasonable basis exists for contesting
such claim, (ii) 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 issue shall not be the same as an
issue previously contested hereunder and decided adversely, unless the
Indemnitee shall have received, at the Lessee's sole expense, a written
opinion, in form and substance reasonably satisfactory to such Indemnitee, of
Tax Counsel, to the effect that the applicable circumstances or law has
changed and, in light thereof, there is substantial authority within the
meaning of Section 6662(d) of the Code, as interpreted by the Treasury
regulations thereunder, or under similar principles of state or foreign law (as
the case may be) for contesting such claim and (vi) the amount of the indemnity
payments the Lessee would be required to make with respect to such adjustment,
when aggregated with similar adjustments that could be raised in other taxable
years of such Indemnitee is at least $50,000.
The Indemnitee shall not appeal any judicial decision unless it
receives an opinion of independent tax counsel, at the Lessee's sole expense,
selected by such Indemnitee and reasonably satisfactory to the Lessee to the
effect that a reasonable basis continues to exist for the Indemnitee's
position.
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) reasonable 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 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. The Lessee shall hold the Indemnitee harmless from
and against any liabilities, including penalties, additions to tax, fines and
interest, imposed upon or incurred by such Indemnitee to the extent directly
attributable to any insufficiency or inaccuracy in any return, statement, or
report prepared by the Lessee or information supplied by the Lessee, or
directly attributable to the Lessee's failure to supply reasonably available
information to such Indemnitee as required by this Section 8.06.
Section 8.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 8 and the Lessee's obligations under any and all of them shall survive
the expiration or other termination of the Operative Agreements.
Section 8.08. Payment of Taxes. With respect to any Tax otherwise
indemnifiable hereunder by the Lessee and applicable to the Aircraft,
Airframe, any Engine or Parts, to the extent permitted by the applicable
federal, state, local or foreign law, the Lessee shall pay such tax directly
to the relevant Taxing authority and file any returns or reports required with
respect thereto; 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 the Owner Participant are the owner of
the Aircraft, the Airframe, any Engine or any Part or which would otherwise be
inconsistent with the terms of the Lease 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. If, for any
reason, Lessee is required to make any payment with respect to any Taxes
imposed on any Indemnitee in respect of the transactions contemplated by the
Operative Agreements or on the Aircraft, the Airframe, the Engines, the Parts
of any part thereof, which Taxes are not the responsibility of the Lessee with
respect to 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 the Lessee with respect to such Taxes.
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally. (a) The Lessee agrees to indemnify each
Indemnitee against and agrees to protect, defend, save and keep harmless each
Indemnitee from any and all liabilities, obligations, losses, damages
(including if, as a result of an Indenture Event of Default described in
Section 7.01(a)(i) of the Indenture, the Indenture Trustee shall have sold all
or any portion of the Indenture Estate and the proceeds thereof were less than
an amount equal to accrued and unpaid Basic Rent on the date of sale plus the
Stipulated Loss Value as of such date, damages equal to such shortfall
together with interest thereon to the extent permitted by law at the Debt Rate
until such shortfall is paid in full), penalties, claims, actions, suits,
costs, disbursements and expenses (including reasonable 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) or Article 15 hereof) of
every kind and nature (whether or not any of the transactions contemplated by
this Agreement are consummated) (individually, an "Expense," collectively,
"Expenses"), which may be imposed on, incurred or suffered by or asserted
against any Indemnitee, in any way relating to, based on or arising out of:
(i) this Agreement, the Lease, the Indenture, the Pass Through
Agreement, the Trust Agreement, the Intercreditor Agreement, the Liquidity
Facilities, the Bills of Sale or any other Operative Agreement or any other
document entered into in connection herewith or any sublease or transfer or
any transactions contemplated hereby or thereby;
(ii) the operation, possession, use, non-use, maintenance, storage,
overhaul, delivery, non-delivery, control, repair or testing of the
Aircraft, Airframe, or any Engine or any engine used in connection with the
Airframe, or any part thereof by the Lessee, any sublessee or any other
Person whatsoever, whether or not such operation, possession, use, non-use,
maintenance, storage, overhaul, delivery, non-delivery, control, repair or
testing is in compliance with the terms of the Lease, including without
limitation, claims for death, personal injury or property damage or other
loss or harm to any Person whatsoever, including, without limitation, any
passengers, shippers or other Persons wherever located, and claims relating
to any laws, rules or regulations, including, without limitation,
environmental control, noise and pollution laws, rules or regulation;
(iii) the manufacture, design, sale, return, purchase, acceptance,
rejection, delivery, non-delivery, condition, repair, modification,
servicing, rebuilding, airworthiness, registration, reregistration, import,
export, performance, non-performance, lease, sublease, transfer,
merchantability, fitness for use, alteration, substitution or replacement
of any Airframe, Engine, or Part under the Lease, the Purchase Agreement or
the Purchase Agreement Assignment or other transfer of use or possession,
or other disposition of the Aircraft, the Airframe, any Engine or any Part
including, without limitation, latent and other defects, whether or not
discoverable, strict tort liability, and any claims for patent, trademark or
copyright infringement;
(iv) any breach of or failure to perform or observe, or any other
non-compliance with, any condition, covenant or agreement to be performed,
or other obligations of the Lessee under any of the Operative Agreements,
or the falsity or inaccuracy of any representation or warranty of the
Lessee in any of the Operative Agreements (other than representations and
warranties in the Tax Indemnity Agreement);
(v) the Collateral Account and the Liquid Collateral;
(vi) the enforcement of the terms of the Operative Agreements and the
administration of the Trust Indenture Estate; and
(vii) the offer, issuance, sale or delivery of any Certificate or any
Pass Through Certificate, or any refunding or refinancing thereof, or
interest in the Lessor's Estate or the Trust Agreement or any similar
interest or in any way relating to or arising out of the Trust Agreement
and the Lessor's Estate, the Indenture or the Trust Indenture Estate
(including, without limitation, any claim arising out of the Securities Act
of 1933, as amended, the Securities Exchange Act of 1934, as amended, or
any other federal or state statute, law or regulation, or at common law or
otherwise relating to securities), or the action or inaction of the Owner
Trustee or Indenture Trustee as trustees, in the manner contemplated by
this Agreement, the Indenture, the Indenture and Security Agreement
Supplement or the Trust Agreement and in the case of the Owner Participant,
its obligations arising under Section 6.01 of the Trust Agreement.
The foregoing indemnity by the Lessee is intended to include and cover, but is
not limited to, any Expense to which the Indemnitees may be subject as a
result of their respective ownership or leasing of any interest in the
Aircraft, Airframe, any Engine or Part during the Term, whether or not in the
Lessee's possession or control, insofar as such Expense relates to any
activity or event whatsoever involving such item while it is under lease to
the Lessee (or after termination of the Lease in connection with the exercise
of remedies thereunder to the extent that such Expense is attributable to the
transactions contemplated hereby and by the other Operative Agreements), and
such Expense does not fall within any of the exceptions listed in Section
9.01(b) hereof.
(b) Exceptions. The indemnity provided for in Section 9.01(a) shall
not extend to any Expense of any Indemnitee to the extent it:
(i) would not have occurred but for the willful misconduct or gross
negligence of such Indemnitee;
(ii) after the Delivery Date, is in respect of the Aircraft, and is
attributable to acts or events which occur after the Aircraft is no longer
part of the Lessor's Estate or leased under the Lease or, if the Aircraft
remains a part of the Lessor's Estate, after the expiration of the Term and
any holdover period under Section 12.05 of the Lease (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 or the Indenture Trustee
shall be entitled to exercise remedies under such Article 17), or to acts
or events which occur after return of possession of the Aircraft by the
Lessee in accordance with the provisions of the Lease but in any such case
only to the extent not fairly attributable to acts or omissions of the
Lessee prior to expiration of the Term and any holdover period under
Section 12.05 of the Lease, including without limitation the Lessee's
failure to fully discharge all of its obligations under the Lease or the
other Operative Agreements;
(iii) is a Tax, whether or not the Lessee is required to indemnify
therefor pursuant to Article 8 hereof or pursuant to the Tax Indemnity
Agreement;
(iv) is a cost or expense required to be paid by the Owner
Participant or its permitted transferees (and not by the Lessee) pursuant
to this Agreement or any other Operative Agreement (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 terms and
provisions required to be observed and performed by it, in this Agreement,
the Purchase Agreement Assignment, the Lease, the Indenture, the Trust
Agreement or any other Operative Agreement to which it is a party unless
such breach or default shall be a result of the breach or default of any of
the foregoing by the Lessee or another Indemnitee;
(vi) [reserved];
(vii) in the case of the Owner Participant, Lessor's Liens to the
extent attributable to the Owner Participant; in the case of the Owner
Trustee, Lessor's Liens to the extent attributable to the Owner Trustee;
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,
to the extent attributable to the offer or sale by such Indemnitee after
the Certificate Closing Date of any interest in the Aircraft, the Lessor's
Estate or the Trust Agreement or any similar interest (including an offer
or sale resulting from bankruptcy or other proceedings for the relief of
debtors in which such Indemnitee is the debtor), unless in each case such
offer or sale shall occur (w) in connection with a Refinancing, (x) as a
result of exercise of remedies under Article 17 of 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
the Lease; or
(ix) which is incurred by 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 (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 hereof shall be an amount sufficient to restore the Indemnitee, on an
After-Tax Basis, to the same position such party would have been in had such
Expense not been incurred. If any Indemnitee actually realizes a permanent
Tax benefit by reason of the payment of such Expense paid or indemnified
against by the Lessee which was not considered in the computation thereof,
such Indemnitee shall promptly pay to the Lessee, but not before the Lessee
shall have made all payments theretofore due such Indemnitee under this
Agreement, the Tax Indemnity Agreement and any other Operative Agreement, an
amount equal to the lesser of (x) the sum of such Tax benefit plus any other
permanent Tax benefit actually realized by such Indemnitee as the result of
any payment made by such Indemnitee pursuant to this sentence and (y) the
amount of such payment pursuant to this Section 9.02 by the Lessee to such
Indemnitee plus the amount of any other payments by the Lessee to such
Indemnitee theretofore made pursuant to this Section 9.02 less the amount of
any payments by such Indemnitee to the Lessee theretofore made pursuant to
this Section 9.02 (and the excess, if any, of the amount described in clause
(x) above over the amount described in clause (y) above shall be carried
forward and applied to reduce pro tanto any subsequent obligations of the
Lessee to make payments pursuant to this Section 9.02), it being intended that
no Indemnitee should realize a net Tax benefit pursuant to this Section 9.02
unless the Lessee shall first have been made whole for any payments by it to
such Indemnitee pursuant to this Section 9.02; provided, however, that
notwithstanding the foregoing portions of this sentence, such Indemnitee shall
not be obligated to make any payment to the Lessee pursuant to this sentence
so long as an Event of Default shall have occurred and be continuing. Any
Taxes that are imposed on any Indemnitee as a result of the disallowance or
reduction of such Tax benefit referred to in the next preceding sentence in a
taxable year subsequent to the year of allowance and utilization by such
Indemnitee (including the expiration of any tax credit carryovers or
carrybacks of such Indemnitee that would not otherwise have expired) shall be
indemnifiable pursuant to the provisions of Section 8.01 hereof without regard
to Section 8.01(b) hereof.
Section 9.03. Subrogation. Upon the payment in full of any indemnity
pursuant to this Article 9 by the Lessee (but not earlier), the Lessee shall be
subrogated to any right of the Indemnitee, other than with respect to any of
such Indemnitee's insurance policies or in connection with any indemnity claim
the Person indemnified may have against any other Indemnitee in respect of the
matter against which such indemnity has been made.
Section 9.04. Notice and Payment. Each Indemnitee and the Lessee
shall give prompt written notice one to the other of any liability of which
such party has knowledge for which the Lessee is, or may be, liable under this
Article 9; provided, however, that failure to give such notice shall not
terminate any of the rights of the Indemnitees under this Article 9, except
(with respect to such Indemnitee) to the extent that the Lessee has been
materially prejudiced by the failure to provide such notice. Unless otherwise
provided in the Operative Agreements, any amount payable to an Indemnitee
pursuant to this Article 9 shall be paid within 30 days after receipt of a
written demand therefor from such Indemnitee accompanied by a written statement
describing in reasonable detail the basis for such indemnity and the
computation of the amount so payable.
Section 9.05. Refunds. If any Indemnitee shall obtain a recovery of
all or any part of any amount which the Lessee shall have paid to such
Indemnitee or for which the Lessee shall have reimbursed such Indemnitee under
this Article 9, and provided there shall not have occurred a Payment Default
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.
Section 9.06. Defense of Claims. The Lessee or its insurers shall
have the right (in each such case at the Lessee's sole expense) to investigate
or, provided that (i) the Lessee or its insurers shall not reserve the right
to dispute liability with respect to any insurance policies pursuant to which
coverage is sought, (ii) in the case of the Lessee, no Event of Default shall
have occurred and be continuing and (iii) the Lessee shall have first
acknowledged in writing to such Indemnitee the Lessee's obligation to
indemnify such Indemnitee hereunder in respect of such claim, defend any claim
covered by insurance for which indemnification is sought pursuant to this
Article 9 and each Indemnitee shall cooperate with the Lessee or its insurers
with respect thereto, and provided, further, the Lessee shall not be entitled
to assume and control the defense of any such claim if and to the extent such
Indemnitee reasonably objects to such control on the ground that an actual or
potential material conflict of interest exists where it is advisable for such
Indemnitee to be represented by separate counsel. Subject to the immediately
foregoing sentence, where the Lessee or the insurers under a policy of
insurance maintained by the Lessee undertake the defense of an Indemnitee with
respect to such a claim, no additional legal fees or expenses of such
Indemnitee in connection with the defense of such claim shall be indemnified
hereunder unless the fees or expenses were incurred at the written request of
the Lessee or such insurers. Subject to the requirement of any policy of
insurance applicable to a claim, an Indemnitee may participate at its own
expense at any judicial proceeding controlled by the Lessee or its insurers
pursuant to the preceding provisions, provided that such party's participation
does not, in the opinion of the independent counsel appointed by the Lessee or
its insurers to conduct such proceedings, interfere with such control; and
such participation shall not constitute a waiver of the indemnification
provided in this Section 9.06. No Indemnitee shall enter into any settlement
or other compromise with respect to any claim described in this Section 9.06
without the prior written consent of the Lessee, which consent shall not
unreasonably be withheld or delayed, unless such Indemnitee waives its right
to be indemnified under this Article 9 with respect to such claim.
Section 9.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 9 and the Lessee's obligations under any and all of them shall survive
the expiration or other termination of this Agreement, the Tax Indemnity
Agreement, the Trust Agreement, the Indenture, the Purchase Agreement
Assignment, the Lease and the other Operative Agreements but, as to such
indemnities, only with respect to losses, liabilities, obligations, damages,
penalties, claims, actions, suits, costs, Expenses and disbursements caused by
events occurring or existing (or fairly attributable to the Lessee's acts or
omissions) prior to or incurred in the process of (i) the return or
disposition of the Aircraft under Article 12 or Article 17 of the Lease, or
(ii) the termination of the Lease or the Indenture or, if later, the return of
the Aircraft.
Section 9.08. Effect of Other Indemnities. The Lessee's obligations
under the indemnities provided for in this Agreement shall be those of a
primary obligor whether or not the Person indemnified shall also be
indemnified with respect to the same matter under the terms of this Agreement,
the Lease, the Indenture, the Trust Agreement, or any other document or
instrument, and the Person seeking indemnification from the Lessee pursuant to
any provision of this Agreement may proceed directly against the Lessee
without first seeking to enforce any other right of indemnification.
Section 9.09. Interest. The Lessee will pay to each Indemnitee on
demand, to the extent permitted by applicable law, interest on any amount of
indemnity not paid when due pursuant to this Article 9 until the same shall be
paid, at the Past Due Rate.
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs. (a) Transaction
Costs. Except as otherwise provided in any amendment to this Agreement, the
Lessee (or the Owner Participant following a transfer of the Initial Owner
Participant's Beneficial Interest) shall pay all fees and expenses of the
following persons relating to the public offering of the Pass Through
Certificates contemplated by the Underwriting Agreement and related to the
transactions contemplated hereby on the Certificate Closing Date and the
Delivery Date: (i) the fees and expenses of counsel for the Owner Participant;
(ii) the fees and expenses of the transaction documentation counsel for the
Lessee and counsel for the Owner Trustee, the Indenture Trustee, the
Subordination Agent, the Pass Through Trustee, each Liquidity Provider, the LC
Bank 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, the LC Bank and
the Indenture Trustee including, without limitation, in connection with the
issuance of the Letter of Credit; (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 the
Registration Statement on Form S-3 bearing Registration No. 333-49411
(including any amendment thereto), 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, the LC Bank 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) of this paragraph shall be
allocable to the Owner Participant under this Agreement (1) to the extent
incurred specifically with respect to the Owner Participant, and (2) to the
extent such fees and expenses are incurred but are not specifically
attributable to the Owner Participant, in the proportion that the principal
amount of the Certificates bears to the total amount of the Pass Through
Certificates.
The Owner Participant, the Owner Trustee and the Lessee acknowledge
that the percentages for Basic Rent, Stipulated Loss Value and Termination
Value set forth in the Lease have been prepared assuming the aggregate amount
payable by the Owner Participant pursuant to the preceding paragraph is
1.4385416667% of the Purchase Price (the "Estimated Expense Amount");
provided, however, that in no event shall the sum of (i) the Owner
Participant's Commitment, (ii) the Transaction Costs to be paid by the Owner
Participant pursuant to Section 2.03 hereof, and (iii) the Transaction Costs
to be paid by the Owner Participant pursuant to Section 10.01 hereof exceed,
in the aggregate, $23,000,000, unless otherwise agreed by the Owner
Participant. To the extent that the payment by the Owner Participant of
Transaction Costs would cause the sum described in the immediately preceding
sentence to exceed $23,000,000, the Lessee shall be obligated to pay the
Transaction Costs constituting the First Chicago Leasing Corporation fee and
the Davis Polk & Wardwell fee to the extent of such excess and the Owner
Participant shall have no obligation to pay such excess.
(b) Continuing Expenses. The continuing fees, expenses and
disbursements (including reasonable counsel fees and expenses) of the entity
acting as Owner Trustee, as lessor under the Lease and as Owner Trustee under
the Trust Agreement with respect to the administration of the Lease and the
Lessor's Estate and the continuing fees, expenses and disbursements (including
reasonable counsel fees and expenses and initial fees relating to the
establishment of any replacement trustee) of the Indenture Trustee, as trustee
under the Indenture with respect to the administration of the Trust Indenture
Estate, 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, the Liquidity
Providers and the Pass Through Trustee all costs and expenses (including
reasonable legal fees and expenses) incurred by any of them in connection
with (a) any Default or Event of Default and any enforcement or collection
proceedings resulting therefrom, or (b) the enforcement of the obligations
of the Lessee hereunder or under the other Operative Agreements 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, including without limitation, any amendment,
supplement, waiver or consent resulting from any work-out, restructuring or
similar proceeding relating to the performance or nonperformance by the
Lessee of its obligations under the Operative Agreements or (c) any
amendment, supplement, waiver or consent (whether or not entered into)
under this Agreement, the Lease, the Indenture, the Certificates, the Tax
Indemnity Agreement, the Purchase Agreement Assignment or any other
Operative Agreement or document or instrument delivered pursuant to any of
them, which amendment, supplement, waiver or consent is required by any
provision of any Operative Agreement or is requested by the Lessee or
necessitated by the action or inaction of the Lessee; provided, however,
that the Lessee shall not be responsible for fees and expenses incurred in
connection with the offer, sale or other transfer (whether pursuant to
Article 5 of the Trust Agreement or otherwise) by the Owner Participant or
the Owner Trustee after the Certificate Closing Date of any interest in the
Aircraft, the Lessor's Estate or the Trust Agreement or any similar
interest (and the Owner Participant shall be responsible for all such fees
and expenses), unless such offer, sale or transfer shall occur (A) during a
period when an Event of Default has occurred and is continuing under the
Lease, (B) during a period following an Event of Loss or (C) in connection
with the termination of the Lease or action or direction of the Lessee
pursuant to Section 4.02 or Article 10 of the Lease; and
(ii) to pay the fees, costs and expenses of all appraisers involved
in an independent appraisal of the Aircraft to the extent required under
Section 4.03 of the Lease.
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee. (a)
Resignation and Removal. The Owner Trustee or any successor Owner Trustee may
resign or may be removed by the Owner Participant, and a successor Owner
Trustee may be appointed 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 satisfactory to the Lessee, the Owner
Participant, the Pass Through Trustee and the Indenture Trustee whereby such
successor Owner Trustee confirms that it shall be deemed a party to this
Agreement, the Trust Agreement, the Lease, the Lease Supplement, the
Purchase Agreement Assignment, the 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 appoint
promptly a successor Owner Trustee meeting the requirements of Section
11.01(b) hereof in the event the Owner Participant has knowledge that the
Owner Trustee at any time shall not be a Citizen of the United States.
(d) Revocation. The Owner Participant agrees not to revoke and
terminate the Trust Agreement except in accordance with Section 4.01(a) of the
Trust Agreement, as in effect on the date hereof or as amended in accordance
with the terms of the Operative Agreements.
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant. The Owner
Participant shall have no obligation or duty to the Lessee or to any Holder
with respect to the transactions contemplated by this Agreement, except those
obligations or duties expressly set forth in this Agreement, the Trust
Agreement, the Tax Indemnity Agreement, the Bills of Sale, the Lease or any
other Operative Agreement to which the Owner Participant is a party and the
Owner Participant shall not be liable for the performance by any party hereto
of such other party's obligations or duties hereunder. Under no circumstances
shall the Owner Participant as such be liable to the Lessee, nor shall the
Owner Participant be liable to any Holder, for any action or inaction on the
part of the Owner Trustee or the Indenture Trustee in connection with this
Agreement, the Indenture, the Lease, the Trust Agreement, the Purchase
Agreement Assignment, any other Operative Agreement, the ownership of the
Aircraft, the administration of the Lessor's Estate or the Trust Indenture
Estate or otherwise, whether or not such action or inaction is caused by the
willful misconduct or gross negligence of the Owner Trustee or the Indenture
Trustee.
Section 12.02. Interest of Holders of Certificates. A Holder of a
Certificate shall have no further interest in, or other right with respect to,
the Trust Indenture Estate when and if the principal and interest on all
Certificates held by such Holder and all other sums payable to such Holder
under this Agreement, under the Indenture and under such Certificates shall
have been paid in full.
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents. The Lessee
hereby consents in all respects to the execution and delivery of the Trust
Agreement, 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 Trust Agreement, the Indenture, the Intercreditor Agreement,
the Liquidity Facilities or the Certificates, except that prior to the
occurrence and continuance of an Event of Default, no section of the Indenture,
the Trust Agreement, the Intercreditor Agreement or 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 Indenture Trustee and the Owner Participant and that, except as otherwise
provided in the Indenture, upon an Indenture Event of Default, the Indenture
Trustee may act as the Lessor under the Lease to the exclusion of the Owner
Trustee. The Lessee further agrees to deliver to the Indenture Trustee and
the Owner Participant a copy of each notice, statement, request, report or
other communication given or required to be given to the Owner Trustee under
the Lease.
Section 13.03. Pass Through Trustee's and Subordination Agent's
Acknowledgment. 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 8.02 thereof regarding the
rights of the Owner Participant to purchase the Certificates under
circumstances specified therein.
ARTICLE 14
NOTICES
Section 14.01. Notices. All notices, demands, declarations and other
communications required by this Agreement shall be in writing and shall be
deemed received (a) if given by telecopier, when transmitted and the
appropriate telephonic confirmation received if transmitted on a Business Day
and during normal business hours of the recipient, and otherwise on the next
Business Day following transmission, (b) if given by certified mail, return
receipt requested, postage prepaid five Business Days after being deposited in
the United States mail and (c) if given by FedEx service (or, if a Default or
Event of Default shall have occurred and be continuing, by other comparable
courier service), when received or personally delivered, addressed:
(a) If to the Lessee, to its office at 2007 Corporate Avenue,
Memphis, Tennessee 38132, Attention: Vice President and Treasurer with a
copy to Senior Vice President and General Counsel at 1980 Nonconnah
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 its office at 225
Asylum Street, Goodwin Square, Hartford, Connecticut 06103, Attention:
Corporate/Muni Administration, facsimile (860) 244-1889 with a copy to
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 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
(d) If to a Liquidity Provider, to its office at Palmengartenstrasse
5-9, D-60325 Frankfurt am Main, Germany, Attention: Head of Aircraft Finance
Department KIII b 3, telephone 011-49-69-7431-0, facsimile
011-49-69-7431-2944; 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 three refinancings, in whole but not in part, of the
Certificates prior to the end of the Basic Term (a "Refinancing"), provided,
that, such Refinancing may not occur prior to the fifth anniversary of the
Refunding Date. Such Refinancings may be placed in either the private or
public markets and shall be denominated in United States dollars (or in any
other foreign currency so long as there is no foreign currency risk to the
Owner Participant), and shall be on terms that do not materially adversely
affect the Owner Participant. The Owner Participant agrees to negotiate
promptly in good faith to conclude an agreement with the Lessee as to the
terms of any such Refinancing transaction (including the terms of any debt to
be issued in connection with such refinancing and the documentation to be
executed in connection therewith). Without the consent of the applicable
Owner Participant, the prospectus and other offering materials relating to any
Refinancing in the form of a public offering shall not identify the Owner
Participant and shall not include any financial statements of the Owner
Participant or any Affiliate thereof. In connection with any such Refinancing
in the form of a public offering, the Lessee shall indemnify the Owner
Participant for any liabilities under federal, state or foreign securities
laws resulting from such offering. The aggregate principal amount of the new
Certificates issued in connection with each Refinancing shall be the same as
the aggregate principal amount outstanding on the Certificates being
refinanced.
(b) Notwithstanding anything herein to the contrary, no Refinancing
will be permitted unless the Owner Participant shall have received at least 10
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 the relevant documentation and the Owner
Participant shall have determined in good faith that neither it nor the Owner
Trustee shall suffer any loss or expense or bear any increased risk as a
result of such Refinancing (including, without limitation, any risk with
respect to taxes or other adverse consequences to the Owner Participant
including the application of Revenue Procedures 75-21 and 75-28 and Section
467 of the Code) for which it has not been or will not have been indemnified
by the Lessee in a manner reasonably satisfactory to the Owner Participant.
Prior to the consummation of any Refinancing pursuant to this Section
15.01, the Owner Participant and the Lessee shall agree upon a schedule
setting forth each installment of Basic Rent, Stipulated Loss Values and
Termination Values payable pursuant to the Lease as a result of the
Refinancing in accordance with Section 3.04 of the Lease, and thereafter the
amounts set forth in such schedule shall become the amounts payable under the
Lease. Upon the consummation of the Refinancing, the evidence of indebtedness
issued pursuant to the Refinancing shall be considered "Certificates" for
purposes of this Agreement, the Lease and the Indenture.
(c) Notwithstanding the foregoing, the Owner Participant shall have
no obligation to proceed with any Refinancing transaction as contemplated by
this Section 15.01 unless the Lessee indemnifies the Owner Trustee and the
Owner Participant by agreement in form and substance satisfactory to each of
them, for any liability, obligation (other than the obligation to pay
principal and interest in respect of the refinanced indebtedness), cost or
expense (including, without limitation, reasonable attorneys' fees and
Make-Whole Premium and any other premiums or other amounts due under the
Indenture), including any adverse tax consequences or impact, related to or
arising out of any such Refinancing transaction, except to the extent of
amounts included in Transaction Costs and payable by the Owner Participant as
provided herein.
(d) Each party agrees to take or cause to be taken all requested
action, including, without limitation, the execution and delivery of any
documents and instruments, including, without limitation, amendments or
supplements to the Lease, which may be reasonably necessary or desirable to
effect such Refinancing, including, in the case of the Owner Participant,
direction to the Owner Trustee by the Owner Participant to prepay the
Certificates then outstanding; provided, however, that such Refinancing shall
be subject to the satisfaction of each of the following conditions:
(i) Payment of principal, accrued interest, Make-Whole Premium and
breakage costs, if any, and all other sums due and owing on the Certificates
payable under the Indenture;
(ii) Payment in full of all other amounts then due and owing by the
Lessee under this Agreement, the Indenture, the Lease, the Trust Agreement,
and the Certificates then outstanding shall have been made by the Lessee;
(iii) Such party shall have received such opinions of counsel
(including, without limitation, an opinion received by the Owner
Participant from independent tax counsel reasonably satisfactory to the
Lessee that such Refinancing shall not result in any adverse tax
consequences to the Owner Participant, unless the Lessee shall have agreed
to provide an indemnity in respect thereof reasonably satisfactory in form
and substance to the Owner Participant), certificates and other documents
as it may reasonably request, each in form and substance reasonably
satisfactory to such party;
(iv) All authorizations, approvals and consents which in the
reasonable judgment of the Owner Participant are necessary for such
Refinancing shall have been obtained;
(v) The Lessee shall have provided or agreed to provide to the Owner
Participant, as Supplemental Rent under the Lease, sufficient funds to pay
any breakage costs, Make-Whole Premium and any other amounts due under the
Indenture;
(vi) The satisfaction or waiver by each other party to this
Agreement of the conditions set forth in this Section 15.01 to such party's
obligations under this Section 15.01;
(vii) No Event of Default shall have occurred and be continuing or
would
occur immediately after giving effect to such Refinancing; and
(viii) The documentation relating to such Refinancing shall permit the
Lessee to place the Refinancing loan certificates with an ERISA Plan. The
Lessee shall not indemnify the Owner Participant, or any of the Owner
Participant's Affiliates, assigns, officers, directors, employees, agents
and servants, for any Taxes, within the meaning of Article 8 hereof, or
Expenses, within the meaning of Article 9 hereof, arising under or in
connection with any "prohibited transaction" within the meaning of Section
406 of ERISA or Section 4975 of the Code, if the sole underwriter or the
manager or co-manager of the underwriting syndicate or the selling or
placement agent of the Refinancing loan certificates has an exemption from
the prohibited transaction rules under Section 406 of ERISA and Section 4975
of the Code with respect to pass through certificates, such as Prohibited
Transaction Exemption 90-24 or any other comparable exemption, unless such
exemption is not available or is not valid with respect to such Refinancing
loan certificates. If such exemption is not available or is not valid,
then the Lessee shall indemnify the Owner Participant pursuant to, and to
the extent provided for, under Articles 8 and 9 hereof for Taxes and
Expenses arising under or in connection with any "prohibited transaction",
within the meaning of Section 406 of ERISA or Section 4975 of the Code,
resulting from such placement.
ARTICLE 16
[RESERVED]
ARTICLE 17
MISCELLANEOUS
Section 17.01. [Reserved].
Section 17.02. Collateral Account. (a) The Indenture Trustee shall
notify the Owner Trustee and the Lessee of any losses incurred on the
Specified Investments in the Collateral Account promptly upon the realization
thereof, as well as any fees, commissions and other costs, Taxes (other than
income taxes) and expenses, if any, incurred by the Indenture Trustee in
connection with its administration of the Collateral Account (collectively,
"Losses"). Promptly upon receipt of such notification but, in any event, no
later than the earlier of the Delivery Date (or, if later, the last day of any
investment period referred to in Section 2.14(b) of the Indenture during which
the Delivery Date occurs) and the 15th day after the Cut-Off Date, the Lessee
shall pay to the Subordination Agent, on behalf of the Owner Trustee, an
amount equal to such Losses, provided, however, that on the Delivery Date the
Lessee shall pay any such Losses to the Indenture Trustee to the extent that
the Debt Portion exceeds the amount in the Collateral Account on such date.
In addition to the foregoing, if Series C Certificates are outstanding
following the Delivery Date and are required to be prepaid on the Series C
Prepayment Date, the Lessee shall pay to the Subordination Agent, on behalf of
the Owner Trustee, promptly upon receipt of such notification but in any event
no later than the Series C Prepayment Date, an amount equal to any additional
unreimbursed Losses.
(b) The Lessee shall pay to the Subordination Agent, on behalf of the
Owner Trustee (A) on each Payment Date prior to the Delivery Date an amount
equal to the aggregate amount of interest accrued on the Certificates from
(and including) the Certificate Closing Date or previous Payment Date, as the
case may be, to, but excluding, such Payment Date, (B) on the first Payment
Date subsequent to the Delivery Date, interest accrued on the Certificates
from and including the last Payment Date (or, if none, the Certificate Closing
Date), to, but excluding, the Delivery Date and (C) on each Payment Date after
the Delivery Date but prior to the Series C Prepayment Date, interest accrued
on the Series C Certificates, if any, outstanding after the Delivery Date
which are required to be prepaid on such Series C Prepayment Date pursuant to
Section 2.03(b) hereof, in each case to the extent such interest due is in
excess of any earnings on investments in the Collateral Account for the period
of accrual of such interest. 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.
(c) If the Aircraft has not been purchased by the Owner Trustee on the
Delivery Date, the Lessee agrees to pay to the Subordination Agent, on behalf
of the Owner Trustee, on the 15th day following the Cut-Off Date the excess,
if any, of the amounts payable under Section 6.02(b)(1) of the Indenture over
the amounts released from the Collateral Account under Section 2.16 of the
Indenture.
(d) If any Series C Certificates outstanding after the Delivery Date
are subject to prepayment on the Series C Prepayment Date pursuant to Section
6.02(a)(viii) of the Indenture, the Lessee agrees to pay to the Subordination
Agent, on behalf of the Owner Trustee, on the Series C Prepayment Date the
excess, if any, of the amounts payable under Section 6.02(b)(1) of the
Indenture over the amounts released from the Collateral Account under Section
2.16 of the Indenture.
(e) All amounts payable by the Lessee pursuant to this Section 17.02
shall be paid to the Indenture Trustee or the Subordination Agent, as the case
may be, at its principal office at 79 South Main Street, Salt Lake City, Utah,
84111, Attention: Corporate Trust Department, or as the Indenture Trustee or
the Subordination Agent, as the case may be, may otherwise direct within the
United States, by wire transfer of immediately available funds in U.S. Dollars
no later than 10:30 a.m., New York City time, on the due date of such payment.
(f) Prior to the date on which the Lessee shall be obligated to make
any payment to the Subordination Agent pursuant to this Section 17.02, the
Subordination Agent shall deliver a written notice to the Lessee specifying
the amount of such payment with respect to each series of Equipment Trust
Certificates.
(g) In the event that (i) any portion of any payment to the
Subordination Agent, the Pass Through Trustee or any holder of any Pass
Through Certificate which is funded from a Specified Shortfall Payment (as
defined below) shall be avoided as a preference under Section 547 of the
Bankruptcy Code and the Subordination Agent, the Pass Through Trustee or any
holder of any Pass Through Certificate becomes liable for such portion or (ii)
(x) the Lessee shall be the subject of a voluntary or involuntary proceeding
under Chapter 7 or Chapter 11 of the Bankruptcy Code on a date less than
fifteen days prior to the expiration date of the Letter of Credit (after
giving effect to any extensions of such expiration date) and (y) any portion
of any payment to the Subordination Agent, the Pass Through Trustee or any
holder of any Pass Through Certificate which is funded from a Specified
Shortfall Payment could be avoided as a preference under Section 547 of the
Bankruptcy Code and the Subordination Agent, the Pass Through Trustee or any
holder of any Pass Through Certificate could become liable for such portion,
the Subordination Agent shall be entitled to draw under the Letter of Credit
an amount equal to the aggregate amount of such liability up to the Maximum
Stated Amount. The Letter of Credit shall expire no earlier than the date 91
days after the later of the last Specified Shortfall Payment payable under
this Section 17.02 and the last "Specified Shortfall Payment" payable under
Section 17.02 of any Related Participation Agreement. In the event of any
drawing under the Letter of Credit pursuant to clause (ii) of this subsection
(g), the proceeds of such drawing shall be applied in accordance with the
Intercreditor Agreement. For purposes of this subsection (g), "Specified
Shortfall Payment" shall mean any payment by the Lessee pursuant to this
Section 17.02 (i) in respect of any Losses which occur as a result of delivery
of the Aircraft on a date other than March 15, 1999, or (ii) in respect of
interest accrued for any applicable period on any Certificate in excess of any
earnings on investments in the Collateral Account for such period.
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 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 each of the Pass Through Trustee and the Subordination
Agent, in its capacity as a party to this Agreement and not as a Holder, shall
not be required to modify, amend or supplement this Agreement or to give any
consent, waiver, authorization or approval with respect to this Agreement
under the circumstances in which the consent of the Indenture Trustee would
not be required for such modification, amendment, supplement, consent, waiver
or approval in accordance with Section 8.01(b) of the Indenture, provided that
the Pass Through Trustee shall be entitled to receive an Opinion of Counsel
(as defined in the Pass Through Agreement) necessary, in its sole discretion,
to establish that the Indenture Trustee's consent would not be required under
such circumstances.
Section 17.05. Captions. The table of contents preceding this
Agreement and the headings of the various Articles and Sections of this
Agreement are for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions of this Agreement.
Section 17.06. Successors and Assigns. The terms of this Agreement
shall be binding upon, and shall inure to the benefit of, the Lessee and its
successors and permitted assigns, the Subordination Agent and its successors
and permitted assigns, the Owner Participant and its successors and permitted
assigns, the Owner Trustee and its successors as Owner Trustee (and any
additional owner trustee appointed), the Indenture Trustee and its successors
as Indenture Trustee (and any additional indenture trustee appointed) under
the Indenture, the Pass Through Trustee and its successors as Pass Through
Trustee (and any additional pass through trustee appointed) and the LC Bank
and its successors and assigns.
Section 17.07. Concerning the Owner Trustee, 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 the Owner Participant on account of (ii)
above, then the Indenture Trustee, as the case may be, shall promptly refund
to the Owner Participant such Recourse Amount. For purposes of this Section
17.10, "Recourse Amount" means the amount by which the portion of such payment
by the Owner Participant on account of clause (ii) above received by the
Indenture Trustee exceeds the amount which would have been received by the
Indenture Trustee if the Owner Participant had not become subject to the
recourse liability referred to in (ii) above. Nothing contained in this
Section shall prevent the Indenture Trustee from enforcing any individual
obligation (and retaining the proceeds thereof) of the Owner Participant under
this Agreement or any other Operative Agreement to the extent herein or
therein provided, for which the Owner Participant has expressly agreed by the
terms of this Agreement to accept individual responsibility.
Section 17.11. GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS AND IS BEING DELIVERED IN NEW
YORK.
Section 17.12. Section 1110 Compliance. The parties hereto agree
that the transactions contemplated by the Operative Agreements are expressly
intended to be, shall be and should be construed so as to be entitled to the
benefits and protection of Section 1110 of the Bankruptcy Code.
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 (on behalf
of itself and each of its Affiliates, agents, directors, officers, employees
and representatives) to use reasonable precautions to keep confidential, in
accordance with its customary procedures for handling confidential information
of this nature, any non-public information supplied to it pursuant to this
Agreement which is identified by the Person supplying the same as being
confidential at the time the same is delivered to such party, provided that
nothing herein shall limit the disclosure of any such information (i) to the
extent required by statute, rule, regulation or judicial process, (ii) to
counsel for any of the parties hereto, (iii) to bank examiners, auditors,
insurance regulators, accountants or similar regulatory authorities, (iv) in
connection with any litigation to which any one or more of the parties hereto
is a party relating to the transactions contemplated hereby or by any of the
Operative Agreements, (v) to 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 an agreement in writing to be bound by the provisions of this
Section 18.01 or (vii) in the case of the Owner Participant or the Owner
Trustee (in its individual or trust capacity) to the Owner Trustee (in its
individual or trust capacity) or to the Owner Participant, as the case may be.
IN WITNESS WHEREOF, the parties have caused this Participation
Agreement to be executed by their respective, duly authorized officers and this
Participation Agreement shall be effective this ____ day of _____, 1998.
LESSEE:
FEDERAL EXPRESS CORPORATION
By:__________________________________________
Name: Robert D. Henning
Title: Vice President and Treasurer
INITIAL OWNER PARTICIPANT:
FEDERAL EXPRESS CORPORATION
By:__________________________________________
Name: Robert D. Henning
Title: Vice President and Treasurer
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
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
SCHEDULE I
CERTIFICATE INFORMATION
1. Federal Express Corporation 1998-1 Pass Through Trust Class A
Federal Express Corporation Trust No. N621FE
--------------------------------------------
Interest Rate: 6.720%
Maturity: January 15, 2022
Principal Amount: $43,372,000
2. Federal Express Corporation 1998-1 Pass Through Trust Class B
Federal Express Corporation Trust No. N621FE
--------------------------------------------
Interest Rate: 6.845%
Maturity: January 15, 2019
Principal Amount: $16,264,000
3. Federal Express Corporation 1998-1 Pass Through Trust Class C
Federal Express Corporation Trust No. N621FE
--------------------------------------------
Interest Rate: 7.020%
Maturity: January 15, 2016
Principal Amount: $17,164,000
SCHEDULE II
DEFINITIONS
(FEDERAL EXPRESS CORPORATION TRUST NO. N621FE)
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement,
the Series Supplements, 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 Section 13.01(c)(i) of the
Lease.
Adjustment Date. The date of any increase or decrease in the
principal amount of the Series C Certificates pursuant to Section 2.19 of the
Indenture.
Aeronautics Authority. As appropriate, the Federal Aviation
Administration and/or the Administrator of the Federal Aviation
Administration, any successor to the former United States Civil Aeronautics
Board, or any Person, governmental department, bureau, commission or agency
located in the United States succeeding to the functions of any of the
foregoing.
Affidavits. The affidavits of citizenship of the Owner Trustee
and the Owner Participant.
Affiliate. With respect to any Person, any other Person directly
or indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant and SSB shall not be deemed to be an
Affiliate of any of the Owner Trustee, the Lessor or 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 reduction in Taxes that would result 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 as provided in the Participation Agreement and to be leased under the
Lease (or any permitted substitute airframe thereunder) together with three
Engines (whether each is an initial Engine or a Replacement Engine) whether or
not any of such initial or Replacement Engines may from time to time be
installed on such Airframe or may be installed on any other airframe or on any
other aircraft, including any aircraft substituted pursuant to Section 11.03
of the Lease. Subject to Section 2.04 of the Participation Agreement, prior
to delivery of the initial Lease Supplement, references in the Operative
Agreements (including Section 3.03 of the Participation Agreement) to Aircraft
shall mean the McDonnell Douglas MD-11F airframe bearing FAA Registration
Number N621FE and Manufacturer's serial number 48792, together with three
Pratt & Whitney 4462 engines.
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 initially and
manufacturer's serial number specified in the initial Lease Supplement,
including (i) all Parts in respect thereof and (ii) any Replacement Airframe
which may be substituted pursuant to Section 11.03 of the Lease and any
Pre-Delivery Replacement Airframe which may be substituted pursuant to Section
2.04 of the Participation Agreement.
Ancillary Agreement. Any written agreement of the Lessee to which
the Lessor is a party or to which the Lessor has consented in writing entered
into on or prior to the Delivery Date or any date thereafter in connection
with the transactions contemplated by the Operative Agreements, as such
agreement may be amended and supplemented from time to time with the consent
of the Lessor and delivered to the Owner Trustee, the Indenture Trustee, the
Pass Through Trustee, the Subordination Agent, each Liquidity Provider and the
Owner Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal Express
Corporation Trust No. N621FE), 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 fair market value
letter to the Lessee) on the Delivery Date pursuant to Section 4.02(h) 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.
Basic Rent. The 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 June 15, 2024, 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. Any day on which commercial banks are not
authorized or required to close in New York, New York, 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 is discharged, Boston, Massachusetts.
Certificate Closing Date. The date of the closing with respect to
the purchase of Certificates by the Pass Through Trustee contemplated by
Section 2.01(b) of the Participation Agreement.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N621FE), 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. Kreditanstalt fur Wiederaufbau, a
corporation organized under the public law of the Federal Republic of Germany
together with any Replacement Liquidity Provider (as defined in the
Intercreditor Agreement).
Class B Liquidity Provider. Kreditanstalt fur Wiederaufbau, a
corporation organized under the public law of the Federal Republic of Germany
together with any Replacement Liquidity Provider (as defined in the
Intercreditor Agreement).
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
acquisition of Certificates by the Pass Through Trustee.
Code. Except as otherwise provided, the Internal Revenue Code of
1986, as amended from time to time.
Collateral Account. The deposit account established and maintained
pursuant to Section 2.13 of the Indenture.
Collateral Agreement. The Collateral Account Control Agreement
(Federal Express Corporation Trust No. N621FE) dated as of June 15, 1998, 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 as provided in
Section 3.02 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. September 13, 1999.
Debt Portion. The amount specified as such on Schedule IV to the
Participation Agreement.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which, with the lapse of time or
the giving of notice, or both, would constitute an Event of Default.
Delivery Date. The date on which the Aircraft is delivered and
sold by 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 3.03(c) of the Participation Agreement.
EBO Price. Has the meaning set forth 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 Pratt & Whitney 4462 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), 10.02(c), 10.03, 11.03, 11.04 or 12.02 of
the Lease, together with all Parts related thereto. Except as otherwise
provided, at such time as a Replacement Engine shall be so substituted and the
Engine for which the substitution is made shall be released from the Lien of
the Indenture, such replaced Engine shall cease to be an "Engine" under the
Lease. The term "Engines" means, as of any date of determination, all Engines
then leased to the Lessee pursuant to the Lease.
Engine Consent and Agreement. The Engine Consent and Agreement
dated as of June 15, 1998, executed by the Engine Manufacturer.
Engine Manufacturer. Pratt & Whitney, a Connecticut corporation.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. An employee benefit plan subject to Title I of ERISA,
or an individual retirement account or plan subject to Section 4975 of the
Code.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of
the Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use
(A) for a period in excess of 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 to the end of the
Term, if less (unless such loss constitutes an Event of Loss under clause (ii)
of this definition) or (B) for a period in excess of 60 days due to the
destruction, damage beyond economic repair or rendition of such property
permanently unfit for normal use by Lessee for any reason whatsoever; (ii) any
damage to such property which results in an insurance settlement with respect
to such property on the basis of a total loss, or constructive or compromised
total loss; (iii) (1) condemnation, confiscation or seizure of, or requisition
of title to such property by the Government, any foreign government or
purported government or any agency or instrumentality thereof, or (2)
condemnation, confiscation, or seizure of, or requisition or taking of, use of
such property (A) by a foreign government or instrumentality or agency of any
such foreign government, for a period in excess of 180 days (or such shorter
period ending on the earlier of the expiration of the Term or on the date on
which an insurance settlement with respect to such property on the basis of a
total loss or constructive or compromised total loss shall occur) or (B) by
the Government for a period extending beyond the Term, provided that no Event
of Loss shall be deemed to have occurred, and the Term shall be extended
automatically for a period of six months (or the date of return of the
Aircraft, if shorter, so long as the Lessor receives at least six months
notice of such date of return) beyond the end of the Term in the event that
the Aircraft, the Airframe or any Engine is requisitioned by the Government
pursuant to an activation as part of the CRAF Program described in Section
7.02(a)(iv) of the Lease; and (iv) as a result of any law, rule, regulation,
order or other action by the Aeronautics Authority or other governmental body
having jurisdiction, the use of the Aircraft or Airframe in the normal course
of air transportation of cargo shall have been prohibited by virtue of a
condition affecting all 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. The date of such Event of Loss shall be (s) the 31st day or the
91st day, as the case may be, following loss of such property or its use due
to theft or disappearance (or the end of the Term, if earlier); (t) the 61st
day following the date of any destruction, damage beyond economic repair or
rendition of such property permanently unfit for normal use; (u) the date of
any insurance settlement on the basis of a total loss or constructive or
compromised total loss; (v) the date of any condemnation, confiscation,
seizure or requisition of title of such property; (w) the 181st day following
condemnation, confiscation, seizure or requisition for use of such property by
a foreign government referred to in clause (iii)(2)(A) above (or the end of
the Term or the date of any insurance settlement described therein, if earlier
than such 181st day); (x) the last day of the Term in the case of requisition
for use of such property by the Government; (y) the last day of the 6 month or
12 month period, referred to in clause (iv) above. An Event of Loss with
respect to the Aircraft shall be deemed to have occurred if any Event of Loss
occurs with respect to the Airframe.
Excepted Payments. Collectively, (i) indemnity or other payments
(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) maintained in accordance with
the provisions of 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) the payment of
incremental out-of-pocket expenses of the Owner Trustee, the Owner Participant
or their respective authorized representatives payable by the Lessee under
Section 6.03(b) of the Participation Agreement or Section 14.01 of the Lease
following any reregistration of the Aircraft and (vii) proceeds of, and any
right to demand, collect or otherwise receive and enforce the payment of any
amount described in clauses (i) through (vii) above.
Expense; Expenses. Have the meaning specified in Section 9.01(a)
of the Participation Agreement.
FAA. The United States Federal Aviation Administration and any
successor agency or agencies thereto.
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 such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and
equal in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease. Fair Market Rental shall be determined
in accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and
equal in amount to, the value which would be obtained in an arm's-length
transaction between an informed and willing purchaser under no compulsion to
buy and an informed and willing seller unaffiliated with such purchaser and
under no compulsion to sell, assuming that the Aircraft (or other property) is
unencumbered by the Lease. Unless otherwise provided in the applicable
provisions of any Operative Agreement, 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. Fair Market Value shall be determined in accordance with the
provisions of Section 4.03 of the Lease.
Federal Aviation Administration. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
FedEx. Federal Express Corporation.
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.
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 Owner Participant, the Indenture Trustee, in its
individual capacity and as trustee, the Subordination Agent, in its individual
capacity and in its capacity as Subordination Agent, each Liquidity Provider,
the Owner Participant Guarantor, if any, 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. N621FE), dated as of June 15, 1998, between the
Lessor and the Indenture Trustee, as supplemented by the Indenture and
Security Agreement Supplement.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N621FE) to be dated the Delivery Date, 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 imposed against
the Indenture Trustee in its individual capacity against which the Lessee has
not indemnified (and is not obligated to indemnify) the Indenture Trustee in
such capacity.
Independent 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
June 15, 1998, 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.
LC Bank. Kreditanstalt fur Wiederaufbau, a corporation organized
under the public law of the Federal Republic of Germany.
Last Cut-Off Date. The later of (i) the Cut-Off Date and (ii) the
"Cut-Off Date" (as defined in the relevant Related Indenture) for the last
Related Aircraft to be delivered.
Last Delivery Date. The later of (i) the Delivery Date and (ii)
the "Delivery Date" (as defined in the relevant Related Indenture) for the
last Related Aircraft to be delivered.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N621FE) dated as of June 15, 1998, 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. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N621FE) to be dated the Delivery Date, substantially in
the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending
at the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation.
Lessee Documents. Has the meaning set forth in Section 6.01(b) of
the Participation Agreement.
Lessee Shortfall. Has the meaning set forth in Section 3.02(a) 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 Purchase Agreement, the Purchase Agreement Assignment, the
Consent and Agreement, the Engine Consent and Agreement, any Ancillary
Agreement, 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), and all
other property of the Owner Trustee purportedly subjected to the Lien of the
Indenture by the Granting Clause thereof; provided that in no event shall
"Lessor's Estate" include any Excepted Payment.
Lessor's Liens. Liens 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, and, in the case of the Lessor
in its individual capacity, arising from its gross negligence or willful
misconduct or expressly prohibited under the Operative Agreements and any act
or omission of the Owner Participant which is in violation of any of the terms
of the Operative Agreements, (iii) Taxes or Expenses imposed against the
Lessor, in its individual capacity or as Owner Trustee, the 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.
Letter of Credit. The Irrevocable Standby Letter of Credit, dated
the Certificate Closing Date, in the form of Exhibit F to the Participation
Agreement and with a Maximum Stated Amount equal to the amount specified under
"Letter of Credit Maximum Stated Amount" on Schedule IV to the Participation
Agreement, from the LC Bank to and for the benefit of the Subordination Agent.
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 1.1 of
the Intercreditor Agreement.
Liquidity Provider. Kreditanstalt fur Wiederaufbau, a corporation
organized under the public law of the Federal Republic of Germany together
with any Replacement Liquidity Provider (as defined in the Intercreditor
Agreement).
Losses. Has the meaning specified in Section 17.02(a) of the
Participation Agreement.
Loss Payee. Has the meaning specified in Section 13.02(b)(i) of
the Lease.
Majority in Interest of Certificate Holders. As of a particular
date of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. With respect to any Certificate, the amount
(as determined by an Independent Investment Banker reasonably acceptable to the
Indenture Trustee and the Owner Participant) by which (i) the present value of
the remaining scheduled payments of principal and interest to the Maturity of
such Certificate computed by discounting such payments on a semiannual basis
on each Payment Date (assuming a 360-day year of twelve 30-day months) using a
discount rate equal to the Treasury Yield exceeds (ii) the outstanding
principal amount of such Certificate plus accrued interest.
Mandatory Document Terms. The terms set forth on Schedule V to the
Participation Agreement.
Mandatory Economic Terms. The terms set forth on Schedule VI to
the Participation Agreement.
Manufacturer. McDonnell Douglas Corporation, a wholly-owned
subsidiary of The Boeing Company.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Maximum Stated Amount. The amount specified under "Letter of
Credit Maximum Stated Amount" on Schedule IV to the Participation Agreement.
Moody's. Moody's Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate equal to the Debt Rate per annum compounded semi-annually.
Non-U.S. Person. Any Person other than a U.S. Person.
Obsolete Parts. Parts which 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 Purchase Agreement, the Purchase Agreement
Assignment, the Consent and Agreement, the Engine Consent and Agreement, the
Lease, the Lease Supplement, the Owner Participant Guaranty, if any, the Owner
Trustee Guaranty, if any, any Ancillary Agreement entered into by or with the
written consent of the Indenture Trustee, which by its terms is an Operative
Agreement, the Certificates outstanding at the time of reference, the
Indenture, the Indenture and Security Agreement Supplement, the Tax Indemnity
Agreement, each Liquidity Facility, the Intercreditor Agreement, the
Collateral Agreement, the Letter of Credit and the Reimbursement 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.
Other Indentures. Collectively, the Trust Indenture and Security
Agreement for each of Federal Express Corporation Trust Nos. N585FE, N676FE,
N677FE, N678FE, N679FE, N680FE, N681FE, N682FE, N620FE and N623FE, each dated
as of June 15, 1998, between State Street Bank and Trust Company of
Connecticut, National Association, as owner trustee and First Security Bank,
National Association, as indenture trustee.
Outstanding. When used with respect to Certificates, as of the
date of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary
amount has been theretofore deposited with the Indenture Trustee
in trust for the Holders of such Certificates pursuant to Section
14.01 of the Indenture; provided, that if such Certificates are to
be prepaid, notice of such prepayment has been duly given pursuant
to the Indenture or provision therefor satisfactory to the
Indenture Trustee has been made; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article
II of the Indenture.
Outstanding C Account. The collateral account established and
maintained under a Related Indenture relating to an undelivered aircraft.
Owner Participant. The Person to whom on the Delivery Date (or, if
earlier, the Transfer Date) the Initial Owner Participant shall transfer its
Beneficial Interest pursuant to Section 3.02 of the Participation Agreement
and any successors thereto, and any Person to which the Owner Participant
transfers, in accordance with the Trust Agreement, its right, title and
interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Guarantor. The provider, if any, of an Owner
Participant Guaranty.
Owner Participant Guaranty. Any guaranty delivered by the Owner
Participant Guarantor.
Owner Trust. Federal Express Corporation Trust No. N621FE.
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 book yield and aggregate after-tax cash 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 and the EBO Price, as such assumptions may be
adjusted for events which have been the basis of adjustments to Rent pursuant
to Section 3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal
Express Corporation Trust No. N621FE), dated as of June 15, 1998, 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
title to which remains vested in the Lessor pursuant to Article 8 of the Lease.
Pass Through Agreement. The Pass Through Trust Agreement dated as
of May 1, 1997, between the Lessee and the Pass Through Trustee.
Pass Through Certificates. Any of the Pass Through Certificates,
1998-1-A, the Pass Through Certificates, 1998-1-B or the Pass Through
Certificates, 1998-1-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. The Business Day on which the sale of
the Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Corporation 1998-1 Pass
Through Trust Class A, Federal Express Corporation 1998-1 Pass Through Trust
Class B and Federal Express Corporation 1998-1 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 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. Each January 15 and July 15 commencing on January
15, 1999.
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).
Pre-Delivery Replacement Airframe. Has the meaning set forth in
Section 2.04 of the Participation Agreement.
Preliminary Notice. Has the meaning specified in Section 4.01(a)
of the Lease.
Premium Termination Date. With respect to the Series A
Certificates, the scheduled maturity date of the Series A Certificates, with
respect to the Series B Certificates, the scheduled maturity date of the
Series B Certificates and with respect to the Series C Certificates, the
scheduled maturity date of the Series C Certificates.
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.
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. Has the meaning specified in Section
10.01(a) of the Lease.
Purchase Agreement. The Purchase Agreement No. A00431-B dated as
of March 17, 1998 between the Manufacturer and the Lessee, including all
exhibits, appendices and letter agreements attached thereto as originally
executed or as modified, amended or supplemented in accordance with the terms
thereof, but only to the extent that the foregoing relates to the Aircraft and
to the extent assigned pursuant to the Purchase Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N620FE), dated as of June 15, 1998
between the Lessor and the Lessee.
Purchase Price. Has the meaning specified 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.
Reimbursement Agreement. The Standby Letter of Credit Application
and Agreement, dated the Pass Through Closing Date, between the Lessee and the
LC Bank.
Related Aircraft. Each of the aircraft relating to a Related
Indenture.
Related Indentures. Collectively, the Trust Indenture and Security
Agreement for each of Federal Express Corporation Trust Nos. N585FE, N676FE,
N677FE, N678FE, N679FE, N680FE, N681FE, N682FE, N620FE and N623FE, each dated
as of June 15, 1998, between State Street Bank and Trust Company of
Connecticut, National Association, as owner trustee and First Security Bank,
National Association, as indenture trustee, the Trust Indenture and Security
Agreement for Federal Express Corporation Trust No. N590FE, dated as of May 1,
1998, as amended and restated as of June 15, 1998, between State Street Bank
and Trust Company of Connecticut, National Association, as owner trustee and
First Security Bank, National Association, as indenture trustee, and the Trust
Indenture and Security Agreement for Federal Express Corporation Trust No.
N675FE, dated as of June 1, 1998, as amended and restated as of June 15, 1998,
between State Street Bank and Trust Company of Connecticut, National
Association, as owner trustee and First Security Bank, National Association,
as indenture trustee.
Related Participation Agreements. Collectively, with respect to
each Related Indenture, the "Participation Agreement" as defined therein.
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. Each January 15 and July 15 commencing on
January 15, 1999.
Reoptimization Date. Has the meaning specified in Section 2.03(b)
of the Participation Agreement.
Replacement Aircraft. Any aircraft substituted for the Aircraft
pursuant to Section 11.03(a) of the Lease.
Replacement Airframe. Has the meaning set forth in Section 11.03
of the Lease.
Replacement Engine. A Pratt & Whitney 4462 engine (or an engine of
the same or another manufacturer) of the same or 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 Pratt & Whitney 4462 engine, such replacement engine must then
be commonly used in the commercial aviation industry on McDonnell Douglas
MD-11 airframes.
Responsible Officer. With respect to the Owner Trustee (except for
purposes of the Trust Agreement in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate
officer or (except in the case of the Owner Participant) other employee of a
party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant,
agreement or obligation of such party pursuant to any Operative Agreement,
would have responsibility for and knowledge of such matter and the
requirements of any Operative Agreement with respect thereto.
S&P. Standard & Poor's Ratings Group.
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 C Prepayment Date. July 15, 1999 or any other date
designated by the Lessee, but in no event later than the fifteenth day after
the Last Cut-Off Date.
Series Supplement or Series Supplements. The Series Supplement
1998-1-A to be executed and delivered by the Lessee and the Pass Through
Trustee, the Series Supplement 1998-1-B to be executed and delivered by the
Lessee and the Pass Through Trustee or the Series Supplement 1998-1-C to be
executed and delivered by 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.
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 or any successor Owner Trustee in
its individual capacity.
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 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.
Subordination Agent. First Security Bank, National Association, a
national banking association, not in its individual capacity but solely as
Subordination Agent.
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 Price and amounts calculated by reference to Termination Value and
all amounts required to be paid by Lessee under the agreements, covenants and
indemnities contained in the Lease or in the Participation Agreement or the
Tax Indemnity Agreement or any other Operative Agreement, but excluding Basic
Rent 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. Shall have the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Tax Indemnity Agreement (Federal
Express Corporation Trust No. N621FE), dated as of June 15, 1998, between the
Lessee and the Owner Participant.
Term. The Basic Term of the lease for the Aircraft under the
Lease and, if renewed pursuant to Section 4.01 of the Lease, each Renewal Term
for the Aircraft for which the Lease is renewed, or such earlier date on which
the Lease is terminated pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that
is on or after December 31, 2005 in the case of Article 10 of the Lease, and
in the case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date
falling on July 15, 2015 or January 15, 2019, as the case may be, (ii) Section
4.02(a)(D) or (E) of the Lease, a Rent Payment Date that is on or after the
eighth anniversary of the Delivery Date and (iii) Section 4.02(a)(F) of the
Lease, January 15, 2018.
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.
Transfer Date. Has the meaning set forth in Section 2.02(b) 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. N621FE), dated as of June 15, 1998, 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, and the Letter of
Credit and any rights thereunder.
UCC. Uniform Commercial Code.
Underwriters. Morgan Stanley & Co. Incorporated, Chase Securities
Inc., Citicorp Securities, Inc., Credit Suisse First Boston Corporation and
J.P. Morgan Securities Inc.
Underwriting Agreement. The Underwriting Agreement dated June 30,
1998, among the Lessee and the Underwriters.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there
is in force a certificate issued pursuant to Section 41102(a) or Section 41103
of the Transportation Code, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Transportation
Code and Part 121 of the regulations under such Transportation Code, for
aircraft capable of carrying ten (10) or more individuals or 6,000 pounds or
more of cargo, or which may operate as an air carrier by certification or
otherwise under any successor or substitute provision thereof or in absence
thereof.
U.S. Person. A Person described in Section 7701(a)(30) of the
Code.
Warranty Bill of Sale. The full warranty bill of sale covering
the Aircraft (and specifically referring to each Engine) executed by the
Lessee, as seller in favor of the Owner Trustee, as buyer, and to be dated the
Delivery Date.
SCHEDULE III
PERMITTED COUNTRY LIST
Australia Malaysia
Austria Mexico
Belgium Netherlands
Canada New Zealand
Denmark Norway
Finland Philippines
France Singapore
Germany Spain
Iceland Sweden
Ireland Switzerland
Japan United Kingdom
Luxembourg
SCHEDULE IV
CERTAIN AMOUNTS
Debt Portion $76,800,000
- ------------
Letter of Credit Maximum Stated Amount $5,500,000
- --------------------------------------
SCHEDULE V
MANDATORY DOCUMENT TERMS
Any amendment and restatement of the Operative Agreements on the Delivery
Date or, if earlier, the Transfer Date:
1. May not modify in any material adverse respect the Granting
Clause of the Indenture so as to deprive the Holders of a first
priority security interest in and mortgage lien on the Aircraft
and the Lease or to eliminate any of the obligations secured
thereby or otherwise modify in any material adverse respect as
regards the interests of the Holders, the Subordination Agent,
the Liquidity Providers or the Indenture Trustee the provisions
of Article II, V, VI or VIII or Section 7.01, 7.02, 7.10, 7.11,
9.08, 13.01, 13.02, 13.07 or 15.04 of the Indenture;
2. May not modify in any material adverse respect as regards the
interests of the Holders, the Subordination Agent, the Liquidity
Providers or the Indenture Trustee the provisions of Section
3.05, 3.06, 11.03(a)(x), 13.01(c)(i), the second sentence of
19.01, 20.01, 22.01, 22.03, 26.03, 27.01 or 27.02 of the Lease
or otherwise modify the terms of the Lease so as to deprive the
Indenture Trustee of rights expressly granted to the "Indenture
Trustee" therein;
3. May not modify in any material adverse respect as regards the
interests of the Holders, the Subordination Agent, the Liquidity
Providers or the Indenture Trustee the provisions of Section
4.02(e), 4.02(f), 17.02, 17.11, 17.12 or 17.13 of the
Participation Agreement or of the provisions of Section 4.02(d)
of the Participation Agreement so as to eliminate the
requirement to deliver to the Indenture Trustee the legal
opinions to be provided to such Persons thereunder (recognizing
that the lawyers rendering such opinions may be changed) or of
the provisions of Section 6.03(b) of the Participation
Agreement as regards the rights of the Indenture Trustee
thereunder or otherwise modify the terms of the Participation
Agreement to deprive the Subordination Agent, the Liquidity
Providers or the Indenture Trustee of any indemnity or right of
reimbursement in its favor for Expenses or Taxes; and
4. May not modify in any material adverse respect as regards the
interests of the holders of the Pass Through Certificates, the
Subordination Agent, the Liquidity Providers or the Indenture
Trustee, the definition of "Make-Whole Premium" or
"Supplemental Rent" in Schedule II to the Participation
Agreement.
Notwithstanding the foregoing, any such Mandatory Document Term
may be modified to correct or supplement any such provision which may
be defective or to cure any ambiguity or correct any mistake,
provided that any such action shall not materially adversely affect
the interests of the Holders, the Subordination Agent, the Liquidity
Providers, the Indenture Trustee or the holders of the Pass Through
Certificates.
SCHEDULE VI
MANDATORY ECONOMIC TERMS
Certificates:
Loan to Aircraft Value Ratio on any Payment Date (with the value of the
Aircraft set forth in Schedule VII hereto) shall be as follows:
Series A: not in excess of 40%
Series B: not in excess of 55%
Series C: not in excess of 75%
Average Life:
The average life may not be more than 15.5 years in the case of the Series A
Certificates, 13.5 years in the case of the Series B Certificates and 12.5
years in the case of the Series C Certificates (but in each case may be
decreased by any amount).
As of the first Payment Date following the Last Delivery Date, the average
life may not be more than 15.0 years in the case of the Pass Through
Certificates, 1998-1-A, 13.0 years in the case of the Pass Through
Certificates, 1998-1-B and 12.0 years in the case of the Pass Through
Certificates, 1998-1-C.
Final Maturity Date:
Series A: may not be extended beyond January 15, 2022
Series B: may not be extended beyond January 15, 2019
Series C: may not be extended beyond January 15, 2016
Debt Rate (computed on the basis of a 360-day year consisting of twelve 30-day
months, payable semi-annually in arrears) shall be as follows:
Series A: 6.720%
Series B: 6.845%
Series C: 7.020%
Past Due Rate: Debt Rate plus 2% per annum.
Payment Dates: January 15 and July 15.
Make-Whole Premium: As provided in Article V of the Indenture.
Redemption and Purchase: As provided in the Indenture.
Lease
Term: The Basic Term shall expire by its terms on or
after final maturity date of the Series A
Certificates.
Rent Payment Dates: January 15 and July 15.
Minimum Rent: Basic Rent due and payable on each Payment Date
shall be at least sufficient to pay in full, as of
such Payment Date (assuming timely payment of the
Certificates prior to such Date), the aggregate
principal amount of scheduled installments due on
the Certificates outstanding on such Payment Date.
Supplemental Rent: Shall be sufficient to cover the sums described in
the definition of such term in Schedule II to the
Participation Agreement.
Stipulated Loss Value: At all times shall be equal to or greater than the
outstanding principal amount of the Certificates
together with accrued interest thereon. The
interest rate payable with respect to Stipulated
Loss Value may not be modified.
Termination Value: At all times shall be equal to or greater than the
outstanding principal amount of the Certificates
together with accrued interest thereon. The
interest rate payable with respect to Termination
Value Date may not be modified.
All-risk hull insurance: Shall not be less than Stipulated Loss Value,
subject to Lessee's right to self-insure on terms
no more favorable to Lessee in any material respect
than those set forth in Article 13 of the Lease.
Minimum Liability
Insurance Amount: $300,000,000.
Past Due Rate: As set forth in the definition thereof in Schedule
II to the Participation Agreement.
Participation Agreement
The Indenture Trustee, the Subordination Agent and the Liquidity Providers
indemnified against Expenses and Taxes to the extent set forth in Articles 8
and 9 of the Participation Agreement as in effect on the Certificate Closing
Date.
SCHEDULE VII
ASSUMED AIRCRAFT VALUE
Assumed Aircraft Value
(in millions)
----------------------------------
$108,430,000
EXHIBIT A(1)(a)(i)
[Letterhead of Federal Express]
[Certificate Closing Date]
To the Addressees Listed on Schedule A Attached
Re: Federal Express Corporation Trust No. N621FE
--------------------------------------------
Ladies and Gentlemen:
I am the Senior Vice President and General Counsel of Federal Express
Corporation, a Delaware corporation ("Federal"), and am familiar with the
transactions contemplated by the Participation Agreement (Federal Express
Corporation Trust No. N621FE), dated as of June 15, 1998 (the "Participation
Agreement"), among Federal, as Lessee and Initial 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(j)(i) of the Participation Agreement.
Capitalized terms not otherwise defined herein have the meanings assigned
thereto in the Participation Agreement.
The Participation Agreement provides, among other things, for the
financing on the Delivery Date of a portion of the Owner Trustee's payment of
the Purchase Price of one 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 will be 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 will
be issued under the Indenture.
In connection with the opinions expressed below, I have examined, or
caused to be examined by attorneys under my supervision, (i) executed
counterparts of the Pass Through Agreement, the Series Supplements and the
Operative Agreements to be delivered on the Certificate Closing Date (the
"Certificate Closing Date Documents") and (ii) the forms of the Operative
Agreements to be delivered on the Delivery Date. We have relied upon
originals or copies, certified or otherwise identified to our satisfaction, of
such corporate records, documents and other instruments as in our judgment are
relevant to rendering the opinions expressed below. As to any facts material
to the opinions expressed below (other than any thereof relating to Federal),
we have relied upon the representations and warranties made in the Certificate
Closing Date Documents, the accuracy of which we have not independently
investigated or verified. In such examination, we have assumed the
genuineness of all signatures (other than the signatures of Federal) and the
authenticity of all documents submitted to us as originals and the conformity
with the originals of all documents submitted to us as copies. We have also
assumed that each of the parties to each of the Certificate Closing Date
Documents, other than Federal, has full power, authority and legal right to
enter into such Certificate Closing Date Documents and that each such
Certificate Closing Date Document has been duly authorized, executed and
delivered by each of such parties.
Based on the foregoing, it is my opinion that:
1. Federal is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, is a "citizen of
the United States" within the meaning of Section 40102(a)(15) of the
Transportation Code, and has or had, on the date of execution thereof, the
corporate power and authority to carry on its business as currently conducted
and to enter into and perform its obligations under the Certificate Closing
Date Documents to which it is a party. Federal is duly qualified to do
business and is in good standing in the State of Tennessee and each other state
of the United States in which its operations or the nature of its business
requires Federal to so qualify, except where the failure to so qualify would
not have a material adverse impact on Federal or its business.
2. Federal possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents which are material to
the operation of the routes flown by it and the conduct of its business and
operations as currently conducted, and each such certificate, franchise,
license, permit, right and concession and consent is in full force and effect.
3. Each of the Certificate Closing Date Documents to which Federal
is a party has or had, on the date of execution thereof, been duly authorized,
executed and delivered by Federal and each constitutes the legal, valid and
binding obligation of Federal enforceable against Federal in accordance with
its terms. Each of the Certificate Closing Date Documents to which Federal is
to be a party and which are to be executed on the Delivery Date has been duly
authorized by Federal.
4. Neither the execution and delivery by Federal of the Certificate
Closing Date Documents to which Federal is a party, nor the consummation of
any of the transactions by Federal contemplated thereby, nor the performance
of the obligations thereunder by Federal, did at the time of execution and
delivery, or does presently (a) require any stockholder approval or violate
the certificate of incorporation or by-laws of Federal or (b) conflict with or
contravene the provisions of, or constitute a default under, or result in the
creation of any Lien (other than Liens permitted under Section 6.01(a) of the
Lease) upon the property of Federal under any law, governmental rule or
regulation, or the charter or bylaws of Federal or any order, writ, injunction
or decree of any court or governmental authority against Federal or by which
any of its properties may be bound or any indenture, mortgage, contract or
other agreement known to me to which Federal is a party or by which it may be
bound or, require the approval or consent of any trustee or the holders of any
indebtedness or obligations of Federal.
5. Neither the execution and delivery by Federal of the Certificate
Closing Date Documents to which it is a party, nor the consummation of any
transactions by Federal contemplated thereby, nor the performance of the
obligations thereunder by Federal, did or does, as the case may be, (a)
require the consent or approval of, the giving of notice to, or (except as
described or contemplated in the Participation Agreement and the Lease, all of
which are required to be performed on or prior to the Certificate Closing Date
and which shall have been accomplished on or prior to the Certificate Closing
Date) the registration with, or the taking of any other action in respect of,
the Aeronautics Authority, the Securities and Exchange Commission or any other
authority or agency of the federal government or of the State of Tennessee
other than (i) the registration of the issuance and sale of the Pass Through
Certificates under the Securities Act and (ii) compliance with the securities
laws of each applicable state, or (b) contravene any judgment or order
applicable to or binding on Federal or any law or governmental rule or
regulation of the United States or of the State of Tennessee.
6. There is no pending or, to my knowledge, threatened action or
proceeding before any court or administrative agency which individually (or in
the aggregate in the case of any group of related lawsuits) is expected to
have a material adverse effect on (A) 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 (as updated
by Note 7 to the financial statements included in Federal's Quarterly Reports
on Form 10-Q for the fiscal quarters ended August 31, 1997, November 30, 1997
and February 28, 1998), and (b) in Federal's Current Report on Form 8-K dated
June 11, 1997, as to all of 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 Certificate Closing Date Documents.
7. Federal is a duly certificated "air carrier" within the meaning
of the Transportation Code, and a holder of a certificate under Sections
41102(a) and 41103 of the Transportation Code, and an "air carrier operating
certificate" issued under Chapter 447 of the Transportation Code for aircraft
capable of carrying ten (10) or more individuals or 6,000 pounds or more of
cargo, and each such certificate is in full force and effect.
8. Federal's principal place of business and chief executive
office (as such term is defined in the Uniform Commercial Code in effect in
the State of Tennessee) are located at 2005 Corporate Avenue, Memphis, Shelby
County, Tennessee.
9. Federal is not, and is not directly or indirectly controlled by
or acting on behalf of any Person which is, an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
The opinions expressed in paragraph 3 above as to the enforceability
of the Certificate Closing Date Documents to which Federal is a party are
based upon the assumption for purposes of such opinions and without
independent analysis that, notwithstanding the respective choice of laws
clauses in the Certificate Closing Date Documents, the governing law with
respect to each of the Certificate Closing Date Documents is identical in all
relevant respects to the law of the State of Tennessee. Insofar as the
foregoing opinion relates to the enforceability of any instrument, such
enforceability is subject to applicable bankruptcy, insolvency and other
similar laws affecting the enforcement of creditors' rights generally (whether
such enforceability is considered in a proceeding in equity or at law). The
enforceability of the remedies provided under the Lease may also be limited by
applicable laws which may affect the remedies provided therein but which do
not in my opinion affect the validity of the Lease or make such remedies
inadequate for the practical realization of the benefits intended to be
provided thereby.
I do not express any opinion as to matters governed by any law other
than the Federal laws of the United States of America, the corporation law of
the State of Delaware and the laws of the State of Tennessee.
This opinion is delivered to you solely for your use in connection
with the transaction described herein, and may not be used for any other
purpose, and may not be relied upon by any other person, without my prior
written consent.
Very truly yours,
SCHEDULE A
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(1)(a)(ii)
[Letterhead of Federal Express]
[Delivery Date]
To the Addressees Listed on Schedule A Attached
Re: Federal Express Corporation Trust No. N621FE
--------------------------------------------
Ladies and Gentlemen:
I am the Senior Vice President and General Counsel of Federal Express
Corporation, a Delaware corporation ("Federal"), and am familiar with the
transactions contemplated by the Participation Agreement (Federal Express
Corporation Trust No. N621FE), dated as of June 15, 1998, as amended and
restated as of ________________ (the "Participation Agreement"), among
Federal, as Lessee and Initial Owner Participant, ____________________, 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
4.02(d)(i) of the Participation Agreement. Capitalized terms not otherwise
defined herein have the meanings assigned thereto in the Participation
Agreement.
The Participation Agreement provides, among other things, for the
financing on the Delivery Date of a portion of the Owner Trustee's payment of
the Purchase Price of one 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, the Pass Through Agreement and each Series
Supplement (the "Transaction Agreements"). We have relied upon originals or
copies, certified or otherwise identified to our satisfaction, of such
corporate records, documents and other instruments as in our judgment are
relevant to rendering the opinions expressed below. As to any facts material
to the opinions expressed below (other than any thereof relating to Federal),
we have relied upon the representations and warranties made in the Transaction
Agreements, the accuracy of which we have not independently investigated or
verified. In such examination, we have assumed the genuineness of all
signatures (other than the signatures of Federal) and the authenticity of all
documents submitted to us as originals and the conformity with the originals of
all documents submitted to us as copies. We have also assumed that each of the
parties to each of the Transaction Agreements, other than Federal, has full
power, authority and legal right to enter into such Transaction Agreements and
that each such Transaction Agreement has been duly authorized, executed and
delivered by each of such parties.
Based on the foregoing, it is my opinion that:
1. Federal is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, is a "citizen of
the United States" within the meaning of Section 40102(a)(15) of the
Transportation Code, and has or had, on the date of execution thereof, the
corporate power and authority to carry on its business as currently conducted
and to enter into and perform its obligations under the Transaction Agreements
to which it is a party. Federal is duly qualified to do business and is in
good standing in the State of Tennessee and each other state of the United
States in which its operations or the nature of its business requires Federal
to so qualify, except where the failure to so qualify would not have a
material adverse impact on Federal or its business.
2. Federal possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents which are material to
the operation of the routes flown by it and the conduct of its business and
operations as currently conducted, and each such certificate, franchise,
license, permit, right and concession and consent is in full force and effect.
3. Each of the Transaction Agreements to which Federal is a party
has or had, on the date of execution thereof, been duly authorized, executed
and delivered by Federal and each constitutes the legal, valid and binding
obligation of Federal enforceable against Federal in accordance with its terms.
4. Neither the execution and delivery by Federal of the Transaction
Agreements to which Federal is a party, nor the consummation of any of the
transactions by Federal contemplated thereby, nor the performance of the
obligations thereunder by Federal, did at the time of execution and delivery,
or does presently (a) require any stockholder approval or violate the
certificate of incorporation or by-laws of Federal or (b) conflict with or
contravene the provisions of, or constitute a default under, or result in the
creation of any Lien (other than Liens permitted under Section 6.01(a) of the
Lease) upon the property of Federal under any law, governmental rule or
regulation, or the charter or bylaws of Federal or any order, writ, injunction
or decree of any court or governmental authority against Federal or by which
any of its properties may be bound or any indenture, mortgage, contract or
other agreement known to me to which Federal is a party or by which it may be
bound or, require the approval or consent of any trustee or the holders of any
indebtedness or obligations of Federal.
5. Neither the execution and delivery by Federal of the Transaction
Agreements to which it is a party, nor the consummation of any transactions by
Federal contemplated thereby, nor the performance of the obligations
thereunder by Federal, did or does, as the case may be, (a) require the
consent or approval of, the giving of notice to, or (except as described or
contemplated in the Participation Agreement and the Lease, all of which were
or are required to be performed on or prior to the Delivery Date and which
were or shall have been accomplished on or prior to the Delivery Date) the
registration with, or the taking of any other action in respect of, the
Aeronautics Authority, the Securities and Exchange Commission or any other
authority or agency of the federal government or of the State of Tennessee
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 (as updated
by Note 7 to the financial statements included in Federal's Quarterly Reports
on Form 10-Q for the fiscal quarters ended August 31, 1997, November 30, 1997
and February 28, 1998), and (b) in Federal's Current Report on Form 8-K dated
June 11, 1997, as to all of 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 Transaction Agreements, or (ii) involves the Aircraft.
7. Except for the registration in the Owner Trustee's name of the
Aircraft pursuant to the Transportation Code, and except for the filing and,
where appropriate, recording, pursuant to the Transportation Code of (A) 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 Transaction Agreements to which Federal is a party are based upon the
assumption for purposes of such opinions and without independent analysis
that, notwithstanding the respective choice of laws clauses in the Transaction
Agreements, the governing law with respect to each of the Transaction
Agreements is identical in all relevant respects to the law of the State of
Tennessee. Insofar as the foregoing opinion relates to the enforceability of
any instrument, such enforceability is subject to applicable bankruptcy,
insolvency and other similar laws affecting the enforcement of creditors'
rights generally (whether such enforceability is considered in a proceeding in
equity or at law). The enforceability of the remedies provided under the
Lease may also be limited by applicable laws which may affect the remedies
provided therein but which do not in my opinion affect the validity of the
Lease or make such remedies inadequate for the practical realization of the
benefits intended to be provided thereby.
I do not express any opinion as to matters governed by any law other
than the Federal laws of the United States of America, the corporation law of
the State of Delaware and the laws of the State of Tennessee.
As to the matters referred to in paragraphs 5, 7 and 9, I have relied
on the opinion of Daugherty, Fowler & Peregrin of even date herewith, to the
extent such matters are addressed in such counsel's opinion and subject to the
assumptions and qualifications expressed therein.
This opinion is delivered to you solely for your use in connection
with the transaction described herein, and may not be used for any other
purpose, and may not be relied upon by any other person, without my prior
written consent.
Very truly yours,
SCHEDULE A
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
- -----------------
[name of owner participant]
EXHIBIT A(1)(b)(i)
[Letterhead of Davis Polk & Wardwell]
[Certificate Closing Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N621FE
--------------------------------------------
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. N621FE), dated as of June 15, 1998 (the "Participation Agreement"), among
Federal Express, as Lessee and Initial 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(j)(iv) 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
will be issued by separate Pass Through Trusts, each formed to acquire, among
other securities, the Certificates bearing a particular interest rate and
having a particular Maturity that will be issued under the Indenture.
In connection with the opinions expressed below, we have examined
executed counterparts of the Operative Agreements, the Pass Through
Certificates, the Pass Through Agreement and each Series Supplement (the
"Certificate Closing Date Documents"). We have also examined originals, or
copies certified to our satisfaction, of such other agreements, documents,
certificates and statements of governmental officials and corporate officers
as we have deemed necessary or advisable as a basis for such opinions. In
such examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity
with the originals of all documents submitted to us as copies.
As to any facts material to our opinions expressed below, we have,
with your consent, relied on the representations and warranties made in or
pursuant to the Participation Agreement and the other documents referred to
therein, the accuracy of which we have not independently verified. In
addition, we have, when relevant facts were not independently established by
us, relied, to the extent we deemed such reliance proper, upon certificates of
public officials and certificates, telegrams and other written or telephoned
statements of officers of the parties referred to herein.
Based on the foregoing, it is our opinion that:
1. Assuming (i) the due authorization, execution and delivery of
the Certificate Closing Date Documents by each of the parties to each such
document (other than Federal Express), (ii) each such party has full power and
legal right to enter into and perform its respective obligations under the
Certificate Closing Date Documents, (iii) that the execution, delivery and
performance by each of the Certificate Closing Date Documents by each of the
parties thereto will not violate the respective parties' constituent
documents, (iv) the due authorization, execution, issuance and delivery by the
Owner Trustee, and the due authentication by the Indenture Trustee, of the
Certificates to be issued under the Indenture in accordance with the terms of
the Indenture, (v) the due authorization, execution, issuance, delivery and
authentication by the Pass Through Trustee of the Pass Through Certificates to
be issued under the Pass Through Agreement and the Series Supplement relating
to such Pass Through Certificates, in each case in accordance with the terms
of the Pass Through Agreement and such Series Supplement, and (vi) that the
form of each Certificate Closing Date Document is in compliance with all
applicable laws and governmental rules and regulations (other than the laws of
the United States and the State of New York), then: (A) to the extent governed
by New York law, each Certificate Closing Date Document in form constitutes a
legal, valid and binding agreement of each party thereto enforceable against
each such party in accordance with its terms; (B) the Indenture creates, for
the benefit of the Holders, the security interest in the Trust Indenture
Estate that it purports to create, except that no opinion is given with respect
to perfection of such security interest on the date hereof; (C) the
Certificates, when issued to and acquired by the Pass Through Trustee, will be
legal, valid and binding obligations of the Owner Trustee enforceable against
the Owner Trustee in accordance with their terms and the terms of the
Indenture and will be entitled to the benefits of the Indenture, including the
benefit of the security interest created thereby, except that no opinion is
given with respect to perfection of such security interest on the date hereof;
(D) the Pass Through Certificates, when issued to and acquired by the
Underwriters in accordance with the Underwriting Agreement, will be legal,
valid and binding obligations of the Pass Through Trustee enforceable against
the Pass Through Trustee in accordance with their terms and will be entitled
to the benefits of the Pass Through Agreement and the Series Supplement
relating thereto; and (E) the beneficial interest of the Initial Owner
Participant under the Trust Agreement in and to the properties which are part
of the Trust Indenture Estate is subject, to the extent provided in the
Indenture, to the Lien of the Indenture in favor of the Holders.
2. (a) Each of the Certificate Closing Date Documents to which
Federal Express is a party has been duly authorized, executed and delivered by
Federal Express. Each of the Operative Agreements to which Federal Express is
to be a party and which are to be delivered on the Delivery Date has been
authorized by Federal Express.
(b) The execution, delivery and performance by Federal Express of
each of the Certificate Closing Date Documents to which Federal Express is a
party do not, or did not on the date of execution thereof, violate, and fully
comply, or did fully comply on the date of execution thereof, with, any laws
and governmental rules and regulations of the State of New York that may be
applicable to Federal Express. The opinion set forth in this paragraph 2(b)
is rendered without regard to the taking of any action or the conduct of any
other business by Federal Express in the State of New York other than the
transactions contemplated by the Certificate Closing Date Documents.
3. The execution, delivery and performance of the Certificate
Closing Date Documents (other than the Certificates) by the Owner Trustee in
its individual or trust capacity, as the case may be, and the issuance,
execution, delivery and performance of the Certificates by the Owner Trustee
in its trust capacity do not violate, and fully comply with, any laws and
governmental rules and regulations of the State of New York that may be
applicable to the Owner Trustee in its individual or trust capacity, as the
case may be. The opinion set forth in this paragraph 3 is rendered without
regard to the effect, if any, on such issuance (in the case of the
Certificates), execution, delivery or performance, of the taking of any
action, the conduct of any business or the exercise of any other powers by
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 Certificate Closing Date Documents. 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.
4. It is not necessary, in connection with the creation of the
beneficial interest of the Initial 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 or the Indenture under the Trust
Indenture Act of 1939, as amended.
The foregoing opinions are subject to the following qualifications:
(a) We have relied, with your consent, without independent
investigation and verification and subject to the assumptions and
qualifications contained therein, upon the opinion of Karen M. Clayborne,
Senior Vice President and General Counsel of Federal Express to be
delivered to you and dated the date hereof, for purposes of the matters
covered thereby.
(b) We are qualified to practice law in the State of New York, and
we do not purport to be experts on, or to express any opinion herein
concerning, any laws other than the laws of the State of New York, the laws
of the United States and the General Corporation Law of the State of
Delaware.
(c) The opinion contained in paragraph 1(A) above as to
enforceability is subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity which may
affect the remedies provided in the agreements referred to in said
opinions, which laws and principles, however, do not in our opinion make
the remedies provided in said agreements inadequate for the practical
realization of the benefits of the security intended to be provided thereby.
(d) This opinion is rendered solely to you at Federal Express's
request in connection with the above matter. This opinion may not be
relied upon by you for any other purpose or relied upon by any other Person
without our prior written consent.
Very truly yours,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(1)(b)(ii)
[Letterhead of Davis Polk & Wardwell]
[Delivery Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N621FE
--------------------------------------------
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. N621FE), dated as of June 15, 1998, as amended and restated as of
___________ (the "Participation Agreement"), among Federal Express, as Lessee
and Initial Owner Participant, _________________, 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 4.02(d)(ii) of the Participation
Agreement. Capitalized terms not otherwise defined herein have the meanings
assigned thereto in the Participation Agreement.
The Participation Agreement provides, among other things, for the
financing on the Delivery Date of the Owner Trustee's payment of a portion of
the Purchase Price of one 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, the Pass Through
Certificates, the Pass Through Agreement and each Series Supplement (the
"Transaction Agreements"). We have also examined originals, or copies
certified to our satisfaction, of such other agreements, documents,
certificates and statements of governmental officials and corporate officers
as we have deemed necessary or advisable as a basis for such opinions. In
such examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity
with the originals of all documents submitted to us as copies.
As to any facts material to our opinions expressed below, we have,
with your consent, relied on the representations and warranties made in or
pursuant to the Participation Agreement and the other documents referred to
therein, the accuracy of which we have not independently verified. In
addition, we have, when relevant facts were not independently established by
us, relied, to the extent we deemed such reliance proper, upon certificates of
public officials and certificates, telegrams and other written or telephoned
statements of officers of the parties referred to herein.
Based on the foregoing, it is our opinion that:
1. With respect to that portion, if any, of the Aircraft and the
other property included in the Lessor's Estate as may not be covered by the
recording system established by the FAA pursuant to Section 44107 of the
Transportation Code, no filing or recording of any document or other action
was or is necessary in order to establish the Owner Trustee's title thereto
and interest therein as against Federal Express and any third parties.
2. Subject to execution and delivery of the Lease Supplement and
the Indenture and Security Agreement Supplement for the Aircraft and to the
registration of the Aircraft with the FAA in the name of the Owner Trustee,
the Lease, as supplemented, will create a valid leasehold interest in the
Aircraft, the entitlement thereof to the benefits of recordation under the
Transportation Code being subject to the due and timely filing and, where
appropriate, recording of (A) 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 Transaction Agreements by each of the parties to each such document (other
than Federal Express), (ii) each such party has full power and legal right to
enter into and perform its respective obligations under the Transaction
Agreements, (iii) that the execution, delivery and performance by each of the
Transaction Agreements by each of the parties thereto will not violate the
respective parties' constituent documents, (iv) the due authorization,
execution, issuance and delivery by the Owner Trustee, and the due
authentication by the Indenture Trustee, of the Certificates issued under the
Indenture in accordance with the terms of the Indenture, (v) the due
authorization, execution, issuance, delivery and authentication by the Pass
Through Trustee of the Pass Through Certificates issued under the Pass Through
Agreement and the Series Supplement relating to such Pass Through
Certificates, in each case in accordance with the terms of the Pass Through
Agreement and such Series Supplement, and (vi) that the form of each
Transaction Agreement is in compliance with all applicable laws and
governmental rules and regulations (other than the laws of the United States
and the State of New York), then: (A) to the extent governed by New York law,
each Transaction Agreement in form constitutes a legal, valid and binding
agreement of each party thereto enforceable against each such party in
accordance with its terms; (B) the Indenture creates, for the benefit of the
Holders, the security interest in the Trust Indenture Estate that it purports
to create; (C) the Certificates are legal, valid and binding obligations of
the Owner Trustee enforceable against the Owner Trustee in accordance with
their terms and the terms of the Indenture and are entitled to the benefits of
the Indenture, including the benefit of the security interest created thereby;
and (D) the beneficial interest of the Owner Participant under the Trust
Agreement in and to the properties which are part of the Trust Indenture
Estate is subject, to the extent provided in the Indenture, as supplemented by
the Indenture and Security Agreement Supplement, to the Lien of the Indenture
in favor of the Holders. The opinions set forth in this paragraph 3 are
subject to the due filing and, where appropriate, recording with the FAA of
the documents referred to in paragraph 2 above.
4. (a) Each of the Transaction Agreements to which Federal Express
is a party has been duly authorized, executed and delivered by Federal Express.
(b) The execution, delivery and performance by Federal Express of
each of the Transaction Agreements to which Federal Express is a party do not,
or did not on the date of execution thereof, violate, and fully comply, or did
fully comply on the date of execution thereof, with, any laws and governmental
rules and regulations of the State of New York that may be applicable to
Federal Express. The opinion set forth in this paragraph 4(b) is rendered
without regard to the taking of any action or the conduct of any other
business by Federal Express in the State of New York other than the
transactions contemplated by the Transaction Agreements.
5. The execution, delivery and performance of the Transaction
Agreements (other than the Certificates) by the Owner Trustee in its
individual or trust capacity, as the case may be, and the issuance, execution,
delivery and performance of the Certificates by the Owner Trustee in its trust
capacity do not violate, and fully comply with, any laws and governmental
rules and regulations of the State of New York that may be applicable to the
Owner Trustee in its individual or trust capacity, as the case may be. The
opinion set forth in this paragraph 5 is rendered without regard to the
effect, if any, on such issuance (in the case of the Certificates), execution,
delivery or performance, of the taking of any action, the conduct of any
business or the exercise of any other powers by 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 Transaction Agreements. 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 statement referred to in Section 4.02(f) of the Participation
Agreement), and the beneficial interest of the Owner Participant under the
Trust Agreement in and to such properties is subject, to the extent provided
in the Indenture, to the Lien of the Indenture in favor of the Holders of the
Certificates issued and to be issued under the Indenture.
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 or the Indenture under the Trust
Indenture Act of 1939, as amended.
10. The Indenture Trustee on behalf of the holders of the
Certificates will be entitled to the benefits of Section 1110 of the United
States Bankruptcy Code with respect to the Aircraft in the event of a case
under Chapter 11 of the United States Bankruptcy Code in which Federal Express
is a debtor. We note that a recent decision by the United States District
Court for the District of Colorado in connection with the Western Pacific
Airlines, Inc. bankruptcy suggests that the protections of Section 1110 become
unavailable to the lessor or security interest holder once the bankruptcy
trustee or debtor-in-possession, within the 60 day period following the date of
commencement of the reorganization proceedings, agrees to perform the debtor's
obligations that become due on or after such date and cures outstanding
defaults, with the result, among others, that the ability of a lessor or
security interest holder to exercise remedies based on a subsequent default
would be subject to the automatic stay. We believe that this holding is
erroneous because it is inconsistent with the overriding purpose of Section
1110 to protect lessors of, and creditors secured by, qualifying aircraft
against being stayed from exercising their rights while defaults under their
leases or financing agreements remain uncured.
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 Karen M. Clayborne, Senior Vice President and General Counsel
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,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
- -----------------
[name of owner participant]
EXHIBIT A(2)
[Letterhead of Ray, Quinney & Nebeker]
[Certificate Closing Date]
To the Persons Listed in Schedule A Attached Hereto
Re: Federal Express Corporation Trust No. N621FE
--------------------------------------------
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.
N621FE), dated as of June 15, 1998 (the "Participation Agreement"), among
Federal Express Corporation, as Lessee and Initial 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. N621FE (the "Aircraft")
is being financed. This opinion is furnished pursuant to Section 4.01(j)(ii)
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 Collateral Account Control Agreement; 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 or had, on the date of execution thereof,
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 Certificate
Closing 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 Certificate Closing 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 Initial 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,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(3)(a)(i)
[Letterhead of Bingham Dana LLP]
[Certificate Closing Date]
To Each of the Parties Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N621FE
--------------------------------------------
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. N621FE) dated as of June 15, 1998 between State Street and Federal Express
Corporation, as Initial Owner Participant ("Initial Owner Participant") (the
"Trust Agreement") in connection with the transactions contemplated by that
certain Participation Agreement (Federal Express Corporation Trust No. N621FE)
dated as of June 15, 1998 (the "Participation Agreement") by and among Federal
Express Corporation, as Lessee (the "Lessee"); the Initial Owner Participant;
the Owner Trustee; and First Security Bank, National Association, in its
individual capacity and as Indenture Trustee (the "Indenture Trustee"), Pass
Through Trustee and 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(j)(iii) 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) the certificates
delivered to us by the management of State Street and have assumed, without
independent inquiry, the accuracy of those representations and certificates.
We have examined each 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 Initial
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 of each other party thereto (except,
with respect to the Trust Agreement, the Initial Owner Participant);
(ii) except as otherwise set forth in our opinions in
paragraphs 13 and 14 below, the enforceability of any obligation of State
Street, the Owner Trustee and the Initial 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 Initial 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. 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 13 and 14 below, we have
assumed that the Initial 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 Initial 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 Documents
and to issue, execute, deliver and perform its obligations under the
Certificates.
2. 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.
3. The Owner Trustee is duly authorized under the Trust Agreement to
execute, deliver and perform each of the Owner Trustee Documents and each
such Owner Trustee Document 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, 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.
4. Assuming the due authorization, execution and delivery of the
Trust Agreement by the Initial Owner Participant and that the Initial 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 Initial Owner
Participant, enforceable against the Initial Owner Participant in
accordance with the terms thereof.
5. 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, which filing has been duly effected,
and the filing of continuation statements with respect thereto required to
be filed at periodic intervals under the UCC.
6. The Trust Agreement duly creates a legal and valid trust under
Connecticut law; the trust created by the Trust Agreement exists for the
benefit of the Initial Owner Participant as provided therein and creates
for the benefit of the Initial 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.
7. 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.
8. 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.
9. 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.
10. 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, (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 Initial
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
Initial 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.
11. 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.
12. 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 Initial 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.
13. 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 Initial 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.
14. 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 Initial 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,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
[Letterhead of Bingham Dana LLP]
[Certificate Closing Date]
To Each of the Parties Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N621FE
--------------------------------------------
Ladies and Gentlemen:
We have acted as special Connecticut counsel to the Owner Trustee in
connection with the Trust Indenture and Security Agreement (Federal Express
Corporation Trust No. N621FE) dated as of June 15, 1998 (the "Indenture")
between First Security Bank, National Association (the "Indenture Trustee"),
and State Street Bank and Trust Company of Connecticut, National Association,
not in its individual capacity, but solely as Owner Trustee (the "Owner
Trustee"), and the Collateral Account Control Agreement (Federal Express
Corporation Trust No. N621FE) dated as of June 15, 1998 (the "Control
Agreement"), among the Owner Trustee, the Indenture Trustee and State Street
Bank and Trust Company, as Custodian (the "Custodian").
We are issuing this opinion solely in our capacity as counsel to the
Owner Trustee under the circumstances set forth in this paragraph and solely
as to the matters set forth herein. Pursuant to the Indenture, the Owner
Trustee purports to grant to the Indenture Trustee a security interest, inter
alia, in those securities and instruments, presently owned or hereafter
acquired by the Owner Trustee, that are from time to time credited to an
account numbered ______ (the "Collateral Account") established by the Owner
Trustee with the Custodian and which securities and instruments the Owner
Trustee has directed the Custodian to identify on the books and records of the
Custodian as being subject to a security interest in favor of the Indenture
Trustee to secure the payment to the Indenture Trustee of the Owner Trustee's
obligations (the "Obligations") under the Indenture. Those securities and
instruments which the Owner Trustee has directed the Custodian to so identify
on the books of the Custodian as being subject to such security interest, and
which, at the time of reference thereto, have been so identified and have not
been substituted by other property or otherwise withdrawn from such
identification or the Collateral Account, are hereinafter referred to,
collectively, as the "Liquid Collateral." We have assumed with your
permission for purposes of this opinion that the Liquid Collateral consists
solely of assets constituting (a) a "security" or "security entitlement," as
each such term is defined in Section 8-102 of the Uniform Commercial Code as
currently in effect in the State of Connecticut (the "Connecticut UCC"), (b) a
"securities account" (as such term is defined in Section 8-501 of the
Connecticut UCC), (c) a "financial asset," (as such term is defined in Section
8-102 of the Connecticut UCC), held in a securities account and (d) "general
intangibles" (as such term is defined in Section 9-106 of the Connecticut
UCC).
For purposes of this opinion, we have examined the Indenture, the
Control Agreement and such other documents and instruments as are referred to
as having been examined by us for purposes of our opinion letter dated the
date hereof, addressed to the parties listed on Schedule A hereto.
As to all matters of fact, we have examined and have relied entirely
upon the representations and warranties contained in and made pursuant to the
Indenture and the Control Agreement, without any independent investigation of
any kind.
We have assumed the genuineness of all signatures (other than those on
behalf of the Owner Trustee and the Custodian), 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 the Owner Trustee and the Custodian).
For purposes of this opinion, we have made such examination of law as
we have deemed necessary. This opinion is limited solely to the internal
substantive laws of the State of Connecticut as applied by courts located in
the State of Connecticut and, where applicable, the federal laws of the United
States of America, in each case without regard to choice of law. No opinion
is given as to the choice of law which any tribunal may apply to the
transactions referred to herein.
Our opinion is further subject to the following exceptions,
qualifications and assumptions, all of which we understand to be acceptable to
you:
(a) We have assumed without any independent investigation that each
party to the transactions contemplated by the Indenture or the Control
Agreement at all times relevant thereto (other than the Owner Trustee) was
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it was incorporated or organized, and had and has the
full power, authority and legal right under its certificate of
incorporation, articles of organization and other governing documents,
corporate or other enterprise legislation and applicable laws, as the case
may be, to execute and deliver and perform its obligations under all
documents executed by it in connection with those transactions.
(b) We have assumed without any independent investigation (i) the
due authorization, execution and delivery of each of the Indenture and the
Control Agreement by the Indenture Trustee, (ii) that the execution,
delivery and performance by the Indenture Trustee of each of the Indenture
and the Control Agreement does not and will not conflict with, or result in
a breach of, the terms, conditions or provisions of, or result in a
violation of, or constitute a default or require any consent (other than
such consents as have been duly obtained) under, any organizational
document, any order, judgment, arbitration award or stipulation, or any
agreement, to which the Indenture Trustee is a party or is subject or by
which any of the properties or assets of the Indenture Trustee is bound,
(iii) that the Owner Trustee has received "value," as defined under the
Connecticut UCC, for the incurrence of the Obligations, (iv) that, whenever
the Custodian receives instructions from the Owner Trustee for the
Custodian to note on its books and records that any securities or
instruments credited to the Collateral Account are to be subject to a
security interest in favor of the Indenture Trustee to secure the payment
of the Obligations, such instructions will have been duly authorized by or
on behalf of the Owner Trustee and (v) that, when the Indenture Trustee is
to act in connection with any of the transactions contemplated by the
Indenture, it is acting in its capacity as Indenture Trustee.
(c) We have made no examination of, and no opinion is given herein
as to, the Owner Trustee's title to or other ownership rights in, or the
existence of any liens, charges or encumbrances on, or adverse claims
against, the Liquid Collateral, other than the security interest in favor
of the Indenture Trustee as contemplated by the Indenture and the Control
Agreement, and have assumed that the Owner Trustee has, or at the time of
any purported attachment of the security interest in the relevant Liquid
Collateral will have, rights in the Liquid Collateral.
(d) We point out that, pursuant to Part 357 of Title 31 of the
United States Code of Federal Regulations ("CFR"), with respect to United
States "book-entry Treasury securities" maintained by a Federal Reserve
Bank and, pursuant to other relevant sections of the CFR, with respect to
various other securities issued or guaranteed by the federal government of
the United States or an agency thereof or a corporation sponsored thereby
and maintained by a Federal Reserve Bank, the perfection of security
interests granted by commercial, non-governmental parties in book-entry
Treasury securities, or such other federal securities, as the case may be,
held in a securities account of a participant financial institution, such
as the Custodian, maintaining such account with such Federal Reserve Bank,
will be governed by the law of the jurisdiction determined in accordance
with Section 357.11 of Title 31 of the CFR. If that jurisdiction has not
adopted Revised Article 8, then such jurisdiction will be deemed to have
adopted Revised Article 8 for purposes of determining the law governing
such perfection. We confirm that Revised Article 8 has been enacted by
Connecticut as part of the Connecticut UCC and that Revised Article 8 is
currently in effect in Connecticut.
(e) We have also assumed that (i) any securities comprised in the
Liquid Collateral and held by Depository Trust Company or another clearing
corporation will be held by Depository Trust Company or such other clearing
corporation for the direct account of the Custodian and not for the account
of the Custodian through any other securities intermediary, and (ii) any
securities comprised in the Liquid Collateral consisting of "book-entry
Treasury securities" or other uncertificated federal securities will be
credited to a direct account of the Custodian with a Reserve Bank (as such
term is defined in the relevant section of the CFR) and not for the account
of the Custodian through a securities intermediary.
(f) We do not express any opinion as to the attachment or
perfection of any security interest in (i) any securities that are
maintained with, or held on the system of, Cedel S.A., or any like
maintenance, clearing or settlement system operating outside of the United
States of America, (ii) the Collateral Account, to the extent that the
Collateral Account constitutes an asset, other than general intangibles,
separate from the property credited thereto, (iii) any Liquid Collateral
which, at the time of reference thereto, is no longer identified as subject
to a security interest in favor of the Indenture Trustee or has otherwise
been withdrawn from the Collateral Account, or (iv) any identifiable
proceeds of any Liquid Collateral following the lapse of the ten day period
set forth in Section 9-306(3) of the Connecticut UCC, to the extent that
such proceeds do not constitute securities, security entitlements,
financial assets or general intangibles in which a security interest is
perfected in the manner contemplated by this opinion, as if such proceeds
were original Liquid Collateral.
(g) We express no opinion as to the priority of such security
interest over any other or competing interest in or claims against such
Liquid Collateral.
(h) We have assumed that (i) the Custodian, in the ordinary course
of business, accepts for deposit securities as a service for its customers,
maintains securities accounts in the names of such customers reflecting
ownership of or interests in such securities, and, in regard to the
transactions contemplated by the Indenture, is acting in such capacity,
(ii) all securities or other financial assets from time to time credited to
the Collateral Account and to be comprised in the Liquid Collateral will
have been credited to the Collateral Account in such a way as to create
security entitlements in favor of the Owner Trustee, (iii) the records of
the Custodian indicate and will, at the time of reference thereto, indicate
that the aggregate amount of each security or other financial assets
comprised in the Liquid Collateral, together with all other such securities
or other financial assets carried by the Custodian for its customers and
for its proprietary account, is at least equal to the aggregate amount of
such security or other financial assets carried by it for its customers and
for its proprietary account, (iv) the books and records of the Custodian
indicate and will, at the time of reference thereto, indicate that the
securities or other financial assets to be comprised in the Liquid
Collateral are registered on the books and records of the Custodian as
being for the beneficial account of the Owner Trustee, subject to, as
identified on such books and records, the security interest therein in
favor of the Indenture Trustee, and (v) the assumptions contained in this
paragraph are in accordance with laws and regulations currently in effect
as applicable to the Custodian.
(j) In so far as our opinion relates to the enforceability of any
obligations of the Owner Trustee, the enforcement of such obligations may
be limited by bankruptcy, insolvency, reorganization, moratorium,
marshalling or other laws and rules of law affecting the enforcement
generally of creditors' rights and remedies (including such as may deny
giving effect to waivers of debtors' or guarantors' rights); and we express
no opinion as to (i) the status under Section 548 of the Bankruptcy Code
and applicable state fraudulent conveyance laws of the obligations of the
Owner Trustee under the Indenture or interests purported to be granted
pursuant to the Indenture, (ii) the enforceability of any particular
provision of the Indenture relating to remedies after default or as to the
availability of any specific or equitable relief of any kind (and we point
out that the enforcement of any of your rights may in all cases be subject
to an implied duty of good faith and fair dealing and to general principles
of equity, regardless of whether such enforceability is considered in a
proceeding at law or in equity, and, as to any of your rights to collateral
security, will be subject to a duty to act in a commercially reasonable
manner), (iii) the enforceability of any particular provision of the
Indenture relating to (A) waivers of defenses, of rights to trial by jury,
or rights to object to jurisdiction or venue and other rights or benefits
bestowed by operation of law, (B) the effect of suretyship defenses, or
defenses in the nature thereof, with respect to obligations of any
applicable guarantor, joint obligator or surety, (C) waivers of provisions
which are not capable of waiver under Sections 1-102(3) and 9-501(3) of the
Connecticut UCC, (D) the grant of powers of attorney to the Indenture
Trustee, (E) exculpation clauses, indemnity clauses and clauses relating
to releases or waivers of unmatured claims or rights, (F) interest or other
charges that may be usurious under applicable law, or (G) the collection of
interest on overdue interest or providing for a penalty rate of interest or
late charges on overdue or defaulted obligations, or (iv) as to the
availability of any specific or equitable relief of any kind. However,
notwithstanding the qualification set forth in the foregoing clause (ii),
and excluding the parenthetical in that clause, subject to the other
exceptions, qualifications and limitations set forth in this opinion
(including the parenthetical in clause (ii)) and subject to the fact that
there may be economic consequences arising out of any procedural or other
delay on account of the limitation or unenforceability of any particular
provision of the Indenture relating to remedies after default, such
limitation or unenforceability does not, in our judgment, render the
provisions of the Indenture and the Control Agreement relating to remedies
after default, taken as a whole, inadequate for the practical realization
of the benefits of enforcement of a security interest in the Liquid
Collateral following the receipt by the Custodian of an enforcement notice
properly given under the Indenture and the Control Agreement by the
Indenture Trustee to the Custodian with respect to such Liquid Collateral.
(k) With respect to property as to which the security interest
purported to be granted pursuant to the Indenture attaches after the date
hereof, we call to your attention that Section 552 of the Bankruptcy Code
limits the extent to which assets acquired by a debtor after the
commencement of a case under the United States Bankruptcy Code may be
subject to a security interest arising from a security agreement entered
into by the debtor before the commencement of such case. We further call
to your attention that under Section 547 of the Bankruptcy Code, a security
interest that attaches within the relevant period set forth in Section
547(b)(4) of the Bankruptcy Code may be avoidable under certain
circumstances.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Indenture Trustee has, under the terms of the Connecticut
UCC and, in the case of book-entry Treasury securities, under the CFR, a
perfected security interest in the Liquid Collateral that constitutes a
"security," "security entitlement" or "financial asset" (as each such term
is defined in the Connecticut UCC), and in the identifiable proceeds
thereof to secure the payment of the Obligations.
2. The Indenture creates, under the terms of the Connecticut UCC, a
valid security interest in such of the Liquid Collateral that constitutes
"general intangibles" (as such term is defined in Section 9-106 of the
Connecticut UCC) and in the identifiable proceeds thereof to secure the
payment of the Obligations. Upon the filing of a financing statement on
form UCC-1 pursuant to the Connecticut UCC with the Secretary of State of
the State of Connecticut naming the Owner Trustee as Debtor and the
Indenture Trustee as Secured Party and accurately describing the Liquid
Collateral and the Collateral Account, which filing has been duly effected,
such security interest will be perfected (to the extent that the perfection
of a security interest in the Liquid Collateral can be accomplished by the
filing in Connecticut of financing statements under the Connecticut UCC).
We point out that:
(a) The effectiveness of a financing statement will lapse (i) on
the expiration of a five-year period from their dates of filing, or (if
later) five years from the last date as to which such financing statements
were effective following the proper filing of continuation statements with
respect thereto, unless continuation statements are filed within six months
prior to the expiration of the applicable five-year period, (ii) with
respect to general intangibles in which a security interest has been
perfected by the filing of a financing statement in the jurisdiction of the
location of the debtor, for a period of more than four months after the
debtor has changed its location from that jurisdiction to a new
jurisdiction unless such security is perfected in the new jurisdiction
within the earlier to occur of the end of such four month period or the
date on which such financing statement would have otherwise lapsed, and
(iii) with respect to "investment property," under and as defined in
Revised Article 8, in which a security interest has been perfected by the
filing of a financing statement in the jurisdiction of the location of the
debtor, from the time that the debtor changes its location from that
jurisdiction to a new jurisdiction unless such security interest is
perfected in the new jurisdiction on or before the time of such change of
location.
(b) If any debtor changes its name, identity or corporate structure
such that any financing statement becomes misleading, such financing
statement will be ineffective to perfect a security interest in any
collateral acquired by such debtor more than four months after such change.
We assume no obligation to update this opinion as a result of any
change in any fact, circumstance or statute or other rule of law occurring
after the date hereof.
This opinion is delivered to you solely in connection with the
transactions referred to herein and for your sole use and no other person or
entity may rely on this opinion without our express written consent.
Very truly yours,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(3)(a)(ii)
[Letterhead of Bingham Dana LLP]
[Delivery Date]
To Each of the Parties Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N621FE
--------------------------------------------
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. N621FE) dated as of June 15, 1998, as amended and restated as of
______________ between State Street and ___________________, as Owner
Participant ("Owner Participant") (the "Trust Agreement") in connection with
the transactions contemplated by that certain Participation Agreement (Federal
Express Corporation Trust No. N621FE) dated as of June 15, 1998, as amended
and restated as of ______________ (the "Participation Agreement") by and among
Federal Express Corporation, as Lessee (the "Lessee") and the Initial Owner
Participant; the Owner Participant; the Owner Trustee; and First Security
Bank, National Association, in its individual capacity and as Indenture Trustee
(the "Indenture Trustee"), Pass Through Trustee and 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 4.02(d)(iii) 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) the certificates
delivered to us by the management of State Street and have assumed, without
independent inquiry, the accuracy of those representations and certificates.
We have examined each 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 of each other party thereto (except,
with respect to the Trust Agreement, the Owner Participant);
(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.
Except as set forth in paragraph 12 below, which opinion is based
solely upon our review of Uniform Commercial Code search reports conducted
with the Secretary of the State of the State of Connecticut, 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. 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 or had, on the date of execution
thereof, 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 Documents 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 or had, on the date of execution thereof, 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 Documents and each
such Owner Trustee Document 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, 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, which filing has been duly effected,
and the filing of continuation statements with respect thereto required to
be filed at periodic intervals under the UCC.
7. 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, (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,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
- -----------------
[name of owner participant]
EXHIBIT A(4)
[Letterhead of Ray, Quinney & Nebeker]
[Certificate Closing Date]
To the Persons Listed in Schedule A Attached Hereto
Re: Federal Express Corporation Trust No. N621FE
--------------------------------------------
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 the
date hereof 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 1998-1-A, 1998-1-B and 1998-1-C,
respectively (the "Series Supplements") and the Participation Agreement
(Federal Express Corporation Trust No. N621FE), dated as of June 15, 1998 (the
"Participation Agreement"), among Federal Express Corporation, as Lessee and
Initial 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.
N621FE (the "Aircraft") is being financed. This opinion is furnished pursuant
to Section 4.01(j)(v) 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) are being
collectively referred to as the "Pass Through Trustee Documents" and each of
the documents identified in paragraphs (d) through (f) 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 below, 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. 333-49411 (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 the Owner Participant, nor the
Owner Trustee, 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), governmental fee or other similar charge under the laws of
the State of Utah or any political subdivision thereof (other than taxes
imposed on the fees received by First Security 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),
governmental fee or other similar 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 Pass Through 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 Pass Through 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 Pass Through
Trustee, of the Pass Through 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 Pass
Through 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,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(5)(a)
[Letterhead of Kreditanstalt fur Wiederaufbau]
[Certificate Closing Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation 1998-1 Pass Through Trusts
------------------------------------------------------
Ladies and Gentlemen:
In my capacity as General Counsel of Kreditanstalt fur Wiederaufbau
("KfW") I am rendering this opinion in connection with (i) the Irrevocable
Revolving Credit Agreement Class A Pass Through Certificates, dated as of June
15, 1998 (the "Class A Liquidity Agreement"), between KfW and First Security
Bank, National Association, a national banking association, as Subordination
Agent under the Intercreditor Agreement (as defined below), and as agent and
trustee for the Federal Express Corporation 1998-1-A Pass Through Trust, (ii)
the Irrevocable Revolving Credit Agreement Class B Pass Through Certificates,
dated as of June 15, 1998 (the "Class B Liquidity Agreement" and, together
with the Class A Liquidity Agreement, the "Liquidity Agreements"), between KfW
and First Security Bank, National Association, a national banking association,
as Subordination Agent under the Intercreditor Agreement, and as agent and
trustee for the Federal Express Corporation 1998-1-B Pass Through Trust, and
(iii) the Intercreditor Agreement, dated as of June 15, 1998 (the
"Intercreditor Agreement"), among KfW, First Security Bank, National
Association, a national banking association, as Pass Through Trustee and as
Subordination Agent (the Liquidity Agreements and the Intercreditor Agreement
are hereinafter collectively referred to as the "Relevant Documents").
Capitalized terms herein which are undefined have the meanings
assigned thereto in the Relevant Documents.
For purposes of this legal opinion, I have examined a copy of each of
the Relevant Documents and such other certificates, documents, agreements and
instruments as I have deemed necessary as a basis for the opinions expressed
below.
In giving this opinion, I have assumed the genuineness of all
signatures, the authenticity of all agreements, certificates, instruments and
documents submitted to me as originals, and the conformity to the originals of
all agreements, certificates, instruments and documents submitted to me as
copies. As to questions of fact material to the opinions expressed below, I
have, when relevant facts were not independently established by me, examined
and relied upon representations of officers of KfW.
Based upon and subject to the foregoing examination and assumptions,
and subject to the qualifications set forth below, I am of the opinion that:
1. KfW is duly organized and validly existing as a corporation under
the public law of the Federal Republic of Germany and has full power and
authority (corporate and otherwise) to execute, deliver and perform the
Relevant Documents.
2. Mr. Scheer and Mr. Behler, acting together, are both duly
authorized by KfW to execute and deliver the Relevant Documents for and on
behalf of KfW.
3. The governing-law clause, subjecting the Relevant Documents to New
York law, is valid under German law.
(i) Under German law, New York law will be applied to an agreement,
such as the Relevant Documents, which under German law has been
validly subjected to New York law.
(ii) (a) None of the terms of the Relevant Documents is
irreconcilable with important principles of German law, and (b) there
are no mandatory provisions of German law which must be applied to
the transactions covered by the Relevant Documents.
4. No notice to or filing with, any governmental, administrative or
other authority or court of the Federal Republic of Germany is required for
the execution or delivery of the Relevant Documents by KfW or for the
performance by KfW of the Relevant Documents.
5. Assuming the validity under New York law of the Relevant
Documents:
(i) The Relevant Documents constitute legal, valid and binding
obligations of KfW enforceable against KfW in accordance with their
respective terms.
(ii) A judgment obtained against KfW in the courts of the State of
New York in any suit, action or proceeding arising out of the
Relevant Documents will be enforceable against KfW in the courts of
Germany without further litigation or examination on the merits of
such suit, action or proceeding, provided that conditions in terms
of Section 328 of the German Zivilprozeordnung (Code of Civil
Procedure) - notably (a) if reciprocity is not guaranteed; (b) if
according to German law the foreign venue is improper, and if
procedural rules have not been observed by the court to the
disadvantage of the defendant; (c) if the judgment obtained is
irreconcilable with important principles of German law or would
conflict with German basic rights (see 3(ii) above) - do not bar the
judgment from recognition.
(iii) The obligations of KfW under the Relevant Documents rank at
least equal in priority of payment and in all other respects with its
obligations to pay any other unsecured and unsubordinated obligations
of KfW for borrowed money, including deposit liabilities, that are
not expressly preferred by law.
6. The waiver of immunity set forth in Section 7.11(c) of each of the
Liquidity Agreements and Section 10.11(c) of the Intercreditor Agreement is
valid under German law.
The foregoing opinions are subject to the following qualifications:
(i) The opinion in paragraph (5) with respect to enforceability is
subject to the effect of any bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws affecting creditors' rights
generally, applicable to KfW and to any law or general principle of
law from time to time in effect in the Federal Republic of Germany
that could be considered by the German Courts as a provision of
public policy.
(ii) No opinion is expressed with respect to the law of any
jurisdiction other than the laws of the Federal Republic of Germany.
This opinion is being furnished to you solely for your benefit in
connection with the transactions described above and may not be used,
circulated, quoted or otherwise referred to for any other purpose without my
express written consent.
Very truly yours,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
EXHIBIT A(5)(b)
[Letterhead of Kreditanstalt fur Wiederaufbau]
[Certificate Closing Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation 1998-1 Pass Through Trusts
------------------------------------------------------
Ladies and Gentlemen:
In my capacity as General Counsel of Kreditanstalt fur Wiederaufbau
("KfW") I am rendering this opinion in connection with (i) Letter of Credit
No. ______________ dated July ___, 1998 (the "Letter of Credit") issued by KfW
in favor of First Security Bank, National Association, as Subordination Agent
(the "Subordination Agent") under the Intercreditor Agreement dated as of June
15, 1998 among First Security Bank, National Association, as Pass Through
Trustee, KfW, as Class A Liquidity Provider and Class B Liquidity Provider,
and the Subordination Agent, (ii) the Reimbursement Agreement dated July ___,
1998 (the "Reimbursement Agreement") between KfW and Federal Express
Corporation and (iii) the letter dated July ___, 1998 (the "Letter Agreement"
and, together with the Letter of Credit and the Reimbursement Agreement, the
"Relevant Documents") from KfW to the Subordination Agent.
Capitalized terms herein which are undefined have the meanings
assigned thereto in the Relevant Documents.
For purposes of this legal opinion, I have examined a copy of each of
the Relevant Documents and such other certificates, documents, agreements and
instruments as I have deemed necessary as a basis for the opinions expressed
below.
In giving this opinion, I have assumed the genuineness of all
signatures, the authenticity of all agreements, certificates, instruments and
documents submitted to me as originals, and the conformity to the originals of
all agreements, certificates, instruments and documents submitted to me as
copies. As to questions of fact material to the opinions expressed below, I
have, when relevant facts were not independently established by me, examined
and relied upon representations of officers of KfW.
Based upon and subject to the foregoing examination and assumptions,
and subject to the qualifications set forth below, I am of the opinion that:
1. KfW is duly organized and validly existing as a corporation under
the public law of the Federal Republic of Germany and has full power and
authority (corporate and otherwise) to execute, deliver and perform the
Relevant Documents.
2. Mr. Scheer and Mr. Behler, acting together, are both duly
authorized by KfW to execute and deliver the Relevant Documents for and on
behalf of KfW.
3. The governing-law clause, subjecting the Relevant Documents to New
York law, is valid under German law.
(i) Under German law, New York law will be applied to an agreement,
such as the Relevant Documents, which under German law has been
validly subjected to New York law.
(ii) (a) None of the terms of the Relevant Documents is
irreconcilable with important principles of German law, and (b) there
are no mandatory provisions of German law which must be applied to
the transactions covered by the Relevant Documents.
4. No notice to or filing with, any governmental, administrative or
other authority or court of the Federal Republic of Germany is required for
the execution or delivery of the Relevant Documents by KfW or for the
performance by KfW of the Relevant Documents.
5. Assuming the validity under New York law of the Relevant
Documents:
(i) The Relevant Documents constitute legal, valid and binding
obligations of KfW enforceable against KfW in accordance with their
respective terms.
(ii) A judgment obtained against KfW in the courts of the State of
New York in any suit, action or proceeding arising out of the
Relevant Documents will be enforceable against KfW in the courts of
Germany without further litigation or examination on the merits of
such suit, action or proceeding, provided that conditions in terms
of Section 328 of the German Zivilprozeordnung (Code of Civil
Procedure) - notably (a) if reciprocity is not guaranteed; (b) if
according to German law the foreign venue is improper, and if
procedural rules have not been observed by the court to the
disadvantage of the defendant; (c) if the judgment obtained is
irreconcilable with important principles of German law or would
conflict with German basic rights (see 3(ii) above) - do not bar the
judgment from recognition.
(iii) The obligations of KfW under the Relevant Documents rank at
least equal in priority of payment and in all other respects with its
obligations to pay any other unsecured and unsubordinated obligations
of KfW for borrowed money, including deposit liabilities, that are
not expressly preferred by law.
The foregoing opinions are subject to the following qualifications:
(i) The opinion in paragraph (5) with respect to enforceability is
subject to the effect of any bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws affecting creditors' rights
generally, applicable to KfW and to any law or general principle of
law from time to time in effect in the Federal Republic of Germany
that could be considered by the German Courts as a provision of
public policy.
(ii) No opinion is expressed with respect to the law of any
jurisdiction other than the laws of the Federal Republic of Germany.
This opinion is being furnished to you solely for your benefit in
connection with the transactions described above and may not be used,
circulated, quoted or otherwise referred to for any other purpose without my
express written consent.
Very truly yours,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
EXHIBIT A(5)(c)
[Letterhead of Milbank, Tweed, Hadley & McCloy]
[Certificate Closing Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation 1998-1 Pass Through Trusts
------------------------------------------------------
Ladies and Gentlemen:
We have acted as special New York counsel to Kreditanstalt fur
Wiederaufbau (herein called "KfW") in connection with the transactions
contemplated by (i) the Irrevocable Revolving Credit Agreement Class A Pass
Through Certificates, dated as of June 15, 1998 (the "Class A Liquidity
Agreement"), between KfW and First Security Bank, National Association, as
Subordination Agent under the Intercreditor Agreement, as defined below, as
agent and trustee for the Federal Express Corporation 1998-1-A Pass Through
Trust, (ii) the Irrevocable Revolving Credit Agreement Class B Pass Through
Certificates, dated as of June 15, 1998 (the "Class B Liquidity Agreement"
and, together with the Class A Liquidity Agreement, the "Liquidity
Agreements"), between KfW and First Security Bank, National Association, as
Subordination Agent under the Intercreditor Agreement, as defined below, as
agent and trustee for the Federal Express Corporation 1998-1-B Pass Through
Trust and (iii) the Intercreditor Agreement, dated as of June 15, 1998 (the
"Intercreditor Agreement" and, together with the Liquidity Agreements, the
"Relevant Documents"), among KfW and First Security Bank, National
Association, as Pass Through Trustee and as Subordination Agent. Capitalized
terms used herein but not otherwise defined herein shall have the meanings
provided in the Relevant Documents.
In rendering the opinion expressed below, we have examined the
Relevant Documents, the opinion dated the date hereof of Ruediger Sass,
General Counsel of KfW, and such other documents as we have deemed necessary.
In our examination, we have assumed the authenticity of all documents
submitted to us as originals and the conformity with authentic original
documents of all documents submitted to us as copies. When relevant facts
were not independently established, we have relied upon representations made
in or pursuant to the Relevant Documents.
In rendering the opinion expressed below, we have assumed, with
respect to each Relevant Document, that:
(i) it has been duly authorized by, has been duly executed and
delivered by, and (except to the extent set forth in the opinion
below as to KfW) constitutes legal, valid, binding and enforceable
obligations of all of the parties thereto;
(ii) all signatories thereto have been duly authorized; and
(iii) all of the parties thereto are duly organized and validly existing
and have the power and authority (corporate, partnership, trust or
otherwise) to execute, deliver and perform thereunder.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinion
expressed below, we are of the opinion that each Relevant Document constitutes
the legal, valid and binding obligation of KfW, enforceable against KfW in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or transfer or other similar
laws relating to or affecting the rights of creditors generally and except as
the enforceability of such Relevant Document is subject to the application of
general principles of equity (regardless of whether considered in a proceeding
in equity or at law), including, without limitation, (a) the possible
unavailability of specific performance, injunctive relief or any other
equitable remedy and (b) concepts of materiality, reasonableness, good faith
and fair dealing.
The foregoing opinion is subject to the following comments and
qualifications:
(A) The enforceability of provisions in the Relevant Documents to
the effect that terms may not be waived or modified except in writing
may be limited under certain circumstances.
(B) We express no opinion as to (i) the effect of the laws of any
jurisdiction in which KfW is located (other than New York) that limit
the interest, fees or other charges KfW may impose for the loan or use
of money or other credit, (ii) Section 7.11(a)(i) of each Liquidity
Agreement and Section 10.11(a)(i) of the Intercreditor Agreement,
insofar as such Sections relate to the subject matter jurisdiction of a
Federal court sitting in New York, New York to adjudicate any
controversy related to the Relevant Documents, (iii) the waiver of
inconvenient forum set forth in Section 7.11(a)(ii) of each Liquidity
Agreement and Section 10.11(a)(ii) of the Intercreditor Agreement with
respect to proceedings in a Federal court sitting in New York, New York
and a State court of the State of New York and (iv) the waiver of
immunity set forth in Section 7.11(c) of each Liquidity Agreement and
Section 10.11(c) of the Intercreditor Agreement with respect to
proceedings in a Federal court sitting in New York, New York and a State
court of the State of New York.
The foregoing opinion is limited to matters involving the Federal
laws of the United States of America and the law of the State of New York, and
we do not express any opinion as to the laws of any other jurisdiction. In
particular, we do not express any opinion as to the laws of Germany and, to
the extent such laws may be relevant to the opinion expressed herein, we have,
with your permission, relied upon the aforementioned opinion of Ruediger Sass,
Esq., General Counsel of KfW, without independently considering the matters
covered thereby, and our opinion is subject to all limitations, exceptions and
qualifications contained therein as if set forth herein in full.
At the request of KfW, this opinion letter is provided to you by
us in our capacity as special New York counsel to KfW, and this opinion letter
may not be relied upon by any Person for any purpose other than in connection
with the transactions contemplated by the Relevant Documents without, in each
instance, our prior written consent.
Very truly yours,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(5)(d)
[Letterhead of Milbank, Tweed, Hadley & McCloy]
[Certificate Closing Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation 1998-1 Pass Through Trusts
------------------------------------------------------
Ladies and Gentlemen:
We have acted as special New York counsel to Kreditanstalt fur
Wiederaufbau (herein called "KfW") in connection with (i) Letter of Credit No.
______________ dated July ___, 1998 (the "Letter of Credit") issued by KfW in
favor of First Security Bank, National Association, as Subordination Agent
(the "Subordination Agent") under the Intercreditor Agreement dated as of June
15, 1998 among First Security Bank, National Association, as Pass Through
Trustee, KfW, as Class A Liquidity Provider and Class B Liquidity Provider,
and the Subordination Agent, (ii) the Reimbursement Agreement dated July ___,
1998 (the "Reimbursement Agreement") between KfW and Federal Express
Corporation, and (iii) the letter dated July ___, 1998 (the "Letter Agreement"
and, together with the Letter of Credit and the Reimbursement Agreement, the
"Relevant Documents") from KfW to the Subordination Agent.
In rendering the opinions expressed below, we have examined each of
the Relevant Documents, the opinion dated the date hereof of Ruediger Sass,
General Counsel of KfW, and such other documents as we have deemed necessary
as a basis for the opinions expressed below.
In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity with authentic original documents of all documents submitted to
us as copies. When relevant facts were not independently established, we have
relied upon statements of governmental officials and upon certificates of
appropriate representatives of KfW.
In rendering the opinions expressed below, we have assumed, with
respect to all of the documents referred to in this opinion letter, that:
(i) such documents been duly authorized by, have been duly executed and
delivered by, and (except to the extent set forth in the opinion
below as to KfW) constitute legal, valid, binding and enforceable
obligations of, all of the parties to such documents;
(ii) all signatories to such documents have been duly authorized; and
(iii) all of the parties to such documents are duly organized and validly
existing and have the power and authority (corporate, trust or
otherwise) to execute, deliver and perform such documents.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinions
expressed below, we are of the opinion that each of the Relevant Documents
constitutes valid and binding obligations of KfW enforceable against KfW in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, conservatorship, receivership, moratorium or other similar
laws relating to or affecting the rights of creditors generally (as such laws
would apply in the event of the insolvency, liquidation, reorganization,
conservatorship or receivership of, or other similar occurrence with respect
to, KfW) and except as the enforceability of such Relevant Document is subject
to the application of general principles of equity (regardless of whether
considered in a proceeding in equity or at law), including, without limitation,
(a) the possible unavailability of specific performance, injunctive relief or
any other equitable remedy and (b) concepts of materiality, reasonableness,
good faith and fair dealing.
The foregoing opinion is subject to the following comments and
qualifications:
(A) The enforceability of any provision in any of the Relevant
Documents to the effect that the terms thereof may not be waived or
modified except in writing may be limited as provided in Section
15-301(1) of the New York General Obligations Law and Section 1-205(3)
of the New York Uniform Commercial Code.
(B) With respect to our opinion above as it pertains to the
Letter of Credit, we call your attention to Wysko Investment Co. v.
Great American Bank, 131 B.R. 146 (D. Ariz. 1991), which holds that a
bankruptcy court may enjoin payment under a letter of credit pursuant to
Section 105 of the United States Bankruptcy Code, 11 U.S.C. Section 105,
in unusual circumstances. Id. at 147. In that case, the unusual
circumstance was a bankruptcy court finding that the injunction was
necessary for the reorganization. Id. at 148. In addition, In re
Delaware River Stevedores, Inc., 129 B.R. 38 (Bankr. E.D. Pa. 1991),
suggests that "an injunction prohibiting payment on a L/C could
conceivably be appropriate" if certain factors relating to issuing
Section 105(a) injunctions "generally weighed in the debtor's favor."
Id. at 42, citing In re Guy C. Long, Inc., 74 B.R. 939 (Bankr. E.D. Pa.
1987). To the extent that the rationale of Wysko Investment Co. or
Delaware River Stevedores would support the issuance of a permanent
injunction against payment under the Letter of Credit, we are of the
opinion that those cases do not reflect a correct statement of the law
in respect of letters of credit and are not controlling precedent in any
court exercising bankruptcy jurisdiction outside of Arizona or the
Eastern District of Pennsylvania, as the case may be.
(C) We express no opinion as to whether a court exercising
bankruptcy jurisdiction might issue a temporary restraining order or
other interim relief in order to preserve the status quo concerning the
Letter of Credit pending a review of the merits of any request to enjoin
payment under the Letter of Credit.
The foregoing opinions are limited to matters involving the
Federal laws of the United States and the law of the State of New York, and we
do not express any opinion as to the laws of any other jurisdiction. In
particular, we do not express any opinion as to the laws of Germany and, to
the extent such laws may be relevant to the opinion expressed herein, we have,
with your permission, relied upon the aforementioned opinion of Ruediger Sass,
Esq., General Counsel of KfW, without independently considering the matters
covered thereby, and our opinion is subject to all limitations, exceptions and
qualifications contained therein as if set forth herein in full.
This opinion letter is provided to you by us in our capacity as
special New York counsel to KfW and may not be relied upon by any other person
or entity or by you for any purpose other than in connection with the Relevant
Documents without, in each instance, our prior written consent.
Very truly yours,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(6)
[Letterhead of McDonnell Douglas Corporation]
[Delivery Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N621FE
--------------------------------------------
You have requested that McDonnell Douglas Corporation, a
wholly-owned subsidiary of The Boeing Company (the "Manufacturer") furnish you
an opinion in connection with Section 4.02(d) of the Participation Agreement
(Federal Express Corporation Trust No. N621FE), dated as of June 15, 1998, as
amended and restated as of ________________ (the "Participation Agreement"),
among Federal, as Lessee and Initial Owner Participant, ____________________,
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, with
respect to a McDonnell Douglas Model MD-11F aircraft bearing Federal Aviation
Administration registration number N621FE and Manufacturer's serial number
48792 (including the engines installed thereon but excluding equipment
furnished by the Lessee therefor, the "Aircraft").
In this regard, the Office of the General Counsel for Douglas
Aircraft Company, a division of the Manufacturer has examined and is familiar
with the Manufacturer's Articles of Incorporation and Bylaws, as amended,
including provisions thereof with respect to the Boards of Directors. In
addition, we have examined, among other things (1) Purchase Agreement No.
A00431B dated as of March 17, 1998 between the Lessee and the Manufacturer,
(2) the Manufacturer's Consent and Agreement to the Purchase Agreement
Assignment (Federal Express Corporation Trust No. N621FE) dated as of June 15,
1998 between the Lessee and the Owner Trustee and (3) the Manufacturer's
Warranty Bill of Sale and FAA Bill of Sale conveying title to the Aircraft to
the Lessee (such documents executed by the Manufacturer are hereby
collectively referred to as the "Manufacturer Documents").
Based upon the foregoing and upon statements of appropriate
Manufacturer employees as to factual matters and upon examination of the law
as it deems necessary for the purposes of this Opinion, this Office is of the
following opinion:
1. The Manufacturer is a corporation duly incorporated and
validly existing in good standing under the laws of the State of Maryland, and
is duly qualified and authorized to do business as a foreign corporation in,
among other jurisdictions, the state of California.
2. The Manufacturer has the full corporate power, authority, and
legal right to execute, deliver and perform under the Manufacturer Documents
and the execution, delivery and performance by the Manufacturer of its
obligations under the Manufacturer Documents have been duly authorized by all
necessary corporate action on the part of the Manufacturer.
3. The Manufacturer Documents have been duly executed and
delivered by, and, on the assumption that they have been duly executed and
delivered by all other parties thereto, constitute the legal, valid and
binding obligations of, the Manufacturer, enforceable in accordance with the
respective terms thereof, do not require any stockholder approval, do not, to
the best of our knowledge, require any approval or consent of any trustee or
holder of any indebtedness or obligations of the Manufacturer, and do not
contravene the Certificate of Incorporation or by-laws of the Manufacturer, or
any indenture, mortgage, contract, instrument, or other agreement, in each
case known to us, to which the Manufacturer is a party or by which it or any of
its properties is bound.
4. Good title to the Aircraft was at the time of delivery by the
Manufacturer to the Lessee vested in the Manufacturer, free and clear of all
liens, claims, encumbrances, security interests, and rights of others; and
assuming the filing for recordation of the FAA Bill of Sale in accordance with
the provisions of the Federal Aviation Act of 1958, as amended, good title to
the Aircraft was on such date duly conveyed by the Manufacturer to the Lessee,
free and clear of all liens, claims, encumbrances, security interests, and
rights of others.
5. Each of the FAA Bill of Sale and the Warranty Bill of Sale
covering the Aircraft constituted an effective instrument for the conveyance
of good title to the Aircraft to the Lessee, given the filing for recordation
of the FAA Bill of Sale for the Aircraft in accordance with the provisions of
the Federal Aviation Act of 1958 as amended.
6. The Aircraft was duly delivered by the Manufacturer to the
Lessee and (as evidenced by the Lessee's execution of a receipt for the
Aircraft) duly accepted by the Lessee pursuant to the Purchase Agreement. For
purposes of this opinion, I have assumed that the Lessee had the power and
authority to accept title to and delivery of the Aircraft on the date of
delivery and that the representative acting on behalf of the Lessee was duly
authorized to accept title to and delivery of the Aircraft on the Lessee's
behalf.
Insofar as the foregoing opinion relates to the enforceability of
any instrument, such enforceability is subject to applicable bankruptcy,
insolvency, moratorium and other similar laws affecting the enforcement of
creditors' rights generally (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
No opinion is expressed as to laws other than the corporate law of
the State of Maryland, the laws of the State of California and the Federal
laws of the United States of America.
Very truly yours,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
- -----------------
[name of owner participant]
EXHIBIT A(7)
[Letterhead of Pratt & Whitney]
[Delivery Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N621FE
--------------------------------------------
Reference is made to (i) that certain Participation Agreement (Federal
Express Corporation Trust No. N621FE), dated as of June 15, 1998, as amended
and restated as of _______________ (the "Participation Agreement") by and
among Federal Express Corporation, as Lessee and Initial Owner Participant
("Fed Ex"), ________________________, 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) and (ii) that certain Purchase Agreement Assignment
(Federal Express Corporation Trust No. N621FE), dated as of June 15, 1998 (the
"Purchase Agreement Assignment") between Fed Ex, as Lessee and SSB, as Lessor.
I am an attorney employed by Pratt & Whitney (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 Engine Consent and Agreement (the "Consent"). The Consent covers three
Pratt & Whitney 4462 series engines bearing Engine Manufacturer's serial
numbers ___-___, ___-___ and ___-___, 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.
_______, dated as of _____________ between the Engine Manufacturer and Fed Ex
(the "General Terms Agreement"), the Participation Agreement and the Purchase
Agreement Assignment.
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 and the Purchase Agreement Assignment.
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 and the Purchase
Agreement Assignment 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 and the
Purchase Agreement Assignment 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.
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 and the Consent. The execution,
delivery and performance by the Engine Manufacturer of each of the
General Terms Agreement and the Consent was duly authorized by all
necessary corporate action on the part of the Engine Manufacturer.
(2) Each of the General Terms Agreement and the Consent 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.
The foregoing opinions are limited to the laws of the State of
__________ 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,
SCHEDULE A
Lessee
- ------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
- -----------------
[name of owner participant]
EXHIBIT A(8)
[Letterhead of Daugherty, Fowler & Peregrin]
[Delivery Date]
To the Parties Named on Schedule A attached hereto
Re: Federal Express Corporation Trust No. N621FE
--------------------------------------------
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 4.02(d)(vii)
of the Participation Agreement (Federal Express Corporation Trust No. N621FE),
dated as of June 15, 1998, as amended and restated as of _____________ (the
"Participation Agreement") among Federal Express Corporation, as Lessee (the
"Lessee") and Initial Owner Participant, _________________, 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._.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._.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._.T.;
(d) executed counterpart of Trust Agreement (Federal Express
Corporation Trust No. N621FE) dated as of June 15, 1998, as
amended and restated as of ____________ (the "Trust
Agreement") between the Owner Participant and the Owner
Trustee, which Trust Agreement was filed at ____ _.m.,
C._.T.;
(e) executed counterpart of Trust Indenture and Security
Agreement (Federal Express Corporation Trust No. N621FE)
dated as of June 15, 1998, as amended and restated as of
_____________ (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. N621FE) 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._.T.; and,
(f) executed counterpart of Lease Agreement (Federal Express
Corporation Trust No. N621FE) dated as of June 15, 1998, as
amended and restated as of ______________ (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. N621FE) 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._.T.
The Confidential Omissions were intentionally omitted from the FAA
filing counterparts of the Lease and the Trust Indenture as containing
confidential financial information.
Based upon our examination of the above described instruments and
of such records of the FAA as we deemed necessary to render this opinion, it
is our opinion that:
1. the FAA Bill of Sale, the Trust Indenture with the Trust
Indenture Supplement attached and the Lease with the Lease
Attachments attached are in due form for recordation by and
have been duly filed for recordation with the FAA pursuant
to and in accordance with the provisions of 49 U.S.C.
Section 44107;
2. the Aircraft Registration Application, the Owner Trustee
Affidavit with the Owner Participant Affidavit attached and
the Trust Agreement are in due form for filing and have been
duly filed with the FAA pursuant to and in accordance with
the provisions of 49 U.S.C. Section 44103(a) and Section
47.7(c) of the Federal Aviation Regulations;
3. the Airframe is eligible for registration under 49 U.S.C.
Section 44102 in the name of the Owner Trustee and the
filing with the FAA of the FAA Bill of Sale, the Aircraft
Registration Application, the Owner Trustee Affidavit with
the Owner Participant Affidavit attached and the Trust
Agreement will cause the FAA to register the Airframe, in
due course, in the name of the Owner Trustee and to issue to
the Owner Trustee an AC Form 8050-3 Certificate of Aircraft
Registration for the Airframe, and the Airframe will be duly
registered pursuant to and in accordance with the provisions
of 49 U.S.C. Section 44103(a);
4. the Owner Trustee has valid legal title to the Airframe and
the Aircraft is free and clear of all Liens, except (i) the
security interest created by the Trust Indenture, as
supplemented by the Trust Indenture Supplement, and (ii) the
rights of the parties under the Lease, as supplemented by
the Lease Supplement;
5. the rights of the Owner Trustee and the Lessee under the
Lease, as supplemented by the Lease Supplement, with respect
to the Aircraft, are perfected;
6. the Trust Indenture, as supplemented by the Trust Indenture
Supplement, constitutes a duly perfected first priority
security interest in the Aircraft and a duly perfected first
assignment of all the right, title and interest of the Owner
Trustee in, to and under the Lease and the Lease Supplement
(insofar as such assignment affects an interest covered by
the recording system established by the FAA pursuant to 49
U.S.C. Section 44107), and no other registration of the
Airframe or filings other than filings with the FAA (which
have been duly effected) are necessary in order to perfect
in any applicable jurisdiction in the United States (A) the
Owner Trustee's title to the Airframe or (B) such security
interest and assignment (insofar as such assignment affects
an interest covered by the recording system established by
the FAA pursuant to 49 U.S.C. Section 44107), it being
understood that no opinion is herein expressed as to the
validity, priority or enforceability of such security
interest and assignment under local law or as to the
recognition of the perfection of such security interest and
assignment as against third parties in any legal proceeding
outside the United States;
7. no authorization, approval, consent, license or order of, or
registration with, or the giving of notice to, the FAA is
required for the valid authorization, delivery and
performance of the Lease, as supplemented by the Lease
Supplement, the Trust Indenture, as supplemented by the
Trust Indenture Supplement, or the Trust Agreement except
for such filings as are referred to above; and,
8. neither the execution and delivery by the Owner Participant
of the Participation Agreement or the Trust Agreement, nor
other consummation of the transactions contemplated thereby
by the Owner Participant, requires the consent or approval
of, or the giving of notice to, or the registration of, or
the taking of any other action in respect of the FAA, except
(x) the registration of the Airframe, including the
submission of the Aircraft Registration Application, the
Owner Trustee Affidavit, the Owner Participant Affidavit and
the Trust Agreement to the FAA and (y) the filings for
recordation specified elsewhere in this opinion.
No opinion is expressed as to the Airframe during any period or
periods of time during which it has not been subject to United States
registration.
No opinion is expressed as to laws other than Federal laws of the
United States. In rendering this opinion, we were subject to the accuracy of
the FAA, its employees and agents, in the filing, indexing and recording of
instruments filed with the FAA and in the search for encumbrance
cross-reference index cards for the Engines. Further, in rendering this
opinion we are assuming the validity and enforceability of the above described
instruments under local law. Since our examination was limited to records
maintained by the FAA, our opinion does not cover liens which are perfected
without the filing of notice thereof with the FAA, such as federal tax liens,
liens arising under Section 1368(a) of Title 29 of the United States Code,
possessory artisan's liens, or matters of which the parties have 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,
Annex I
Certain Definitions
-------------------
Airframe, Engines and Aircraft
------------------------------
One (1) McDonnell Douglas MD-11F aircraft bearing manufacturer's
serial number 48792 and U.S. Registration No. N621FE (the "Airframe") and
three (3) Pratt & Whitney 4462 aircraft engines bearing manufacturer's serial
numbers ___-___, ___-___ and ___-___ (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) of the Lease set forth in Ancillary Agreement II, which was not
attached to the FAA filing counterpart of the Lease or otherwise filed with
the FAA for recordation.
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
- -----------------
[name of owner participant]
EXHIBIT B
[Form of Lease Agreement - See Exhibit 4.e to this Form 8K]
EXHIBIT C
[Form of Indenture - See Exhibit 4.b.1 to this Form 8K]
EXHIBIT D
[Form of Trust Agreement - See Exhibit 4.d to this Form 8K]
EXHIBIT E
PURCHASE AGREEMENT ASSIGNMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N621FE)
PURCHASE AGREEMENT ASSIGNMENT (FEDERAL EXPRESS CORPORATION TRUST
NO. N621FE) dated as of June 15, 1998 (the "Purchase Agreement Assignment"),
between FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Seller"),
and 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 (the "Buyer").
W I T N E S S E T H:
WHEREAS, all capitalized terms used herein shall have the meanings
assigned thereto as provided in Section 1 below;
WHEREAS, the Buyer wishes to purchase the Aircraft, and the
Seller, on the terms and conditions hereinafter set forth, is willing to sell
and transfer title to the Aircraft to the Buyer;
WHEREAS, the Buyer and the Seller are entering into the Lease
pursuant to which the Aircraft will be leased by the Buyer to the Seller; and
WHEREAS, the Seller, on the terms and conditions herein and in the
Consent and Agreement of the Manufacturer and in the Engine Consent and
Agreement of the Engine Manufacturer attached hereto, desires to assign to the
Buyer certain of the Seller's rights and interests in and under the Purchase
Agreement and the GTA relating to the Aircraft, and the Buyer desires to
accept such assignment, as hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the parties hereto
agree as follows:
Section 1. Definitions. For all purposes of this Purchase
Agreement Assignment, except as otherwise expressly provided for or unless the
context otherwise requires, the following terms shall have the following
meanings:
"Aircraft" shall mean the McDonnell Douglas MD-11F aircraft bearing
United States Registration Number N621FE and Manufacturer's Serial Number
48792, which was delivered under the Purchase Agreement, including the Engines.
"Engine Manufacturer" shall mean Pratt & Whitney, a Connecticut
corporation.
"Engines" shall mean the three (3) Pratt & Whitney 4462 turbofan
jet engines bearing Engine Manufacturer's serial numbers ___-___, ___-___ and
___-___, respectively.
"Engine Warranties" shall mean 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 the GTA.
"GTA" shall mean the General Terms Agreement dated as of
________________ between the Engine Manufacturer and the Seller but shall be
limited to applicable engine warranties, as well as all of the terms and
conditions, including the limitations, applicable hereto, as such provisions
are assignable by the terms of this Agreement.
"Lease" shall mean the Lease Agreement (Federal Express Corporation
Trust No. N621FE), dated as of June 15, 1998, between the Buyer and the
Seller, as the same may be amended, modified and supplemented, providing for
the lease of the Aircraft.
"Manufacturer" shall mean McDonnell Douglas Corporation, a
wholly-owned subsidiary of The Boeing Company, and its successors and assigns.
"Participation Agreement" shall mean the Participation Agreement
(Federal Express Corporation Trust No. N621FE), dated as of June 15, 1998, by
and among the Buyer, the Initial Owner Participant, the Indenture Trustee, the
Pass Through Trustee, the Subordination Agent and the Seller, as the same may
be amended, modified or supplemented.
"Purchase Agreement" shall mean the Purchase Agreement A00431-B
between the Seller and the Manufacturer, dated as of March 17, 1998, and as
thereafter originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the foregoing relates
to the Aircraft.
"Purchase Price" shall mean the amount stated in Ancillary
Agreement I.
All other capitalized terms used herein and not otherwise defined
shall have the meaning assigned to such term in the Lease.
Section 2. Representation. The Seller does hereby represent and
warrant that (a) it has furnished to the Buyer a true and complete copy of the
Purchase Agreement and GTA as they relate to all of the Manufacturer's
warranties and Engine Manufacturer's applicable warranties, as well as related
obligations and rights in the Purchase Agreement and GTA, respectively, as
assigned to the Buyer hereunder and (b) the Purchase Agreement and GTA are in
full force and effect and the Seller is not in default thereunder. The Seller
does hereby further represent and warrant that, to its knowledge, the Seller
has, with the authorized execution of the Consent and Agreement and the Engine
Consent and Agreement attached hereto, received all necessary consents to the
assignment and transfer contemplated herein and that such consents are in full
force and effect. The Seller does hereby further represent and warrant that
the Seller has not assigned or pledged, and hereby covenants that it shall not
assign or pledge, so long as this Purchase Agreement Assignment shall remain in
effect, the whole or any part of the rights hereby assigned or any of its
rights in respect of the Aircraft to anyone other than the Buyer. The Seller
further represents and warrants for the benefit of the Buyer and the Owner
Participant and their respective successors and assigns, as of the Delivery
Date, that it is the lawful owner of the Aircraft; and, as of the Delivery
Date that its title to the Aircraft is free and clear of all Liens, except the
rights of the Lessee under the Lease and the Lease Supplement covering the
Aircraft, the beneficial interest of the Owner Participant in the Aircraft and
the Liens permitted by clause (c) of Section 6.01 of the Lease, and that, on
the Delivery Date, the Buyer will receive good and marketable title to the
Aircraft free and clear of all Liens other than rights of the Lessee under the
Lease and the Lease Supplement, the beneficial interest of the Owner
Participant in the Aircraft and the Liens permitted by clause (c) of Section
6.01 of the Lease.
Section 3. Assignment; Rights Reserved. Subject to the
provisions of Section 5(a) hereof, the Seller does hereby sell, assign,
transfer and set over unto the Buyer, except to the extent reserved below, all
of the Seller's right, title and interest in the Purchase Agreement and the
GTA pursuant to which the Seller acquired the Aircraft from the Manufacturer
and Engine Manufacturer, as and to the extent that the same relate to the
Aircraft and the purchase and operation thereof, including, without
limitation, (a) all claims for damages in respect of the Aircraft arising as a
result of any default by the Manufacturer under the Purchase Agreement or by
the Engine Manufacturer under the GTA or by any vendor or other supplier of
aircraft engines or other parts or equipment installed on or in the Aircraft,
including, without limitation, all warranty, service life policy, aircraft
performance guarantee and indemnity provisions contained in the Purchase
Agreement and the GTA and all claims thereunder, (b) any and all rights of the
Seller to compel performance of the terms of the Purchase Agreement and the
GTA in respect of the Aircraft and (c) any and all rights of the Seller under
the Manufacturer's warranty bill of sale dated __________________ covering the
Aircraft, the original of which is to delivered to the Indenture Trustee on the
Delivery Date; reserving to the Seller, however, (i) all of the Seller's
right, title and interest in and to the Purchase Agreement and the GTA as and
to the extent that it relates to any matters other than in respect of the
Aircraft, and (ii) with respect to the Aircraft so long, and only so long, as
the Manufacturer and the Engine Manufacturer shall not have received notice
from the Buyer as set forth in Section 5(d) hereof that a Default or an Event
of Default has occurred and is continuing under the Lease, all of the Seller's
rights and interests in or arising out of any payments or deposits made
relating to the Aircraft or to be made by the Seller or amounts credited or to
be credited or paid or to be paid by the Manufacturer or Engine Manufacturer
to the Seller in respect of the Aircraft and (iii) with respect to the
Aircraft so long, and only so long, (x) as the Lease is in effect and (y) as
the Manufacturer and Engine Manufacturer shall not have received notice from
the Owner Trustee as set forth in Section 5(d) hereof that a Default or an
Event of Default has occurred and is continuing under the Lease, all rights to
demand, accept and retain all rights in and to property (other than the
Aircraft), data and services of any kind which the Manufacturer and Engine
Manufacturer are obligated to provide or do provide pursuant to the Purchase
Agreement and GTA with respect to the Aircraft.
Section 4. Acceptance of Assignment. The Buyer hereby accepts the
assignment contained in Section 3 hereof.
Section 5. Rights of the Seller in Absence of Default. (a)
Notwithstanding the foregoing, if and so long as the Manufacturer and Engine
Manufacturer shall not have received notice from the Owner Trustee as set
forth in Section 5(d) hereof that a Default or an Event of Default under the
Lease has occurred and is continuing, (i) the Buyer authorizes the Seller
during the Term on behalf of but to the exclusion of the Buyer, to exercise in
Seller's own name (A) such rights and powers of the "Buyer" under the Purchase
Agreement and GTA and (B) such rights as the Buyer may have with respect to
the Aircraft under any warranty, covenant, representation, service life
policy, aircraft performance guarantee, indemnity or product support agreement
of the Manufacturer, Engine Manufacturer or any subcontractor or vendor with
respect thereto and, subject to Section 5(c) hereof, to retain any recovery
or benefit resulting from the enforcement of any warranty, covenant,
representation, service life policy, aircraft performance guarantee, indemnity
or product support agreement of the Manufacturer, Engine Manufacturer or any
subcontractor or vendor in respect of the Aircraft, except that the Seller may
not enter into any change order or other amendment, modification or supplement
without the Buyer's prior written consent if such change order, modification
or supplement would result in any rescission, cancellation or termination of
the Purchase Agreement as to the Aircraft or GTA as to the Engines or would
otherwise materially adversely affect the Buyer's rights in the Aircraft or
Engines, and (ii) the Buyer shall, at the Seller's expense, cooperate with the
Seller and take such actions as the Seller reasonably deems necessary to
enable the Seller to enforce such rights and claims.
(b) Effective upon the receipt by the Manufacturer and Engine
Manufacturer of written notice from the Owner Trustee that a Default or an
Event of Default under the Lease has occurred and is continuing and thereafter
until the Manufacturer and Engine Manufacturer shall have received written
notice from the Owner Trustee that all Defaults or Events of Default have been
cured or waived, (i) unless the Buyer in its sole discretion shall notify the
Manufacturer and Engine Manufacturer to the contrary, the authorization given
to the Seller under Section 5(a) hereof to enforce such rights and claims
shall thenceforth cease to be effective and the Buyer and its successors and
assigns shall, to the exclusion of the Seller, be entitled to assert and
enforce such rights and claims as substitute party plaintiff or otherwise, and
the Seller shall, at the request of the Buyer or its successors or assigns and
at the Seller's expense, cooperate with and take such action as is reasonably
necessary to enable the Buyer and its successors and assigns to enforce such
rights and claims, and (ii) the Seller will be deemed to have constituted
Buyer, its successors and permitted assigns, the Seller's true and lawful
attorney, irrevocably (it being acknowledged that such appointment is coupled
with an interest, namely the Buyer's rights acquired and to be acquired
hereunder) with full power (in the name of the Seller or otherwise) to ask,
require, demand, receive, compromise, settle, compound and give acquittance
for any and all monies and claims for monies due and to become due under, or
arising out of, the Purchase Agreement in respect of the Aircraft or the GTA
in respect of the Engines, to the extent that the same have been assigned by
this Purchase Agreement Assignment, and for such period as the Buyer may
exercise rights with respect thereto under this clause (ii), to endorse any
checks or other instruments or orders in connection therewith and to file any
claims or take any action or institute (or, if previously commenced, assume
control of) any proceedings and to obtain any recovery in connection therewith
that the Buyer may deem to be necessary or advisable in the premises.
(c) Notwithstanding this Purchase Agreement Assignment and
anything contained herein to the contrary, all amounts that the Manufacturer
or Engine Manufacturer are obligated to pay to the Seller under the Purchase
Agreement and GTA with respect to the Aircraft or Engines, respectively,
including, without limitation, in respect of refunds thereunder or resulting
from the enforcement of any warranty, covenant, representation, service life
policy, aircraft performance guarantee, indemnity or product support agreement
thereunder or the enforcement or exercise of any right or power under the
Purchase Agreement (a "Manufacturer Payment") or under the GTA (an "Engine
Manufacturer Payment") (excluding, however, from the Manufacturer Payments and
Engine Manufacturer Payments any amounts the Manufacturer or Engine
Manufacturer are obligated to pay to the Seller with respect to the rights
reserved to the Seller in clauses (i) through (iii) of Section 3(b) hereof),
will be payable and applicable as follows: all the Manufacturer Payments and
Engine Manufacturer Payments shall be paid to the Seller unless and until the
Manufacturer and Engine Manufacturer shall have received written notice as set
forth in Section 5(d) from the Owner Trustee that a Default or an Event of
Default under the Lease has occurred and is continuing, whereupon the
Manufacturer and Engine Manufacturer will, until the Manufacturer and Engine
Manufacturer shall have received written notice from the Owner Trustee that
all Defaults or Events of Default under the Lease have been cured or waived,
make any and all such payments directly to the Buyer. Any amounts received by
the Buyer pursuant to the immediately preceding sentence shall, to the extent
not theretofore applied in satisfaction of sums owing to the Buyer in
accordance with the terms of the Lease, be returned to the Seller promptly
after all Defaults or Events of Default under the Lease have been cured or
waived.
(d) For all purposes of this Purchase Agreement Assignment, the
Manufacturer and Engine Manufacturer shall not be deemed to have knowledge of a
declaration of an Event of Default or Default under the Lease or of the
discontinuance or waiver of an Event of Default or Default unless and until
the Manufacturer and Engine Manufacturer shall have received written notice
thereof from the Owner Trustee addressed, in case of the Manufacturer, to 3855
Lakewood Boulevard, Long Beach, California 90846-0001, Attention: Contracts
Department, and in the case of the Engine Manufacturer, to
_________________________________________. When acting in accordance with the
terms and conditions of the Purchase Agreement, the GTA and this Purchase
Agreement Assignment, the Manufacturer and Engine Manufacturer may rely
conclusively upon any such notice.
Section 6. Certain Rights and Obligations of the Parties. (a)
Anything herein contained to the contrary notwithstanding, (i) the Seller
shall at all times remain liable to the Manufacturer and Engine Manufacturer
under the Purchase Agreement and GTA in respect of the Aircraft to perform all
of its duties and obligations of "Buyer" thereunder to the same extent as if
this Purchase Agreement Assignment had not been executed, (ii) the exercise by
the Buyer of any of the rights assigned hereunder shall not release the Seller
from any of its duties or obligations to the Manufacturer and Engine
Manufacturer under the Purchase Agreement and GTA in respect of the Aircraft
except to the extent that such exercise by the Buyer shall constitute
performance of such duties and obligations, and (iii) except as provided in
Section 6(b) hereof, neither the Buyer, the Indenture Trustee nor the Loan
Certificate Holders shall have any obligation or liability under the Purchase
Agreement or GTA by reason of, or arising out of, this Purchase Agreement
Assignment or be obligated to perform any of the obligations or duties of the
Seller under the Purchase Agreement or GTA or to make any payment or make any
inquiry as to the sufficiency of any payment received by it or to present or
to file any claim or to take any other action to collect or enforce any claim
for any payment assigned thereunder.
Notwithstanding anything in this Purchase Agreement Assignment or the attached
Engine Consent and Agreement to the contrary, the Buyer and the Seller confirm
expressly for the benefit of the Engine Manufacturer that:
(i) The Buyer 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 Seller incident to effecting the assignment herein; provided,
however, that (1) the Buyer may use, retain and disclose such
information to its special counsel and public accountants, who shall not
further disclose such terms, (2) the Buyer 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 the Seller and
to the Engine Manufacturer, and the Buyer shall afford the Seller 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, and (3) the Buyer
may disclose such information to any bona fide potential purchaser of
the Aircraft and/or the Engines (subject to 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).
(ii) Without in any way releasing the Seller from any of its
duties or obligations under the GTA, the Buyer 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 shall apply to,
and be binding upon, the Buyer to the same extent as the Seller.
(iii) It is expressly agreed that: (1) the Seller shall at all
times remain liable to the Engine Manufacturer under the GTA to perform
all the duties and obligations of the Seller thereunder to the same
extent as if this Purchase Agreement Assignment had not been executed,
(2) the exercise by the Buyer of any of the rights assigned hereunder
shall not release the Seller from any of its duties or obligations to
the Engine Manufacturer under the GTA except to the extent that such
exercise by the Buyer shall constitute performance of such duties and
obligations.
(iv) Nothing contained in this Purchase Agreement 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. No further assignment of any remaining Engine
Warranties, including but not limited to assignments for security
purposes, are permitted without the express written consent of the
Engine Manufacturer.
(v) The Engine Manufacturer shall not be deemed to have knowledge
of any change in the authority of the Seller or the Buyer, as the case
may be, to exercise the rights established hereunder until the Engine
Manufacturer has received written notice thereof. Such notice should be
sent to: ______________________________________________. Any
performance by the Engine Manufacturer that discharges its obligation
under the Engine Warranties will satisfy the respective interests of the
Seller and the Buyer. So long as the Engine Manufacturer acts in good
faith in accordance with this Purchase Agreement Assignment, the Engine
Manufacturer may rely conclusively on any such notice without inquiring
as to the accuracy of, or the entitlement of the party to give, such
notice.
(b) Without in any way releasing the Seller from any of its
duties or obligations under the Purchase Agreement or GTA, the Buyer confirms
for the benefit of the Manufacturer and Engine Manufacturer that, insofar as
the provisions of the Purchase Agreement and GTA relate to the Aircraft, each
of (i) in exercising any rights under the Purchase Agreement or GTA, or in
making any claim with respect to the Aircraft or other goods and services
delivered or to be delivered pursuant to the Purchase Agreement or GTA, the
Purchase Agreement and GTA disclosed to the Buyer in writing and (ii) the
provisions of the article of the Purchase Agreement entitled Assignment and
Transfer regarding future assignment and transfer of rights under the Purchase
Agreement, shall apply to, and be binding upon, the Buyer to the same extent
as the Seller.
(c) Nothing contained herein shall (i) subject the Manufacturer
or Engine Manufacturer to any liability to which it would not otherwise be
subject under the Purchase Agreement or GTA or (ii) modify in any respect the
Manufacturer's or Engine Manufacturer's contract rights thereunder, except as
provided in the Consent and Agreement and Engine Consent and Agreement
attached hereto.
(d) The parties hereto, the Manufacturer by its execution and
delivery of the Consent and Agreement and the Engine Manufacturer by its
execution of the Engine Consent and Agreement, agree that all of the
statements, representations, covenants and agreements made by the Buyer as
Owner Trustee (when made in such capacity) contained in this Purchase
Agreement Assignment and any agreement referred to herein or in the
Participation Agreement other than the Trust Agreement, unless expressly
otherwise stated, are made and intended only for the purpose of binding the
Lessor's Estate and establishing the existence of rights and remedies which
can be exercised and enforced against the Lessor's Estate. Therefore, anything
contained in this Purchase Agreement Assignment or such other agreements to the
contrary notwithstanding (except for any express provisions that the Buyer is
responsible for in its individual capacity), no recourse shall be had with
respect to this Purchase Agreement Assignment or such other agreements against
the Buyer in its individual capacity (or against any institution or person
which becomes a successor trustee or co-trustee), the Owner Participant, or
any officer, director, trustee, servant or direct or indirect parent or
controlling person or persons of any of them; provided, however, that this
Section 6(d) shall not be construed to prohibit any action or proceeding
against the Owner Trustee in its individual capacity for its own willful
misconduct or grossly negligent conduct; and provided, further, that nothing
contained in this Section 6(d) shall be construed to limit the exercise and
enforcement in accordance with the terms of this Purchase Agreement Assignment
or such other agreements of rights and remedies against the Lessor's Estate.
The foregoing provisions of this Section 6(d) shall survive the termination of
this Purchase Agreement Assignment and the other Operative Agreements.
(e) Nothing contained herein shall in any way diminish or limit
the provisions of the Seller's indemnities in Article 9 of the Participation
Agreement with respect to any liability of the Buyer, or any party to the
Participation Agreement, to the Manufacturer in anyway relating to or arising
out of the Purchase Agreement.
Section 7. Further Assurances. The Seller agrees that at any
time and from time to time the Seller shall promptly and duly execute and
deliver any and all such further instruments and documents and take such
further action as the Buyer may reasonably request in writing in order to
obtain the full benefits of this Purchase Agreement Assignment and of the
rights and powers herein granted.
Section 8. No Amendment of Purchase Agreement and GTA. The Buyer
agrees that it will not enter into any amendment, modification, supplement,
rescission, cancellation or termination of the Purchase Agreement or GTA
without the prior written consent of the Seller unless the Buyer shall have
notified the Manufacturer and Engine Manufacturer as set forth in Section 5(d)
hereof that a Default or an Event of Default under the Lease has occurred and
is continuing, in which event any such amendment, modification, supplement,
rescission, cancellation or termination shall relate solely to the rights
assigned hereunder.
Section 9. Binding Effect. This Purchase Agreement Assignment
shall be binding upon and shall inure to the benefit of the Seller, the Buyer
and their respective successors and permitted assigns.
Section 10. Notice. Except as otherwise expressly provided
herein, notice hereunder may be given, and shall be deemed to have been
received, as provided in Section 25.01 of the Lease.
Section 11. Simultaneous Execution. This Purchase Agreement
Assignment is executed by the Buyer and the Seller concurrently with the
execution and delivery of the Lease, the Participation Agreement and the Trust
Agreement.
Section 12. Grant of Security Interest. By the Indenture, the
Buyer has granted to the Indenture Trustee, for the benefit of the Loan
Certificate Holders, a security interest in all estate, right, title and
interest of the Buyer in and to the Purchase Agreement, the GTA and this
Purchase Agreement Assignment.
Section 13. Counterparts. This Purchase Agreement Assignment may
be executed by the parties hereto in separate counterparts, each of which when
so executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 14. GOVERNING LAW. THIS PURCHASE AGREEMENT ASSIGNMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK (BUT WITHOUT GIVING EFFECT TO ITS CONFLICTS OF LAWS PROVISIONS),
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
IN WITNESS WHEREOF, the parties hereto have caused this Purchase
Agreement Assignment to be duly executed as of the day and year first above
written.
FEDERAL EXPRESS CORPORATION,
Seller
By: _______________________________________
Name: Robert D. Henning
Title: Vice President and Treasurer
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee,
Buyer
By: _______________________________________
Name:
Title:
CONSENT AND AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N621FE)
The undersigned, MCDONNELL DOUGLAS CORPORATION, a wholly-owned
subsidiary of The Boeing Company (the "Manufacturer"), hereby acknowledges
notice of, and consents to, all of the terms of, the Purchase Agreement
Assignment (Federal Express Corporation Trust No. N621FE), dated as of June
15, 1998 (the "Purchase Agreement Assignment"; capitalized terms used herein
and not otherwise defined shall have the meaning assigned such term in the
Purchase Agreement Assignment), between Federal Express Corporation, a
Delaware corporation ("Assignor") and 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
("Assignee") and hereby confirms to the Assignor and the Assignee, and agrees,
that: (i) all representations, warranties, indemnities and agreements of the
Manufacturer under the Purchase Agreement with respect to the Aircraft to the
extent assigned by the Assignor to the Assignee, shall inure to the benefit of
the Assignee to the same extent as if originally named the "Buyer" therein,
subject to the terms and conditions of the Purchase Agreement Assignment; (ii)
the Assignee shall not be liable for any of the obligations or duties of the
Assignor under the Purchase Agreement, nor shall the Purchase Agreement
Assignment give rise to any duties or obligations whatsoever on the part of the
Assignee owing to the Manufacturer, except for the Assignee's agreement in the
Purchase Agreement Assignment to the effect that, insofar as the provisions of
the Purchase Agreement relate to the Aircraft, in exercising any rights under
the Purchase Agreement or in making any claim with respect to the Aircraft or
other goods and services delivered or to be delivered pursuant to the Purchase
Agreement and future assignment or transfer of the Aircraft to a third party,
the terms and conditions of the Purchase Agreement relating to the Aircraft
shall apply to, and be binding upon, the Assignee to the same extent as the
Assignor; provided, that no person other than the Manufacturer shall have any
rights against the Assignee with respect to the undertaking and agreement set
forth in this clause (ii); (iii) the Manufacturer consents to the lease of the
Aircraft by the Assignee to the Assignor under the Lease and agrees that the
Purchase Agreement Assignment constitutes an agreement by the Assignee
thereunder as required by Article 13 of the Purchase Agreement; (iv) the
Manufacturer will continue to pay to the Assignor all payments which the
Manufacturer may be required to make in respect to the Aircraft under the
Purchase Agreement unless and until the Manufacturer shall have received
written notice from the Assignee addressed to 3855 Lakewood Boulevard, Long
Beach, California 90846-0001, Attention: Contracts Department, that a Default
or an Event of Default under the Lease has occurred and is continuing,
whereupon the Manufacturer will make any and all payments, including warranty
and indemnity payments, which it may be required to make in respect to the
Aircraft under the Purchase Agreement (to the extent the right to receive such
payments has been assigned under the Purchase Agreement Assignment) directly
to the Assignee at 225 Asylum Street, Goodwin Square, Hartford, Connecticut
06103, Attention: Corporate/Muni Administration, with a copy to State Street
Bank and Trust Company, Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department (provided, that, as
long as the Indenture shall not have been discharged, such payment shall be
made directly to the Indenture Trustee at 79 South Main Street, Salt Lake
City, Utah 84111, Attention: Corporate Trust Department); and (v) the
Manufacturer agrees that it will not assert any liability claim against the
Aircraft or any part thereof arising with respect to or in connection with any
work performed by the Manufacturer or at its direction on the Aircraft on or
prior to the date the Manufacturer conveys title to the Assignor.
The Manufacturer hereby represents and warrants that: (i) it is a
corporation duly organized and existing in good standing under the laws of the
State of Maryland, (ii) the making and performance of the Purchase Agreement
and this Consent and Agreement have been duly authorized by all necessary
corporate action on the part of the Manufacturer, do not require any
stockholder or other approval, and do not contravene the Manufacturer's
Certificate of Incorporation or By-Laws or any indenture, credit agreement or
other contractual agreement to which Manufacturer is a party or by which it is
bound, and (iii) the making of the Purchase Agreement and this Consent and
Agreement does not contravene, and to the best of the Manufacturer's
knowledge, the Manufacturer's performance of the Purchase Agreement and this
Consent and Agreement, does not contravene any law binding on the Manufacturer;
and (iv) the Purchase Agreement constituted as of the date thereof and at all
times thereafter to and including the date of this Consent and Agreement has
continued to constitute a binding obligation of the Manufacturer enforceable
against the Manufacturer in accordance with its terms and this Consent and
Agreement constitutes a binding obligation of the Manufacturer enforceable
against the Manufacturer in accordance with its respective terms. The
Manufacturer further represents and warrants that it has received payment in
full with respect to the Aircraft. It is understood that this Consent and
Agreement is subject to the condition that the Lease shall have been entered
into by the Assignor and the Assignee.
The Manufacturer hereby represents and warrants that:
1. The Aircraft was manufactured in the United States within the
meaning of Section 927(a)(1)(A) of the Internal Revenue Code
of 1986, as amended (the "Code"), by a person or persons
other than a foreign sales corporation, as defined in
Section 922(a) of the Code; and
2. At time of delivery of the Aircraft to the Lessee, less than
50% of the fair market value of the Aircraft was
attributable to articles imported into the United States
within the meaning of Section 927(a)(1)(c) of the Code.
Dated as of June 15, 1998
McDONNELL DOUGLAS CORPORATION
By: _______________________________________
Name:
Title:
ENGINE CONSENT AND AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N611FE)
Subject to the understanding that nothing contained in this
Consent and Agreement or any other document pertaining thereto shall subject
it to any liability or duplication of obligations to which it would not
otherwise be subject under General Terms Agreement No. _______ dated as of
________________ (the "Engine Agreement") between it and Federal Express
Corporation (the "Grantor") or modify in any respect its contract right
thereunder, the undersigned, PRATT & WHITNEY, a Connecticut corporation (the
"Engine Manufacturer"), hereby acknowledges notice of, and consents to, all of
the terms of, the Purchase Agreement Assignment (Federal Express Corporation
Trust No. N621FE), dated as of June 15, 1998 (the "Purchase Agreement
Assignment"; capitalized terms used herein and not otherwise defined shall
have the meaning assigned such term in the Purchase Agreement Assignment),
between Federal Express Corporation, a Delaware corporation ("Assigner") and
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 ("Assignee") and hereby confirms to
the Assignor and the Assignee, and agrees, that: (i) all representations,
warranties, indemnities and agreements of the Engine Manufacturer under the
GTA with respect to the Engines to the extent assigned by the Assignor to the
Assignee, shall inure to the benefit of the Assignee to the same extent as if
originally named the "Airline" therein, subject to the terms and conditions of
the Purchase Agreement Assignment; (ii) the Assignee shall not be liable for
any of the obligations or duties of the Assignor under the GTA, nor shall the
Purchase Agreement Assignment give rise to any duties or obligations
whatsoever on the part of the Assignee owing to the Engine Manufacturer,
except for the Assignee's agreement in the Purchase Agreement Assignment to
the effect that, insofar as the provisions of the GTA relate to the Engines,
in exercising any rights under the GTA or in making any claim with respect to
the Engines or other goods and services delivered or to be delivered pursuant
to the GTA and future assignment or transfer of the Engines to a third party,
the terms and conditions of the GTA relating to the Aircraft shall apply to,
and be binding upon, the Assignee to the same extent as the Assignor;
provided, that no person other than the Engine Manufacturer shall have any
rights against the Assignee with respect to the undertaking and agreement set
forth in this clause (ii); (iii) the Engine Manufacturer consents to the lease
of the Engines by the Assignee to the Assignor under the Lease; (iv) the
Engine Manufacturer will continue to pay to the Assignor all payments which
the Manufacturer may be required to make in respect to the Engines under the
GTA unless and until the Engine Manufacturer shall have received written
notice from the Owner Trustee addressed to _________________________, that a
Default or an Event of Default under the Lease has occurred and is continuing,
whereupon the Engine Manufacturer will make any and all payments, including
warranty and indemnity payments, which it may be required to make in respect
to the Engines under the GTA (to the extent the right to receive such payments
has been assigned under the Purchase Agreement Assignment) directly to the
Assignee at 225 Asylum Street, Goodwin Square, Hartford, Connecticut 06103,
Attention: Corporate/Muni Administration, with a copy to State Street Bank and
Trust Company, Two International Place, 4th Floor, Boston, Massachusetts 02110,
Attention: Corporate Trust Department (provided, that, as long as the
Indenture shall not have been discharged, such payment shall be made directly
to the Indenture Trustee at 79 South Main Street, Salt Lake City, Utah 84111,
Attention: Corporate Trust Department); and (v) the Engine Manufacturer agrees
that it will not assert any liability claim against the Engines arising with
respect to or work performed by the Engine Manufacturer or at its direction on
the Engines on or prior to the date the Manufacturer transferred title to the
Assignor.
The Engine Manufacturer hereby represents and warrants that: (i) the
manufacturer is a corporation duly organized and existing in good standing
under the laws of the State of New York; (ii) the making and performance of
the GTA and this Engine Consent and Agreement have been duly authorized by all
necessary corporate action on the part of the Engine Manufacturer, do not
require any stockholder or other approval, and do not contravene the Engine
Manufacturer's Certificate of Incorporation or By-Laws or any indenture,
credit agreement or other contractual agreement to which the Engine
Manufacturer is a party or by which it is bound; (iii) the making of the GTA
and this Engine Consent and Agreement does not contravene, and to the best of
the Engines Manufacturer's knowledge, the Engine Manufacturer's performance of
the GTA and this Engine Consent and Agreement, does not contravene any law
binding on the Engine Manufacturer; (iv) the GTA constituted as of the date
thereof and at all times thereafter to and including the date of this Engine
Consent and Agreement has continued to constitute a binding obligation of the
Engine Manufacturer enforceable against the Engine Manufacturer in accordance
with its terms and this Engine Consent and Agreement constitutes a binding
obligation of the Engine Manufacturer enforceable against the Engine
Manufacturer in accordance with its respective terms and (v) it has received
payment in full with respect to the Engines. It is understood that this Engine
Consent and Agreement is subject to the condition that the Lease shall have
been entered into by the Assignor and the Assignee.
The Engine Manufacturer hereby further represents and warrants that:
1. Each Engine was manufactured in the United States within the
meaning of Section 927(a)(1)(A) of the Internal Revenue Code of
1986, as amended (the "Code"), by a person or persons other than a
foreign sales corporation, as defined in Section 922(a) of the
Code; and
2. At the time of delivery of each Engine to Lessee, less than 50% of
the fair market value of the Engine was attributable to articles
imported into the United States within the meaning of Section
927(a)(1)(c) of the Code.
Dated as of June 15, 1998
PRATT & WHITNEY
By: _______________________________________
Name:
Title:
- -------------------------------------------------------------------------------
PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N623FE)
Dated as of June 15, 1998
among
FEDERAL EXPRESS CORPORATION,
Lessee and Initial 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. 48794, REGISTRATION NO. N623FE
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
Initial Recitals........................................................... 1
ARTICLE 1
DEFINITIONS............................................................. 3
ARTICLE 2
ISSUANCE OF PASS THROUGH CERTIFICATES;
ISSUANCE AND PURCHASE OF CERTIFICATES
Section 2.01. Transfer of Funds........................................ 3
Section 2.02. (a) Certificates.......................................... 5
(b) Transfer of Beneficial Interest..................................... 5
Section 2.03. Amendments on Delivery Date or Transfer Date............. 5
Section 2.04. Event of Loss Prior to Delivery Date..................... 7
ARTICLE 3
PARTICIPATION IN INVESTMENT ON DELIVERY DATE;
DELIVERY OF AIRCRAFT
Section 3.01. Lessee's Notice of Delivery Date......................... 7
Section 3.02. Commitments to Participate in Purchase Price............. 7
Section 3.03. Postponement of Delivery Date............................ 10
Section 3.04. Closing.................................................. 11
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent (Certificate Closing Date).......... 11
Section 4.02. Conditions Precedent (Delivery Date)..................... 18
Section 4.03. Opinion of Special Aviation Counsel Upon Registration.... 27
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations............. 28
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties.................. 28
Section 6.02. Offering by Lessee....................................... 34
Section 6.03. Certain Covenants of Lessee.............................. 35
Section 6.04. Survival of Representations and Warranties............... 42
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in
Lessor's Estate.......................................... 43
Section 7.02. Citizenship.............................................. 43
Section 7.03. Representations, Warranties and Covenants of Owner
Participant.............................................. 44
Section 7.04. Representations, Covenants and Warranties of SSB and the
Owner Trustee............................................ 47
Section 7.05. Representations, Warranties and Covenants of the
Indenture Trustee........................................ 50
Section 7.06. Indenture Trustee's Notice of Default.................... 52
Section 7.07. Releases from Indenture.................................. 52
Section 7.08. Covenant of Quiet Enjoyment.............................. 52
Section 7.09. Pass Through Trustee's Representations and Warranties.... 52
Section 7.10. Survival of Representations, Warranties and Covenants.... 53
Section 7.11. Lessee's Assumption of the Certificates.................. 53
Section 7.12. Indebtedness of Owner Trustee............................ 55
Section 7.13. Compliance with Trust Agreement, Etc..................... 56
Section 7.14. Subordination Agent's Representations, Warranties and
Covenants................................................ 56
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes......................... 58
Section 8.02. After-Tax Basis.......................................... 63
Section 8.03. Time of Payment.......................................... 63
Section 8.04. Contests................................................. 63
Section 8.05. Refunds.................................................. 65
Section 8.06. Lessee's Reports......................................... 66
Section 8.07. Survival of Obligations.................................. 67
Section 8.08. Payment of Taxes......................................... 67
Section 8.09. Reimbursements by Indemnitees Generally.................. 67
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally................................................ 67
Section 9.02. After-Tax Basis.......................................... 71
Section 9.03. Subrogation.............................................. 72
Section 9.04. Notice and Payment....................................... 72
Section 9.05. Refunds.................................................. 72
Section 9.06. Defense of Claims........................................ 72
Section 9.07. Survival of Obligations.................................. 73
Section 9.08. Effect of Other Indemnities.............................. 73
Section 9.09. Interest................................................. 74
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs....................... 74
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee.................. 77
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant.................... 78
Section 12.02. Interest of Holders of Certificates..................... 78
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents.................... 79
Section 13.02. Further Assurances...................................... 79
Section 13.03. Pass Through Trustee's and Subordination Agent's
Acknowledgment.......................................... 79
ARTICLE 14
NOTICES
Section 14.01. Notices................................................. 79
ARTICLE 15
REFINANCING
Section 15.01. Refinancing............................................. 80
ARTICLE 16
[RESERVED]
ARTICLE 17
MISCELLANEOUS
Section 17.01. [Reserved].............................................. 83
Section 17.02. Collateral Account...................................... 83
Section 17.03. Counterparts............................................ 85
Section 17.04. No Oral Modifications................................... 86
Section 17.05. Captions................................................ 86
Section 17.06. Successors and Assigns.................................. 86
Section 17.07. Concerning the Owner Trustee, Indenture Trustee
and the Pass Through Trustee............................ 86
Section 17.08. Severability............................................ 87
Section 17.09. Public Release of Information........................... 87
Section 17.10. Certain Limitations on Reorganization................... 87
Section 17.11. GOVERNING LAW........................................... 88
Section 17.12. Section 1110 Compliance................................. 88
Section 17.13. Reliance of Liquidity Providers......................... 88
ARTICLE 18
CONFIDENTIALITY
Section 18.01. Confidentiality......................................... 88
SCHEDULE I Certificate Information
SCHEDULE II Definitions
SCHEDULE III Permitted Country List
SCHEDULE IV Certain Amounts
SCHEDULE V Mandatory Document Terms
SCHEDULE VI Mandatory Economic Terms
SCHEDULE VII Assumed Aircraft Value
EXHIBIT A(1)(a)(i) Opinion of Lessee's Counsel
(Certificate Closing Date)
EXHIBIT A(1)(a)(ii) Opinion of Lessee's Counsel
(Delivery Date)
EXHIBIT A(1)(b)(i) Opinion of Lessee's Special Counsel
(Certificate Closing Date)
EXHIBIT A(1)(b)(ii) Opinion of Lessee's Special Counsel
(Delivery Date)
EXHIBIT A(2) Opinion of Indenture Trustee's Special Counsel
EXHIBIT A(3)(i) Opinion of Owner Trustee's Special Counsel
(Certificate Closing Date)
EXHIBIT A(3)(ii) Opinion of Owner Trustee's Special Counsel
(Delivery Date)
EXHIBIT A(4) Opinion of Pass Through Trustee's and Subordination
Agent's Special Counsel
EXHIBIT A(5)(a) Opinion of Liquidity Provider's Counsel
EXHIBIT A(5)(b) Opinion of LC Bank's Counsel
EXHIBIT A(5)(c) Opinion of Liquidity Provider's Special Counsel
EXHIBIT A(5)(d) Opinion of LC Bank's Special Counsel
EXHIBIT A(6) Opinion of Manufacturer's Counsel
EXHIBIT A(7) Opinion of Engine Manufacturer's Counsel
EXHIBIT A(8) Opinion of Special Aviation Counsel
EXHIBIT B Form of Lease Agreement
EXHIBIT C Form of Indenture
EXHIBIT D Form of Trust Agreement
EXHIBIT E Form of Purchase Agreement Assignment, Consent and
Agreement and Engine Consent and Agreement
PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N623FE)
PARTICIPATION AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO.
N623FE) dated as of June 15, 1998 (this "Agreement") among FEDERAL EXPRESS
CORPORATION, a Delaware corporation (herein, together with its successors and
permitted assigns, the "Lessee" and the "Initial 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").
W I T N E S S E T H :
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article 1 hereof.
WHEREAS, the Initial Owner Participant has entered into the Trust
Agreement with the Owner Trustee in its individual capacity, substantially in
the form of Exhibit D hereto, pursuant to which Trust Agreement the Owner
Trustee agrees, among other things, to hold the Lessor's Estate for the
benefit of the 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 will occur with
respect to the public offering of Pass Through Certificates issued by each Pass
Through Trust, an allocable amount of the proceeds of which offering will be
used by the Pass Through Trustee to purchase for each such Pass Through Trust
the Certificates of the Series and Maturity applicable thereto.
WHEREAS, on the Certificate Closing Date, the Owner Trustee and the
Indenture Trustee will enter into the Indenture for the benefit of the Pass
Through Trustee, pursuant to which the Owner Trustee is issuing 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 will be deposited by the Indenture
Trustee on behalf of the Owner Trustee in the Collateral Account.
WHEREAS, concurrently with the execution and delivery hereof, (i) the
Liquidity Provider will enter 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 will
enter into the Intercreditor Agreement.
WHEREAS, the Certificates will be 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, all of the outstanding Certificates will be secured by the
Liquid Collateral prior to the Delivery Date, and any Series C Certificates
outstanding after the Delivery Date that are subject to prepayment on the
Series C Prepayment Date will be secured by the Liquid Collateral up to and
including the Series C Prepayment Date.
WHEREAS, pursuant to the terms of the Trust Agreement, the Owner
Trustee will be authorized and directed by the Initial Owner Participant:
(a) on the Delivery Date, to purchase the Aircraft from the Lessee;
(b) on the Certificate Closing Date, to execute and deliver the
Lease substantially in the form of Exhibit B hereto, pursuant to which,
subject to the terms and conditions set forth in said Lease, the Owner
Trustee agrees to lease to the Lessee, and the Lessee agrees to lease from
the Owner Trustee, the Aircraft on the Delivery Date, such lease to be
effected by the execution and delivery on the Delivery Date of a Lease
Supplement, in the form of Exhibit A to the Lease, covering the Aircraft
and incorporating by reference all of the terms of the Lease;
(c) on the Certificate Closing Date, to execute and deliver the
Indenture, substantially in the form of Exhibit C hereto, for the benefit
of the Holders from time to time of the Certificates, pursuant to which the
Owner Trustee agrees, among other things, (A) to deposit, mortgage and
pledge with the Indenture Trustee, as part of the Trust Indenture Estate,
all of the Lessor's Estate but not Excepted Payments, (B) on the
Certificate Closing Date, to issue Certificates substantially in the form
set forth in Exhibit B to the Indenture, the proceeds of the sale of which
will be held by the Indenture Trustee on behalf of the Owner Trustee in the
Collateral Account until released in accordance with the terms hereof and of
the Indenture, and (C) on the Delivery Date, to execute and deliver the
Indenture and Security Agreement Supplement, substantially in the form of
Exhibit A to the Indenture, covering the Aircraft and supplementing the
Indenture; and
(d) on the Delivery Date, to execute and deliver the Purchase
Agreement Assignment, whereby the Lessee assigns to the Owner Trustee
certain of the Lessee's rights and interests under the Purchase Agreement
to the extent that the same relate to the Aircraft (except to the extent
reserved in said Purchase Agreement Assignment), which Purchase Agreement
Assignment is to include as an annex a Consent and Agreement executed by
the Manufacturer and an Engine Consent and Agreement executed by the Engine
Manufacturer, said Purchase Agreement Assignment, Consent and Agreement and
Engine Consent and Agreement to be substantially in the form of Exhibit E
hereto.
WHEREAS, on the Delivery Date pursuant to and subject to the terms and
conditions of this Agreement, the Purchase Agreement Assignment, the Engine
Consent and Agreement and the Bills of Sale, the Owner Trustee will purchase,
and receive title to, the Aircraft from the Lessee and lease the Aircraft to
the Lessee pursuant to the Lease.
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Unless otherwise specifically provided herein, the definitions set
forth in Schedule II hereto are incorporated herein for all purposes of this
Agreement and shall be equally applicable to both the singular and the plural
forms of the terms so defined.
ARTICLE 2
ISSUANCE OF PASS THROUGH CERTIFICATES;
ISSUANCE AND PURCHASE OF CERTIFICATES
Section 2.01. Transfer of Funds.
(a) On or before the Pass Through Closing Date, the Pass Through
Trustee and the Lessee, in accordance with the Pass Through Agreement, shall
enter into the Series Supplements, and, subject to the terms and conditions
set forth therein, on the Pass Through Closing Date (i) the Lessee shall
direct the Underwriters to execute a wire transfer or intra-bank transfer to
the Pass Through Trustee in the amount of the total proceeds payable pursuant
to the Underwriting Agreement with respect to the Pass Through Certificates
and (ii) the Pass Through Trustee shall deliver the Pass Through Certificates
to the Underwriters upon receipt by the Pass Through Trustee of such proceeds.
(b) Subject to the satisfaction or waiver of the conditions set
forth herein, on the Certificate Closing Date, on behalf of each Pass Through
Trust, from an allocable amount of the proceeds of the sale of the related
Pass Through Certificates, the Pass Through Trustee shall purchase the
Certificates specified for such Pass Through Trust on Schedule I hereto. For
each Pass Through Trust, the Pass Through Trustee shall pay an amount equal to
the principal amount of Certificates of the Series and Maturity that relates
to such Pass Through Trust, which amounts in the aggregate shall equal the
aggregate principal amount of the Certificates as specified in Section 2.04 of
the Indenture. The aggregate amount payable by the Pass Through Trustee
pursuant to this Section 2.01(b) shall be payable by wire transfer or
intra-bank transfer to the Indenture Trustee on behalf of the Owner Trustee.
(c) On the Certificate Closing Date, the Indenture Trustee shall,
on behalf of the Owner Trustee, deposit, by wire transfer or intra-bank
transfer, the amounts received by it pursuant to Section 2.01(b) hereof in the
Collateral Account pursuant to the Indenture.
(d) On the Certificate Closing Date, the LC Bank shall issue the
Letter of Credit.
(e) On the Certificate Closing Date concurrently with the events
specified in Section 2.01(b) hereof, the parties hereto shall execute and
deliver, to the extent they are parties thereto, and consent to the execution
and delivery of (if they are not parties thereto), the Lease (other than the
Lease Supplement), the Indenture (other than the Indenture and Security
Agreement Supplement), and the other documents listed in Section 4.01(d)
hereof, and the Owner Trustee shall execute and deliver to the Indenture
Trustee for authentication, and the Indenture Trustee shall authenticate and
deliver to the Subordination Agent on behalf of the Pass Through Trustee for
each of the Pass Through Trusts, upon the request of the Owner Trustee, the
Certificates as provided in Section 2.02 hereof.
(f) The Closings shall take place at the offices of Davis Polk &
Wardwell, 450 Lexington Avenue, New York, New York 10017.
Section 2.02. (a) Certificates. Subject to the satisfaction or
waiver of the conditions set forth herein, on the Certificate Closing Date,
the Initial Owner Participant will instruct the Owner Trustee to execute and
deliver to the Indenture Trustee, and the Indenture Trustee shall authenticate
and deliver, upon the request of the Owner Trustee, to the Subordination Agent
on behalf of the Pass Through Trustee for each of the Pass Through Trusts, the
Certificates specified for such Pass Through Trust on Schedule I attached
hereto, which (i) shall be issued in the principal amount and in the Series
and Maturity set forth for such Certificate in Schedule I hereto, (ii) shall
bear interest at the interest rate set forth for such Certificate in Schedule
I hereto, (iii) shall be issued in such form and on such terms as are
specified in the Indenture, (iv) shall be dated and authenticated on the
Certificate Closing Date and shall bear interest from the Certificate Closing
Date and (v) shall be registered in the name of the Subordination Agent on
behalf of the Pass Through Trustee for such Pass Through Trust.
(b) Transfer of Beneficial Interest. If on a date prior to the
Delivery Date, the Lessee shall have identified one or more Owner Participants
ready, willing and able to acquire the Beneficial Interest of the Initial
Owner Participant in consideration for such Owner Participant's or Owner
Participants' agreement to participate in the Lessor's payment of the Purchase
Price for the Aircraft on the Delivery Date, the Initial Owner Participant
shall transfer its Beneficial Interest to such Owner Participant or Owner
Participants on such date (the "Transfer Date"). On the Transfer Date, the
document amendments contemplated by Section 2.03(a) hereof (subject to the
limitations set forth in such Section) shall be effected and such amended
documents delivered.
Section 2.03. Amendments on Delivery Date or Transfer Date. (a)
Amendment and Restatement of Certain Documents. Upon any transfer by the
Initial Owner Participant of its Beneficial Interest on the Delivery Date (as
contemplated by Section 3.02(a) hereof (or, if earlier, the Transfer Date),
the parties hereto shall enter into amendments and restatements of the Trust
Agreement, the Lease, the Indenture and this Agreement, which amendments and
restatements shall reflect such changes as shall have been requested by the
Owner Participant, agreed to by the Lessee and, if modified in any material
respect, as to which Rating Agency Confirmation shall have been obtained from
each Rating Agency by the Lessee (to be delivered by the Lessee to the Pass
Through Trustee on or before the Delivery Date or the Transfer Date, as the
case may be); provided, however, that in any event such amended and restated
documents shall not vary the Mandatory Economic Terms and shall contain the
Mandatory Document Terms.
The Lessee agrees to furnish to each Liquidity Provider and to
Milbank, Tweed, Hadley & McCloy (the initial Liquidity Provider's special New
York counsel) at its New York office, attention: Drew S. Fine, as soon as
practicable but in no event less than 7 Business Days prior to the estimated
Delivery Date (or, if earlier, the estimated Transfer Date), true and complete
copies of drafts of any such amended and restated Participation Agreement,
amended and restated Lease Agreement and amended and restated Indenture. The
Lessee further agrees to furnish to each Liquidity Provider and to the counsel
identified in the preceding sentence (i) each and every subsequent draft of
such documents and (ii) promptly following the execution thereof, true and
complete copies of such documents.
(b) Amendments to Certain Schedules. The percentages of Basic Rent,
Stipulated Loss Value and Termination Value set forth on Schedules II, III and
IV, respectively, of the Lease, the EBO Price and the schedule of principal
payments on the Certificates set forth in Section 6.06 of the Indenture and
Schedule I to each Certificate on the Certificate Closing Date have been
calculated based upon a hypothetical owner's economic return and certain
assumptions regarding the Delivery Date, Transaction Costs, tax law, Basic
Term and certain other items (the "Assumptions"). If the Initial Owner
Participant transfers its Beneficial Interest to one or more Owner
Participants on the Delivery Date (as contemplated by Section 3.02(a) hereof
(or, if earlier, the Transfer Date), then, no later than 20 days following the
Delivery Date (the "Reoptimization Date"), the Owner Trustee may elect to amend
such Schedules to reflect the actual Owner's or Owners' Economic Return and any
changes to the Assumptions. In connection with any such amendments, the Owner
Trustee may increase or decrease the aggregate principal amount of the Series C
Certificates pursuant to Section 2.19 of the Indenture, and may prepay part of
the remaining Series C Certificates on the Series C Prepayment Date.
The Lessee, on behalf of the Owner Trustee, shall provide written
notice to the Indenture Trustee on the Reoptimization Date and any Adjustment
Date of any increase or decrease in the principal amount of the Series C
Certificates pursuant to Section 2.19 of the Indenture and of the aggregate
principal amount of the Series C Certificates, if any, which shall then be
subject to prepayment on the Series C Prepayment Date pursuant to this Section
2.03(b). On the Reoptimization Date, any Adjustment Date, and on the Series C
Prepayment Date in the event of any prepayment of such Series C Certificates,
the Owner Trustee shall deliver and the Subordination Agent on behalf of the
Pass Through Trustee of each Pass Through Trust shall accept delivery of an
amended Schedule I to each Certificate containing such changed principal
installments.
The Owner Trustee will give not less than 10 days' notice of the
Reoptimization Date. Any amendment to such Schedules shall not vary the
Mandatory Economic Terms and on the Reoptimization 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. If the Reoptimization Date or any
Adjustment Date occurs later than the Delivery Date, the Lessee shall cause
any required filing and recording of the affected documents with the
Aeronautics Authority to be effected on such date.
Section 2.04. Event of Loss Prior to Delivery Date. If, prior to
delivery of the initial Lease Supplement, an Event of Loss occurs with respect
to the Airframe initially contemplated to be sold by the Lessee to the Owner
Trustee as provided herein and to be leased under the Lease, the Lessee shall
have the right at any time up to and including the Cut-Off Date by written
notice to the Lessor and the Indenture Trustee to elect to substitute such
Airframe with another airframe (the "Pre-Delivery Replacement Airframe"),
provided, that the Pre-Delivery Replacement Airframe shall be a McDonnell
Douglas MD-11F airframe having a value, remaining useful life and utility at
least equal to the Airframe with respect to which such Event of Loss has
occurred. Upon the Lessee's election to replace the Airframe suffering an
Event of Loss with the Pre-Delivery Replacement Airframe, the Pre-Delivery
Replacement Airframe shall become the Airframe for purposes of the Operative
Agreements.
ARTICLE 3
PARTICIPATION IN INVESTMENT ON DELIVERY DATE;
DELIVERY OF AIRCRAFT
Section 3.01. Lessee's Notice of Delivery Date. The Lessee agrees
to give the Owner Participant, the Indenture Trustee, the Owner Trustee and
the Pass Through Trustee at least three (3) Business Days' written or
facsimile notice prior to the Delivery Date (which notice shall be effective
only if received not later than 10:00 a.m. (New York City time) on the date
that is at least three (3) Business Days prior to the Delivery Date), which
Delivery Notice shall specify the amount of the Purchase Price, the amount of
the Owner Participant's Commitment, the Debt Portion, the Delivery Date for
the Aircraft, the serial number of the Airframe and each Engine, and the
Aeronautics Authority registration number for the Aircraft.
Section 3.02. Commitments to Participate in Purchase Price. (a)
Participation in Purchase Price. Subject to the terms and conditions of this
Agreement, on the Delivery Date, (i) subject to the proviso to this Section
3.02(a), the Indenture Trustee agrees to release the Debt Portion or such
lesser amount as may then be held in the Collateral Account together with the
Lessee Shortfall (as defined in clause (iii) below), if any, to the Owner
Trustee for application to the Purchase Price as provided below, (ii) unless
previously transferred on the Transfer Date, 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 in Ancillary Agreement I, (iii)
subject to the proviso to this Section 3.02(a), the Lessee agrees to pay to
the Indenture Trustee the excess, if any, of (I) the Debt Portion over (II)
such amount as may then be held in the Collateral Account (the "Lessee
Shortfall") as provided in Section 17.02(a) hereof, 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 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) by the Owner Trustee to the Lessee, an amount equal to the Purchase
Price, or such lesser amount referred to in the proviso to this Section
3.02(a), and (B) by the Indenture Trustee, on behalf of the Owner Trustee, if
the Indenture Trustee is so instructed by the Lessee, to one or more
Outstanding C Accounts, the excess (or a portion of the excess) of any amounts
then held in the Collateral Account over the Debt Portion; provided, however,
that if (1) the Delivery Date has been postponed, (2) the investments
contemplated by Section 2.14(b) of the Indenture have been made, (3) such
investments do not mature on the rescheduled Delivery Date and (4) the Lessee
elects not to break such investments, then the Indenture Trustee shall not
release amounts in the Collateral Account to the Owner Trustee and the Lessee
shall accept as payment of the Purchase Price by the Owner Trustee an amount
equal to the Owner Participant's Commitment and the Indenture Trustee shall
pay to the Lessee at the end of the applicable investment period referred to
in Section 2.14(b) of the Indenture an amount equal to the Debt Portion or such
lesser amount as may then be held in the Collateral Account. After the
Delivery Date, any amounts remaining in the Collateral Account shall secure
the Secured Obligations relating to any Series C Certificates outstanding
after the Delivery Date that are subject to prepayment on the Series C
Prepayment Date pursuant to Section 6.02(a)(viii) of the Indenture.
(b) 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.
(ii) Subject to the provisions of Section 3.03 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 the Cut-Off Date, whereupon the Owner
Participant's Commitment hereunder shall terminate. On such third Business
Day (or such earlier date) or the Cut-Off Date, as the case may be, or the
earliest practicable Business Day thereafter, the Owner Trustee shall return
the amounts held by it hereunder to the Owner Participant, provided that the
Owner Trustee shall have had a reasonable time to liquidate any Permitted
Investments it has been authorized to invest in pursuant to the preceding
paragraph and to obtain the proceeds therefrom in funds of the type originally
received, and the Lessee shall pay interest on such funds to the Owner
Participant at the full-term implicit lease rate (which rate shall not be less
than the Owner Participant's cost of funds), such interest to be payable for
the period from and including such Scheduled Delivery Date to but excluding
the date such funds are returned to the Owner Participant in accordance with
the terms hereof; provided that if any such funds are returned to the Owner
Participant after 2:00 p.m. (New York City time) on any such date, such funds
shall be deemed for purposes of this paragraph to have been returned on the
next succeeding Business Day.
The Lessee shall reimburse the Owner Trustee on demand for any loss
incurred by the Owner Trustee as a result of the investment of funds by the
Owner Trustee in accordance with the terms of this Section 3.02(b). Further,
the Lessee shall indemnify the Owner Trustee and hold it harmless from and
against any cost or expense the Owner Trustee may incur as a result of any
investment of funds or transfer of funds referred to herein in accordance with
the terms hereof. The Owner Trustee shall not be liable for failure to invest
such funds except as otherwise provided herein or for any losses incurred on
such investments except for any losses arising out of its own gross negligence
or willful misconduct.
Section 3.03. Postponement of Delivery Date. (a) If no Owner
Participant has committed to participate in the transactions contemplated to
occur on the Scheduled Delivery Date or if an 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 3.02
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. If no Owner Participant has committed to
participate or an Owner Participant shall for any reason fail or refuse to
make the full amount of its Commitment available in accordance with the terms
of Section 3.02 hereof on such postponed Delivery Date, the Lessee shall
endeavor during such period to identify another equity investor to whom it can
assign its Beneficial Interest. If the Lessee identifies an equity investor,
the Lessee shall assign its interest in the Lessor's Estate as provided above.
In case of any such conveyance (but subject to the satisfaction of the
conditions precedent specified herein), the Indenture Trustee shall release
the Debt Portion or such lesser amount as may then be held in the Collateral
Account for application to the payments contemplated in the last sentence of
Section 3.02(a) hereof, subject to the proviso to Section 3.02(a) hereof. For
the avoidance of doubt, it is understood and agreed that if for any reason
other than the failure of the Manufacturer to deliver the Aircraft, the Lessee
does not enter into the Lease Supplement with the Owner Trustee on or prior to
the Cut-Off Date, the Lessee, the Indenture Trustee and the Pass Through
Trustee agree that the Lessee shall purchase the Aircraft and assume all of
the obligations of the Owner Trustee under the Certificates upon satisfaction
of the requirements set forth in Section 4.02 hereof, as the same may be
modified by the provisions of Section 7.11 hereof and as otherwise necessary
to reflect a full recourse secured aircraft financing of the Lessee.
(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, there being no Owner Participant committed to
participate in the transactions contemplated to occur on the Delivery Date 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 3.02 hereof and
no transferee Owner Participant having been identified pursuant to Section
3.03(a) hereof), then, in such event, the Owner Trustee shall not purchase the
Aircraft from the Lessee, and subject to the last sentence of Section 3.03(a)
hereof 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 if the last sentence of Section 3.03(a) hereof does
not apply the Lessee shall provide, no later than the Cut-Off Date, notice of
prepayment to the Indenture Trustee and the Certificates shall be prepaid on
the 15th day following the Cut-Off Date as provided in Section 6.02(a)(vi) of
the Indenture and Section 17.02(c) hereof and provided further, that (i) the
Lessee's obligation to indemnify such parties to the extent provided in such
documents, shall not be diminished or modified in any respect and (ii) the
obligations of the Owner Trustee, the Indenture Trustee and the Lessee to
return funds and pay interest, costs, expenses and other amounts thereon or in
respect thereof as provided in Section 3.02 hereof shall continue.
(c) Optional Postponement. Without limiting the provisions of
Section 3.02(b) 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 3.03(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 3.04. Closing. The closing with respect to the purchase and
lease of the Aircraft on the Delivery Date shall take place at the offices of
Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017.
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent (Certificate Closing Date). The
obligations of the Owner Trustee, the 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 Certificate Closing
Date are subject to the fulfillment to the satisfaction of such party (or
waiver by such party), prior to or on the Certificate Closing Date, of the
following conditions precedent (it being understood that receipt by the Lessee
of any of the following documents shall not be a condition precedent to the
obligations of any party):
(a) Certificates. (i) On the Certificate Closing Date, there shall
have been duly issued and delivered by the Owner Trustee to the
Subordination Agent on behalf of the Pass Through Trustee for each Pass
Through Trust, against payment therefor, a Certificate, substantially in
the form set forth in Exhibit B to the Indenture, duly authenticated, dated
the Certificate Closing Date and registered in the name of the
Subordination Agent, in the principal amounts, Series and Maturity, bearing
the interest rate and the other economic terms specified in the Series
Supplements and otherwise as provided in Section 2.04 of the Indenture.
(ii) The Pass Through Certificates shall be registered under the Securities
Act, any applicable state securities laws shall have been complied with,
and the Pass Through Agreement shall have been qualified under the Trust
Indenture Act, and on the Certificate Closing Date, the "Certificates" (as
defined in each of the Related Indentures) have been duly issued and
delivered by the "Owner Trustee" (as defined in each of the Related
Indentures) to the Subordination Agent on behalf of the Pass Through
Trustee for each Pass Through Trust.
(b) Legal Investment. On the Certificate Closing Date, no fact or
condition shall exist under applicable laws or regulations, or
interpretations of any such laws or regulations by applicable regulatory
authorities, which, in the opinion of the Pass Through Trustee, the
Subordination Agent or the Indenture Trustee or their special counsel,
would make it illegal for the Initial 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 such Initial Owner Participant, the
Lessee, the Owner Trustee, the Pass Through Trustee, the Subordination
Agent or the Indenture Trustee, to participate in the transactions to be
consummated on the Certificate Closing Date; and no action or proceeding
shall have been instituted nor shall governmental action before any court,
governmental authority or agency be threatened which in the opinion of
counsel for the Indenture Trustee, the Subordination Agent or the Pass
Through Trustee is not frivolous, nor shall any order have been issued or
proposed to be issued by any court, or governmental authority or agency, as
of the Certificate Closing Date, to set aside, restrain, enjoin or prevent
the consummation of any of the transactions contemplated by this Agreement
or by any of the other Operative Agreements.
(c) Underwriters. The Underwriters shall have transferred the funds
specified in Section 2.01(a) hereof and all conditions thereunder shall
have been satisfied or waived.
(d) Documents. This Agreement and the following documents shall have
been duly authorized, executed and delivered by the respective party or
parties thereto, shall each be satisfactory in form and substance to the LC
Bank, the Lessee, the Owner Trustee, the Indenture Trustee and the Pass
Through Trustee (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 LC Bank, the Lessee, the Owner
Trustee, the Indenture Trustee, the Pass Through Trustee or the
Subordination Agent, as the case may be, of such documents shall have been
delivered to the LC Bank, the Lessee, the Indenture Trustee, the Pass
Through Trustee, the Subordination Agent and the Owner Trustee (provided
that the sole chattel-paper original of each of the Lease and each
Ancillary Agreement amendatory of the Lease, shall be delivered to the
Indenture Trustee):
(i) the Lease;
(ii) the Indenture;
(iii) the Trust Agreement;
(iv) the Intercreditor Agreement;
(v) the Liquidity Facility for each of the Pass Through Trusts for
the Series A Certificates and the Series B Certificates;
(vi) the Collateral Agreement; and
(vii) the Letter of Credit (the original of such document to be
delivered to the beneficiaries of the Letter of Credit only).
(e) Approvals. All approvals and consents of any trustees or
holders of any indebtedness or obligations of the Lessee, which in the
opinion of the Pass Through Trustee or the Indenture Trustee are required
in connection with any transaction contemplated by this Agreement, shall
have been duly obtained.
(f) Financing Statements. UCC financing statements covering all the
security interests (and other interests) intended to be created by or
pursuant to the Granting Clause of the Indenture shall have been executed
and delivered by the Owner Trustee, as debtor, and by the Indenture
Trustee, as secured party, for and on behalf of the Holders, and such
financing statements shall have been duly filed or duly submitted for
filing in the State of Connecticut, and all other actions shall have been
taken which, in the opinion of the Pass Through Trustee and the
Underwriters, are necessary to perfect and protect such security interests
and other interests.
(g) Corporate Documents. Except when such Person is the delivering
party, the LC Bank, the Owner Trustee, the Pass Through Trustee, the Lessee
and the Indenture Trustee (acting directly or by authorization to its
counsel) shall have received the following, in each case in form and
substance satisfactory to it:
(i) a copy of the certificate of incorporation and by-laws of the
Lessee, certified by the Secretary or an Assistant Secretary of the
Lessee as of the Certificate Closing Date, and a copy of the minutes
of the regular meeting of the board of directors of the Lessee,
certified as such as of the Certificate Closing Date by such
Secretary or Assistant Secretary, duly authorizing the lease by the
Lessee of the Aircraft under the Lease and the execution, delivery
and performance by the Lessee of this Agreement, the Lease, the Pass
Through Agreement, the Series Supplements, the other Operative
Agreements to which the Lessee is or is to be a party and each other
document to be executed and delivered by the Lessee in connection
with the transactions contemplated hereby;
(ii) a copy of the articles of association and by-laws and other
instruments of the Owner Trustee, certified by the Secretary or an
Assistant Secretary of the Owner Trustee as of the Certificate
Closing Date (or other like instruments satisfactory to the Lessee)
and 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;
(iii) 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 Certificate
Closing Date (or other like instruments satisfactory to the Lessee)
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;
(iv) 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
Certificate Closing Date (or other like instruments satisfactory to
the Lessee) 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;
(v) 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
Certificate Closing Date (or other like instruments satisfactory to
the Lessee) 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
(vi) such other documents, evidences, materials, and information
with respect to the Lessee, the Owner Trustee, the Indenture Trustee
and the Pass Through Trustee as the Indenture Trustee, the Pass
Through Trustee or the LC Bank may reasonably request in order to
establish the consummation of the transactions contemplated by this
Agreement.
(h) Officer's Certificate of Lessee. On the Certificate Closing
Date, the following statements shall be true, and the LC Bank, the Owner
Trustee, the Pass Through Trustee and the Indenture Trustee shall have
received a certificate signed by the Vice President and Treasurer or any
other duly authorized officer of the Lessee, dated the Certificate Closing
Date, stating that:
(i) the representations and warranties of the Lessee contained in
the Operative Agreements to which it is a party and in any
certificate delivered pursuant hereto or thereto are true and correct
on and as of the Certificate Closing Date as though made on and as of
such date (except to the extent that such representations and
warranties relate solely to an earlier date, in which case such
certificate shall state that such representations and warranties were
true and correct on and as of such earlier date);
(ii) except for the matters described (i) under "Legal
Proceedings" in the Lessee's Annual Report on Form 10-K for the
fiscal year ended May 31, 1997 (as updated by Note 7 to the financial
statements included in the Lessee's Quarterly Reports on Form 10-Q
for the fiscal quarters ended August 31, 1997, November 30, 1997 and
February 28, 1998), 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 financial
statements of the Lessee as of May 31, 1997 or the unaudited
consolidated financial statements of the Lessee as of February 28,
1998 and nothing has occurred which will, in the judgment of such
officer, materially adversely affect the ability of the Lessee to
carry on its business or to perform its obligations under this
Agreement and each other Operative Agreement to which it is or is to
be a party; and
(iii) no event has occurred and is continuing, or would result
from the purchase, sale, mortgage, or lease of the Aircraft, which
constitutes an Event of Loss (or event which with the passage of time
would become an Event of Loss) with respect to the Airframe or any
Engine, or a Default or an Event of Default under the Lease.
(i) Other Officer's Certificates. On the Certificate Closing Date,
the following statements shall be true, and the Lessee, the LC Bank, 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 LC Bank, the Pass Through
Trustee, the Subordination Agent and the Indenture Trustee), FSB and the
Indenture Trustee (in the case of the Lessee, the LC Bank, the Pass Through
Trustee, the Subordination Agent and the Owner Trustee), FSB and the Pass
Through Trustee (in the case of the Lessee, the LC Bank, the Indenture
Trustee, the Subordination Agent and the Owner Trustee), and FSB and the
Subordination Agent (in the case of the Lessee, the LC Bank, the Pass
Through Trustee, the Indenture Trustee and the Owner Trustee), signed by a
duly authorized officer of SSB and FSB, respectively, dated the Certificate
Closing 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 Certificate
Closing Date as though made on and as of such date (except to the
extent that such representations and warranties relate solely to an
earlier date, in which case such certificate shall state that such
representations and warranties were true and correct on and as of such
earlier date);
(ii) to the best of its knowledge, no event has occurred and is
continuing, which constitutes or which, but for the lapse of time or
the giving of notice, or both, would constitute, due to any action or
omission on the part of 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.
(j) Legal Opinions. The Underwriters, the Lessee, the Owner
Trustee, the Pass Through Trustee and the Indenture Trustee (acting
directly or by authorization to its special counsel) shall have received
from the following counsel their respective legal opinions in each case
satisfactory to the Underwriters, the Lessee, the Owner Trustee, the Pass
Through Trustee or the Indenture Trustee, as the case may be, as to scope
and substance (and covering such other matters as the recipient may
reasonably request) and dated the Certificate Closing Date:
(i) Karen M. Clayborne, Senior Vice President and General Counsel
of the Lessee, in the form of Exhibit A(1)(a)(i) hereto and addressed
to the Underwriters, the Owner Trustee, the Pass Through Trustee,
each Liquidity Provider and the Indenture Trustee;
(ii) Ray, Quinney & Nebeker, special counsel for the Indenture
Trustee, in the form of Exhibit A(2) hereto and addressed to the
Underwriters, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee, each Liquidity Provider and the Lessee;
(iii) Bingham Dana LLP, special counsel for the Owner Trustee, in
the form of Exhibit A(3)(i) hereto and addressed to the Underwriters,
the Indenture Trustee, the Owner Trustee, the Pass Through Trustee,
each Liquidity Provider and the Lessee;
(iv) Davis Polk & Wardwell, special counsel for the Lessee, in the
form of Exhibit A(1)(b)(i) hereto and addressed to the Underwriters,
the Indenture Trustee, the Owner Trustee, the Pass Through Trustee,
each Liquidity Provider and the Lessee;
(v) Ray, Quinney & Nebeker, special counsel for the Pass Through
Trustee and the Subordination Agent, in the form of Exhibit A(4)
hereto and addressed to the Underwriters, the Indenture Trustee, the
Owner Trustee, the Pass Through Trustee, each Liquidity Provider and
the Lessee; and
(vi) Ruediger Sass, General Counsel to the Liquidity Providers, in
the form of Exhibit A(5)(a) hereto, Ruediger Sass, General Counsel to
the LC Bank, in the form of Exhibit A(5)(b) hereto, Milbank, Tweed,
Hadley & McCloy, special counsel for the Liquidity Providers, in the
form of Exhibit A(5)(c) hereto, and Milbank, Tweed, Hadley & McCloy,
special counsel for the LC Bank in the form of Exhibit A(5)(d)
hereto, each addressed to the Pass Through Trustee, the Subordination
Agent, each Liquidity Provider and the Lessee.
(k) No Indenture Event of Default. No Indenture Event of Default or
Indenture Default has occurred and is continuing.
(l) Event of Default; Default; Event of Loss. No Default or Event
of Default under the Lease or Event of Loss or event, which with the
passage of time or if continued unremedied or unaltered would constitute an
Event of Loss, shall have occurred or be in existence.
(m) Other Agreements. The Lessee and the Pass Through Trustee shall
have entered into the Pass Through Agreement and the Series Supplements, all
conditions to the effectiveness of each thereof shall have been satisfied
or waived, and the Pass Through Certificates shall have been issued
pursuant to the Series Supplements. The Lessee and the Underwriters shall
have entered into the Underwriting Agreement, all conditions to the
effectiveness thereof shall have been satisfied or waived, and the Pass
Through Certificates shall have been delivered pursuant to the Underwriting
Agreement. All conditions to the effectiveness of each Liquidity Facility
shall have been satisfied or waived.
(n) Payment of Taxes. (A) All taxes, fees, charges, assessments,
costs and other expenses then due and payable in connection with the
execution, delivery, recording and filing of all financing statements
referred to in subparagraph (f) of this Section 4.01, or in connection with
the issuance of the Certificates shall have been duly paid or caused to be
paid in full; and (B) all sales or use taxes and duties related to the
consummation of the transactions contemplated by the Operative Agreements
on the Certificate Closing Date which are then due and payable shall have
been duly paid in full.
(o) Governmental Compliance. All appropriate action required to
have been taken by the FAA, the SEC, or any governmental or political
agency, subdivision or instrumentality of the United States, prior to the
Certificate Closing Date in connection with the transactions contemplated
by this Agreement shall have been taken, and all orders, permits, waivers,
authorizations, exemptions and approvals (collectively "permits") of such
entities required to be in effect on the Certificate Closing Date in
connection with the transactions contemplated by this Agreement shall have
been issued, and all such permits shall be in full force and effect on the
Certificate Closing Date.
(p) 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.
Section 4.02. Conditions Precedent (Delivery Date). Subject to the
last paragraph of this Section 4.02, 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 Delivery Date.
(b) Legal Investment. No change shall have occurred after the date
which is two days prior to the Certificate Closing Date in applicable laws
or regulations, or interpretations of any such laws or regulations by
applicable regulatory authorities, which, in the opinion of the Owner
Participant or its special counsel, the Pass Through Trustee, 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 transactions to be consummated on the
Delivery Date; and no action or proceeding shall have been instituted nor
shall governmental action before any court, governmental authority or
agency be threatened which in the opinion of counsel for the Owner
Participant, the Indenture Trustee, the Subordination Agent or the Pass
Through Trustee is not frivolous, nor shall any order have been issued or
proposed to be issued by any court, or governmental authority or agency, as
of the Delivery Date, to set aside, restrain, enjoin or prevent the
consummation of any of the transactions contemplated by this Agreement or
by any of the other Operative Agreements.
(c) Documents. The documents referred to in Section 4.01(d) hereof
shall each be in full force and effect and the following documents shall
have been duly authorized, executed and delivered by the respective party
or parties thereto, shall each be satisfactory in form and substance to the
LC Bank, 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 LC Bank, 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 LC
Bank, the Owner Participant, the Lessee, the Indenture Trustee, the Pass
Through Trustee and the Owner Trustee (provided that the sole chattel-paper
original of the amended and restated Lease (whether delivered on the
Transfer Date or the Delivery Date), the Lease Supplement and the Ancillary
Agreement I shall be delivered to the Indenture Trustee):
(i) this Agreement, as amended and restated as of the Delivery Date;
(ii) the Lease, as amended and restated as of the Delivery Date;
(iii) the Trust Agreement, as amended and restated as of the Delivery
Date;
(iv) the Indenture, as amended and restated as of the Delivery Date;
(v) the Lease Supplement covering the Aircraft, dated the Delivery
Date;
(vi) the Indenture and Security Agreement Supplement covering the
Aircraft, dated the Delivery Date;
(vii) in the case of the Owner Participant only, the Tax Indemnity
Agreement (unless delivered on the Transfer Date);
(viii) the Ancillary Agreement I;
(ix) the Invoice;
(x) the Bills of Sale;
(xi) the Purchase Agreement;
(xii) the Purchase Agreement Assignment;
(xiii) the Consent and Agreement and the Engine Consent and Agreement;
unless, in the case of each of the documents listed in clauses (i) through
(iv) above they shall have been amended and restated as of and delivered on
the Transfer Date.
(d) Legal Opinions. The Owner Participant, the Underwriters, the
Lessee, the Owner Trustee, the Pass Through Trustee and the Indenture
Trustee (acting directly or by authorization to its special counsel) shall
have received from the following counsel their respective legal opinions in
each case satisfactory to the Owner Participant, the Underwriters, the
Lessee, the Owner Trustee, the Pass Through Trustee or the Indenture
Trustee, as the case may be, as to scope and substance (and covering such
other matters as the recipient may reasonably request) and dated the
Delivery Date:
(i) Karen M. Clayborne, Senior Vice President and General Counsel
of the Lessee, in the form of Exhibit A(1)(a)(ii) hereto and
addressed to the Underwriters, the Owner Participant, the Owner
Trustee, the Pass Through Trustee, each Liquidity Provider and the
Indenture Trustee;
(ii) Davis Polk & Wardwell, special counsel for the Lessee, in the
form of Exhibit A(1)(b)(ii) hereto and addressed to the Underwriters,
the Owner Participant, the Indenture Trustee, the Owner Trustee, the
Pass Through Trustee, each Liquidity Provider and the Lessee;
(iii) Bingham Dana LLP, special counsel for the Owner Trustee, in
the form of Exhibit A(3)(ii) 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) special counsel for the Owner Participant, and in-house
counsel for the Owner Participant, each addressed to the
Underwriters, the Owner Participant, the Indenture Trustee, the Owner
Trustee, the Pass Through Trustee, each Liquidity Provider and the
Lessee;
(v) counsel for the 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;
(vi) counsel for the Engine Manufacturer, in the form of Exhibit
A(7) hereto and addressed to the Underwriters, the Owner Participant,
the Indenture Trustee, the Owner Trustee, the Pass Through Trustee,
each Liquidity Provider and the Lessee;
(vii) Daugherty, Fowler & Peregrin, special aviation counsel, in
the form of Exhibit A(8) hereto and addressed to the Underwriters,
the Owner Participant, the Indenture Trustee, the Owner Trustee, the
Pass Through Trustee, each Liquidity Provider and the Lessee; and
(viii) in the case of the Owner Participant only, special tax
counsel to the Owner Participant, addressed to the Owner Participant,
with respect to certain tax matters.
(e) Title, Airworthiness and Registration. On the Delivery Date, the
following statements shall be true, and the Owner Participant, the Indenture
Trustee, the Pass Through Trustee and the Owner Trustee shall have received
evidence from the Lessee reasonably satisfactory to the Owner Participant,
the Indenture Trustee, the Pass Through Trustee and the Owner Trustee to
the effect that:
(i) the Owner Trustee has good and marketable title (subject to
filing and recording of 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 amended and restated Lease and the
Lease Supplement covering the Aircraft, the amended and restated
Indenture and the Indenture and Security Agreement Supplement
covering the Aircraft and the amended and restated Trust Agreement
shall have been duly filed for recordation (or shall be in the
process of being so duly filed for recordation) with the Aeronautics
Authority pursuant to the Transportation Code; and
(iv) application to the Aeronautics Authority for registration of
the Aircraft in the name of the Owner Trustee shall have been duly
made and the Lessee shall have temporary or permanent authority to
operate the Aircraft.
(f) Financing Statements. (i) a form UCC-3 financing statement to
amend and restate each financing statement referred to in Section 4.01(f)
hereof 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 (ii) a UCC notice filing describing the Lease as a lease
shall have been executed and delivered by the Owner Trustee, as lessor, and
the Lessee, as lessee (which filing shall name the Indenture Trustee as
assignee of the Owner Trustee), and shall have been duly filed in the State
of Tennessee.
(g) Payments. The Owner Participant shall have made available its
Commitment to the Owner Trustee and the other payments contemplated by
Section 3.02 hereof shall have been made.
(h) Report of Aircraft Expert. The Owner Participant shall have
received a report prepared by BK Associates, Inc. addressed to the Owner
Participant (with an abbreviated report to the Lessee) which report shall
be in form and substance satisfactory to the Owner Participant.
(i) Insurance. Each of the Indenture Trustee, the Pass Through
Trustee, the Owner Trustee and the Owner Participant shall have received
such evidence as it deems appropriate, including, without limitation, an
independent insurance broker's report, together with certificates of
insurance from such broker, in form and substance satisfactory to the
Indenture Trustee, the Pass Through Trustee, the Owner Trustee and the
Owner Participant to establish that the insurance required by Article 13 of
the Lease is in effect.
(j) Payment of Taxes. (A) All taxes, fees, charges, assessments,
costs and other expenses then due and payable in connection with the
execution, delivery, recording and filing of all financing statements and
the documents and instruments referred to in subparagraphs (e) and (f) of
this Section 4.02, or in connection with the purchase of the Aircraft by
the Owner Trustee and the making by the Owner Participant of its equity
investment shall have been duly paid or caused to be paid in full; and (B)
all sales or use taxes and duties related to the consummation of the
transactions contemplated by the Operative Agreements on the Delivery Date
which are then due and payable shall have been duly paid in full.
(k) No Indenture Event of Default. No Indenture Event of Default or
Indenture Default has occurred and is continuing.
(l) Event of Default; Default; Event of Loss. No Default or Event
of Default under the Lease (assuming, for this purpose, that the provisions
of Article 16 of the Lease had become operative on the Certificate Closing
Date and not the Delivery Date) or Event of Loss or event, which with the
passage of time or if continued unremedied or unaltered would constitute an
Event of Loss, shall have occurred or be in existence.
(m) Governmental Compliance. All appropriate action required to
have been taken by the FAA, the SEC, or any governmental or political
agency, subdivision or instrumentality of the United States, prior to the
Delivery Date in connection with the transactions contemplated by this
Agreement shall have been taken, and all orders, permits, waivers,
authorizations, exemptions and approvals (collectively "permits") of such
entities required to be in effect on the Delivery Date in connection with
the transactions contemplated by this Agreement shall have been issued, and
all such permits shall be in full force and effect on the Delivery Date.
(n) Officer's Certificate of Lessee. On the Delivery Date, the
following statements shall be true, and the LC Bank, 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 (as updated by Note 7 to the financial
statements included in the Lessee's Quarterly Reports on Form 10-Q
for the fiscal quarters ended August 31, 1997, November 30, 1997 and
February 28, 1998), 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 financial
statements of the Lessee as of May 31, 1997 or the unaudited
consolidated financial statements of the Lessee as of February 28,
1998 and nothing has occurred which will, in the judgment of such
officer, materially adversely affect the ability of the Lessee to
carry on its business or to perform its obligations under this
Agreement and each other Operative Agreement to which it is or is to
be a party; and
(iii) no event has occurred and is continuing, or would result
from the purchase, sale, mortgage, or lease of the Aircraft, which
constitutes an Event of Loss (or event which with the passage of time
would become an Event of Loss) with respect to the Airframe or any
Engine, or a Default or an Event of Default under the Lease.
(o) Certificates of Owner Participant. (a) On the Delivery Date,
the LC Bank, the Owner Trustee, the Pass Through Trustee, the Lessee and
the Indenture Trustee (acting directly or by authorization to its counsel)
shall have received the following in form and substance satisfactory to it:
(i) a copy of the articles of incorporation and bylaws of the
Owner Participant, certified by the Secretary or an Assistant
Secretary of the Owner Participant as of the Delivery Date, and a
copy of the resolutions of the board of directors of the Owner
Participant, certified as such as of the Delivery Date by such
Secretary or an Assistant Secretary, authorizing the execution and
delivery by the Owner Participant of this Agreement, the Tax
Indemnity Agreement, the Trust Agreement and the other Operative
Agreements to which the Owner Participant is or is to be a party and
each other document to be executed and delivered by the Owner
Participant in connection with the transactions contemplated hereby.
(b) On the Delivery Date, the following statements shall be true,
and the LC Bank, the Lessee, the Pass Through Trustee, the Owner Trustee
and the Indenture Trustee shall have received a certificate from the Owner
Participant, signed by a duly authorized officer of the Owner Participant
dated the Delivery Date, stating that:
(i) the representations and warranties of the Owner Participant
contained in this Agreement, the Trust Agreement and any other
Operative Agreement (excluding the Tax Indemnity Agreement) to which
it is a party and in any certificate delivered pursuant hereto or
thereto, are true and correct on and as of the Delivery Date as
though made on and as of such date (except to the extent that such
representations and warranties relate solely to an earlier date, in
which case such certificate shall state that such representations and
warranties were true and correct on and as of such earlier date);
(ii) no Lessor's Liens attributable to the Owner Participant
exist; and
(iii) no event has occurred and is continuing which constitutes
or, with notice or lapse of time or both would constitute, due to any
action or omission on the part of the Owner Participant, an Indenture
Event of Default other than an Indenture Event of Default
attributable to a Lease Event of Default.
(p) Other Officer's Certificates. On the Delivery Date, the
following statements shall be true, and the LC Bank, 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 LC Bank, 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
LC Bank, 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 LC Bank, 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 LC Bank, 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.
(q) Release of Debt Portion. Except as set forth in the proviso to
Section 3.02(a) hereof, the Indenture Trustee shall have released the Debt
Portion from (or such lesser amount as may then be held in) the Collateral
Account.
(r) Outstanding C Accounts. Any amount withdrawn by the Indenture
Trustee from the Collateral Account and not used to pay the Debt Portion of
the Purchase Price of the Aircraft shall be deposited into one or more
Outstanding C Accounts.
(s) Officer's Certificate of Lessee Regarding Mandatory Economic
Terms and Mandatory Document Terms. On the Delivery Date, or if earlier,
the Transfer Date, in connection with the amendments contemplated by
Section 2.03(a) hereof, 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 or the Transfer Date, as the case may be, 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 or any Liquidity Provider and such
certification shall be true and correct.
Notwithstanding anything else to the contrary in this Section 4.02, 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
4.02(n) and (o) 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 4.03. Opinion of Special Aviation Counsel Upon Registration.
Promptly upon the registration of the Aircraft and the filing and, where
appropriate, recordation pursuant to the Transportation Code, of 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 amended and restated Trust
Agreement, the amended and restated Lease (with such Lease Supplement, the
amended and restated Indenture and such Indenture and Security Agreement
Supplement attached as exhibits), and the amended and restated Indenture (with
such Indenture and Security Agreement Supplement attached as an exhibit), and
(iii), subject to customary qualifications, the lack of any intervening
documents with respect to the Aircraft.
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations. The
Lessee's obligation to participate in the transactions contemplated hereby on
the Certificate Closing Date is subject to the conditions that, prior to or on
the Certificate Closing Date, the Lessee shall have received the certificates
and other documents which are referred to in, or the opinions to be addressed
to it under, as the case may be, paragraphs (d), (g)(ii)-(v), (i),
(j)(ii)-(vii) of Section 4.01 hereof and the Underwriters shall have made
available the amounts required to be paid by them pursuant to Section 2.01
hereof, and the Lessee's obligation to participate in the transactions
contemplated hereby on the Delivery Date is subject to the conditions that, on
or prior to the Delivery Date, the Lessee shall have received the documents
which are referred to in, or the opinions to be addressed to it under, as the
case may be, paragraphs (c) and (d)(ii)-(vii) of Section 4.02 hereof and the
Indenture Trustee shall have released the Debt Portion from (or such lesser
amount as may then be held in) the Collateral Account.
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties. The Lessee
represents and warrants to the Owner Participant, the Owner Trustee (in its
individual capacity and as Owner Trustee), the Pass Through Trustee (in its
individual capacity and as Pass Through Trustee), each Liquidity Provider and
the Indenture Trustee (in its individual capacity and as Indenture Trustee)
that, on the date hereof and as of the Certificate Closing Date and the
Delivery Date (unless any such representation is specifically made as of one
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 UCC) in Memphis, Tennessee, and is duly qualified
to do business as a foreign corporation and is in good standing in all
jurisdictions in which it has intrastate routes, or offices or major
overhaul facilities or in which other activities of the Lessee require such
qualification;
(b) the Lessee has full power, authority and legal right to conduct
its business and operations as currently conducted and to own or hold under
lease its Properties and to enter into and perform its obligations under
this Agreement, the other Operative Agreements to which it is a party, the
Pass Through Agreement and the Series Supplements (the "Lessee Documents");
(c) the Lessee is an "air carrier" within the meaning of the
Transportation Code and a holder of a certificate under Sections 41102(a)
and 41103 of the Transportation Code and a "citizen of the United States"
within the meaning of Section 40102(a)(15) of the Transportation Code
holding an "air carrier operating certificate" issued under Chapter 447 of
the Transportation Code for aircraft capable of carrying ten (10) or more
individuals or 6,000 pounds or more of cargo, and each such certificate is
in full force and effect;
(d) the Lessee possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents (collectively
"permits") which are material to the operation of the routes flown by it
and the conduct of its business and operations as currently conducted and
each such permit is in full force and effect;
(e) the execution, delivery and performance of the Lessee Documents
by the Lessee have been duly authorized by all necessary corporate action
on the part of the Lessee and do not require any stockholder approval, or
approval or consent of any trustee or holder of any indebtedness or
obligations of the Lessee, and each such document has been duly executed
and delivered or, in the case of the Operative Agreements identified in
Section 4.02(c) hereof, will on the Delivery Date be executed and delivered
by the Lessee and constitutes (or will constitute, as the case may be) the
legal, valid and binding obligations of the Lessee enforceable against it
in accordance with the terms thereof except as such enforceability may be
limited by bankruptcy, insolvency, moratorium, reorganization or other
similar laws or equitable principles of general application to or affecting
the enforcement of creditors' rights generally (regardless of whether
enforceability is considered in a proceeding in equity or at law);
(f) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body (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
4.02(d)(iii) and 4.03 hereof and except for the filings referred to in
Sections 4.01(f) and 4.02(f) hereof, all of which shall have been duly
obtained or made and shall be in full force and effect on and as of the
Certificate Closing Date or the Delivery Date, or as contemplated by said
Sections;
(g) neither the execution, delivery or performance by the Lessee of
the Lessee Documents nor compliance with the terms and provisions hereof or
thereof, conflicts or will conflict with or results or will result in a
breach or violation of any of the terms, conditions or provisions of, or
will require any consent (other than the Consent and Agreement and the
Engine Consent and Agreement which will be executed on or prior to the
Delivery Date) 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 (as updated by Note 7 to the financial statements
included in the Lessee's Quarterly Reports on Form 10-Q for the fiscal
quarters ended August 31, 1997, November 30, 1997 and February 28, 1998),
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 has filed or caused to be filed all tax returns which
are required to be filed and has paid or caused to be paid all taxes shown
to be due and payable pursuant to such returns or pursuant to any
assessment received by the Lessee (other than assessments the payment of
which is being contested in good faith by the Lessee), and the Lessee has
no knowledge of any related actual or proposed deficiency or additional
assessment which either in any case or in the aggregate would materially
adversely affect the Lessee's consolidated financial condition (other than,
in any such case, assessments, the payment of which is being contested in
good faith by the Lessee, as to which no representation is made concerning
the Lessee's liability (if any) or the effect of any adverse determination
upon the Lessee's consolidated financial condition);
(j) except for (A) the registration in the Owner Trustee's name of
the Aircraft pursuant to the Transportation Code to be accomplished by
filing with the FAA, of 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 Sections 4.01(f) and
4.02(f) hereof and (D)(x) on the Certificate Closing Date, the taking of
possession by the Indenture Trustee of the Liquid Collateral and
maintaining possession by the Indenture Trustee thereof as contemplated in
Section 2.14(a) of the Indenture and (y) on the Delivery Date, the taking
of possession by the Indenture Trustee of the original counterpart of the
Lease and the Lease Supplement covering the Aircraft, no further action,
including any filing or recording of any document, is necessary or
advisable in order (i) to establish the Owner Trustee's title to and
interest in the Aircraft and the Lessor's Estate as against the Lessee and
any third parties, or (ii) to perfect the first security interest in and
mortgage Lien on the Trust Indenture Estate in favor of the Indenture
Trustee;
(k) on the Delivery Date, the Owner Trustee has received good and
marketable title to the Aircraft, free and clear of all Liens, except the
rights of the Lessee under the Lease and the Lease Supplement, the rights
of the Indenture Trustee under the Indenture and the beneficial interest of
the Owner Participant created by the Trust Agreement;
(l) the Lessee has heretofore delivered to the Owner Participant
true and correct copies of the Lessee's Annual Report on Form 10-K for the
fiscal year ended May 31, 1997 and its Quarterly Reports on Form 10-Q for
the fiscal quarters ended August 31, 1997, November 30, 1997 and February
28, 1998, and of the audited consolidated balance sheet of the Lessee for
the fiscal year ended May 31, 1997 and the unaudited consolidated balance
sheets of the Lessee as of August 31, 1997, November 30, 1997 and February
28, 1998, and the related consolidated statements of income, changes in
common stockholders' investment and cash flows for the fiscal year and
interim reporting periods ended on such dates, accompanied (except in the
case of such interim reporting periods) by a report thereon containing
opinions without qualification, except as therein noted, by Arthur Andersen
LLP, independent public accountants; said financial statements have been
prepared in accordance with generally accepted accounting principles
consistently applied and present fairly the financial position of the
Lessee as of such dates and the results of its operations and cash flows
for such periods and such Annual Report, Quarterly Reports and financial
statements did not, as of their respective dates of filing with the SEC,
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein not misleading;
(m) with respect to ERISA:
(i) none of the Pension Plans (as defined at the end of this
Section 6.01(m)) nor their related trusts have been terminated in a
distress termination pursuant to Section 4041(c) of ERISA or by the
Pension Benefit Guaranty Corporation (together with any successor
agency or instrumentality thereto, the "PBGC") pursuant to Section
4042 of ERISA, nor have any actions been taken to so terminate any
Pension Plan or related trust and neither the Lessee nor any ERISA
Affiliate (as defined at the end of this Section 6.01(m)) has
incurred or could reasonably be expected to incur any material
liability with respect to a Pension Plan under Section 4062, 4063,
4064 or 4069 of ERISA;
(ii) there have been no "reportable events" (as such term is
defined in Section 4043(b) of ERISA) with respect to any Pension Plan
which have resulted or could reasonably be expected to result in any
material liability of the Lessee or any ERISA Affiliate;
(iii) no "accumulated funding deficiency" (as such term is defined
in Section 302 of ERISA or Section 412 of the Code) exists with
respect to any Pension Plan, whether or not waived, nor has any
request for a waiver under Section 412(d) of the Code been, or is
reasonably likely to be, filed with respect to any of the Pension
Plans;
(iv) neither the Lessee nor any ERISA Affiliate has failed to make
any contribution or payment to any Pension Plan which has resulted or
could reasonably be expected to result in the imposition of a Lien
under Section 302(f) of ERISA or Section 412(n) of the Code;
(v) all Pension Plans are in compliance in all material respects
with all applicable provisions of ERISA and the Code;
(vi) neither the Lessee nor any ERISA Affiliate has incurred or is
reasonably likely to incur any material withdrawal liability pursuant
to Section 4201 or 4204 of ERISA or any material liability under
Section 515 of ERISA;
(vii) to the best of the Lessee's knowledge, neither the Lessee
nor any ERISA Affiliate has engaged in a "prohibited transaction"
(within the meaning of Section 4975 of the Code or Section 406 of
ERISA) which could reasonably be expected to subject the Lessee to
the tax or penalties on prohibited transactions imposed by Section
4975 of the Code or Section 502 of ERISA; and
(viii) assuming the truth of the representations contained in
Section 7.03(a)(viii) hereof and compliance with Section 10.06 of the
Indenture, the execution and delivery of this Agreement and the other
Operative Agreements and the consummation of the transactions
contemplated hereby and thereby will not involve any transaction
which is prohibited by Section 406 of ERISA or in connection with
which a tax could be imposed pursuant to Section 4975 of the Code.
No part of the funds to be used by the Lessee in satisfaction of its
obligations under this Agreement or any other of the Operative
Agreements to which the Lessee is a party or to which the Lessee is
bound are the assets of any employee benefit plan subject to Title I
of ERISA, or any individual retirement account or an employee benefit
plan subject to Section 4975 of the Code;
as used in this Section 6.01(m), the term "Pension Plan" means an employee
pension benefit plan as defined in Section 3(2) of ERISA (other than a
multiemployer plan as defined in Section 4001(a)(3) of ERISA) which is
covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code and which is maintained, or contributed to,
by the Lessee or any ERISA Affiliate, and the term "ERISA Affiliate" means
any entity which together with the Lessee would be treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code;
(n) the Lessee is a Citizen of the United States;
(o) except for the filings referred to in Sections 4.01(f), 4.02(e)
and 4.02(f) hereof, no governmental approval of any kind is required of the
Owner Participant or for the Owner Participant's execution of or
performance under this Agreement or any agreement contemplated hereby by
reason of any fact or circumstance of the Lessee, the nature of the
Aircraft or the Lessee's proposed operations or use of the Aircraft;
(p) on the Delivery Date, all premiums with respect to the insurance
required to be provided by the Lessee on or prior to the Delivery Date
under Article 13 of the Lease have been paid by the Lessee;
(q) on the Delivery Date, all sales or use taxes relating to the
sale of the Aircraft by the Lessee to the Owner Trustee which are then or
were theretofore due shall have been paid;
(r) the Lessee is not in default under any mortgage, deed of trust,
indenture, lease or other instrument or agreement to which the Lessee is a
party or by which it or any of its Properties or assets may be bound, or in
violation of any applicable law, which default or violation would have a
material adverse effect on the financial condition, business or operations
of the Lessee or its ability to perform any of its obligations under the
Lessee Documents;
(s) no Default or Event of Default or Event of Loss or event, which
with the passage of time or if continued unremedied or unaltered would
constitute an Event of Loss, has occurred or exists;
(t) on the Delivery Date, the Aircraft will be in such condition so
as to enable the airworthiness certificate of such Aircraft to be in good
standing under the Transportation Code; the Aircraft will have been duly
certificated by the FAA as to type and airworthiness; there will be in
effect with respect to the Aircraft a current and valid airworthiness
certificate issued by the FAA pursuant to the Transportation Code; and
there is no fact known to the Lessee which materially adversely affects the
value, utility or condition of the Aircraft;
(u) on the Certificate Closing Date and the Delivery Date, the
Lessee shall not be in default in the performance of any term or condition
of the Purchase Agreement or the Purchase Agreement Assignment and the
aggregate amount of loans shall not exceed the Debt Portion;
(v) neither the Lessee nor any subsidiary of the Lessee is an
"investment company" or a company "controlled by an investment company"
within the meaning of the Investment Company Act of 1940, as amended;
(w) 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; and
(x) 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.
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 50 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 Purchase Agreement, the Purchase
Agreement 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 take, or
cause to be taken, at the Lessee's cost and expense, such action with
respect to the recording, filing, re-recording and re-filing of the
Indenture, each Indenture and Security Agreement Supplement, the Lease,
each Lease Supplement and any financing statements or other instruments as
may be necessary, or as requested by the Indenture Trustee and appropriate,
to maintain the perfection of the first security interest and the Lien
created by the Indenture, and the Owner Trustee's title to and interest in
the Aircraft and the Lessor's Estate as against the Lessee and any third
parties, or if the Lessee cannot take, or cause to be taken, such action,
will furnish to the Indenture Trustee and the Owner Trustee timely notice
of the necessity of such action, together with such instruments, in
execution form, and such other information as may be required to enable
either of them to take such action at the Lessee's cost and expense in a
timely manner.
(b) From and after the Delivery Date, the Lessee shall maintain the
certificates referred to in Section 7.01 of the Lease and shall cause the
Aircraft to be duly registered, and at all times to remain duly registered,
in the name of the Owner Trustee, under the Transportation Code; provided,
however, that the Owner Participant, the Owner Trustee and the Indenture
Trustee agree that, so long as no Default or Event of Default shall have
occurred and be continuing, if at any time after 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 in which a sublessee could be located under the
provisions of Section 7.02(a)(i) of the Lease with which the United States
then maintains normal and full diplomatic relations, upon receipt by the
Owner Participant, the Owner Trustee and the Indenture Trustee of the
assurances and opinion described below, none of them shall unreasonably
withhold their consent to such change in registration (it being agreed,
without limitation, that the inability of the Lessee to deliver such
assurances or such opinion shall constitute reasonable grounds to withhold
such consent).
As a condition to any change in the registration of the Aircraft, the
Owner Participant, the Owner Trustee in its individual and trust capacities,
and the Indenture Trustee shall have received:
(i) assurances satisfactory to them:
(A) to the effect that the insurance provisions of the Lease have
been and will be complied with and are and shall be in full force and
effect upon such change of registry;
(B) as to the continuation of the Lien of the Indenture as a
first priority, duly perfected Lien on the Aircraft;
(C) that the Owner Trustee's right, title and interest in and to
the Aircraft is recognized and fully enforceable in the new
jurisdiction of registry, that the rights of the Owner Trustee in and
to the Aircraft will not be impaired in such new jurisdiction of
registry and that the new jurisdiction of registry will give effect
to the title and registry of the Aircraft therein substantially to
the same extent as does the Government;
(D) that such new country of registry (x) would provide
substantially equivalent protection for the rights of owner
participants, lessors or lenders in similar transactions as provided
under United States law (except that, in the absence of restrictions
under the laws of such country on rights and remedies of lessors and
secured parties similar to those imposed by Sections 362 and 363 of
the Bankruptcy Code, rights and remedies similar to those available
under Section 1110 of the Bankruptcy Code shall not be required), and
(y)(i) if such change in registration is made other than in
connection with a sublease, imposes maintenance standards at least
comparable to those of the FAA, and (ii) if such change in
registration is made in connection with a sublease permitted under
Section 7.02(a)(i) of the Lease, imposes maintenance standards in
conformity with those set forth in Section 7.02(a)(i) of the Lease;
(E) that import and export certificates and any exchange permits
necessary to allow all Rent and other payments provided for under the
Lease, if required, shall have been procured at the Lessee's own cost
and expense by the Lessee;
(F) that the Lessee shall have effected or caused to be effected
at the Lessee's own cost and expense all recordings and filings that
are required to perfect the Lien of the Indenture;
(G) to the effect that the original indemnities (and any additional
indemnities for which the Lessee is then willing to enter into a
binding agreement to indemnify) in favor of the Owner Participant,
the Owner Trustee (in its individual capacity and as trustee under
the Trust Agreement), the Indenture Trustee (in its individual
capacity, and as trustee under the Indenture), the Pass Through
Trustee (in its individual capacity, and as trustee under the Pass
Through Agreement) and the other Indemnitees under this Agreement,
the Indenture, the Pass Through Agreement and (in the case of the
Owner Participant only) the Tax Indemnity Agreement, afford each such
party substantially the same protection as provided prior to such
change of registry;
(H) that such change will not result in the imposition of, or
increase in the amount of, any Tax for which the Lessee has not
agreed to indemnify the Owner Participant, the Indenture Trustee, the
Pass Through Trustee, the Owner Trustee (or any successor, assign or
Affiliate thereof) and the Trust Estate;
(I) that any value added tax, customs duty, tariff or similar
governmental charge relating to the change in jurisdiction of
registration of the Aircraft shall have been paid in full or
adequately provided for by the Lessee to the satisfaction of the
Owner Trustee, the Indenture Trustee and the Owner Participant;
(J) of the payment by the Lessee of any reasonable fees and
expenses of the Owner Participant, the Owner Trustee, the Indenture
Trustee and the Pass Through Trustee in connection with such change
of registry, including any reasonable attorneys' fees and expenses;
and
(K) that duties and tariffs, if applicable, shall have been paid
for by the Lessee;
(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)(D)(x) of this Section 6.03) in respect of the
transactions contemplated hereby, including, without limitation, the
remedies provided in the Indenture and the Lease;
(D) that there is no tort liability of the beneficial owner,
record owner, lessor or mortgagee of an aircraft not in possession
thereof under the laws of such jurisdiction, other than tort
liability which might have been imposed on such owner, lessor or
mortgagee under the laws of the United States or any state thereof
(it being understood that, in the event such latter opinion cannot be
given in a form satisfactory to the Owner Participant and the
Indenture Trustee, such opinion shall be waived, if insurance
reasonably satisfactory to the Owner Participant, the Indenture
Trustee and the Owner Trustee, in its individual capacity, is
provided, at the Lessee's expense, to cover such risk and the Lessee
undertakes to keep such insurance in full force and effect);
(E) that the laws of such jurisdiction will not impair the rights
of the Lessor in and to the Aircraft and (unless the Lessee shall
have agreed to provide insurance reasonably satisfactory to the
Indenture Trustee and the Owner Participant covering the risk of
requisition of use of the Aircraft by the government of registry of
the Aircraft) require fair compensation by the government of such
jurisdiction payable in currency freely convertible into United
States dollars for the loss of use of the Aircraft in the event of
such requisition;
(F) that the Owner Trustee's title to the Aircraft is recognized
and fully enforceable in such jurisdiction, that such jurisdiction
will give effect to the title of the Aircraft therein substantially
to the same extent as does the Government, and that the Lien of the
Indenture shall continue as a first priority, duly perfected lien on
the Aircraft; and
(G) to such further effect with respect to such other matters as
the Owner Participant, the Owner Trustee, or the Indenture Trustee may
reasonably request.
If following any reregistration of the Aircraft, the Aircraft is
located outside the United States, the Lessee shall have thirty (30) days to
relocate the Aircraft within the United States and, if unable to do so, shall
pay the reasonable incremental out-of-pocket costs of the Lessor, the Owner
Participant or their authorized representatives incurred in connection with
any inspection or appraisal required or permitted under the Operative
Agreements. Such obligation shall apply only with respect to one inspection
or appraisal in any calendar year unless an Event of Default shall have
occurred and be continuing.
(c) The Lessee shall promptly file any reports, or furnish to the
Owner Trustee and the Owner Participant such information as may be required
to enable the Owner Trustee and the Owner Participant timely to file any
reports required to be filed by the Owner Trustee as the Lessor and the
Owner Participant under the Lease with any governmental authority.
(d) The Lessee will cause the Special Aviation Counsel to file, and
where appropriate record, on the Delivery Date, the FAA Bill of Sale, the
Lease, the Lease Supplement, the Trust Agreement, the Indenture and the
Indenture and Security Agreement Supplement. The following documents shall
be filed and, where appropriate, recorded on the Delivery Date with the
Aeronautics Authority in the following order of priority: first, the FAA
Bill of Sale, second, the Application, with the Trust Agreement and the
Affidavits, third, the Indenture with the Indenture and Security Agreement
Supplement attached thereto, and fourth, the Lease with the Lease
Supplement, the Indenture and the Indenture and Security Agreement
Supplement attached thereto.
(e) The Lessee will furnish to the Owner Participant, the Owner
Trustee and the Indenture Trustee annually after the execution of this
Agreement, by March 15 of each year, commencing with the year 1999, 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.
(g) The Lessee shall not enter into any merger or consolidation, or
convey, transfer or lease all or substantially all of its assets as an
entirety to any Person, unless the surviving corporation or Person which
acquires by conveyance, transfer or lease all or substantially all of the
assets of the Lessee as an entirety (i) is a domestic corporation organized
and existing under the laws of the United States or a political subdivision
thereof, (ii) is a Citizen of the United States, (iii) is a U.S. Air
Carrier, (iv) expressly assumes by an instrument in writing in form and
substance satisfactory to the Indenture Trustee, the Owner Participant and
the Owner Trustee all of the Lessee's obligations hereunder and under the
other Operative Agreements, and each other document contemplated hereby or
thereby and the Lessee delivers such instrument to the Indenture Trustee,
the Owner Participant and the Owner Trustee, (v) provides an opinion from
outside counsel to the Lessee which counsel shall be reasonably
satisfactory to the Owner Participant and the Indenture Trustee and which
opinion shall be reasonably satisfactory to the Owner Participant and the
Indenture Trustee, and an officer's certificate, each stating that such
merger, consolidation, conveyance, transfer or lease and the instrument
noted in clause (iv) above comply with this Section 6.03(g), that such
instrument is a legal, valid and binding obligation of, and is enforceable
against, such survivor or Person, and that all conditions precedent herein
provided for relating to such transaction have been complied with, and (vi)
immediately after such merger, consolidation or conveyance, transfer or
lease, as the case may be, the surviving company is in compliance with all
of the terms and conditions of this Agreement and the Lease and each other
Operative Agreement and each other document contemplated hereby or thereby;
provided that no such merger, consolidation or conveyance, transfer or
lease shall be permitted if the same gives rise to an Event of Default.
Upon any consolidation or merger, or any conveyance, transfer or
lease of all or substantially all of the assets of the Lessee and the
satisfaction of the conditions specified in this Section 6.03(g), the
successor corporation formed by such consolidation or into which the Lessee
is merged or the Person to which such conveyance, transfer or lease is made
shall succeed to, and be substituted for, and may exercise every right and
power of, the Lessee under this Agreement and the Lease and each other
Operative Agreement and any other document contemplated hereby and thereby
to which the Lessee is a party with the same effect as if such successor
corporation had been named as the Lessee herein and therein. No such
conveyance, transfer or lease of all or substantially all of the assets of
the Lessee as an entirety shall have the effect of releasing the Lessee or
any successor corporation which shall theretofore have become such in the
manner prescribed in this Section 6.03(g) from its liability hereunder or
under the other Operative Agreements. Nothing contained herein shall
permit any lease, sublease, or other arrangement for the use, operation or
possession of the Aircraft except in compliance with the applicable
provisions of the Lease.
(h) The Lessee agrees to give prompt written notice to the Owner
Participant 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 UCC) or of any change in its corporate name.
(i) The Lessee agrees to furnish to the Owner Participant, the
Lessor and the Indenture Trustee:
(A) as soon as available, but in any event within one hundred
twenty (120) days after the end of each fiscal year of the Lessee, a
consolidated balance sheet as of the end of such fiscal year, and the
related consolidated statements of income, common stockholders'
equity, retained earnings and cash flows of the Lessee for the fiscal
year then ended as prepared and certified by the Lessee's independent
certified public accountants, including their opinion;
(B) within sixty (60) days after the end of the first, second and
third quarterly accounting periods in each fiscal year of the Lessee,
a consolidated balance sheet of the Lessee prepared by it as of the
close of the accounting period then ended, together with the related
consolidated statements of income, retained earnings and cash flows
for such accounting period certified by the chief accounting officer
or a financial vice president of the Lessee;
(C) promptly upon their general transmission, copies of all
regular and periodic reports furnished by the Lessee to its
stockholders;
(D) promptly after filing with the SEC, copies of the Lessee's
Annual Reports on Form 10-K (including all corresponding annual
reports to shareholders), Quarterly Reports on Form 10-Q and, if
requested, any registration statement or prospectus filed by the
Lessee with any securities exchange or with the SEC;
(E) promptly upon (and in any event within five (5) Business Days
after) any 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 Pass Through Trustee and the Indenture Trustee a certificate
of the Lessee, signed by any one of the President, the Chief Financial
Officer, the General Counsel, the Treasurer or the principal accounting
officer of the Lessee, stating that the signer, or an employee reporting to
same, is familiar with the relevant terms of this Agreement and the Lease and
the signer has reviewed, or has caused to be made under such Person's
supervision a review of, the activities of the Lessee and that, to the best of
his or her knowledge, there does not exist any Default or any Event of Default
or if a Default or an Event of Default exists or did exist, specifying the
nature thereof, the period of existence thereof and what action the Lessee has
taken or proposes to take with respect thereto.
Section 6.04. Survival of Representations and Warranties. The
representations and warranties of the Lessee provided in Sections 6.01 and 6.02
hereof and in any other Operative Agreement shall survive the Closings
hereunder and the expiration or other termination of this Agreement and the
other Operative Agreements.
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in Lessor's
Estate. (a) [Reserved.]
(b) Owner Participant (other than Initial Owner Participant). The
Owner Participant represents and warrants that its interest in the Lessor's
Estate and the Trust Agreement was acquired by it for its own account and not
with a view to resale or distribution thereof; provided, however, that the
disposition by the Owner Participant of its interest in the Lessor's Estate
and the Trust Agreement shall, subject to the terms and provisions of Article
5 of the Trust Agreement, at all times be within its control and the foregoing
representation shall not limit the Owner Participant's right to transfer or
sell such interests pursuant to the terms of this Agreement. The Owner
Participant nor anyone else authorized to act on its behalf has directly or
indirectly offered any interest in the Lessor's Estate or the Trust Agreement,
or in any similar security, for sale to, or solicited any offer to acquire any
of the same from, anyone. The Owner Participant further represents and
warrants that neither it nor anyone authorized to act on its behalf has made
or will make any offer, solicitation or sale of any interest in the Lessor's
Estate or the Trust Agreement in violation of the provisions of Section 5 of
the Securities Act of 1933, as amended. No representation in this Section
7.01(b) shall include any action or inaction of the Lessee, First Chicago
Leasing Corporation, the Subordination Agent, the Underwriters or any
Affiliate of any thereof whether or not purportedly on behalf of the Owner
Trustee, the Owner Participant or any of their Affiliates.
(c) Owner Trustee. The Owner Trustee represents and warrants, both
in its individual capacity and as trustee, that neither it nor anyone acting
on its behalf (i) has directly or indirectly offered or will directly or
indirectly offer any interest in the Lessor's Estate, or in any similar
security, for sale to, or solicited any offer to acquire any of the same from
anyone (other than the Owner Participant) and (ii) 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 Owner Trustee, and the Owner
Participant severally represents and warrants that it is or will be a Citizen
of the United States on the Delivery Date. If the Owner Participant or the
Owner Trustee in its individual capacity does not comply with the requirements
of this Section 7.02, the Owner Trustee, the Indenture Trustee and the Owner
Participant hereby agree that a Default or an Event of Default shall not be
deemed to have occurred and be continuing under the Lease due to
non-compliance by the Lessee with the registration requirements in the Lease
occasioned by the noncompliance of the Owner Participant or the Owner Trustee.
(b) Owner Trustee. The Owner Trustee, in its individual capacity,
covenants that if at any time it shall have actual knowledge that it has
ceased to be a Citizen of the United States, it will resign immediately as the
Owner Trustee if such citizenship is necessary under the Transportation Code
as in effect at such time or, if it is not necessary under the Transportation
Code as in effect at such time, if it is informed in writing by the Lessee,
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 when the Aircraft is registered or the
Lessee proposes to register the Aircraft in the United States (i) it shall
cease to be, or believes itself likely 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 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 15 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 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 and to each Holder any damages actually suffered
by any such other party or Holder as the result of the representation and
warranty of the Owner Participant in the first sentence of Section 7.02(a)
hereof proving to be untrue as of the Delivery Date; and (B) to the Lessee, the
Indenture Trustee and the Pass Through Trustee for any damages actually
incurred by the Lessee, the Indenture Trustee and the Pass Through Trustee as
a result of the Owner Participant's failure to comply with its obligations
pursuant to the first sentence of this Section 7.02(c). 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).
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 (other than the Initial Owner
Participant) represents and warrants as of the Delivery Date that:
(i) it is a corporation duly incorporated and validly existing in
good standing under the laws of the state of its jurisdiction and it has
full 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 bylaws, as amended, of the Owner
Participant or any order, writ, injunction or decree of any court or
governmental authority against the Owner Participant or by which it or any
of its Properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which the Owner Participant is a party or by
which it or any of its Properties is bound, or constitutes or will
constitute a default thereunder or results or will result in the imposition
of any Lien upon any of its Properties;
(iv) this Agreement, the Tax Indemnity Agreement, 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) to the best of its knowledge, 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 is not a tax resident of another country; and
(x) it has a consolidated tangible net worth of not less than
$75,000,000.
Notwithstanding the foregoing or anything else contained in this
Agreement, the Owner Participant makes no representation or warranty in this
Agreement with respect to laws, rules or regulations relating to aviation or
to the nature or use of the equipment owned by the Owner Trustee, 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 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) Indemnity for Lessor's Liens. The Owner Participant agrees to
indemnify and hold harmless the Lessee, the Indenture Trustee and the Pass
Through Trustee from and against any loss, cost, expense or damage which may
be suffered by the Lessee, the Indenture Trustee or the Pass Through Trustee
as the result of the failure of the Owner Participant to discharge and satisfy
any Lessor's Liens attributable to the Owner Participant (or an Affiliate
thereof) and required to be discharged as described in Section 7.03(b) hereof.
(d) Assignment of Interests of Owner Participant. The Owner
Participant agrees that it will not assign, convey or otherwise transfer any
of its right, title or interest in and to the Operative Agreements or the
Lessor's Estate except in accordance with the provisions of Article 5 of the
Trust Agreement, as in effect on the date hereof or as amended in accordance
with the terms of the Operative Agreements.
(e) Actions with Respect to Lessor's Estate, Etc. The Owner
Participant agrees that it will not take any action to subject the Lessor's
Estate or the trust established by the Trust Agreement, as debtor, to the
reorganization or liquidation provisions of the Bankruptcy Code or any other
applicable bankruptcy or insolvency statute.
Section 7.04. Representations, Covenants and Warranties of 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) on the date hereof and as of the
Certificate Closing Date and the Delivery Date that:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America
with its principal place of business and chief executive office (as such
terms are used in Article 9 of the UCC) at 225 Asylum Street, Goodwin
Square, Hartford, Connecticut 06103, Attention: Corporate/Muni
Administration 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 Initial Owner Participant) as the
Owner Trustee, as the case may be, to carry on its business as now
conducted, and to execute, deliver and perform this Agreement and the
Operative Agreements to which it is or is to be a party;
(ii) the execution, delivery and performance by 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, and has been duly executed and delivered
or, in the case of the Operative Agreements identified in Section 4.02(c)
hereof, will on the Delivery Date be duly executed and delivered by 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 Certificate Closing Date, the proceeds arising from the
issuance and sale of the Certificates shall be free of Lessor's Liens
attributable to SSB in its individual capacity and on the Delivery Date the
Owner Trustee shall be holding whatever title to the Aircraft as was
conveyed to it by 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 Certificate Closing Date or the Delivery Date. The
Owner Trustee, in its trust capacity, and at the cost and expense of the
Lessee, covenants that it will in its trust capacity promptly, and in any
event within 30 days after the same shall first become known to it, take such
action as may be necessary to discharge duly any Lessor's Liens attributable
to it in its trust capacity. 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) Securities Act. None of SSB, the Owner Trustee or any Person
authorized by either of them to act on its behalf has directly or indirectly
offered or sold or will directly or indirectly offer or sell any interest in
the Lessor's Estate, or in any similar security relating to the Lessor's
Estate, or in any security the offering of which for purposes of the
Securities Act of 1933, as amended, would be deemed to be part of the same
offering as the offering of the aforementioned securities to, or solicited any
offer to acquire any of the same from, any Person.
(e) 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 on the date hereof and as of the
Certificate Closing Date and 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 to be delivered on
the Certificate Closing Date;
(ii) the Indenture and this Agreement and the other Operative
Agreements to which it is or is to be a party, and the authentication of
the Certificates to be delivered on the Certificate Closing Date, have been
duly authorized by all necessary corporate action on its part, and neither
the execution and delivery thereof nor its performance of any of the terms
and provisions thereof will violate any Federal or 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 or, in the case of the Operative Agreements
identified in Section 4.02(c) hereof, will on the Delivery Date be executed
and delivered by it and, assuming that each such agreement is the legal,
valid and binding obligation of each other party thereto, is (or will be,
as the case may be), the legal, valid and binding obligation of the
Indenture Trustee, enforceable against the Indenture Trustee in accordance
with its terms except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws or equitable principles of
general application to or affecting the enforcement of creditors' rights
(regardless of whether enforceability is considered in a proceeding in
equity or at law);
(iv) neither the execution and delivery by it of the Indenture and
this Agreement and the other Operative Agreements to which it is or is to
be a party, nor the performance by it of any of the transactions
contemplated hereby or thereby, requires the consent or approval of, the
giving of notice to, the registration with, or the taking of any other
action in respect of, any Federal or state governmental authority or agency
governing its banking and trust powers; and
(v) on the Certificate Closing Date, the Indenture Trustee holds
the Liquid Collateral on behalf of the Owner Trustee and on the Delivery
Date, the Indenture Trustee will hold the original counterparts of the
Lease, the Lease Supplement and the Ancillary Agreement I.
(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 Certificate
Closing Date or, as at and following the Delivery Date, the Aircraft. The
Indenture Trustee, in its individual capacity, covenants and agrees that it
will at its own expense take such action as may be necessary to duly discharge
and satisfy in full, promptly, and in any event within 30 days, after the same
shall first become known to it, any Indenture Trustee's Liens.
(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.
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 the Owner
Participant (or the Owner Trustee, the Indenture Trustee or the Pass Through
Trustee, as the case may be) nor any Person lawfully claiming through the
Owner Participant (or the Owner Trustee, the Indenture Trustee or the Pass
Through Trustee, as the case may be) shall interfere with the Lessee's right
quietly to enjoy the Aircraft during the Term without hindrance or disturbance
by the Owner Participant (or the Owner Trustee, the Indenture Trustee or the
Pass Through Trustee as the case may be), provided, however, that the Lessor
shall not be liable for any act or omission of the Indenture Trustee or any
other Person claiming through the Indenture Trustee.
Section 7.09. Pass Through Trustee's Representations and Warranties.
The Pass Through Trustee, in its individual capacity (except with respect to
clause (iii) below), represents and warrants as of the date hereof (except as
otherwise provided), as of the Pass Through Closing Date, the Certificate
Closing Date and the Delivery Date that:
(i) it is a 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 Pass Through Agreement, the Series Supplements, the Intercreditor
Agreement and this Agreement and to execute and authenticate the Pass
Through Certificates to be delivered on the Pass Through Closing Date;
(ii) the execution, delivery and performance of this Agreement, the
Pass Through Agreement and the Series Supplements and the performance of its
obligations hereunder and thereunder (including the execution and
authentication of the Pass Through Certificates to be delivered on the Pass
Through Closing Date) have been fully authorized by all necessary corporate
action on its part, and, subject to (A) the registration of the issuance
and sale of the Pass Through Certificates under the Securities Act, (B)
compliance with any applicable state securities laws and (C) the
qualification of the Pass Through Agreement under the Trust Indenture Act,
neither the execution and delivery thereof nor its performance of any of
the terms and provisions thereof will violate any Federal or 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; and
(iii) each of this Agreement and the Pass Through Agreement has been,
and as of the Pass Through Closing Date the Series Supplements will be, duly
executed and delivered by it (in its individual and trust capacities) and,
assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is or will be, as the case may be,
the legal, valid and binding obligation of the Pass Through Trustee (in its
individual and trust capacities), enforceable in accordance with its
respective terms except as limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights generally
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
Section 7.10. Survival of Representations, Warranties and Covenants.
The representations, warranties and covenants of the Owner Participant, the
Owner Trustee (in its individual or trust capacity), the Pass Through Trustee
(in its individual or trust capacity), the Subordination Agent (in its
individual capacity or trust capacity) and the Indenture Trustee (in its
individual or trust capacity) provided for in this Article 7, and their
respective obligations under any and all of them, shall survive the Closings,
the delivery of the Aircraft and the expiration or other termination of this
Agreement, and the other Operative Agreements.
Section 7.11. Lessee's Assumption of the Certificates. (a) Subject
to compliance by the Lessee with all of its obligations under the Operative
Agreements, each of the Owner Participant, the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Lessee covenants and agrees that if
the Lessee elects to terminate the Lease and to purchase the Aircraft pursuant
to Section 4.02(a)(A), (D), (E) or (F) of the Lease, and so long as no Event
of Default shall have occurred and be continuing then, upon compliance with
the applicable provisions of said Section 4.02(a) of the Lease, the Owner
Trustee will transfer to the Lessee, without recourse or warranty (except as
to the absence of Lessor's Liens) 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, each of the parties shall execute
and deliver appropriate documentation permitting the Lessee to assume such
obligations on the basis of full recourse to the Lessee, maintaining for the
benefit of the Holders the security interest in the Aircraft created by the
Indenture, and upon compliance with the provisions of this Section 7.11
releasing the Owner Participant and the Owner Trustee from all obligations in
respect of the Certificates, the Indenture 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 UCC financing statements relating thereto, and any other
documents which shall be necessary (or reasonably requested by the
Indenture Trustee) to establish the Lessee's title to and interest in the
Aircraft or to reflect the substitution of the Lessee for the Owner Trustee
under the Operative Agreements or to continue the perfection of the
security interests in the Aircraft and the other rights, Property and
interests included in the Trust Indenture Estate for the benefit of the
Holders (or the Lessee's substituted obligations) shall be filed in such
form, manner and places as are necessary or, in the reasonable opinion of
the Indenture Trustee, advisable for such purpose;
(iii) the Indenture Trustee shall have received an insurance report
dated the effective date of such assumption of an independent insurance
broker and certificates of insurance, each in form and substance
satisfactory to the Indenture Trustee, as to the due compliance as of the
effective date of such assumption with the terms of Article 13 of the Lease
(as it relates to the Indenture Trustee) relating to the insurance with
respect to the Aircraft;
(iv) the Indenture Trustee shall have received evidence that as of
the effectiveness of the assignment on the date of such assumption the
Aircraft is free and clear of all Liens other than the Lien of the
Indenture and other Permitted Liens;
(v) the Indenture Trustee shall have received a certificate from
the Lessee that no Event of Default shall have occurred and be continuing
as of the effective date of such assumption; and
(vi) the Indenture Trustee shall have received (A) from counsel for
the Lessee (who may be the Lessee's General Counsel) a legal opinion, in
form and substance satisfactory to the Indenture Trustee (w) with respect
to the compliance of the assumption contemplated hereby with the terms,
provisions and conditions hereof, (x) with respect to the due
authorization, execution, delivery, validity and enforceability of the
instrument referred to in paragraph (i) of this Section 7.11(b), (y) with
respect to the continued perfection of the first and prior Lien and security
interest in the Aircraft for the benefit of the Holders of the Certificates
(or the Lessee's substituted obligations) referred to in paragraph (ii) of
this Section 7.11(b) and (z) with respect to the continued availability of
the benefits of Section 1110 of the Bankruptcy Code to the Indenture
Trustee for the benefit of the Holders with respect to the Aircraft after
giving effect to such assumption, (B) from counsel to the Indenture Trustee
and Special Aviation Counsel, a legal opinion comparable to the respective
opinions delivered on the Certificate Closing Date or the Delivery Date, as
the case may be, with such changes therein as may be appropriate in light
of such assumption, and (C) in the case of each opinion described in clause
(A) or (B) above, covering such additional matters as the Indenture Trustee
shall reasonably request.
(c) The Lessee shall pay all reasonable expenses (including
reasonable fees and expenses of counsel) of the Owner Participant, the Owner
Trustee and the Indenture Trustee 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 provision of the Trust Agreement in a manner that would 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 and (so long as the Indenture shall not have
been discharged) the Indenture Trustee.
Section 7.14. Subordination Agent's Representations, Warranties and
Covenants. (a) Representations and Warranties. The Subordination Agent
represents and warrants as of the date hereof (except as otherwise provided),
as of the Pass Through Closing Date, the Certificate Closing Date and the
Delivery Date that:
(i) it is a 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, the Liquidity Facilities and the
Intercreditor Agreement;
(ii) the execution, delivery and performance of this Agreement, each
of the Liquidity Facilities and the Intercreditor Agreement and the
performance of its obligations hereunder and thereunder 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) each of this Agreement, the Liquidity Facilities and the
Intercreditor 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; and
(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.
(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 shall have the meanings specified in the Intercreditor Agreement.
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes. (a) Generally. The
Lessee agrees promptly to pay when due, and to indemnify and hold each
Indemnitee harmless from all license, recording, documentary, registration and
other fees and all taxes (including, without limitation, income, gross
receipts, sales, rental, use, value added, property (tangible and intangible),
ad valorem, excise and stamp taxes), fees, levies, imposts, recording duties,
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
(whether imposed upon any Indemnitee, the Lessee, all or any part of the
Aircraft, Airframe, any Engine or any Part, the Lessor's Estate, the Trust
Indenture Estate, Rent or otherwise), 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, upon or with respect to, based upon or
measured by:
(i) the Aircraft, the Airframe, any Engine or any Part;
(ii) the location, replacement, conditioning, refinancing, control,
purchase, registration, reregistration, repossession, improvement,
maintenance, redelivery, manufacture, acquisition, purchase, financing,
mortgaging, ownership, acceptance, rejection, delivery, non-delivery,
leasing, subleasing, transport, insuring, inspection, registration,
assembly, abandonment, preparation, installment, possession, use,
operation, return, presence, storage, repair, transfer of title,
modification, rebuilding, import, export, alteration, addition, replacement,
assignment, overhaul, transfer of registration or registration, imposition
of any lien, sale or other disposition of the Aircraft, Airframe, any
Engine or any Part thereof or interest therein;
(iii) the rentals (including Basic Rent and Supplemental Rent),
receipts or earnings arising from the Operative Agreements or from the
purchase, financing, ownership, delivery, leasing, possession, use,
operation, return, storage, transfer of title, sale or other disposition of
the Aircraft, the Airframe or any part thereof or interest therein;
(iv) any or all of the Operative Agreements;
(v) the Property, or the income or other proceeds received with
respect to the Property, held by the Owner Trustee under the Trust
Agreement or after an Event of Default under the Lease, or by the Indenture
Trustee under the Indenture;
(vi) otherwise with respect to or by reason of the transactions
described in or contemplated by the Operative Agreements;
(vii) the payment of the principal or interest or other amounts
payable with respect to the Certificates;
(viii) the Certificates or the Pass Through Certificates or the
issuance, acquisition, or refinancing thereof or the beneficial interests
in the Lessor's Estate or the creation thereof under the Trust Agreement; or
(ix) any assumption by the Lessee pursuant to Section 7.11 of this
Agreement and Section 2.12 of the Indenture.
(b) Exceptions. The indemnity provided for in Section 8.01(a) shall
not extend to any of the following:
(i) With respect to an Indemnitee, Taxes based upon, measured by or
with respect to the net or gross income, items of tax preference or minimum
tax or excess profits, receipts, value added (but only to the extent such
value added tax is in the nature of an income tax), capital, franchise, net
worth or conduct of business or other similarly-based Taxes of such
Indemnitee (other than any Taxes in the nature of sales, use, transfer,
excise, rental, license, ad valorem, property or other similarly based
Taxes) (the "Income Taxes"); provided, however that the provisions of this
paragraph (b)(i) shall not exclude from the indemnity described in Section
8.01(a) hereof, any Income Taxes to the extent such Income Taxes are
imposed by any jurisdiction in which the Indemnitee would not be subject to
such Income Taxes but for, or would be subject to such Income 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 any such indemnity would be payable only to the extent of
the net harm incurred by the Indemnitee from such Income Taxes, taking into
account any incremental current Tax benefit in another tax jurisdiction
resulting from payment of such Income Taxes); provided, further, that the
provisions of this paragraph (b)(i) relating to Income Taxes shall not
exclude from the indemnity described in Section 8.01(a) hereof any Income
Taxes for which the Lessee would be required to indemnify an Indemnitee (x)
so that any payment under the Operative Agreements, otherwise required to
be made on an After-Tax Basis, is made on an After-Tax Basis or (y)
pursuant to the last sentence of Section 8.02, 8.05, 9.02 or 9.05 of this
Agreement;
(ii) [Reserved];
(iii) Taxes arising out of or measured by acts, omissions, events or
periods of time (or any combination of the foregoing) which occur after
(and are not attributable to acts, omissions or events occurring
contemporaneously with or prior to) (A) the payment in full of all amounts
payable by the Lessee pursuant to and in accordance with the Operative
Agreements, or the earlier discharge in full of the Lessee's payment
obligations under and in accordance with the Lease and the Operative
Agreements (and the Certificates in the case of the Indenture Trustee or
the Trust Indenture Estate if the Lessee shall have assumed the Certificates
pursuant to Section 7.11 of this Agreement), and (B) the earliest of (x) the
expiration of the Term of the Lease and return of the Aircraft in
accordance with Article 12 of the Lease, (y) the termination of the Lease
in accordance with the applicable provisions of the Lease and return of the
Aircraft in accordance with the Lease, or (z) the termination of the Lease
in accordance with the applicable provisions of the Lease and the transfer
of all right, title and interest in the Aircraft to the Lessee pursuant to
its exercise of any of its purchase options set forth in Section 4.02(a) of
the Lease, except that, notwithstanding anything in this Section 8.01(b) to
the contrary, Taxes incurred in connection with the exercise of any
remedies pursuant to Article 17 of the Lease following the occurrence of an
Event of Default shall not be excluded from the indemnity described in
Section 8.01(a) hereof;
(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 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);
(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, other than (A) Taxes that result
from transfers or dispositions which occur while an Event of Default under
the Lease has occurred and is continuing at the time of such transfer or
disposition or (B) Taxes that result from any transfer or disposition
pursuant to the terms of the Lease;
(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) Notwithstanding anything herein to the contrary, Taxes imposed
on a successor, assign or other transferee (including, without limitation,
a transferee which is a new lending office of an original Indemnitee) of
any entity or Person which on the Certificate Closing Date is an Indemnitee
(for purposes of this clause (vii), 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 thereof, 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 (vii) shall not apply in the case of a
succession, assignment or other transfer (1) while an Event of Default
under the Lease or the Indenture has occurred and is continuing; (2)
required by any provision of the Operative Agreements (other than pursuant
to Section 7.02 hereof) or (3) in the case of the Owner Participant, to any
Tax other than an Income Tax;
(ix) [Reserved];
(x) any Taxes which have been included in the Purchase Price;
(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
with respect to the Indenture Trustee;
(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 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; and
(xiii) Taxes imposed by any jurisdiction to the extent they 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.
(c) Withholding. The Pass Through Trustee shall withhold any Taxes
required to be withheld on payments to any holder of a Pass Through
Certificate who is a Non-U.S. Person except to the extent that such a holder
of a Pass Through Certificate has furnished evidence to the Pass Through
Trustee sufficient under applicable law to entitle such holder of a Pass
Through Certificate to any exemption from or reduction in the rate of
withholding on interest claimed by such holder of a Pass Through Certificate.
The Indenture Trustee shall withhold any Taxes required to be withheld on any
payment to a Holder pursuant to Section 5.09 of the Indenture. If the
Indenture Trustee or the Pass Through Trustee fails to withhold a Tax required
to be withheld with respect to any Holder of a Certificate or any holder of a
Pass Through Certificate or any claim is otherwise asserted by a taxing
authority against the Owner Trustee or the Owner Participant for any
withholding tax, the Lessee will indemnify the Owner Trustee and the Owner
Participant (without regard to the exclusions set forth in Section 8.01(b)
hereof) on an After-Tax Basis against any such Taxes required to be withheld
and any interest and penalties with respect thereto, along with any other
costs (including reasonable attorney's fees) incurred in connection with any
such claim. The Indenture Trustee or the Pass Through Trustee, as the case
may be, in its individual capacity (and without recourse to the Trust
Indenture Estate), shall indemnify the Lessee (without regard to the
exclusions set forth in Section 8.01(b) hereof) on an After-Tax Basis for any
payment the Lessee shall have made pursuant to the preceding sentence.
Section 8.02. After-Tax Basis. The amount which the Lessee shall be
required to pay with respect to any Tax indemnified against under Section 8.01
shall be an amount sufficient to restore the Indemnitee, on an After-Tax
Basis, to the same position such party would have been in had such Tax not
been incurred. If any Indemnitee actually realizes a permanent 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 permanent tax
benefit plus any other permanent 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 this Section 8.02 and Section 8.01
hereof 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 Section 8.01 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 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 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 disallowed or reduced in a taxable year subsequent to the
year of such payment (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 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 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 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. The
Indemnitee shall in good faith, with due diligence and at the Lessee's
expense, if timely requested in writing by the Lessee, contest (or, at the
Indemnitee's option, require the Lessee to contest in the name of the Lessee,
if permitted by law) 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.
If the Indemnitee, after reasonable discussion with the Lessee and
consideration in good faith of any suggestion made by the Lessee as to the
method of pursuing such contest, elects to conduct the contest, such
Indemnitee shall determine the manner in which to contest such Taxes, and
shall periodically or upon the Lessee's request advise the Lessee of the
progress of such contest; provided, however, that if the Indemnitee determines
in its sole discretion that such participation will not adversely affect such
Indemnitee's contest of any Taxes not indemnified hereunder, the Lessee shall
have the right to participate in such contest, including, among other rights,
the right to attend governmental or judicial conferences (to the extent
unrelated issues are not discussed) concerning such claim and the right to
review and approve all submissions to any governmental or other authority
insofar as they relate to the Tax for which indemnification is sought.
Notwithstanding the preceding sentences of this Section 8.04, such Indemnitee
shall not be required to take or continue any action unless the Lessee shall
have (i) agreed in writing to pay and shall pay the Indemnitee on demand and
on an After-Tax Basis for any liability or reasonable expense which such
Indemnitee may incur as a result of contesting such Taxes including without
limitation (y) reasonable attorneys' and accountants' fees and (z) the amount
of any interest, penalty or additions to tax which may ultimately be payable
as the result of contesting such Taxes, (ii) delivered to the Indemnitee a
written acknowledgment of the Lessee's obligation to such Indemnitee pursuant
to this Agreement to the extent that the contest is not successful and of the
inapplicability of any exclusion or defenses thereto, provided, however, that
such acknowledgement shall not preclude the Lessee from raising defenses to
liability under this Agreement if a decision in such contest is rendered which
clearly articulates the cause of such Tax and the cause, as so articulated, is
not one for which the Lessee is responsible to pay an indemnity hereunder,
(iii) 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 or the Lessee permitted to contest pursuant
to this Section 8.04 the imposition of any Tax for which the Lessee is
obligated to indemnify any Indemnitee hereunder unless (i) such Indemnitee
shall have received an opinion of independent tax counsel, at the Lessee's
expense, selected by such Indemnitee and reasonably satisfactory to the Lessee
("Tax Counsel") to the effect that a reasonable basis exists for contesting
such claim, (ii) 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 issue shall not be the same as an
issue previously contested hereunder and decided adversely, unless the
Indemnitee shall have received, at the Lessee's sole expense, a written
opinion, in form and substance reasonably satisfactory to such Indemnitee, of
Tax Counsel, to the effect that the applicable circumstances or law has
changed and, in light thereof, there is substantial authority within the
meaning of Section 6662(d) of the Code, as interpreted by the Treasury
regulations thereunder, or under similar principles of state or foreign law (as
the case may be) for contesting such claim and (vi) the amount of the indemnity
payments the Lessee would be required to make with respect to such adjustment,
when aggregated with similar adjustments that could be raised in other taxable
years of such Indemnitee is at least $50,000.
The Indemnitee shall not appeal any judicial decision unless it
receives an opinion of independent tax counsel, at the Lessee's sole expense,
selected by such Indemnitee and reasonably satisfactory to the Lessee to the
effect that a reasonable basis continues to exist for the Indemnitee's
position.
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) reasonable 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 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. The Lessee shall hold the Indemnitee harmless from
and against any liabilities, including penalties, additions to tax, fines and
interest, imposed upon or incurred by such Indemnitee to the extent directly
attributable to any insufficiency or inaccuracy in any return, statement, or
report prepared by the Lessee or information supplied by the Lessee, or
directly attributable to the Lessee's failure to supply reasonably available
information to such Indemnitee as required by this Section 8.06.
Section 8.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 8 and the Lessee's obligations under any and all of them shall survive
the expiration or other termination of the Operative Agreements.
Section 8.08. Payment of Taxes. With respect to any Tax otherwise
indemnifiable hereunder by the Lessee and applicable to the Aircraft,
Airframe, any Engine or Parts, to the extent permitted by the applicable
federal, state, local or foreign law, the Lessee shall pay such tax directly
to the relevant Taxing authority and file any returns or reports required with
respect thereto; 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 the Owner Participant are the owner of
the Aircraft, the Airframe, any Engine or any Part or which would otherwise be
inconsistent with the terms of the Lease 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. If, for any
reason, Lessee is required to make any payment with respect to any Taxes
imposed on any Indemnitee in respect of the transactions contemplated by the
Operative Agreements or on the Aircraft, the Airframe, the Engines, the Parts
of any part thereof, which Taxes are not the responsibility of the Lessee with
respect to 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 the Lessee with respect to such Taxes.
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally. (a) The Lessee agrees to indemnify each
Indemnitee against and agrees to protect, defend, save and keep harmless each
Indemnitee from any and all liabilities, obligations, losses, damages
(including if, as a result of an Indenture Event of Default described in
Section 7.01(a)(i) of the Indenture, the Indenture Trustee shall have sold all
or any portion of the Indenture Estate and the proceeds thereof were less than
an amount equal to accrued and unpaid Basic Rent on the date of sale plus the
Stipulated Loss Value as of such date, damages equal to such shortfall
together with interest thereon to the extent permitted by law at the Debt Rate
until such shortfall is paid in full), penalties, claims, actions, suits,
costs, disbursements and expenses (including reasonable 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) or Article 15 hereof) of
every kind and nature (whether or not any of the transactions contemplated by
this Agreement are consummated) (individually, an "Expense," collectively,
"Expenses"), which may be imposed on, incurred or suffered by or asserted
against any Indemnitee, in any way relating to, based on or arising out of:
(i) this Agreement, the Lease, the Indenture, the Pass Through
Agreement, the Trust Agreement, the Intercreditor Agreement, the Liquidity
Facilities, the Bills of Sale or any other Operative Agreement or any other
document entered into in connection herewith or any sublease or transfer or
any transactions contemplated hereby or thereby;
(ii) the operation, possession, use, non-use, maintenance, storage,
overhaul, delivery, non-delivery, control, repair or testing of the
Aircraft, Airframe, or any Engine or any engine used in connection with the
Airframe, or any part thereof by the Lessee, any sublessee or any other
Person whatsoever, whether or not such operation, possession, use, non-use,
maintenance, storage, overhaul, delivery, non-delivery, control, repair or
testing is in compliance with the terms of the Lease, including without
limitation, claims for death, personal injury or property damage or other
loss or harm to any Person whatsoever, including, without limitation, any
passengers, shippers or other Persons wherever located, and claims relating
to any laws, rules or regulations, including, without limitation,
environmental control, noise and pollution laws, rules or regulation;
(iii) the manufacture, design, sale, return, purchase, acceptance,
rejection, delivery, non-delivery, condition, repair, modification,
servicing, rebuilding, airworthiness, registration, reregistration, import,
export, performance, non-performance, lease, sublease, transfer,
merchantability, fitness for use, alteration, substitution or replacement
of any Airframe, Engine, or Part under the Lease, the Purchase Agreement or
the Purchase Agreement Assignment or other transfer of use or possession,
or other disposition of the Aircraft, the Airframe, any Engine or any Part
including, without limitation, latent and other defects, whether or not
discoverable, strict tort liability, and any claims for patent, trademark or
copyright infringement;
(iv) any breach of or failure to perform or observe, or any other
non-compliance with, any condition, covenant or agreement to be performed,
or other obligations of the Lessee under any of the Operative Agreements,
or the falsity or inaccuracy of any representation or warranty of the
Lessee in any of the Operative Agreements (other than representations and
warranties in the Tax Indemnity Agreement);
(v) the Collateral Account and the Liquid Collateral;
(vi) the enforcement of the terms of the Operative Agreements and the
administration of the Trust Indenture Estate; and
(vii) the offer, issuance, sale or delivery of any Certificate or any
Pass Through Certificate, or any refunding or refinancing thereof, or
interest in the Lessor's Estate or the Trust Agreement or any similar
interest or in any way relating to or arising out of the Trust Agreement
and the Lessor's Estate, the Indenture or the Trust Indenture Estate
(including, without limitation, any claim arising out of the Securities Act
of 1933, as amended, the Securities Exchange Act of 1934, as amended, or
any other federal or state statute, law or regulation, or at common law or
otherwise relating to securities), or the action or inaction of the Owner
Trustee or Indenture Trustee as trustees, in the manner contemplated by
this Agreement, the Indenture, the Indenture and Security Agreement
Supplement or the Trust Agreement and in the case of the Owner Participant,
its obligations arising under Section 6.01 of the Trust Agreement.
The foregoing indemnity by the Lessee is intended to include and cover, but is
not limited to, any Expense to which the Indemnitees may be subject as a
result of their respective ownership or leasing of any interest in the
Aircraft, Airframe, any Engine or Part during the Term, whether or not in the
Lessee's possession or control, insofar as such Expense relates to any
activity or event whatsoever involving such item while it is under lease to
the Lessee (or after termination of the Lease in connection with the exercise
of remedies thereunder to the extent that such Expense is attributable to the
transactions contemplated hereby and by the other Operative Agreements), and
such Expense does not fall within any of the exceptions listed in Section
9.01(b) hereof.
(b) Exceptions. The indemnity provided for in Section 9.01(a) shall
not extend to any Expense of any Indemnitee to the extent it:
(i) would not have occurred but for the willful misconduct or gross
negligence of such Indemnitee;
(ii) after the Delivery Date, is in respect of the Aircraft, and is
attributable to acts or events which occur after the Aircraft is no longer
part of the Lessor's Estate or leased under the Lease or, if the Aircraft
remains a part of the Lessor's Estate, after the expiration of the Term and
any holdover period under Section 12.05 of the Lease (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 or the Indenture Trustee
shall be entitled to exercise remedies under such Article 17), or to acts
or events which occur after return of possession of the Aircraft by the
Lessee in accordance with the provisions of the Lease but in any such case
only to the extent not fairly attributable to acts or omissions of the
Lessee prior to expiration of the Term and any holdover period under
Section 12.05 of the Lease, including without limitation the Lessee's
failure to fully discharge all of its obligations under the Lease or the
other Operative Agreements;
(iii) is a Tax, whether or not the Lessee is required to indemnify
therefor pursuant to Article 8 hereof or pursuant to the Tax Indemnity
Agreement;
(iv) is a cost or expense required to be paid by the Owner
Participant or its permitted transferees (and not by the Lessee) pursuant
to this Agreement or any other Operative Agreement (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 terms and
provisions required to be observed and performed by it, in this Agreement,
the Purchase Agreement Assignment, the Lease, the Indenture, the Trust
Agreement or any other Operative Agreement to which it is a party unless
such breach or default shall be a result of the breach or default of any of
the foregoing by the Lessee or another Indemnitee;
(vi) [reserved];
(vii) in the case of the Owner Participant, Lessor's Liens to the
extent attributable to the Owner Participant; in the case of the Owner
Trustee, Lessor's Liens to the extent attributable to the Owner Trustee;
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,
to the extent attributable to the offer or sale by such Indemnitee after
the Certificate Closing Date of any interest in the Aircraft, the Lessor's
Estate or the Trust Agreement or any similar interest (including an offer
or sale resulting from bankruptcy or other proceedings for the relief of
debtors in which such Indemnitee is the debtor), unless in each case such
offer or sale shall occur (w) in connection with a Refinancing, (x) as a
result of exercise of remedies under Article 17 of 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
the Lease; or
(ix) which is incurred by 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 (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 hereof shall be an amount sufficient to restore the Indemnitee, on an
After-Tax Basis, to the same position such party would have been in had such
Expense not been incurred. If any Indemnitee actually realizes a permanent
Tax benefit by reason of the payment of such Expense paid or indemnified
against by the Lessee which was not considered in the computation thereof,
such Indemnitee shall promptly pay to the Lessee, but not before the Lessee
shall have made all payments theretofore due such Indemnitee under this
Agreement, the Tax Indemnity Agreement and any other Operative Agreement, an
amount equal to the lesser of (x) the sum of such Tax benefit plus any other
permanent Tax benefit actually realized by such Indemnitee as the result of
any payment made by such Indemnitee pursuant to this sentence and (y) the
amount of such payment pursuant to this Section 9.02 by the Lessee to such
Indemnitee plus the amount of any other payments by the Lessee to such
Indemnitee theretofore made pursuant to this Section 9.02 less the amount of
any payments by such Indemnitee to the Lessee theretofore made pursuant to
this Section 9.02 (and the excess, if any, of the amount described in clause
(x) above over the amount described in clause (y) above shall be carried
forward and applied to reduce pro tanto any subsequent obligations of the
Lessee to make payments pursuant to this Section 9.02), it being intended that
no Indemnitee should realize a net Tax benefit pursuant to this Section 9.02
unless the Lessee shall first have been made whole for any payments by it to
such Indemnitee pursuant to this Section 9.02; provided, however, that
notwithstanding the foregoing portions of this sentence, such Indemnitee shall
not be obligated to make any payment to the Lessee pursuant to this sentence
so long as an Event of Default shall have occurred and be continuing. Any
Taxes that are imposed on any Indemnitee as a result of the disallowance or
reduction of such Tax benefit referred to in the next preceding sentence in a
taxable year subsequent to the year of allowance and utilization by such
Indemnitee (including the expiration of any tax credit carryovers or
carrybacks of such Indemnitee that would not otherwise have expired) shall be
indemnifiable pursuant to the provisions of Section 8.01 hereof without regard
to Section 8.01(b) hereof.
Section 9.03. Subrogation. Upon the payment in full of any indemnity
pursuant to this Article 9 by the Lessee (but not earlier), the Lessee shall be
subrogated to any right of the Indemnitee, other than with respect to any of
such Indemnitee's insurance policies or in connection with any indemnity claim
the Person indemnified may have against any other Indemnitee in respect of the
matter against which such indemnity has been made.
Section 9.04. Notice and Payment. Each Indemnitee and the Lessee
shall give prompt written notice one to the other of any liability of which
such party has knowledge for which the Lessee is, or may be, liable under this
Article 9; provided, however, that failure to give such notice shall not
terminate any of the rights of the Indemnitees under this Article 9, except
(with respect to such Indemnitee) to the extent that the Lessee has been
materially prejudiced by the failure to provide such notice. Unless otherwise
provided in the Operative Agreements, any amount payable to an Indemnitee
pursuant to this Article 9 shall be paid within 30 days after receipt of a
written demand therefor from such Indemnitee accompanied by a written statement
describing in reasonable detail the basis for such indemnity and the
computation of the amount so payable.
Section 9.05. Refunds. If any Indemnitee shall obtain a recovery of
all or any part of any amount which the Lessee shall have paid to such
Indemnitee or for which the Lessee shall have reimbursed such Indemnitee under
this Article 9, and provided there shall not have occurred a Payment Default
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.
Section 9.06. Defense of Claims. The Lessee or its insurers shall
have the right (in each such case at the Lessee's sole expense) to investigate
or, provided that (i) the Lessee or its insurers shall not reserve the right
to dispute liability with respect to any insurance policies pursuant to which
coverage is sought, (ii) in the case of the Lessee, no Event of Default shall
have occurred and be continuing and (iii) the Lessee shall have first
acknowledged in writing to such Indemnitee the Lessee's obligation to
indemnify such Indemnitee hereunder in respect of such claim, defend any claim
covered by insurance for which indemnification is sought pursuant to this
Article 9 and each Indemnitee shall cooperate with the Lessee or its insurers
with respect thereto, and provided, further, the Lessee shall not be entitled
to assume and control the defense of any such claim if and to the extent such
Indemnitee reasonably objects to such control on the ground that an actual or
potential material conflict of interest exists where it is advisable for such
Indemnitee to be represented by separate counsel. Subject to the immediately
foregoing sentence, where the Lessee or the insurers under a policy of
insurance maintained by the Lessee undertake the defense of an Indemnitee with
respect to such a claim, no additional legal fees or expenses of such
Indemnitee in connection with the defense of such claim shall be indemnified
hereunder unless the fees or expenses were incurred at the written request of
the Lessee or such insurers. Subject to the requirement of any policy of
insurance applicable to a claim, an Indemnitee may participate at its own
expense at any judicial proceeding controlled by the Lessee or its insurers
pursuant to the preceding provisions, provided that such party's participation
does not, in the opinion of the independent counsel appointed by the Lessee or
its insurers to conduct such proceedings, interfere with such control; and
such participation shall not constitute a waiver of the indemnification
provided in this Section 9.06. No Indemnitee shall enter into any settlement
or other compromise with respect to any claim described in this Section 9.06
without the prior written consent of the Lessee, which consent shall not
unreasonably be withheld or delayed, unless such Indemnitee waives its right
to be indemnified under this Article 9 with respect to such claim.
Section 9.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 9 and the Lessee's obligations under any and all of them shall survive
the expiration or other termination of this Agreement, the Tax Indemnity
Agreement, the Trust Agreement, the Indenture, the Purchase Agreement
Assignment, the Lease and the other Operative Agreements but, as to such
indemnities, only with respect to losses, liabilities, obligations, damages,
penalties, claims, actions, suits, costs, Expenses and disbursements caused by
events occurring or existing (or fairly attributable to the Lessee's acts or
omissions) prior to or incurred in the process of (i) the return or
disposition of the Aircraft under Article 12 or Article 17 of the Lease, or
(ii) the termination of the Lease or the Indenture or, if later, the return of
the Aircraft.
Section 9.08. Effect of Other Indemnities. The Lessee's obligations
under the indemnities provided for in this Agreement shall be those of a
primary obligor whether or not the Person indemnified shall also be
indemnified with respect to the same matter under the terms of this Agreement,
the Lease, the Indenture, the Trust Agreement, or any other document or
instrument, and the Person seeking indemnification from the Lessee pursuant to
any provision of this Agreement may proceed directly against the Lessee
without first seeking to enforce any other right of indemnification.
Section 9.09. Interest. The Lessee will pay to each Indemnitee on
demand, to the extent permitted by applicable law, interest on any amount of
indemnity not paid when due pursuant to this Article 9 until the same shall be
paid, at the Past Due Rate.
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs. (a) Transaction
Costs. Except as otherwise provided in any amendment to this Agreement, the
Lessee (or the Owner Participant following a transfer of the Initial Owner
Participant's Beneficial Interest) shall pay all fees and expenses of the
following persons relating to the public offering of the Pass Through
Certificates contemplated by the Underwriting Agreement and related to the
transactions contemplated hereby on the Certificate Closing Date and the
Delivery Date: (i) the fees and expenses of counsel for the Owner Participant;
(ii) the fees and expenses of the transaction documentation counsel for the
Lessee and counsel for the Owner Trustee, the Indenture Trustee, the
Subordination Agent, the Pass Through Trustee, each Liquidity Provider, the LC
Bank 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, the LC Bank and
the Indenture Trustee including, without limitation, in connection with the
issuance of the Letter of Credit; (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 the
Registration Statement on Form S-3 bearing Registration No. 333-49411
(including any amendment thereto), 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, the LC Bank 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) of this paragraph shall be
allocable to the Owner Participant under this Agreement (1) to the extent
incurred specifically with respect to the Owner Participant, and (2) to the
extent such fees and expenses are incurred but are not specifically
attributable to the Owner Participant, in the proportion that the principal
amount of the Certificates bears to the total amount of the Pass Through
Certificates.
The Owner Participant, the Owner Trustee and the Lessee acknowledge
that the percentages for Basic Rent, Stipulated Loss Value and Termination
Value set forth in the Lease have been prepared assuming the aggregate amount
payable by the Owner Participant pursuant to the preceding paragraph is
1.4385416667% of the Purchase Price (the "Estimated Expense Amount");
provided, however, that in no event shall the sum of (i) the Owner
Participant's Commitment, (ii) the Transaction Costs to be paid by the Owner
Participant pursuant to Section 2.03 hereof, and (iii) the Transaction Costs
to be paid by the Owner Participant pursuant to Section 10.01 hereof exceed,
in the aggregate, $23,000,000, unless otherwise agreed by the Owner
Participant. To the extent that the payment by the Owner Participant of
Transaction Costs would cause the sum described in the immediately preceding
sentence to exceed $23,000,000, the Lessee shall be obligated to pay the
Transaction Costs constituting the First Chicago Leasing Corporation fee and
the Davis Polk & Wardwell fee to the extent of such excess and the Owner
Participant shall have no obligation to pay such excess.
(b) Continuing Expenses. The continuing fees, expenses and
disbursements (including reasonable counsel fees and expenses) of the entity
acting as Owner Trustee, as lessor under the Lease and as Owner Trustee under
the Trust Agreement with respect to the administration of the Lease and the
Lessor's Estate and the continuing fees, expenses and disbursements (including
reasonable counsel fees and expenses and initial fees relating to the
establishment of any replacement trustee) of the Indenture Trustee, as trustee
under the Indenture with respect to the administration of the Trust Indenture
Estate, 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, the Liquidity
Providers and the Pass Through Trustee all costs and expenses (including
reasonable legal fees and expenses) incurred by any of them in connection
with (a) any Default or Event of Default and any enforcement or collection
proceedings resulting therefrom, or (b) the enforcement of the obligations
of the Lessee hereunder or under the other Operative Agreements 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, including without limitation, any amendment,
supplement, waiver or consent resulting from any work-out, restructuring or
similar proceeding relating to the performance or nonperformance by the
Lessee of its obligations under the Operative Agreements or (c) any
amendment, supplement, waiver or consent (whether or not entered into)
under this Agreement, the Lease, the Indenture, the Certificates, the Tax
Indemnity Agreement, the Purchase Agreement Assignment or any other
Operative Agreement or document or instrument delivered pursuant to any of
them, which amendment, supplement, waiver or consent is required by any
provision of any Operative Agreement or is requested by the Lessee or
necessitated by the action or inaction of the Lessee; provided, however,
that the Lessee shall not be responsible for fees and expenses incurred in
connection with the offer, sale or other transfer (whether pursuant to
Article 5 of the Trust Agreement or otherwise) by the Owner Participant or
the Owner Trustee after the Certificate Closing Date of any interest in the
Aircraft, the Lessor's Estate or the Trust Agreement or any similar
interest (and the Owner Participant shall be responsible for all such fees
and expenses), unless such offer, sale or transfer shall occur (A) during a
period when an Event of Default has occurred and is continuing under the
Lease, (B) during a period following an Event of Loss or (C) in connection
with the termination of the Lease or action or direction of the Lessee
pursuant to Section 4.02 or Article 10 of the Lease; and
(ii) to pay the fees, costs and expenses of all appraisers involved
in an independent appraisal of the Aircraft to the extent required under
Section 4.03 of the Lease.
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee. (a)
Resignation and Removal. The Owner Trustee or any successor Owner Trustee may
resign or may be removed by the Owner Participant, and a successor Owner
Trustee may be appointed 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 satisfactory to the Lessee, the Owner
Participant, the Pass Through Trustee and the Indenture Trustee whereby such
successor Owner Trustee confirms that it shall be deemed a party to this
Agreement, the Trust Agreement, the Lease, the Lease Supplement, the
Purchase Agreement Assignment, the 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 appoint
promptly a successor Owner Trustee meeting the requirements of Section
11.01(b) hereof in the event the Owner Participant has knowledge that the
Owner Trustee at any time shall not be a Citizen of the United States.
(d) Revocation. The Owner Participant agrees not to revoke and
terminate the Trust Agreement except in accordance with Section 4.01(a) of the
Trust Agreement, as in effect on the date hereof or as amended in accordance
with the terms of the Operative Agreements.
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant. The Owner
Participant shall have no obligation or duty to the Lessee or to any Holder
with respect to the transactions contemplated by this Agreement, except those
obligations or duties expressly set forth in this Agreement, the Trust
Agreement, the Tax Indemnity Agreement, the Bills of Sale, the Lease or any
other Operative Agreement to which the Owner Participant is a party and the
Owner Participant shall not be liable for the performance by any party hereto
of such other party's obligations or duties hereunder. Under no circumstances
shall the Owner Participant as such be liable to the Lessee, nor shall the
Owner Participant be liable to any Holder, for any action or inaction on the
part of the Owner Trustee or the Indenture Trustee in connection with this
Agreement, the Indenture, the Lease, the Trust Agreement, the Purchase
Agreement Assignment, any other Operative Agreement, the ownership of the
Aircraft, the administration of the Lessor's Estate or the Trust Indenture
Estate or otherwise, whether or not such action or inaction is caused by the
willful misconduct or gross negligence of the Owner Trustee or the Indenture
Trustee.
Section 12.02. Interest of Holders of Certificates. A Holder of a
Certificate shall have no further interest in, or other right with respect to,
the Trust Indenture Estate when and if the principal and interest on all
Certificates held by such Holder and all other sums payable to such Holder
under this Agreement, under the Indenture and under such Certificates shall
have been paid in full.
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents. The Lessee
hereby consents in all respects to the execution and delivery of the Trust
Agreement, 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 Trust Agreement, the Indenture, the Intercreditor Agreement,
the Liquidity Facilities or the Certificates, except that prior to the
occurrence and continuance of an Event of Default, no section of the Indenture,
the Trust Agreement, the Intercreditor Agreement or 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 Indenture Trustee and the Owner Participant and that, except as otherwise
provided in the Indenture, upon an Indenture Event of Default, the Indenture
Trustee may act as the Lessor under the Lease to the exclusion of the Owner
Trustee. The Lessee further agrees to deliver to the Indenture Trustee and
the Owner Participant a copy of each notice, statement, request, report or
other communication given or required to be given to the Owner Trustee under
the Lease.
Section 13.03. Pass Through Trustee's and Subordination Agent's
Acknowledgment. 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 8.02 thereof regarding the
rights of the Owner Participant to purchase the Certificates under
circumstances specified therein.
ARTICLE 14
NOTICES
Section 14.01. Notices. All notices, demands, declarations and other
communications required by this Agreement shall be in writing and shall be
deemed received (a) if given by telecopier, when transmitted and the
appropriate telephonic confirmation received if transmitted on a Business Day
and during normal business hours of the recipient, and otherwise on the next
Business Day following transmission, (b) if given by certified mail, return
receipt requested, postage prepaid five Business Days after being deposited in
the United States mail and (c) if given by FedEx service (or, if a Default or
Event of Default shall have occurred and be continuing, by other comparable
courier service), when received or personally delivered, addressed:
(a) If to the Lessee, to its office at 2007 Corporate Avenue,
Memphis, Tennessee 38132, Attention: Vice President and Treasurer with a
copy to Senior Vice President and General Counsel at 1980 Nonconnah
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 its office at 225
Asylum Street, Goodwin Square, Hartford, Connecticut 06103, Attention:
Corporate/Muni Administration, facsimile (860) 244-1889 with a copy to
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 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
(d) If to a Liquidity Provider, to its office at Palmengartenstrasse
5-9, D-60325 Frankfurt am Main, Germany, Attention: Head of Aircraft Finance
Department KIII b 3, telephone 011-49-69-7431-0, facsimile
011-49-69-7431-2944; 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 three refinancings, in whole but not in part, of the
Certificates prior to the end of the Basic Term (a "Refinancing"), provided,
that, such Refinancing may not occur prior to the fifth anniversary of the
Refunding Date. Such Refinancings may be placed in either the private or
public markets and shall be denominated in United States dollars (or in any
other foreign currency so long as there is no foreign currency risk to the
Owner Participant), and shall be on terms that do not materially adversely
affect the Owner Participant. The Owner Participant agrees to negotiate
promptly in good faith to conclude an agreement with the Lessee as to the
terms of any such Refinancing transaction (including the terms of any debt to
be issued in connection with such refinancing and the documentation to be
executed in connection therewith). Without the consent of the applicable
Owner Participant, the prospectus and other offering materials relating to any
Refinancing in the form of a public offering shall not identify the Owner
Participant and shall not include any financial statements of the Owner
Participant or any Affiliate thereof. In connection with any such Refinancing
in the form of a public offering, the Lessee shall indemnify the Owner
Participant for any liabilities under federal, state or foreign securities
laws resulting from such offering. The aggregate principal amount of the new
Certificates issued in connection with each Refinancing shall be the same as
the aggregate principal amount outstanding on the Certificates being
refinanced.
(b) Notwithstanding anything herein to the contrary, no Refinancing
will be permitted unless the Owner Participant shall have received at least 10
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 the relevant documentation and the Owner
Participant shall have determined in good faith that neither it nor the Owner
Trustee shall suffer any loss or expense or bear any increased risk as a
result of such Refinancing (including, without limitation, any risk with
respect to taxes or other adverse consequences to the Owner Participant
including the application of Revenue Procedures 75-21 and 75-28 and Section
467 of the Code) for which it has not been or will not have been indemnified
by the Lessee in a manner reasonably satisfactory to the Owner Participant.
Prior to the consummation of any Refinancing pursuant to this Section
15.01, the Owner Participant and the Lessee shall agree upon a schedule
setting forth each installment of Basic Rent, Stipulated Loss Values and
Termination Values payable pursuant to the Lease as a result of the
Refinancing in accordance with Section 3.04 of the Lease, and thereafter the
amounts set forth in such schedule shall become the amounts payable under the
Lease. Upon the consummation of the Refinancing, the evidence of indebtedness
issued pursuant to the Refinancing shall be considered "Certificates" for
purposes of this Agreement, the Lease and the Indenture.
(c) Notwithstanding the foregoing, the Owner Participant shall have
no obligation to proceed with any Refinancing transaction as contemplated by
this Section 15.01 unless the Lessee indemnifies the Owner Trustee and the
Owner Participant by agreement in form and substance satisfactory to each of
them, for any liability, obligation (other than the obligation to pay
principal and interest in respect of the refinanced indebtedness), cost or
expense (including, without limitation, reasonable attorneys' fees and
Make-Whole Premium and any other premiums or other amounts due under the
Indenture), including any adverse tax consequences or impact, related to or
arising out of any such Refinancing transaction, except to the extent of
amounts included in Transaction Costs and payable by the Owner Participant as
provided herein.
(d) Each party agrees to take or cause to be taken all requested
action, including, without limitation, the execution and delivery of any
documents and instruments, including, without limitation, amendments or
supplements to the Lease, which may be reasonably necessary or desirable to
effect such Refinancing, including, in the case of the Owner Participant,
direction to the Owner Trustee by the Owner Participant to prepay the
Certificates then outstanding; provided, however, that such Refinancing shall
be subject to the satisfaction of each of the following conditions:
(i) Payment of principal, accrued interest, Make-Whole Premium and
breakage costs, if any, and all other sums due and owing on the Certificates
payable under the Indenture;
(ii) Payment in full of all other amounts then due and owing by the
Lessee under this Agreement, the Indenture, the Lease, the Trust Agreement,
and the Certificates then outstanding shall have been made by the Lessee;
(iii) Such party shall have received such opinions of counsel
(including, without limitation, an opinion received by the Owner
Participant from independent tax counsel reasonably satisfactory to the
Lessee that such Refinancing shall not result in any adverse tax
consequences to the Owner Participant, unless the Lessee shall have agreed
to provide an indemnity in respect thereof reasonably satisfactory in form
and substance to the Owner Participant), certificates and other documents
as it may reasonably request, each in form and substance reasonably
satisfactory to such party;
(iv) All authorizations, approvals and consents which in the
reasonable judgment of the Owner Participant are necessary for such
Refinancing shall have been obtained;
(v) The Lessee shall have provided or agreed to provide to the Owner
Participant, as Supplemental Rent under the Lease, sufficient funds to pay
any breakage costs, Make-Whole Premium and any other amounts due under the
Indenture;
(vi) The satisfaction or waiver by each other party to this
Agreement of the conditions set forth in this Section 15.01 to such party's
obligations under this Section 15.01;
(vii) No Event of Default shall have occurred and be continuing or
would
occur immediately after giving effect to such Refinancing; and
(viii) The documentation relating to such Refinancing shall permit the
Lessee to place the Refinancing loan certificates with an ERISA Plan. The
Lessee shall not indemnify the Owner Participant, or any of the Owner
Participant's Affiliates, assigns, officers, directors, employees, agents
and servants, for any Taxes, within the meaning of Article 8 hereof, or
Expenses, within the meaning of Article 9 hereof, arising under or in
connection with any "prohibited transaction" within the meaning of Section
406 of ERISA or Section 4975 of the Code, if the sole underwriter or the
manager or co-manager of the underwriting syndicate or the selling or
placement agent of the Refinancing loan certificates has an exemption from
the prohibited transaction rules under Section 406 of ERISA and Section 4975
of the Code with respect to pass through certificates, such as Prohibited
Transaction Exemption 90-24 or any other comparable exemption, unless such
exemption is not available or is not valid with respect to such Refinancing
loan certificates. If such exemption is not available or is not valid,
then the Lessee shall indemnify the Owner Participant pursuant to, and to
the extent provided for, under Articles 8 and 9 hereof for Taxes and
Expenses arising under or in connection with any "prohibited transaction",
within the meaning of Section 406 of ERISA or Section 4975 of the Code,
resulting from such placement.
ARTICLE 16
[RESERVED]
ARTICLE 17
MISCELLANEOUS
Section 17.01. [Reserved].
Section 17.02. Collateral Account. (a) The Indenture Trustee shall
notify the Owner Trustee and the Lessee of any losses incurred on the
Specified Investments in the Collateral Account promptly upon the realization
thereof, as well as any fees, commissions and other costs, Taxes (other than
income taxes) and expenses, if any, incurred by the Indenture Trustee in
connection with its administration of the Collateral Account (collectively,
"Losses"). Promptly upon receipt of such notification but, in any event, no
later than the earlier of the Delivery Date (or, if later, the last day of any
investment period referred to in Section 2.14(b) of the Indenture during which
the Delivery Date occurs) and the 15th day after the Cut-Off Date, the Lessee
shall pay to the Subordination Agent, on behalf of the Owner Trustee, an
amount equal to such Losses, provided, however, that on the Delivery Date the
Lessee shall pay any such Losses to the Indenture Trustee to the extent that
the Debt Portion exceeds the amount in the Collateral Account on such date.
In addition to the foregoing, if Series C Certificates are outstanding
following the Delivery Date and are required to be prepaid on the Series C
Prepayment Date, the Lessee shall pay to the Subordination Agent, on behalf of
the Owner Trustee, promptly upon receipt of such notification but in any event
no later than the Series C Prepayment Date, an amount equal to any additional
unreimbursed Losses.
(b) The Lessee shall pay to the Subordination Agent, on behalf of the
Owner Trustee (A) on each Payment Date prior to the Delivery Date an amount
equal to the aggregate amount of interest accrued on the Certificates from
(and including) the Certificate Closing Date or previous Payment Date, as the
case may be, to, but excluding, such Payment Date, (B) on the first Payment
Date subsequent to the Delivery Date, interest accrued on the Certificates
from and including the last Payment Date (or, if none, the Certificate Closing
Date), to, but excluding, the Delivery Date and (C) on each Payment Date after
the Delivery Date but prior to the Series C Prepayment Date, interest accrued
on the Series C Certificates, if any, outstanding after the Delivery Date
which are required to be prepaid on such Series C Prepayment Date pursuant to
Section 2.03(b) hereof, in each case to the extent such interest due is in
excess of any earnings on investments in the Collateral Account for the period
of accrual of such interest. 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.
(c) If the Aircraft has not been purchased by the Owner Trustee on the
Delivery Date, the Lessee agrees to pay to the Subordination Agent, on behalf
of the Owner Trustee, on the 15th day following the Cut-Off Date the excess,
if any, of the amounts payable under Section 6.02(b)(1) of the Indenture over
the amounts released from the Collateral Account under Section 2.16 of the
Indenture.
(d) If any Series C Certificates outstanding after the Delivery Date
are subject to prepayment on the Series C Prepayment Date pursuant to Section
6.02(a)(viii) of the Indenture, the Lessee agrees to pay to the Subordination
Agent, on behalf of the Owner Trustee, on the Series C Prepayment Date the
excess, if any, of the amounts payable under Section 6.02(b)(1) of the
Indenture over the amounts released from the Collateral Account under Section
2.16 of the Indenture.
(e) All amounts payable by the Lessee pursuant to this Section 17.02
shall be paid to the Indenture Trustee or the Subordination Agent, as the case
may be, at its principal office at 79 South Main Street, Salt Lake City, Utah,
84111, Attention: Corporate Trust Department, or as the Indenture Trustee or
the Subordination Agent, as the case may be, may otherwise direct within the
United States, by wire transfer of immediately available funds in U.S. Dollars
no later than 10:30 a.m., New York City time, on the due date of such payment.
(f) Prior to the date on which the Lessee shall be obligated to make
any payment to the Subordination Agent pursuant to this Section 17.02, the
Subordination Agent shall deliver a written notice to the Lessee specifying
the amount of such payment with respect to each series of Equipment Trust
Certificates.
(g) In the event that (i) any portion of any payment to the
Subordination Agent, the Pass Through Trustee or any holder of any Pass
Through Certificate which is funded from a Specified Shortfall Payment (as
defined below) shall be avoided as a preference under Section 547 of the
Bankruptcy Code and the Subordination Agent, the Pass Through Trustee or any
holder of any Pass Through Certificate becomes liable for such portion or (ii)
(x) the Lessee shall be the subject of a voluntary or involuntary proceeding
under Chapter 7 or Chapter 11 of the Bankruptcy Code on a date less than
fifteen days prior to the expiration date of the Letter of Credit (after
giving effect to any extensions of such expiration date) and (y) any portion
of any payment to the Subordination Agent, the Pass Through Trustee or any
holder of any Pass Through Certificate which is funded from a Specified
Shortfall Payment could be avoided as a preference under Section 547 of the
Bankruptcy Code and the Subordination Agent, the Pass Through Trustee or any
holder of any Pass Through Certificate could become liable for such portion,
the Subordination Agent shall be entitled to draw under the Letter of Credit
an amount equal to the aggregate amount of such liability up to the Maximum
Stated Amount. The Letter of Credit shall expire no earlier than the date 91
days after the later of the last Specified Shortfall Payment payable under
this Section 17.02 and the last "Specified Shortfall Payment" payable under
Section 17.02 of any Related Participation Agreement. In the event of any
drawing under the Letter of Credit pursuant to clause (ii) of this subsection
(g), the proceeds of such drawing shall be applied in accordance with the
Intercreditor Agreement. For purposes of this subsection (g), "Specified
Shortfall Payment" shall mean any payment by the Lessee pursuant to this
Section 17.02 (i) in respect of any Losses which occur as a result of delivery
of the Aircraft on a date other than March 15, 1999, or (ii) in respect of
interest accrued for any applicable period on any Certificate in excess of any
earnings on investments in the Collateral Account for such period.
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 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 each of the Pass Through Trustee and the Subordination
Agent, in its capacity as a party to this Agreement and not as a Holder, shall
not be required to modify, amend or supplement this Agreement or to give any
consent, waiver, authorization or approval with respect to this Agreement
under the circumstances in which the consent of the Indenture Trustee would
not be required for such modification, amendment, supplement, consent, waiver
or approval in accordance with Section 8.01(b) of the Indenture, provided that
the Pass Through Trustee shall be entitled to receive an Opinion of Counsel
(as defined in the Pass Through Agreement) necessary, in its sole discretion,
to establish that the Indenture Trustee's consent would not be required under
such circumstances.
Section 17.05. Captions. The table of contents preceding this
Agreement and the headings of the various Articles and Sections of this
Agreement are for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions of this Agreement.
Section 17.06. Successors and Assigns. The terms of this Agreement
shall be binding upon, and shall inure to the benefit of, the Lessee and its
successors and permitted assigns, the Subordination Agent and its successors
and permitted assigns, the Owner Participant and its successors and permitted
assigns, the Owner Trustee and its successors as Owner Trustee (and any
additional owner trustee appointed), the Indenture Trustee and its successors
as Indenture Trustee (and any additional indenture trustee appointed) under
the Indenture, the Pass Through Trustee and its successors as Pass Through
Trustee (and any additional pass through trustee appointed) and the LC Bank
and its successors and assigns.
Section 17.07. Concerning the Owner Trustee, 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 the Owner Participant on account of (ii)
above, then the Indenture Trustee, as the case may be, shall promptly refund
to the Owner Participant such Recourse Amount. For purposes of this Section
17.10, "Recourse Amount" means the amount by which the portion of such payment
by the Owner Participant on account of clause (ii) above received by the
Indenture Trustee exceeds the amount which would have been received by the
Indenture Trustee if the Owner Participant had not become subject to the
recourse liability referred to in (ii) above. Nothing contained in this
Section shall prevent the Indenture Trustee from enforcing any individual
obligation (and retaining the proceeds thereof) of the Owner Participant under
this Agreement or any other Operative Agreement to the extent herein or
therein provided, for which the Owner Participant has expressly agreed by the
terms of this Agreement to accept individual responsibility.
Section 17.11. GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS AND IS BEING DELIVERED IN NEW
YORK.
Section 17.12. Section 1110 Compliance. The parties hereto agree
that the transactions contemplated by the Operative Agreements are expressly
intended to be, shall be and should be construed so as to be entitled to the
benefits and protection of Section 1110 of the Bankruptcy Code.
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 (on behalf
of itself and each of its Affiliates, agents, directors, officers, employees
and representatives) to use reasonable precautions to keep confidential, in
accordance with its customary procedures for handling confidential information
of this nature, any non-public information supplied to it pursuant to this
Agreement which is identified by the Person supplying the same as being
confidential at the time the same is delivered to such party, provided that
nothing herein shall limit the disclosure of any such information (i) to the
extent required by statute, rule, regulation or judicial process, (ii) to
counsel for any of the parties hereto, (iii) to bank examiners, auditors,
insurance regulators, accountants or similar regulatory authorities, (iv) in
connection with any litigation to which any one or more of the parties hereto
is a party relating to the transactions contemplated hereby or by any of the
Operative Agreements, (v) to 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 an agreement in writing to be bound by the provisions of this
Section 18.01 or (vii) in the case of the Owner Participant or the Owner
Trustee (in its individual or trust capacity) to the Owner Trustee (in its
individual or trust capacity) or to the Owner Participant, as the case may be.
IN WITNESS WHEREOF, the parties have caused this Participation
Agreement to be executed by their respective, duly authorized officers and this
Participation Agreement shall be effective this ____ day of _____, 1998.
LESSEE:
FEDERAL EXPRESS CORPORATION
By:__________________________________________
Name: Robert D. Henning
Title: Vice President and Treasurer
INITIAL OWNER PARTICIPANT:
FEDERAL EXPRESS CORPORATION
By:__________________________________________
Name: Robert D. Henning
Title: Vice President and Treasurer
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
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
SCHEDULE I
CERTIFICATE INFORMATION
1. Federal Express Corporation 1998-1 Pass Through Trust Class A
Federal Express Corporation Trust No. N623FE
--------------------------------------------
Interest Rate: 6.720%
Maturity: January 15, 2022
Principal Amount: $43,372,000
2. Federal Express Corporation 1998-1 Pass Through Trust Class B
Federal Express Corporation Trust No. N623FE
--------------------------------------------
Interest Rate: 6.845%
Maturity: January 15, 2019
Principal Amount: $16,264,000
3. Federal Express Corporation 1998-1 Pass Through Trust Class C
Federal Express Corporation Trust No. N623FE
--------------------------------------------
Interest Rate: 7.020%
Maturity: January 15, 2016
Principal Amount: $17,164,000
SCHEDULE II
DEFINITIONS
(FEDERAL EXPRESS CORPORATION TRUST NO. N623FE)
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement,
the Series Supplements, 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 Section 13.01(c)(i) of the
Lease.
Adjustment Date. The date of any increase or decrease in the
principal amount of the Series C Certificates pursuant to Section 2.19 of the
Indenture.
Aeronautics Authority. As appropriate, the Federal Aviation
Administration and/or the Administrator of the Federal Aviation
Administration, any successor to the former United States Civil Aeronautics
Board, or any Person, governmental department, bureau, commission or agency
located in the United States succeeding to the functions of any of the
foregoing.
Affidavits. The affidavits of citizenship of the Owner Trustee
and the Owner Participant.
Affiliate. With respect to any Person, any other Person directly
or indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant and SSB shall not be deemed to be an
Affiliate of any of the Owner Trustee, the Lessor or 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 reduction in Taxes that would result 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 as provided in the Participation Agreement and to be leased under the
Lease (or any permitted substitute airframe thereunder) together with three
Engines (whether each is an initial Engine or a Replacement Engine) whether or
not any of such initial or Replacement Engines may from time to time be
installed on such Airframe or may be installed on any other airframe or on any
other aircraft, including any aircraft substituted pursuant to Section 11.03
of the Lease. Subject to Section 2.04 of the Participation Agreement, prior
to delivery of the initial Lease Supplement, references in the Operative
Agreements (including Section 3.03 of the Participation Agreement) to Aircraft
shall mean the McDonnell Douglas MD-11F airframe bearing FAA Registration
Number N623FE and Manufacturer's serial number 48794, together with three
Pratt & Whitney 4462 engines.
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 initially and
manufacturer's serial number specified in the initial Lease Supplement,
including (i) all Parts in respect thereof and (ii) any Replacement Airframe
which may be substituted pursuant to Section 11.03 of the Lease and any
Pre-Delivery Replacement Airframe which may be substituted pursuant to Section
2.04 of the Participation Agreement.
Ancillary Agreement. Any written agreement of the Lessee to which
the Lessor is a party or to which the Lessor has consented in writing entered
into on or prior to the Delivery Date or any date thereafter in connection
with the transactions contemplated by the Operative Agreements, as such
agreement may be amended and supplemented from time to time with the consent
of the Lessor and delivered to the Owner Trustee, the Indenture Trustee, the
Pass Through Trustee, the Subordination Agent, each Liquidity Provider and the
Owner Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal Express
Corporation Trust No. N623FE), 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 fair market value
letter to the Lessee) on the Delivery Date pursuant to Section 4.02(h) 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.
Basic Rent. The 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 June 15, 2024, 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. Any day on which commercial banks are not
authorized or required to close in New York, New York, 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 is discharged, Boston, Massachusetts.
Certificate Closing Date. The date of the closing with respect to
the purchase of Certificates by the Pass Through Trustee contemplated by
Section 2.01(b) of the Participation Agreement.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N623FE), 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. Kreditanstalt fur Wiederaufbau, a
corporation organized under the public law of the Federal Republic of Germany
together with any Replacement Liquidity Provider (as defined in the
Intercreditor Agreement).
Class B Liquidity Provider. Kreditanstalt fur Wiederaufbau, a
corporation organized under the public law of the Federal Republic of Germany
together with any Replacement Liquidity Provider (as defined in the
Intercreditor Agreement).
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
acquisition of Certificates by the Pass Through Trustee.
Code. Except as otherwise provided, the Internal Revenue Code of
1986, as amended from time to time.
Collateral Account. The deposit account established and maintained
pursuant to Section 2.13 of the Indenture.
Collateral Agreement. The Collateral Account Control Agreement
(Federal Express Corporation Trust No. N623FE) dated as of June 15, 1998, 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 as provided in
Section 3.02 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. September 13, 1999.
Debt Portion. The amount specified as such on Schedule IV to the
Participation Agreement.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which, with the lapse of time or
the giving of notice, or both, would constitute an Event of Default.
Delivery Date. The date on which the Aircraft is delivered and
sold by 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 3.03(c) of the Participation Agreement.
EBO Price. Has the meaning set forth 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 Pratt & Whitney 4462 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), 10.02(c), 10.03, 11.03, 11.04 or 12.02 of
the Lease, together with all Parts related thereto. Except as otherwise
provided, at such time as a Replacement Engine shall be so substituted and the
Engine for which the substitution is made shall be released from the Lien of
the Indenture, such replaced Engine shall cease to be an "Engine" under the
Lease. The term "Engines" means, as of any date of determination, all Engines
then leased to the Lessee pursuant to the Lease.
Engine Consent and Agreement. The Engine Consent and Agreement
dated as of June 15, 1998, executed by the Engine Manufacturer.
Engine Manufacturer. Pratt & Whitney, a Connecticut corporation.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. An employee benefit plan subject to Title I of ERISA,
or an individual retirement account or plan subject to Section 4975 of the
Code.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of
the Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use
(A) for a period in excess of 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 to the end of the
Term, if less (unless such loss constitutes an Event of Loss under clause (ii)
of this definition) or (B) for a period in excess of 60 days due to the
destruction, damage beyond economic repair or rendition of such property
permanently unfit for normal use by Lessee for any reason whatsoever; (ii) any
damage to such property which results in an insurance settlement with respect
to such property on the basis of a total loss, or constructive or compromised
total loss; (iii) (1) condemnation, confiscation or seizure of, or requisition
of title to such property by the Government, any foreign government or
purported government or any agency or instrumentality thereof, or (2)
condemnation, confiscation, or seizure of, or requisition or taking of, use of
such property (A) by a foreign government or instrumentality or agency of any
such foreign government, for a period in excess of 180 days (or such shorter
period ending on the earlier of the expiration of the Term or on the date on
which an insurance settlement with respect to such property on the basis of a
total loss or constructive or compromised total loss shall occur) or (B) by
the Government for a period extending beyond the Term, provided that no Event
of Loss shall be deemed to have occurred, and the Term shall be extended
automatically for a period of six months (or the date of return of the
Aircraft, if shorter, so long as the Lessor receives at least six months
notice of such date of return) beyond the end of the Term in the event that
the Aircraft, the Airframe or any Engine is requisitioned by the Government
pursuant to an activation as part of the CRAF Program described in Section
7.02(a)(iv) of the Lease; and (iv) as a result of any law, rule, regulation,
order or other action by the Aeronautics Authority or other governmental body
having jurisdiction, the use of the Aircraft or Airframe in the normal course
of air transportation of cargo shall have been prohibited by virtue of a
condition affecting all 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. The date of such Event of Loss shall be (s) the 31st day or the
91st day, as the case may be, following loss of such property or its use due
to theft or disappearance (or the end of the Term, if earlier); (t) the 61st
day following the date of any destruction, damage beyond economic repair or
rendition of such property permanently unfit for normal use; (u) the date of
any insurance settlement on the basis of a total loss or constructive or
compromised total loss; (v) the date of any condemnation, confiscation,
seizure or requisition of title of such property; (w) the 181st day following
condemnation, confiscation, seizure or requisition for use of such property by
a foreign government referred to in clause (iii)(2)(A) above (or the end of
the Term or the date of any insurance settlement described therein, if earlier
than such 181st day); (x) the last day of the Term in the case of requisition
for use of such property by the Government; (y) the last day of the 6 month or
12 month period, referred to in clause (iv) above. An Event of Loss with
respect to the Aircraft shall be deemed to have occurred if any Event of Loss
occurs with respect to the Airframe.
Excepted Payments. Collectively, (i) indemnity or other payments
(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) maintained in accordance with
the provisions of 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) the payment of
incremental out-of-pocket expenses of the Owner Trustee, the Owner Participant
or their respective authorized representatives payable by the Lessee under
Section 6.03(b) of the Participation Agreement or Section 14.01 of the Lease
following any reregistration of the Aircraft and (vii) proceeds of, and any
right to demand, collect or otherwise receive and enforce the payment of any
amount described in clauses (i) through (vii) above.
Expense; Expenses. Have the meaning specified in Section 9.01(a)
of the Participation Agreement.
FAA. The United States Federal Aviation Administration and any
successor agency or agencies thereto.
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 such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and
equal in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease. Fair Market Rental shall be determined
in accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and
equal in amount to, the value which would be obtained in an arm's-length
transaction between an informed and willing purchaser under no compulsion to
buy and an informed and willing seller unaffiliated with such purchaser and
under no compulsion to sell, assuming that the Aircraft (or other property) is
unencumbered by the Lease. Unless otherwise provided in the applicable
provisions of any Operative Agreement, 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. Fair Market Value shall be determined in accordance with the
provisions of Section 4.03 of the Lease.
Federal Aviation Administration. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
FedEx. Federal Express Corporation.
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.
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 Owner Participant, the Indenture Trustee, in its
individual capacity and as trustee, the Subordination Agent, in its individual
capacity and in its capacity as Subordination Agent, each Liquidity Provider,
the Owner Participant Guarantor, if any, 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. N623FE), dated as of June 15, 1998, between the
Lessor and the Indenture Trustee, as supplemented by the Indenture and
Security Agreement Supplement.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N623FE) to be dated the Delivery Date, 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 imposed against
the Indenture Trustee in its individual capacity against which the Lessee has
not indemnified (and is not obligated to indemnify) the Indenture Trustee in
such capacity.
Independent 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
June 15, 1998, 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.
LC Bank. Kreditanstalt fur Wiederaufbau, a corporation organized
under the public law of the Federal Republic of Germany.
Last Cut-Off Date. The later of (i) the Cut-Off Date and (ii) the
"Cut-Off Date" (as defined in the relevant Related Indenture) for the last
Related Aircraft to be delivered.
Last Delivery Date. The later of (i) the Delivery Date and (ii)
the "Delivery Date" (as defined in the relevant Related Indenture) for the
last Related Aircraft to be delivered.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N623FE) dated as of June 15, 1998, 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. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N623FE) to be dated the Delivery Date, substantially in
the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending
at the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation.
Lessee Documents. Has the meaning set forth in Section 6.01(b) of
the Participation Agreement.
Lessee Shortfall. Has the meaning set forth in Section 3.02(a) 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 Purchase Agreement, the Purchase Agreement Assignment, the
Consent and Agreement, the Engine Consent and Agreement, any Ancillary
Agreement, 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), and all
other property of the Owner Trustee purportedly subjected to the Lien of the
Indenture by the Granting Clause thereof; provided that in no event shall
"Lessor's Estate" include any Excepted Payment.
Lessor's Liens. Liens 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, and, in the case of the Lessor
in its individual capacity, arising from its gross negligence or willful
misconduct or expressly prohibited under the Operative Agreements and any act
or omission of the Owner Participant which is in violation of any of the terms
of the Operative Agreements, (iii) Taxes or Expenses imposed against the
Lessor, in its individual capacity or as Owner Trustee, the 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.
Letter of Credit. The Irrevocable Standby Letter of Credit, dated
the Certificate Closing Date, in the form of Exhibit F to the Participation
Agreement and with a Maximum Stated Amount equal to the amount specified under
"Letter of Credit Maximum Stated Amount" on Schedule IV to the Participation
Agreement, from the LC Bank to and for the benefit of the Subordination Agent.
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 1.1 of
the Intercreditor Agreement.
Liquidity Provider. Kreditanstalt fur Wiederaufbau, a corporation
organized under the public law of the Federal Republic of Germany together
with any Replacement Liquidity Provider (as defined in the Intercreditor
Agreement).
Losses. Has the meaning specified in Section 17.02(a) of the
Participation Agreement.
Loss Payee. Has the meaning specified in Section 13.02(b)(i) of
the Lease.
Majority in Interest of Certificate Holders. As of a particular
date of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. With respect to any Certificate, the amount
(as determined by an Independent Investment Banker reasonably acceptable to the
Indenture Trustee and the Owner Participant) by which (i) the present value of
the remaining scheduled payments of principal and interest to the Maturity of
such Certificate computed by discounting such payments on a semiannual basis
on each Payment Date (assuming a 360-day year of twelve 30-day months) using a
discount rate equal to the Treasury Yield exceeds (ii) the outstanding
principal amount of such Certificate plus accrued interest.
Mandatory Document Terms. The terms set forth on Schedule V to the
Participation Agreement.
Mandatory Economic Terms. The terms set forth on Schedule VI to
the Participation Agreement.
Manufacturer. McDonnell Douglas Corporation, a wholly-owned
subsidiary of The Boeing Company.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Maximum Stated Amount. The amount specified under "Letter of
Credit Maximum Stated Amount" on Schedule IV to the Participation Agreement.
Moody's. Moody's Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate equal to the Debt Rate per annum compounded semi-annually.
Non-U.S. Person. Any Person other than a U.S. Person.
Obsolete Parts. Parts which 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 Purchase Agreement, the Purchase Agreement
Assignment, the Consent and Agreement, the Engine Consent and Agreement, the
Lease, the Lease Supplement, the Owner Participant Guaranty, if any, the Owner
Trustee Guaranty, if any, any Ancillary Agreement entered into by or with the
written consent of the Indenture Trustee, which by its terms is an Operative
Agreement, the Certificates outstanding at the time of reference, the
Indenture, the Indenture and Security Agreement Supplement, the Tax Indemnity
Agreement, each Liquidity Facility, the Intercreditor Agreement, the
Collateral Agreement, the Letter of Credit and the Reimbursement 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.
Other Indentures. Collectively, the Trust Indenture and Security
Agreement for each of Federal Express Corporation Trust Nos. N585FE, N676FE,
N677FE, N678FE, N679FE, N680FE, N681FE, N682FE, N620FE and N621FE, each dated
as of June 15, 1998, between State Street Bank and Trust Company of
Connecticut, National Association, as owner trustee and First Security Bank,
National Association, as indenture trustee.
Outstanding. When used with respect to Certificates, as of the
date of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary
amount has been theretofore deposited with the Indenture Trustee
in trust for the Holders of such Certificates pursuant to Section
14.01 of the Indenture; provided, that if such Certificates are to
be prepaid, notice of such prepayment has been duly given pursuant
to the Indenture or provision therefor satisfactory to the
Indenture Trustee has been made; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article
II of the Indenture.
Outstanding C Account. The collateral account established and
maintained under a Related Indenture relating to an undelivered aircraft.
Owner Participant. The Person to whom on the Delivery Date (or, if
earlier, the Transfer Date) the Initial Owner Participant shall transfer its
Beneficial Interest pursuant to Section 3.02 of the Participation Agreement
and any successors thereto, and any Person to which the Owner Participant
transfers, in accordance with the Trust Agreement, its right, title and
interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Guarantor. The provider, if any, of an Owner
Participant Guaranty.
Owner Participant Guaranty. Any guaranty delivered by the Owner
Participant Guarantor.
Owner Trust. Federal Express Corporation Trust No. N623FE.
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 book yield and aggregate after-tax cash 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 and the EBO Price, as such assumptions may be
adjusted for events which have been the basis of adjustments to Rent pursuant
to Section 3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal
Express Corporation Trust No. N623FE), dated as of June 15, 1998, 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
title to which remains vested in the Lessor pursuant to Article 8 of the Lease.
Pass Through Agreement. The Pass Through Trust Agreement dated as
of May 1, 1997, between the Lessee and the Pass Through Trustee.
Pass Through Certificates. Any of the Pass Through Certificates,
1998-1-A, the Pass Through Certificates, 1998-1-B or the Pass Through
Certificates, 1998-1-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. The Business Day on which the sale of
the Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Corporation 1998-1 Pass
Through Trust Class A, Federal Express Corporation 1998-1 Pass Through Trust
Class B and Federal Express Corporation 1998-1 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 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. Each January 15 and July 15 commencing on January
15, 1999.
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).
Pre-Delivery Replacement Airframe. Has the meaning set forth in
Section 2.04 of the Participation Agreement.
Preliminary Notice. Has the meaning specified in Section 4.01(a)
of the Lease.
Premium Termination Date. With respect to the Series A
Certificates, the scheduled maturity date of the Series A Certificates, with
respect to the Series B Certificates, the scheduled maturity date of the
Series B Certificates and with respect to the Series C Certificates, the
scheduled maturity date of the Series C Certificates.
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.
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. Has the meaning specified in Section
10.01(a) of the Lease.
Purchase Agreement. The Purchase Agreement No. A00431-B dated as
of March 17, 1998 between the Manufacturer and the Lessee, including all
exhibits, appendices and letter agreements attached thereto as originally
executed or as modified, amended or supplemented in accordance with the terms
thereof, but only to the extent that the foregoing relates to the Aircraft and
to the extent assigned pursuant to the Purchase Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N623FE), dated as of June 15, 1998
between the Lessor and the Lessee.
Purchase Price. Has the meaning specified 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.
Reimbursement Agreement. The Standby Letter of Credit Application
and Agreement, dated the Pass Through Closing Date, between the Lessee and the
LC Bank.
Related Aircraft. Each of the aircraft relating to a Related
Indenture.
Related Indentures. Collectively, the Trust Indenture and Security
Agreement for each of Federal Express Corporation Trust Nos. N585FE, N676FE,
N677FE, N678FE, N679FE, N680FE, N681FE, N682FE, N620FE and N621FE, each dated
as of June 15, 1998, between State Street Bank and Trust Company of
Connecticut, National Association, as owner trustee and First Security Bank,
National Association, as indenture trustee, the Trust Indenture and Security
Agreement for Federal Express Corporation Trust No. N590FE, dated as of May 1,
1998, as amended and restated as of June 15, 1998, between State Street Bank
and Trust Company of Connecticut, National Association, as owner trustee and
First Security Bank, National Association, as indenture trustee, and the Trust
Indenture and Security Agreement for Federal Express Corporation Trust No.
N675FE, dated as of June 1, 1998, as amended and restated as of June 15, 1998,
between State Street Bank and Trust Company of Connecticut, National
Association, as owner trustee and First Security Bank, National Association,
as indenture trustee.
Related Participation Agreements. Collectively, with respect to
each Related Indenture, the "Participation Agreement" as defined therein.
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. Each January 15 and July 15 commencing on
January 15, 1999.
Reoptimization Date. Has the meaning specified in Section 2.03(b)
of the Participation Agreement.
Replacement Aircraft. Any aircraft substituted for the Aircraft
pursuant to Section 11.03(a) of the Lease.
Replacement Airframe. Has the meaning set forth in Section 11.03
of the Lease.
Replacement Engine. A Pratt & Whitney 4462 engine (or an engine of
the same or another manufacturer) of the same or 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 Pratt & Whitney 4462 engine, such replacement engine must then
be commonly used in the commercial aviation industry on McDonnell Douglas
MD-11 airframes.
Responsible Officer. With respect to the Owner Trustee (except for
purposes of the Trust Agreement in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate
officer or (except in the case of the Owner Participant) other employee of a
party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant,
agreement or obligation of such party pursuant to any Operative Agreement,
would have responsibility for and knowledge of such matter and the
requirements of any Operative Agreement with respect thereto.
S&P. Standard & Poor's Ratings Group.
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 C Prepayment Date. July 15, 1999 or any other date
designated by the Lessee, but in no event later than the fifteenth day after
the Last Cut-Off Date.
Series Supplement or Series Supplements. The Series Supplement
1998-1-A to be executed and delivered by the Lessee and the Pass Through
Trustee, the Series Supplement 1998-1-B to be executed and delivered by the
Lessee and the Pass Through Trustee or the Series Supplement 1998-1-C to be
executed and delivered by 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.
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 or any successor Owner Trustee in
its individual capacity.
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 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.
Subordination Agent. First Security Bank, National Association, a
national banking association, not in its individual capacity but solely as
Subordination Agent.
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 Price and amounts calculated by reference to Termination Value and
all amounts required to be paid by Lessee under the agreements, covenants and
indemnities contained in the Lease or in the Participation Agreement or the
Tax Indemnity Agreement or any other Operative Agreement, but excluding Basic
Rent 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. Shall have the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Tax Indemnity Agreement (Federal
Express Corporation Trust No. N623FE), dated as of June 15, 1998, between the
Lessee and the Owner Participant.
Term. The Basic Term of the lease for the Aircraft under the
Lease and, if renewed pursuant to Section 4.01 of the Lease, each Renewal Term
for the Aircraft for which the Lease is renewed, or such earlier date on which
the Lease is terminated pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that
is on or after December 31, 2005 in the case of Article 10 of the Lease, and
in the case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date
falling on July 15, 2016 or July 15, 2019, as the case may be, (ii) Section
4.02(a)(D) or (E) of the Lease, a Rent Payment Date that is on or after the
eighth anniversary of the Delivery Date and (iii) Section 4.02(a)(F) of the
Lease, January 15, 2018.
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.
Transfer Date. Has the meaning set forth in Section 2.02(b) 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. N623FE), dated as of June 15, 1998, 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, and the Letter of
Credit and any rights thereunder.
UCC. Uniform Commercial Code.
Underwriters. Morgan Stanley & Co. Incorporated, Chase Securities
Inc., Citicorp Securities, Inc., Credit Suisse First Boston Corporation and
J.P. Morgan Securities Inc.
Underwriting Agreement. The Underwriting Agreement dated June 30,
1998, among the Lessee and the Underwriters.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there
is in force a certificate issued pursuant to Section 41102(a) or Section 41103
of the Transportation Code, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Transportation
Code and Part 121 of the regulations under such Transportation Code, for
aircraft capable of carrying ten (10) or more individuals or 6,000 pounds or
more of cargo, or which may operate as an air carrier by certification or
otherwise under any successor or substitute provision thereof or in absence
thereof.
U.S. Person. A Person described in Section 7701(a)(30) of the
Code.
Warranty Bill of Sale. The full warranty bill of sale covering
the Aircraft (and specifically referring to each Engine) executed by the
Lessee, as seller in favor of the Owner Trustee, as buyer, and to be dated the
Delivery Date.
SCHEDULE III
PERMITTED COUNTRY LIST
Australia Malaysia
Austria Mexico
Belgium Netherlands
Canada New Zealand
Denmark Norway
Finland Philippines
France Singapore
Germany Spain
Iceland Sweden
Ireland Switzerland
Japan United Kingdom
Luxembourg
SCHEDULE IV
CERTAIN AMOUNTS
Debt Portion $76,800,000
- ------------
Letter of Credit Maximum Stated Amount $5,500,000
- --------------------------------------
SCHEDULE V
MANDATORY DOCUMENT TERMS
Any amendment and restatement of the Operative Agreements on the Delivery
Date or, if earlier, the Transfer Date:
1. May not modify in any material adverse respect the Granting
Clause of the Indenture so as to deprive the Holders of a first
priority security interest in and mortgage lien on the Aircraft
and the Lease or to eliminate any of the obligations secured
thereby or otherwise modify in any material adverse respect as
regards the interests of the Holders, the Subordination Agent,
the Liquidity Providers or the Indenture Trustee the provisions
of Article II, V, VI or VIII or Section 7.01, 7.02, 7.10, 7.11,
9.08, 13.01, 13.02, 13.07 or 15.04 of the Indenture;
2. May not modify in any material adverse respect as regards the
interests of the Holders, the Subordination Agent, the Liquidity
Providers or the Indenture Trustee the provisions of Section
3.05, 3.06, 11.03(a)(x), 13.01(c)(i), the second sentence of
19.01, 20.01, 22.01, 22.03, 26.03, 27.01 or 27.02 of the Lease
or otherwise modify the terms of the Lease so as to deprive the
Indenture Trustee of rights expressly granted to the "Indenture
Trustee" therein;
3. May not modify in any material adverse respect as regards the
interests of the Holders, the Subordination Agent, the Liquidity
Providers or the Indenture Trustee the provisions of Section
4.02(e), 4.02(f), 17.02, 17.11, 17.12 or 17.13 of the
Participation Agreement or of the provisions of Section 4.02(d)
of the Participation Agreement so as to eliminate the
requirement to deliver to the Indenture Trustee the legal
opinions to be provided to such Persons thereunder (recognizing
that the lawyers rendering such opinions may be changed) or of
the provisions of Section 6.03(b) of the Participation
Agreement as regards the rights of the Indenture Trustee
thereunder or otherwise modify the terms of the Participation
Agreement to deprive the Subordination Agent, the Liquidity
Providers or the Indenture Trustee of any indemnity or right of
reimbursement in its favor for Expenses or Taxes;.
4. May not modify in any material adverse respect as regards the
interests of the holders of the Pass Through Certificates, the
Subordination Agent, the Liquidity Providers or the Indenture
Trustee, the definition of "Make-Whole Premium" or
"Supplemental Rent" in Schedule II to the Participation
Agreement; and
Notwithstanding the foregoing, any such Mandatory Document Term
may be modified to correct or supplement any such provision which may
be defective or to cure any ambiguity or correct any mistake,
provided that any such action shall not materially adversely affect
the interests of the Holders, the Subordination Agent, the Liquidity
Providers, the Indenture Trustee or the holders of the Pass Through
Certificates.
SCHEDULE VI
MANDATORY ECONOMIC TERMS
Certificates:
Loan to Aircraft Value Ratio on any Payment Date (with the value of the
Aircraft set forth in Schedule VII hereto) shall be as follows:
Series A: not in excess of 40%
Series B: not in excess of 55%
Series C: not in excess of 75%
Average Life:
The average life may not be more than 15.5 years in the case of the Series A
Certificates, 13.5 years in the case of the Series B Certificates and 12.5
years in the case of the Series C Certificates (but in each case may be
decreased by any amount).
As of the first Payment Date following the Last Delivery Date, the average
life may not be more than 15.0 years in the case of the Pass Through
Certificates, 1998-1-A, 13.0 years in the case of the Pass Through
Certificates, 1998-1-B and 12.0 years in the case of the Pass Through
Certificates, 1998-1-C.
Final Maturity Date:
Series A: may not be extended beyond January 15, 2022
Series B: may not be extended beyond January 15, 2019
Series C: may not be extended beyond January 15, 2016
Debt Rate (computed on the basis of a 360-day year consisting of twelve 30-day
months, payable semi-annually in arrears) shall be as follows:
Series A: 6.720%
Series B: 6.845%
Series C: 7.020%
Past Due Rate: Debt Rate plus 2% per annum.
Payment Dates: January 15 and July 15.
Make-Whole Premium: As provided in Article V of the Indenture.
Redemption and Purchase: As provided in the Indenture.
Lease
Term: The Basic Term shall expire by its terms on or
after final maturity date of the Series A
Certificates.
Rent Payment Dates: January 15 and July 15.
Minimum Rent: Basic Rent due and payable on each Payment Date
shall be at least sufficient to pay in full, as of
such Payment Date (assuming timely payment of the
Certificates prior to such Date), the aggregate
principal amount of scheduled installments due on
the Certificates outstanding on such Payment Date.
Supplemental Rent: Shall be sufficient to cover the sums described in
the definition of such term in Schedule II to the
Participation Agreement.
Stipulated Loss Value: At all times shall be equal to or greater than the
outstanding principal amount of the Certificates
together with accrued interest thereon. The
interest rate payable with respect to Stipulated
Loss Value may not be modified.
Termination Value: At all times shall be equal to or greater than the
outstanding principal amount of the Certificates
together with accrued interest thereon. The
interest rate payable with respect to Termination
Value Date may not be modified.
All-risk hull insurance: Shall not be less than Stipulated Loss Value,
subject to Lessee's right to self-insure on terms
no more favorable to Lessee in any material respect
than those set forth in Article 13 of the Lease.
Minimum Liability
Insurance Amount: $300,000,000.
Past Due Rate: As set forth in the definition thereof in Schedule
II to the Participation Agreement.
Participation Agreement
The Indenture Trustee, the Subordination Agent and the Liquidity Providers
indemnified against Expenses and Taxes to the extent set forth in Articles 8
and 9 of the Participation Agreement as in effect on the Certificate Closing
Date.
SCHEDULE VII
ASSUMED AIRCRAFT VALUE
Assumed Aircraft Value
(in millions)
----------------------------------
$108,430,000
EXHIBIT A(1)(a)(i)
[Letterhead of Federal Express]
[Certificate Closing Date]
To the Addressees Listed on Schedule A Attached
Re: Federal Express Corporation Trust No. N623FE
--------------------------------------------
Ladies and Gentlemen:
I am the Senior Vice President and General Counsel of Federal Express
Corporation, a Delaware corporation ("Federal"), and am familiar with the
transactions contemplated by the Participation Agreement (Federal Express
Corporation Trust No. N623FE), dated as of June 15, 1998 (the "Participation
Agreement"), among Federal, as Lessee and Initial 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(j)(i) of the Participation Agreement.
Capitalized terms not otherwise defined herein have the meanings assigned
thereto in the Participation Agreement.
The Participation Agreement provides, among other things, for the
financing on the Delivery Date of a portion of the Owner Trustee's payment of
the Purchase Price of one 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 will be 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 will
be issued under the Indenture.
In connection with the opinions expressed below, I have examined, or
caused to be examined by attorneys under my supervision, (i) executed
counterparts of the Pass Through Agreement, the Series Supplements and the
Operative Agreements to be delivered on the Certificate Closing Date (the
"Certificate Closing Date Documents") and (ii) the forms of the Operative
Agreements to be delivered on the Delivery Date. We have relied upon
originals or copies, certified or otherwise identified to our satisfaction, of
such corporate records, documents and other instruments as in our judgment are
relevant to rendering the opinions expressed below. As to any facts material
to the opinions expressed below (other than any thereof relating to Federal),
we have relied upon the representations and warranties made in the Certificate
Closing Date Documents, the accuracy of which we have not independently
investigated or verified. In such examination, we have assumed the
genuineness of all signatures (other than the signatures of Federal) and the
authenticity of all documents submitted to us as originals and the conformity
with the originals of all documents submitted to us as copies. We have also
assumed that each of the parties to each of the Certificate Closing Date
Documents, other than Federal, has full power, authority and legal right to
enter into such Certificate Closing Date Documents and that each such
Certificate Closing Date Document has been duly authorized, executed and
delivered by each of such parties.
Based on the foregoing, it is my opinion that:
1. Federal is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, is a "citizen of
the United States" within the meaning of Section 40102(a)(15) of the
Transportation Code, and has or had, on the date of execution thereof, the
corporate power and authority to carry on its business as currently conducted
and to enter into and perform its obligations under the Certificate Closing
Date Documents to which it is a party. Federal is duly qualified to do
business and is in good standing in the State of Tennessee and each other state
of the United States in which its operations or the nature of its business
requires Federal to so qualify, except where the failure to so qualify would
not have a material adverse impact on Federal or its business.
2. Federal possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents which are material to
the operation of the routes flown by it and the conduct of its business and
operations as currently conducted, and each such certificate, franchise,
license, permit, right and concession and consent is in full force and effect.
3. Each of the Certificate Closing Date Documents to which Federal
is a party has or had, on the date of execution thereof, been duly authorized,
executed and delivered by Federal and each constitutes the legal, valid and
binding obligation of Federal enforceable against Federal in accordance with
its terms. Each of the Certificate Closing Date Documents to which Federal is
to be a party and which are to be executed on the Delivery Date has been duly
authorized by Federal.
4. Neither the execution and delivery by Federal of the Certificate
Closing Date Documents to which Federal is a party, nor the consummation of
any of the transactions by Federal contemplated thereby, nor the performance
of the obligations thereunder by Federal, did at the time of execution and
delivery, or does presently (a) require any stockholder approval or violate
the certificate of incorporation or by-laws of Federal or (b) conflict with or
contravene the provisions of, or constitute a default under, or result in the
creation of any Lien (other than Liens permitted under Section 6.01(a) of the
Lease) upon the property of Federal under any law, governmental rule or
regulation, or the charter or bylaws of Federal or any order, writ, injunction
or decree of any court or governmental authority against Federal or by which
any of its properties may be bound or any indenture, mortgage, contract or
other agreement known to me to which Federal is a party or by which it may be
bound or, require the approval or consent of any trustee or the holders of any
indebtedness or obligations of Federal.
5. Neither the execution and delivery by Federal of the Certificate
Closing Date Documents to which it is a party, nor the consummation of any
transactions by Federal contemplated thereby, nor the performance of the
obligations thereunder by Federal, did or does, as the case may be, (a)
require the consent or approval of, the giving of notice to, or (except as
described or contemplated in the Participation Agreement and the Lease, all of
which are required to be performed on or prior to the Certificate Closing Date
and which shall have been accomplished on or prior to the Certificate Closing
Date) the registration with, or the taking of any other action in respect of,
the Aeronautics Authority, the Securities and Exchange Commission or any other
authority or agency of the federal government or of the State of Tennessee
other than (i) the registration of the issuance and sale of the Pass Through
Certificates under the Securities Act and (ii) compliance with the securities
laws of each applicable state, or (b) contravene any judgment or order
applicable to or binding on Federal or any law or governmental rule or
regulation of the United States or of the State of Tennessee.
6. There is no pending or, to my knowledge, threatened action or
proceeding before any court or administrative agency which individually (or in
the aggregate in the case of any group of related lawsuits) is expected to
have a material adverse effect on (A) 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 (as updated
by Note 7 to the financial statements included in Federal's Quarterly Reports
on Form 10-Q for the fiscal quarters ended August 31, 1997, November 30, 1997
and February 28, 1998), and (b) in Federal's Current Report on Form 8-K dated
June 11, 1997, as to all of 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 Certificate Closing Date Documents.
7. Federal is a duly certificated "air carrier" within the meaning
of the Transportation Code, and a holder of a certificate under Sections
41102(a) and 41103 of the Transportation Code, and an "air carrier operating
certificate" issued under Chapter 447 of the Transportation Code for aircraft
capable of carrying ten (10) or more individuals or 6,000 pounds or more of
cargo, and each such certificate is in full force and effect.
8. Federal's principal place of business and chief executive
office (as such term is defined in the Uniform Commercial Code in effect in
the State of Tennessee) are located at 2005 Corporate Avenue, Memphis, Shelby
County, Tennessee.
9. Federal is not, and is not directly or indirectly controlled by
or acting on behalf of any Person which is, an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
The opinions expressed in paragraph 3 above as to the enforceability
of the Certificate Closing Date Documents to which Federal is a party are
based upon the assumption for purposes of such opinions and without
independent analysis that, notwithstanding the respective choice of laws
clauses in the Certificate Closing Date Documents, the governing law with
respect to each of the Certificate Closing Date Documents is identical in all
relevant respects to the law of the State of Tennessee. Insofar as the
foregoing opinion relates to the enforceability of any instrument, such
enforceability is subject to applicable bankruptcy, insolvency and other
similar laws affecting the enforcement of creditors' rights generally (whether
such enforceability is considered in a proceeding in equity or at law). The
enforceability of the remedies provided under the Lease may also be limited by
applicable laws which may affect the remedies provided therein but which do
not in my opinion affect the validity of the Lease or make such remedies
inadequate for the practical realization of the benefits intended to be
provided thereby.
I do not express any opinion as to matters governed by any law other
than the Federal laws of the United States of America, the corporation law of
the State of Delaware and the laws of the State of Tennessee.
This opinion is delivered to you solely for your use in connection
with the transaction described herein, and may not be used for any other
purpose, and may not be relied upon by any other person, without my prior
written consent.
Very truly yours,
SCHEDULE A
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(1)(a)(ii)
[Letterhead of Federal Express]
[Delivery Date]
To the Addressees Listed on Schedule A Attached
Re: Federal Express Corporation Trust No. N623FE
--------------------------------------------
Ladies and Gentlemen:
I am the Senior Vice President and General Counsel of Federal Express
Corporation, a Delaware corporation ("Federal"), and am familiar with the
transactions contemplated by the Participation Agreement (Federal Express
Corporation Trust No. N623FE), dated as of June 15, 1998, as amended and
restated as of ________________ (the "Participation Agreement"), among
Federal, as Lessee and Initial Owner Participant, ____________________, 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
4.02(d)(i) of the Participation Agreement. Capitalized terms not otherwise
defined herein have the meanings assigned thereto in the Participation
Agreement.
The Participation Agreement provides, among other things, for the
financing on the Delivery Date of a portion of the Owner Trustee's payment of
the Purchase Price of one 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, the Pass Through Agreement and each Series
Supplement (the "Transaction Agreements"). We have relied upon originals or
copies, certified or otherwise identified to our satisfaction, of such
corporate records, documents and other instruments as in our judgment are
relevant to rendering the opinions expressed below. As to any facts material
to the opinions expressed below (other than any thereof relating to Federal),
we have relied upon the representations and warranties made in the Transaction
Agreements, the accuracy of which we have not independently investigated or
verified. In such examination, we have assumed the genuineness of all
signatures (other than the signatures of Federal) and the authenticity of all
documents submitted to us as originals and the conformity with the originals of
all documents submitted to us as copies. We have also assumed that each of the
parties to each of the Transaction Agreements, other than Federal, has full
power, authority and legal right to enter into such Transaction Agreements and
that each such Transaction Agreement has been duly authorized, executed and
delivered by each of such parties.
Based on the foregoing, it is my opinion that:
1. Federal is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, is a "citizen of
the United States" within the meaning of Section 40102(a)(15) of the
Transportation Code, and has or had, on the date of execution thereof, the
corporate power and authority to carry on its business as currently conducted
and to enter into and perform its obligations under the Transaction Agreements
to which it is a party. Federal is duly qualified to do business and is in
good standing in the State of Tennessee and each other state of the United
States in which its operations or the nature of its business requires Federal
to so qualify, except where the failure to so qualify would not have a
material adverse impact on Federal or its business.
2. Federal possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents which are material to
the operation of the routes flown by it and the conduct of its business and
operations as currently conducted, and each such certificate, franchise,
license, permit, right and concession and consent is in full force and effect.
3. Each of the Transaction Agreements to which Federal is a party
has or had, on the date of execution thereof, been duly authorized, executed
and delivered by Federal and each constitutes the legal, valid and binding
obligation of Federal enforceable against Federal in accordance with its terms.
4. Neither the execution and delivery by Federal of the Transaction
Agreements to which Federal is a party, nor the consummation of any of the
transactions by Federal contemplated thereby, nor the performance of the
obligations thereunder by Federal, did at the time of execution and delivery,
or does presently (a) require any stockholder approval or violate the
certificate of incorporation or by-laws of Federal or (b) conflict with or
contravene the provisions of, or constitute a default under, or result in the
creation of any Lien (other than Liens permitted under Section 6.01(a) of the
Lease) upon the property of Federal under any law, governmental rule or
regulation, or the charter or bylaws of Federal or any order, writ, injunction
or decree of any court or governmental authority against Federal or by which
any of its properties may be bound or any indenture, mortgage, contract or
other agreement known to me to which Federal is a party or by which it may be
bound or, require the approval or consent of any trustee or the holders of any
indebtedness or obligations of Federal.
5. Neither the execution and delivery by Federal of the Transaction
Agreements to which it is a party, nor the consummation of any transactions by
Federal contemplated thereby, nor the performance of the obligations
thereunder by Federal, did or does, as the case may be, (a) require the
consent or approval of, the giving of notice to, or (except as described or
contemplated in the Participation Agreement and the Lease, all of which were
or are required to be performed on or prior to the Delivery Date and which
were or shall have been accomplished on or prior to the Delivery Date) the
registration with, or the taking of any other action in respect of, the
Aeronautics Authority, the Securities and Exchange Commission or any other
authority or agency of the federal government or of the State of Tennessee
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 (as updated
by Note 7 to the financial statements included in Federal's Quarterly Reports
on Form 10-Q for the fiscal quarters ended August 31, 1997, November 30, 1997
and February 28, 1998), and (b) in Federal's Current Report on Form 8-K dated
June 11, 1997, as to all of 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 Transaction Agreements, or (ii) involves the Aircraft.
7. Except for the registration in the Owner Trustee's name of the
Aircraft pursuant to the Transportation Code, and except for the filing and,
where appropriate, recording, pursuant to the Transportation Code of (A) 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 Transaction Agreements to which Federal is a party are based upon the
assumption for purposes of such opinions and without independent analysis
that, notwithstanding the respective choice of laws clauses in the Transaction
Agreements, the governing law with respect to each of the Transaction
Agreements is identical in all relevant respects to the law of the State of
Tennessee. Insofar as the foregoing opinion relates to the enforceability of
any instrument, such enforceability is subject to applicable bankruptcy,
insolvency and other similar laws affecting the enforcement of creditors'
rights generally (whether such enforceability is considered in a proceeding in
equity or at law). The enforceability of the remedies provided under the
Lease may also be limited by applicable laws which may affect the remedies
provided therein but which do not in my opinion affect the validity of the
Lease or make such remedies inadequate for the practical realization of the
benefits intended to be provided thereby.
I do not express any opinion as to matters governed by any law other
than the Federal laws of the United States of America, the corporation law of
the State of Delaware and the laws of the State of Tennessee.
As to the matters referred to in paragraphs 5, 7 and 9, I have relied
on the opinion of Daugherty, Fowler & Peregrin of even date herewith, to the
extent such matters are addressed in such counsel's opinion and subject to the
assumptions and qualifications expressed therein.
This opinion is delivered to you solely for your use in connection
with the transaction described herein, and may not be used for any other
purpose, and may not be relied upon by any other person, without my prior
written consent.
Very truly yours,
SCHEDULE A
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
- -----------------
[name of owner participant]
EXHIBIT A(1)(b)(i)
[Letterhead of Davis Polk & Wardwell]
[Certificate Closing Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N623FE
--------------------------------------------
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. N623FE), dated as of June 15, 1998 (the "Participation Agreement"), among
Federal Express, as Lessee and Initial 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(j)(iv) 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
will be issued by separate Pass Through Trusts, each formed to acquire, among
other securities, the Certificates bearing a particular interest rate and
having a particular Maturity that will be issued under the Indenture.
In connection with the opinions expressed below, we have examined
executed counterparts of the Operative Agreements, the Pass Through
Certificates, the Pass Through Agreement and each Series Supplement (the
"Certificate Closing Date Documents"). We have also examined originals, or
copies certified to our satisfaction, of such other agreements, documents,
certificates and statements of governmental officials and corporate officers
as we have deemed necessary or advisable as a basis for such opinions. In
such examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity
with the originals of all documents submitted to us as copies.
As to any facts material to our opinions expressed below, we have,
with your consent, relied on the representations and warranties made in or
pursuant to the Participation Agreement and the other documents referred to
therein, the accuracy of which we have not independently verified. In
addition, we have, when relevant facts were not independently established by
us, relied, to the extent we deemed such reliance proper, upon certificates of
public officials and certificates, telegrams and other written or telephoned
statements of officers of the parties referred to herein.
Based on the foregoing, it is our opinion that:
1. Assuming (i) the due authorization, execution and delivery of
the Certificate Closing Date Documents by each of the parties to each such
document (other than Federal Express), (ii) each such party has full power and
legal right to enter into and perform its respective obligations under the
Certificate Closing Date Documents, (iii) that the execution, delivery and
performance by each of the Certificate Closing Date Documents by each of the
parties thereto will not violate the respective parties' constituent
documents, (iv) the due authorization, execution, issuance and delivery by the
Owner Trustee, and the due authentication by the Indenture Trustee, of the
Certificates to be issued under the Indenture in accordance with the terms of
the Indenture, (v) the due authorization, execution, issuance, delivery and
authentication by the Pass Through Trustee of the Pass Through Certificates to
be issued under the Pass Through Agreement and the Series Supplement relating
to such Pass Through Certificates, in each case in accordance with the terms
of the Pass Through Agreement and such Series Supplement, and (vi) that the
form of each Certificate Closing Date Document is in compliance with all
applicable laws and governmental rules and regulations (other than the laws of
the United States and the State of New York), then: (A) to the extent governed
by New York law, each Certificate Closing Date Document in form constitutes a
legal, valid and binding agreement of each party thereto enforceable against
each such party in accordance with its terms; (B) the Indenture creates, for
the benefit of the Holders, the security interest in the Trust Indenture
Estate that it purports to create, except that no opinion is given with respect
to perfection of such security interest on the date hereof; (C) the
Certificates, when issued to and acquired by the Pass Through Trustee, will be
legal, valid and binding obligations of the Owner Trustee enforceable against
the Owner Trustee in accordance with their terms and the terms of the
Indenture and will be entitled to the benefits of the Indenture, including the
benefit of the security interest created thereby, except that no opinion is
given with respect to perfection of such security interest on the date hereof;
(D) the Pass Through Certificates, when issued to and acquired by the
Underwriters in accordance with the Underwriting Agreement, will be legal,
valid and binding obligations of the Pass Through Trustee enforceable against
the Pass Through Trustee in accordance with their terms and will be entitled
to the benefits of the Pass Through Agreement and the Series Supplement
relating thereto; and (E) the beneficial interest of the Initial Owner
Participant under the Trust Agreement in and to the properties which are part
of the Trust Indenture Estate is subject, to the extent provided in the
Indenture, to the Lien of the Indenture in favor of the Holders.
2. (a) Each of the Certificate Closing Date Documents to which
Federal Express is a party has been duly authorized, executed and delivered by
Federal Express. Each of the Operative Agreements to which Federal Express is
to be a party and which are to be delivered on the Delivery Date has been
authorized by Federal Express.
(b) The execution, delivery and performance by Federal Express of
each of the Certificate Closing Date Documents to which Federal Express is a
party do not, or did not on the date of execution thereof, violate, and fully
comply, or did fully comply on the date of execution thereof, with, any laws
and governmental rules and regulations of the State of New York that may be
applicable to Federal Express. The opinion set forth in this paragraph 2(b)
is rendered without regard to the taking of any action or the conduct of any
other business by Federal Express in the State of New York other than the
transactions contemplated by the Certificate Closing Date Documents.
3. The execution, delivery and performance of the Certificate
Closing Date Documents (other than the Certificates) by the Owner Trustee in
its individual or trust capacity, as the case may be, and the issuance,
execution, delivery and performance of the Certificates by the Owner Trustee
in its trust capacity do not violate, and fully comply with, any laws and
governmental rules and regulations of the State of New York that may be
applicable to the Owner Trustee in its individual or trust capacity, as the
case may be. The opinion set forth in this paragraph 3 is rendered without
regard to the effect, if any, on such issuance (in the case of the
Certificates), execution, delivery or performance, of the taking of any
action, the conduct of any business or the exercise of any other powers by
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 Certificate Closing Date Documents. 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.
4. It is not necessary, in connection with the creation of the
beneficial interest of the Initial 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 or the Indenture under the Trust
Indenture Act of 1939, as amended.
The foregoing opinions are subject to the following qualifications:
(a) We have relied, with your consent, without independent
investigation and verification and subject to the assumptions and
qualifications contained therein, upon the opinion of Karen M. Clayborne,
Senior Vice President and General Counsel of Federal Express to be
delivered to you and dated the date hereof, for purposes of the matters
covered thereby.
(b) We are qualified to practice law in the State of New York, and
we do not purport to be experts on, or to express any opinion herein
concerning, any laws other than the laws of the State of New York, the laws
of the United States and the General Corporation Law of the State of
Delaware.
(c) The opinion contained in paragraph 1(A) above as to
enforceability is subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity which may
affect the remedies provided in the agreements referred to in said
opinions, which laws and principles, however, do not in our opinion make
the remedies provided in said agreements inadequate for the practical
realization of the benefits of the security intended to be provided thereby.
(d) This opinion is rendered solely to you at Federal Express's
request in connection with the above matter. This opinion may not be
relied upon by you for any other purpose or relied upon by any other Person
without our prior written consent.
Very truly yours,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(1)(b)(ii)
[Letterhead of Davis Polk & Wardwell]
[Delivery Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N623FE
--------------------------------------------
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. N623FE), dated as of June 15, 1998, as amended and restated as of
___________ (the "Participation Agreement"), among Federal Express, as Lessee
and Initial Owner Participant, _________________, 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 4.02(d)(ii) of the Participation
Agreement. Capitalized terms not otherwise defined herein have the meanings
assigned thereto in the Participation Agreement.
The Participation Agreement provides, among other things, for the
financing on the Delivery Date of the Owner Trustee's payment of a portion of
the Purchase Price of one 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, the Pass Through
Certificates, the Pass Through Agreement and each Series Supplement (the
"Transaction Agreements"). We have also examined originals, or copies
certified to our satisfaction, of such other agreements, documents,
certificates and statements of governmental officials and corporate officers
as we have deemed necessary or advisable as a basis for such opinions. In
such examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity
with the originals of all documents submitted to us as copies.
As to any facts material to our opinions expressed below, we have,
with your consent, relied on the representations and warranties made in or
pursuant to the Participation Agreement and the other documents referred to
therein, the accuracy of which we have not independently verified. In
addition, we have, when relevant facts were not independently established by
us, relied, to the extent we deemed such reliance proper, upon certificates of
public officials and certificates, telegrams and other written or telephoned
statements of officers of the parties referred to herein.
Based on the foregoing, it is our opinion that:
1. With respect to that portion, if any, of the Aircraft and the
other property included in the Lessor's Estate as may not be covered by the
recording system established by the FAA pursuant to Section 44107 of the
Transportation Code, no filing or recording of any document or other action
was or is necessary in order to establish the Owner Trustee's title thereto
and interest therein as against Federal Express and any third parties.
2. Subject to execution and delivery of the Lease Supplement and
the Indenture and Security Agreement Supplement for the Aircraft and to the
registration of the Aircraft with the FAA in the name of the Owner Trustee,
the Lease, as supplemented, will create a valid leasehold interest in the
Aircraft, the entitlement thereof to the benefits of recordation under the
Transportation Code being subject to the due and timely filing and, where
appropriate, recording of (A) 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 Transaction Agreements by each of the parties to each such document (other
than Federal Express), (ii) each such party has full power and legal right to
enter into and perform its respective obligations under the Transaction
Agreements, (iii) that the execution, delivery and performance by each of the
Transaction Agreements by each of the parties thereto will not violate the
respective parties' constituent documents, (iv) the due authorization,
execution, issuance and delivery by the Owner Trustee, and the due
authentication by the Indenture Trustee, of the Certificates issued under the
Indenture in accordance with the terms of the Indenture, (v) the due
authorization, execution, issuance, delivery and authentication by the Pass
Through Trustee of the Pass Through Certificates issued under the Pass Through
Agreement and the Series Supplement relating to such Pass Through
Certificates, in each case in accordance with the terms of the Pass Through
Agreement and such Series Supplement, and (vi) that the form of each
Transaction Agreement is in compliance with all applicable laws and
governmental rules and regulations (other than the laws of the United States
and the State of New York), then: (A) to the extent governed by New York law,
each Transaction Agreement in form constitutes a legal, valid and binding
agreement of each party thereto enforceable against each such party in
accordance with its terms; (B) the Indenture creates, for the benefit of the
Holders, the security interest in the Trust Indenture Estate that it purports
to create; (C) the Certificates are legal, valid and binding obligations of
the Owner Trustee enforceable against the Owner Trustee in accordance with
their terms and the terms of the Indenture and are entitled to the benefits of
the Indenture, including the benefit of the security interest created thereby;
and (D) the beneficial interest of the Owner Participant under the Trust
Agreement in and to the properties which are part of the Trust Indenture
Estate is subject, to the extent provided in the Indenture, as supplemented by
the Indenture and Security Agreement Supplement, to the Lien of the Indenture
in favor of the Holders. The opinions set forth in this paragraph 3 are
subject to the due filing and, where appropriate, recording with the FAA of
the documents referred to in paragraph 2 above.
4. (a) Each of the Transaction Agreements to which Federal Express
is a party has been duly authorized, executed and delivered by Federal Express.
(b) The execution, delivery and performance by Federal Express of
each of the Transaction Agreements to which Federal Express is a party do not,
or did not on the date of execution thereof, violate, and fully comply, or did
fully comply on the date of execution thereof, with, any laws and governmental
rules and regulations of the State of New York that may be applicable to
Federal Express. The opinion set forth in this paragraph 4(b) is rendered
without regard to the taking of any action or the conduct of any other
business by Federal Express in the State of New York other than the
transactions contemplated by the Transaction Agreements.
5. The execution, delivery and performance of the Transaction
Agreements (other than the Certificates) by the Owner Trustee in its
individual or trust capacity, as the case may be, and the issuance, execution,
delivery and performance of the Certificates by the Owner Trustee in its trust
capacity do not violate, and fully comply with, any laws and governmental
rules and regulations of the State of New York that may be applicable to the
Owner Trustee in its individual or trust capacity, as the case may be. The
opinion set forth in this paragraph 5 is rendered without regard to the
effect, if any, on such issuance (in the case of the Certificates), execution,
delivery or performance, of the taking of any action, the conduct of any
business or the exercise of any other powers by 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 Transaction Agreements. 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 statement referred to in Section 4.02(f) of the Participation
Agreement), and the beneficial interest of the Owner Participant under the
Trust Agreement in and to such properties is subject, to the extent provided
in the Indenture, to the Lien of the Indenture in favor of the Holders of the
Certificates issued and to be issued under the Indenture.
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 or the Indenture under the Trust
Indenture Act of 1939, as amended.
10. The Indenture Trustee on behalf of the holders of the
Certificates will be entitled to the benefits of Section 1110 of the United
States Bankruptcy Code with respect to the Aircraft in the event of a case
under Chapter 11 of the United States Bankruptcy Code in which Federal Express
is a debtor. We note that a recent decision by the United States District
Court for the District of Colorado in connection with the Western Pacific
Airlines, Inc. bankruptcy suggests that the protections of Section 1110 become
unavailable to the lessor or security interest holder once the bankruptcy
trustee or debtor-in-possession, within the 60 day period following the date of
commencement of the reorganization proceedings, agrees to perform the debtor's
obligations that become due on or after such date and cures outstanding
defaults, with the result, among others, that the ability of a lessor or
security interest holder to exercise remedies based on a subsequent default
would be subject to the automatic stay. We believe that this holding is
erroneous because it is inconsistent with the overriding purpose of Section
1110 to protect lessors of, and creditors secured by, qualifying aircraft
against being stayed from exercising their rights while defaults under their
leases or financing agreements remain uncured.
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 Karen M. Clayborne, Senior Vice President and General Counsel
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,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
- -----------------
[name of owner participant]
EXHIBIT A(2)
[Letterhead of Ray, Quinney & Nebeker]
[Certificate Closing Date]
To the Persons Listed in Schedule A Attached Hereto
Re: Federal Express Corporation Trust No. N623FE
--------------------------------------------
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.
N623FE), dated as of June 15, 1998 (the "Participation Agreement"), among
Federal Express Corporation, as Lessee and Initial 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. N623FE (the "Aircraft")
is being financed. This opinion is furnished pursuant to Section 4.01(j)(ii)
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 Collateral Account Control Agreement; 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 or had, on the date of execution thereof,
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 Certificate
Closing 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 Certificate Closing 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 Initial 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,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(3)(a)(i)
[Letterhead of Bingham Dana LLP]
[Certificate Closing Date]
To Each of the Parties Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N623FE
--------------------------------------------
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. N623FE) dated as of June 15, 1998 between State Street and Federal Express
Corporation, as Initial Owner Participant ("Initial Owner Participant") (the
"Trust Agreement") in connection with the transactions contemplated by that
certain Participation Agreement (Federal Express Corporation Trust No. N623FE)
dated as of June 15, 1998 (the "Participation Agreement") by and among Federal
Express Corporation, as Lessee (the "Lessee"); the Initial Owner Participant;
the Owner Trustee; and First Security Bank, National Association, in its
individual capacity and as Indenture Trustee (the "Indenture Trustee"), Pass
Through Trustee and 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(j)(iii) 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) the certificates
delivered to us by the management of State Street and have assumed, without
independent inquiry, the accuracy of those representations and certificates.
We have examined each 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 Initial
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 of each other party thereto (except,
with respect to the Trust Agreement, the Initial Owner Participant);
(ii) except as otherwise set forth in our opinions in
paragraphs 13 and 14 below, the enforceability of any obligation of State
Street, the Owner Trustee and the Initial 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 Initial 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. 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 13 and 14 below, we have
assumed that the Initial 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 Initial 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 Documents
and to issue, execute, deliver and perform its obligations under the
Certificates.
2. 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.
3. The Owner Trustee is duly authorized under the Trust Agreement to
execute, deliver and perform each of the Owner Trustee Documents and each
such Owner Trustee Document 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, 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.
4. Assuming the due authorization, execution and delivery of the
Trust Agreement by the Initial Owner Participant and that the Initial 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 Initial Owner
Participant, enforceable against the Initial Owner Participant in
accordance with the terms thereof.
5. 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, which filing has been duly effected,
and the filing of continuation statements with respect thereto required to
be filed at periodic intervals under the UCC.
6. The Trust Agreement duly creates a legal and valid trust under
Connecticut law; the trust created by the Trust Agreement exists for the
benefit of the Initial Owner Participant as provided therein and creates
for the benefit of the Initial 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.
7. 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.
8. 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.
9. 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.
10. 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, (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 Initial
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
Initial 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.
11. 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.
12. 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 Initial 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.
13. 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 Initial 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.
14. 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 Initial 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,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
[Letterhead of Bingham Dana LLP]
[Certificate Closing Date]
To Each of the Parties Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N623FE
--------------------------------------------
Ladies and Gentlemen:
We have acted as special Connecticut counsel to the Owner Trustee in
connection with the Trust Indenture and Security Agreement (Federal Express
Corporation Trust No. N623FE) dated as of June 15, 1998 (the "Indenture")
between First Security Bank, National Association (the "Indenture Trustee"),
and State Street Bank and Trust Company of Connecticut, National Association,
not in its individual capacity, but solely as Owner Trustee (the "Owner
Trustee"), and the Collateral Account Control Agreement (Federal Express
Corporation Trust No. N623FE) dated as of June 15, 1998 (the "Control
Agreement"), among the Owner Trustee, the Indenture Trustee and State Street
Bank and Trust Company, as Custodian (the "Custodian").
We are issuing this opinion solely in our capacity as counsel to the
Owner Trustee under the circumstances set forth in this paragraph and solely
as to the matters set forth herein. Pursuant to the Indenture, the Owner
Trustee purports to grant to the Indenture Trustee a security interest, inter
alia, in those securities and instruments, presently owned or hereafter
acquired by the Owner Trustee, that are from time to time credited to an
account numbered ______ (the "Collateral Account") established by the Owner
Trustee with the Custodian and which securities and instruments the Owner
Trustee has directed the Custodian to identify on the books and records of the
Custodian as being subject to a security interest in favor of the Indenture
Trustee to secure the payment to the Indenture Trustee of the Owner Trustee's
obligations (the "Obligations") under the Indenture. Those securities and
instruments which the Owner Trustee has directed the Custodian to so identify
on the books of the Custodian as being subject to such security interest, and
which, at the time of reference thereto, have been so identified and have not
been substituted by other property or otherwise withdrawn from such
identification or the Collateral Account, are hereinafter referred to,
collectively, as the "Liquid Collateral." We have assumed with your
permission for purposes of this opinion that the Liquid Collateral consists
solely of assets constituting (a) a "security" or "security entitlement," as
each such term is defined in Section 8-102 of the Uniform Commercial Code as
currently in effect in the State of Connecticut (the "Connecticut UCC"), (b) a
"securities account" (as such term is defined in Section 8-501 of the
Connecticut UCC), (c) a "financial asset," (as such term is defined in Section
8-102 of the Connecticut UCC), held in a securities account and (d) "general
intangibles" (as such term is defined in Section 9-106 of the Connecticut
UCC).
For purposes of this opinion, we have examined the Indenture, the
Control Agreement and such other documents and instruments as are referred to
as having been examined by us for purposes of our opinion letter dated the
date hereof, addressed to the parties listed on Schedule A hereto.
As to all matters of fact, we have examined and have relied entirely
upon the representations and warranties contained in and made pursuant to the
Indenture and the Control Agreement, without any independent investigation of
any kind.
We have assumed the genuineness of all signatures (other than those on
behalf of the Owner Trustee and the Custodian), 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 the Owner Trustee and the Custodian).
For purposes of this opinion, we have made such examination of law as
we have deemed necessary. This opinion is limited solely to the internal
substantive laws of the State of Connecticut as applied by courts located in
the State of Connecticut and, where applicable, the federal laws of the United
States of America, in each case without regard to choice of law. No opinion
is given as to the choice of law which any tribunal may apply to the
transactions referred to herein.
Our opinion is further subject to the following exceptions,
qualifications and assumptions, all of which we understand to be acceptable to
you:
(a) We have assumed without any independent investigation that each
party to the transactions contemplated by the Indenture or the Control
Agreement at all times relevant thereto (other than the Owner Trustee) was
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it was incorporated or organized, and had and has the
full power, authority and legal right under its certificate of
incorporation, articles of organization and other governing documents,
corporate or other enterprise legislation and applicable laws, as the case
may be, to execute and deliver and perform its obligations under all
documents executed by it in connection with those transactions.
(b) We have assumed without any independent investigation (i) the
due authorization, execution and delivery of each of the Indenture and the
Control Agreement by the Indenture Trustee, (ii) that the execution,
delivery and performance by the Indenture Trustee of each of the Indenture
and the Control Agreement does not and will not conflict with, or result in
a breach of, the terms, conditions or provisions of, or result in a
violation of, or constitute a default or require any consent (other than
such consents as have been duly obtained) under, any organizational
document, any order, judgment, arbitration award or stipulation, or any
agreement, to which the Indenture Trustee is a party or is subject or by
which any of the properties or assets of the Indenture Trustee is bound,
(iii) that the Owner Trustee has received "value," as defined under the
Connecticut UCC, for the incurrence of the Obligations, (iv) that, whenever
the Custodian receives instructions from the Owner Trustee for the
Custodian to note on its books and records that any securities or
instruments credited to the Collateral Account are to be subject to a
security interest in favor of the Indenture Trustee to secure the payment
of the Obligations, such instructions will have been duly authorized by or
on behalf of the Owner Trustee and (v) that, when the Indenture Trustee is
to act in connection with any of the transactions contemplated by the
Indenture, it is acting in its capacity as Indenture Trustee.
(c) We have made no examination of, and no opinion is given herein
as to, the Owner Trustee's title to or other ownership rights in, or the
existence of any liens, charges or encumbrances on, or adverse claims
against, the Liquid Collateral, other than the security interest in favor
of the Indenture Trustee as contemplated by the Indenture and the Control
Agreement, and have assumed that the Owner Trustee has, or at the time of
any purported attachment of the security interest in the relevant Liquid
Collateral will have, rights in the Liquid Collateral.
(d) We point out that, pursuant to Part 357 of Title 31 of the
United States Code of Federal Regulations ("CFR"), with respect to United
States "book-entry Treasury securities" maintained by a Federal Reserve
Bank and, pursuant to other relevant sections of the CFR, with respect to
various other securities issued or guaranteed by the federal government of
the United States or an agency thereof or a corporation sponsored thereby
and maintained by a Federal Reserve Bank, the perfection of security
interests granted by commercial, non-governmental parties in book-entry
Treasury securities, or such other federal securities, as the case may be,
held in a securities account of a participant financial institution, such
as the Custodian, maintaining such account with such Federal Reserve Bank,
will be governed by the law of the jurisdiction determined in accordance
with Section 357.11 of Title 31 of the CFR. If that jurisdiction has not
adopted Revised Article 8, then such jurisdiction will be deemed to have
adopted Revised Article 8 for purposes of determining the law governing
such perfection. We confirm that Revised Article 8 has been enacted by
Connecticut as part of the Connecticut UCC and that Revised Article 8 is
currently in effect in Connecticut.
(e) We have also assumed that (i) any securities comprised in the
Liquid Collateral and held by Depository Trust Company or another clearing
corporation will be held by Depository Trust Company or such other clearing
corporation for the direct account of the Custodian and not for the account
of the Custodian through any other securities intermediary, and (ii) any
securities comprised in the Liquid Collateral consisting of "book-entry
Treasury securities" or other uncertificated federal securities will be
credited to a direct account of the Custodian with a Reserve Bank (as such
term is defined in the relevant section of the CFR) and not for the account
of the Custodian through a securities intermediary.
(f) We do not express any opinion as to the attachment or
perfection of any security interest in (i) any securities that are
maintained with, or held on the system of, Cedel S.A., or any like
maintenance, clearing or settlement system operating outside of the United
States of America, (ii) the Collateral Account, to the extent that the
Collateral Account constitutes an asset, other than general intangibles,
separate from the property credited thereto, (iii) any Liquid Collateral
which, at the time of reference thereto, is no longer identified as subject
to a security interest in favor of the Indenture Trustee or has otherwise
been withdrawn from the Collateral Account, or (iv) any identifiable
proceeds of any Liquid Collateral following the lapse of the ten day period
set forth in Section 9-306(3) of the Connecticut UCC, to the extent that
such proceeds do not constitute securities, security entitlements,
financial assets or general intangibles in which a security interest is
perfected in the manner contemplated by this opinion, as if such proceeds
were original Liquid Collateral.
(g) We express no opinion as to the priority of such security
interest over any other or competing interest in or claims against such
Liquid Collateral.
(h) We have assumed that (i) the Custodian, in the ordinary course
of business, accepts for deposit securities as a service for its customers,
maintains securities accounts in the names of such customers reflecting
ownership of or interests in such securities, and, in regard to the
transactions contemplated by the Indenture, is acting in such capacity,
(ii) all securities or other financial assets from time to time credited to
the Collateral Account and to be comprised in the Liquid Collateral will
have been credited to the Collateral Account in such a way as to create
security entitlements in favor of the Owner Trustee, (iii) the records of
the Custodian indicate and will, at the time of reference thereto, indicate
that the aggregate amount of each security or other financial assets
comprised in the Liquid Collateral, together with all other such securities
or other financial assets carried by the Custodian for its customers and
for its proprietary account, is at least equal to the aggregate amount of
such security or other financial assets carried by it for its customers and
for its proprietary account, (iv) the books and records of the Custodian
indicate and will, at the time of reference thereto, indicate that the
securities or other financial assets to be comprised in the Liquid
Collateral are registered on the books and records of the Custodian as
being for the beneficial account of the Owner Trustee, subject to, as
identified on such books and records, the security interest therein in
favor of the Indenture Trustee, and (v) the assumptions contained in this
paragraph are in accordance with laws and regulations currently in effect
as applicable to the Custodian.
(j) In so far as our opinion relates to the enforceability of any
obligations of the Owner Trustee, the enforcement of such obligations may
be limited by bankruptcy, insolvency, reorganization, moratorium,
marshalling or other laws and rules of law affecting the enforcement
generally of creditors' rights and remedies (including such as may deny
giving effect to waivers of debtors' or guarantors' rights); and we express
no opinion as to (i) the status under Section 548 of the Bankruptcy Code
and applicable state fraudulent conveyance laws of the obligations of the
Owner Trustee under the Indenture or interests purported to be granted
pursuant to the Indenture, (ii) the enforceability of any particular
provision of the Indenture relating to remedies after default or as to the
availability of any specific or equitable relief of any kind (and we point
out that the enforcement of any of your rights may in all cases be subject
to an implied duty of good faith and fair dealing and to general principles
of equity, regardless of whether such enforceability is considered in a
proceeding at law or in equity, and, as to any of your rights to collateral
security, will be subject to a duty to act in a commercially reasonable
manner), (iii) the enforceability of any particular provision of the
Indenture relating to (A) waivers of defenses, of rights to trial by jury,
or rights to object to jurisdiction or venue and other rights or benefits
bestowed by operation of law, (B) the effect of suretyship defenses, or
defenses in the nature thereof, with respect to obligations of any
applicable guarantor, joint obligator or surety, (C) waivers of provisions
which are not capable of waiver under Sections 1-102(3) and 9-501(3) of the
Connecticut UCC, (D) the grant of powers of attorney to the Indenture
Trustee, (E) exculpation clauses, indemnity clauses and clauses relating
to releases or waivers of unmatured claims or rights, (F) interest or other
charges that may be usurious under applicable law, or (G) the collection of
interest on overdue interest or providing for a penalty rate of interest or
late charges on overdue or defaulted obligations, or (iv) as to the
availability of any specific or equitable relief of any kind. However,
notwithstanding the qualification set forth in the foregoing clause (ii),
and excluding the parenthetical in that clause, subject to the other
exceptions, qualifications and limitations set forth in this opinion
(including the parenthetical in clause (ii)) and subject to the fact that
there may be economic consequences arising out of any procedural or other
delay on account of the limitation or unenforceability of any particular
provision of the Indenture relating to remedies after default, such
limitation or unenforceability does not, in our judgment, render the
provisions of the Indenture and the Control Agreement relating to remedies
after default, taken as a whole, inadequate for the practical realization
of the benefits of enforcement of a security interest in the Liquid
Collateral following the receipt by the Custodian of an enforcement notice
properly given under the Indenture and the Control Agreement by the
Indenture Trustee to the Custodian with respect to such Liquid Collateral.
(k) With respect to property as to which the security interest
purported to be granted pursuant to the Indenture attaches after the date
hereof, we call to your attention that Section 552 of the Bankruptcy Code
limits the extent to which assets acquired by a debtor after the
commencement of a case under the United States Bankruptcy Code may be
subject to a security interest arising from a security agreement entered
into by the debtor before the commencement of such case. We further call
to your attention that under Section 547 of the Bankruptcy Code, a security
interest that attaches within the relevant period set forth in Section
547(b)(4) of the Bankruptcy Code may be avoidable under certain
circumstances.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Indenture Trustee has, under the terms of the Connecticut
UCC and, in the case of book-entry Treasury securities, under the CFR, a
perfected security interest in the Liquid Collateral that constitutes a
"security," "security entitlement" or "financial asset" (as each such term
is defined in the Connecticut UCC), and in the identifiable proceeds
thereof to secure the payment of the Obligations.
2. The Indenture creates, under the terms of the Connecticut UCC, a
valid security interest in such of the Liquid Collateral that constitutes
"general intangibles" (as such term is defined in Section 9-106 of the
Connecticut UCC) and in the identifiable proceeds thereof to secure the
payment of the Obligations. Upon the filing of a financing statement on
form UCC-1 pursuant to the Connecticut UCC with the Secretary of State of
the State of Connecticut naming the Owner Trustee as Debtor and the
Indenture Trustee as Secured Party and accurately describing the Liquid
Collateral and the Collateral Account, which filing has been duly effected,
such security interest will be perfected (to the extent that the perfection
of a security interest in the Liquid Collateral can be accomplished by the
filing in Connecticut of financing statements under the Connecticut UCC).
We point out that:
(a) The effectiveness of a financing statement will lapse (i) on
the expiration of a five-year period from their dates of filing, or (if
later) five years from the last date as to which such financing statements
were effective following the proper filing of continuation statements with
respect thereto, unless continuation statements are filed within six months
prior to the expiration of the applicable five-year period, (ii) with
respect to general intangibles in which a security interest has been
perfected by the filing of a financing statement in the jurisdiction of the
location of the debtor, for a period of more than four months after the
debtor has changed its location from that jurisdiction to a new
jurisdiction unless such security is perfected in the new jurisdiction
within the earlier to occur of the end of such four month period or the
date on which such financing statement would have otherwise lapsed, and
(iii) with respect to "investment property," under and as defined in
Revised Article 8, in which a security interest has been perfected by the
filing of a financing statement in the jurisdiction of the location of the
debtor, from the time that the debtor changes its location from that
jurisdiction to a new jurisdiction unless such security interest is
perfected in the new jurisdiction on or before the time of such change of
location.
(b) If any debtor changes its name, identity or corporate structure
such that any financing statement becomes misleading, such financing
statement will be ineffective to perfect a security interest in any
collateral acquired by such debtor more than four months after such change.
We assume no obligation to update this opinion as a result of any
change in any fact, circumstance or statute or other rule of law occurring
after the date hereof.
This opinion is delivered to you solely in connection with the
transactions referred to herein and for your sole use and no other person or
entity may rely on this opinion without our express written consent.
Very truly yours,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(3)(a)(ii)
[Letterhead of Bingham Dana LLP]
[Delivery Date]
To Each of the Parties Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N623FE
--------------------------------------------
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. N623FE) dated as of June 15, 1998, as amended and restated as of
______________ between State Street and ___________________, as Owner
Participant ("Owner Participant") (the "Trust Agreement") in connection with
the transactions contemplated by that certain Participation Agreement (Federal
Express Corporation Trust No. N623FE) dated as of June 15, 1998, as amended
and restated as of ______________ (the "Participation Agreement") by and among
Federal Express Corporation, as Lessee (the "Lessee") and the Initial Owner
Participant; the Owner Participant; the Owner Trustee; and First Security
Bank, National Association, in its individual capacity and as Indenture Trustee
(the "Indenture Trustee"), Pass Through Trustee and 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 4.02(d)(iii) 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) the certificates
delivered to us by the management of State Street and have assumed, without
independent inquiry, the accuracy of those representations and certificates.
We have examined each 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 of each other party thereto (except,
with respect to the Trust Agreement, the Owner Participant);
(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.
Except as set forth in paragraph 12 below, which opinion is based
solely upon our review of Uniform Commercial Code search reports conducted
with the Secretary of the State of the State of Connecticut, 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. 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 or had, on the date of execution
thereof, 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 Documents 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 or had, on the date of execution thereof, 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 Documents and each
such Owner Trustee Document 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, 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, which filing has been duly effected,
and the filing of continuation statements with respect thereto required to
be filed at periodic intervals under the UCC.
7. 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, (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,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
- -----------------
[name of owner participant]
EXHIBIT A(4)
[Letterhead of Ray, Quinney & Nebeker]
[Certificate Closing Date]
To the Persons Listed in Schedule A Attached Hereto
Re: Federal Express Corporation Trust No. N623FE
--------------------------------------------
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 the
date hereof 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 1998-1-A, 1998-1-B and 1998-1-C,
respectively (the "Series Supplements") and the Participation Agreement
(Federal Express Corporation Trust No. N623FE), dated as of June 15, 1998 (the
"Participation Agreement"), among Federal Express Corporation, as Lessee and
Initial 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.
N623FE (the "Aircraft") is being financed. This opinion is furnished pursuant
to Section 4.01(j)(v) 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) are being
collectively referred to as the "Pass Through Trustee Documents" and each of
the documents identified in paragraphs (d) through (f) 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 below, 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. 333-49411 (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 the Owner Participant, nor the
Owner Trustee, 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), governmental fee or other similar charge under the laws of
the State of Utah or any political subdivision thereof (other than taxes
imposed on the fees received by First Security 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),
governmental fee or other similar 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 Pass Through 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 Pass Through 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 Pass Through
Trustee, of the Pass Through 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 Pass
Through 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,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(5)(a)
[Letterhead of Kreditanstalt fur Wiederaufbau]
[Certificate Closing Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation 1998-1 Pass Through Trusts
------------------------------------------------------
Ladies and Gentlemen:
In my capacity as General Counsel of Kreditanstalt fur Wiederaufbau
("KfW") I am rendering this opinion in connection with (i) the Irrevocable
Revolving Credit Agreement Class A Pass Through Certificates, dated as of June
15, 1998 (the "Class A Liquidity Agreement"), between KfW and First Security
Bank, National Association, a national banking association, as Subordination
Agent under the Intercreditor Agreement (as defined below), and as agent and
trustee for the Federal Express Corporation 1998-1-A Pass Through Trust, (ii)
the Irrevocable Revolving Credit Agreement Class B Pass Through Certificates,
dated as of June 15, 1998 (the "Class B Liquidity Agreement" and, together
with the Class A Liquidity Agreement, the "Liquidity Agreements"), between KfW
and First Security Bank, National Association, a national banking association,
as Subordination Agent under the Intercreditor Agreement, and as agent and
trustee for the Federal Express Corporation 1998-1-B Pass Through Trust, and
(iii) the Intercreditor Agreement, dated as of June 15, 1998 (the
"Intercreditor Agreement"), among KfW, First Security Bank, National
Association, a national banking association, as Pass Through Trustee and as
Subordination Agent (the Liquidity Agreements and the Intercreditor Agreement
are hereinafter collectively referred to as the "Relevant Documents").
Capitalized terms herein which are undefined have the meanings
assigned thereto in the Relevant Documents.
For purposes of this legal opinion, I have examined a copy of each of
the Relevant Documents and such other certificates, documents, agreements and
instruments as I have deemed necessary as a basis for the opinions expressed
below.
In giving this opinion, I have assumed the genuineness of all
signatures, the authenticity of all agreements, certificates, instruments and
documents submitted to me as originals, and the conformity to the originals of
all agreements, certificates, instruments and documents submitted to me as
copies. As to questions of fact material to the opinions expressed below, I
have, when relevant facts were not independently established by me, examined
and relied upon representations of officers of KfW.
Based upon and subject to the foregoing examination and assumptions,
and subject to the qualifications set forth below, I am of the opinion that:
1. KfW is duly organized and validly existing as a corporation under
the public law of the Federal Republic of Germany and has full power and
authority (corporate and otherwise) to execute, deliver and perform the
Relevant Documents.
2. Mr. Scheer and Mr. Behler, acting together, are both duly
authorized by KfW to execute and deliver the Relevant Documents for and on
behalf of KfW.
3. The governing-law clause, subjecting the Relevant Documents to New
York law, is valid under German law.
(i) Under German law, New York law will be applied to an agreement,
such as the Relevant Documents, which under German law has been
validly subjected to New York law.
(ii) (a) None of the terms of the Relevant Documents is
irreconcilable with important principles of German law, and (b) there
are no mandatory provisions of German law which must be applied to
the transactions covered by the Relevant Documents.
4. No notice to or filing with, any governmental, administrative or
other authority or court of the Federal Republic of Germany is required for
the execution or delivery of the Relevant Documents by KfW or for the
performance by KfW of the Relevant Documents.
5. Assuming the validity under New York law of the Relevant
Documents:
(i) The Relevant Documents constitute legal, valid and binding
obligations of KfW enforceable against KfW in accordance with their
respective terms.
(ii) A judgment obtained against KfW in the courts of the State of
New York in any suit, action or proceeding arising out of the
Relevant Documents will be enforceable against KfW in the courts of
Germany without further litigation or examination on the merits of
such suit, action or proceeding, provided that conditions in terms
of Section 328 of the German Zivilprozeordnung (Code of Civil
Procedure) - notably (a) if reciprocity is not guaranteed; (b) if
according to German law the foreign venue is improper, and if
procedural rules have not been observed by the court to the
disadvantage of the defendant; (c) if the judgment obtained is
irreconcilable with important principles of German law or would
conflict with German basic rights (see 3(ii) above) - do not bar the
judgment from recognition.
(iii) The obligations of KfW under the Relevant Documents rank at
least equal in priority of payment and in all other respects with its
obligations to pay any other unsecured and unsubordinated obligations
of KfW for borrowed money, including deposit liabilities, that are
not expressly preferred by law.
6. The waiver of immunity set forth in Section 7.11(c) of each of the
Liquidity Agreements and Section 10.11(c) of the Intercreditor Agreement is
valid under German law.
The foregoing opinions are subject to the following qualifications:
(i) The opinion in paragraph (5) with respect to enforceability is
subject to the effect of any bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws affecting creditors' rights
generally, applicable to KfW and to any law or general principle of
law from time to time in effect in the Federal Republic of Germany
that could be considered by the German Courts as a provision of
public policy.
(ii) No opinion is expressed with respect to the law of any
jurisdiction other than the laws of the Federal Republic of Germany.
This opinion is being furnished to you solely for your benefit in
connection with the transactions described above and may not be used,
circulated, quoted or otherwise referred to for any other purpose without my
express written consent.
Very truly yours,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
EXHIBIT A(5)(b)
[Letterhead of Kreditanstalt fur Wiederaufbau]
[Certificate Closing Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation 1998-1 Pass Through Trusts
------------------------------------------------------
Ladies and Gentlemen:
In my capacity as General Counsel of Kreditanstalt fur Wiederaufbau
("KfW") I am rendering this opinion in connection with (i) Letter of Credit
No. ______________ dated July ___, 1998 (the "Letter of Credit") issued by KfW
in favor of First Security Bank, National Association, as Subordination Agent
(the "Subordination Agent") under the Intercreditor Agreement dated as of June
15, 1998 among First Security Bank, National Association, as Pass Through
Trustee, KfW, as Class A Liquidity Provider and Class B Liquidity Provider,
and the Subordination Agent, (ii) the Reimbursement Agreement dated July ___,
1998 (the "Reimbursement Agreement") between KfW and Federal Express
Corporation and (iii) the letter dated July ___, 1998 (the "Letter Agreement"
and, together with the Letter of Credit and the Reimbursement Agreement, the
"Relevant Documents") from KfW to the Subordination Agent.
Capitalized terms herein which are undefined have the meanings
assigned thereto in the Relevant Documents.
For purposes of this legal opinion, I have examined a copy of each of
the Relevant Documents and such other certificates, documents, agreements and
instruments as I have deemed necessary as a basis for the opinions expressed
below.
In giving this opinion, I have assumed the genuineness of all
signatures, the authenticity of all agreements, certificates, instruments and
documents submitted to me as originals, and the conformity to the originals of
all agreements, certificates, instruments and documents submitted to me as
copies. As to questions of fact material to the opinions expressed below, I
have, when relevant facts were not independently established by me, examined
and relied upon representations of officers of KfW.
Based upon and subject to the foregoing examination and assumptions,
and subject to the qualifications set forth below, I am of the opinion that:
1. KfW is duly organized and validly existing as a corporation under
the public law of the Federal Republic of Germany and has full power and
authority (corporate and otherwise) to execute, deliver and perform the
Relevant Documents.
2. Mr. Scheer and Mr. Behler, acting together, are both duly
authorized by KfW to execute and deliver the Relevant Documents for and on
behalf of KfW.
3. The governing-law clause, subjecting the Relevant Documents to New
York law, is valid under German law.
(i) Under German law, New York law will be applied to an agreement,
such as the Relevant Documents, which under German law has been
validly subjected to New York law.
(ii) (a) None of the terms of the Relevant Documents is
irreconcilable with important principles of German law, and (b) there
are no mandatory provisions of German law which must be applied to
the transactions covered by the Relevant Documents.
4. No notice to or filing with, any governmental, administrative or
other authority or court of the Federal Republic of Germany is required for
the execution or delivery of the Relevant Documents by KfW or for the
performance by KfW of the Relevant Documents.
5. Assuming the validity under New York law of the Relevant
Documents:
(i) The Relevant Documents constitute legal, valid and binding
obligations of KfW enforceable against KfW in accordance with their
respective terms.
(ii) A judgment obtained against KfW in the courts of the State of
New York in any suit, action or proceeding arising out of the
Relevant Documents will be enforceable against KfW in the courts of
Germany without further litigation or examination on the merits of
such suit, action or proceeding, provided that conditions in terms
of Section 328 of the German Zivilprozeordnung (Code of Civil
Procedure) - notably (a) if reciprocity is not guaranteed; (b) if
according to German law the foreign venue is improper, and if
procedural rules have not been observed by the court to the
disadvantage of the defendant; (c) if the judgment obtained is
irreconcilable with important principles of German law or would
conflict with German basic rights (see 3(ii) above) - do not bar the
judgment from recognition.
(iii) The obligations of KfW under the Relevant Documents rank at
least equal in priority of payment and in all other respects with its
obligations to pay any other unsecured and unsubordinated obligations
of KfW for borrowed money, including deposit liabilities, that are
not expressly preferred by law.
The foregoing opinions are subject to the following qualifications:
(i) The opinion in paragraph (5) with respect to enforceability is
subject to the effect of any bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws affecting creditors' rights
generally, applicable to KfW and to any law or general principle of
law from time to time in effect in the Federal Republic of Germany
that could be considered by the German Courts as a provision of
public policy.
(ii) No opinion is expressed with respect to the law of any
jurisdiction other than the laws of the Federal Republic of Germany.
This opinion is being furnished to you solely for your benefit in
connection with the transactions described above and may not be used,
circulated, quoted or otherwise referred to for any other purpose without my
express written consent.
Very truly yours,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
EXHIBIT A(5)(c)
[Letterhead of Milbank, Tweed, Hadley & McCloy]
[Certificate Closing Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation 1998-1 Pass Through Trusts
------------------------------------------------------
Ladies and Gentlemen:
We have acted as special New York counsel to Kreditanstalt fur
Wiederaufbau (herein called "KfW") in connection with the transactions
contemplated by (i) the Irrevocable Revolving Credit Agreement Class A Pass
Through Certificates, dated as of June 15, 1998 (the "Class A Liquidity
Agreement"), between KfW and First Security Bank, National Association, as
Subordination Agent under the Intercreditor Agreement, as defined below, as
agent and trustee for the Federal Express Corporation 1998-1-A Pass Through
Trust, (ii) the Irrevocable Revolving Credit Agreement Class B Pass Through
Certificates, dated as of June 15, 1998 (the "Class B Liquidity Agreement"
and, together with the Class A Liquidity Agreement, the "Liquidity
Agreements"), between KfW and First Security Bank, National Association, as
Subordination Agent under the Intercreditor Agreement, as defined below, as
agent and trustee for the Federal Express Corporation 1998-1-B Pass Through
Trust and (iii) the Intercreditor Agreement, dated as of June 15, 1998 (the
"Intercreditor Agreement" and, together with the Liquidity Agreements, the
"Relevant Documents"), among KfW and First Security Bank, National
Association, as Pass Through Trustee and as Subordination Agent. Capitalized
terms used herein but not otherwise defined herein shall have the meanings
provided in the Relevant Documents.
In rendering the opinion expressed below, we have examined the
Relevant Documents, the opinion dated the date hereof of Ruediger Sass,
General Counsel of KfW, and such other documents as we have deemed necessary.
In our examination, we have assumed the authenticity of all documents
submitted to us as originals and the conformity with authentic original
documents of all documents submitted to us as copies. When relevant facts
were not independently established, we have relied upon representations made
in or pursuant to the Relevant Documents.
In rendering the opinion expressed below, we have assumed, with
respect to each Relevant Document, that:
(i) it has been duly authorized by, has been duly executed and
delivered by, and (except to the extent set forth in the opinion
below as to KfW) constitutes legal, valid, binding and enforceable
obligations of all of the parties thereto;
(ii) all signatories thereto have been duly authorized; and
(iii) all of the parties thereto are duly organized and validly existing
and have the power and authority (corporate, partnership, trust or
otherwise) to execute, deliver and perform thereunder.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinion
expressed below, we are of the opinion that each Relevant Document constitutes
the legal, valid and binding obligation of KfW, enforceable against KfW in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or transfer or other similar
laws relating to or affecting the rights of creditors generally and except as
the enforceability of such Relevant Document is subject to the application of
general principles of equity (regardless of whether considered in a proceeding
in equity or at law), including, without limitation, (a) the possible
unavailability of specific performance, injunctive relief or any other
equitable remedy and (b) concepts of materiality, reasonableness, good faith
and fair dealing.
The foregoing opinion is subject to the following comments and
qualifications:
(A) The enforceability of provisions in the Relevant Documents to
the effect that terms may not be waived or modified except in writing
may be limited under certain circumstances.
(B) We express no opinion as to (i) the effect of the laws of any
jurisdiction in which KfW is located (other than New York) that limit
the interest, fees or other charges KfW may impose for the loan or use
of money or other credit, (ii) Section 7.11(a)(i) of each Liquidity
Agreement and Section 10.11(a)(i) of the Intercreditor Agreement,
insofar as such Sections relate to the subject matter jurisdiction of a
Federal court sitting in New York, New York to adjudicate any
controversy related to the Relevant Documents, (iii) the waiver of
inconvenient forum set forth in Section 7.11(a)(ii) of each Liquidity
Agreement and Section 10.11(a)(ii) of the Intercreditor Agreement with
respect to proceedings in a Federal court sitting in New York, New York
and a State court of the State of New York and (iv) the waiver of
immunity set forth in Section 7.11(c) of each Liquidity Agreement and
Section 10.11(c) of the Intercreditor Agreement with respect to
proceedings in a Federal court sitting in New York, New York and a State
court of the State of New York.
The foregoing opinion is limited to matters involving the Federal
laws of the United States of America and the law of the State of New York, and
we do not express any opinion as to the laws of any other jurisdiction. In
particular, we do not express any opinion as to the laws of Germany and, to
the extent such laws may be relevant to the opinion expressed herein, we have,
with your permission, relied upon the aforementioned opinion of Ruediger Sass,
Esq., General Counsel of KfW, without independently considering the matters
covered thereby, and our opinion is subject to all limitations, exceptions and
qualifications contained therein as if set forth herein in full.
At the request of KfW, this opinion letter is provided to you by
us in our capacity as special New York counsel to KfW, and this opinion letter
may not be relied upon by any Person for any purpose other than in connection
with the transactions contemplated by the Relevant Documents without, in each
instance, our prior written consent.
Very truly yours,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
EXHIBIT A(5)(d)
[Letterhead of Milbank, Tweed, Hadley & McCloy]
[Certificate Closing Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation 1998-1 Pass Through Trusts
------------------------------------------------------
Ladies and Gentlemen:
We have acted as special New York counsel to Kreditanstalt fur
Wiederaufbau (herein called "KfW") in connection with (i) Letter of Credit No.
______________ dated July ___, 1998 (the "Letter of Credit") issued by KfW in
favor of First Security Bank, National Association, as Subordination Agent
(the "Subordination Agent") under the Intercreditor Agreement dated as of June
15, 1998 among First Security Bank, National Association, as Pass Through
Trustee, KfW, as Class A Liquidity Provider and Class B Liquidity Provider,
and the Subordination Agent, (ii) the Reimbursement Agreement dated July ___,
1998 (the "Reimbursement Agreement") between KfW and Federal Express
Corporation, and (iii) the letter dated July ___, 1998 (the "Letter Agreement"
and, together with the Letter of Credit and the Reimbursement Agreement, the
"Relevant Documents") from KfW to the Subordination Agent.
In rendering the opinions expressed below, we have examined each of
the Relevant Documents, the opinion dated the date hereof of Ruediger Sass,
General Counsel of KfW, and such other documents as we have deemed necessary
as a basis for the opinions expressed below.
In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity with authentic original documents of all documents submitted to
us as copies. When relevant facts were not independently established, we have
relied upon statements of governmental officials and upon certificates of
appropriate representatives of KfW.
In rendering the opinions expressed below, we have assumed, with
respect to all of the documents referred to in this opinion letter, that:
(i) such documents been duly authorized by, have been duly executed and
delivered by, and (except to the extent set forth in the opinion
below as to KfW) constitute legal, valid, binding and enforceable
obligations of, all of the parties to such documents;
(ii) all signatories to such documents have been duly authorized; and
(iii) all of the parties to such documents are duly organized and validly
existing and have the power and authority (corporate, trust or
otherwise) to execute, deliver and perform such documents.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinions
expressed below, we are of the opinion that each of the Relevant Documents
constitutes valid and binding obligations of KfW enforceable against KfW in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, conservatorship, receivership, moratorium or other similar
laws relating to or affecting the rights of creditors generally (as such laws
would apply in the event of the insolvency, liquidation, reorganization,
conservatorship or receivership of, or other similar occurrence with respect
to, KfW) and except as the enforceability of such Relevant Document is subject
to the application of general principles of equity (regardless of whether
considered in a proceeding in equity or at law), including, without limitation,
(a) the possible unavailability of specific performance, injunctive relief or
any other equitable remedy and (b) concepts of materiality, reasonableness,
good faith and fair dealing.
The foregoing opinion is subject to the following comments and
qualifications:
(A) The enforceability of any provision in any of the Relevant
Documents to the effect that the terms thereof may not be waived or
modified except in writing may be limited as provided in Section
15-301(1) of the New York General Obligations Law and Section 1-205(3)
of the New York Uniform Commercial Code.
(B) With respect to our opinion above as it pertains to the
Letter of Credit, we call your attention to Wysko Investment Co. v.
Great American Bank, 131 B.R. 146 (D. Ariz. 1991), which holds that a
bankruptcy court may enjoin payment under a letter of credit pursuant to
Section 105 of the United States Bankruptcy Code, 11 U.S.C. Section 105,
in unusual circumstances. Id. at 147. In that case, the unusual
circumstance was a bankruptcy court finding that the injunction was
necessary for the reorganization. Id. at 148. In addition, In re
Delaware River Stevedores, Inc., 129 B.R. 38 (Bankr. E.D. Pa. 1991),
suggests that "an injunction prohibiting payment on a L/C could
conceivably be appropriate" if certain factors relating to issuing
Section 105(a) injunctions "generally weighed in the debtor's favor."
Id. at 42, citing In re Guy C. Long, Inc., 74 B.R. 939 (Bankr. E.D. Pa.
1987). To the extent that the rationale of Wysko Investment Co. or
Delaware River Stevedores would support the issuance of a permanent
injunction against payment under the Letter of Credit, we are of the
opinion that those cases do not reflect a correct statement of the law
in respect of letters of credit and are not controlling precedent in any
court exercising bankruptcy jurisdiction outside of Arizona or the
Eastern District of Pennsylvania, as the case may be.
(C) We express no opinion as to whether a court exercising
bankruptcy jurisdiction might issue a temporary restraining order or
other interim relief in order to preserve the status quo concerning the
Letter of Credit pending a review of the merits of any request to enjoin
payment under the Letter of Credit.
The foregoing opinions are limited to matters involving the
Federal laws of the United States and the law of the State of New York, and we
do not express any opinion as to the laws of any other jurisdiction. In
particular, we do not express any opinion as to the laws of Germany and, to
the extent such laws may be relevant to the opinion expressed herein, we have,
with your permission, relied upon the aforementioned opinion of Ruediger Sass,
Esq., General Counsel of KfW, without independently considering the matters
covered thereby, and our opinion is subject to all limitations, exceptions and
qualifications contained therein as if set forth herein in full.
This opinion letter is provided to you by us in our capacity as
special New York counsel to KfW and may not be relied upon by any other person
or entity or by you for any purpose other than in connection with the Relevant
Documents without, in each instance, our prior written consent.
Very truly yours,
SCHEDULE A
Lessee and Initial Owner Participant
- ------------------------------------
Federal Express Corporation
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
Kreditanstalt fur Wiederaufbau
EXHIBIT A(6)
[Letterhead of McDonnell Douglas Corporation]
[Delivery Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N623FE
--------------------------------------------
You have requested that McDonnell Douglas Corporation, a
wholly-owned subsidiary of The Boeing Company (the "Manufacturer") furnish you
an opinion in connection with Section 4.02(d) of the Participation Agreement
(Federal Express Corporation Trust No. N623FE), dated as of June 15, 1998, as
amended and restated as of ________________ (the "Participation Agreement"),
among Federal, as Lessee and Initial Owner Participant, ____________________,
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, with
respect to a McDonnell Douglas Model MD-11F aircraft bearing Federal Aviation
Administration registration number N623FE and Manufacturer's serial number
48794 (including the engines installed thereon but excluding equipment
furnished by the Lessee therefor, the "Aircraft").
In this regard, the Office of the General Counsel for Douglas
Aircraft Company, a division of the Manufacturer has examined and is familiar
with the Manufacturer's Articles of Incorporation and Bylaws, as amended,
including provisions thereof with respect to the Boards of Directors. In
addition, we have examined, among other things (1) Purchase Agreement No.
A00431B dated as of March 17, 1998 between the Lessee and the Manufacturer,
(2) the Manufacturer's Consent and Agreement to the Purchase Agreement
Assignment (Federal Express Corporation Trust No. N623FE) dated as of June 15,
1998 between the Lessee and the Owner Trustee and (3) the Manufacturer's
Warranty Bill of Sale and FAA Bill of Sale conveying title to the Aircraft to
the Lessee (such documents executed by the Manufacturer are hereby
collectively referred to as the "Manufacturer Documents").
Based upon the foregoing and upon statements of appropriate
Manufacturer employees as to factual matters and upon examination of the law
as it deems necessary for the purposes of this Opinion, this Office is of the
following opinion:
1. The Manufacturer is a corporation duly incorporated and
validly existing in good standing under the laws of the State of Maryland, and
is duly qualified and authorized to do business as a foreign corporation in,
among other jurisdictions, the state of California.
2. The Manufacturer has the full corporate power, authority, and
legal right to execute, deliver and perform under the Manufacturer Documents
and the execution, delivery and performance by the Manufacturer of its
obligations under the Manufacturer Documents have been duly authorized by all
necessary corporate action on the part of the Manufacturer.
3. The Manufacturer Documents have been duly executed and
delivered by, and, on the assumption that they have been duly executed and
delivered by all other parties thereto, constitute the legal, valid and
binding obligations of, the Manufacturer, enforceable in accordance with the
respective terms thereof, do not require any stockholder approval, do not, to
the best of our knowledge, require any approval or consent of any trustee or
holder of any indebtedness or obligations of the Manufacturer, and do not
contravene the Certificate of Incorporation or by-laws of the Manufacturer, or
any indenture, mortgage, contract, instrument, or other agreement, in each
case known to us, to which the Manufacturer is a party or by which it or any of
its properties is bound.
4. Good title to the Aircraft was at the time of delivery by the
Manufacturer to the Lessee vested in the Manufacturer, free and clear of all
liens, claims, encumbrances, security interests, and rights of others; and
assuming the filing for recordation of the FAA Bill of Sale in accordance with
the provisions of the Federal Aviation Act of 1958, as amended, good title to
the Aircraft was on such date duly conveyed by the Manufacturer to the Lessee,
free and clear of all liens, claims, encumbrances, security interests, and
rights of others.
5. Each of the FAA Bill of Sale and the Warranty Bill of Sale
covering the Aircraft constituted an effective instrument for the conveyance
of good title to the Aircraft to the Lessee, given the filing for recordation
of the FAA Bill of Sale for the Aircraft in accordance with the provisions of
the Federal Aviation Act of 1958 as amended.
6. The Aircraft was duly delivered by the Manufacturer to the
Lessee and (as evidenced by the Lessee's execution of a receipt for the
Aircraft) duly accepted by the Lessee pursuant to the Purchase Agreement. For
purposes of this opinion, I have assumed that the Lessee had the power and
authority to accept title to and delivery of the Aircraft on the date of
delivery and that the representative acting on behalf of the Lessee was duly
authorized to accept title to and delivery of the Aircraft on the Lessee's
behalf.
Insofar as the foregoing opinion relates to the enforceability of
any instrument, such enforceability is subject to applicable bankruptcy,
insolvency, moratorium and other similar laws affecting the enforcement of
creditors' rights generally (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
No opinion is expressed as to laws other than the corporate law of
the State of Maryland, the laws of the State of California and the Federal
laws of the United States of America.
Very truly yours,
SCHEDULE A
Lessee and Initial Owner Participant
------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
- -----------------
[name of owner participant]
EXHIBIT A(7)
[Letterhead of Pratt & Whitney]
[Delivery Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N623FE
--------------------------------------------
Reference is made to (i) that certain Participation Agreement (Federal
Express Corporation Trust No. N623FE), dated as of June 15, 1998, as amended
and restated as of _______________ (the "Participation Agreement") by and
among Federal Express Corporation, as Lessee and Initial Owner Participant
("Fed Ex"), ________________________, 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) and (ii) that certain Purchase Agreement Assignment
(Federal Express Corporation Trust No. N623FE), dated as of June 15, 1998 (the
"Purchase Agreement Assignment") between Fed Ex, as Lessee and SSB, as Lessor.
I am an attorney employed by Pratt & Whitney (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 Engine Consent and Agreement (the "Consent"). The Consent covers three
Pratt & Whitney 4462 series engines bearing Engine Manufacturer's serial
numbers ___-___, ___-___ and ___-___, 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.
_______, dated as of _____________ between the Engine Manufacturer and Fed Ex
(the "General Terms Agreement"), the Participation Agreement and the Purchase
Agreement Assignment.
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 and the Purchase Agreement Assignment.
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 and the Purchase
Agreement Assignment 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 and the
Purchase Agreement Assignment 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.
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 and the Consent. The execution,
delivery and performance by the Engine Manufacturer of each of the
General Terms Agreement and the Consent was duly authorized by all
necessary corporate action on the part of the Engine Manufacturer.
(2) Each of the General Terms Agreement and the Consent 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.
The foregoing opinions are limited to the laws of the State of
__________ 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,
SCHEDULE A
Lessee
- ------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
- -----------------
[name of owner participant]
EXHIBIT A(8)
[Letterhead of Daugherty, Fowler & Peregrin]
[Delivery Date]
To the Parties Named on Schedule A attached hereto
Re: Federal Express Corporation Trust No. N623FE
--------------------------------------------
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 4.02(d)(vii)
of the Participation Agreement (Federal Express Corporation Trust No. N623FE),
dated as of June 15, 1998, as amended and restated as of _____________ (the
"Participation Agreement") among Federal Express Corporation, as Lessee (the
"Lessee") and Initial Owner Participant, _________________, 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._.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._.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._.T.;
(d) executed counterpart of Trust Agreement (Federal Express
Corporation Trust No. N623FE) dated as of June 15, 1998, as
amended and restated as of ____________ (the "Trust
Agreement") between the Owner Participant and the Owner
Trustee, which Trust Agreement was filed at ____ _.m.,
C._.T.;
(e) executed counterpart of Trust Indenture and Security
Agreement (Federal Express Corporation Trust No. N623FE)
dated as of June 15, 1998, as amended and restated as of
_____________ (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. N623FE) 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._.T.; and,
(f) executed counterpart of Lease Agreement (Federal Express
Corporation Trust No. N623FE) dated as of June 15, 1998, as
amended and restated as of ______________ (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. N623FE) 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._.T.
The Confidential Omissions were intentionally omitted from the FAA
filing counterparts of the Lease and the Trust Indenture as containing
confidential financial information.
Based upon our examination of the above described instruments and
of such records of the FAA as we deemed necessary to render this opinion, it
is our opinion that:
1. the FAA Bill of Sale, the Trust Indenture with the Trust
Indenture Supplement attached and the Lease with the Lease
Attachments attached are in due form for recordation by and
have been duly filed for recordation with the FAA pursuant
to and in accordance with the provisions of 49 U.S.C.
Section 44107;
2. the Aircraft Registration Application, the Owner Trustee
Affidavit with the Owner Participant Affidavit attached and
the Trust Agreement are in due form for filing and have been
duly filed with the FAA pursuant to and in accordance with
the provisions of 49 U.S.C. Section 44103(a) and Section
47.7(c) of the Federal Aviation Regulations;
3. the Airframe is eligible for registration under 49 U.S.C.
Section 44102 in the name of the Owner Trustee and the
filing with the FAA of the FAA Bill of Sale, the Aircraft
Registration Application, the Owner Trustee Affidavit with
the Owner Participant Affidavit attached and the Trust
Agreement will cause the FAA to register the Airframe, in
due course, in the name of the Owner Trustee and to issue to
the Owner Trustee an AC Form 8050-3 Certificate of Aircraft
Registration for the Airframe, and the Airframe will be duly
registered pursuant to and in accordance with the provisions
of 49 U.S.C. Section 44103(a);
4. the Owner Trustee has valid legal title to the Airframe and
the Aircraft is free and clear of all Liens, except (i) the
security interest created by the Trust Indenture, as
supplemented by the Trust Indenture Supplement, and (ii) the
rights of the parties under the Lease, as supplemented by
the Lease Supplement;
5. the rights of the Owner Trustee and the Lessee under the
Lease, as supplemented by the Lease Supplement, with respect
to the Aircraft, are perfected;
6. the Trust Indenture, as supplemented by the Trust Indenture
Supplement, constitutes a duly perfected first priority
security interest in the Aircraft and a duly perfected first
assignment of all the right, title and interest of the Owner
Trustee in, to and under the Lease and the Lease Supplement
(insofar as such assignment affects an interest covered by
the recording system established by the FAA pursuant to 49
U.S.C. Section 44107), and no other registration of the
Airframe or filings other than filings with the FAA (which
have been duly effected) are necessary in order to perfect
in any applicable jurisdiction in the United States (A) the
Owner Trustee's title to the Airframe or (B) such security
interest and assignment (insofar as such assignment affects
an interest covered by the recording system established by
the FAA pursuant to 49 U.S.C. Section 44107), it being
understood that no opinion is herein expressed as to the
validity, priority or enforceability of such security
interest and assignment under local law or as to the
recognition of the perfection of such security interest and
assignment as against third parties in any legal proceeding
outside the United States;
7. no authorization, approval, consent, license or order of, or
registration with, or the giving of notice to, the FAA is
required for the valid authorization, delivery and
performance of the Lease, as supplemented by the Lease
Supplement, the Trust Indenture, as supplemented by the
Trust Indenture Supplement, or the Trust Agreement except
for such filings as are referred to above; and,
8. neither the execution and delivery by the Owner Participant
of the Participation Agreement or the Trust Agreement, nor
other consummation of the transactions contemplated thereby
by the Owner Participant, requires the consent or approval
of, or the giving of notice to, or the registration of, or
the taking of any other action in respect of the FAA, except
(x) the registration of the Airframe, including the
submission of the Aircraft Registration Application, the
Owner Trustee Affidavit, the Owner Participant Affidavit and
the Trust Agreement to the FAA and (y) the filings for
recordation specified elsewhere in this opinion.
No opinion is expressed as to the Airframe during any period or
periods of time during which it has not been subject to United States
registration.
No opinion is expressed as to laws other than Federal laws of the
United States. In rendering this opinion, we were subject to the accuracy of
the FAA, its employees and agents, in the filing, indexing and recording of
instruments filed with the FAA and in the search for encumbrance
cross-reference index cards for the Engines. Further, in rendering this
opinion we are assuming the validity and enforceability of the above described
instruments under local law. Since our examination was limited to records
maintained by the FAA, our opinion does not cover liens which are perfected
without the filing of notice thereof with the FAA, such as federal tax liens,
liens arising under Section 1368(a) of Title 29 of the United States Code,
possessory artisan's liens, or matters of which the parties have 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,
Annex I
Certain Definitions
-------------------
Airframe, Engines and Aircraft
------------------------------
One (1) McDonnell Douglas MD-11F aircraft bearing manufacturer's
serial number 48794 and U.S. Registration No. N623FE (the "Airframe") and
three (3) Pratt & Whitney 4462 aircraft engines bearing manufacturer's serial
numbers ___-___, ___-___ and ___-___ (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) of the Lease set forth in Ancillary Agreement II, which was not
attached to the FAA filing counterpart of the Lease or otherwise filed with
the FAA for recordation.
SCHEDULE A
Lessee and Initial Owner Participant
------------------------------------
Federal Express Corporation
Owner Trustee
- -------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
- -------------------------------------------------------------
First Security Bank, National Association
Underwriters
- ------------
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
- ------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
- -----------------
[name of owner participant]
EXHIBIT B
[Form of Lease Agreement - See Exhibit 4.e to this Form 8K]
EXHIBIT C
[Form of Indenture - See Exhibit 4.b.1 to this Form 8K]
EXHIBIT D
[Form of Trust Agreement - See Exhibit 4.d to this Form 8K]
EXHIBIT E
PURCHASE AGREEMENT ASSIGNMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N623FE)
PURCHASE AGREEMENT ASSIGNMENT (FEDERAL EXPRESS CORPORATION TRUST
NO. N623FE) dated as of June 15, 1998 (the "Purchase Agreement Assignment"),
between FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Seller"),
and 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 (the "Buyer").
W I T N E S S E T H:
WHEREAS, all capitalized terms used herein shall have the meanings
assigned thereto as provided in Section 1 below;
WHEREAS, the Buyer wishes to purchase the Aircraft, and the
Seller, on the terms and conditions hereinafter set forth, is willing to sell
and transfer title to the Aircraft to the Buyer;
WHEREAS, the Buyer and the Seller are entering into the Lease
pursuant to which the Aircraft will be leased by the Buyer to the Seller; and
WHEREAS, the Seller, on the terms and conditions herein and in the
Consent and Agreement of the Manufacturer and in the Engine Consent and
Agreement of the Engine Manufacturer attached hereto, desires to assign to the
Buyer certain of the Seller's rights and interests in and under the Purchase
Agreement and the GTA relating to the Aircraft, and the Buyer desires to
accept such assignment, as hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the parties hereto
agree as follows:
Section 1. Definitions. For all purposes of this Purchase
Agreement Assignment, except as otherwise expressly provided for or unless the
context otherwise requires, the following terms shall have the following
meanings:
"Aircraft" shall mean the McDonnell Douglas MD-11F aircraft bearing
United States Registration Number N623FE and Manufacturer's Serial Number
48794, which was delivered under the Purchase Agreement, including the Engines.
"Engine Manufacturer" shall mean Pratt & Whitney, a Connecticut
corporation.
"Engines" shall mean the three (3) Pratt & Whitney 4462 turbofan
jet engines bearing Engine Manufacturer's serial numbers ___-___, ___-___ and
___-___, respectively.
"Engine Warranties" shall mean 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 the GTA.
"GTA" shall mean the General Terms Agreement dated as of
________________ between the Engine Manufacturer and the Seller but shall be
limited to applicable engine warranties, as well as all of the terms and
conditions, including the limitations, applicable hereto, as such provisions
are assignable by the terms of this Agreement.
"Lease" shall mean the Lease Agreement (Federal Express Corporation
Trust No. N623FE), dated as of June 15, 1998, between the Buyer and the
Seller, as the same may be amended, modified and supplemented, providing for
the lease of the Aircraft.
"Manufacturer" shall mean McDonnell Douglas Corporation, a
wholly-owned subsidiary of The Boeing Company, and its successors and assigns.
"Participation Agreement" shall mean the Participation Agreement
(Federal Express Corporation Trust No. N623FE), dated as of June 15, 1998, by
and among the Buyer, the Initial Owner Participant, the Indenture Trustee, the
Pass Through Trustee, the Subordination Agent and the Seller, as the same may
be amended, modified or supplemented.
"Purchase Agreement" shall mean the Purchase Agreement A00431-B
between the Seller and the Manufacturer, dated as of March 17, 1998, and as
thereafter originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the foregoing relates
to the Aircraft.
"Purchase Price" shall mean the amount stated in Ancillary
Agreement I.
All other capitalized terms used herein and not otherwise defined
shall have the meaning assigned to such term in the Lease.
Section 2. Representation. The Seller does hereby represent and
warrant that (a) it has furnished to the Buyer a true and complete copy of the
Purchase Agreement and GTA as they relate to all of the Manufacturer's
warranties and Engine Manufacturer's applicable warranties, as well as related
obligations and rights in the Purchase Agreement and GTA, respectively, as
assigned to the Buyer hereunder and (b) the Purchase Agreement and GTA are in
full force and effect and the Seller is not in default thereunder. The Seller
does hereby further represent and warrant that, to its knowledge, the Seller
has, with the authorized execution of the Consent and Agreement and the Engine
Consent and Agreement attached hereto, received all necessary consents to the
assignment and transfer contemplated herein and that such consents are in full
force and effect. The Seller does hereby further represent and warrant that
the Seller has not assigned or pledged, and hereby covenants that it shall not
assign or pledge, so long as this Purchase Agreement Assignment shall remain in
effect, the whole or any part of the rights hereby assigned or any of its
rights in respect of the Aircraft to anyone other than the Buyer. The Seller
further represents and warrants for the benefit of the Buyer and the Owner
Participant and their respective successors and assigns, as of the Delivery
Date, that it is the lawful owner of the Aircraft; and, as of the Delivery
Date that its title to the Aircraft is free and clear of all Liens, except the
rights of the Lessee under the Lease and the Lease Supplement covering the
Aircraft, the beneficial interest of the Owner Participant in the Aircraft and
the Liens permitted by clause (c) of Section 6.01 of the Lease, and that, on
the Delivery Date, the Buyer will receive good and marketable title to the
Aircraft free and clear of all Liens other than rights of the Lessee under the
Lease and the Lease Supplement, the beneficial interest of the Owner
Participant in the Aircraft and the Liens permitted by clause (c) of Section
6.01 of the Lease.
Section 3. Assignment; Rights Reserved. Subject to the
provisions of Section 5(a) hereof, the Seller does hereby sell, assign,
transfer and set over unto the Buyer, except to the extent reserved below, all
of the Seller's right, title and interest in the Purchase Agreement and the
GTA pursuant to which the Seller acquired the Aircraft from the Manufacturer
and Engine Manufacturer, as and to the extent that the same relate to the
Aircraft and the purchase and operation thereof, including, without
limitation, (a) all claims for damages in respect of the Aircraft arising as a
result of any default by the Manufacturer under the Purchase Agreement or by
the Engine Manufacturer under the GTA or by any vendor or other supplier of
aircraft engines or other parts or equipment installed on or in the Aircraft,
including, without limitation, all warranty, service life policy, aircraft
performance guarantee and indemnity provisions contained in the Purchase
Agreement and the GTA and all claims thereunder, (b) any and all rights of the
Seller to compel performance of the terms of the Purchase Agreement and the
GTA in respect of the Aircraft and (c) any and all rights of the Seller under
the Manufacturer's warranty bill of sale dated __________________ covering the
Aircraft, the original of which is to delivered to the Indenture Trustee on the
Delivery Date; reserving to the Seller, however, (i) all of the Seller's
right, title and interest in and to the Purchase Agreement and the GTA as and
to the extent that it relates to any matters other than in respect of the
Aircraft, and (ii) with respect to the Aircraft so long, and only so long, as
the Manufacturer and the Engine Manufacturer shall not have received notice
from the Buyer as set forth in Section 5(d) hereof that a Default or an Event
of Default has occurred and is continuing under the Lease, all of the Seller's
rights and interests in or arising out of any payments or deposits made
relating to the Aircraft or to be made by the Seller or amounts credited or to
be credited or paid or to be paid by the Manufacturer or Engine Manufacturer
to the Seller in respect of the Aircraft and (iii) with respect to the
Aircraft so long, and only so long, (x) as the Lease is in effect and (y) as
the Manufacturer and Engine Manufacturer shall not have received notice from
the Owner Trustee as set forth in Section 5(d) hereof that a Default or an
Event of Default has occurred and is continuing under the Lease, all rights to
demand, accept and retain all rights in and to property (other than the
Aircraft), data and services of any kind which the Manufacturer and Engine
Manufacturer are obligated to provide or do provide pursuant to the Purchase
Agreement and GTA with respect to the Aircraft.
Section 4. Acceptance of Assignment. The Buyer hereby accepts the
assignment contained in Section 3 hereof.
Section 5. Rights of the Seller in Absence of Default. (a)
Notwithstanding the foregoing, if and so long as the Manufacturer and Engine
Manufacturer shall not have received notice from the Owner Trustee as set
forth in Section 5(d) hereof that a Default or an Event of Default under the
Lease has occurred and is continuing, (i) the Buyer authorizes the Seller
during the Term on behalf of but to the exclusion of the Buyer, to exercise in
Seller's own name (A) such rights and powers of the "Buyer" under the Purchase
Agreement and GTA and (B) such rights as the Buyer may have with respect to
the Aircraft under any warranty, covenant, representation, service life
policy, aircraft performance guarantee, indemnity or product support agreement
of the Manufacturer, Engine Manufacturer or any subcontractor or vendor with
respect thereto and, subject to Section 5(c) hereof, to retain any recovery
or benefit resulting from the enforcement of any warranty, covenant,
representation, service life policy, aircraft performance guarantee, indemnity
or product support agreement of the Manufacturer, Engine Manufacturer or any
subcontractor or vendor in respect of the Aircraft, except that the Seller may
not enter into any change order or other amendment, modification or supplement
without the Buyer's prior written consent if such change order, modification
or supplement would result in any rescission, cancellation or termination of
the Purchase Agreement as to the Aircraft or GTA as to the Engines or would
otherwise materially adversely affect the Buyer's rights in the Aircraft or
Engines, and (ii) the Buyer shall, at the Seller's expense, cooperate with the
Seller and take such actions as the Seller reasonably deems necessary to
enable the Seller to enforce such rights and claims.
(b) Effective upon the receipt by the Manufacturer and Engine
Manufacturer of written notice from the Owner Trustee that a Default or an
Event of Default under the Lease has occurred and is continuing and thereafter
until the Manufacturer and Engine Manufacturer shall have received written
notice from the Owner Trustee that all Defaults or Events of Default have been
cured or waived, (i) unless the Buyer in its sole discretion shall notify the
Manufacturer and Engine Manufacturer to the contrary, the authorization given
to the Seller under Section 5(a) hereof to enforce such rights and claims
shall thenceforth cease to be effective and the Buyer and its successors and
assigns shall, to the exclusion of the Seller, be entitled to assert and
enforce such rights and claims as substitute party plaintiff or otherwise, and
the Seller shall, at the request of the Buyer or its successors or assigns and
at the Seller's expense, cooperate with and take such action as is reasonably
necessary to enable the Buyer and its successors and assigns to enforce such
rights and claims, and (ii) the Seller will be deemed to have constituted
Buyer, its successors and permitted assigns, the Seller's true and lawful
attorney, irrevocably (it being acknowledged that such appointment is coupled
with an interest, namely the Buyer's rights acquired and to be acquired
hereunder) with full power (in the name of the Seller or otherwise) to ask,
require, demand, receive, compromise, settle, compound and give acquittance
for any and all monies and claims for monies due and to become due under, or
arising out of, the Purchase Agreement in respect of the Aircraft or the GTA
in respect of the Engines, to the extent that the same have been assigned by
this Purchase Agreement Assignment, and for such period as the Buyer may
exercise rights with respect thereto under this clause (ii), to endorse any
checks or other instruments or orders in connection therewith and to file any
claims or take any action or institute (or, if previously commenced, assume
control of) any proceedings and to obtain any recovery in connection therewith
that the Buyer may deem to be necessary or advisable in the premises.
(c) Notwithstanding this Purchase Agreement Assignment and
anything contained herein to the contrary, all amounts that the Manufacturer
or Engine Manufacturer are obligated to pay to the Seller under the Purchase
Agreement and GTA with respect to the Aircraft or Engines, respectively,
including, without limitation, in respect of refunds thereunder or resulting
from the enforcement of any warranty, covenant, representation, service life
policy, aircraft performance guarantee, indemnity or product support agreement
thereunder or the enforcement or exercise of any right or power under the
Purchase Agreement (a "Manufacturer Payment") or under the GTA (an "Engine
Manufacturer Payment") (excluding, however, from the Manufacturer Payments and
Engine Manufacturer Payments any amounts the Manufacturer or Engine
Manufacturer are obligated to pay to the Seller with respect to the rights
reserved to the Seller in clauses (i) through (iii) of Section 3(b) hereof),
will be payable and applicable as follows: all the Manufacturer Payments and
Engine Manufacturer Payments shall be paid to the Seller unless and until the
Manufacturer and Engine Manufacturer shall have received written notice as set
forth in Section 5(d) from the Owner Trustee that a Default or an Event of
Default under the Lease has occurred and is continuing, whereupon the
Manufacturer and Engine Manufacturer will, until the Manufacturer and Engine
Manufacturer shall have received written notice from the Owner Trustee that
all Defaults or Events of Default under the Lease have been cured or waived,
make any and all such payments directly to the Buyer. Any amounts received by
the Buyer pursuant to the immediately preceding sentence shall, to the extent
not theretofore applied in satisfaction of sums owing to the Buyer in
accordance with the terms of the Lease, be returned to the Seller promptly
after all Defaults or Events of Default under the Lease have been cured or
waived.
(d) For all purposes of this Purchase Agreement Assignment, the
Manufacturer and Engine Manufacturer shall not be deemed to have knowledge of a
declaration of an Event of Default or Default under the Lease or of the
discontinuance or waiver of an Event of Default or Default unless and until
the Manufacturer and Engine Manufacturer shall have received written notice
thereof from the Owner Trustee addressed, in case of the Manufacturer, to 3855
Lakewood Boulevard, Long Beach, California 90846-0001, Attention: Contracts
Department, and in the case of the Engine Manufacturer, to
_________________________________________. When acting in accordance with the
terms and conditions of the Purchase Agreement, the GTA and this Purchase
Agreement Assignment, the Manufacturer and Engine Manufacturer may rely
conclusively upon any such notice.
Section 6. Certain Rights and Obligations of the Parties. (a)
Anything herein contained to the contrary notwithstanding, (i) the Seller
shall at all times remain liable to the Manufacturer and Engine Manufacturer
under the Purchase Agreement and GTA in respect of the Aircraft to perform all
of its duties and obligations of "Buyer" thereunder to the same extent as if
this Purchase Agreement Assignment had not been executed, (ii) the exercise by
the Buyer of any of the rights assigned hereunder shall not release the Seller
from any of its duties or obligations to the Manufacturer and Engine
Manufacturer under the Purchase Agreement and GTA in respect of the Aircraft
except to the extent that such exercise by the Buyer shall constitute
performance of such duties and obligations, and (iii) except as provided in
Section 6(b) hereof, neither the Buyer, the Indenture Trustee nor the Loan
Certificate Holders shall have any obligation or liability under the Purchase
Agreement or GTA by reason of, or arising out of, this Purchase Agreement
Assignment or be obligated to perform any of the obligations or duties of the
Seller under the Purchase Agreement or GTA or to make any payment or make any
inquiry as to the sufficiency of any payment received by it or to present or
to file any claim or to take any other action to collect or enforce any claim
for any payment assigned thereunder.
Notwithstanding anything in this Purchase Agreement Assignment or the attached
Engine Consent and Agreement to the contrary, the Buyer and the Seller confirm
expressly for the benefit of the Engine Manufacturer that:
(i) The Buyer 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 Seller incident to effecting the assignment herein; provided,
however, that (1) the Buyer may use, retain and disclose such
information to its special counsel and public accountants, who shall not
further disclose such terms, (2) the Buyer 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 the Seller and
to the Engine Manufacturer, and the Buyer shall afford the Seller 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, and (3) the Buyer
may disclose such information to any bona fide potential purchaser of
the Aircraft and/or the Engines (subject to 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).
(ii) Without in any way releasing the Seller from any of its
duties or obligations under the GTA, the Buyer 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 shall apply to,
and be binding upon, the Buyer to the same extent as the Seller.
(iii) It is expressly agreed that: (1) the Seller shall at all
times remain liable to the Engine Manufacturer under the GTA to perform
all the duties and obligations of the Seller thereunder to the same
extent as if this Purchase Agreement Assignment had not been executed,
(2) the exercise by the Buyer of any of the rights assigned hereunder
shall not release the Seller from any of its duties or obligations to
the Engine Manufacturer under the GTA except to the extent that such
exercise by the Buyer shall constitute performance of such duties and
obligations.
(iv) Nothing contained in this Purchase Agreement 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. No further assignment of any remaining Engine
Warranties, including but not limited to assignments for security
purposes, are permitted without the express written consent of the
Engine Manufacturer.
(v) The Engine Manufacturer shall not be deemed to have knowledge
of any change in the authority of the Seller or the Buyer, as the case
may be, to exercise the rights established hereunder until the Engine
Manufacturer has received written notice thereof. Such notice should be
sent to: ______________________________________________. Any
performance by the Engine Manufacturer that discharges its obligation
under the Engine Warranties will satisfy the respective interests of the
Seller and the Buyer. So long as the Engine Manufacturer acts in good
faith in accordance with this Purchase Agreement Assignment, the Engine
Manufacturer may rely conclusively on any such notice without inquiring
as to the accuracy of, or the entitlement of the party to give, such
notice.
(b) Without in any way releasing the Seller from any of its
duties or obligations under the Purchase Agreement or GTA, the Buyer confirms
for the benefit of the Manufacturer and Engine Manufacturer that, insofar as
the provisions of the Purchase Agreement and GTA relate to the Aircraft, each
of (i) in exercising any rights under the Purchase Agreement or GTA, or in
making any claim with respect to the Aircraft or other goods and services
delivered or to be delivered pursuant to the Purchase Agreement or GTA, the
Purchase Agreement and GTA disclosed to the Buyer in writing and (ii) the
provisions of the article of the Purchase Agreement entitled Assignment and
Transfer regarding future assignment and transfer of rights under the Purchase
Agreement, shall apply to, and be binding upon, the Buyer to the same extent
as the Seller.
(c) Nothing contained herein shall (i) subject the Manufacturer
or Engine Manufacturer to any liability to which it would not otherwise be
subject under the Purchase Agreement or GTA or (ii) modify in any respect the
Manufacturer's or Engine Manufacturer's contract rights thereunder, except as
provided in the Consent and Agreement and Engine Consent and Agreement
attached hereto.
(d) The parties hereto, the Manufacturer by its execution and
delivery of the Consent and Agreement and the Engine Manufacturer by its
execution of the Engine Consent and Agreement, agree that all of the
statements, representations, covenants and agreements made by the Buyer as
Owner Trustee (when made in such capacity) contained in this Purchase
Agreement Assignment and any agreement referred to herein or in the
Participation Agreement other than the Trust Agreement, unless expressly
otherwise stated, are made and intended only for the purpose of binding the
Lessor's Estate and establishing the existence of rights and remedies which
can be exercised and enforced against the Lessor's Estate. Therefore, anything
contained in this Purchase Agreement Assignment or such other agreements to the
contrary notwithstanding (except for any express provisions that the Buyer is
responsible for in its individual capacity), no recourse shall be had with
respect to this Purchase Agreement Assignment or such other agreements against
the Buyer in its individual capacity (or against any institution or person
which becomes a successor trustee or co-trustee), the Owner Participant, or
any officer, director, trustee, servant or direct or indirect parent or
controlling person or persons of any of them; provided, however, that this
Section 6(d) shall not be construed to prohibit any action or proceeding
against the Owner Trustee in its individual capacity for its own willful
misconduct or grossly negligent conduct; and provided, further, that nothing
contained in this Section 6(d) shall be construed to limit the exercise and
enforcement in accordance with the terms of this Purchase Agreement Assignment
or such other agreements of rights and remedies against the Lessor's Estate.
The foregoing provisions of this Section 6(d) shall survive the termination of
this Purchase Agreement Assignment and the other Operative Agreements.
(e) Nothing contained herein shall in any way diminish or limit
the provisions of the Seller's indemnities in Article 9 of the Participation
Agreement with respect to any liability of the Buyer, or any party to the
Participation Agreement, to the Manufacturer in anyway relating to or arising
out of the Purchase Agreement.
Section 7. Further Assurances. The Seller agrees that at any
time and from time to time the Seller shall promptly and duly execute and
deliver any and all such further instruments and documents and take such
further action as the Buyer may reasonably request in writing in order to
obtain the full benefits of this Purchase Agreement Assignment and of the
rights and powers herein granted.
Section 8. No Amendment of Purchase Agreement and GTA. The Buyer
agrees that it will not enter into any amendment, modification, supplement,
rescission, cancellation or termination of the Purchase Agreement or GTA
without the prior written consent of the Seller unless the Buyer shall have
notified the Manufacturer and Engine Manufacturer as set forth in Section 5(d)
hereof that a Default or an Event of Default under the Lease has occurred and
is continuing, in which event any such amendment, modification, supplement,
rescission, cancellation or termination shall relate solely to the rights
assigned hereunder.
Section 9. Binding Effect. This Purchase Agreement Assignment
shall be binding upon and shall inure to the benefit of the Seller, the Buyer
and their respective successors and permitted assigns.
Section 10. Notice. Except as otherwise expressly provided
herein, notice hereunder may be given, and shall be deemed to have been
received, as provided in Section 25.01 of the Lease.
Section 11. Simultaneous Execution. This Purchase Agreement
Assignment is executed by the Buyer and the Seller concurrently with the
execution and delivery of the Lease, the Participation Agreement and the Trust
Agreement.
Section 12. Grant of Security Interest. By the Indenture, the
Buyer has granted to the Indenture Trustee, for the benefit of the Loan
Certificate Holders, a security interest in all estate, right, title and
interest of the Buyer in and to the Purchase Agreement, the GTA and this
Purchase Agreement Assignment.
Section 13. Counterparts. This Purchase Agreement Assignment may
be executed by the parties hereto in separate counterparts, each of which when
so executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 14. GOVERNING LAW. THIS PURCHASE AGREEMENT ASSIGNMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK (BUT WITHOUT GIVING EFFECT TO ITS CONFLICTS OF LAWS PROVISIONS),
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
IN WITNESS WHEREOF, the parties hereto have caused this Purchase
Agreement Assignment to be duly executed as of the day and year first above
written.
FEDERAL EXPRESS CORPORATION,
Seller
By: _______________________________________
Name: Robert D. Henning
Title: Vice President and Treasurer
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee,
Buyer
By: _______________________________________
Name:
Title:
CONSENT AND AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N623FE)
The undersigned, MCDONNELL DOUGLAS CORPORATION, a wholly-owned
subsidiary of The Boeing Company (the "Manufacturer"), hereby acknowledges
notice of, and consents to, all of the terms of, the Purchase Agreement
Assignment (Federal Express Corporation Trust No. N623FE), dated as of June
15, 1998 (the "Purchase Agreement Assignment"; capitalized terms used herein
and not otherwise defined shall have the meaning assigned such term in the
Purchase Agreement Assignment), between Federal Express Corporation, a
Delaware corporation ("Assignor") and 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
("Assignee") and hereby confirms to the Assignor and the Assignee, and agrees,
that: (i) all representations, warranties, indemnities and agreements of the
Manufacturer under the Purchase Agreement with respect to the Aircraft to the
extent assigned by the Assignor to the Assignee, shall inure to the benefit of
the Assignee to the same extent as if originally named the "Buyer" therein,
subject to the terms and conditions of the Purchase Agreement Assignment; (ii)
the Assignee shall not be liable for any of the obligations or duties of the
Assignor under the Purchase Agreement, nor shall the Purchase Agreement
Assignment give rise to any duties or obligations whatsoever on the part of the
Assignee owing to the Manufacturer, except for the Assignee's agreement in the
Purchase Agreement Assignment to the effect that, insofar as the provisions of
the Purchase Agreement relate to the Aircraft, in exercising any rights under
the Purchase Agreement or in making any claim with respect to the Aircraft or
other goods and services delivered or to be delivered pursuant to the Purchase
Agreement and future assignment or transfer of the Aircraft to a third party,
the terms and conditions of the Purchase Agreement relating to the Aircraft
shall apply to, and be binding upon, the Assignee to the same extent as the
Assignor; provided, that no person other than the Manufacturer shall have any
rights against the Assignee with respect to the undertaking and agreement set
forth in this clause (ii); (iii) the Manufacturer consents to the lease of the
Aircraft by the Assignee to the Assignor under the Lease and agrees that the
Purchase Agreement Assignment constitutes an agreement by the Assignee
thereunder as required by Article 13 of the Purchase Agreement; (iv) the
Manufacturer will continue to pay to the Assignor all payments which the
Manufacturer may be required to make in respect to the Aircraft under the
Purchase Agreement unless and until the Manufacturer shall have received
written notice from the Assignee addressed to 3855 Lakewood Boulevard, Long
Beach, California 90846-0001, Attention: Contracts Department, that a Default
or an Event of Default under the Lease has occurred and is continuing,
whereupon the Manufacturer will make any and all payments, including warranty
and indemnity payments, which it may be required to make in respect to the
Aircraft under the Purchase Agreement (to the extent the right to receive such
payments has been assigned under the Purchase Agreement Assignment) directly
to the Assignee at 225 Asylum Street, Goodwin Square, Hartford, Connecticut
06103, Attention: Corporate/Muni Administration, with a copy to State Street
Bank and Trust Company, Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department (provided, that, as
long as the Indenture shall not have been discharged, such payment shall be
made directly to the Indenture Trustee at 79 South Main Street, Salt Lake
City, Utah 84111, Attention: Corporate Trust Department); and (v) the
Manufacturer agrees that it will not assert any liability claim against the
Aircraft or any part thereof arising with respect to or in connection with any
work performed by the Manufacturer or at its direction on the Aircraft on or
prior to the date the Manufacturer conveys title to the Assignor.
The Manufacturer hereby represents and warrants that: (i) it is a
corporation duly organized and existing in good standing under the laws of the
State of Maryland, (ii) the making and performance of the Purchase Agreement
and this Consent and Agreement have been duly authorized by all necessary
corporate action on the part of the Manufacturer, do not require any
stockholder or other approval, and do not contravene the Manufacturer's
Certificate of Incorporation or By-Laws or any indenture, credit agreement or
other contractual agreement to which Manufacturer is a party or by which it is
bound, and (iii) the making of the Purchase Agreement and this Consent and
Agreement does not contravene, and to the best of the Manufacturer's
knowledge, the Manufacturer's performance of the Purchase Agreement and this
Consent and Agreement, does not contravene any law binding on the Manufacturer;
and (iv) the Purchase Agreement constituted as of the date thereof and at all
times thereafter to and including the date of this Consent and Agreement has
continued to constitute a binding obligation of the Manufacturer enforceable
against the Manufacturer in accordance with its terms and this Consent and
Agreement constitutes a binding obligation of the Manufacturer enforceable
against the Manufacturer in accordance with its respective terms. The
Manufacturer further represents and warrants that it has received payment in
full with respect to the Aircraft. It is understood that this Consent and
Agreement is subject to the condition that the Lease shall have been entered
into by the Assignor and the Assignee.
The Manufacturer hereby represents and warrants that:
1. The Aircraft was manufactured in the United States within the
meaning of Section 927(a)(1)(A) of the Internal Revenue Code
of 1986, as amended (the "Code"), by a person or persons
other than a foreign sales corporation, as defined in
Section 922(a) of the Code; and
2. At time of delivery of the Aircraft to the Lessee, less than
50% of the fair market value of the Aircraft was
attributable to articles imported into the United States
within the meaning of Section 927(a)(1)(c) of the Code.
Dated as of June 15, 1998
McDONNELL DOUGLAS CORPORATION
By: _______________________________________
Name:
Title:
ENGINE CONSENT AND AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N611FE)
Subject to the understanding that nothing contained in this
Consent and Agreement or any other document pertaining thereto shall subject
it to any liability or duplication of obligations to which it would not
otherwise be subject under General Terms Agreement No. _______ dated as of
________________ (the "Engine Agreement") between it and Federal Express
Corporation (the "Grantor") or modify in any respect its contract right
thereunder, the undersigned, PRATT & WHITNEY, a Connecticut corporation (the
"Engine Manufacturer"), hereby acknowledges notice of, and consents to, all of
the terms of, the Purchase Agreement Assignment (Federal Express Corporation
Trust No. N623FE), dated as of June 15, 1998 (the "Purchase Agreement
Assignment"; capitalized terms used herein and not otherwise defined shall
have the meaning assigned such term in the Purchase Agreement Assignment),
between Federal Express Corporation, a Delaware corporation ("Assigner") and
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 ("Assignee") and hereby confirms to
the Assignor and the Assignee, and agrees, that: (i) all representations,
warranties, indemnities and agreements of the Engine Manufacturer under the
GTA with respect to the Engines to the extent assigned by the Assignor to the
Assignee, shall inure to the benefit of the Assignee to the same extent as if
originally named the "Airline" therein, subject to the terms and conditions of
the Purchase Agreement Assignment; (ii) the Assignee shall not be liable for
any of the obligations or duties of the Assignor under the GTA, nor shall the
Purchase Agreement Assignment give rise to any duties or obligations
whatsoever on the part of the Assignee owing to the Engine Manufacturer,
except for the Assignee's agreement in the Purchase Agreement Assignment to
the effect that, insofar as the provisions of the GTA relate to the Engines,
in exercising any rights under the GTA or in making any claim with respect to
the Engines or other goods and services delivered or to be delivered pursuant
to the GTA and future assignment or transfer of the Engines to a third party,
the terms and conditions of the GTA relating to the Aircraft shall apply to,
and be binding upon, the Assignee to the same extent as the Assignor;
provided, that no person other than the Engine Manufacturer shall have any
rights against the Assignee with respect to the undertaking and agreement set
forth in this clause (ii); (iii) the Engine Manufacturer consents to the lease
of the Engines by the Assignee to the Assignor under the Lease; (iv) the
Engine Manufacturer will continue to pay to the Assignor all payments which
the Manufacturer may be required to make in respect to the Engines under the
GTA unless and until the Engine Manufacturer shall have received written
notice from the Owner Trustee addressed to _________________________, that a
Default or an Event of Default under the Lease has occurred and is continuing,
whereupon the Engine Manufacturer will make any and all payments, including
warranty and indemnity payments, which it may be required to make in respect
to the Engines under the GTA (to the extent the right to receive such payments
has been assigned under the Purchase Agreement Assignment) directly to the
Assignee at 225 Asylum Street, Goodwin Square, Hartford, Connecticut 06103,
Attention: Corporate/Muni Administration, with a copy to State Street Bank and
Trust Company, Two International Place, 4th Floor, Boston, Massachusetts 02110,
Attention: Corporate Trust Department (provided, that, as long as the
Indenture shall not have been discharged, such payment shall be made directly
to the Indenture Trustee at 79 South Main Street, Salt Lake City, Utah 84111,
Attention: Corporate Trust Department); and (v) the Engine Manufacturer agrees
that it will not assert any liability claim against the Engines arising with
respect to or work performed by the Engine Manufacturer or at its direction on
the Engines on or prior to the date the Manufacturer transferred title to the
Assignor.
The Engine Manufacturer hereby represents and warrants that: (i) the
manufacturer is a corporation duly organized and existing in good standing
under the laws of the State of New York; (ii) the making and performance of
the GTA and this Engine Consent and Agreement have been duly authorized by all
necessary corporate action on the part of the Engine Manufacturer, do not
require any stockholder or other approval, and do not contravene the Engine
Manufacturer's Certificate of Incorporation or By-Laws or any indenture,
credit agreement or other contractual agreement to which the Engine
Manufacturer is a party or by which it is bound; (iii) the making of the GTA
and this Engine Consent and Agreement does not contravene, and to the best of
the Engines Manufacturer's knowledge, the Engine Manufacturer's performance of
the GTA and this Engine Consent and Agreement, does not contravene any law
binding on the Engine Manufacturer; (iv) the GTA constituted as of the date
thereof and at all times thereafter to and including the date of this Engine
Consent and Agreement has continued to constitute a binding obligation of the
Engine Manufacturer enforceable against the Engine Manufacturer in accordance
with its terms and this Engine Consent and Agreement constitutes a binding
obligation of the Engine Manufacturer enforceable against the Engine
Manufacturer in accordance with its respective terms and (v) it has received
payment in full with respect to the Engines. It is understood that this Engine
Consent and Agreement is subject to the condition that the Lease shall have
been entered into by the Assignor and the Assignee.
The Engine Manufacturer hereby further represents and warrants that:
1. Each Engine was manufactured in the United States within the
meaning of Section 927(a)(1)(A) of the Internal Revenue Code of
1986, as amended (the "Code"), by a person or persons other than a
foreign sales corporation, as defined in Section 922(a) of the
Code; and
2. At the time of delivery of each Engine to Lessee, less than 50% of
the fair market value of the Engine was attributable to articles
imported into the United States within the meaning of Section
927(a)(1)(c) of the Code.
Dated as of June 15, 1998
PRATT & WHITNEY
By: _______________________________________
Name:
Title:
- --------------------------------------------------------------------------------
PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N675FE)
Dated as of June 1, 1998
Amended and Restated as of June 15, 1998
among
FEDERAL EXPRESS CORPORATION,
Lessee
PMCC LEASING CORPORATION,
Owner Participant
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
Original Loan 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 AIRBUS A300F4-605R AIRCRAFT
SERIAL NO. 789, REGISTRATION NO. N675FE
TABLE OF CONTENTS
Page
Initial Recitals........................................................... 1
ARTICLE 1
DEFINITIONS............................................................. 3
ARTICLE 2
Section 2.01. Transfer of Funds........................................ 4
Section 2.02. Certificates............................................. 7
Section 2.03. Owner Participant's Instructions to Owner Trustee........ 7
ARTICLE 3
EXTENT OF INTEREST OF ORIGINAL LOAN PARTICIPANT
Section 3.01. Extent of Interest of Original Loan Participant.......... 7
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent..................................... 8
Section 4.02. Opinion of Special Aviation Counsel...................... 18
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations............. 19
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties.................. 19
Section 6.02. Offering by Lessee....................................... 25
Section 6.03. Certain Covenants of Lessee.............................. 25
Section 6.04. Survival of Representations and Warranties............... 33
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in Lessor's
Estate................................................... 33
Section 7.02. Citizenship.............................................. 34
Section 7.03. Representations, Warranties and Covenants of Owner
Participant.............................................. 35
Section 7.04. Representations, Covenants and Warranties of SSB and the
Owner Trustee............................................ 40
Section 7.05. Representations, Warranties and Covenants of the
Indenture Trustee........................................ 43
Section 7.06. Indenture Trustee's Notice of Default.................... 44
Section 7.07. Releases from Indenture.................................. 44
Section 7.08. Covenant of Quiet Enjoyment.............................. 44
Section 7.09. Original Loan Participant's and Pass Through Trustee's
Representations and Warranties........................... 45
Section 7.10. Survival of Representations, Warranties and Covenants.... 46
Section 7.11. Lessee's Assumption of the Certificates.................. 46
Section 7.12. Indebtedness of Owner Trustee............................ 48
Section 7.13. Compliance with Trust Agreement, Etc
Section 7.14. Subordination Agent's Representations, Warranties and
Covenants................................................ 49
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes......................... 51
Section 8.02. After-Tax Basis.......................................... 57
Section 8.03. Time of Payment.......................................... 57
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
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.............................. 69
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.................. 72
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the 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.................... 74
Section 13.02. Further Assurances...................................... 74
Section 13.03. No Retroactive Application.............................. 74
Section 13.04. Pass Through Trustee's and Subordination Agent's
Acknowledgement......................................... 74
ARTICLE 14
NOTICES
Section 14.01. Notices................................................. 75
ARTICLE 15
REFINANCING/REOPTIMIZATION
Section 15.01. Refinancing............................................. 76
Section 15.02. Reoptimization.......................................... 79
ARTICLE 16
[RESERVED]
ARTICLE 17
MISCELLANEOUS
Section 17.01. Owner for Federal Tax Purposes.......................... 81
Section 17.02. [Reserved].............................................. 81
Section 17.03. Counterparts............................................ 81
Section 17.04. No Oral Modifications................................... 81
Section 17.05. Captions................................................ 82
Section 17.06. Successors and Assigns.................................. 82
Section 17.07. Concerning the Owner Trustee, Indenture Trustee and the
Pass Through Trustee.................................... 82
Section 17.08. Severability............................................ 83
Section 17.09. Public Release of Information........................... 83
Section 17.10. Certain Limitations on Reorganization................... 83
Section 17.11. GOVERNING LAW........................................... 84
Section 17.12. Section 1110 Compliance................................. 84
Section 17.13. Reliance of Liquidity Providers......................... 84
ARTICLE 18
CONFIDENTIALITY
Section 18.01. Confidentiality......................................... 84
SCHEDULE I Certificate Information
SCHEDULE II Definitions
SCHEDULE III Permitted Country List
EXHIBIT A(1)(a) Opinion of Lessee's Counsel
EXHIBIT A(1)(b) Opinion of Lessee's Special Counsel
EXHIBIT A(2)(a) Opinion of Owner Participant's and Owner Participant
Guarantor's Special Counsel
EXHIBIT A(2)(b) Opinion of Owner Participant's and Owner Participant
Guarantor's Counsel
EXHIBIT A(3) Opinion of Indenture Trustee's Special Counsel
EXHIBIT A(4) Opinion of Owner Trustee's Special Counsel
EXHIBIT A(5) Opinion of Pass Through Trustee's and Subordination
Agent's Special Counsel
EXHIBIT A(6)(a) Opinion of Liquidity Provider's Counsel
EXHIBIT A(6)(b) Opinion of Liquidity Provider's Special Counsel
EXHIBIT A(7) Opinion of Special Aviation Counsel
EXHIBIT B Form of Lease Agreement
EXHIBIT C Form of Indenture
EXHIBIT D Form of Trust Agreement
EXHIBIT E-1 Form of Assignment and Assumption Agreement
EXHIBIT E-2 Form of Owner Participant Guaranty
PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N675FE)
PARTICIPATION AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO.
N675FE) dated as of June 1, 1998, as amended and restated as of June 15, 1998
(this "Agreement") among FEDERAL EXPRESS CORPORATION, a Delaware corporation
(herein, together with its successors and permitted assigns, the "Lessee"),
PMCC LEASING CORPORATION, a Delaware corporation (herein, together with its
successors and permitted assigns, the "Owner Participant"), MORGAN GUARANTY
TRUST COMPANY OF NEW YORK (together with its successors and permitted assigns,
the "Original Loan 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").
W I T N E S S E T H :
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article 1 hereof.
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, the
Original Loan Participant and the Indenture Trustee entered into the Original
Participation Agreement, providing for the sale and lease of the Aircraft that
was delivered on the Delivery Date;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Participant entered into the Original Trust
Agreement relating to the Aircraft with SSB in its individual capacity,
pursuant to which SSB agreed, among other things, to hold the Lessor's Estate
in trust for the benefit of the Owner Participant;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Trustee and the Indenture Trustee entered
into the Original Indenture, for the benefit of the Original Loan Participant,
pursuant to which the Owner Trustee issued to the Original Loan Participant
the Original Loan Certificates as evidence of the loans made by the Original
Loan Participant to the Owner Trustee, the proceeds of which were used by the
Owner Trustee to pay a portion of the Purchase Price for the Aircraft;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Trustee and the Lessee entered into the
Original Lease relating to the Aircraft, whereby, subject to the terms and
conditions set forth in said Lease, the Owner Trustee agreed to lease the
Aircraft to the Lessee, and the Lessee agreed to lease the Aircraft from the
Owner Trustee, such lease of the Aircraft being evidenced by the execution and
delivery of the Lease Supplement;
WHEREAS, Article 15 of the Original Participation Agreement permits a
Refinancing of the Original Loan Certificates subject to the satisfaction of
the conditions specified in Section 15.01 thereof, and Section 3.04 of the
Original Lease contemplates the adjustment of the percentages for Basic Rent,
Stipulated Loss Value and Termination Value in the event of such a
Refinancing, and the Lessee has requested that the Owner Trustee effect such a
Refinancing and adjustment;
WHEREAS, in order to facilitate such Refinancing, the Lessee is
concurrently entering into an Underwriting Agreement, which relates to three
series of Pass Through Certificates that will be issued by the Pass Through
Trusts formed to acquire, among other securities, the Certificates bearing a
particular Series and having a particular Maturity that will be issued under
the Indenture;
WHEREAS, on the Pass Through Closing Date, a closing will occur with
respect to the public offering of the Pass Through Certificates issued by each
Pass Through Trust, an allocable amount of the proceeds of which offering will
be used by the Pass Through Trustee to purchase for each such Pass Through
Trust the Certificates of the Series and Maturity applicable thereto, the
proceeds of which purchase in turn will be applied to the Refinancing in full
of the outstanding principal amount of the Original Loan Certificates;
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, the
Original Loan Participant and the Indenture Trustee have agreed, subject to
the terms and conditions hereinafter provided, to amend and restate, and to
add each of the Pass Through Trustee and the Subordination Agent as a party
to, the Original Participation Agreement;
WHEREAS, concurrently with the execution and delivery hereof, (i) the
Liquidity Provider will enter 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 will
enter into the Intercreditor Agreement;
WHEREAS, the Certificates will be held by the Subordination Agent
pursuant to the Intercreditor Agreement on behalf of the Pass Through Trustee
for each of the Pass Through Trusts; and
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, the
Original Loan Participant and the Indenture Trustee have agreed, to the extent
they are parties thereto and, subject to the terms and conditions hereinafter
provided, to amend and restate the Original Indenture, to amend and restate
the Original Lease, to amend and restate the Original Ancillary Agreement I,
to amend the Original Tax Indemnity Agreement and to amend and restate the
Original Trust Agreement, each such amendment and restatement to be executed
and delivered simultaneously with the purchase of the Certificates by the Pass
Through Trustee for the Pass Through Trusts and the Refinancing in full of the
Original Loan Certificates.
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto agree, subject to the terms and
conditions hereinafter provided, that the Original Participation Agreement be
and the same is hereby amended and restated in its entirety as follows:
ARTICLE 1
DEFINITIONS
Unless otherwise specifically provided herein, the definitions set
forth in Schedule II hereto are incorporated herein for all purposes of this
Agreement and shall be equally applicable to both the singular and the plural
forms of the terms so defined.
ARTICLE 2
ISSUANCE OF PASS THROUGH CERTIFICATES;
REFUNDING THE ORIGINAL LOAN CERTIFICATES
Section 2.01. Transfer of Funds.
(a) On or before the Pass Through Closing Date, the Pass Through
Trustee and the Lessee, in accordance with the Pass Through Agreement, shall
enter into the Series Supplements, and, subject to the terms and conditions
set forth therein, on the Pass Through Closing Date (i) the Lessee shall
direct the Underwriters to execute a wire transfer or intra-bank transfer to
the Pass Through Trustee in the amount of the total proceeds payable pursuant
to the Underwriting Agreement with respect to the Pass Through Certificates
and (ii) the Pass Through Trustee shall deliver the Pass Through Certificates
to the Underwriters upon receipt by the Pass Through Trustee of such proceeds.
(b) Subject to the satisfaction or waiver of the conditions set
forth herein, on the Refunding Date the following events shall occur in the
order set forth below:
(i) the Lessee shall on behalf of the Owner Trustee execute a wire
transfer or intra-bank transfer in favor of the Agent (as a prepayment of
the portion of Basic Rent allocable to the period from the Closing Date
through the Refunding Date) in the amount of all accrued and unpaid
interest on the Original Loan Certificates to but excluding the Refunding
Date, which transfer shall constitute the payment of all such accrued and
unpaid interest;
(ii) the Lessee shall on behalf of the Owner Trustee execute a wire
transfer or intra-bank transfer in favor of the Agent as Supplemental Rent
in the amount of any Breakage Costs required to be paid pursuant to the
Original Indenture which transfer shall constitute the payment of all such
Breakage Costs;
(iii) for each Pass Through Trust, from an allocable amount of the
proceeds of the sale of the related Pass Through Certificates, the Pass
Through Trustee shall pay on behalf of the Owner Trustee in the manner
specified in paragraph (iv) below, an amount equal to the principal amount
of Certificates of the Series and Maturity that relates to such Pass
Through Trust, which amounts in the aggregate shall equal the aggregate
principal amount of the Certificates as specified in Section 2.04 of the
Indenture;
(iv) the aggregate amount payable by the Pass Through Trustee pursuant
to paragraph (iii) above shall be payable by wire transfer or intra-bank
transfer in favor of the Agent on behalf of the Owner Trustee in the amount
of the outstanding principal amount of the Original Loan Certificates;
(v) the Agent shall apply the amounts received by it under paragraphs
(i), (ii) and (iv) of this subsection (b) to prepay the Original Loan
Certificates in full in accordance with Sections 2.06 and 2.10 of the
Original Indenture; and
(vi) the Owner Trustee shall cause the Certificates to be delivered
to the applicable Pass Through Trustee in accordance with Section 2.02
hereof.
On the Refunding Date concurrently with the events specified in
clauses (iii) through (v) of this Section 2.01(b), the parties hereto shall
execute and deliver, to the extent they are parties thereto, and consent to
the execution and delivery of (if they are not a party thereto), the
Indenture, the Lease and the Trust Agreement, and the Owner Trustee shall
execute and deliver to the Indenture Trustee for authentication, and the
Indenture Trustee shall authenticate and deliver to the Subordination Agent on
behalf of the Pass Through Trustee for each of the Pass Through Trusts, upon
the request of the Owner Trustee, the Certificates as provided in Section 2.02
hereof. The Owner Participant hereby requests and directs the Owner Trustee
to execute and deliver this Agreement and, subject to the terms hereof, to
take the actions specified herein. The Original Loan Participant by its
execution and delivery hereof, requests and directs the Indenture Trustee to
execute and deliver this Agreement and concurrently with the events specified
in clauses (iii) through (v) of this Section 2.01(b) and subject to the terms
and conditions hereof to take the actions contemplated herein. The parties
hereto, including, without limitation, the Original Loan Participant, confirm
that, as provided in Section 2.06 of the Original Indenture, upon payment in
full of the principal amount, Breakage Costs, if any, and interest on the
Original Loan Certificates and all other sums then payable to the Original Loan
Participant under the Original Agreements to the extent specified in
subsection (c) below, the Original Loan Participant shall have no further
interest in, or other right or obligation with respect to, the Trust Indenture
Estate, the Original Agreements or the Operative Agreements (it being
understood that the foregoing shall not limit or detract from any claim that
the Original Loan Participant may have under Article 8 or 9 or Section
10.01(a)(ii) hereof or of the Original Participation Agreement) and,
accordingly, have no obligation to, and will not attempt to direct any future
actions of the Indenture Trustee with respect to the Trust Indenture Estate,
provided that the rights and obligations of the Original Loan Participant
shall, until the payment in full of such amounts to the Agent on behalf of the
Original Loan Participant on the Refunding Date, be governed by the Original
Participation Agreement and the other Operative Agreements contemplated
thereby or in effect immediately prior to the effectiveness of this Agreement
and shall, upon such payment and thereafter, be governed by this Agreement.
The Lessee hereby consents to the foregoing.
(c) Not less than three (3) Business Days prior to the Refunding
Date, the Agent on behalf of the Original Loan Participant shall give notice
in writing to the parties hereto of the principal amount, Breakage Costs, if
any, and interest on and all other amounts due on the Refunding Date under the
Original Loan Certificates and all other sums payable on the Refunding Date to
the Original Loan Participant under the Original Agreements, such notice to be
deemed final and binding on the Original Loan Participant as to the respective
amounts of principal, Breakage Costs, if any, and interest when given;
provided that the expected Refunding Date, at the time such notice is given,
is the same as the Refunding Date.
(d) On the Refunding Date, subject to (i) the giving of the written
notice referred to in Section 2.01(c) above to the Indenture Trustee and the
Original Loan Participant, (ii) the receipt by the Original Loan Participant
of the funds referred to in Section 2.01(b)(v) above and (iii) compliance with
the provisions of Article 15 of the Original Participation Agreement and
Section 2.10(c) of the Original Indenture (including the Refinancing in full
of the Original Loan Certificates), the Original Loan Participant shall
deliver the Original Loan Certificates to the Indenture Trustee for
cancellation and delivery to the Owner Trustee.
(e) The closing with respect to the acquisition of the Pass Through
Certificates by the Underwriters and the closing with respect to the
Refinancing of the Original Loan Certificates (together, the "Closings") shall
take place at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, New
York, New York 10017.
(f) All payments pursuant to this Section 2.01 shall be made in
immediately available funds.
(g) In the event that the Refunding Date and the actions
contemplated to occur on such date pursuant to subsection (d) of this Section
2.01 do not occur on or before July 30, 1998, then the rights and obligations
of the parties to the Original Participation Agreement, including, without
limitation, the Original Loan Participant and the Indenture Trustee, shall be
governed by the Original Participation Agreement and the other Operative
Agreements contemplated thereby or in effect immediately prior to the
effectiveness of this Agreement and this Agreement shall be of no further force
and effect, except that the Lessee shall be obligated hereby to pay all fees
and expenses of the Original Loan Participant, the Indenture Trustee, the Owner
Participant, the Owner Trustee, the Pass Through Trustee and their respective
counsel relating to the transactions contemplated hereby. Each of the parties
hereto agrees to execute and deliver to the other parties such documents and
instruments as may be necessary to give effect to the foregoing provisions of
this subsection (g).
Section 2.02. Certificates. Subject to the satisfaction or waiver
of the conditions set forth herein, on the Refunding Date, the Owner
Participant will instruct the Owner Trustee to execute and deliver to the
Indenture Trustee, and the Indenture Trustee shall authenticate and deliver,
upon the request of the Owner Trustee, to the Subordination Agent on behalf of
the Pass Through Trustee for each of the Pass Through Trusts, the Certificates
specified for such Pass Through Trust on Schedule I attached hereto, which (i)
shall be issued in the principal amount and in the Series and Maturity set
forth for such Certificate in Schedule I hereto, (ii) shall bear interest at
the interest rate set forth for such Certificate in Schedule I hereto, (iii)
shall be issued in such form and on such terms as are specified in the
Indenture, (iv) shall be dated and authenticated on the Refunding Date and
shall bear interest from the Refunding Date and (v) shall be registered in the
name of the Subordination Agent on behalf of the Pass Through Trustee for such
Pass Through Trust.
Section 2.03. Owner Participant's Instructions to Owner Trustee. The
Owner Participant agrees that the issuance of Certificates in accordance with
the terms hereof shall constitute, without further act, authorization and
direction by the Owner Participant to the Owner Trustee to take the actions
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.
ARTICLE 3
EXTENT OF INTEREST OF ORIGINAL LOAN PARTICIPANT
Section 3.01. Extent of Interest of Original Loan Participant.
Delivery of the Original Loan Certificates by the Original Loan Participant to
the Indenture Trustee for cancellation on the Refunding Date shall be
conclusive evidence of receipt by the Original Loan Participant of all amounts
then due and payable to the Original Loan Participant in respect of principal
of, Breakage Costs, if any, and interest on the Original Loan Certificates
under the Original Agreements (it being understood that the foregoing shall
not limit or detract from any claim the Original Loan Participant may have
under Article 8 or 9 or Section 10.01(a)(ii) hereof or of the Original
Participation Agreement).
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent. The obligations of the Owner
Trustee, the Owner Participant, the Indenture Trustee, the Subordination Agent
and the Pass Through Trustee on behalf of each Pass Through Trust to
participate in the transactions contemplated hereby are subject to the
fulfillment to the satisfaction of such party (or waiver by such party), prior
to or on the Refunding Date, of the following conditions precedent (it being
understood that receipt by the Lessee of any of the following documents shall
not be a condition precedent to the obligations of any party):
(a) Certificates. (i) On the Refunding Date, there shall have been
duly issued and delivered by the Owner Trustee to the Subordination Agent
on behalf of the Pass Through Trustee for each Pass Through Trust, against
payment therefor, a Certificate, substantially in the form set forth in
Exhibit B to the Indenture, duly authenticated, dated the Refunding Date
and registered in the name of the Subordination Agent, in the principal
amounts, Series and Maturity, bearing the interest rate and the other
economic terms specified in the Series Supplements and otherwise as
provided in Section 2.04 of the Indenture. (ii) The Pass Through
Certificates shall be registered under the Securities Act, any applicable
state securities laws shall have been complied with, and the Pass Through
Agreement shall have been qualified under the Trust Indenture Act, and on
the Refunding Date, the "Certificates" (as defined in each of the Related
Indentures) have been duly issued and delivered by the "Owner Trustee" (as
defined in each of the Related Indentures) to the Subordination Agent on
behalf of the Pass Through Trustee for each Pass Through Trust.
(b) Legal Investment. On the Refunding Date, no fact or condition
shall exist under applicable laws or regulations, or interpretations of any
such laws or regulations by applicable regulatory authorities, which, in
the opinion of the Owner Participant or its special counsel, the Pass
Through Trustee, 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 transactions to be
consummated on the Refunding Date; and no action or proceeding shall have
been instituted nor shall governmental action before any court,
governmental authority or agency be threatened which in the opinion of
counsel for the Owner Participant, the Indenture Trustee, the Subordination
Agent or the Pass Through Trustee is not frivolous, nor shall any order
have been issued or proposed to be issued by any court, or governmental
authority or agency, as of the Refunding Date, to set aside, restrain,
enjoin or prevent the consummation of any of the transactions contemplated
by this Agreement or by any of the other Operative Agreements.
(c) Underwriters. The Underwriters shall have transferred the funds
specified in Section 2.01(a) hereof and all conditions thereunder shall
have been satisfied or waived.
(d) Refunding Documents. This Agreement and the following documents
shall have been duly authorized, executed and delivered by the respective
party or parties thereto, shall each be satisfactory in form and substance
to the Lessee, the Owner Trustee, the Indenture Trustee, the Pass Through
Trustee and the Owner Participant (each acting directly or by authorization
to its special counsel) and shall each be in full force and effect; there
shall not have occurred any default thereunder, or any event which with the
lapse of time or the giving of notice or both would be a default
thereunder, and copies executed or certified as requested by the Lessee,
the Owner Trustee, the Indenture Trustee, the Pass Through Trustee, the
Subordination Agent 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
and the Owner Trustee (provided that the sole chattel-paper original of
each of the Lease and each Ancillary Agreement amendatory of the Lease
shall be delivered to the Indenture Trustee):
(i) the Lease;
(ii) the Indenture;
(iii) in the case of the Owner Participant only, Amendment No. 1 to
the Original Tax Indemnity Agreement;
(iv) the Trust Agreement;
(v) each Ancillary Agreement;
(vi) the Owner Participant Guaranty;
(vii) the Owner Trustee Guaranty;
(viii) the Intercreditor Agreement; and
(ix) the Liquidity Facility for each of the Pass Through Trusts for
the Series A Certificates and the Series B Certificates.
(e) Insurance. Each of the Indenture Trustee, the Pass Through
Trustee, the Owner Trustee, each Liquidity Provider and the Owner
Participant shall have received such evidence as it deems appropriate,
including, without limitation, an independent insurance broker's report,
together with certificates of insurance from such broker, in form and
substance satisfactory to the Indenture Trustee, the Pass Through Trustee,
the Owner Trustee, each Liquidity Provider and the Owner Participant to
establish that the insurance required by Article 13 of the Lease is in
effect.
(f) Financing Statements. (i) UCC financing statements covering all
the security interests (and other interests) created by or pursuant to the
Granting Clause of the Original Indenture shall have been executed and
delivered by the Owner Trustee, as debtor, and by the Indenture Trustee, as
secured party, for and on behalf of the Original Loan Participant, and such
financing statements shall have been duly filed in the State of
Connecticut; (ii) a form UCC-3 financing statement to amend and restate
each financing statement referred to in the immediately preceding sentence
shall have been executed and delivered by the Owner Trustee, as debtor, and
by the Indenture Trustee as secured party, and a form UCC-1 financing
statement covering all the security interests (and other interests) created
by or pursuant to the Granting Clause of the Indenture shall have been
executed and delivered by the Owner Trustee, as debtor, and by the
Indenture Trustee, as secured party, for and on behalf of the Holders, and
concurrently with the Refinancing of the Original Loan Certificates such
UCC-3 financing statement and UCC-1 financing statement shall have been
duly filed or duly submitted for filing in the State of 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; (iii) a UCC notice
filing describing the Original Lease as a lease shall have been executed
and delivered by the Owner Trustee, as lessor, and the Lessee, as lessee
(which filing shall name the Indenture Trustee as assignee of the Owner
Trustee), and shall have been duly filed in the State of Tennessee; and
(iv) a form UCC-3 financing statement to amend and restate the UCC notice
filing referred to in the immediately preceding clause (iii) shall have
been executed and delivered by the Owner Trustee, as lessor, and by the
Lessee, as lessee (which filing shall name the Indenture Trustee as
assignee of the Owner Trustee), and such notice filing shall concurrently
with the Refinancing of the Original Loan Certificates have been duly filed
in the State of Tennessee, and all other actions shall have been taken
which, in the opinion of the Owner Participant, the Pass Through Trustee
and the Underwriters, are necessary to perfect and protect such security
interests and other interests created by or pursuant to the Granting Clause
of the Indenture.
(g) Corporate Documents. Except when such Person is the delivering
party, the Owner Participant, the Owner Trustee, the Original Loan
Participant, the Pass Through Trustee, the Subordination Agent, the Lessee
and the Indenture Trustee (acting directly or by authorization to its
counsel) shall have received the following, in each case in form and
substance satisfactory to it:
(i) a copy of the certificate of incorporation and by-laws of the
Lessee, certified by the Secretary or an Assistant Secretary of the
Lessee as of the Refunding Date, and a copy of the minutes of the
regular meeting of the board of directors of the Lessee, certified as
such as of the Refunding Date by such Secretary or Assistant
Secretary, duly authorizing the lease by the Lessee of the Aircraft
under the Lease and the execution, delivery and performance by the
Lessee of the Original Agreements to which it is a party, this
Agreement, the Lease, the Tax Indemnity Agreement, the Pass Through
Agreement, the Series Supplements, the other Operative Agreements to
which the Lessee is or is to be a party and each other document to be
executed and delivered by the Lessee in connection with the
transactions contemplated hereby;
(ii) a copy of the articles of incorporation and bylaws of the
Owner Participant and the Owner Participant Guarantor, certified by
the Secretary or an Assistant Secretary of the Owner Participant or
the Owner Participant Guarantor as of the Refunding Date, and a copy
of the resolutions of the board of directors of the Owner
Participant, certified as such as of the Refunding Date by such
Secretary or an Assistant Secretary, authorizing the execution and
delivery by the Owner Participant of the Original Agreements to which
it is a party, this Agreement, the Tax Indemnity Agreement, the Trust
Agreement and the other Operative Agreements to which the Owner
Participant is or is to be a party and each other document to be
executed and delivered by the Owner Participant in connection with
the transactions contemplated hereby, and a copy of the resolutions
of the board of directors of the Owner Participant Guarantor,
certified as such as of the Refunding Date by the Secretary or an
Assistant Secretary, authorizing the execution and delivery by the
Owner Participant Guarantor of the Owner Participant Guaranty and the
other Operative Agreements to which such Owner Participant Guarantor
is or is to be a party and each other document to be executed and
delivered by the Owner Participant Guarantor in connection with the
transactions contemplated hereby;
(iii) a copy of the articles of association and by-laws and other
instruments of the Owner Trustee and the Owner Trustee Guarantor,
certified by the Secretary or an Assistant Secretary of the Owner
Trustee or the Owner Trustee Guarantor as of the Refunding Date (or
other like instruments satisfactory to the Lessee and the Owner
Participant) and evidence authorizing (i) the execution, delivery and
performance by the Owner Trustee in its individual capacity or as
Owner Trustee, as the case may be, of the Original Agreements to
which it is a party, this Agreement, the Trust Agreement and each of
the other Operative Agreements to which it is or is to be a party,
whether in its individual capacity or as Owner Trustee, and each
other document to be executed and delivered by the Owner Trustee in
connection with the transactions contemplated hereby and (ii) the
execution, delivery and performance by the Owner Trustee Guarantor in
its individual capacity or as Owner Trustee Guarantor, as the case
may be, of the Original Agreements to which it is a party, the Owner
Trustee Guaranty 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 Guarantor, and each other document to be executed and
delivered by the Owner Trustee Guarantor 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 Refunding Date
(or other like instruments satisfactory to the Lessee and the Owner
Participant) and evidence authorizing the execution, delivery and
performance by the Indenture Trustee of each of the Original
Agreements to which it is party, this Agreement, the Indenture and
each of the other Operative Agreements to which it is or is to be a
party, and each other document to be executed and delivered by the
Indenture Trustee in connection with the transactions contemplated
hereby;
(v) a copy of the 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
Refunding Date (or other like instruments satisfactory to the Lessee
and the Owner Participant) and evidence authorizing the execution,
delivery and performance by the Pass Through Trustee of this
Agreement, the Pass Through Agreement, the Series Supplements and
each of the other Operative Agreements to which it is or is to be a
party, and each other document to be executed and delivered by the
Pass Through Trustee in connection with the transactions contemplated
hereby;
(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 Refunding
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, the Owner Participant, the Owner Trustee
Guarantor and the Owner Participant Guarantor as the Indenture
Trustee, the Pass Through Trustee or the Owner Participant may
reasonably request in order to establish the consummation of the
transactions contemplated by this Agreement.
(h) Title, Airworthiness and Registration. On the Refunding Date,
the following statements shall be true, and the Owner Participant, the
Owner Trustee, the Pass Through Trustee and the Indenture Trustee shall
have received evidence from the Lessee reasonably satisfactory to each such
Person to the effect that:
(i) the Owner Trustee has good and marketable title to the
Aircraft, free and clear of Liens, except the rights of the Owner
Trustee and the Lessee under the Lease and the Lease Supplement
covering the Aircraft, the rights of the Indenture Trustee under the
Indenture and the beneficial interest of the Owner Participant
created by the Trust Agreement and the interest of the Holders
created by the Indenture and the Indenture and Security Agreement
Supplement covering the Aircraft;
(ii) the Aircraft has been duly certificated by the Aeronautics
Authority as to type and airworthiness in accordance with the terms
of the Operative Agreements;
(iii) the Lease, the Indenture and the Trust Agreement
concurrently with the Refinancing of the Original Loan Certificates
have been duly filed for recordation (or shall be in the process of
being so duly filed for recordation) with the Aeronautics Authority
pursuant to the Transportation Code; and
(iv) the Aircraft is registered in the name of the Owner Trustee.
(i) Officer's Certificate of Lessee. On the Refunding Date, the
following statements shall be true, and the Owner Participant, the Owner
Trustee, the Pass Through Trustee and the Indenture Trustee shall have
received a certificate signed by the Vice President and Treasurer or any
other duly authorized officer of the Lessee, dated the Refunding Date,
stating that:
(i) the representations and warranties of the Lessee contained in
the Operative Agreements to which it is a party (excluding the Tax
Indemnity Agreement) and in any certificate delivered at the closing
pursuant hereto or thereto are true and correct on and as of the
Refunding Date as though made on and as of such date (except to the
extent that such representations and warranties relate solely to an
earlier date, in which case such certificate shall state that such
representations and warranties were true and correct on and as of
such earlier date);
(ii) except for the matters described (i) under "Legal
Proceedings" in the Lessee's Annual Report on Form 10-K for the
fiscal year ended May 31, 1997 (as updated by Note 7 to the financial
statements included in the Lessee's Quarterly Reports on Form 10-Q
for the fiscal quarters ended August 31, 1997, November 30, 1997 and
February 28, 1998), 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 financial
statements of the Lessee as of May 31, 1996 and nothing has occurred
which will, in the judgment of such officer, materially adversely
affect the ability of the Lessee to carry on its business or to
perform its obligations under this Agreement and each other Operative
Agreement to which it is or is to be a party; and
(iii) no event has occurred and is continuing, or would result
from the purchase, sale, mortgage, or lease of the Aircraft, which
constitutes an Event of Loss (or event which with the passage of time
would become an Event of Loss) with respect to the Airframe or any
Engine, or a Default or an Event of Default under the Lease.
(j) Officer's Certificates of Owner Participant and Owner Participant
Guarantor. On the Refunding Date, the following statements shall be true,
and the Lessee, the Pass Through Trustee, the Owner Trustee and the
Indenture Trustee shall have received a certificate from (i) the Owner
Participant, signed by a duly authorized officer of the Owner Participant
dated the Refunding Date, stating that:
(A) the representations and warranties of the Owner Participant
contained in this Agreement, the Trust Agreement and any other
Operative Agreement to which it is a party (excluding the Tax
Indemnity Agreement) and in any certificate delivered at the closing
pursuant hereto or thereto, are true and correct on and as of the
Refunding Date as though made on and as of such date (except to the
extent that such representations and warranties relate solely to an
earlier date, in which case such certificate shall state that such
representations and warranties were true and correct on and as of such
earlier date);
(B) no Lessor's Liens attributable to the Owner Participant exist;
and
(C) 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;
and (ii) from the Owner Participant Guarantor, signed by a duly authorized
officer of such Owner Participant Guarantor dated the Refunding Date,
stating that the representations and warranties of such Owner Participant
Guarantor contained in its Owner Participant Guaranty and in any
certificate delivered at the closing pursuant thereto are true and correct
on and as of the Refunding Date as though made on and as of such date
(except to the extent that such representations and warranties relate
solely to an earlier date, in which case such certificate shall state that
such representations and warranties were true and correct on and as of such
earlier date).
(k) Other Officer's Certificates. On the Refunding Date, the
following statements shall be true, and the Lessee, the Owner Participant,
the Pass Through Trustee, the Owner Trustee, the Subordination Agent and
the Indenture Trustee shall have received a certificate from (i) each of
SSB and the Owner Trustee (in the case of the Lessee, the Owner
Participant, the Pass Through Trustee, the Subordination Agent and the
Indenture Trustee), FSB and the Indenture Trustee (in the case of the
Lessee, the Owner Participant, the Pass Through Trustee, the Subordination
Agent and the Owner Trustee), FSB and the Pass Through Trustee (in the case
of the Lessee, the Owner Participant, the Indenture Trustee, the
Subordination Agent and the Owner Trustee) and FSB and the Subordination
Agent (in the case of the Lessee, the Owner Participant, the Pass Through
Trustee, the Indenture Trustee and the Owner Trustee), signed by a duly
authorized officer of SSB and FSB, respectively, dated the Refunding 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:
(A) 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 at the
closing pursuant hereto or thereto are true and correct on and as of
the Refunding Date as though made on and as of such date (except to
the extent that such representations and warranties relate solely to
an earlier date, in which case such certificate shall state that such
representations and warranties were true and correct on and as of such
earlier date);
(B) 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
(C) there are no Lessor's Liens attributable to the Owner Trustee
or SSB and no Indenture Trustee's Liens;
and (ii) from the Owner Trustee Guarantor, signed by a duly authorized
officer of the Owner Trustee Guarantor dated the Refunding Date, stating
that the representations and warranties of the Owner Trustee Guarantor
contained in the Owner Trustee Guaranty and in any certificate delivered at
the closing pursuant thereto are true and correct on and as of the
Refunding Date as though made on and as of such date (except to the extent
that such representations and warranties relate solely to an earlier date,
in which case such certificate shall state that such representations and
warranties were true and correct on and as of such earlier date).
(l) Legal Opinions. The Owner Participant, the Owner Participant
Guarantor, the Agent, the Original Loan Participant, the Underwriters, the
Lessee, the Owner Trustee, the Pass Through Trustee and the Indenture
Trustee (acting directly or by authorization to its special counsel) shall
have received from the following counsel their respective legal opinions in
each case satisfactory to the Owner Participant, the Owner Participant
Guarantor, the Agent, the Original Loan Participant, the Underwriters, the
Lessee, the Owner Trustee, the Pass Through Trustee or the Indenture
Trustee, as the case may be, as to scope and substance (and covering such
other matters as the recipient may reasonably request) and dated the
Refunding Date:
(i) Karen M. Clayborne, Senior Vice President and General Counsel
of the Lessee, in the form of Exhibit A(1)(a) hereto and addressed to
the Agent, the Original Loan Participant, the Underwriters, the Owner
Participant, the Owner Participant Guarantor, the Owner Trustee, the
Pass Through Trustee, each Liquidity Provider and the Indenture
Trustee;
(ii) Davis Polk & Wardwell, special counsel for the Lessee, in the
form of Exhibit A(1)(b) hereto and addressed to the Agent, the
Original Loan Participant, the Underwriters, the Owner Participant,
the Owner Participant Guarantor, the Indenture Trustee, the Owner
Trustee, the Pass Through Trustee, each Liquidity Provider and the
Lessee;
(iii) Simpson, Thacher & Bartlett, special counsel for the Owner
Participant and the Owner Participant Guarantor, in the form of
Exhibit A(2)(a) hereto and the General Counsel's Office of the Owner
Participant and the Owner Participant Guarantor, in the form of
Exhibit A(2)(b) hereto, each addressed to the Agent, the Original
Loan Participant, the Underwriters, the Owner Participant, the Owner
Participant Guarantor, 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
Agent, the Original Loan Participant, the Underwriters, the Owner
Participant, the Owner Participant Guarantor, the Indenture Trustee,
the Owner Trustee, the Pass Through Trustee, each Liquidity Provider
and the Lessee;
(v) Bingham Dana LLP, special counsel for the Owner Trustee and the
Owner Trustee Guarantor, in the form of Exhibit A(4) hereto and
addressed to the Agent, the Original Loan Participant, the
Underwriters, the Owner Participant, the Owner Participant Guarantor,
the Indenture Trustee, the Owner Trustee, the Pass Through Trustee,
each Liquidity Provider and the Lessee;
(vi) Ray, Quinney & Nebeker, special counsel for the Pass Through
Trustee and the Subordination Agent, in the form of Exhibit A(5)
hereto and addressed to the Agent, the Original Loan Participant, the
Underwriters, the Owner Participant, the Owner Participant Guarantor,
the Indenture Trustee, the Owner Trustee, the Pass Through Trustee,
each Liquidity Provider and the Lessee;
(vii) Ruediger Sass, General Counsel to the Liquidity Providers,
in the form of Exhibit A(6)(a) hereto, and Milbank, Tweed, Hadley &
McCloy, special counsel for the Liquidity Providers, in the form of
Exhibit A(6)(b) hereto, each addressed to the Pass Through Trustee,
the Subordination Agent, each Liquidity Provider and the Lessee; and
(viii) Daugherty, Fowler & Peregrin, special aviation counsel, in
the form of Exhibit A(7) hereto and addressed to the Agent, the
Original Loan Participant, the Underwriters, the Owner Participant,
the Owner Participant Guarantor, the Indenture Trustee, the Owner
Trustee, the Pass Through Trustee, each Liquidity Provider and the
Lessee.
(m) 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 (f) and (h) of
this Section 4.01, or in connection with the purchase of the Aircraft by
the Owner Trustee and the issuance of the Loan Certificates and the making
by the Owner Participant of its equity investment shall have been duly paid
or caused to be paid in full; and (B) all sales or use taxes and duties
related to the consummation of the transactions contemplated by the
Operative Agreements then due and payable shall have been duly paid in full.
(n) No Indenture Event of Default. No Indenture Event of Default or
Indenture Default has occurred and is continuing.
(o) 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.
(p) Cancellation. Following the Refinancing of the Original Loan
Certificates, the Original Loan Certificates shall have been duly delivered
by the Original Loan Participant to the Indenture Trustee for cancellation
and delivery to the Owner Trustee.
(q) Other Agreements. The Lessee and the Pass Through Trustee shall
have entered into the Pass Through Agreement and the Series Supplements, all
conditions to the effectiveness of each thereof shall have been satisfied
or waived, and the Pass Through Certificates shall have been issued
pursuant to the Series Supplements. The Lessee and the Underwriters shall
have entered into the Underwriting Agreement, all conditions to the
effectiveness thereof shall have been satisfied or waived, and the Pass
Through Certificates shall have been delivered pursuant to the Underwriting
Agreement. All conditions to the effectiveness of each Liquidity Facility
shall have been satisfied or waived.
Section 4.02. Opinion of Special Aviation Counsel. Promptly upon
the filing and, where appropriate, recording of the documents specified in
4.01(h)(iii) hereof, pursuant to the Transportation Code the Lessee shall
cause Special Aviation Counsel to deliver to the Owner Participant, the Owner
Participant Guarantor, the Owner Trustee, the Pass Through Trustee and the
Indenture Trustee an opinion as to (i) the due recording of such documents and
the documents identified in Section 4.01(i) of the Original Participation
Agreement and (ii), subject to customary qualifications, the lack of any
intervening documents with respect to the Aircraft.
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations. The
Lessee's obligation to participate in the transactions contemplated hereby is
subject to the conditions that, prior to or on the Refunding Date, the Lessee
shall have received the certificates and other documents which are referred to
in, or the opinions to be addressed to it under, as the case may be,
paragraphs (d), (g)(ii)-(vii), (h)(ii)-(iv), (j), (k) and (l)(ii)-(viii) of
Section 4.01 hereof and the Underwriters shall have made available the amounts
required to be paid by them pursuant to Section 2.01 hereof.
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, on the date hereof and as of the Refunding Date:
(a) the Lessee is a corporation duly organized and validly existing
and is in good standing under the laws of the State of Delaware with its
principal place of business and chief executive office (as such terms are
used in Article 9 of the UCC) 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(l)(viii) and 4.02 hereof and except for the filings referred to in
Section 4.01(f) hereof, all of which shall have been duly obtained or made
and shall be in full force and effect on and as of the Refunding Date or as
contemplated by said Sections;
(g) neither the execution, delivery or performance by the Lessee of
the Lessee Documents nor compliance with the terms and provisions hereof or
thereof, conflicts or will conflict with or results or will result in a
breach or violation of any of the terms, conditions or provisions of, or
will require any consent or approval under, any law, governmental rule or
regulation or the charter documents, as amended, or bylaws, as amended, of
the Lessee or any order, writ, injunction or decree of any court or
governmental authority against the Lessee or by which it or any of its
Properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which the Lessee is a party or by which it or
any of its Properties is bound, or constitutes or will constitute a default
thereunder or results or will result in the imposition of any Lien upon any
of its Properties;
(h) there are no pending or, to the knowledge of the Lessee,
threatened actions, suits, investigations or proceedings (whether or not
purportedly on behalf of the Lessee) against or affecting the Lessee or any
of its Property before or by any court or administrative agency which (A)
involve the Aircraft, (B) except for the matters described (i) under "Legal
Proceedings" in the Lessee's Annual Report on Form 10-K for the fiscal year
ended May 31, 1997 (as updated by Note 7 to the financial statements
included in the Lessee's Quarterly Reports on Form 10-Q for the fiscal
quarters ended August 31, 1997, November 30, 1997 and February 28, 1998),
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 has filed or caused to be filed all tax returns which
are required to be filed and has paid or caused to be paid all taxes shown
to be due and payable pursuant to such returns or pursuant to any
assessment received by the Lessee (other than assessments the payment of
which is being contested in good faith by the Lessee by appropriate
proceedings that do not involve any material danger of sale, forfeiture or
loss of the Aircraft or any part thereof), and the Lessee has no knowledge
of any related actual or proposed deficiency or additional assessment which
either in any case or in the aggregate would materially adversely affect
the Lessee's consolidated financial condition (other than, in any such case,
assessments, the payment of which is being contested in good faith by the
Lessee, as to which no representation is made concerning the Lessee's
liability (if any) or the effect of any adverse determination upon the
Lessee's consolidated financial condition);
(j) except for (A) the filing with and, where appropriate,
recordation pursuant to the Transportation Code of the Indenture, the Trust
Agreement and the Lease, (B) the filing of the financing statements
referred to in Section 4.01(f) hereof and (C) the taking of possession by
the Indenture Trustee of the original counterpart of the Lease and
maintaining possession of the original counterpart of the Lease Supplement
delivered on the Delivery Date, no further action, including any filing or
recording of any document, is necessary or advisable in order (i) to
establish the Owner Trustee's title to and interest in the Aircraft and the
Lessor's Estate as against the Lessee and any third parties, or (ii) to
perfect the first security interest in and mortgage Lien on the Trust
Indenture Estate in favor of the Indenture Trustee;
(k) on the Delivery Date, the Owner Trustee received good and
marketable title to the Aircraft, free and clear of all Liens, except the
rights of the Owner Trustee and the Lessee under the Original Lease, the
rights of the Indenture Trustee under the Original Indenture, the
beneficial interest of the Owner Participant created by the Original Trust
Agreement and the interest of the Original Loan Participant created by the
Original Indenture and the Indenture and Security Agreement Supplement
covering the Aircraft;
(l) the Lessee has heretofore delivered to the Owner Participant
true and correct copies of the Lessee's Annual Reports on Form 10-K for the
fiscal years ended May 31, 1996 and May 31, 1997, its Quarterly Reports on
Form 10-Q for the fiscal quarters ended August 31, 1997, November 30, 1997
and February 28, 1998 and its Current Report on Form 8-K dated June 11,
1997, and of the audited consolidated balance sheet of the Lessee for the
fiscal year ended May 31, 1997 and the unaudited consolidated balance
sheets of the Lessee as of August 31, 1997, November 30, 1997 and February
28, 1998, 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 Reports, Quarterly Reports and financial
statements did not, as of their respective dates of filing with the SEC,
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein not misleading;
(m) with respect to ERISA:
(i) none of the Pension Plans (as defined at the end of this
Section 6.01(m)) nor their related trusts have been terminated in a
distress termination pursuant to Section 4041(c) of ERISA or by the
Pension Benefit Guaranty Corporation (together with any successor
agency or instrumentality thereto, the "PBGC") pursuant to Section
4042 of ERISA, nor have any actions been taken to so terminate any
Pension Plan or related trust and neither the Lessee nor any ERISA
Affiliate (as defined at the end of this Section 6.01(m)) has
incurred or could reasonably be expected to incur any material
liability with respect to a Pension Plan under Section 4062, 4063,
4064 or 4069 of ERISA;
(ii) there have been no "reportable events" (as such term is
defined in Section 4043(b) of ERISA) with respect to any Pension Plan
which have resulted or could reasonably be expected to result in any
material liability of the Lessee or any ERISA Affiliate;
(iii) no "accumulated funding deficiency" (as such term is defined
in Section 302 of ERISA or Section 412 of the Code) exists with
respect to any Pension Plan, whether or not waived, nor has any
request for a waiver under Section 412(d) of the Code been, or is
reasonably likely to be, filed with respect to any of the Pension
Plans;
(iv) neither the Lessee nor any ERISA Affiliate has failed to make
any contribution or payment to any Pension Plan which has resulted or
could reasonably be expected to result in the imposition of a Lien
under Section 302(f) of ERISA or Section 412(n) of the Code;
(v) all Pension Plans are in compliance in all material respects
with all applicable provisions of ERISA and the Code;
(vi) neither the Lessee nor any ERISA Affiliate has incurred or is
reasonably likely to incur any material withdrawal liability pursuant
to Section 4201 or 4204 of ERISA or any material liability under
Section 515 of ERISA;
(vii) to the best of the Lessee's knowledge, neither the Lessee
nor any ERISA Affiliate has engaged in a "prohibited transaction"
(within the meaning of Section 4975 of the Code or Section 406 of
ERISA) which could reasonably be expected to subject the Lessee to
the tax or penalties on prohibited transactions imposed by Section
4975 of the Code or Section 502 of ERISA; and
(viii) assuming the truth of the representations contained in
Section 7.03(a)(viii) hereof and compliance with Section 10.06 of the
Indenture, the execution and delivery of this Agreement and the other
Operative Agreements and the consummation of the transactions
contemplated hereby and thereby will not involve any transaction
which is prohibited by Section 406 of ERISA or in connection with
which a tax could be imposed pursuant to Section 4975 of the Code.
No part of the funds to be used by the Lessee in satisfaction of its
obligations under this Agreement or any other of the Operative
Agreements to which the Lessee is a party or to which the Lessee is
bound are the assets of any employee benefit plan subject to Title I
of ERISA, or any individual retirement account or an employee benefit
plan subject to Section 4975 of the Code;
as used in this Section 6.01(m), the term "Pension Plan" means an employee
pension benefit plan as defined in Section 3(2) of ERISA (other than a
multiemployer plan as defined in Section 4001(a)(3) of ERISA) which is
covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code and which is maintained, or contributed to,
by the Lessee or any ERISA Affiliate, and the term "ERISA Affiliate" means
any entity which together with the Lessee would be treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code;
(n) the Lessee is a Citizen of the United States;
(o) except for the filings referred to in Sections 4.01(f) 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 Refunding Date, all premiums with respect to the insurance
required to be provided by the Lessee on or prior to the Refunding Date
under Article 13 of the Lease shall have been paid by the Lessee;
(q) on the Refunding Date, all sales or use taxes relating to the
sale of the Aircraft by AVSA to the Owner Trustee which are then or were
theretofore due shall have been paid;
(r) the Lessee is not in default under any mortgage, deed of trust,
indenture, lease or other instrument or agreement to which the Lessee is a
party or by which it or any of its Properties or assets may be bound, or in
violation of any applicable law, which default or violation would have a
material adverse effect on the financial condition, business or operations
of the Lessee or its ability to perform any of its obligations under the
Lessee Documents;
(s) no Default or Event of Default or Event of Loss or event, which
with the passage of time or if continued unremedied or unaltered would
constitute an Event of Loss, has occurred or exists;
(t) the Aircraft has been duly certificated by the FAA as to type and
airworthiness; there is in effect with respect to the Aircraft a current
and valid airworthiness certificate issued by the FAA pursuant to the
Transportation Code; and there is no fact known to the Lessee which
materially adversely affects the value, utility or condition of the
Aircraft;
(u) on the Refunding Date, the Lessee shall not be in default in the
performance of any term or condition of the Purchase Agreement, the Purchase
Agreement Assignment, the Engine Warranty Assignment and the GTA;
(v) neither the Lessee nor any subsidiary of the Lessee is an
"investment company" or a company "controlled by an investment company"
within the meaning of the Investment Company Act of 1940, as amended;
(w) the Aircraft is fully equipped to operate in commercial service
and will comply with all governmental requirements governing such service;
(x) there are no broker's or underwriter's fees payable on behalf of
the Lessee in connection with the transactions contemplated in the Operative
Agreements other than those of the Underwriters and First Chicago Leasing
Corporation referred to in Article 10 hereof; and
(y) the representations and warranties of the Lessee set forth in the
Original Agreements to which it is a party were correct on and as of the
Delivery Date (except to the extent such representations expressly related
solely to a specified earlier date, in which case such warranties and
representations were correct on and as of such earlier date).
Section 6.02. Offering by Lessee. The Lessee represents and
warrants that it has authorized no one to act on its behalf in connection with
the offer or sale of any interest in the Lessor's Estate or the Trust
Agreement other than First Chicago Leasing Corporation. The Lessee represents
and warrants that neither it, nor, based on representations of First Chicago
Leasing Corporation, First Chicago Leasing Corporation acting on its behalf,
has taken or will take any action which would subject the issuance or sale of
any interest in the Lessor's Estate or the Trust Agreement to the provisions
of Section 5 of the Securities Act of 1933, as amended. Neither the Lessee
nor, based on representations of First Chicago Leasing Corporation, anyone
acting on its behalf has directly or indirectly offered 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 15 other accredited investors (as such term
is defined in Regulation D promulgated under the Securities Act of 1933, as
amended).
Section 6.03. Certain Covenants of Lessee. The Lessee covenants and
agrees with the Owner Participant, the Owner Trustee (in its individual
capacity and as Owner Trustee), the Pass Through Trustee (in its individual
capacity and as Pass Through Trustee) and the Indenture Trustee (in its
individual capacity and as Indenture Trustee) as follows:
(a) The Lessee will cause to be done, executed, acknowledged and
delivered at the Lessee's cost and expense all such further acts,
conveyances and assurances as the Owner Trustee, the Indenture Trustee, the
Pass Through Trustee or the Owner Participant shall reasonably require for
accomplishing the purposes of this Agreement, the Trust Agreement, the
Indenture, the Tax Indemnity Agreement, the Lease and the other Operative
Agreements to which it is a party. Without limiting the generality of
this Section 6.03(a), the Lessee will promptly take, or cause to be taken,
at the Lessee's cost and expense, such action with respect to the
recording, filing, re-recording and re-filing of the Indenture, each
Indenture and Security Agreement Supplement, the Lease, each Lease
Supplement and any financing statements or other instruments as may be
necessary, or as requested by the Indenture Trustee and appropriate, to
maintain the perfection of the first security interest and the Lien created
by the Indenture, and the Owner Trustee's title to and interest in the
Aircraft and the Lessor's Estate as against the Lessee and any third
parties or if the Lessee cannot take, or cause to be taken, such action,
will furnish to the Indenture Trustee and the Owner Trustee timely notice
of the necessity of such action, together with such instruments, in
execution form, and such other information as may be required to enable
either of them to take such action at the Lessee's cost and expense in a
timely manner.
(b) The Lessee shall maintain the certificates referred to in
Section 7.01 of the Lease and shall cause the Aircraft to remain duly
registered in the name of the Owner Trustee, under the Transportation Code;
provided, however, that the Owner Participant, the Owner Trustee and the
Indenture Trustee agree that if at any time after December 31, 2005, so
long as no Event of Default shall have occurred and be continuing, the
Lessee has requested their consent to the registration of the Aircraft in
the name of the Owner Trustee (or, if appropriate under the laws of such
jurisdiction of reregistration, in the name of the Lessee or a sublessee as
a "lessee" or a "sublessee"), at the Lessee's expense, in a country listed
in Schedule III hereto with which the United States then maintains normal
diplomatic relations (and which is not then experiencing war or substantial
civil unrest), the Owner Participant, 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:
(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, that the rights of the Owner Trustee in and
to the Aircraft will not be impaired in such new jurisdiction of
registry and that the new jurisdiction of registry will give effect
to the title and registry of the Aircraft therein substantially to the
same extent as does the Government;
(C) that such new country of registry (x) would provide
substantially equivalent protection for the rights of owner
participants, lessors or lenders in similar transactions as provided
under United States law (except that, in the absence of restrictions
under the laws of such country on rights and remedies of lessors and
secured parties similar to those imposed by Sections 362 and 363 of
the Bankruptcy Code, rights and remedies similar to those available
under Section 1110 of the Bankruptcy Code shall not be required) and
(y)(i) if such change in registration is made other than in
connection with a sublease permitted under Section 7.02(a)(i) of the
Lease, imposes maintenance standards at least comparable to those of
the FAA, and (ii) if such change in registration is made in
connection with a sublease permitted under Section 7.02(a)(i) of the
Lease, imposes maintenance standards in conformity with those set
forth in Section 7.02(a)(i) of the Lease;
(D) that import and export certificates and any exchange permits
necessary to allow all Rent and other payments provided for under the
Lease, if required, shall have been procured at the Lessee's own cost
and expense by the Lessee;
(E) that the Lessee shall have effected or caused to be effected
at the Lessee's own cost and expense all recordings and filings that
are required to perfect the Lien of the Indenture;
(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;
(G) that such change will not result in the imposition of, or
increase in the amount of, any Tax (which, for this purpose, includes
the loss of any tax benefits assumed by the Owner Participant to be
available to it based upon the assumptions set forth in Section 2 of
the Tax Indemnity Agreement) for which the Lessee has not agreed to
indemnify the Owner Participant to its reasonable satisfaction, the
Indenture Trustee, the Pass Through Trustee, the Owner Trustee (or
any successor, assign or Affiliate thereof) and the Trust Estate;
(H) that any value added tax, customs duty, tariff or similar
governmental charge relating to the change in jurisdiction of
registration of the Aircraft shall have been paid in full or
adequately provided for by the Lessee to the satisfaction of the
Owner Trustee, the Indenture Trustee and the Owner Participant;
(I) 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;
(J) that duties and tariffs, if applicable, shall have been paid
for by the Lessee;
(K) as to the continuation of the Lien of the Indenture as a
first priority, duly perfected Lien on the Aircraft and the Trust
Indenture Estate, that all recordings and filings required to so
perfect the Lien of the Indenture have been duly effected, and that
no Liens (except Liens permitted under Section 6.01 of the Lease)
shall arise by reason of such registration; and
(L) that appropriate deregistration powers of attorney in favor of
the Owner Trustee and the Indenture Trustee have been executed and
delivered by the Lessee and any sublessee and, if necessary or
desirable for the effectiveness thereof, filed with the relevant
aeronautics authority; and
(ii) a favorable opinion of counsel (reasonably satisfactory to the
Owner Trustee, the Indenture Trustee and the Owner Participant) in the new
jurisdiction of registry, addressed and reasonably satisfactory to such
parties in scope, form and substance, to the effect:
(A) that the terms (including, without limitation, the governing
law, service-of-process and jurisdictional-submission provisions
thereof) of the Lease and the Indenture are legal, valid, binding and
enforceable in such jurisdiction against the Lessee, any sublessee,
the Owner Trustee and the Indenture Trustee, respectively;
(B) that it is not necessary for the Owner Participant, the Owner
Trustee, the Indenture Trustee or the Pass Through Trustee to
register or qualify to do business or meet other requirements not
already met in such jurisdiction in connection with the registration
in the new jurisdiction (and the filing and/or recordation therein of
the Indenture or 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)(D)(x) of this Section 6.03) in respect of the
transactions contemplated hereby, including, without limitation, the
remedies provided in the Indenture and the Lease;
(D) that there is no tort liability of the beneficial owner,
record owner, lessor or mortgagee of an aircraft not in possession
thereof under the laws of such jurisdiction, other than tort
liability which might reasonably have been imposed on such owner,
lessor or mortgagee under the laws of the United States or any state
thereof (it being understood that, in the event such latter opinion
cannot be given in a form satisfactory to the Owner Trustee, the
Owner Participant and the Indenture Trustee, such opinion shall be
waived, if insurance reasonably satisfactory to the Owner
Participant, the Indenture Trustee and the Owner Trustee, in its
individual capacity, is provided, at the Lessee's expense, to cover
such risk and the Lessee undertakes to keep such insurance in full
force and effect);
(E) that the laws of such jurisdiction will not impair the rights
of the Lessor in and to the Aircraft or under the Lease and (unless
the Lessee shall have agreed to provide insurance reasonably
satisfactory to the Indenture Trustee and the Owner Participant
covering the risk of requisition of use of the Aircraft by the
government of registry of the Aircraft) require fair compensation by
the government of such jurisdiction payable in currency freely
convertible into United States dollars for the loss of use of the
Aircraft in the event of such requisition;
(F) that the Owner Trustee's title to the Aircraft is recognized
and fully enforceable in such jurisdiction, that such jurisdiction
will give effect to the title of the Aircraft therein substantially
to the same extent as does the Government, and that the Lien of the
Indenture shall continue as a first priority, duly perfected lien on
the Aircraft;
(G) to such further effect with respect to such other matters as
the Owner Participant, the Owner Trustee, or the Indenture Trustee may
reasonably request; and
(H) the Lien of the Indenture continues to constitute a first
priority, duly perfected Lien on the Aircraft.
(c) The Lessee shall promptly file any reports, or furnish to the
Owner Trustee and the Owner Participant such information as may be required
to enable the Owner Trustee and the Owner Participant timely to file any
reports required to be filed by the Owner Trustee as the Lessor and the
Owner Participant under the Lease with any governmental authority.
(d) The Lessee will cause the Special Aviation Counsel to file, and
where appropriate record, on the Refunding Date, the Lease, the Trust
Agreement and the Indenture. The following documents shall be filed and,
where appropriate, recorded on the Refunding Date with the Aeronautics
Authority in the following order of priority: first, the Trust Agreement,
second, the Indenture and third, the Lease with the Indenture attached
thereto.
(e) The Lessee will furnish to the Owner Participant, the Owner
Trustee and the Indenture Trustee annually after the execution of this
Agreement, by March 15 of each year, commencing with the year 1999, an
opinion, reasonably satisfactory to the Owner Participant and the Indenture
Trustee, of Special Aviation Counsel, or other counsel specified from time
to time by the Lessee acceptable to the Lessor and the Indenture Trustee:
(i) stating either (1) that in the opinion of such counsel such action has
been taken with respect to the recording, filing, re-recording and
re-filing of the Lease, the Indenture, the Trust Agreement, and any
supplements to any of them and any financing statements, continuation
statements or other instruments, and all other action has been taken, as is
necessary to maintain the Owner Trustee's title to and interest in the
Aircraft and the Lessor's Estate as against the Lessee and any third
parties and to maintain the perfection of the security interests created by
said documents and reciting the details of such action, or (2) that in the
opinion of such counsel no such action is necessary to maintain such title
or the perfection of such security interests; (ii) specifying all other
action which needs to be taken during the succeeding 14 months in order to
maintain such title and the perfection of such security interests (which
the Lessee agrees timely to take); and (iii) stating that the Owner Trustee
is the owner of legal title to the Aircraft, and the Aircraft is free and
clear of all Liens, except the security interest created by the Indenture
and such as are permitted by the Lease and the Indenture.
(f) The Lessee shall at all times maintain its corporate existence
except as permitted by Section 6.03(g) hereof and all of its rights,
privileges and franchises necessary in the normal conduct of its business,
except for any corporate right, privilege or franchise (i) that it
determines, in its reasonable, good faith business judgment, is no longer
necessary or desirable in the conduct of its business and (ii) the loss of
which will not materially adversely affect or diminish the rights of the
Holders or the Owner Participant.
(g) The Lessee shall not enter into any merger or consolidation, or
convey, transfer or lease all or substantially all of its assets as an
entirety to any Person, unless the surviving corporation or Person which
acquires by conveyance, transfer or lease all or substantially all of the
assets of the Lessee as an entirety (i) is a domestic corporation organized
and existing under the laws of the United States or a political subdivision
thereof, (ii) is a Citizen of the United States, (iii) is a U.S. Air
Carrier, (iv) expressly assumes by an instrument in writing in form and
substance satisfactory to the Owner Participant, the Indenture Trustee and
the Owner Trustee all of the Lessee's obligations hereunder and under the
other Operative Agreements, and each other document contemplated hereby or
thereby and the Lessee delivers such instrument to the Indenture Trustee,
the Owner Participant and the Owner Trustee, (v) provides an opinion from
outside counsel to the Lessee which counsel shall be reasonably
satisfactory to the Owner Participant and the Indenture Trustee and which
opinion shall be reasonably satisfactory to the Owner Participant and the
Indenture Trustee, and an officer's certificate, each stating that such
merger, consolidation, conveyance, transfer or lease and the instrument
noted in clause (iv) above comply with this Section 6.03(g), that such
instrument is a legal, valid and binding obligation of, and is enforceable
against, such survivor or Person, and that all conditions precedent herein
provided for relating to such transaction have been complied with, and (vi)
immediately after such merger, consolidation or conveyance, transfer or
lease, as the case may be, the surviving company (or Person which acquires
by conveyance, transfer or lease the assets of the Lessee) is in compliance
with all of the terms and conditions of this Agreement and the Lease and
each other Operative Agreement and each other document contemplated hereby
or thereby; provided that no such merger, consolidation or conveyance,
transfer or lease shall be permitted if the same gives rise to an Event of
Default.
Upon any consolidation or merger, or any conveyance, transfer or
lease of all or substantially all of the assets of the Lessee and the
satisfaction of the conditions specified in this Section 6.03(g), the
successor corporation formed by such consolidation or into which the Lessee
is merged or the Person to which such conveyance, transfer or lease is made
shall succeed to, and be substituted for, and may exercise every right and
power of, the Lessee under this Agreement and the Lease and each other
Operative Agreement and any other document contemplated hereby and thereby
to which the Lessee is a party with the same effect as if such successor
corporation had been named as the Lessee herein and therein. No such
conveyance, transfer or lease of all or substantially all of the assets of
the Lessee as an entirety shall have the effect of releasing the Lessee or
any successor corporation which shall theretofore have become the Lessee
hereunder in the manner prescribed in this Section 6.03(g) from its
liability hereunder or under the other Operative Agreements. Nothing
contained herein shall permit any lease, sublease, or other arrangement for
the use, operation or possession of the Aircraft except in compliance with
the applicable provisions of the Lease.
(h) The Lessee agrees to give prompt written notice to the Owner
Participant, the Owner Trustee and the Indenture Trustee of any change in
the address of its chief executive office (as such term is used in Section
9-103(3) of the Tennessee UCC) or of any change in its corporate name.
(i) The Lessee agrees to furnish to the Owner Participant, the Lessor
and the Indenture Trustee:
(A) as soon as available, but in any event within one hundred
twenty (120) days after the end of each fiscal year of the Lessee, a
consolidated balance sheet as of the end of such fiscal year, and the
related consolidated statements of income, common stockholders'
equity, retained earnings and cash flows of the Lessee for the fiscal
year then ended as prepared and certified by the Lessee's independent
certified public accountants, including their opinion;
(B) within sixty (60) days after the end of the first, second and
third quarterly accounting periods in each fiscal year of the Lessee,
a consolidated balance sheet of the Lessee prepared by it as of the
close of the accounting period then ended, together with the related
consolidated statements of income, retained earnings and cash flows
for such accounting period certified by the chief accounting officer
or a financial vice president of the Lessee;
(C) promptly upon their general transmission, copies of all
reports and statements furnished by the Lessee to its stockholders;
(D) promptly after filing with the SEC, copies of the Lessee's
Annual Reports on Form 10-K (including all corresponding annual
reports to shareholders), Quarterly Reports on Form 10-Q and, if
requested, any registration statement or prospectus filed by the
Lessee with any securities exchange or with the SEC;
(E) promptly upon (and in any event within five (5) Business Days
after) any officer of the Lessee obtaining knowledge of any condition
or event which constitutes a Default or an Event of Default, an
officer's certificate specifying the nature and period of existence
thereof and what action the Lessee has taken or is taking or proposes
to take with respect thereto;
(F) from time to time, such other financial information as the
Lessor, the Owner Participant or the Indenture Trustee may reasonably
request.
Concurrently with the delivery of the financial statements referred
to in clause (A) above, the Lessee shall deliver to the Lessor, the Owner
Participant, the Indenture Trustee and the Pass Through Trustee a certificate
of the Lessee, signed by any one of the President, the Chief Financial
Officer, the General Counsel, the Treasurer or the principal accounting
officer of the Lessee, stating that the signer, or an employee reporting to
same, is familiar with the relevant terms of this Agreement and the Lease and
the signer has reviewed, or has caused to be made under such Person's
supervision a review, of the activities of the Lessee and that, to the best of
his or her knowledge, there does not exist any Default or any Event of Default
or if a Default or an Event of Default exists or did exist, specifying the
nature thereof, the period of existence thereof and what action the Lessee has
taken or proposes to take with respect thereto.
Section 6.04. Survival of Representations and Warranties. The
representations and warranties of the Lessee provided in Sections 6.01 and 6.02
hereof and in any other Operative Agreement to which it is or is to be a party
shall survive the Closings hereunder and the expiration or other termination
of this Agreement and the other Operative Agreements.
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in Lessor's
Estate. (a) [Reserved]
(b) Owner Participant. The Owner Participant represents and
warrants that its interest in the Lessor's Estate and the Trust Agreement was
acquired by it for its own account and not with a view to resale or
distribution thereof; provided, however, that the disposition by the Owner
Participant of its interest in the Lessor's Estate and the Trust Agreement
shall, subject to the terms and provisions of Section 7.03(d) hereof, at all
times be within its control and the foregoing representation shall not limit
the Owner Participant's right to transfer or sell such interests pursuant to
the terms of this Agreement. Neither the Owner Participant nor anyone
authorized to act on its behalf has directly or indirectly offered any
interest in the Lessor's Estate or the Trust Agreement, or in any similar
security, for sale to, or solicited any offer to acquire any of the same from,
anyone. The Owner Participant further represents and warrants that neither it
nor anyone authorized to act on its behalf has made or will make any offer,
solicitation or sale of any interest in the Lessor's Estate or the Trust
Agreement in violation of the provisions of Section 5 of the Securities Act of
1933, as amended. No representation in this Section 7.01(b) shall include any
action or inaction of the Lessee, 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.
Section 7.02. Citizenship. (a) Generally. Each of the Owner
Trustee, in its individual capacity and as Owner Trustee, and the Owner
Participant severally represents and warrants that it is or will be a Citizen
of the United States on the Refunding Date. If the Owner Participant or the
Owner Trustee in its individual capacity does not comply with the requirements
of this Section 7.02, the Owner Trustee, the Indenture Trustee and the Owner
Participant hereby agree that a Default or an Event of Default shall not be
deemed to have occurred and be continuing under the Lease due to
non-compliance by the Lessee with the registration requirements in the Lease
occasioned by the noncompliance of the Owner Participant or the Owner Trustee.
(b) Owner Trustee. The Owner Trustee, in its individual capacity,
covenants that if at any time on or after the Delivery Date it shall have
actual knowledge that it has ceased to be a Citizen of the United States, it
will resign immediately as the Owner Trustee if such citizenship is necessary
under the Transportation Code as in effect at such time or, if it is not
necessary under the Transportation Code as in effect at such time, if it is
informed in writing by the Lessee, 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 Refunding Date; and (B) to the Lessee,
the Indenture Trustee or the Pass Through Trustee for any damages actually
(but not consequentially) incurred by the Lessee, the Indenture Trustee and
the Pass Through Trustee as a result of the Owner Participant's failure to
comply with its obligations pursuant to the first sentence of this Section
7.02(c); provided, that, the foregoing shall not restrict the Pass Through
Trustee or the Indenture Trustee from asserting against the Owner Participant
any damages actually incurred by the holders of any Pass Through Certificates.
Each party hereto agrees, upon the request and at the sole expense of the Owner
Participant, to cooperate with the Owner Participant in complying with its
obligations under the provisions of the first sentence of this Section
7.02(c), but without any obligation on the part of such other party to take
any action believed by it in good faith to be unreasonably burdensome to such
party or materially adverse to its business interests.
Section 7.03. Representations, Warranties and Covenants of Owner
Participant. (a) Representations, Warranties and Covenants. In addition to
and without limiting its other representations and warranties provided for in
this Article 7, the Owner Participant represents and warrants on the date
hereof and as of the Refunding Date that:
(i) it is a corporation duly incorporated and validly existing in
good standing under the laws of the State of Delaware and it has full
corporate power, authority and legal right to carry on its present business
and operations, to own or lease its Properties and to enter into and to
carry out the transactions contemplated by the Original Agreements to which
it is a party, this Agreement and the other Operative Agreements to which
it is or is to be a party;
(ii) the execution, delivery and performance by it of the Original
Agreements to which it is a party, this Agreement and the other Operative
Agreements to which it is or is to be a party 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 the Original Agreements to which it
is a party, this Agreement and the other Operative Agreements to which it
is or is to be a party nor compliance with the terms and provisions hereof
or thereof, conflicts or will conflict with or results or will result in a
breach or violation of any of the terms, conditions or provisions of, or
will require any consent or approval under any law, governmental rule or
regulation applicable to the Owner Participant or the charter documents, as
amended, or bylaws, as amended, of the Owner Participant or any order, writ,
injunction or decree of any court or governmental authority against the
Owner Participant or by which it or any of its Properties is bound or any
indenture, mortgage or contract or other agreement or instrument to which
the Owner Participant is a party or by which it or any of its Properties is
bound, or constitutes or will constitute a default thereunder or results or
will result in the imposition of any Lien upon any of its Properties;
(iv) the Original Agreements to which it is a party, this Agreement
and the other Operative Agreements to which it is or is to be a party have
been or on the Refunding Date will be duly executed and delivered by the
Owner Participant and constitute or on the Refunding Date will constitute
the legal, valid and binding obligation of the Owner Participant
enforceable against it in accordance with their terms except as such
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights
(regardless of whether enforceability is considered in a proceeding in
equity or at law);
(v) it is not in default under any mortgage, deed of trust,
indenture, lease or other instrument or agreement to which the Owner
Participant is a party or by which it or any of its Properties may be
bound, or in violation of any applicable law, which default or violation
would have a material adverse effect on the financial condition, business
or operations of the Owner Participant or an adverse effect on the ability
of the Owner Participant to perform its obligations under the Original
Agreements to which it is a party, this Agreement and the other Operative
Agreements to which it is or is to be a party;
(vi) there are no pending or, to the knowledge of the Owner
Participant, threatened actions, suits, investigations or proceedings
against the Owner Participant before any court, administrative agency or
tribunal which are expected to materially adversely affect the ability of
the Owner Participant to perform its obligations under any of the Original
Agreements to which it is a party, this Agreement and the other Operative
Agreements to which it is or is to be a party and the Owner Participant
knows of no pending or threatened actions or proceedings before any court,
administrative agency or tribunal involving it in connection with the
transactions contemplated by the Operative Agreements;
(vii) neither the execution and delivery by it of the Original
Agreements to which it is a party, this Agreement or the other Operative
Agreements to which it is 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 is not a tax resident of another country; and
(x) the representations and warranties of the Owner Participant
set forth in the Original Agreements to which it is a party were correct on
and as of the Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
warranties and representations were correct on and as of such earlier date).
Notwithstanding the foregoing or anything else contained in this
Agreement, the Owner Participant makes no representation or warranty in this
Agreement with respect to laws, rules or regulations relating to aviation or
to the nature or use of the equipment owned by the Owner Trustee, 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 Refunding Date. The Owner
Participant agrees with and for the benefit of the Lessee, the Owner Trustee,
the Indenture Trustee and the Pass Through Trustee that the Owner Participant
will, at its own cost and expense, take such action as may be necessary (by
bonding or otherwise, so long as neither the Lessee's operation and use of the
Aircraft nor the validity and priority of the Lien of the Indenture is
impaired) to duly discharge and satisfy in full, promptly after the same first
becomes known to the Owner Participant, any Lessor's Lien 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 and provided further that the Owner
Participant and any Owner Participant Guarantor shall remain liable for all
obligations of the Owner Participant under the Trust Agreement and the
Operative Agreements to which the Owner Participant is a party to the extent
(but only to the extent) relating to the period on or before the date of such
transfer and provided that the transferee agrees by a written instrument
substantially in the form attached hereto as Exhibit E-1 to assume primary
liability for all obligations as an Owner Participant under the Trust
Agreement and the other Operative Agreements to which such Owner Participant
is a party relating to the period after the date of transfer. Any such
transferee shall (a) be (i) a bank, savings institution, finance company,
leasing company or trust company, national banking association acting for its
own account or in a fiduciary capacity as trustee or agent under any pension,
retirement, profit sharing or similar trust or fund, insurance company,
fraternal benefit society or corporation acting for its own account having a
combined capital and surplus (or, if applicable, consolidated tangible net
worth or its equivalent) of not less than $75,000,000, (ii) a subsidiary of
any Person described in clause (i) where such Person provides (A) support for
the obligations assumed by such transferee subsidiary reasonably satisfactory
to the Lessee, the Owner Trustee and the Indenture Trustee or (B) an
unconditional guaranty substantially in the form of Exhibit E-2 attached
hereto of such transferee subsidiary's obligations, or (iii) an Affiliate of
the transferring Owner Participant, so long as such Affiliate has a combined
capital and surplus (or, if applicable, consolidated tangible net worth or its
equivalent) of not less than $75,000,000, (b) be legally capable of binding
itself to the obligations of the Owner Participant and shall expressly agree
to assume all obligations of the Owner Participant under the Trust Agreement
and this Agreement and (c) provide representations substantially similar to
those contained in Sections 7.02(a) and 7.03(a) hereof. In the event of any
such assignment, conveyance or transfer, the transferee shall become a party
to the Trust Agreement and shall agree to be bound by all the terms of and will
undertake all of the obligations of the Owner Participant contained in the
Trust Agreement and the other Operative Agreements in the manner set forth in
the form attached as Exhibit E-1. A transferee hereunder shall be (i) a "U.S.
Person" as defined in Section 7701(a)(30) of the Code (or any successor
provision thereto) and such transferee shall be personally liable for any debt
service to the extent that its receipt of rentals is reduced by reason of any
withholding Taxes that result from such transferee's failure to be such a
"U.S. Person" and (ii) a Citizen of the United States or has established a
voting trust, voting powers or other arrangement reasonably satisfactory to
the Indenture Trustee and the Lessee to permit the Owner Trustee to be the
registered owner of the Aircraft under the Transportation Code. A transferee
hereunder shall not be, and in acquiring the Beneficial Interest shall not use
the assets of, an employee benefit plan subject to Title I of ERISA or an
individual retirement account or a plan subject to Section 4975 of the Code.
Assuming the truth of the representations made in 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. Notwithstanding anything
to the contrary contained in this Section 7.03(d), in no event shall the Owner
Participant transfer its interest in the Beneficial Interest to any entity
whose business is that of a nationwide or worldwide overnight or expedited
delivery small package air courier, cargo or freight deliverer or which
competes with the Lessee in such lines of business. The Lessee agrees that it
will reasonably cooperate with the Owner Participant in effecting an
assignment of the Owner Participant's interests including, without limitation,
providing letters to any successor Owner Participant permitting such successor
Owner Participant to rely on any opinions provided by the Lessee on the
Delivery Date.
(e) Actions with Respect to Lessor's Estate, Etc. The Owner
Participant agrees that it will not take any action to subject the Lessor's
Estate or the trust established by the Trust Agreement, as debtor, to the
reorganization or liquidation provisions of the Bankruptcy Code or any other
applicable bankruptcy or insolvency statute.
Section 7.04. Representations, Covenants and Warranties of 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) on the date hereof and as of the Refunding
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 UCC) at 225 Asylum Street, Goodwin
Square, Hartford, Connecticut 06103, Attention: Corporate/Muni
Administration 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 the Original Agreements to which it is a
party, this Agreement and the 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 the
Original Agreements to which it is a party, 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 the Original
Agreements to which it is a party, this Agreement and the other Operative
Agreements to which it is or is to be a party 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, and each of the Original
Agreements to which it is a party does, 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, and each of the Original
Agreements to which it is a party does, to the extent each such document is
entered into by the Owner Trustee in its trust capacity, constitute the
legal, valid and binding obligation of the Owner Trustee enforceable
against it in such capacity in accordance with its respective terms, except
as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights
(regardless of whether enforceability is considered in a proceeding in
equity or at law), and the performance by the Owner Trustee of any of its
obligations thereunder does not contravene any lease, regulation or
contractual restriction binding on the Owner Trustee;
(iv) there are no pending or, to its knowledge, threatened actions or
proceedings against 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 Original Agreements and 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;
(vii) on the Refunding Date the Owner Trustee shall be holding
whatever title to the Aircraft as was conveyed to it by AVSA on the
Delivery Date, the Aircraft shall be free of Lessor's Liens attributable to
SSB in its individual capacity and SSB in its individual capacity is a
Citizen of the United States; and
(viii) the representations and warranties of the Owner Trustee set
forth in the Original Agreements to which it is a party were correct on and
as of the Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
warranties and representations were correct on and as of such earlier date).
(b) Lessor's Liens. 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 Refunding Date. The Owner Trustee, in its trust
capacity, and at the cost and expense of the Lessee, covenants that it will in
its trust capacity promptly, and in any event within 30 days after the same
shall first become known to it, take such action as may be necessary to
discharge duly any Lessor's Liens attributable to it in its trust capacity.
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) Securities Act. None of SSB, the Owner Trustee or any Person
authorized by either of them to act on its behalf has directly or indirectly
offered or sold or will directly or indirectly offer or sell any interest in
the Lessor's Estate, or in any similar security relating to the Lessor's
Estate, or in any security the offering of which for purposes of the
Securities Act of 1933, as amended, would be deemed to be part of the same
offering as the offering of the aforementioned securities to, or solicited any
offer to acquire any of the same from, any Person.
(e) 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 on the date hereof and as of the
Refunding 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 Original Agreements to which it is a party, this Agreement and
the other Operative Agreements to which it is or is to be a party and to
authenticate the Certificates to be delivered on the Refunding Date;
(ii) the Original Agreements to which it is a party, this Agreement
and the other Operative Agreements to which it is or is to be a party, and
the authentication of the Certificates to be delivered on the Refunding
Date, have been duly authorized by all necessary corporate action on its
part, and neither the execution and delivery thereof nor its performance of
any of the terms and provisions thereof will violate any Federal or 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 Original Agreements to which it is a party, this
Agreement and the other Operative Agreements to which it is or is to be a
party 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 Original
Agreements to which it is a party, this Agreement and the other Operative
Agreements to which it is or is to be a party, 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 Refunding Date, the Indenture Trustee will hold the
original counterparts of the Lease, the Lease Supplement and each Ancillary
Agreement; 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 Delivery Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
warranties and representations were correct on and as of such earlier date).
(b) 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 Refunding Date.
The Indenture Trustee, in its individual capacity, covenants and agrees that
it will at its own expense take such action as may be necessary to duly
discharge and satisfy in full, promptly, and in any event within 30 days,
after the same shall first become known to it, any Indenture Trustee's Liens.
(c) Indemnity for Indenture Trustee's Liens. The Indenture Trustee,
in its individual capacity, agrees to indemnify and hold harmless the Lessee,
the Owner Participant, the Owner Trustee and the Pass Through Trustee from and
against any loss, cost, expense or damage which may be suffered by the Lessee,
the Indenture Trustee, the Owner Participant, the Owner Trustee or the Pass
Through Trustee as a result of the failure of the Indenture Trustee to
discharge and satisfy any Indenture Trustee's Liens attributable to it in its
individual capacity, as described in Section 7.05(b) hereof.
Section 7.06. Indenture Trustee's Notice of Default. The Indenture
Trustee agrees to give the Owner Participant notice of any Default or Event of
Default promptly upon a Responsible Officer of the Indenture Trustee having
actual knowledge thereof.
Section 7.07. Releases from Indenture. The Indenture Trustee
covenants and agrees, for the benefit of the Lessee and the Owner Participant,
to execute and deliver the instruments of release from the Lien of the
Indenture which it is required to execute and deliver in accordance with the
provisions of Article XIV of the Indenture, and the Owner Participant agrees,
for the benefit of the Lessee, to cause the Owner Trustee to request the
Indenture Trustee to execute and deliver such instruments of release upon
written notice from the Lessee to make such request.
Section 7.08. Covenant of Quiet Enjoyment. 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 the Owner
Participant (or the Owner Trustee, the Indenture Trustee or the Pass Through
Trustee, as the case may be) nor any Person lawfully claiming through the
Owner Participant (or the Owner Trustee, the Indenture Trustee or the Pass
Through Trustee, as the case may be) shall interfere with the Lessee's right
quietly to enjoy the Aircraft during the Term without hindrance or disturbance
by the Owner Participant (or the Owner Trustee, the Indenture Trustee or the
Pass Through Trustee, as the case may be).
Section 7.09. Original Loan Participant's and Pass Through Trustee's
Representations and Warranties. (a) The Original Loan Participant represents
and warrants that the representations and warranties made by it in Sections
7.01(a) and 7.06 of the Original Participation Agreement were correct on and
as of the Delivery Date (except to the extent such representations expressly
related solely to a specified earlier date, in which case such representations
and warranties were correct on and as of such earlier date).
(b) The Pass Through Trustee, in its individual capacity (except
with respect to clause (iii) below), represents and warrants as of the date
hereof (except as otherwise provided), as of the Pass Through Closing Date and
as of the Refunding Date that:
(i) it is a 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 Pass Through Agreement, the Series Supplements, the Intercreditor
Agreement and this Agreement and to execute and authenticate the Pass
Through Certificates to be delivered on the Pass Through Closing Date;
(ii) the execution, delivery and performance of this Agreement, the
Pass Through Agreement and the Series Supplements and the performance of its
obligations hereunder and thereunder (including the execution and
authentication of the Pass Through Certificates to be delivered on the Pass
Through Closing Date) have been fully authorized by all necessary corporate
action on its part, and, subject to (A) the registration of the issuance
and sale of the Pass Through Certificates under the Securities Act, (B)
compliance with any applicable state securities laws and (C) the
qualification of the Pass Through Agreement under the Trust Indenture Act,
neither the execution and delivery thereof nor its performance of any of
the terms and provisions thereof will violate any Federal or 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; and
(iii) each of this Agreement and the Pass Through Agreement has been,
and as of the Pass Through Closing Date the Series Supplements will be, duly
executed and delivered by it (in its individual and trust capacities) and,
assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is or will be, as the case may be,
the legal, valid and binding obligation of the Pass Through Trustee (in its
individual and trust capacities), enforceable in accordance with its
respective terms except as limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights generally
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
Section 7.10. Survival of Representations, Warranties and Covenants.
The representations, warranties and covenants of the Owner Participant, the
Owner Trustee (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 and all of them, shall survive the Closings and the
expiration or other termination of this Agreement, and the other Operative
Agreements.
Section 7.11. Lessee's Assumption of the Certificates. (a) Subject
to compliance by the Lessee with all of its obligations under the Operative
Agreements, each of the Owner Participant, the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Lessee covenants and agrees that if
the Lessee elects to terminate the Lease and to purchase the Aircraft pursuant
to Section 4.02(a)(A), (D) or (E) of the Lease, and so long as no Event of
Default shall have occurred and be continuing then, upon compliance with the
applicable provisions of said Section 4.02(a) of the Lease, the Owner Trustee
will transfer to the Lessee, without recourse or warranty (except as to the
absence of Lessor's Liens attributable to the Owner Trustee) but subject to
the Lien of the Indenture, all of the Owner Trustee's right, title and
interest in and to the Aircraft, and if the Lessee, in connection with such
purchase, elects pursuant to Section 4.02(a)(A), (D) or (E) of the Lease to
assume the obligations of the Owner Trustee to the Indenture Trustee and the
Holders under the Indenture, the Certificates and hereunder, then the Lessee
shall so notify the Indenture Trustee (such notice to be given at least 30 and
not more than 60 days prior to the effective date of such assumption), and
each of the parties shall execute and deliver appropriate documentation
permitting the Lessee to assume such obligations on the basis of full recourse
to the Lessee, maintaining for the benefit of the Holders the security
interest in the Aircraft created by the Indenture, and upon compliance with the
provisions of this Section 7.11 releasing the Owner Participant and the Owner
Trustee from all obligations in respect of the Certificates, the Indenture,
this Agreement and the other Operative Agreements, except any obligations
relating to the period prior to such assumption and take all such other
actions, at the Lessee's expense, as are reasonably necessary to permit such
assumption by the Lessee.
(b) In connection with such assumption:
(i) the Lessee shall execute and deliver an instrument satisfactory
in form and substance to the Indenture Trustee (A) pursuant to which the
Lessee irrevocably and unconditionally assumes and undertakes, with full
recourse to the Lessee, to pay, satisfy and discharge when and as due (at
the stated maturity thereof, by acceleration or otherwise) the principal
of, Make-Whole Premium, if any, interest and all other sums owing on all
Outstanding Certificates (or on the Lessee's substituted obligations) in
accordance with their terms and to punctually perform and observe all of
the covenants and obligations hereunder and under the Indenture and the
Certificates (as the same may be amended in connection with such
assumption) to be performed or observed by the Owner Trustee and (B) which
contains amendments to the Indenture, in form and substance satisfactory to
the 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 UCC 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. If and so
long as the Indenture shall not have been discharged the consent of the
Indenture Trustee shall also be required prior to any termination or
revocation of such trust and in addition, the Owner Participant will, at the
Lessee's expense, promptly and duly execute and deliver to the Indenture
Trustee such documents and assurances including, without limitation,
conveyances, financing statements and continuation statements with respect to
financing statements and take such further action as the Indenture Trustee may
from time to time reasonably request and furnish in order to protect the
rights and remedies created or intended to be created in favor of the
Indenture Trustee under the Indenture and to create for the benefit of the
Certificate Holders a valid first priority Lien with respect to, and a first
and prior perfected security interest in, the Trust Indenture Estate.
Section 7.14. Subordination Agent's Representations, Warranties and
Covenants. (a) Representations and Warranties. The Subordination Agent
represents and warrants as of the date hereof (except as otherwise provided),
as of the Pass Through Closing 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, the Liquidity Facilities and the
Intercreditor Agreement;
(ii) the execution, delivery and performance of this Agreement, each
of the Liquidity Facilities and the Intercreditor Agreement and the
performance of its obligations hereunder and thereunder 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) each of this Agreement, the Liquidity Facilities and the
Intercreditor 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; and
(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.
(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 shall have the meanings specified in the Intercreditor Agreement.
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes. (a) Generally. The
Lessee agrees promptly to pay when due, and to indemnify and hold each
Indemnitee harmless from all license, recording, documentary, registration and
other fees and all taxes (including, without limitation, income, gross
receipts, sales, rental, use, value added, property (tangible and intangible),
ad valorem, excise and stamp taxes), fees, levies, imposts, recording duties,
duties, charges, assessments or withholdings of any nature whatsoever,
together with any assessments, penalties, fines, additions to tax or interest
thereon (individually, a "Tax," and collectively called "Taxes"), however
imposed or asserted (whether imposed upon any Indemnitee, the Lessee, all or
any part of the Aircraft, Airframe, any Engine or any Part or the Lessor's
Estate, the Trust Indenture Estate, Rent, the Certificates or otherwise upon
or with respect to any Operative Agreement or Original Agreement, any payments
thereunder or otherwise in connection therewith), by any Federal, state or
local government or taxing authority in the United States, or by any
government or taxing authority of a foreign country or of any political
subdivision or taxing authority thereof or by a territory or possession of the
United States or an international taxing authority relating to or measured by:
(i) the construction, mortgaging, financing, refinancing, purchase,
acceptance, rejection, delivery, nondelivery, transport, location, ownership,
registration, reregistration, deregistration, insuring, assembly, possession,
repossession, operation, use, non-use, condition, maintenance, repair,
improvement, conversion, sale, return, abandonment, preparation, installation,
storage, redelivery, replacement, manufacture, leasing, subleasing,
sub-subleasing, modification, alteration, rebuilding, importation, transfer of
title, transfer of registration, exportation or other application or
disposition of, or the imposition of any Lien (or the incurrence of any
liability to refund or pay over any amount as a result of any Lien) on, the
Aircraft, the Airframe, any Engine or any Part or any interest therein;
(ii) amounts payable under the Operative Agreements or Original
Agreements;
(iii) the Property, or the income or other proceeds received with
respect to the Property attributable to the transactions contemplated by
the Operative Agreements or the Original Agreements, held by the Owner
Trustee under the Trust Agreement or after an Event of Default under the
Lease, or by the Indenture Trustee under the Indenture;
(iv) otherwise with respect to any Operative Agreement or Original
Agreement, any interest therein or by reason of the transactions described
in or contemplated by the Operative Agreements or the Original Agreements;
(v) the principal or interest or other amounts payable with respect
to the Original Loan Certificates, the Pass Through Certificates or the
Certificates;
(vi) the Original Loan Certificates, the Pass Through Certificates
or the Certificates or the issuance, sale, acquisition, reoptimization, or
refinancing thereof or the beneficial interests in the Trust Estate or the
Trust Indenture Estate or the creation thereof under the Trust Agreement or
the Indenture, or the security interest created or perfected thereby or by
any filing thereof;
(vii) any assumption by the Lessee pursuant to Section 7.11 of this
Agreement and Section 2.12 of the Indenture;
(viii) the Aircraft, the Airframe, any Engine or any Part; or
(ix) the rentals (including Basic Rent, Renewal Rent and
Supplemental Rent), receipts or earnings arising from the Operative
Agreements or the Original Agreements.
(b) Exceptions. The indemnity provided for in Section 8.01(a) shall
not extend to any of the following:
(i) With respect to an Indemnitee other than an Original Loan
Participant, Taxes based upon, measured by or with respect to the net or
gross income, items of tax preference or minimum tax or excess profits,
receipts, value-added taxes, capital, franchise, net worth (whether
denominated income, excise, capital stock, or doing business taxes) or
other similarly-based taxes (other than sales, use, transfer, rental, ad
valorem, stamp, property, or similar taxes) ("Income Taxes"), provided,
however, that this clause (i) shall not exclude from the indemnity
described in Section 8.01(a) above any such Income Taxes to the extent such
taxes are imposed by any jurisdiction in which the Indemnitee would not be
subject to such taxes but for, or would be subject to such taxes solely as
a result of, (x) the operation, registration, location, presence, or use of
the Aircraft, Airframe, any Engine or any Part thereof, in such
jurisdiction or (y) the place of incorporation or principal office or the
activities of the Lessee or any sublessee in such jurisdiction (it being
understood that (A) any such indemnity would be payable only to the extent
of the net harm incurred by the Indemnitee from such Income Taxes, taking
into account any incremental current Tax benefit in another tax
jurisdiction resulting from payment of such Income Taxes and (B) this
sentence would require indemnification in a jurisdiction in which the
Indemnitee is already subject to an Income Tax (an "Existing Income Tax")
only if an event set forth in Clause (x) or (y) of this sentence causes the
Indemnitee to be subject to an Income Tax in that jurisdiction (a "New
Income Tax") other than an Existing Income Tax, and such New Income Tax
would have been imposed even if the activities contemplated by the
Operative Agreements or the Original Agreements were the Indemnitee's sole
nexus to the jurisdiction); provided, further, that the provisions of this
paragraph (b)(i) relating to Income Taxes shall not exclude from the
indemnity described in Section 8.01(a) hereof any Income Taxes for which
the Lessee would be required to indemnify an Indemnitee (x) so that any
payment under the Operative Agreements or the Original Agreements,
otherwise required to be made on an After-Tax Basis, is made on an
After-Tax Basis or (y) pursuant to the last sentence of Section 8.02, 8.05,
9.02 or 9.05 of this Agreement;
(ii) With respect to an Original Loan Participant, Income Taxes
except to the extent such Income Tax is imposed (including by way of
increase) (A) on or with respect to any gain resulting from the assumption
of any Certificate by the Lessee, (B) as a result of the operation,
registration, location, presence, basing or use of the Aircraft, Airframe,
any Engine or any Part thereof, in such jurisdiction (it being understood
that (I) the incremental Income Taxes described in this clause (B) shall
not include any U.S. Federal income taxes and (II) that to the extent such
incremental Income Taxes give rise to any incremental current Tax benefit in
another tax jurisdiction, that such incremental benefit shall offset and
decrease the incremental Income Taxes determined under this clause (B)) or
(C) solely as a result of the place of incorporation, principal office,
corporate domicile or the activities of the Lessor, the Owner Participant,
the Owner Trustee, the Indenture Trustee, the Lessee or any sublessee in
such jurisdiction (it being understood that to the extent that any Income
Taxes described under this clause (C) give rise to any incremental current
Tax benefit in another tax jurisdiction or another tax period, that such
incremental Tax benefit shall offset and decrease the Income Taxes
determined under this clause (C)); provided, however, that the provisions
of this paragraph (b)(ii) relating to Income Taxes shall not exclude from
the indemnity described in Section 8.01(a) any Income Taxes for which the
Lessee would be required to indemnify an Indemnitee (x) so that any payment
under the Operative Agreements, otherwise required to be made on an
After-Tax Basis, is made on an After-Tax Basis or (y) pursuant to the last
sentence of Section 8.02 of this Agreement;
(iii) Taxes imposed with respect to the Aircraft and arising out of or
measured by acts, omissions, events or periods (or any combination of the
foregoing) which occur after the later of (A) the payment in full of all
amounts payable by the Lessee pursuant to and in accordance with the
Operative Agreements, or the earlier discharge in full of the Lessee's
payment obligations under and in accordance with the Lease and the
Operative Agreements (and the Original Loan Certificates in the case of an
Original Loan Participant, the Indenture Trustee or the Trust Indenture
Estate if the Lessee shall have assumed the Certificates pursuant to
Section 7.11 of this Agreement), and (B) the earliest of (x) the expiration
of the Term of the Lease and return of the Aircraft in accordance with
Article 12 of the Lease, (y) the termination of the Lease in accordance with
the applicable provisions of the Lease and return of the Aircraft in
accordance with the Lease, or (z) the termination of the Lease in
accordance with the applicable provisions of the Lease and the transfer of
all right, title and interest in the Aircraft to the Lessee pursuant to its
exercise of any of its purchase options set forth in Section 4.02(a) of the
Lease, provided that this exclusion (iii) shall not apply in respect of any
payment made after the dates set forth in clauses (A) and (B) above unless
such payment is made with respect to any event or circumstance occurring
on, with or prior to such return or transfer or period prior to such return
or transfer, or Taxes incurred in connection with the exercise of any
remedies pursuant to Article 17 of the Lease following the occurrence of an
Event of Default;
(iv) As to the Owner Trustee, Taxes imposed against the Owner Trustee
upon or with respect to any fees for services rendered in its capacity as
Owner Trustee under the Original Trust Agreement or the Trust Agreement or,
as to the Indenture Trustee, Taxes imposed against the Indenture Trustee
upon or with respect to any fees received by it for services rendered in
its capacity as Indenture Trustee under the Original Indenture or the
Indenture;
(v) Taxes imposed on an Indemnitee that would not have been imposed
but for the willful misconduct or gross negligence of such Indemnitee
(other than gross negligence or willful misconduct not actually committed
by but instead imputed to such Indemnitee by reason of such Indemnitee's
participation in the transactions contemplated by the Operative Agreements
or the Original Agreements) or the breach by such Indemnitee of: (i) in the
case of an Indemnitee other than the Owner Participant, any representation,
warranty or covenant contained in the Operative Agreements or the Original
Agreements or any document delivered in connection therewith and (ii) in
the case of the Owner Participant, the representations or covenants in
Sections 7.02(a), (c); 7.03(a)(i), (ii), (iii), (iv), (vii), (ix); and
7.03(b), (c), (d), (e) of the Original Participation Agreement or this
Agreement (in either case unless attributable to a breach of representation,
warranty or covenant of the Lessee);
(vi) Taxes imposed on, and not collected by withholding from
payments of Rent, the Owner Trustee or the Owner Participant or any
successor, assign or Affiliate thereof which became payable by reason of
any voluntary or involuntary transfer or disposition by such Indemnitee
subsequent to the Delivery Date, including revocation of the Trust, of any
interest in some or all of the Aircraft, Airframe, Engines or Parts thereof
or its interest in the Lessor's Estate (not including any transfers of any
Certificates pursuant to Section 15.01(a) hereof) or a disposition in
connection with a bankruptcy or similar proceedings involving either the
Lessor or the Owner Participant other than (A) transfers resulting from a
loss, substitution or modification of the Aircraft, Engines or any Part,
(B) any transfer of the Aircraft, Engines or any Part (in each case other
than at Fair Market Value) to the Lessee or other person in possession
thereof, (C) transfers attributable to an Event of Default or (D) a
transfer pursuant to the Lessee's exercise of its rights under Section
10.01 of the Lease; the parties agree to cooperate to minimize any such
Taxes covered by this provision;
(vii) Taxes imposed on the Owner Participant for which the Lessee is
obligated to indemnify the Owner Participant pursuant to the Tax Indemnity
Agreement;
(viii) Taxes imposed on a successor, assign or other transferee of the
Owner Participant or the Owner Trustee that is not a U.S. Person or of any
other Indemnitee under the Original Agreements or an Indemnitee as of the
date hereof under the Operative Agreements (including, without limitation,
a transferee which is a new lending office of an original Indemnitee) which
on the Delivery Date is an Indemnitee (for purposes of this clause (viii),
an "original Indemnitee") or such original Indemnitee to the extent that
such Taxes exceed the amount of Taxes that would have been imposed (in the
case of an Original Loan Participant, immediately after giving effect to
such succession, assignment or other transfer) and would have been
indemnifiable pursuant to Section 8.01(a) 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) that occurs after the Lease has been declared in default
or if such transfer or disposition is pursuant to the exercise of remedies
under Article 17 of the Lease, (B) which is an actual or deemed transfer
pursuant to Section 7.11 hereof or as a consequence of a Refinancing under
Section 15.01 hereof, or any actual or deemed transfer of an Original Loan
Certificate that as part of a Refinancing under Section 15.01 hereof is not
retired, but only to the extent the Taxes attributable to such transfer
exceed the amount of Taxes that would have been imposed on such transferor
if the debt had instead been retired, (C) to the extent necessary to make
payments with respect to such Taxes on an After-Tax Basis, (D) to the
extent such Taxes are directly attributable to the failure of the Lessee to
take administrative actions as have been reasonably requested of it in
writing in a timely manner and which will result in no after-tax cost or
expense to the Lessee or (E) in the case of the Owner Participant or the
Lessor, to any Tax other than an Income Tax;
(ix) [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 or an Indenture Trustee's Lien; and
(xii) Any Taxes imposed on the Owner Participant arising under or in
connection with any prohibited transaction, within the meaning of Section
406 of ERISA or Section 4975(c)(1) of the Code ("Prohibited Transaction");
provided, however, that in the event any prohibited transaction arises
which is not exempt under any class prohibited transaction exemption or any
individual or statutory prohibited transaction exemption (individually or
collectively, a "PTE") then the indemnity provided for herein shall extend
to any Taxes incurred by the Owner Participant (or any Affiliate thereof)
as the result of any Prohibited Transaction arising out of the purchase or
holding of any Loan Certificates by an employee benefit plan subject to
Title I of ERISA or by a plan subject to Section 4975 of the Code
(individually or collectively, an "ERISA Plan") with respect to which the
Owner Participant is a party in interest, within the meaning of Section
3(14) of ERISA, or a disqualified person,within the meaning of Section 4975
of the Code, except, however, that such Indemnity shall not extend to any
Taxes incurred by the Owner Participant (or any Affiliate thereof) as the
result of any Prohibited Transaction occurring with respect to the purchase
or holding of any Loan Certificates (A) over which purchase or holding the
Owner Participant (or an Affiliate thereof) has discretion or control
(other than in the capacity of a custodian, directed trustee or other
similar nondiscretionary capacity), or (B) by an ERISA Plan with respect to
which the Owner Participant (or any Affiliate thereof) is a "plan sponsor"
within the meaning of Section 3(16)(B) of ERISA.
(c) Withholding. The Pass Through Trustee shall withhold any Taxes
required to be withheld on payments to any holder of a Pass Through
Certificate who is a Non-U.S. Person except to the extent that such a holder
of a Pass Through Certificate has furnished evidence to the Pass Through
Trustee sufficient under applicable law to entitle such holder of a Pass
Through Certificate to any exemption from or reduction in the rate of
withholding on interest claimed by such holder of a Pass Through Certificate.
The Indenture Trustee shall withhold any Taxes required to be withheld on any
payment to a Holder pursuant to Section 5.09 of the Indenture. If the
Indenture Trustee or the Pass Through Trustee fails to withhold a Tax required
to be withheld with respect to any Holder of a Certificate or any holder of a
Pass Through Certificate or any claim is otherwise asserted by a taxing
authority against the Owner Trustee or Owner Participant for any withholding
tax, the Lessee will indemnify the Owner Trustee and the Owner Participant
(without regard to the exclusions set forth in Section 8.01(b) hereof) on an
After-Tax Basis against any such Taxes required to be withheld and any
interest and penalties with respect thereto, along with any other costs
(including reasonable attorney's fees) incurred in connection with any such
claim. The Indenture Trustee or the Pass Through Trustee, as the case may be,
in its individual capacity (and without recourse to the Trust Indenture
Estate), shall indemnify the Lessee (without regard to the exclusions set
forth in Section 8.01(b) hereof) on an After-Tax Basis for any payment the
Lessee shall have made pursuant to the preceding sentence.
Section 8.02. After-Tax Basis. The amount which the Lessee shall be
required to pay with respect to any Tax indemnified against under Section 8.01
shall be an amount sufficient to restore the Indemnitee, on an After-Tax
Basis, to the same position such party would have been in had such Tax not
been incurred, provided that the calculation of any additional amounts owing
to any Indemnitee as a result of the Lessee's obligation to indemnify on an
After-Tax Basis shall be made without regard to the exclusions set forth in
Section 8.01(b). If any Indemnitee actually realizes a tax benefit by reason
of the payment of any Tax paid or indemnified against by the Lessee, such
Indemnitee shall promptly pay to the Lessee, to the extent such tax benefit was
not previously taken into account in computing such payment, but not before the
Lessee shall have made all payments then due to such Indemnitee under this
Agreement, the Tax Indemnity Agreement and any other Operative Agreement, an
amount equal to the lesser of (x) the sum of such tax benefit plus any other
tax benefit actually realized by such Indemnitee that would not have been
realized but for any payment made by such Indemnitee pursuant to this sentence
and not already paid to the Lessee, and (y) the amount of the payment made
under Section 8.01 hereof and this Section 8.02 by the Lessee to such
Indemnitee plus the amount of any other payments by the Lessee to such
Indemnitee theretofore required to be made under this Section 8.02 and
Sections 8.01 and 8.05 hereof (and the excess, if any, of the amount described
in clause (x) above over the amount described in clause (y) above shall be
carried forward and applied to reduce pro tanto any subsequent obligations of
the Lessee to make payments to such Indemnitee pursuant to Section 8.01
hereof); provided, however, that notwithstanding the foregoing portions of
this sentence, such Indemnitee shall not be obligated to make any payment to
the Lessee pursuant to this sentence as long as an Event of Default shall have
occurred and be continuing under the Lease. The Lessee shall reimburse on an
After-Tax Basis such Indemnitee (and without regard to Section 8.01(b) hereof,
except for clause (v) thereof) for any payment of a tax benefit pursuant to
the preceding sentence (or a tax benefit otherwise taken into account in
calculating the Lessee's indemnity obligation hereunder) to the extent that
such tax benefit is subsequently disallowed or reduced (including the
expiration of any tax credit carryovers or carrybacks of such Indemnitee that
would not otherwise have expired).
Section 8.03. Time of Payment. Any amount payable to an Indemnitee
pursuant to this Article 8 shall be paid promptly, but in any event within 30
days after receipt of a written demand therefor from such Indemnitee
accompanied by a written statement describing in reasonable detail the basis
for such indemnity and the computation of the amount so payable, provided that
in the case of amounts which are being contested by the Lessee in good faith
or by the Indemnitee in either case pursuant to Section 8.04 hereof, such
amount shall be payable within 30 days after the time such contest is finally
resolved.
Section 8.04. Contests. If a written claim is made against any
Indemnitee for Taxes with respect to which the Lessee is liable for a payment
or indemnity hereunder, such Indemnitee shall promptly (but in any event
within 30 days of receipt thereof) give the Lessee notice in writing of such
claim and shall furnish the Lessee with copies of any written requests for
information sent to such Indemnitee (and not the Lessee) from any taxing
authority to the extent relating to such Taxes with respect to which the
Lessee may be required to indemnify hereunder and with respect to which it
would be necessary or beneficial to have information provided by the Lessee;
provided, however, that the failure of an Indemnitee to give such notice or
furnish such copy shall not terminate any of the rights of such Indemnitee
under this Article 8, except to the extent that the Lessee's contest rights
have been materially and adversely impaired by the failure to provide such
notice or copy. The Lessee may, at its option, contest in its own name or, if
required by law, require the Indemnitee to contest in good faith, with due
diligence and at the Lessee's expense, if timely requested in writing by the
Lessee, the validity, applicability or amount of such Taxes by:
(i) resisting payment thereof if lawful and practicable or not
paying the same except under protest if protest is necessary and proper in
each case so long as non-payment will not result in a material risk of the
sale, forfeiture or loss of, or the creation of a Lien other than a
Lessor's Lien on the Aircraft, Airframe or any Engine or any risk of
criminal liability; or
(ii) if the payment be made, using reasonable efforts to obtain a
refund thereof in appropriate administrative and judicial proceedings.
Notwithstanding the foregoing, the Lessee shall not be permitted or entitled
to contest any such Tax in its own name unless the Tax is reflected in a
report or a return of the Lessee or raised in an audit or other proceeding of
the Lessee and the Lessee is allowed to directly contest such Tax under
applicable law of the taxing jurisdiction provided, that if the Lessee is so
permitted under applicable law to contest a Tax asserted against the Lessee
and the same or similar Tax is also asserted against the Indemnitee, each of
the Lessee and such Indemnitee shall conduct its contest in its own name and
the Lessee and such Indemnitee will cooperate in a reasonable manner with
respect to the respective contests of such Tax.
If the Indemnitee, after reasonable discussion with the Lessee and
consideration in good faith of any suggestion made by the Lessee as to the
method of pursuing such contest, elects to conduct the contest, such
Indemnitee shall control the contest and shall determine the manner in which
to contest such Taxes and shall periodically or upon the Lessee's request
advise the Lessee of the progress of such contest; provided, however, that the
Lessee shall have the right to be consulted in good faith with respect to any
contest of claims subject to indemnification hereunder, including governmental
and judicial conferences and the right to be consulted in good faith regarding
the relevant portions of all related submissions to any governmental or other
authority, provided, however, that the Lessee shall be permitted to
participate in any such contest only (x) with respect to issues that can be
separated on audit from any Taxes for which the Lessee is not required to
indemnify the Indemnitee hereunder, and (y) if the Indemnitee shall have
determined that in its judgment, exercised in its sole discretion, neither
such participation nor the separation of issues will adversely affect the
Indemnitee. The Indemnitee will not settle a contest that results in a final
determination without consent of the Lessee, unless the Indemnitee waives its
right to indemnification with respect to such contest and any related contest.
Notwithstanding the preceding sentences of this Section 8.04, such Indemnitee
shall not be required to take or continue any action unless the Lessee shall
have (i) agreed in writing to pay and shall pay the Indemnitee on a current
basis and on an After-Tax Basis the after-tax cost of all reasonable fees and
expenses (including reasonable attorneys' fees and accountants' fees) which
such Indemnitee may incur as a result of contesting such Taxes, (ii) made all
payments and indemnities (other than contested payments and indemnities) then
due to the Indemnitee hereunder or with respect to any of the transactions
contemplated by or under the Operative Agreements and (iii) acknowledged in
writing the Lessee's obligation to such Indemnitee pursuant to this Agreement
to the extent that the contest is not successful, unless it is reasonably
clear from the resolution of the contest that an exclusion set forth in
Section 8.01(b) hereof applies. In no event shall such Indemnitee be required
or the Lessee be permitted to contest pursuant to this Section 8.04 the
imposition of any Tax for which the Lessee is obligated to indemnify any
Indemnitee hereunder unless (i) such Indemnitee shall have received, at the
Lessee's expense, an opinion of its tax counsel, such counsel to be reasonably
satisfactory to the Lessee ("Tax Counsel"), to the effect that there exists a
reasonable basis for contesting such claim, (ii) such Indemnitee (and, if such
Indemnitee is not the Owner Participant, the Owner Participant and such
Indemnitee) shall have determined that such contest will not result in any
material risk of loss, sale or forfeiture of, or the creation of a Lien (other
than Lessor's Liens) on, the Aircraft or any part thereof or interest thereon
or in a risk of criminal liability, or adversely affect the Trust Indenture
Estate, (iii) if a Payment Default, Bankruptcy Default or an Event of Default
shall have occurred and be continuing, the Lessee shall have provided security
for its obligations hereunder reasonably satisfactory to the Indemnitee, (iv)
if such contest shall be conducted in a manner requiring payment of the claim
in advance, the Lessee shall have advanced sufficient funds, on an interest
free basis, to make the payment required, and agreed to indemnify the
Indemnitee against any additional net adverse tax consequences on an After-Tax
Basis to such Indemnitee of such advance, (v) the issue shall not be the same
as an issue previously contested hereunder and decided adversely, unless the
Indemnitee shall have received at the Lessee's sole expense, a written
opinion, in form and substance reasonably satisfactory to such Indemnitee, of
Tax Counsel to the effect that the applicable circumstances or law has changed
and that in light thereof, there is substantial authority for contesting such
claim and (vi) the amount of the indemnity payments the Lessee would be
required to make with respect to such adjustment, when aggregated with similar
adjustments that could be raised in other taxable years of such Indemnitee
exceeds $50,000; provided, that in the event that such Indemnitee is not
required under this paragraph to contest any Tax liability for which the
Lessee is obligated to indemnify any Indemnitee, the Lessee may contest such
Tax liability in the name of the Lessee, if permitted by law. The Lessee may
appeal or require the Indemnitee to appeal any judicial decision provided the
foregoing requirements of this Section 8.04 are met and the Indemnitee shall
have received, at the Lessee's expense, an opinion of Tax Counsel, to the
effect that there is substantial authority for such appeal.
Nothing contained in this Section 8.04 shall require any Indemnitee to
contest or continue to contest, or permit Lessee to contest, a claim which such
Indemnitee would otherwise be required to contest pursuant to this Section
8.04, if such Indemnitee shall waive payment by Lessee of any amount that
might otherwise be payable by Lessee under this Article 8 in connection with
such claim.
Section 8.05. Refunds. Upon receipt by an Indemnitee of a refund of
all or any part of any Taxes which the Lessee shall have paid for such
Indemnitee or for which the Lessee shall have reimbursed or indemnified such
Indemnitee, and provided there shall not have occurred and be continuing any
Payment Default, Bankruptcy Default or Event of Default by the Lessee
hereunder or under the Lease (in which case payment shall not be made to the
Lessee until such Payment Default, Bankruptcy Default or Event of Default
shall have been cured), such Indemnitee shall pay to the Lessee an amount
equal to the amount of such refund less (x) any expenses not previously
reimbursed, (y) all payments then due to such Indemnitee under this Article
8 and (z) Taxes imposed with respect to the accrual or receipt thereof,
including interest received attributable thereto, plus any tax benefit
actually realized by such Indemnitee as a result of any payment by such
Indemnitee made pursuant to this sentence; provided, however, that such amount
shall not be payable (a) before such time as the Lessee shall have made all
payments or indemnities then due and payable to such Indemnitee under this
Article 8 and (b) to the extent that the amount of such payment would exceed
(i) the amount of all prior payments by the Lessee to such Indemnitee pursuant
to this Article 8 less (ii) the amount of all prior payments by such
Indemnitee to the Lessee pursuant to this Article 8.
Any subsequent loss of such refund or tax benefit shall be treated as
a Tax subject to indemnification under the provisions of this Article 8 (in
the case of any such tax benefit, without regard to Section 8.01(b) hereof).
Section 8.06. Lessee's Reports. In case any report or return is
required to be made with respect to any Taxes against which the Lessee is or
may be obligated to indemnify the Indemnitees under this Article 8, the Lessee
shall make such report or return, except for any such report or return that
the Indemnitee has notified the Lessee that it intends to file, in such manner
as will show the ownership of the Aircraft in the Owner Trustee and shall send
a copy of the applicable portions of such report or return to the Indemnitee
and the Owner Trustee or will notify the Indemnitee of such requirement and
make such report or return in such manner as shall be satisfactory to such
Indemnitee and the Owner Trustee. The Lessee will provide such information
reasonably available to the Lessee as the Indemnitee may reasonably require
from the Lessee to enable the Indemnitee to fulfill its tax filing
requirements with respect to the transactions contemplated by the Operative
Agreements (without duplication of the requirements of Section 3 of the Tax
Indemnity Agreement) and any audit information request arising from any such
filing. The Indemnitee will provide such information reasonably available to
it as the Lessee may reasonably require from such Indemnitee to enable the
Lessee to fulfill its tax filing requirements with respect to the transactions
contemplated by the Operative Agreements and any audit information request
arising from such filing; provided that in no event shall any Indemnitee be
required to provide copies of any of its tax returns or other confidential
information. The Lessee shall hold the Indemnitee harmless on an After-Tax
Basis from and against any liabilities, including penalties, additions to tax,
fines and interest, imposed upon or incurred by such Indemnitee to the extent
directly attributable to any insufficiency or inaccuracy in any return,
statement, or report prepared by the Lessee or information supplied by the
Lessee, or directly attributable to the Lessee's failure to supply reasonably
available information to such Indemnitee as required by this Section 8.06.
Section 8.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 8 and the Lessee's obligations under any and all of them shall survive
the expiration or other termination of the Operative Agreements.
Section 8.08. Payment of Taxes. With respect to any Tax otherwise
indemnifiable hereunder by the Lessee and applicable to the Aircraft,
Airframe, any Engine or Parts, to the extent permitted by the applicable
federal, state, local or foreign law, the Lessee shall pay such tax directly
to the relevant Taxing authority and file any returns or reports required with
respect thereto to the extent legally entitled to do so in its own name;
provided, however, that the Lessee shall not make any statements or take any
action which would indicate that the Lessee or any Person other than the Owner
Trustee or Owner Participant is the owner of the Aircraft, the Airframe, any
Engine or any Part or which would otherwise be inconsistent with the terms of
the Lease or the Tax Indemnity Agreement and the position thereunder of the
Owner Trustee and the Owner Participant. Copies of such returns or reports,
together with evidence of payment of any tax due, shall be sent by the Lessee
to the Owner Participant within thirty (30) days after the date of each
payment by the Lessee of any Tax.
Section 8.09. Reimbursements by Indemnitees Generally. To the
extent the Lessee is required to pay or withhold any Tax imposed on or with
respect to an Indemnitee in respect of the transactions contemplated by the
Operative Agreements, which Tax is not otherwise the responsibility of the
Lessee under the Operative Agreements, or any other written agreements between
the Lessee and such Indemnitee, then such Indemnitee shall pay to the Lessee
within 30 days of the Lessee's demand therefor an amount which equals the
amount actually paid by the Lessee with respect to such Taxes.
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally. (a) The Lessee agrees to indemnify each
Indemnitee against and agrees to protect, defend, save and keep harmless each
Indemnitee from any and all liabilities, obligations, losses, damages,
penalties, claims, actions, suits, costs, disbursements and expenses
(including legal fees and expenses and all costs and expenses relating to
amendments, supplements, adjustments, consents, refinancings and waivers under
the Operative Agreements and the Original Agreements except as otherwise
provided in Section 10.01(c)(i) or Article 15 hereof) of every kind and
nature, including without limitation Make-Whole Premium (unless excluded
pursuant to Section 3.03 of the Lease) (whether or not any of the transactions
contemplated by this Agreement are consummated) (individually, an "Expense,"
collectively, "Expenses"), which may be imposed on, incurred or suffered by or
asserted against any Indemnitee, in any way relating to, based on or arising
out of:
(i) the Original Agreements, this Agreement, the Lease, the
Indenture, the Trust Agreement, the Intercreditor Agreement, the Liquidity
Facilities, the Pass Through Agreement, AVSA's FAA Bill of Sale, AVSA's
Warranty Bill of Sale or any other Operative Agreement or any other
document entered into in connection herewith or any sublease or transfer or
any transactions contemplated hereby or thereby;
(ii) the operation, possession, use, non-use, maintenance, storage,
overhaul, delivery, non-delivery, control, repair or testing of the
Aircraft, Airframe, or any Engine or any engine used in connection with the
Airframe, or any part thereof by the Lessee, any sublessee or any other
Person whatsoever, whether or not such operation, possession, use, non-use,
maintenance, storage, overhaul, delivery, non-delivery, control, repair or
testing is in compliance with the terms of the Lease, including without
limitation, claims for death, personal injury or property damage or other
loss or harm to any Person whatsoever, including, without limitation, any
passengers, shippers or other Persons wherever located, and claims relating
to any laws, rules or regulations, including, without limitation,
environmental control, noise and pollution laws, rules or regulation;
(iii) the manufacture, design, sale, return, purchase, acceptance,
rejection, delivery, non-delivery, condition, repair, modification,
servicing, rebuilding, airworthiness, registration, reregistration, import,
export, performance, non-performance, lease, sublease, transfer,
merchantability, fitness for use, alteration, substitution or replacement
of any Airframe, Engine, or Part under the Lease, the Purchase Agreement,
the Purchase Agreement Assignment, the GTA or the Engine Warranty
Assignment or other transfer of use or possession, or other disposition of
the Aircraft, the Airframe, any Engine or any Part including, without
limitation, latent and other defects, whether or not discoverable, strict
tort liability, and any claims for patent, trademark or copyright
infringement;
(iv) any breach of or failure to perform or observe, or any other
non-compliance with, any condition, covenant or agreement to be performed,
or other obligations of the Lessee under any of the Operative Agreements or
the Original Agreements, or the falsity or inaccuracy of any representation
or warranty of the Lessee in any of the Operative Agreements or the
Original Agreements (other than representations and warranties in the Tax
Indemnity Agreement);
(v) the enforcement of the terms of the Operative Agreements or the
Original Agreements and the administration of the Trust Indenture Estate;
and
(vi) the offer, issuance, sale or delivery of any Certificate or any
Pass Through Certificate or any Original Loan Certificate, or any refunding
or refinancing thereof, or interest in the Lessor's Estate or the Trust
Agreement or the Original Trust Agreement or any similar interest or in any
way relating to or arising out of the Trust Agreement or the Original Trust
Agreement and the Lessor's Estate, the Indenture or the Original Indenture
or the Trust Indenture Estate (including, without limitation, any claim
arising out of the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, or any other federal or state statute,
law or regulation, or at common law or otherwise relating to securities), or
the action or inaction of the Owner Trustee or Indenture Trustee as
trustees, in the manner contemplated by this Agreement, the Original
Participation Agreement, the Indenture, the Original Indenture, the
Indenture and Security Agreement Supplement, the Trust Agreement or the
Original Trust Agreement and in the case of the Owner Participant, its
obligations arising under Section 6.01 of the Trust Agreement or the
Original Trust Agreement.
The foregoing indemnity by the Lessee is intended to include and cover, but is
not limited to, any Expense to which the Indemnitees may be subject as a
result of their respective ownership or leasing of any interest in or holding
of any Lien on the Aircraft, Airframe, any Engine or Part during the Term,
whether or not in the Lessee's possession or control, insofar as such Expense
relates to any activity or event whatsoever involving such item while it is
under lease to the Lessee (or after termination of the Lease in connection
with the exercise of remedies thereunder to the extent that such Expense is
attributable to the transactions contemplated hereby and by the other
Operative Agreements and the Original Agreements), and such Expense does not
fall within any of the exceptions listed in Section 9.01(b) hereof.
(b) Exceptions. The indemnity provided for in Section 9.01(a) shall
not extend to any Expense of any Indemnitee to the extent it:
(i) would not have occurred but for the willful misconduct or gross
negligence of such Indemnitee;
(ii) is in respect of the Aircraft, and is attributable to acts or
events which occur after the Aircraft is no longer part of the Lessor's
Estate or, if the Aircraft remains a part of the Lessor's Estate, after the
expiration of the Term (unless the Aircraft is being returned at such time,
in which case after return of physical possession; provided that if the
Lessor has terminated the Lease pursuant to Article 17 thereof, the
indemnity provided in Section 9.01(a) hereof shall survive for so long as
Lessor shall be exercising remedies under such Article 17), or to acts or
events which occur after return of possession of the Aircraft by the Lessee
in accordance with the provisions of the Lease (subject to the foregoing
proviso if the Lessor has terminated the Lease pursuant to Article 17 of
the Lease) but in any such case only to the extent not fairly attributable
to acts or omissions of the Lessee prior to expiration of the Term,
including without limitation the Lessee's failure to fully discharge all of
its obligations under the Lease, the other Operative Agreements or the
Original Agreements;
(iii) is a Tax, whether or not the Lessee is required to indemnify
therefor pursuant to Article 8 hereof or pursuant to the Tax Indemnity
Agreement;
(iv) is a cost or expense required to be paid by the Owner
Participant or its permitted transferees (and not by the Lessee) pursuant
to this Agreement or any other Operative Agreement and for which the Lessee
is not otherwise obligated to reimburse the Owner Participant, directly or
indirectly pursuant to the terms of this Agreement or any other Operative
Agreement;
(v) would not have been incurred by such Indemnitee if such
Indemnitee had not been in breach of its representations or warranties, or
had not defaulted in the observance and performance of the terms and
provisions required to be observed and performed by it, in this Agreement,
the Purchase Agreement Assignment, the Lease, the Indenture, the Trust
Agreement, the Original Agreements or any other Operative Agreement to
which it is a party unless such breach or default shall be a result of the
breach or default by the Lessee of any of its obligations under the
Operative Agreements or by another Indemnitee of any of the foregoing;
(vi) [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 the Owner
Trustee, Lessor's Liens to the extent attributable to the Owner Trustee; 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 (x) in connection with a Refinancing, (y) as a result of the
occurrence of an Event of Default provided that either the Lease has been
declared in default or the transfer is pursuant to the exercise of remedies
under Article 17 of the Lease or (z) in connection with the Lessee's
exercise of its early termination option under Article 10 of the Lease or
its purchase options under Article 4 of the Lease or in connection with
Article 11 of the Lease; and
(ix) is an Expense arising under or in connection with any prohibited
transaction, within the meaning of Section 406 of ERISA or Section
4975(c)(1) of the Code ("Prohibited Transaction"); provided, however, that
in the event any prohibited transaction arises which is not exempt under
any class prohibited transaction exemption or any individual or statutory
prohibited transaction exemption (individually or collectively, a "PTE")
then the indemnity provided for herein shall extend to any Expenses
incurred by the Owner Participant (or any Affiliate thereof) as the result
of any Prohibited Transaction arising out of the purchase or holding of any
Certificates by an employee benefit plan subject to Title I of ERISA or by
a plan subject to Section 4975 of the Code (individually or collectively,
an "ERISA Plan") with respect to which the Owner Participant is a party in
interest, within the meaning of Section 3(14) of ERISA, or a disqualified
person,within the meaning of Section 4975 of the Code, except, however, that
such Indemnity shall not extend to any Expenses incurred by the Owner
Participant (or any Affiliate thereof) as the result of any Prohibited
Transaction occurring with respect to the purchase or holding of any
Certificates (A) over which purchase or holding the Owner Participant (or
an Affiliate thereof) has discretion or control (other than in the capacity
of a custodian, directed trustee or other similar nondiscretionary
capacity), or (B) by an ERISA Plan with respect to which the Owner
Participant (or any Affiliate thereof) is a "plan sponsor" within the
meaning of Section 3(16)(B) of ERISA.
Section 9.02. After-Tax Basis. The amount which the Lessee shall be
required to pay with respect to any Expense indemnified against under Section
9.01 shall be an amount sufficient to restore the Indemnitee, on an After-Tax
Basis, to the same position such party would have been in had such Expense not
been incurred. If any Indemnitee actually realizes a permanent Tax benefit by
reason of the payment of such Expense paid or indemnified against by the
Lessee which was not considered in the computation thereof, such Indemnitee
shall promptly pay to the Lessee, but not before the Lessee shall have made
all payments theretofore due such Indemnitee under this Agreement, the Tax
Indemnity Agreement, the Original Agreements and any other Operative
Agreement, an amount equal to the lesser of (x) the sum of such Tax benefit
plus any other permanent Tax benefit actually realized by such Indemnitee as
the result of any payment made by such Indemnitee pursuant to this sentence
and (y) the amount of such payment pursuant to this Section 9.02 by the Lessee
to such Indemnitee plus the amount of any other payments by the Lessee to such
Indemnitee theretofore made pursuant to this Section 9.02 less the amount of
any payments by such Indemnitee to the Lessee theretofore made pursuant to
this Section 9.02 (and the excess, if any, of the amount described in clause
(x) above over the amount described in clause (y) above shall be carried
forward and applied to reduce pro tanto any subsequent obligations of the
Lessee to make payments to such Indemnitee pursuant to this Section 9.02), it
being intended that no Indemnitee should realize a net Tax benefit pursuant to
this Section 9.02 unless the Lessee shall first have been made whole for any
payments by it to such Indemnitee pursuant to this Section 9.02; provided,
however, that notwithstanding the foregoing portions of this sentence, such
Indemnitee shall not be obligated to make any payment to the Lessee pursuant
to this sentence so long as an Event of Default shall have occurred and be
continuing. Any Taxes that are imposed on any Indemnitee as a result of the
disallowance or reduction of such Tax benefit referred to in the next
preceding sentence in a taxable year subsequent to the year of allowance and
utilization by such Indemnitee (including the expiration of any tax credit
carryovers or carrybacks of such Indemnitee that would not otherwise have
expired) shall be indemnifiable pursuant to the provisions of Section 8.01
hereof without regard to Section 8.01(b) hereof.
Section 9.03. Subrogation. Upon the payment in full of any indemnity
pursuant to this Article 9 by the Lessee (but not earlier), the Lessee shall be
subrogated to any right of the Indemnitee, other than with respect to any of
such Indemnitee's insurance policies or in connection with any indemnity claim
the Person indemnified may have against any other Indemnitee in respect of the
matter against which such indemnity has been made.
Section 9.04. Notice and Payment. Each Indemnitee and the Lessee
shall give prompt written notice one to the other of any liability of which
such party has received notice for which the Lessee is, or may be, liable
under this Article 9; provided, however, that failure to give such notice
shall not terminate any of the rights of the Indemnitees under this Article 9,
except (with respect to such Indemnitee) to the extent that the Lessee has
been materially prejudiced by the failure to provide such notice. Unless
otherwise provided in the Operative Agreements, any amount payable to an
Indemnitee pursuant to this Article 9 shall be paid within 30 days after
receipt of a written demand therefor from such Indemnitee accompanied by a
written statement describing in reasonable detail the basis for such indemnity
and the computation of the amount so payable.
Section 9.05. Refunds. If any Indemnitee shall obtain a recovery of
all or any part of any amount which the Lessee shall have paid to such
Indemnitee or for which the Lessee shall have reimbursed such Indemnitee under
this Article 9, and provided there shall not have occurred a Payment Default
or an Event of Default (in which case payment shall not be made to the Lessee
until such Payment Default or Event of Default shall have been cured) such
Indemnitee shall pay to the Lessee the amount of any such recovery, including
interest received with respect to the recovery, net of any Taxes paid or
payable as a result of the receipt of the recovery and interest, plus any net
additional permanent income tax benefits actually realized by Indemnitee as
the result of any payment made pursuant to this sentence less any reasonable
costs and expense of any Indemnitee not reimbursed by the Lessee; provided,
however, that such amount shall not be payable (a) before such time as the
Lessee shall have made all payments or indemnities then due and payable to
such Indemnitee under this Article 9 or (b) to the extent that the amount of
such payment would exceed the amount of all prior payments by the Lessee to
such Indemnitee pursuant to this Article 9, less the amount of all prior
payments by such Indemnitee to the Lessee pursuant to this Article 9. Any
subsequent loss of such recovery or tax benefit shall be subject to
indemnification under Article 8 or this Article 9, as the case may be, but
without regard to Section 8.01(b) hereof, other than Section 8.01(b)(v) hereof.
Section 9.06. Defense of Claims. The Lessee or its insurers shall
have the right (in each such case at the Lessee's sole expense) to investigate
or, provided that (i) the Lessee or its insurers shall not reserve the right
to dispute liability with respect to any insurance policies pursuant to which
coverage is sought, (ii) in the case of the Lessee, no Payment Default or
Event of Default shall have occurred and be continuing or shall arise at any
time during the claim and (iii) the Lessee shall have first acknowledged in
writing to such Indemnitee the Lessee's obligation to indemnify such
Indemnitee hereunder in respect of such claim, defend any such claim covered by
insurance for which indemnification is sought pursuant to this Article 9 and
each Indemnitee shall cooperate with the Lessee or its insurers with respect
thereto, and provided, further, the Lessee shall not be entitled to assume and
control the defense of any such claim if and to the extent (A) such Indemnitee
reasonably objects to such control on the ground that an actual or potential
material conflict of interest exists where it is advisable for such Indemnitee
to be represented by separate counsel or on the grounds that such proceeding
involves the potential imposition of criminal liability on such Indemnitee or
(B) such proceeding will involve any material danger of the sale, forfeiture
or loss of, or the creation of any Lien on the Aircraft or the Trust Estate
(unless the Lessee posts a bond or other security reasonably acceptable in
form and substance to such Indemnitee) or involve any material risk of civil
liability to such Indemnitee for which it is not indemnified hereunder.
Subject to the immediately foregoing sentence, where the Lessee or the
insurers under a policy of insurance maintained by the Lessee undertake the
defense of an Indemnitee with respect to such a claim, no additional legal
fees or expenses of such Indemnitee in connection with the defense of such
claim shall be indemnified hereunder unless the fees or expenses were incurred
at the written request of the Lessee or such insurers. Subject to the
requirement of any policy of insurance applicable to a claim, an Indemnitee
may participate at its own expense at any judicial proceeding controlled by
the Lessee or its insurers pursuant to the preceding provisions, to the extent
that such party's participation does not, in the opinion of the independent
counsel appointed by the Lessee or its insurers to conduct such proceedings,
interfere with such control; and such participation shall not constitute a
waiver of the indemnification provided in this Section 9.06. No Indemnitee
shall enter into any settlement or other compromise with respect to any claim
described in this Section 9.06 without the prior written consent of the
Lessee, which consent shall not unreasonably be withheld or delayed, unless
such Indemnitee waives its right to be indemnified under this Article 9 with
respect to such claim. The Lessee shall not enter into any settlement or
compromise which the Lessee has not agreed to discharge or with respect to
which the Lessee has not agreed to indemnify such Indemnitee to such
Indemnitee's satisfaction or which admits any criminal violation, gross
negligence or willful misconduct on the part of any Indemnitee without the
prior written consent of such Indemnitee.
Section 9.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 9 and the Lessee's obligations under any and all of them shall survive
the expiration or other termination of this Agreement, the Tax Indemnity
Agreement, the Trust Agreement, the Indenture, the Purchase Agreement
Assignment, the Engine Warranty Assignment, the Lease and the other Operative
Agreements but, as to such indemnities after the expiration or other
termination of the Lease, only with respect to losses, liabilities,
obligations, damages, penalties, claims, actions, suits, costs, Expenses and
disbursements caused by events occurring or existing (or fairly attributable
to the Lessee's acts or omissions) prior to such termination or expiration or
incurred in the process of (i) the return or disposition of the Aircraft under
Article 12 or Article 17 of the Lease, or (ii) the termination of the Lease or
the Indenture or, if later, the return of the Aircraft.
Section 9.08. Effect of Other Indemnities. The Lessee's obligations
under the indemnities provided for in this Agreement shall be those of a
primary obligor whether or not the Person indemnified shall also be
indemnified with respect to the same matter under the terms of this Agreement,
the Lease, the Indenture, the Trust Agreement, or any other document or
instrument, and the Person seeking indemnification from the Lessee pursuant to
any provision of this Agreement may proceed directly against the Lessee
without first seeking to enforce any other right of indemnification.
Section 9.09. Interest. The Lessee will pay to each Indemnitee on
demand, to the extent permitted by applicable law, interest on any amount of
indemnity not paid when due pursuant to this Article 9 until the same shall be
paid, at the Past Due Rate.
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs. (a) Transaction
Costs. The Owner Participant shall (as soon as practicable upon receipt of
appropriate bills or invoices) furnish the Owner Trustee funds in an amount
equal to the amount of the Transaction Costs for which the Owner Trustee is
liable pursuant to this Section 10.01. The Owner Trustee shall pay (or
reimburse the Lessee if the Lessee shall have previously made such payment),
in addition to those items set forth in Section 10.01(a) of the Original
Participation Agreement (other than clause (vii) thereof) all fees and
expenses of the following persons relating to the public offering of the Pass
Through Certificates contemplated by the Underwriting Agreement and related to
the transactions contemplated hereby: (i) the fees and expenses of counsel for
the Owner Participant; (ii) the fees and expenses of the transaction
documentation counsel for the Lessee and counsel for the Owner Trustee, the
Indenture Trustee, the Subordination Agent, the Pass Through Trustee, each
Liquidity Provider, the Original Loan Participant 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 the Registration Statement on Form S-3 bearing Registration No.
333-49411 (including any amendment thereto), printing any Preliminary
Prospectus or Prospectus (as such terms are defined in the Underwriting
Agreement) for the offering of the Pass Through Certificates; (viii) the fees
and expenses of Arthur Andersen LLP; (ix) the fees and expenses of Moody's and
S&P; (x) the fees and expenses (including computer time-sharing charges) of
First Chicago Leasing Corporation; (xi) the reasonable out-of-pocket expenses
of the Owner Participant, including, without limitation, any amounts paid in
connection with any appraisal report prepared on behalf of the Owner
Participant; (xii) reimbursement to the Owner Participant, the Owner
Participant Guarantor, the Owner Trustee, the Indenture Trustee, the
Subordination Agent, each Liquidity Provider, the Original Loan Participant
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) of
this paragraph shall be allocable to the Owner Participant under this
Agreement (1) to the extent incurred specifically with respect to the Owner
Participant or the refunding of the Original Loan Certificates, and (2) to the
extent such fees and expenses are incurred but are not specifically
attributable to the Owner Participant or the refunding of the Original Loan
Certificates, in the proportion that the principal amount of the Certificates
bears to the total amount of the Pass Through Certificates.
The Owner Participant, the Owner Trustee and the Lessee acknowledge
that the percentages for Basic Rent, Stipulated Loss Value and Termination
Value set forth in the Lease have been prepared assuming the aggregate amount
payable by the Owner Participant pursuant to the preceding paragraph is
1.4896969697% 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 Owner Participant Guarantor, the Indenture Trustee, the
Subordination Agent, the Liquidity Providers and the Pass Through Trustee
all costs and expenses (including reasonable legal fees and expenses)
incurred by any of them in connection with (a) any Default or Event of
Default and any enforcement or collection proceedings resulting therefrom,
or (b) the enforcement of the obligations of the Lessee hereunder or under
the other Operative Agreements, including, without limitation, the entering
into or giving or withholding of any amendments or supplements or waivers
or consents (whether or not consummated), including without limitation, any
amendment, supplement, waiver or consent resulting from any work-out,
restructuring or similar proceeding relating to the performance or
nonperformance by the Lessee of its obligations under the Operative
Agreements or (c) any amendment, supplement, waiver or consent (whether or
not entered into) under the Original Agreements, this Agreement, the Lease,
the Indenture, the Certificates, the Tax Indemnity Agreement, the Purchase
Agreement Assignment or any other Operative Agreement or document or
instrument delivered pursuant to any of them, which amendment, supplement,
waiver or consent is required by any provision of any Operative Agreement
(including any adjustment pursuant to Section 3.04 of the Lease) or is
requested by the Lessee or necessitated by the action or inaction of the
Lessee; provided, however, that the Lessee shall not be responsible for
fees and expenses incurred in connection with the offer, sale or other
transfer (whether pursuant to Section 7.03(d) hereof or otherwise) by the
Owner Participant after the Refunding Date of any interest in the Aircraft,
the Lessor's Estate, the Beneficial Interest or the Trust Agreement or any
similar interest (and the Owner Participant shall be responsible for all
such fees and expenses), unless such offer, sale or transfer shall occur
(A) after the Lease has been declared in default or if the transfer is
pursuant to the exercise of remedies under Article 17 of the Lease or (B)
in connection with the termination of the Lease or action or direction of
the Lessee pursuant to Section 4.02, Article 10 or Article 11 of the Lease;
and
(ii) to pay the fees, costs and expenses of all appraisers involved
in an independent appraisal of the Aircraft to the extent required under
Section 4.03 of the Lease.
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee. (a)
Resignation and Removal. The Owner Trustee or any successor Owner Trustee may
resign or may be removed by the Owner Participant, and a successor Owner
Trustee may be appointed and a Person may become Owner Trustee under the Trust
Agreement only in accordance with the provisions of Section 3.11 of the Trust
Agreement and the provisions of paragraphs (b) and (c) of this Section 11.01.
(b) Conditions to Appointment. The appointment in any manner of a
successor Owner Trustee pursuant to Section 3.11 of the Trust Agreement shall
be subject to the following conditions:
(i) Such successor Owner Trustee shall be a Citizen of the United
States;
(ii) Such successor Owner Trustee shall be a bank or a trust company
having combined capital, surplus and undivided profits of at least
$100,000,000 or a bank or trust company fully guaranteed by a direct or
indirect parent thereof having a combined capital, surplus and undivided
profits of at least $100,000,000;
(iii) Such appointment shall not violate any provisions of the
Transportation Code or any applicable rule or regulation of the applicable
regulatory agency or body of any other jurisdiction in which the Aircraft
may then be registered or create a relationship which would be in violation
of the Transportation Code or any applicable rule or regulation of the
applicable regulatory agency or body of any other jurisdiction in which the
Aircraft may then be registered;
(iv) Such successor Owner Trustee shall enter into an agreement or
agreements, in form and substance reasonably satisfactory to the Lessee, the
Owner Participant, the Pass Through Trustee and the Indenture Trustee
whereby such successor Owner Trustee confirms that it shall be deemed a
party to this Agreement, the Trust Agreement, the Lease, the Lease
Supplement, the Purchase Agreement Assignment, the Engine Warranty
Assignment, the Indenture, the Indenture Supplement and any other Operative
Agreement to which the Owner Trustee is a party and agrees to be bound by
all the terms of such documents applicable to the Owner Trustee and makes
the representations and warranties contained in Section 7.04 hereof (except
that it may be duly incorporated, validly existing and in good standing
under the laws of the United States of America or any State thereof); and
(v) All filings of 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 appoint
promptly a successor Owner Trustee meeting the requirements of Section
11.01(b) hereof in the event the Owner Participant has knowledge that the
Owner Trustee at any time shall not be a Citizen of the United States.
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant. The Owner
Participant shall have no obligation or duty to the Lessee or to any Holder
with respect to the transactions contemplated by this Agreement, except those
obligations or duties expressly set forth in this Agreement, the Indenture,
the Trust Agreement, the Tax Indemnity Agreement, AVSA's FAA Bill of Sale,
AVSA's Warranty Bill of Sale, the Lease or any other Operative Agreement to
which the Owner Participant is a party and the Owner Participant shall not be
liable for the performance by any party hereto of such other party's
obligations or duties hereunder. Under no circumstances shall the Owner
Participant as such be liable to the Lessee, nor shall the Owner Participant be
liable to any Holder, for any action or inaction on the part of the Owner
Trustee or the Indenture Trustee in connection with this Agreement, the
Indenture, the Lease, the Trust Agreement, the Purchase Agreement Assignment,
the Engine Warranty Assignment, any other Operative Agreement, any Original
Agreement, the ownership of the Aircraft, the administration of the Lessor's
Estate or the Trust Indenture Estate or otherwise, whether or not such action
or inaction is caused by the willful misconduct or gross negligence of the
Owner Trustee or the Indenture Trustee.
Section 12.02. Interest of Holders of Certificates. A Holder of a
Certificate shall have no further interest in, or other right with respect to,
the Trust Indenture Estate when and if the principal, any Make-Whole Premium
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 or the Liquidity Facilities or the
Certificates, except that prior to the occurrence and continuance of an Event
of Default, no section of the Indenture, the Trust Agreement, the
Intercreditor Agreement or 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 Indenture Trustee and the Owner Participant and that, except as otherwise
provided in the Indenture, upon an Indenture Event of Default, the Indenture
Trustee may act as the Lessor under the Lease to the exclusion of the Owner
Trustee. The Lessee further agrees to deliver to the Indenture Trustee and
the Owner Participant a copy of each notice, statement, request, report or
other communication given or required to be given to the Owner Trustee under
the Lease.
Section 13.03. No Retroactive Application. This Agreement, the
Lease, the Indenture, the Ancillary Agreement I and the Trust Agreement each
amend and restate, and the Tax Indemnity Agreement amends, the respective
original agreements with no intention of retroactive application. The
applicable original agreements have been restated for the convenience of the
parties and such amendments and restatements, and such amendment in the case
of the Tax Indemnity Agreement, are not intended to waive or modify the
obligations of any party which accrued or were to have been performed on or
prior to the Refunding Date under such unamended agreements (or, in the case
of this Agreement, the effective date hereof) or to deprive any party of its
rights and remedies in respect thereof.
Section 13.04. Pass Through Trustee's 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 8.02 thereof regarding the
rights of the Owner Participant to purchase the Certificates under
circumstances specified therein.
ARTICLE 14
NOTICES
Section 14.01. Notices. All notices, demands, declarations and other
communications required by this Agreement shall be in writing and shall be
deemed received (a) if given by telecopier, when transmitted and the
appropriate telephonic confirmation received if transmitted on a Business Day
and during normal business hours of the recipient, and otherwise on the next
Business Day following transmission, (b) if given by certified mail, return
receipt requested, postage prepaid five Business Days after being deposited in
the United States mail and (c) if given by FedEx service (or, if a Default or
Event of Default shall have occurred and be continuing, by other comparable
courier service), when received or personally delivered, addressed:
(a) If to the Lessee, to its office at 2007 Corporate Avenue,
Memphis, Tennessee 38132, Attention: Vice President and Treasurer with a
copy to Senior Vice President and General Counsel at 1980 Nonconnah
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 its office at 225
Asylum Street, Goodwin Square, Hartford, Connecticut 06103, Attention:
Corporate/Muni Administration, facsimile (860) 244-1889 with a copy to
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 200 First Stamford
Place, Stamford, Connecticut 06902, Attention: Vice President Leasing with
a copy to Director, Portfolio Administration, telephone (914) 335-5000,
facsimile 914 335-8301, 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 Pass Through Trustee or the
Subordination Agent, 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, Pass Through Trustee or the Subordination Agent, 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 Palmengartenstrasse
5-9, D-60325 Frankfurt am Main, Germany, Attention: Head of Aircraft Finance
Department KIII b 3, telephone 011-49-69-7431-0, facsimile
011-49-69-7431-2944; 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/REOPTIMIZATION
Section 15.01. Refinancing. (a) Subject to the terms and
conditions of this Section 15.01, the Lessee may request the Owner Participant
to participate in up to three refinancings (including the refinancing
contemplated by this Agreement on the Refunding Date) in whole but not in
part, of the Certificates prior to the end of the Basic Term (a
"Refinancing"). Such Refinancings may be placed in either the private or
public markets and shall be denominated in United States dollars (or in any
other foreign currency so long as the Owner Participant is satisfied there is
no foreign currency risk to it), and shall be on terms that do not materially
adversely affect the Owner Participant. The Owner Participant agrees to
negotiate promptly in good faith to conclude an agreement with the Lessee as
to the terms of any such Refinancing transaction (including the terms of any
debt to be issued in connection with such refinancing and the documentation to
be executed in connection therewith). Without the prior written consent of
the Owner Participant, the prospectus and other offering materials relating to
any Refinancing in the form of a public offering shall not identify the Owner
Participant and shall not include any financial statements of the Owner
Participant or any Affiliate thereof. In connection with any such Refinancing
in the form of a public offering, the Lessee shall indemnify the Owner
Participant in a manner satisfactory to it for any liabilities under federal,
state or foreign securities laws resulting from such offering. The aggregate
principal amount of the new Certificates issued in connection with each
Refinancing shall be the same as the aggregate principal amount outstanding on
the Certificates being refinanced.
(b) Notwithstanding anything herein to the contrary, no Refinancing
will be permitted unless the Owner Participant and the Indenture Trustee shall
have received at least 15 days' prior written notice (three (3) Business Days
with respect to the refinancing contemplated by this Agreement on the
Refunding Date) of the scheduled closing date of such Refinancing and the
Owner Participant shall have been provided such longer period as it shall have
required for a reasonable opportunity to review the relevant documentation and
the Owner Participant shall have determined in good faith that neither it nor
the Owner Trustee shall suffer any loss or expense or bear any increased risk
as a result of such Refinancing (including, without limitation, any risk with
respect to taxes or other adverse consequences to the Owner Participant
including the application of Revenue Procedures 75-21 and 75-28 and Section
467 of the Code) for which it has not been or will not have been indemnified
by the Lessee in a manner reasonably satisfactory to the Owner Participant,
nor shall its rights against all other parties taken as a whole be adversely
affected compared to such rights in effect under the Operative Agreements
prior to such proposed Refinancing.
Prior to the consummation of any Refinancing pursuant to this Section
15.01, the Owner Participant and the Lessee shall agree upon a schedule
setting forth each installment of Basic Rent and setting forth Stipulated Loss
Values and Termination Values payable pursuant to the Lease as a result of the
Refinancing in accordance with Section 3.04 of the Lease, and thereafter the
amounts set forth in such schedule shall become the amounts payable under the
Lease. Upon the consummation of the Refinancing, the evidence of indebtedness
issued pursuant to the Refinancing shall be considered "Certificates" for
purposes of this Agreement, the Lease and the Indenture.
(c) Notwithstanding the foregoing, the Owner Participant shall have
no obligation to proceed with any Refinancing transaction as contemplated by
this Section 15.01 unless the Lessee indemnifies the Owner Trustee and the
Owner Participant by agreement in form and substance satisfactory to each of
them, for any liability, obligation (other than the obligation to pay
principal and interest in respect of the refinanced indebtedness), cost or
expense (including, without limitation, reasonable attorneys' fees and
Make-Whole Premium or other amounts due under the Indenture), including any
adverse tax consequences or impact, related to or arising out of any such
Refinancing transaction.
(d) Without the prior written consent of the Owner Participant, which
consent may be withheld in its sole discretion, no such refinancing shall (1)
cause the aggregate principal amount of the indebtedness to be substituted for
the Certificates to exceed the aggregate principal amount of the then
outstanding Certificates, (2) with the exception of the refinancing
contemplated by this Agreement on the Refunding Date, cause the weighted
average life of such indebtedness to be different by more than 6 months than
the remaining weighted average life of the then outstanding Certificates, or
(3) cause the date of maturity of such indebtedness to be later than the date
of maturity of the Certificates being refinanced.
(e) Each party agrees to take or cause to be taken all requested
action, including, without limitation, the execution and delivery of any
documents and instruments, including, without limitation, amendments or
supplements to the Lease, which may be reasonably necessary or desirable to
effect such Refinancing, including, in the case of the Owner Participant,
direction to the Owner Trustee by the Owner Participant to prepay the
Certificates then outstanding; provided, however, that such Refinancing shall
be subject to the satisfaction of each of the following conditions:
(i) Payment of principal, accrued interest, Make-Whole Premium and
Breakage Costs, if any, and all other sums due and owing on the Certificates
payable under the Indenture;
(ii) Payment in full of all other amounts then due and owing by the
Lessee under this Agreement, the Indenture, the Lease, the Trust Agreement,
and the Certificates then outstanding shall have been made by the Lessee;
(iii) Such party shall have received such opinions of counsel
(including, without limitation, an opinion received by the Owner
Participant from independent tax counsel reasonably satisfactory to the
Lessee that such Refinancing shall not result in any adverse tax
consequences to such Owner Participant, unless the Lessee shall have agreed
to provide an indemnity in respect thereof reasonably satisfactory in form
and substance to the Owner Participant), certificates and other documents
as it may reasonably request, each in form and substance reasonably
satisfactory to such party;
(iv) All authorizations, approvals and consents which in the
reasonable judgment of the Owner Participant are necessary for such
Refinancing shall have been obtained;
(v) The Lessee shall have provided or agreed to provide to the Owner
Participant, as Supplemental Rent under the Lease, sufficient funds to pay
any Breakage Costs, Make-Whole Premium and any other amounts due under the
Indenture;
(vi) The satisfaction or waiver by each other party to this
Agreement of the conditions set forth in this Section 15.01 to such party's
obligations under this Section 15.01;
(vii) No Payment Default, Bankruptcy Default or Event of Default shall
have occurred and be continuing or would occur immediately after giving
effect to such Refinancing;
(viii) In the event the Lessee shall not prohibit the purchase of the
Refinancing loan certificates (or pass through certificates, if the
placement is in the form of pass through 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 or pass through certificates, as the case may
be, with an ERISA Plan only if purchasers of the Refinancing loan
certificates or holders of pass through certificate holders, as the case
may be, 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 or pass through certificates, as the case may
be, and, if such purchasers or holders represent that they are using funds
of an ERISA Plan in acquiring the Refinancing loan certificates or pass
through certificates, as the case may be, 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 or pass through certificates, as the case
may be, 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 or pass through certificates, as the
case may be, 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 the exemption referred to in this paragraph (viii) is not valid
or applicable in any respect to the purchase and holding of the Refinancing
loan certificates or pass through certificates, as the case may be, or if
the representation in 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 Articles 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 the
representations set forth in 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; and
(ix) The Lessee shall pay all costs and expenses (including legal
fees) incurred in connection with any proposed or actually consummated
Refinancing.
Section 15.02. Reoptimization. (a) If a Change in Tax Rate occurs
prior to the end of the Basic Term, then, subject to the terms and conditions
of this Section 15.02 and Section 3.04 of the Lease, the Owner Participant
may, upon 30 days' prior notice to the Lessee, the Indenture Trustee, the
Owner Trustee and the Holders, elect to modify the schedule of payments of
principal of the certificates issued ("Refinancing Certificates") in
connection with any Refinancing effected after the Refunding Date using
private debt (not including debt issued pursuant to an exemption from
registration under the Securities Act relying on Rule 144A promulgated
thereunder but otherwise marketed in a manner substantially similar to
securities registered under the Securities Act, and not including debt issued
in connection with any offering of securities registered under the Securities
Act) due on each remaining Rent Payment Date on or commencing on the Rent
Payment Date next succeeding the date mutually agreed to by the Owner
Participant, the Lessee and the Indenture Trustee on which the Owner
Participant shall make such modification (the "Reoptimization Date"). Promptly
after making such modification, the Owner Participant shall furnish each party
hereto written notice of the amounts so recalculated.
(b) Adjustments to Refinancing Certificates. On the Reoptimization
Date, subject to the satisfaction on or before the Reoptimization Date of the
conditions set forth in Section 15.02(c), the Owner Trustee will issue and
deliver and the Indenture Trustee will authenticate, and each holder of a
Refinancing Certificate will accept delivery of, a new Refinancing Certificate
or Refinancing Certificates (in replacement of each Refinancing Certificate
then held by such holder, which Refinancing Certificates shall be surrendered
to the Indenture Trustee for cancellation) containing such changed principal
installments (expressed as a percentage of the original principal amount of
such Refinancing Certificate) as shall have been recalculated by the Owner
Participant, but in the same principal amount as, and containing terms
identical to, except as otherwise contemplated by Section 15.02(d) hereof, the
Refinancing Certificates originally issued in connection with the Operative
Agreements.
(c) Conditions to the Obligations of the Holders of the Refinancing
Certificates on the Reoptimization Date. The obligation of each holder of a
Refinancing Certificate to accept delivery of a new Refinancing Certificate on
the Reoptimization Date, and to surrender on such Reoptimization Date any
Refinancing Certificate then held by it, is subject to the following
conditions precedent having been satisfied on or before the Reoptimization
Date:
(i) the requirements of Section 15.02(d) hereof shall have been
satisfied;
(ii) the following documents, in form and substance satisfactory to
such Holder, shall have been duly authorized, executed and delivered by the
party or parties thereto and shall be in full force and effect: (A) if the
payments of Basic Rent, Stipulated Loss Values and Termination Values with
respect to the Term have been changed, an amendment to the Lease, dated the
Reoptimization Date, (B) an amendment to the Indenture setting forth any
changed repayment schedule to the Refinancing Certificates, dated the
Reoptimization Date and duly filed (or in the process of being so duly
filed) for recordation with the Aeronautics Authority and (C) replacement
Refinancing Certificates; and
(iii) in connection with any Reoptimization the Owner Participant
shall pay or agree to pay all reasonable costs and expenses incurred by the
Lessee, the Owner Trustee, the Indenture Trustee and each Holder of a
Refinancing Certificate (including, without limitation, reasonable legal
fees and expenses) in connection with any such reoptimization.
(d) Payment Schedules. Except as otherwise provided in this Section
15.02 as long as the Refinancing Certificates remain outstanding, the payment
schedules for the Refinancing Certificates shall not be modified.
ARTICLE 16
[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. [Reserved].
Section 17.03. Counterparts. This Agreement may be executed by the
parties in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
Section 17.04. No Oral Modifications. Neither this Agreement nor
any of its terms may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by the party against which
the enforcement of the termination, amendment, supplement, waiver or
modification is sought. No such written termination, amendment, supplement,
waiver or modification shall be effective unless a signed copy shall have been
delivered to and executed by the Owner Trustee and the Indenture Trustee. A
copy of each such termination, amendment, supplement, waiver or modification
shall also be delivered to each other party to this Agreement other than the
Original Loan Participant.
The consent of each of the Pass Through Trustee and the Subordination
Agent, in its capacity as a party to this Agreement and not as a Holder, shall
not be required to modify, amend or supplement this Agreement or to give any
consent, waiver, authorization or approval with respect to this Agreement
under the circumstances in which the consent of the Indenture Trustee would
not be required for such modification, amendment, supplement, consent, waiver
or approval in accordance with Section 8.01(b) of the Indenture, provided that
the Pass Through Trustee shall be entitled to receive an Opinion of Counsel
(as defined in the Pass Through Agreement) necessary, in its sole discretion,
to establish that the Indenture Trustee's consent would not be required under
such circumstances.
Section 17.05. Captions. The table of contents preceding this
Agreement and the headings of the various Articles and Sections of this
Agreement are for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions of this Agreement.
Section 17.06. Successors and Assigns. The terms of this Agreement
shall be binding upon, and shall inure to the benefit of, the Lessee and its
successors and permitted assigns, the Owner Participant and its successors and
permitted assigns, the Owner Trustee and its successors as Owner Trustee (and
any additional owner trustee appointed) under the Trust Agreement, the
Indenture Trustee and its successors as Indenture Trustee (and any additional
indenture trustee appointed) under the Indenture, the Subordination Agent and
its successors and permitted assigns, including without limitation each Holder
of a Certificate, and the Pass Through Trustee and its successors as Pass
Through Trustee (and any additional pass through trustee appointed).
Section 17.07. Concerning the Owner Trustee, Indenture Trustee and
the Pass Through Trustee. Each of 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 Participant
or the Owner Trustee becomes, or all or any part of the Lessor's Estate or the
trust created by the Trust Agreement becomes the property of, a debtor subject
to the reorganization provisions of the Bankruptcy Code or any other
applicable bankruptcy or insolvency statutes, (ii) pursuant to any such
reorganization provisions, the Owner Participant is held to have recourse
liability to the debtor, the Owner Trustee or the trustee of the debtor
directly or indirectly on account of any amount payable as Make-Whole Premium,
principal or interest on the Certificates, or any other amount payable on any
Certificate that is provided in the Operative Agreements to be nonrecourse to
the Owner Participant and (iii) the Indenture Trustee actually receives any
Recourse Amount which reflects any payment by the Owner Participant on account
of (ii) above, then the Indenture Trustee, as the case may be, shall promptly
refund to the Owner Participant such Recourse Amount. For purposes of this
Section 17.10, "Recourse Amount" means the amount by which the portion of such
payment by the Owner Participant on account of clause (ii) above received by
the Indenture Trustee exceeds the amount which would have been received by the
Indenture Trustee if the Owner Participant had not become subject to the
recourse liability referred to in (ii) above. Nothing contained in this
Section shall prevent the Indenture Trustee from enforcing any individual
obligation (and retaining the proceeds thereof) of the Owner Participant under
this Agreement or any other Operative Agreement to the extent herein or therein
provided, for which the Owner Participant has expressly agreed by the terms of
this Agreement to accept individual responsibility.
Section 17.11. GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS AND IS BEING DELIVERED IN NEW
YORK.
Section 17.12. Section 1110 Compliance. The parties hereto agree
that the transactions contemplated by the Operative Agreements are expressly
intended to be, shall be and should be construed so as to be entitled to the
benefits and protection of Section 1110 of the Bankruptcy Code.
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 (on behalf
of itself and each of its Affiliates, agents, directors, officers, employees
and representatives) to use reasonable precautions to keep confidential, in
accordance with its customary procedures for handling confidential information
of this nature, any non-public information supplied to it pursuant to this
Agreement which is identified by the Person supplying the same as being
confidential at the time the same is delivered to such party, provided that
nothing herein shall limit the disclosure of any such information (i) to the
extent required by statute, rule, regulation or judicial process, (ii) to
counsel for any of the parties hereto, (iii) to bank examiners or similar
regulatory authorities, auditors or accountants, (iv) in connection with any
litigation to which any one or more of the parties hereto is a party relating
to the transactions contemplated hereby or by any of the Operative Agreements,
(v) to an Affiliate of the parties hereto, (vi) to any assignee or participant
(or prospective assignee or participant) or other transferee so long as such
assignee or participant (or prospective assignee or participant) or other
transferee first executes and delivers to the respective party making such
assignment or participation an agreement in writing to be bound by the
provisions of this Section 18.01 or (vii) in the case of the Owner Participant
or the Owner Trustee (in its individual or trust capacity) to the Owner
Trustee (in its individual or trust capacity) or to the Owner Participant, as
the case may be.
IN WITNESS WHEREOF, the parties have caused this Participation
Agreement to be executed by their respective, duly authorized officers and this
Participation Agreement shall be effective this _____ day of _____, 1998.
LESSEE:
FEDERAL EXPRESS CORPORATION
By:__________________________________________
Name: Robert D. Henning
Title: Vice President and Treasurer
OWNER PARTICIPANT:
PMCC LEASING CORPORATION
By:__________________________________________
Name: Joan D. Woodroof
Title: Director, Structured Finance,
Philip Morris Capital Corporation
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
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
ORIGINAL LOAN PARTICIPANT:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK,
as Agent and as Original Loan Participant
By:__________________________________________
Name:
Title:
SCHEDULE I
CERTIFICATE INFORMATION
1. Federal Express Corporation 1998-1 Pass Through Trust Class A
Federal Express Corporation Trust No. N675FE
--------------------------------------------
Interest Rate: 6.720%
Maturity: January 15, 2018
Principal Amount: $33,630,000
2. Federal Express Corporation 1998-1 Pass Through Trust Class B
Federal Express Corporation Trust No. N675FE
--------------------------------------------
Interest Rate: 6.845%
Maturity: January 15, 2016
Principal Amount: $12,611,000
3. Federal Express Corporation 1998-1 Pass Through Trust Class C
Federal Express Corporation Trust No. N675FE
--------------------------------------------
Interest Rate: 7.020%
Maturity: January 15, 2014
Principal Amount: $16,816,000
SCHEDULE II
DEFINITIONS
(FEDERAL EXPRESS CORPORATION TRUST NO. N675FE)
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement,
the Series Supplements, 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 and except in the case of the
Original Agreements, (i) references to agreements shall be deemed to mean and
include such agreements as amended and supplemented from time to time, and
(ii) references to parties to agreements shall be deemed to include the
successors and permitted assigns of such parties.
DEFINED TERMS:
Additional Insured. As defined in Article 13 of the Lease.
Aeronautics Authority. As appropriate, the Federal Aviation
Administration and/or the Administrator of the Federal Aviation
Administration, any successor to the former United States Civil Aeronautics
Board, or any Person, governmental department, bureau, commission or agency
located in the United States succeeding to the functions of any of the
foregoing.
Affiliate. With respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant.
After-Tax Basis. A basis such that any payment to be received by a
Person shall be supplemented by a further payment to such Person so that the
sum of the two payments, after deduction of all Taxes resulting from the
receipt or accrual of such payments, shall be equal to the payment to be
received. In the case of amounts payable to the Lessor, the Owner Participant,
or any corporate Affiliate of the Owner Participant, it shall be presumed that
such Person is at all times subject to Federal income tax at the maximum
marginal rate generally applicable to corporations from time to time and
actual state, local and foreign income taxes.
Agent. Morgan Guaranty Trust Company of New York and its successors
and permitted assigns as Agent for the Original Loan Participant pursuant to
Article 16 of the Original Participation Agreement.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier" (as
defined in the Transportation Code) as to which there is in force a permit
granted under Section 41302 of the Transportation Code.
Airbus Guaranty. The Guaranty dated the Delivery Date executed by the
Manufacturer and guaranteeing AVSA's Warranty Bill of Sale.
Aircraft. The Airframe (or any permitted substitute airframe
thereunder) together with two Engines (whether either is an initial Engine or
a Replacement Engine) whether or not any of such initial or Replacement
Engines may from time to time be installed on such Airframe or may be
installed on any other airframe or on any other aircraft, including any
aircraft substituted pursuant to Section 11.03 of the Lease.
Airframe. The Airbus A300F4-605R aircraft (excluding the Engines or
engines from time to time installed thereon) leased by the Lessor to the Lessee
pursuant to the Lease and the initial Lease Supplement and having the United
States FAA Registration Number initially and manufacturer's serial number
specified in the initial Lease Supplement, including (i) all Parts in respect
thereof and (ii) any Replacement Airframe which may be substituted pursuant to
Section 11.03 of the Lease.
Amendment No. 1 to the Original Tax Indemnity Agreement. Amendment
No. 1 to the Original Tax Indemnity Agreement (Federal Express Corporation
Trust No. N675FE), dated as of June 15, 1998, between the Lessee and the Owner
Participant.
Ancillary Agreement. Any written agreement of the Lessee to which the
Lessor is a party or to which the Lessor has consented in writing entered into
on or prior to the Delivery Date or the Refunding Date or any date thereafter
in connection with the transactions contemplated by the Operative Agreements,
as such agreement may be amended and supplemented from time to time with the
consent of the Lessor and delivered to the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee, the Subordination Agent, each Liquidity
Provider and the Owner Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal Express
Corporation Trust No. N675FE), dated the Delivery Date, as amended and
restated on the Refunding Date, among the Lessee, the Owner Trustee, not in
its individual capacity, but solely as Owner Trustee, the Owner Participant
and the Indenture Trustee not in its individual capacity, but solely as
Indenture Trustee, as originally executed or as amended, modified or
supplemented with the consent of all the parties thereto.
Ancillary Agreement II. The Ancillary Agreement II (Federal Express
Corporation Trust No. N675FE), dated the Refunding Date, among the Lessee, the
Owner Trustee, not in its individual capacity, but solely as Owner Trustee,
the Owner Participant and the Indenture Trustee not in its individual
capacity, but solely as Indenture Trustee, as originally executed or as
amended, modified or supplemented with the consent of all the parties thereto.
Appraisal. The report prepared by BK Associates, Inc. and delivered
to the Owner Participant (with an abbreviated report to the Lessee) on the
Delivery Date pursuant to Section 4.01(n) of the Original Participation
Agreement.
Assignment and Assumption Agreement. Any agreement delivered in
compliance with Section 7.03(d) of the Participation Agreement.
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.
AVSA. AVSA S.A.R.L., a societe a responsabilite limitee, organized
and existing under the laws of France.
AVSA Consent and Agreement. The Consent and Agreement dated as of
June 1, 1998, executed by AVSA.
AVSA's FAA Bill of Sale. The bill of sale for the Airframe on AC
Form 8050-2, or such other form as may be approved by the Aeronautics
Authority, executed by AVSA in favor of the Owner Trustee and dated the
Delivery Date.
AVSA's Warranty Bill of Sale. The full warranty bill of sale
covering the Aircraft (and specifically referring to each Engine) executed by
AVSA as owner of the Aircraft in favor of the Owner Trustee and dated the
Delivery Date.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended, and
any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f) or
(g) of the Lease which either does or, with the giving of notice or lapse of
time or both, would constitute an Event of Default.
Basic Rent. The aggregate periodic rent payable for the Aircraft
throughout the Basic Term pursuant to Section 3.02 of the Lease, adjusted
pursuant to Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on the
Delivery Date and ending at the end of the day on September 18, 2021, or such
earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant under the
Trust Agreement.
Breakage Costs. Has the meaning specified in Schedule II to the
Original Participation Agreement.
Business Day. Any day on which commercial banks are not authorized or
required to close in New York, New York, Stamford, Connecticut, 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 is discharged, Boston,
Massachusetts.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N675FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Law. Any change to the Code or the Treasury regulations
promulgated thereunder or the publication of any revenue ruling, revenue
procedure or any informational release by the Internal Revenue Service or the
Department of Treasury either of which would change or would allow a change in
the tax assumptions or structure upon which the lease economics were based,
provided that the Owner Participant or the Lessee has notified the other party
of such change in writing prior to the Refunding Date.
Change in Tax Rate. Any amendment, modification, deletion, addition,
or change to the Code which is enacted into law after the Delivery Date which
changes the highest marginal statutory rate of Federal income tax applicable
to the Owner Participant (other than a change which is in the nature of a
minimum tax).
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Transportation Code, or any analogous
part of any successor or substituted legislation or regulation at the time in
effect.
Class A Liquidity Provider. Kreditanstalt fur Wiederaufbau, a
corporation organized under the public law of the Federal Republic of Germany
together with any Replacement Liquidity Provider (as defined in the
Intercreditor Agreement).
Class B Liquidity Provider. Kreditanstalt fur Wiederaufbau, a
corporation organized under the public law of the Federal Republic of Germany
together with any Replacement Liquidity Provider (as defined in the
Intercreditor Agreement).
Closings. The closing with respect to the acquisition of the Pass
Through Certificates by the Underwriters and the closing with respect to the
refunding of the Original Loan Certificates.
Code. Except as otherwise provided, the Internal Revenue Code of
1986, as amended from time to time.
Consent and Agreement. The Consent and Agreement dated as of June 1,
1998, executed by the Manufacturer.
Consent and Guaranty. The Consent and Guaranty of the Manufacturer
attached to the Purchase 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.
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. June 18, 1998.
Engine. Each of the two General Electric CF6-80C2-A5F 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), 10.02(c), 10.03, 11.03, 11.04 or 12.02 of
the Lease, together with all Parts related thereto. Except as otherwise
provided, at such time as a Replacement Engine shall be so substituted and the
Engine for which the substitution is made shall be released from the Lien of
the Indenture, such replaced Engine shall cease to be an "Engine" under the
Lease. The term "Engines" means, as of any date of determination, both Engines
then leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of June 1, 1998, 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. N675FE), dated as of June 1, 1998, between the
Lessor and the Lessee.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. As defined in Section 8.01(b)(xii) of the Participation
Agreement.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of the
Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A)
for a period in excess of 60 days due to theft or disappearance or such longer
period, not to exceed 180 days from the end of such initial 60-day period, if
and so long as the location of such property is known to the Lessee and the
Lessee is diligently pursuing recovery of such property, or to the end of the
Term, if less (unless such theft or disappearance constitutes an Event of Loss
pursuant to (i)(B) or (ii) hereof) or (B) for a period in excess of 60 days
due to the destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use by Lessee for any reason whatsoever;
(ii) any damage to such property which results in an insurance settlement with
respect to such property on the basis of a total loss, or constructive or
compromised total loss; (iii) (1) condemnation, confiscation or seizure of, or
requisition of title to such property by the Government, any foreign
government or purported government or any agency or instrumentality thereof,
or (2) condemnation, confiscation, or seizure of, or requisition or taking of,
use of such property (A) by a foreign government or instrumentality or agency
of any such foreign government, for a period in excess of 180 days (or such
shorter period ending on the earlier of the expiration of the Term or on the
date on which an insurance settlement with respect to such property on the
basis of a total loss or constructive or compromised total loss shall occur)
or (B) by the Government for a period extending beyond the Term; and (iv) as a
result of any law, rule, regulation, order or other action by the Aeronautics
Authority or other governmental body having jurisdiction, the use of the
Aircraft or Airframe in the normal course of air transportation of cargo shall
have been prohibited by virtue of a condition affecting all Airbus A300-600
series aircraft equipped with engines of the same make and model as the
Engines for a period of twelve (12) consecutive months, unless the Lessee,
prior to the expiration of such twelve (12) month period, shall be diligently
carrying forward all steps which are necessary or desirable to permit the
normal use of the Aircraft or Airframe or, in any event, if such use of the
Aircraft or the Airframe shall have been prohibited for a period of
twenty-four (24) consecutive months or until the end of the Term, if earlier.
The date of such Event of Loss shall be (s) the 61st day or the 241st day, as
the case may be, following loss of such property or its use due to theft or
disappearance (or the end of the Term or the Lessee's abandonment of diligent
efforts to recover such property, if earlier); (t) the 61st day following the
date of any destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use; (u) the date of any insurance
settlement on the basis of a total loss or constructive or compromised total
loss; (v) the date of any condemnation, confiscation, seizure or requisition
of title of such property; (w) the 181st day following condemnation,
confiscation, seizure or requisition for use of such property by a foreign
government referred to in clause (iii)(2)(A) above (or the end of the Term or
the date of any insurance settlement described therein, if earlier than such
181st day); (x) the last day of the Term in the case of requisition for use of
such property by the Government; (y) the last day of the 12 month or 24 month
period, referred to in clause (iv) above (or if earlier, the end of the Term
or abandonment of the Lessee's efforts to restore the normal use of the
Aircraft). An Event of Loss with respect to the Aircraft shall be deemed to
have occurred if any Event of Loss occurs with respect to the Airframe.
Excepted Payments. Collectively, (i) indemnity, expense,
reimbursement or other payments paid or payable by the Lessee in respect of
the Owner Participant, the Owner Trustee in its individual capacity or any of
their respective successors, permitted assigns, directors, officers,
employees, servants and agents or Affiliates, pursuant to the Participation
Agreement or any other Operative Agreement or any indemnity hereafter granted
to the Owner Participant or the Owner Trustee in its individual capacity
pursuant to the Lease or the Participation Agreement, (ii) proceeds of public
liability insurance (or government indemnities in lieu thereof) in respect of
the Aircraft payable as a result of insurance claims paid for the benefit of,
or losses suffered by, the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by the Owner Participant, or their
respective successors, permitted assigns or Affiliates, (iii) proceeds of
insurance maintained with respect to the Aircraft by the Owner Participant
(whether directly or through the Owner Trustee) maintained in accordance with
Section 13.05 of the Lease but not required under Article 13 of the Lease,
(iv) payments of Supplemental Rent by the Lessee in respect of any amounts
payable under the Tax Indemnity Agreement, (v) any purchase price paid to the
Owner Participant for its interest in the Trust Estate pursuant to Section
7.03(d) of the Participation Agreement, (vi) subject to Section 3.05 of the
Lease, payments constituting increases in Basic Rent attributable to payments
arising pursuant to Section 5 of the Tax Indemnity Agreement, (vii) any
payments in respect of interest to the extent attributable to payments
referred to in clauses (i) through (vi) above and (viii) any right to demand,
collect or otherwise receive and enforce the payment of any amount described
in clauses (i) through (v) and (vii) above (except with respect to interest
attributable to payments referred to in clause (vi) above).
Expense; Expenses. Have the meaning specified in Section 9.01(a) of
the Participation Agreement.
FAA. The United States Federal Aviation Administration and any
successor agency or agencies thereto.
Fair Market Renewal Term. A term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the second paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and equal
in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease and Fair Market Rental shall be determined
in accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and equal in
amount to, the value which would be obtained in an arm's-length transaction
between an informed and willing purchaser under no compulsion to buy and an
informed and willing seller unaffiliated with such purchaser and under no
compulsion to sell, assuming the Aircraft (or other property) is unencumbered
by the Lease. In such determination, except for purposes of Section 17.01 of
the Lease (when it shall be determined based upon the actual condition and
location of the Aircraft), it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease and Fair Market Value shall be determined
in accordance with the provisions of Section 4.03 of the Lease.
Federal Aviation Administration. The United States Federal Aviation
Administration and any successor agency or agencies thereto.
FedEx. Federal Express Corporation.
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 lesser of (i) Fair Market Rental as determined as of
the commencement of such Fixed Renewal Term and (ii) 50% of the average actual
semi-annual Basic Rent payable during the Basic Term.
Fixed Renewal Term. The term with respect to which the Lessee has
exercised its option to renew the Lease pursuant to the first paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
FPO Price. Has the meaning set forth in Section 4.02(a)(F) of the
Lease.
French Pledge Agreement. The French Pledge Agreement dated as of June
1, 1998, between the Owner Trustee and the Indenture Trustee.
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 Agent (to the extent set forth in Articles 8 and 9 of
the Original Participation Agreement), the Subordination Agent, in its
individual capacity and in its capacity as Subordination Agent, each Liquidity
Provider, the Owner Participant, the Original Loan Participant (to the extent
set forth in Articles 8 and 9 of the Original Participation Agreement), the
Indenture Trustee, in its individual capacity and as trustee, the Owner
Participant Guarantor, and any successor (including any trustee which may
succeed to the Lessor's interest under the Lease), Affiliate, assign, officer,
director, employee, agent and servant of any of the foregoing, the Lessor's
Estate and the Trust Indenture Estate. 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. N675FE), dated as of June 1, 1998, as amended
and restated as of June 15, 1998, between the Lessor and the Indenture
Trustee, as supplemented by the Indenture and Security Agreement Supplement.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N675FE), dated June 18, 1998, 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 imposed against
the Indenture Trustee in its individual capacity in respect of which the Lessee
has not indemnified (and is not obligated to indemnify) the Indenture Trustee
in such capacity.
Independent Appraisal. An appraisal conducted pursuant to Section
4.03 of the Lease.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent
in fact, does not have any direct financial interests, or any material
indirect financial interest, in the Lessee or any Affiliate of the Lessee, and
is not connected with the Lessee or any Affiliate of the Lessee, as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall
not have received written notice of such an appointment at least 10 days prior
to the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Intercreditor Agreement. The Intercreditor Agreement dated as of
June 15, 1998, 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.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N675FE) dated as of June 1, 1998, as amended and restated as of June 15, 1998,
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. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N675FE), dated June 18, 1998, substantially in the form
of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and ending at
the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation.
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 Aircraft, the Lease, any Lease Supplement, the
Participation Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of
Sale, the Airbus Guaranty, the Purchase Agreement, the Purchase Agreement
Assignment, the Consent and Agreement, the AVSA Consent and Agreement, the
Consent and Guaranty (to the extent assigned by the Purchase Agreement
Assignment), any Ancillary Agreement, the GTA, the Engine Warranty Assignment,
the Engine Consent, any warranty with respect to the Airframe and the Engines,
all amounts of Basic Rent and Supplemental Rent, including without limitation,
insurance proceeds (other than insurance proceeds payable to or for the
benefit of the Owner Trustee in its individual capacity, the Owner
Participant, the Original Loan Participants or any other Holder 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 the Original Loan Participants or any other Holder, or to any
of their respective directors, officers, employees and agents pursuant to
Articles 8 and 9 of the Participation Agreement), and all other property of
the Owner Trustee purportedly subjected to the Lien of the Indenture by the
Granting Clause thereof; provided that in no event shall "Lessor's Estate"
include any Excepted Payment.
Lessor's Liens. Liens 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, and, in the case of the Lessor in its individual
capacity, arising from its gross negligence or willful misconduct or expressly
prohibited under the Operative Agreements and any act or omission of the Owner
Participant which is in violation of any of the terms of the Operative
Agreements, (iii) Taxes or Expenses imposed against the Lessor, in its
individual capacity or as Owner Trustee, the Owner Participant, Lessor's
Estate or the trust created by the Trust Agreement which are not required to
be indemnified against by the Lessee pursuant to the Participation Agreement
by reason of Section 8.01(b) or 9.01(b) thereof and which are not required to
be indemnified against by the Lessee pursuant to the Tax Indemnity Agreement,
or (iv) claims against the Lessor or the Owner Participant arising from the
voluntary transfer by the Lessor or the Owner Participant of its interests in
the Aircraft other than a transfer of the Aircraft pursuant to Section 4.02(a)
or Article 10 or 11 of the Lease and other than a transfer pursuant to the
exercise of the remedies set forth in Article 17 of the Lease.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Liquidity Facility. Has the meaning specified in Section 1.1 of the
Intercreditor Agreement.
Liquidity Provider. Kreditanstalt fur Wiederaufbau, a corporation
organized under the public law of the Federal Republic of Germany together
with any Replacement Liquidity Provider (as defined in 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 or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii) the
Lessee or (iii) any Affiliate of any thereof.
Make-Whole Premium. With respect to any Certificate, the amount (as
determined by an Independent Investment Banker reasonably acceptable to the
Indenture Trustee and the Owner Participant) by which (i) the present value of
the remaining scheduled payments of principal and interest to the Maturity of
such Certificate computed by discounting such payments on a semiannual basis
on each Payment Date (assuming a 360-day year of twelve 30-day months) using a
discount rate equal to the Treasury Yield exceeds (ii) the outstanding
principal amount of such Certificate plus accrued interest.
Manufacturer. Airbus Industrie G.I.E., a groupement d'interet
economique formed under the laws of France.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Moody's. Moody's Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate equal to the Debt Rate per annum compounded semi-annually.
Non-U.S. Person. Any Person other than a U.S. Person.
Obsolete Parts. Parts which are severable from the Aircraft in
accordance with clauses (ii) and (iii) of the proviso to Section 9.02(b) of
the Lease and the Lessee in good faith determines to be obsolete or no longer
suitable or appropriate for use on the Airframe or any Engine.
Officer's Certificate. When delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each
such certificate shall include the statements provided for in Section 15.07 of
the Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, AVSA's FAA Bill of Sale, AVSA's Warranty Bill of Sale, the Airbus
Guaranty, the Purchase Agreement, the Purchase Agreement Assignment, the GTA,
the Engine Warranty Assignment, the French Pledge Agreement, the Lease, the
Lease Supplement, the Owner Participant Guaranty, the Owner Trustee Guaranty,
any Ancillary Agreement entered into by or with the written consent of the
Indenture Trustee, which by its terms is an Operative Agreement, the
Certificates outstanding at the time of reference, the Indenture, the
Indenture and Security Agreement Supplement, the Consent and Agreement, the
AVSA Consent and Agreement, the Consent and Guaranty (to the extent assigned
by the Purchase Agreement Assignment), the Engine Consent, the Tax Indemnity
Agreement, any Assignment and Assumption Agreement, each Liquidity Facility
and the Intercreditor 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
Delivery Date in connection with the transactions contemplated by the Original
Participation Agreement.
Original Ancillary Agreement I. The Ancillary Agreement I (Federal
Express Corporation Trust No. N675FE), dated the Delivery Date, among the
Lessee, the Owner Participant, the Indenture Trustee and the Owner Trustee as
it was originally executed on June 18, 1998.
Original Indenture. The Trust Indenture, Mortgage and Security
Agreement (Federal Express Corporation Trust No. N675FE), dated as of June 1,
1998, between the Owner Trustee and the Indenture Trustee, which together with
the Indenture and Security Agreement Supplement No. 1 (Federal Express
Corporation Trust No. N675FE), dated June 18, 1998 attached thereto was
recorded as one instrument by the FAA on June 22, 1998 and assigned Conveyance
Number BB27401.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N675FE), dated as of June 1, 1998, between the Owner Trustee as
lessor, and the Lessee, which together with Lease Supplement No. 1 (Federal
Express Corporation Trust No. N675FE), dated June 18, 1998 attached thereto
was recorded as one instrument by the FAA on June 22, 1998 and assigned
Conveyance Number BB27402.
Original Loan Certificates. The loan certificates issued on the
Delivery Date to the Original Loan Participant.
Original Loan Participant. The entity listed on Schedule I to the
Original Participation Agreement and its successors and assigns (other than
any assignees in connection with the Refunding Date).
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N675FE), dated as of June 1, 1998,
among the Lessee, the Owner Participant, the Indenture Trustee, the Owner
Trustee and the Original Loan Participant as it was originally executed on
June 18, 1998.
Original Tax Indemnity Agreement. The Tax Indemnity Agreement
(Federal Express Corporation Trust No. N675FE), dated as of June 1, 1998,
between the Lessee and the Owner Participant as it was originally executed on
June 18, 1998.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N675FE), dated as of June 1, 1998, between the Owner
Participant and the Owner Trustee as it was originally executed and filed with
the FAA on June 18, 1998.
Outstanding. When used with respect to Certificates, as of the date
of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary amount
has been theretofore deposited with the Indenture Trustee in trust
for the Holders of such Certificates pursuant to Section 14.01 of the
Indenture; provided, that if such Certificates are to be prepaid,
notice of such prepayment has been duly given pursuant to the
Indenture or provision therefor satisfactory to the Indenture Trustee
has been made; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article II
of the Indenture.
Owner Participant. The trustor originally named in the Trust
Agreement and any successor thereto, and any Person to which the Owner
Participant transfers, in accordance with the Trust Agreement, its right,
title and interest in and to the Operative Agreements and the Lessor's Estate.
Owner Participant Guarantor. Philip Morris Capital Corporation, a
Delaware corporation, and any other provider of an Owner Participant Guaranty.
Owner Participant Guaranty. The Owner Participant Guaranty dated the
Delivery Date, as amended and restated as of the Refunding Date, by the Owner
Participant Guarantor in favor of the Lessee, the Owner Trustee, the Indenture
Trustee and the Pass Through Trustee, and any 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. State Street Bank and Trust Company, a
Massachusetts trust company, and any other provider of an Owner Trustee
Guaranty.
Owner Trustee Guaranty. The Owner Trustee Guaranty dated the Delivery
Date, as amended and restated as of the Refunding Date, by the Owner Trustee
Guarantor in favor of the Lessee, the Owner Participant, the Indenture Trustee
and the Pass Through Trustee, and any guaranty delivered in compliance with
Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax book yield and aggregate after-tax cash during the Basic Term
utilizing the multiple investment sinking fund method of analysis, computed on
the basis of the same methodology and assumptions as were utilized by the
Owner Participant in determining Basic Rent, Stipulated Loss Value and
Termination Value percentages, as the case may be, as such assumptions may be
adjusted for events which have been the basis of adjustments to Rent pursuant
to Section 3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal Express
Corporation Trust No. N675FE), dated as of June 1, 1998, as amended and
restated as of June 15, 1998, among the Lessee, the Original Loan Participant,
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 title to which
remains vested in the Lessor pursuant to Article 8 of the Lease.
Pass Through Agreement. The Pass Through Trust Agreement dated as of
May 1, 1997, between the Lessee and the Pass Through Trustee.
Pass Through Certificates. Any of the Pass Through Certificates,
1998-1-A, the Pass Through Certificates, 1998-1-B or the Pass Through
Certificates, 1998-1-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. The Business Day on which the sale of the
Pass Through Certificates to the Underwriters pursuant to the Underwriting
Agreement takes place.
Pass Through Trust. The Federal Express Corporation 1998-1 Pass
Through Trust Class A, Federal Express Corporation 1998-1 Pass Through Trust
Class B and Federal Express Corporation 1998-1 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 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due
(whether at Maturity, by acceleration, by optional or mandatory prepayment or
otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to (i) in the
case of any such amount payable to the Holder of any Certificate, 2% plus the
interest rate applicable to such Certificate and (ii) in the case of any other
such amount, 2% plus the Debt Rate.
Payment Date. Each January 15 and July 15 commencing on January 15,
1999.
Payment Default. Any event specified in Section 16.01(a) or 16.01(b)
of the Lease which with the giving of notice or lapse of time or both would
constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local,
foreign or any agency, instrumentality, division or body thereof).
Preliminary Notice. Has the meaning specified in Section 4.01(a) of
the Lease.
Premium Termination Date. With respect to the Series A Certificates,
the scheduled maturity date of the Series A Certificates, with respect to the
Series B Certificates, the scheduled maturity date of the Series B
Certificates and with respect to the Series C Certificates, the scheduled
maturity date of the Series C Certificates.
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.
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 Agreement. The Airbus A300-600R Freighter Purchase Agreement,
dated as of July 3, 1991 between AVSA and the Lessee, including all exhibits,
appendices and letter agreements attached thereto as originally executed or as
modified, amended or supplemented in accordance with the terms thereof, but
only to the extent that the foregoing relates to the Aircraft and to the
extent assigned pursuant to the Purchase Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N675FE), dated as of June 15, 1998,
between the Lessor and the Lessee.
Purchase Price. Has the meaning specified in Ancillary Agreement II.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), 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.
Refunding Date. A Business Day on which the refunding of the
Original Loan Certificates occurs, the expected date thereof having been
specified by the Lessee in a written notice given to the parties to the
Participation Agreement and the Underwriters at least three (3) Business Days
prior to such expected Refunding Date.
Register. Has the meaning set forth in Section 3.02 of the Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Regulation D. Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
Regulatory Change. Any change after June 18, 1998 in Federal, state
or foreign law or regulations or the adoption or making after such date of any
interpretation, directive or request applying to a class of financial
institutions including any Certificate Holder of or under any Federal, state
or foreign law or regulation (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.
Related Indentures. Collectively, the Trust Indenture and Security
Agreement for each of Federal Express Corporation Trust Nos. N676FE, N677FE,
N678FE, N679FE, N680FE, N681FE, N682FE, N585FE, N620FE, N621FE and N623FE,
each dated as of June 15, 1998, between the State Street Bank and Trust
Company of Connecticut, National Association, as owner trustee and First
Security Bank, National Association, as indenture trustee, and the Trust
Indenture and Security Agreement for Federal Express Corporation Trust No.
N590FE, dated as of May 1, 1998, as amended and restated as of June 15, 1998,
between the State Street Bank and Trust Company of Connecticut, National
Association, as owner trustee and First Security Bank, National Association,
as indenture trustee.
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. July 7, 1998, September 18, 2021 and each January
15 and July 15 commencing on July 15, 1998.
Reoptimization Date. Has the meaning specified in Section 15.02(a)
of the Participation Agreement.
Replacement Aircraft. Any aircraft substituted for the Aircraft
pursuant to Section 11.03(a) of the Lease.
Replacement Airframe. Has the meaning set forth in Section 11.03 of
the Lease.
Replacement Engine. A General Electric CF6-80C2-A5F engine (or an
engine of the same or another manufacturer) of equal or greater value,
airworthiness, remaining useful life and utility as the Engine being replaced,
together with all Parts relating to such engine; provided, however, that if
such replacement engine is not a General Electric CF6-80C2-A5F engine, such
replacement engine must then be commonly used in the commercial aviation
industry on Airbus A300-600 airframes.
Responsible Officer. With respect to the Owner Trustee (except for
purposes of the Trust Agreement in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Department, as the case
may be, designated by such Person to perform obligations under the Operative
Agreements, and with respect to any other party, any corporate officer or
(except in the case of the Owner Participant) other employee of a party who,
in the normal performance of his or her operational responsibilities, with
respect to the subject matter of any covenant, agreement or obligation of such
party pursuant to any Operative Agreement, would have responsibility for and
knowledge of such matter and the requirements of any Operative Agreement with
respect thereto.
S&P. Standard & Poor's Ratings Group.
SEC. The Securities and Exchange Commission of the United States and
any successor agencies or authorities.
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 Supplement or Series Supplements. The Series Supplement
1998-1-A to be executed and delivered by the Lessee and the Pass Through
Trustee, the Series Supplement 1998-1-B to be executed and delivered by the
Lessee and the Pass Through Trustee or the Series Supplement 1998-1-C to be
executed and delivered by 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.
SSB. State Street Bank and Trust Company of Connecticut, National
Association, a national banking association or any successor Owner Trustee in
its individual capacity.
Stipulated Loss Value. As of any Stipulated Loss Value Determination
Date during the Basic Term, the amount determined by multiplying the Purchase
Price by the percentage set forth in Schedule III of the Lease under the
heading "Stipulated Loss Value Factor" opposite such date (as such Schedule
III may be adjusted from time to time as provided in Section 3.04 of the
Lease), and during any Renewal Term, the amount determined pursuant to Section
4.01(b) of the Lease. Notwithstanding any other provisions of the Lease or
the Participation Agreement or the Indenture, each Stipulated Loss Value for
the Aircraft shall be, under any circumstances and in any event, an amount,
together with so much of the arrears portion of Basic Rent due and owing
through the date of payment of Stipulated Loss Value as does not constitute an
Excepted Payment, at least sufficient to pay in full as of such date of
payment the aggregate unpaid principal amount of and accrued interest on the
Certificates outstanding on such date of payment. Subject to the immediately
preceding sentence, it is understood and agreed that the amounts set forth on
Schedule III of the Lease, for dates other than Rent Payment Dates on which
arrears Basic Rent is due, fully reflect appropriate Basic Rent accruals and
credits of unearned Basic Rent through such date and, accordingly, no further
accrual or credit shall be required through such date whenever Stipulated Loss
Value is to be calculated with reference to any such date; provided that if
amounts in respect of Stipulated Loss Value are payable under the Operative
Agreements after the Stipulated Loss Determination Date in respect of which
such Stipulated Loss Value was determined, the Lessor shall be compensated
during the period from the Stipulated Loss Determination Date to such payment
date in accordance with the provisions of the Operative Agreements.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease.
Subordination Agent. First Security Bank, National Association, a
national banking association, not in its individual capacity but solely as
Subordination Agent.
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 the Lessor, the Owner
Participant, the Indenture Trustee, the Subordination Agent, any Liquidity
Provider or others, including, without limitation, payments of Stipulated Loss
Value, FPO Price and amounts calculated by reference to Termination Value, any
amounts of Make-Whole Premium payable under the Indenture to the extent
provided in Section 3.03 of the Lease, and all amounts required to be paid by
Lessee under the agreements, covenants and indemnities contained in the Lease
or in the Participation Agreement or the Tax Indemnity Agreement or any other
Operative Agreement, but excluding Basic Rent 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. Has the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Original Tax Indemnity Agreement as
amended by Amendment No. 1 to the Original Tax Indemnity Agreement.
Term. The Basic Term of the lease for the Aircraft under the Lease
and, if renewed pursuant to Section 4.01 of the Lease, each Renewal Term for
the Aircraft for which the Lease is renewed, or such earlier date on which the
Lease is terminated pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that is
on or after December 31, 2005 in the case of Article 10 of the Lease, and in
the case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date falling
on July 15, 2016, (ii) Section 4.02(a)(D) or (E) of the Lease, a Rent Payment
Date that is on or after the seventh anniversary of the Delivery Date and
(iii) Section 4.02(a)(F) of the Lease, the last day of the Basic Term.
Termination Value. As of any Termination Date, the amount determined
by multiplying the Purchase Price by the percentage set forth in Schedule IV
of the Lease under the heading "Termination Value Factor" opposite such
Termination Date (as such Schedule IV may be adjusted from time to time as
provided in Section 3.04 of the Lease). Notwithstanding any other provisions
of the Lease, the Participation Agreement or the Indenture, each Termination
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of any amount calculated by reference to Termination Value as
does not constitute an Excepted Payment, at least sufficient to pay in full as
of such date of payment the aggregate unpaid principal amount of and accrued
interest on the Certificates outstanding on such date of payment. Subject to
the immediately preceding sentence, it is understood and agreed that the
amounts set forth on Schedule IV of the Lease, for dates other than Rent
Payment Dates on which arrears Basic Rent is due, fully reflect appropriate
Basic Rent accruals and credits of unearned Basic Rent through such date and,
accordingly, no further accrual or credit shall be required through such date
whenever Termination Value is to be calculated with reference to any such
date; provided that if amounts in respect of Termination Value are payable
under the Operative Agreements after the Termination Date in respect of which
such Termination Value was determined, the Lessor shall be compensated during
the period from the Termination Date to such payment date in accordance with
the provisions of the Operative Agreements.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Transportation Code. Title 49 of the United States Code, as amended
and in effect on the date of the Lease or as subsequently amended, or any
successor or substituted legislation at the time in effect and applicable, and
the regulations promulgated pursuant thereto.
Treasury Yield. 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. N675FE), dated as of June 1, 1998, as amended and restated as of
June 15, 1998, 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.
UCC. Uniform Commercial Code.
Underwriters. Morgan Stanley & Co. Incorporated, Chase Securities
Inc., Citicorp Securities, Inc., Credit Suisse First Boston Corporation and
J.P. Morgan Securities Inc.
Underwriting Agreement. The Underwriting Agreement dated June 30,
1998, among the Lessee and the Underwriters.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which there is
in force a certificate issued pursuant to Section 41102(a) or Section 41103 of
the Transportation Code, and as to which there is in force an air carrier
operating certificate issued pursuant to Chapter 447 of the Transportation
Code and Part 121 of the regulations under such Transportation Code, for
aircraft capable of carrying ten (10) or more individuals or 6,000 pounds or
more of cargo, or which may operate as an air carrier by certification or
otherwise under any successor or substitute provision thereof or in absence
thereof.
U.S. Person. A Person described in Section 7701(a)(30) of the Code.
SCHEDULE III
PERMITTED COUNTRY LIST
Australia Netherlands
Austria New Zealand
Belgium Norway
Canada Philippines
Denmark Portugal
Finland Republic of China (Taiwan)
France Singapore
Germany Sweden
Greece Switzerland
Iceland Thailand
Ireland United Kingdom
Japan
Luxembourg
EXHIBIT A(1)(a)
[Letterhead of Federal Express]
[Refunding Date]
To the Addressees Listed on Schedule A Attached
Re: Federal Express Corporation Trust No. N675FE
Ladies and Gentlemen:
I am the Senior Vice President and General Counsel of Federal Express
Corporation, a Delaware corporation ("Federal"), and am familiar with the
transactions contemplated by the Participation Agreement (Federal Express
Corporation Trust No. N675FE), dated as of June 1, 1998, as amended and
restated as of June 15, 1998 (the "Participation Agreement"), among Federal,
as Lessee, PMCC Leasing Corporation, as Owner Participant, Morgan Guaranty
Trust Company of New York, as Original Loan 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(l)(i) 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
refinancing in full of the Original Loan Certificates evidencing the Original
Loan Participants' participation in the payment of the Purchase Price of one
Airbus A300F4-605R aircraft (the "Aircraft"), using the proceeds from the
public offering of the Pass Through Certificates. Three Classes of Pass
Through Certificates will be 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 will be 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, the Pass Through Agreement and each Series
Supplement (the "Transaction Agreements"). We have relied upon originals or
copies, certified or otherwise identified to our satisfaction, of such
corporate records, documents and other instruments as in our judgment are
relevant to rendering the opinions expressed below. As to any facts material
to the opinions expressed below (other than any thereof relating to Federal),
we have relied upon the representations and warranties made in the Transaction
Agreements, the accuracy of which we have not independently investigated or
verified. In such examination, we have assumed the genuineness of all
signatures (other than the signatures of Federal) and the authenticity of all
documents submitted to us as originals and the conformity with the originals of
all documents submitted to us as copies. We have also assumed that each of the
parties to each of the Transaction Agreements, other than Federal, has full
power, authority and legal right to enter into such Transaction Agreements and
that each such Transaction Agreement has been duly authorized, executed and
delivered by each of such parties.
Based on the foregoing, it is my opinion that:
1. Federal is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, is a "citizen of
the United States" within the meaning of Section 40102(a)(15) of the
Transportation Code, and has or had, on the date of execution thereof, the
corporate power and authority to carry on its business as currently conducted
and to enter into and perform its obligations under the Transaction Agreements
to which it is a party. Federal is duly qualified to do business and is in
good standing in the State of Tennessee and each other state of the United
States in which its operations or the nature of its business requires Federal
to so qualify, except where the failure to so qualify would not have a
material adverse impact on Federal or its business.
2. Federal possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents which are material to
the operation of the routes flown by it and the conduct of its business and
operations as currently conducted, and each such certificate, franchise,
license, permit, right and concession and consent is in full force and effect.
3. Each of the Transaction Agreements to which Federal is a party
has or had, on the date of execution thereof, been duly authorized, executed
and delivered by Federal and each constitutes the legal, valid and binding
obligation of Federal enforceable against Federal in accordance with its terms.
4. Neither the execution and delivery by Federal of the Transaction
Agreements to which Federal is a party, nor the consummation of any of the
transactions by Federal contemplated thereby, nor the performance of the
obligations thereunder by Federal, did at the time of execution and delivery,
or does presently (a) require any stockholder approval or violate the
certificate of incorporation or by-laws of Federal or (b) conflict with or
contravene the provisions of, or constitute a default under, or result in the
creation of any Lien (other than Liens permitted under Section 6.01(a) of the
Lease) upon the property of Federal under any law, governmental rule or
regulation, or the charter or bylaws of Federal or any order, writ, injunction
or decree of any court or governmental authority against Federal or by which
any of its properties may be bound or any indenture, mortgage, contract or
other agreement known to me to which Federal is a party or by which it may be
bound or, require the approval or consent of any trustee or the holders of any
indebtedness or obligations of Federal.
5. Neither the execution and delivery by Federal of the Transaction
Agreements to which it is a party, nor the consummation of any transactions by
Federal contemplated thereby, nor the performance of the obligations
thereunder by Federal, did or does, as the case may be, (a) require the
consent or approval of, the giving of notice to, or (except as described or
contemplated in the Participation Agreement and the Lease, all of which were
or are required to be performed on or prior to the Refunding Date and which
were or shall have been accomplished on or prior to the Refunding Date) the
registration with, or the taking of any other action in respect of, the
Aeronautics Authority, the Securities and Exchange Commission or any other
authority or agency of the federal government or of the State of Tennessee
other than (i) the registration of the issuance and sale of the Pass Through
Certificates under the Securities Act, (ii) compliance with the securities
laws of each applicable state and (iii) the 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 (as updated
by Note 7 to the financial statements included in Federal's Quarterly Reports
on Form 10-Q for the fiscal quarters ended August 31, 1997, November 30, 1997
and February 28, 1998), and (b) in Federal's Current Report on Form 8-K dated
June 11, 1997, as to all of 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 Transaction Agreements, or (ii) involves the Aircraft.
7. Except for the filing and, where appropriate, recording,
pursuant to the Transportation Code of the Lease, the Indenture, the Trust
Agreement, the filing of the financing statements referred to in Section
4.01(f) of the Participation Agreement and the taking of possession by the
Indenture Trustee of the original counterpart of the Lease and maintaining
possession of the original counterpart of the Lease Supplement delivered on
the Delivery Date, no further action, including any filing or recording of any
document is necessary or advisable in order to establish and perfect the Owner
Trustee's title to and interest in the Aircraft as against Federal and any
third parties, or to perfect the first mortgage lien on the Aircraft in favor
of the Indenture Trustee in each case with respect to such portion of the
Aircraft as is covered by the recording system established by the
Transportation Code.
8. Federal is a duly certificated "air carrier" within the meaning
of the Transportation Code, and a holder of a certificate under Sections
41102(a) and 41103 of the Transportation Code, and an "air carrier operating
certificate" issued under Chapter 447 of the Transportation Code for aircraft
capable of carrying ten (10) or more individuals or 6,000 pounds or more of
cargo, and each such certificate is in full force and effect.
9. On the Delivery Date the Owner Trustee received good and valid
title to the Aircraft free and clear of all liens on file with the FAA, except
for Liens permitted under Section 6.01(a) of the Lease. Pursuant to the
Original Participation Agreement the Aircraft was duly delivered to the Owner
Trustee. Federal, as Lessee, duly accepted the Aircraft under the Original
Lease and the Lease Supplement and the Term commenced on the Delivery Date.
10. Federal's principal place of business and chief executive
office (as such term is defined in the Uniform Commercial Code in effect in
the State of Tennessee) are located at 2005 Corporate Avenue, Memphis, Shelby
County, Tennessee.
11. Federal is not, and is not directly or indirectly controlled by
or acting on behalf of any Person which is, an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
The opinions expressed in paragraph 3 above as to the enforceability
of the Transaction Agreements to which Federal is a party are based upon the
assumption for purposes of such opinions and without independent analysis
that, notwithstanding the respective choice of laws clauses in the Transaction
Agreements, the governing law with respect to each of the Transaction
Agreements is identical in all relevant respects to the law of the State of
Tennessee. Insofar as the foregoing opinion relates to the enforceability of
any instrument, such enforceability is subject to applicable bankruptcy,
insolvency and other similar laws affecting the enforcement of creditors'
rights generally (whether such enforceability is considered in a proceeding in
equity or at law). The enforceability of the remedies provided under the
Lease may also be limited by applicable laws which may affect the remedies
provided therein but which do not in my opinion affect the validity of the
Lease or make such remedies inadequate for the practical realization of the
benefits intended to be provided thereby.
I do not express any opinion as to matters governed by any law other
than the Federal laws of the United States of America, the corporation law of
the State of Delaware and the laws of the State of Tennessee.
As to the matters referred to in paragraphs 5, 7 and 9, I have relied
on the opinion of Daugherty, Fowler & Peregrin of even date herewith, to the
extent such matters are addressed in such counsel's opinion and subject to the
assumptions and qualifications expressed therein.
This opinion is delivered to you solely for your use in connection
with the transaction described herein, and may not be used for any other
purpose, and may not be relied upon by any other person, without my prior
written consent.
I rendered an opinion dated June 18, 1998 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. I hereby consent and
agree that the addressees hereto who were not addressees to the Delivery Date
Opinion may rely on the Delivery Date Opinion as fully and with the same force
and effect as if such addressees were originally named therein on the date of
the Delivery Date Opinion.
Very truly yours,
SCHEDULE A
Owner Trustee
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
First Security Bank, National Association
Agent and Original Loan Participant
Morgan Guaranty Trust Company of New York
Owner Participant
PMCC Leasing Corporation
Owner Participant Guarantor
Philip Morris Capital Corporation
Underwriters
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
Kreditanstalt fur Wiederaufbau
EXHIBIT A(1)(b)
[Letterhead of Davis Polk & Wardwell]
[Refunding Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N675FE
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. N675FE), dated as of June 1, 1998, as amended and restated as of June 15,
1998 (the "Participation Agreement"), among Federal Express, as Lessee, PMCC
Leasing Corporation, as Owner Participant, Morgan Guaranty Trust Company of
New York, as Original Loan 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(l)(ii) of the Participation Agreement.
Capitalized terms not otherwise defined herein have the meanings assigned
thereto in the Participation Agreement.
Pursuant to the Original Participation Agreement, the Owner
Participant and the Original Loan Participant participated in the payment of
the Purchase Price of one Airbus A300F4-605R Aircraft which was purchased by
the Owner Trustee pursuant to AVSA's FAA Bill of Sale and AVSA's Warranty Bill
of Sale, subjected to the Lien of the Original Indenture and leased to Federal
Express under the Original Lease. The Participation Agreement provides, among
other things, for the refinancing of the Original Loan Certificates using the
proceeds from the public offering of the Pass Through Certificates. Three
Classes of Pass Through Certificates will be issued by three separate Pass
Through Trusts, each formed to acquire, among other securities, the
Certificates bearing a particular interest rate and having a particular
Maturity that will be issued under the Indenture.
In connection with the opinions expressed below, we have examined
executed counterparts of the Operative Agreements, the Pass Through
Certificates, the Pass Through Agreement and each Series Supplement (the
"Transaction Agreements"). We have also examined originals, or copies
certified to our satisfaction, of such other agreements, documents,
certificates and statements of governmental officials and corporate officers
as we have deemed necessary or advisable as a basis for such opinions. In
such examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity
with the originals of all documents submitted to us as copies.
As to any facts material to our opinions expressed below, we have,
with your consent, relied on the representations and warranties made in or
pursuant to the Participation Agreement and the other documents referred to
therein, the accuracy of which we have not independently verified. In
addition, we have, when relevant facts were not independently established by
us, relied, to the extent we deemed such reliance proper, upon certificates of
public officials and certificates, telegrams and other written or telephoned
statements of officers of the parties referred to herein.
Based on the foregoing, it is our opinion that:
1. With respect to that portion, if any, of the Aircraft and the
other property included in the Lessor's Estate as may not be covered by the
recording system established by the FAA pursuant to Section 44107 of the
Transportation Code, no filing or recording of any document or other action
was or is necessary in order to establish the Owner Trustee's title thereto
and interest therein as against Federal Express and any third parties.
2. The Lease creates a valid leasehold interest in the Aircraft,
the entitlement thereof to the benefits of recordation under the
Transportation Code being subject to the due and timely filing and, where
appropriate, recording of (A) the Lease (with the Indenture attached as an
exhibit), (B) the Indenture and (C) the Trust Agreement.
3. Assuming (i) the due authorization, execution and delivery of
the Transaction Agreements by each of the parties to each such document (other
than Federal Express), (ii) each such party has full power and legal right to
enter into and perform its respective obligations under the Transaction
Agreements, (iii) that the execution, delivery and performance by each of the
Transaction Agreements by each of the parties thereto will not violate the
respective parties' constituent documents, (iv) the due authorization,
execution, issuance and delivery by the Owner Trustee, and the due
authentication by the Indenture Trustee, of the Certificates to be issued
under the Indenture in accordance with the terms of the Indenture, (v) that
the Original Loan Certificate is delivered by the Original Loan Participant to
the Indenture Trustee for cancellation and is cancelled, (vi) the due
authorization, execution, issuance, delivery and authentication by the Pass
Through Trustee of the Pass Through Certificates to be issued under the Pass
Through Agreement and the Series Supplement relating to such Pass Through
Certificates, in each case in accordance with the terms of the Pass Through
Agreement and such Series Supplement, and (vii) that the form of each
Transaction Agreement is in compliance with all applicable laws and
governmental rules and regulations (other than the laws of the United States
and the State of New York), then: (A) to the extent governed by New York law,
each Transaction Agreement in form constitutes a legal, valid and binding
agreement of each party thereto enforceable against each such party in
accordance with its terms; (B) the Original Indenture created, and the
Indenture creates, for the benefit of the Holders, the security interest in
the Trust Indenture Estate that they purport to create; (C) the Certificates,
when issued to and acquired by the Pass Through Trustee, will be legal, valid
and binding obligations of the Owner Trustee enforceable against the Owner
Trustee in accordance with their terms and the terms of the Indenture and will
be entitled to the benefits of the Indenture, including the benefit of the
security interest created thereby; (D) the Pass Through Certificates, when
issued to and acquired by the Underwriters in accordance with the Underwriting
Agreement, will be legal, valid and binding obligations of the Pass Through
Trustee enforceable against the Pass Through Trustee in accordance with their
terms and will be entitled to the benefits of the Pass Through Agreement and
the Series Supplement relating thereto; and (E) the beneficial interest of the
Owner Participant under the Trust Agreement in and to the properties which are
part of the Trust Indenture Estate is subject, to the extent provided in the
Indenture, to the Lien of the Indenture in favor of the Holders. The opinions
set forth in this paragraph 3 are subject to the due filing and, where
appropriate, recording with the FAA of the documents referred to in paragraph
2 above.
4. (a) Each of the Transaction Agreements to which Federal Express
is a party has been duly authorized, executed and delivered by Federal Express.
(b) The execution, delivery and performance by Federal Express of
each of the Transaction Agreements to which Federal Express is a party do not,
or did not on the date of execution thereof, violate, and fully comply, or did
fully comply on the date of execution thereof, with, any laws and governmental
rules and regulations of the State of New York that may be applicable to
Federal Express. The opinion set forth in this paragraph 4(b) is rendered
without regard to the taking of any action or the conduct of any other
business by Federal Express in the State of New York other than the
transactions contemplated by the Transaction Agreements.
5. The execution, delivery and performance of the Participation
Agreement, the Trust Agreement, the Indenture and the Lease by the Owner
Trustee in its individual or trust capacity, as the case may be, and the
issuance, execution, delivery and performance of the Certificates by the Owner
Trustee in its trust capacity do not violate, and fully comply with, any laws
and governmental rules and regulations of the State of New York that may be
applicable to the Owner Trustee in its individual or trust capacity, as the
case may be. The opinion set forth in this paragraph 5 is rendered without
regard to the effect, if any, on such issuance (in the case of the
Certificates), execution, delivery or performance, of the taking of any
action, the conduct of any business or the exercise of any other powers by
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 Transaction Agreements. 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(f) of the Participation
Agreement), and the beneficial interest of the Owner Participant under the
Trust Agreement in and to such properties is subject, to the extent provided
in the Indenture, to the Lien of the Indenture in favor of the Holders of the
Certificates issued and to be issued under the Indenture.
7. The Indenture creates, as security for the Certificates duly
issued and to be issued under the Indenture, the first priority security
interest in the Aircraft it purports to create, the perfection and rank
thereof being subject to the registration with the FAA of the Aircraft in the
name of the Owner Trustee and the due filing and, where appropriate, recording
in accordance with the Transportation Code of the documents referred to in
paragraph 2 above. We express no opinion with respect to the status of any
security interest in any portion of the Aircraft which does not constitute an
"aircraft" or "aircraft engine", as defined in paragraphs (6) and (7) of
Section 40102(a) of the Transportation Code.
8. 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 or the Indenture under the Trust
Indenture Act of 1939, as amended.
10. The Indenture Trustee on behalf of the holders of the
Certificates will be entitled to the benefits of Section 1110 of the United
States Bankruptcy Code with respect to the Aircraft in the event of a case
under Chapter 11 of the United States Bankruptcy Code in which Federal Express
is a debtor. We note that a recent decision by the United States District
Court for the District of Colorado in connection with the Western Pacific
Airlines, Inc. bankruptcy suggests that the protections of Section 1110 become
unavailable to the lessor or security interest holder once the bankruptcy
trustee or debtor-in-possession, within the 60 day period following the date of
commencement of the reorganization proceedings, agrees to perform the debtor's
obligations that become due on or after such date and cures outstanding
defaults, with the result, among others, that the ability of a lessor or
security interest holder to exercise remedies based on a subsequent default
would be subject to the automatic stay. We believe that this holding is
erroneous because it is inconsistent with the overriding purpose of Section
1110 to protect lessors of, and creditors secured by, qualifying aircraft
against being stayed from exercising their rights while defaults under their
leases or financing agreements remain uncured.
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 Karen M. Clayborne, Senior Vice President and General Counsel
of Federal Express to be delivered to you and dated the date hereof, for
purposes of the matters covered thereby.
(b) We are qualified to practice law in the State of New York, and
we do not purport to be experts on, or to express any opinion herein
concerning, any laws other than the laws of the State of New York, the laws
of the United States and the General Corporation Law of the State of
Delaware. We express no opinion as to any matters involving aviation law.
(c) The opinion contained in paragraph 3(A) above as to
enforceability is subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity which may
affect the remedies provided in the agreements referred to in said
opinions, which laws and principles, however, do not in our opinion make
the remedies provided in said agreements inadequate for the practical
realization of the benefits of the security intended to be provided thereby.
(d) This opinion is rendered solely to you at Federal Express's
request in connection with the above matter. This opinion may not be
relied upon by you for any other purpose or relied upon by any other Person
without our prior written consent.
(e) We rendered an opinion dated June 18, 1998 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. We hereby consent
and agree that the addressees hereto who were not addressees to the
Delivery Date Opinion may rely on the Delivery Date Opinion as fully and
with the same force and effect as if such addressees were originally named
therein on the date of the Delivery Date Opinion.
Very truly yours,
SCHEDULE A
Lessee
Federal Express Corporation
Owner Trustee
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
First Security Bank, National Association
Agent and Original Loan Participant
Morgan Guaranty Trust Company of New York
Owner Participant
PMCC Leasing Corporation
Owner Participant Guarantor
Philip Morris Capital Corporation
Underwriters
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
Kreditanstalt fur Wiederaufbau
EXHIBIT A(2)(a)
[Letterhead of Simpson Thacher & Bartlett]
[Refunding Date]
To Each of the Addressees Listed in Schedule A Attached Hereto
Re: Federal Express Corporation Trust No. N675FE
Ladies and Gentlemen:
We have acted as special New York counsel for PMCC Leasing Corporation
("PMCC Leasing") and Philip Morris Capital Corporation ("PMCC") in connection
with the transactions contemplated by the Participation Agreement (Federal
Express Corporation Trust No. N675FE), dated as of June 1, 1998, as amended
and restated as of June 15, 1998 (the "Participation Agreement"), among
Federal Express Corporation, as lessee, State Street Bank and Trust Company of
Connecticut, National Association, not in its individual capacity, but solely
as owner trustee, PMCC Leasing, as owner participant, First Security Bank,
National Association, not in its individual capacity, but solely as indenture
trustee, First Security Bank, National Association, not in its individual
capacity, but solely as pass through trustee, First Security Bank, National
Association, not in its individual capacity, but solely as subordination agent,
and Morgan Guaranty Trust Company of New York, as loan participant. This
opinion is being furnished to you pursuant to Section 4.01(l)(iii) of the
Participation Agreement. Capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to them in the Participation
Agreement.
We have examined executed counterparts of the Participation Agreement,
Amendment No. 1 to the Tax Indemnity Agreement, Trust Agreement, Ancillary
Agreement I and Ancillary Agreement II (collectively, the "Owner Participant
Documents") and the Owner Participant Guaranty and we have made such other and
further investigations as we have deemed necessary or appropriate for purposes
of this opinion. In our examination we have assumed, with your permission,
and without independent investigation or inquiry, the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity to original documents of all documents submitted to us as
certified or photocopies and the authenticity of the originals of such latter
documents.
With your permission, we have further assumed that (i) the Owner
Participant Documents and the Owner Participant Guaranty have been duly
authorized, executed and delivered by each of the parties thereto, (ii) the
respective parties thereto have the power and authority to execute, deliver
and perform the Owner Participant Documents and the Owner Participant
Guaranty, (iii) the execution, delivery and performance of the Owner
Participant Documents and the Owner Participant Guaranty by the parties
thereto do not and will not violate the certificate of incorporation, by-laws
or other organizational documents of any such party or any bond, debenture,
note, mortgage, indenture, lease or other agreement or instrument to which any
such party is a party or by which any such party is bound and does and will
fully comply with all laws and regulations applicable to each such party and
(iv) the Owner Participant Documents and the Owner Participant Guaranty
constitute valid, legal and binding obligations of the parties thereto (other
than PMCC Leasing and PMCC), enforceable against such parties (other than PMCC
Leasing and PMCC) in accordance with their respective terms.
Based upon the foregoing, we are of the opinion that:
1. The Participation Agreement and the Amendment No. 1 to the Tax
Indemnity Agreement constitute valid and legally binding obligations of PMCC
Leasing enforceable against PMCC Leasing in accordance with their respective
terms, and the Owner Participant Guaranty constitutes a valid and legally
binding obligation of PMCC enforceable against PMCC in accordance with its
terms.
2. The execution and delivery by PMCC Leasing of the Owner Participant
Documents and the making of its investment thereby, and the execution and
delivery by PMCC of the Owner Participant Guaranty, do not result in any
violation of any Federal or New York statute or any order, rule or regulation
issued pursuant to New York or Federal statute by any New York or Federal
Court or governmental agency or body having jurisdiction over PMCC Leasing or
PMCC, as the case may be.
3. No consent, approval, authorization, order, registration or
qualification under any Federal or New York statute is required to be obtained
by PMCC Leasing for the execution and delivery by PMCC Leasing of the Owner
Participant Documents or the making of its investment thereby, or by PMCC for
the execution and delivery by PMCC of the Owner Participant Guaranty.
Our opinion in paragraph 1 is subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing.
We are members of the Bar of the State of New York and express no
opinion herein concerning any law other than the laws of the State of New York.
This opinion is rendered to you in connection with the above-described
transaction. This opinion may not be relied upon by you for any other
purpose, or relied upon by or furnished to any other person, firm or
corporation without our prior written consent, except that PMCC Leasing and
PMCC may furnish a copy of this opinion to a potential transferee or
participant of the interest of such entity or otherwise as required by a
governmental authority.
We rendered an opinion dated June 18, 1998 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. We hereby consent and
agree that the addressees hereto who were not addressees to the Delivery Date
Opinion may rely on the Delivery Date Opinion as fully and with the same force
and effect as if such addressees were originally named therein on the date of
the Delivery Date Opinion.
Very truly yours,
SCHEDULE A
Lessee
Federal Express Corporation
Owner Trustee
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
First Security Bank, National Association
Agent and Original Loan Participant
Morgan Guaranty Trust Company of New York
Owner Participant
PMCC Leasing Corporation
Owner Participant Guarantor
Philip Morris Capital Corporation
Underwriters
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
Kreditanstalt fur Wiederaufbau
EXHIBIT A(2)(b)
[Letterhead of PMCC Leasing Corporation]
[Refunding Date]
To Each of the Persons Listed on
Schedule A Hereto
Re: Federal Express Corporation Trust No. N675FE
Ladies and Gentlemen:
We have supervised corporate proceedings of Philip Morris Capital
Corporation, a Delaware corporation ("PMCC") and of PMCC Leasing Corporation, a
Delaware corporation (the "Owner Participant"), in connection with the Owner
Participant's participation in the transactions contemplated by that certain
Participation Agreement (Federal Express Corporation Trust No. N675FE), dated
as of June 1, 1998, as amended and restated as of June 15, 1998 (the
"Participation Agreement"), among the Owner Participant; Federal Express
Corporation as Lessee; First Security Bank, National Association, as Indenture
Trustee, Pass Through Trustee and Subordination Agent; State Street Bank and
Trust Company of Connecticut, National Association as Owner Trustee; and
Morgan Guaranty Trust Company of New York, as Original Loan Participant.
Capitalized terms used herein but not otherwise defined herein shall have the
respective meanings set forth in Schedule II to the Participation Agreement.
We have examined originals, or copies certified or otherwise
identified to our satisfaction of the Participation Agreement, Ancillary
Agreement I, Ancillary Agreement II, Amendment No. 1 to the Tax Indemnity
Agreement, the Trust Agreement and the Owner Participant Guaranty (each such
Participation Agreement, Ancillary Agreement I, Ancillary Agreement II,
Amendment No. 1 to the Tax Indemnity Agreement, Trust Agreement and Owner
Participant Guaranty to be hereafter referred to individually as an "Operative
Document" and collectively as the "Operative Documents"). We have also
examined such public records and such corporate documents, records and
instruments of PMCC and the Owner Participant as in our judgement are
necessary or appropriate to enable us to render the opinions expressed below.
In rendering such opinions, we have relied upon the representations and
warranties contained in or made pursuant to the Operative Documents, the
accuracy of which we have not independently verified, and have assumed the due
authorization, execution and delivery of all documents and instruments by all
parties thereto other than the Owner Participant and PMCC.
Based on the foregoing and subject to the qualifications and matters
of reliance set forth herein, we are of the opinion that:
1. Each of PMCC and the Owner Participant is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware, has full corporate power, authority and legal right to
execute and deliver the Operative Documents to which either of them is a
party and to fulfill and comply with the terms, conditions and other
provisions thereof.
2. The Operative Documents to which the Owner Participant is a party
have been duly authorized by all necessary corporate action on the part of
the Owner Participant, and have been duly executed and delivered by the
Owner Participant.
3. The Owner Participant Guaranty has been duly authorized by all
necessary corporate action on the part of PMCC, and has been duly executed
and delivered by PMCC.
4. No filing with, notice to or authorization or approval from any
governmental or public body or authority is required under the laws of the
State of New York, the laws of the United States of America, or the General
Corporation Law of the State of Delaware in connection with the execution,
delivery and performance by PMCC or the Owner Participant of the Operative
Documents to which either of them is party.
5. There are no actions, suits or proceedings (whether or not
purportedly on behalf of the Owner Participant) pending or, to my
knowledge, threatened against PMCC or the Owner Participant at law or in
equity which challenge the legality, validity or enforceability of such
Operative Documents.
6. Neither the execution and delivery of the Operative Documents to
which either PMCC or the Owner Participant is a party, the consummation of
the transactions therein contemplated nor the fulfillment of or compliance
with the terms, conditions and other provisions thereof will conflict with,
or result in any breach of, any of the terms, conditions or provisions of
(i) any law or regulation binding upon PMCC or the Owner Participant, (ii)
to our knowledge after due inquiry, any order, injunction or decree of any
court or governmental instrumentality binding upon PMCC or the Owner
Participant, (iii) the Certificate of Incorporation or Bylaws of PMCC or
the Owner Participant, or (iv) to our knowledge after due inquiry, any
bond, debenture, note, mortgage indenture or other agreement or instrument
providing for the issuance or guarantee of indebtedness for borrowed money
to which the Owner Participant or PMCC is now a party or by which the
property of the Owner Participant or PMCC may be bound.
We are admitted to and are members in good standing of the bar of the
State of New York, and do not purport to be conversant with, or to express any
opinion herein concerning, the laws of any jurisdiction other than those of
the State of New York and the United States of America and the General
Corporation Law of the State of Delaware. In addition, we express no opinion
concerning (i) the laws of the State of New York, the United States of America
or any other jurisdiction applicable to the offering or sale of securities or
(ii) ERISA. Further, we have made no investigation and express no opinion, as
to any aviation law including, without limitation, the Federal Aviation Act of
1958, as amended, or other laws, statutes, rules or regulations applicable due
to the particular nature of the equipment subject to the Lease.
The opinion set forth above is given as of the date hereof and we
disavow any undertaking or obligation to advise you of any changes in law or
any facts or circumstances that may hereafter occur or come to our attention
that could affect such opinion. This opinion is solely for the benefit of the
addresses hereof and their respective successors and assigns for use in
connection with the transactions contemplated by the Operative Documents and
may not be relied upon by any other person or for any other purpose without
our express written consent. This opinion may be relied upon by Simpson,
Thacher & Bartlett in rendering their opinion of even date herewith.
We rendered an opinion dated June 18, 1998 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. We hereby consent and
agree that the addressees hereto who were not addressees to the Delivery Date
Opinion may rely on the Delivery Date Opinion as fully and with the same force
and effect as if such addressees were originally named therein on the date of
the Delivery Date Opinion.
Very truly yours,
SCHEDULE A
Lessee
Federal Express Corporation
Owner Trustee
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
First Security Bank, National Association
Agent and Original Loan Participant
Morgan Guaranty Trust Company of New York
Owner Participant
PMCC Leasing Corporation
Owner Participant Guarantor
Philip Morris Capital Corporation
Underwriters
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
Kreditanstalt fur Wiederaufbau
EXHIBIT A(3)
[Letterhead of Ray, Quinney & Nebeker]
[Refunding Date]
To the Persons Listed in Schedule A Attached Hereto
Re: Federal Express Corporation Trust No. N675FE
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.
N675FE), dated as of June 1, 1998, as amended and restated as of June 15, 1998
(the "Participation Agreement"), among Federal Express Corporation, as Lessee,
PMCC Leasing Corporation, as Owner Participant, Morgan Guaranty Trust Company
of New York, as Original Loan 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 Airbus A300F4-605R aircraft bearing U.S.
Registration No. N675FE (the "Aircraft") is being refinanced. This opinion is
furnished pursuant to Section 4.01(l)(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;
(d) The Ancillary Agreement II; and
(e) The Certificates.
(each of the documents identified in paragraphs (a) through (e) 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 or had, on the date of execution thereof,
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 Refunding
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 Refunding 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.
We rendered an opinion dated June 18, 1998 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. We hereby consent and
agree that the addressees hereto who were not addressees to the Delivery Date
Opinion may rely on the Delivery Date Opinion as fully and with the same force
and effect as if such addressees were originally named therein on the date of
the Delivery Date Opinion.
Very truly yours,
SCHEDULE A
Lessee
Federal Express Corporation
Owner Trustee
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
First Security Bank, National Association
Agent and Original Loan Participant
Morgan Guaranty Trust Company of New York
Owner Participant
PMCC Leasing Corporation
Owner Participant Guarantor
Philip Morris Capital Corporation
Underwriters
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
Kreditanstalt fur Wiederaufbau
EXHIBIT A(4)
[Letterhead of Bingham Dana LLP]
[Refunding Date]
To Each of the Parties Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N675FE
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. N675FE) dated as of June 1, 1998, as amended and restated as of June 15,
1998 between State Street and PMCC Leasing Corporation, as Owner Participant
("Owner Participant") (the "Trust Agreement") and to State Street Bank and
Trust Company (the "Parent Guarantor") in connection with the transactions
contemplated by that certain Participation Agreement (Federal Express
Corporation Trust No. N675FE) dated as of June 1, 1998, as amended and
restated as of June 15, 1998 (the "Participation Agreement") by and among
Federal Express Corporation, as Lessee (the "Lessee"); State Street, in its
individual capacity and Owner Trustee; the Owner Participant; First Security
Bank, National Association, in its individual capacity and as Indenture
Trustee (the "Indenture Trustee"), Pass Through Trustee and Subordination
Agent; and Morgan Guaranty Trust Company of New York, as Original Loan
Participant. 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 and the Parent Guarantor has requested that we
deliver this opinion to you in accordance with Section 4.01(l)(v) of the
Participation Agreement.
Our representation of State Street and the Parent Guarantor has been
as special counsel for the purposes stated above. As to all matters of fact
(including factual conclusions and characterizations and descriptions of
purpose, intention or other state of mind), we have relied entirely upon (i)
the representations of the parties set forth in the Operative Agreements and
(ii) the certificates delivered to us by the management of State Street and
the Parent Guarantor 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 and the
Massachusetts Commissioner of Banks relating to State Street and the Parent
Guarantor, respectively, the Owner Trustee Parent Guarantee of the Parent
Guarantor dated as of the date hereof (the "Guaranty") 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, the Owner Trustee and the Parent Guarantor), 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, the Owner Trustee and the
Parent Guarantor).
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, the Parent
Guarantor 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 of each other party thereto (except,
with respect to the Trust Agreement, the Owner Participant);
(ii) except as otherwise set forth in our opinions in
paragraphs 13 and 14 below, the enforceability of any obligation of State
Street, the Owner Trustee, the Parent Guarantor 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 in paragraphs 1 through 14 are limited solely
to the internal substantive laws of the State of Connecticut and the Federal
laws of the United States of America and the opinions expressed in paragraphs
15 through 19 are limited solely to the laws of the Commonwealth of
Massachusetts and the federal laws of the United States of America. No
opinion is expressed herein as to the application or effect of federal
securities laws or as to the securities or so-called "Blue Sky" laws of any
state or other jurisdiction. In addition, 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.
Except as set forth in paragraph 11 below, which opinion is based
solely upon our review of Uniform Commercial Code search reports conducted
with the Secretary of the State of the State of Connecticut, 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. 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 13 and 14 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 or had, on the date of execution
thereof, 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 Documents and to issue, execute,
deliver and perform its obligations under the Certificates.
2. State Street has or had, on the date of execution thereof, 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.
3. The Owner Trustee is duly authorized under the Trust Agreement to
execute, deliver and perform each of the Owner Trustee Documents and each
such Owner Trustee Document 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, 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.
4. 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.
5. 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, which filing has been duly effected,
and the filing of continuation statements with respect thereto required to
be filed at periodic intervals under the UCC.
6. The Trust Agreement duly creates a legal and valid trust under
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.
7. 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.
8. 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.
9. 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.
10. 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, (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.
11. On the Delivery Date, the Owner Trustee 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.
12. 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.
13. 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.
14. 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.
15. The Parent Guarantor is a Massachusetts trust company, duly
organized, existing and in good standing with the Commissioner of Banks of
the Commonwealth of Massachusetts under the laws of the Commonwealth of
Massachusetts.
16. The Parent Guarantor has full corporate power and authority to
enter into, deliver and perform its obligations under the Guaranty, and the
Guaranty has been duly authorized, executed and delivered by the Parent
Guarantor, is a legal, valid and binding obligation of the Parent Guarantor
and is enforceable against the Parent Guarantor in accordance with its
terms.
17. The execution and delivery of the Guaranty and compliance by the
Parent Guarantor with all of the provisions thereof do not and will not
contravene (a) any provisions of any requirement of law or of any rule or
regulation or any judgement or order known to us of any court or
governmental authority applicable to or binding on the Parent Guarantor or
any of its properties, (b) any contractual obligations of the Parent
Guarantor known to us, or (c) any of the provisions of its charter
documents or by-laws.
18. No consent or authorization of, notice to, filing or
registration with, or other act by or in respect of, any federal or
Massachusetts governmental authority and, to our knowledge, no consent of
any other person (including, without limitation, any stockholder or
creditor of the Parent Guarantor) is required in connection with the
execution, delivery, performance, validity or enforceability of the
Guaranty against the Parent Guarantor.
19. To our knowledge, there are no proceedings pending or threatened
against or affecting the Parent Guarantor in or before any court or by or
before any governmental authority, administrative agency, arbitration board
or tribunal which, individually or in the aggregate, if adversely
determined, would materially adversely affect the ability of the Parent
Guarantor to perform its obligations under the Guaranty.
We rendered an opinion dated June 18, 1998 (the "Delivery Date
Opinion"), a copy of which is attached hereto, in connection with the
financing and acquisition of the Aircraft on such date. We hereby consent and
agree that the addressees hereto who were not addressees to the Delivery Date
Opinion may rely on the Delivery Date Opinion as fully and with the same force
and effect as if such addressees were originally named therein on the date of
the Delivery Date Opinion.
Very truly yours,
SCHEDULE A
Lessee
Federal Express Corporation
Owner Trustee
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
First Security Bank, National Association
Agent and Original Loan Participant
Morgan Guaranty Trust Company of New York
Owner Participant
PMCC Leasing Corporation
Owner Participant Guarantor
Philip Morris Capital Corporation
Underwriters
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
Kreditanstalt fur Wiederaufbau
EXHIBIT A(5)
[Letterhead of Ray, Quinney & Nebeker]
[Refunding Date]
To the Persons Listed in Schedule A Attached Hereto
Re: Federal Express Corporation Trust No. N675FE
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 the
date hereof 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 1998-1-A, 1998-1-B and 1998-1-C,
respectively (the "Series Supplements") and the Participation Agreement
(Federal Express Corporation Trust No. N675FE), dated as of June 1, 1998, as
amended and restated as of June 15, 1998 (the "Participation Agreement"),
among Federal Express Corporation, as Lessee, PMCC Leasing Corporation, as
Owner Participant, Morgan Guaranty Trust Company of New York, as Original Loan
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
Airbus A300F4-605R aircraft bearing U.S. Registration No. N675FE (the
"Aircraft") is being refinanced. This opinion is furnished pursuant to
Section 4.01(l)(vi) of the Participation Agreement. Capitalized terms used
herein and not otherwise defined are used as defined in the Participation
Agreement, except that references herein to any instrument shall mean such
instrument as in effect on the date hereof.
We have examined executed counterparts or copies otherwise identified
to our satisfaction of the following documents:
(a) The 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) are being
collectively referred to as the "Pass Through Trustee Documents" and each of
the documents identified in paragraphs (d) through (f) 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 below, 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. 333-49411 (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 Refunding 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 Refunding
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 the Owner Participant, nor the
Owner Trustee, 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), governmental fee or other similar charge under the laws of
the State of Utah or any political subdivision thereof (other than taxes
imposed on the fees received by First Security 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),
governmental fee or other similar 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 Pass Through 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 Pass Through 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 Pass Through
Trustee, of the Pass Through 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 Pass
Through 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,
SCHEDULE A
Lessee
Federal Express Corporation
Owner Trustee
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
First Security Bank, National Association
Agent and Original Loan Participant
Morgan Guaranty Trust Company of New York
Owner Participant
PMCC Leasing Corporation
Owner Participant Guarantor
Philip Morris Capital Corporation
Underwriters
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
Kreditanstalt fur Wiederaufbau
EXHIBIT A(6)(a)
[Letterhead of Kreditanstalt fur Wiederaufbau]
[Refunding Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation 1998-1 Pass Through Trusts
Ladies and Gentlemen:
In my capacity as General Counsel of Kreditanstalt fur Wiederaufbau
("KfW") I am rendering this opinion in connection with (i) the Irrevocable
Revolving Credit Agreement Class A Pass Through Certificates, dated as of June
15, 1998 (the "Class A Liquidity Agreement"), between KfW and First Security
Bank, National Association, a national banking association, as Subordination
Agent under the Intercreditor Agreement (as defined below), and as agent and
trustee for the Federal Express Corporation 1998-1-A Pass Through Trust, (ii)
the Irrevocable Revolving Credit Agreement Class B Pass Through Certificates,
dated as of June 15, 1998 (the "Class B Liquidity Agreement" and, together
with the Class A Liquidity Agreement, the "Liquidity Agreements"), between KfW
and First Security Bank, National Association, a national banking association,
as Subordination Agent under the Intercreditor Agreement, and as agent and
trustee for the Federal Express Corporation 1998-1-B Pass Through Trust, and
(iii) the Intercreditor Agreement, dated as of June 15, 1998 (the
"Intercreditor Agreement"), among KfW, First Security Bank, National
Association, a national banking association, as Pass Through Trustee and as
Subordination Agent (the Liquidity Agreements and the Intercreditor Agreement
are hereinafter collectively referred to as the "Relevant Documents").
Capitalized terms herein which are undefined have the meanings
assigned thereto in the Relevant Documents.
For purposes of this legal opinion, I have examined a copy of each of
the Relevant Documents and such other certificates, documents, agreements and
instruments as I have deemed necessary as a basis for the opinions expressed
below.
In giving this opinion, I have assumed the genuineness of all
signatures, the authenticity of all agreements, certificates, instruments and
documents submitted to me as originals, and the conformity to the originals of
all agreements, certificates, instruments and documents submitted to me as
copies. As to questions of fact material to the opinions expressed below, I
have, when relevant facts were not independently established by me, examined
and relied upon representations of officers of KfW.
Based upon and subject to the foregoing examination and assumptions,
and subject to the qualifications set forth below, I am of the opinion that:
1. KfW is duly organized and validly existing as a corporation under
the public law of the Federal Republic of Germany and has full power and
authority (corporate and otherwise) to execute, deliver and perform the
Relevant Documents.
2. Mr. Scheer and Mr. Behler, acting together, are both duly
authorized by KfW to execute and deliver the Relevant Documents for and on
behalf of KfW.
3. The governing-law clause, subjecting the Relevant Documents to New
York law, is valid under German law.
(i) Under German law, New York law will be applied to an agreement,
such as the Relevant Documents, which under German law has been
validly subjected to New York law.
(ii) (a) None of the terms of the Relevant Documents is
irreconcilable with important principles of German law, and (b) there
are no mandatory provisions of German law which must be applied to
the transactions covered by the Relevant Documents.
4. No notice to or filing with, any governmental, administrative or
other authority or court of the Federal Republic of Germany is required for
the execution or delivery of the Relevant Documents by KfW or for the
performance by KfW of the Relevant Documents.
5. Assuming the validity under New York law of the Relevant
Documents:
(i) The Relevant Documents constitute legal, valid and binding
obligations of KfW enforceable against KfW in accordance with their
respective terms.
(ii) A judgment obtained against KfW in the courts of the State of
New York in any suit, action or proceeding arising out of the
Relevant Documents will be enforceable against KfW in the courts of
Germany without further litigation or examination on the merits of
such suit, action or proceeding, provided that conditions in terms
of Section 328 of the German Zivilprozsseordnung (Code of Civil
Procedure) - notably (a) if reciprocity is not guaranteed; (b) if
according to German law the foreign venue is improper, and if
procedural rules have not been observed by the court to the
disadvantage of the defendant; (c) if the judgment obtained is
irreconcilable with important principles of German law or would
conflict with German basic rights (see 3(ii) above) - do not bar the
judgment from recognition.
(iii) The obligations of KfW under the Relevant Documents rank at
least equal in priority of payment and in all other respects with its
obligations to pay any other unsecured and unsubordinated obligations
of KfW for borrowed money, including deposit liabilities, that are
not expressly preferred by law.
6. The waiver of immunity set forth in Section 7.11(c) of each of the
Liquidity Agreements and Section 10.11(c) of the Intercreditor Agreement is
valid under German law.
The foregoing opinions are subject to the following qualifications:
(i) The opinion in paragraph (5) with respect to enforceability is
subject to the effect of any bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws affecting creditors' rights
generally, applicable to KfW and to any law or general principle of
law from time to time in effect in the Federal Republic of Germany
that could be considered by the German Courts as a provision of
public policy.
(ii) No opinion is expressed with respect to the law of any
jurisdiction other than the laws of the Federal Republic of Germany.
This opinion is being furnished to you solely for your benefit in
connection with the transactions described above and may not be used,
circulated, quoted or otherwise referred to for any other purpose without my
express written consent.
Very truly yours,
SCHEDULE A
Lessee
Federal Express Corporation
Indenture Trustee, Pass Through Trustee & Subordination Agent
First Security Bank, National Association
Underwriters
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
EXHIBIT A(6)(b)
[Letterhead of Milbank, Tweed, Hadley & McCloy]
[Refunding Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation 1998-1 Pass Through Trusts
Ladies and Gentlemen:
We have acted as special New York counsel to Kreditanstalt fur
Wiederaufbau (herein called "KfW") in connection with the transactions
contemplated by (i) the Irrevocable Revolving Credit Agreement Class A Pass
Through Certificates, dated as of June 15, 1998 (the "Class A Liquidity
Agreement"), between KfW and First Security Bank, National Association, as
Subordination Agent under the Intercreditor Agreement, as defined below, as
agent and trustee for the Federal Express Corporation 1998-1-A Pass Through
Trust, (ii) the Irrevocable Revolving Credit Agreement Class B Pass Through
Certificates, dated as of June 15, 1998 (the "Class B Liquidity Agreement"
and, together with the Class A Liquidity Agreement, the "Liquidity
Agreements"), between KfW and First Security Bank, National Association, as
Subordination Agent under the Intercreditor Agreement, as defined below, as
agent and trustee for the Federal Express Corporation 1998-1-B Pass Through
Trust and (iii) the Intercreditor Agreement, dated as of June 15, 1998 (the
"Intercreditor Agreement" and, together with the Liquidity Agreements, the
"Relevant Documents"), among KfW and First Security Bank, National
Association, as Pass Through Trustee and as Subordination Agent. Capitalized
terms used herein but not otherwise defined herein shall have the meanings
provided in the Relevant Documents.
In rendering the opinion expressed below, we have examined the
Relevant Documents, the opinion dated the date hereof of Ruediger Sass,
General Counsel of KfW, and such other documents as we have deemed necessary.
In our examination, we have assumed the authenticity of all documents
submitted to us as originals and the conformity with authentic original
documents of all documents submitted to us as copies. When relevant facts
were not independently established, we have relied upon representations made
in or pursuant to the Relevant Documents.
In rendering the opinion expressed below, we have assumed, with
respect to each Relevant Document, that:
(i) it has been duly authorized by, has been duly executed and
delivered by, and (except to the extent set forth in the opinion
below as to KfW) constitutes legal, valid, binding and enforceable
obligations of all of the parties thereto;
(ii) all signatories thereto have been duly authorized; and
(iii) all of the parties thereto are duly organized and validly existing
and have the power and authority (corporate, partnership, trust or
otherwise) to execute, deliver and perform thereunder.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinion
expressed below, we are of the opinion that each Relevant Document constitutes
the legal, valid and binding obligation of KfW, enforceable against KfW in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or transfer or other similar
laws relating to or affecting the rights of creditors generally and except as
the enforceability of such Relevant Document is subject to the application of
general principles of equity (regardless of whether considered in a proceeding
in equity or at law), including, without limitation, (a) the possible
unavailability of specific performance, injunctive relief or any other
equitable remedy and (b) concepts of materiality, reasonableness, good faith
and fair dealing.
The foregoing opinion is subject to the following comments and
qualifications:
(A) The enforceability of provisions in the Relevant Documents to
the effect that terms may not be waived or modified except in writing
may be limited under certain circumstances.
(B) We express no opinion as to (i) the effect of the laws of any
jurisdiction in which KfW is located (other than New York) that limit
the interest, fees or other charges KfW may impose for the loan or use
of money or other credit, (ii) Section 7.11(a)(i) of each Liquidity
Agreement and Section 10.11(a)(i) of the Intercreditor Agreement,
insofar as such Sections relate to the subject matter jurisdiction of a
Federal court sitting in New York, New York to adjudicate any
controversy related to the Relevant Documents, (iii) the waiver of
inconvenient forum set forth in Section 7.11(a)(ii) of each Liquidity
Agreement and Section 10.11(a)(ii) of the Intercreditor Agreement with
respect to proceedings in a Federal court sitting in New York, New York
and a State court of the State of New York and (iv) the waiver of
immunity set forth in Section 7.11(c) of each Liquidity Agreement and
Section 10.11(c) of the Intercreditor Agreement with respect to
proceedings in a Federal court sitting in New York, New York and a State
court of the State of New York.
The foregoing opinion is limited to matters involving the Federal
laws of the United States of America and the law of the State of New York, and
we do not express any opinion as to the laws of any other jurisdiction. In
particular, we do not express any opinion as to the laws of Germany and, to
the extent such laws may be relevant to the opinion expressed herein, we have,
with your permission, relied upon the aforementioned opinion of Ruediger Sass,
Esq., General Counsel of KfW, without independently considering the matters
covered thereby, and our opinion is subject to all limitations, exceptions and
qualifications contained therein as if set forth herein in full.
At the request of KfW, this opinion letter is provided to you by
us in our capacity as special New York counsel to KfW, and this opinion letter
may not be relied upon by any Person for any purpose other than in connection
with the transactions contemplated by the Relevant Documents without, in each
instance, our prior written consent.
Very truly yours,
SCHEDULE A
Lessee
Federal Express Corporation
Indenture Trustee, Pass Through Trustee & Subordination Agent
First Security Bank, National Association
Underwriters
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
Kreditanstalt fur Wiederaufbau
EXHIBIT A(7)
[Letterhead of Daugherty, Fowler & Peregrin]
[Refunding Date]
To the Parties Named on Schedule A attached hereto
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 4.01(l)(viii)
of the Participation Agreement (Federal Express Corporation Trust No. N675FE),
dated as of June 1, 1998, as amended and restated as of June 15, 1998 (the
"Participation Agreement") among Federal Express Corporation, as lessee (the
"Lessee"), PMCC Leasing Corporation, as owner participant (the "Owner
Participant"), Morgan Guaranty Trust Company of New York, as original loan
participant (the "Original Loan Participant"), State Street Bank and Trust
Company of Connecticut, National Association, as owner trustee (the "Owner
Trustee"), and First Security Bank, National Association, as indenture
trustee, pass through trustee and subordination agent (the "Indenture
Trustee"), which Participation Agreement amends and restates that certain
Participation Agreement (Federal Express Corporation Trust No. N675FE), dated
as of June 1, 1998 (the "Original Participation Agreement") among the Lessee,
the Owner Participant, the Original Loan Participant, the Owner Trustee and
the Indenture Trustee, with respect to that portion of Subtitle VII of Title
49 of the United States Code relative to the recordation of instruments and
the registration of aircraft thereunder.
The capitalized terms herein shall, unless otherwise defined, have
the same meanings given them in the Participation Agreement or in Annex I
attached hereto.
We have examined and filed on this date with the Federal Aviation
Administration (the "FAA") the following described instruments at the
respective times listed below:
(a) Trust Agreement (Federal Express Corporation Trust No.
N675FE) dated as of June 1, 1998, as amended and restated as
of June 15, 1998 (the "Trust Agreement") between the Owner
Participant and the Owner Trustee, which Trust Agreement
amends and restates the Original Trust Agreement, which
Trust Agreement was filed at ____ _.m., C._.T.;
(b) Trust Indenture and Security Agreement (Federal Express
Corporation Trust No. N675FE) dated as of June 1, 1998, as
amended and restated as of June 15, 1998 (the "Indenture")
between the Owner Trustee and the Indenture Trustee, which
Indenture amends and restates the Original Indenture, which
Indenture was filed at ____ _.m., C._.T.; and,
(c) Lease Agreement (Federal Express Corporation Trust No.
N675FE) dated as of June 1, 1998, as amended and restated as
of June 15, 1998 (the "Lease") between the Owner Trustee, as
lessor, and the Lessee, as lessee, which Lease amends and
restates the Original Lease, with the Indenture attached
thereto, which Lease with the Indenture attached was filed
at ____ _.m., C._.T.
The Confidential Omissions were intentionally omitted from the FAA
filing counterparts of the Lease and the Indenture as containing confidential
financial information.
Based upon our examination of the above described instruments and
of such records of the FAA as we deemed necessary to render this opinion, it
is our opinion that:
1. AC Form 8050-2 Aircraft Bill of Sale dated June 18, 1998 (the "FAA
Bill of Sale") from AVSA S.A.R.L., as seller, conveying title to
the Airframe to the Owner Trustee has been duly recorded by the
FAA on __________________ and assigned Conveyance No. ______;
2. the Indenture and the Lease with the Indenture attached are in due
form for recordation by and have been duly filed for recordation
with the FAA pursuant to and in accordance with the provisions of
49 U.S.C. Section 44107;
3. the Trust Agreement is in due form for filing and has been duly
filed with the FAA pursuant to and in accordance with the
provisions of 49 U.S.C. Section 44103(a);
4. the Original Trust Agreement was duly filed with the FAA on June
18, 1998 pursuant to and in accordance with the provisions of 49
U.S.C. Section 44103(a);
5. the Original Indenture with the Indenture and Security Agreement
Supplement attached has been duly filed with and duly recorded by
the FAA pursuant to and in accordance with the provisions of 49
U.S.C. Section 44107;
6. the Original Lease with the Lease Supplement, the Original
Indenture and the Indenture and Security Agreement Supplement
attached was duly filed with and duly recorded by the FAA pursuant
to and in accordance with the provisions of 49 U.S.C. Section
44107;
7. the Airframe is duly registered in the name of the Owner Trustee
pursuant to and in accordance with the provisions of 49 U.S.C.
Section 44103(a);
8. the Owner Trustee has valid legal title to the Airframe and the
Aircraft is free and clear of all Liens, except (i) the security
interest created by the Original Indenture, as amended and
restated by the Indenture, as supplemented by the Indenture and
Security Agreement Supplement, and (ii) the rights of the parties
under the Original Lease, as amended and restated by the Lease, as
supplemented by the Lease Supplement;
9. the Original Indenture, as amended and restated by the Indenture,
as supplemented by the Indenture and Security Agreement Supplement,
constitutes a duly perfected first priority security interest in
the Aircraft and a duly perfected first assignment of all the
right, title and interest of the Owner Trustee in, to and under
the Original Lease, as amended and restated by the Lease, as
supplemented by the Lease Supplement (insofar as such assignment
affects an interest covered by the recording system established by
the FAA pursuant to 49 U.S.C. Section 44107), and no other
registration of the Airframe or filings other than filings with
the FAA (which have been duly effected) are necessary in order to
perfect in any applicable jurisdiction in the United States (A)
the Owner Trustee's title to the Airframe or (B) such security
interest and assignment (insofar as such assignment affects an
interest covered by the recording system established by the FAA
pursuant to 49 U.S.C. Section 44107), it being understood that no
opinion is herein expressed as to the validity, priority or
enforceability of such security interest and assignment under
local law or as to the recognition of the perfection of such
security interest and assignment as against third parties in any
legal proceeding outside the United States;
10. no authorization, approval, consent, license or order of, or
registration with, or the giving of notice to, the FAA is required
for the valid authorization, delivery and performance of the
Original Lease, as amended and restated by the Lease, as
supplemented by the Lease Supplement, the Original Indenture, as
amended and restated by the Indenture, as supplemented by the
Indenture and Security Agreement Supplement, or the Original Trust
Agreement, as amended and restated by the Trust Agreement, except
for such filings as are referred to in our opinion dated June 18,
1998 (which have been duly effected) and the filings referred to
in clauses (a), (b) and (c) above; and,
11. neither the authorization, issuance and delivery of the
Certificates, the execution and delivery by the parties thereto of
the Original Trust Agreement, the Trust Agreement, the Original
Indenture, the Indenture, the Indenture and Security Agreement
Supplement, the Original Participation Agreement, the
Participation Agreement, the FAA Bill of Sale, the Original Lease,
the Lease and the Lease Supplement or the performance by the
parties thereto of: (i) the Original Trust Agreement, as amended
and restated by the Trust Agreement; (ii) the Original Indenture,
as amended and restated by the Indenture, as supplemented by the
Indenture and Security Agreement Supplement; (iii) the Original
Participation Agreement, as amended and restated by the
Participation Agreement; and (iv) the Original Lease, as amended
and restated by the Lease, as supplemented by the Lease
Supplement, in accordance with the provisions thereof, nor the
consummation by the parties thereto of any of the transactions
contemplated thereby, requires the consent or approval of, or the
giving of notice to, or the registration with, or the taking of
any other action in respect of, the FAA except for the filings,
the recordations and the filings for recordations 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 29 U.S.C. Section 1368(a), possessory artisan's liens, or
matters of which the parties have 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 for the Aeronautical Center dated ____________, 1998
and have continued to rely upon the opinion of the Assistant Chief Counsel of
the Aeronautical Center dated __________________, copies of which are attached
hereto.
Very truly yours,
SCHEDULE A
Lessee
Federal Express Corporation
Owner Trustee
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
First Security Bank, National Association
Agent and Original Loan Participant
Morgan Guaranty Trust Company of New York
Owner Participant
PMCC Leasing Corporation
Owner Participant Guarantor
Philip Morris Capital Corporation
Underwriters
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
J.P. Morgan Securities Inc.
Liquidity Provider
Kreditanstalt fur Wiederaufbau
Annex I
Certain Definitions
Airframe, Engines and Aircraft
One (1) Airbus Industrie A300F4-605R aircraft bearing
manufacturer's serial number 789 and U.S. Registration No. N675FE (the
"Airframe") and two (2) General Electric CF6-80C2-A5F aircraft engines bearing
manufacturer's serial number 705-261 and 705-262 (the "Engines") (the Airframe
and the Engines are referred to collectively as the "Aircraft").
Original Trust Agreement
Trust Agreement (Federal Express Corporation Trust No. N675FE)
dated as of June 1, 1998 between PMCC Leasing Corporation, as owner
participant, and State Street Bank and Trust Company of Connecticut, National
Association, as owner trustee, which was filed with the FAA on June 18, 1998.
Original Indenture
Trust Indenture, Mortgage and Security Agreement (Federal Express
Corporation Trust No. N675FE) dated as of June 1, 1998 between State Street
Bank and Trust Company of Connecticut, National Association, as owner trustee,
and First Security Bank, National Association, as indenture trustee, which
together with the Indenture and Security Agreement Supplement (as hereinafter
defined) attached thereto was recorded as one instrument by the FAA on
________________ and assigned Conveyance No. _______.
Indenture and Security Agreement Supplement
Indenture and Security Agreement Supplement No. 1 (Federal Express
Corporation Trust No. N675FE) dated June 18, 1998 between State Street Bank and
Trust Company of Connecticut, National Association, as owner trustee, and First
Security Bank, National Association, as indenture trustee, with respect to the
Aircraft, which was attached to and recorded by the FAA as one instrument with
the Original Indenture.
Original Lease
Lease Agreement (Federal Express Corporation Trust No. N675FE)
dated as of June 1, 1998 between State Street Bank and Trust Company of
Connecticut, National Association, as owner trustee, as lessor, and Federal
Express Corporation, as lessee, which together with the Lease Supplement (as
hereinafter defined), the Original Indenture and the Indenture and Security
Agreement Supplement attached thereto was recorded as one instrument by the
FAA on ________________ and assigned Conveyance No. _______.
Lease Supplement
Lease Supplement No. 1 (Federal Express Corporation Trust No.
N675FE) dated June 18, 1998 between State Street Bank and Trust Company of
Connecticut, National Association, as owner trustee, as lessor, and Federal
Express Corporation, as lessee, with respect to the Aircraft, which was
attached to and recorded by the FAA as one instrument with the Original Lease.
Confidential Omissions
The Lease was filed with the FAA, with (i) Basic Rent (Schedule
II), (ii) the Stipulated Loss Values (Schedule III), (iii) the Termination
Values (Schedule IV), (iv) the Purchase Option Schedule (Schedule V) omitted
from the FAA filing counterpart thereof as containing confidential financial
information; and (v) the purchase price under Section 4.02(a)(F) of the Lease
set forth in Ancillary Agreement II, which was not attached to the FAA filing
counterpart of the Lease or otherwise filed with the FAA for recordation.
EXHIBIT B
[Form of Lease Agreement - See Exhibit 4.e to this Form 8K]
EXHIBIT C
[Form of Indenture - See Exhibit 4.b.1 to this Form 8K]
EXHIBIT D
[Form of Trust Agreement - See Exhibit 4.d to this Form 8K]
EXHIBIT E-1
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
BENEFICIAL INTEREST TRANSFER AGREEMENT (this "Document"), dated
as of _______ __, ____, between ______________, a ______________ corporation
("Transferor") and ______________, a ______________ corporation
("Transferee").
W I T N E S S E T H :
WHEREAS, the parties hereto desire to effect (a) the transfer by
Transferor to Transferee of all of the rights, title and interest of
Transferor in and to its interest (the "Beneficial Interest") under the Trust
Agreement (Federal Express Corporation Trust No. N675FE), dated as of June 1,
1998, as amended and restated as of June 15, 1998 (as heretofore amended, the
"Trust Agreement"), between Transferor and State Street Bank and Trust Company
of Connecticut, National Association, and the Lessor's Estate created
thereunder, and all of Transferor's rights and obligations under the
Participation Agreement (Federal Express Corporation Trust No. N675FE), dated
as of June 1, 1998, as amended and restated as of June 15, 1998 (the
"Participation Agreement"), among Federal Express Corporation, as Lessee,
State Street Bank and Trust Company of Connecticut, National Association, not
in its individual capacity, except as otherwise stated therein, but solely as
Owner Trustee, PMCC Leasing Corporation, as Owner Participant, First Security
Bank, National Association, not in its individual capacity, except as
otherwise stated therein, but solely as Indenture Trustee, First Security Bank,
National Association, not in its individual capacity, except as otherwise
stated therein, but solely as Pass Through Trustee and First Security Bank,
National Association, as Subordination Agent, and Morgan Guaranty Trust
Company of New York, as Loan Participant, and under the other Operative
Agreements and (b) the acceptance by Transferee of such transfer and the
assumption by Transferee of such obligations of Transferor thereunder; and
WHEREAS, Section 7.03(d) of the Participation Agreement permits
such transfer and assumption upon satisfaction of certain conditions
heretofore or concurrently herewith being observed;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the parties hereto agree as
follows:
1. Definitions. Capitalized terms used herein without
definition shall have the respective meanings ascribed thereto in the
Participation Agreement.
2. Transfer. Transferor does hereby sell, convey, assign,
transfer and set over, unto Transferee, as of the Effective Time (as defined
below), all of Transferor's present and future right, title and interest in
and to (a) all of the Beneficial Interest and (b) all of the Owner
Participant's rights and obligations under the Participation Agreement, the
Tax Indemnity Agreement, the Trust Agreement and the other Operative Agreements
and any proceeds therefrom, together with all other documents and instruments
evidencing any of such right, title and interest, except such rights of
Transferor as have arisen or accrued to Transferor prior to the Effective Time
(including without limitation, the right to receive any amounts due or accrued
to Transferor under the Operative Agreements as of a time prior to the
Effective Time and the right to receive any indemnity payment pursuant to the
Participation Agreement or the Tax Indemnity Agreement, with respect to events
occurring prior to such time); all of the foregoing that is being transferred
under this paragraph 2, the "Transferred Interest".
3. Assumption. Transferee hereby accepts the transfer of the
Transferred Interest and, for the benefit of Transferor and the other parties
to the Participation Agreement, assumes and undertakes and agrees to perform
and discharge all of the duties and obligations of Transferor with respect to
the Transferred Interest whenever and wherever accrued (other than duties and
obligations of Transferor required to be performed by it on or prior to the
Effective Time). Transferee hereby confirms that, from and after the
Effective Time, Transferee (a) shall be deemed, to the extent set forth in
Section 2 hereof, the "Owner Participant" party to the Participation
Agreement, the Tax Indemnity Agreement, the Trust Agreement and the other
Operative Agreements and (b) shall be bound by all of the terms of the
Operative Agreements to the extent the same relate to the Transferred
Interest.
4. Release of Transferor. At the Effective Time, Transferor
shall be relieved of all of its duties and obligations with respect to the
Transferred Interest under the Operative Agreements, provided, however, that
Transferor shall in no event be released from any such duty or obligations
arising or relating to any event occurring prior to the Effective Time, or on
account of any breach by Transferor of any of its representations, warranties,
covenants or obligations set forth in the Operative Agreements, or for any
fraudulent or willful misconduct engaged in by it prior to the Effective Time,
or from any obligation that relates to any indemnity claimed by Transferor or
any Lessor's Lien attributable to Transferor.
5. Fees and Expenses. The fees, expenses and charges of the
parties to the Participation Agreement incurred in connection with the
transfer effected hereby shall be for the account of [specify
Transferor/Transferee].
6. Payments. Transferor hereby covenants and agrees to pay
over to Transferee, if and when received following the Effective Time, any
amounts (including any sums payable as interest in respect thereof) paid on
account of the Transferred Interest to or for the benefit of Transferor, and
Transferee hereby covenants and agrees to pay over to Transferor, if and when
received following the Effective Time, any amounts (including any sums payable
as interest in respect thereof) paid to or for the benefit of Transferee that
are not attributable to the Transferred Interest and to which Transferor is
otherwise entitled.
7. Investment Purpose. Transferee hereby represents and
warrants that, as of the date hereof, it is acquiring the Transferred Interest
for its account with no present intention of distributing such Transferred
Interest or any part thereof in any manner which would violate the Securities
Act of 1933, as amended, but without prejudice, however, to the right of
Transferee at all times to sell or otherwise dispose of all or any part of
such Transferred Interest in compliance with Section 7.03(d) of the
Participation Agreement.
8. Representations and Warranties of Transferor. Transferor
represents and warrants to Transferee that as of the Effective Time:
(a) Organization and Power. Transferor is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has full corporate power, authority and legal right
to execute, deliver and perform this Agreement and to enter into and carry
out the transactions contemplated hereby and in the other Operative
Agreements (the "Transactions").
(b) Authorization, Execution and Validity. This Agreement has been
duly authorized, executed and delivered by Transferor and constitutes the
legal, valid and binding obligation of Transferor, enforceable against it
in accordance with its terms except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general principles of
equity.
(c) Conflict. The execution, delivery and performance by
Transferor of this Agreement and compliance by Transferor with all of the
provisions hereof do not contravene any regulation or any order of any
governmental authority applicable to or binding on Transferor, or
contravene the provisions, or constitute a default by Transferor under, its
certificate of incorporation or by-laws or any indenture, mortgage,
contract or other agreement or instrument to which Transferor is a party or
by which Transferor or any of its Properties is bound or affected.
(d) Consents. No consent, approval or authorization of, or filing,
registration or qualification with, or the giving of notice or the taking
of any other action with respect to, any governmental authority on the part
of Transferor is required in connection with the execution, delivery and
performance by Transferor of this Agreement.
(e) Litigation. There are no proceedings pending or, to the
knowledge of Transferor, threatened against Transferor before any
governmental authority that would materially and adversely affect the
ability of Transferor to consummate the Transactions.
(f) No Liens. The Trust Estate is free of Lessor's Liens
attributable to Transferor.
(g) Compliance with Operative Agreements. Transferor has fully
performed all of its obligations under the Participation Agreement and
under each other Operative Agreement which obligations by their terms are
required to be satisfied or performed prior to the Effective Time or prior
to the consummation of the Transactions.
(h) Default. As a result of the transfer effected hereby, no
Indenture Default attributable to the Owner Participant or the Owner
Trustee has occurred and is continuing.
Notwithstanding the foregoing or anything else contained in this
Agreement, it makes no representation or warranty in this Agreement with
respect to laws, rules or regulations relating to aviation or to the nature or
use of the equipment owned by the Owner Trustee, including, without
limitation, the airworthiness, value, condition, workmanship, design, patent
or trademark infringement, operation, merchantability or fitness for use of
the Aircraft.
9. Representations and Warranties of Transferee. Transferee
represents and warrants to Transferor and to the other parties to the
Participation Agreement that as of the Effective Time:
(a) Transferee is a corporation duly organized, validly existing
and in good standing under the laws of the State of [ ], has the
full corporate power, authority and legal right to carry on its business as
now conducted, and has full corporate power, authority and legal right to
execute, deliver and perform this Agreement and to enter into and carry out
the transactions contemplated hereby and in the other Operative Agreements
(the "Transactions");
(b) Transferee has full corporate power, authority and legal right
to execute, deliver and enter into this Agreement and the other Operative
Agreements and full corporate power and authority to perform its
obligations thereunder, and such execution, delivery and performance do not
and will not contravene any applicable law or any order of any governmental
authority applicable to or binding on the Transferee, or contravene the
provisions of, or constitute a default under, or result in the creation of
any Lien upon the property of the Transferee under, its articles of
incorporation or by-laws or any material indenture, mortgage, contract or
other agreement or instrument to which the Transferee is a party or by
which it or any of its property may be bound or affected;
(c) the execution, delivery and performance of this Agreement by the
Transferee (i) has been duly authorized by all necessary corporate action
and (ii) does not require any approval of the shareholders of the
Transferee or any approval or consent of, or notice to, any trustee or
holders of any indebtedness or obligation of the Transferee, except for
such approvals and consents as have already been obtained;
(d) this Agreement has been duly executed and delivered by the
Transferee, and constitutes the legal, valid and binding obligation of the
Transferee, enforceable against the Transferee in accordance with its
terms, except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity;
(e) there are no proceedings or actions pending or, to the
knowledge of the Transferee, threatened against the Transferee before any
governmental authority in which there is a reasonable probability of an
adverse determination that individually or in the aggregate would
materially and adversely impair the ability of the Transferee to perform
its obligations under this Agreement or the Operative Agreements, or which
involve the Transactions or question the validity of any Operative
Agreement to which the Owner Participant is a party or any action taken or
to be taken pursuant thereto; and the Transferee is not in default with
respect to any order of any governmental authority which involves the
Transactions or the default under which would materially and adversely
affect the ability of the Transferee to perform its obligations under this
Agreement or any of the Operative Agreements;
(f) no consent, approval, order or authorization of, giving of
notice to, or registration with, or taking of any other action in respect
of, any governmental authority is required under any law for the execution
and delivery by the Transferee of this Agreement, or the carrying out by
the Transferee of any of the Transactions, other than any such consent,
approval, order, authorization, registration, notice or action as has been
duly obtained, given or taken;
(g) the Lessor's Estate is free of any Lessor's Liens attributable
to the Transferee;
(h) the Transferee, upon execution of this Agreement, will not be
in default under any of the Operative Agreements;
(i) no part of the funds to be used by it to acquire the interests
acquired by the Owner Participant under the Participation Agreement
constitutes assets (within the meaning of ERISA and any applicable rules
and regulations) of any employee benefit plan subject to Title I of ERISA
or of any plan or individual retirement account subject to Section 4975 of
the Code;
(j) the Transferee is a "U.S. Person" as defined in Section
7701(a)(30) of the Code and is not a tax resident of another country and if
it shall at any time cease to be such a "U.S. Person" or shall become a tax
resident of another country, it shall furnish to the Agent and each
Certificate Holder an indemnity, in form and substance reasonably
satisfactory to such Certificate Holder, for any Taxes that may be imposed
on such Holder as a result of its failure to be such a "U.S. Person" or as
a result of its being a tax resident of another country, and it shall be
personally liable for any debt service to the extent that the receipt of
rentals is reduced by reason of any withholding Taxes that result from such
failure to be such a "U.S. Person" or from being a tax resident of another
country;
(k) [after giving effect to a voting trust or similar agreement(1),
Transferee is a Citizen of the United States] [applicable if Aircraft is
registered in the United States or is proposed to be so registered];
(l) on and as of the Effective Date, the representations and
warranties of the Owner Participant in Article 7 of the Participation
Agreement are true and correct as to the Transferee;
(m) Transferee satisfies the conditions applicable to a transferee
of the Beneficial Interest set forth in Section 7.03(d) of the
Participation Agreement, including without limitation, the condition set
forth in the last sentence thereof [and to the extent the same has been
requested by the Lessee or the Indenture Trustee, Transferee has heretofore
provided to the Lessee and the Indenture Trustee its most recent audited
financial statements, which show a consolidated tangible net worth or
combined capital and surplus of at least $75,000,000] [remove bracketed
language if an Owner Participant Guaranty is provided]; and
(n) the Transferee has, independently and without reliance upon any
other party (including without limitation the Transferor) and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement, and the Transferee has
established adequate means of obtaining from Lessee on a continuing basis
information pertaining to, and is now and on a continuing basis will be
----------
(1) Such voting trust or similar agreement must be reasonably
satisfactory to the Lessor and the Indenture Trustee.
completely familiar with, the financial condition, operations, properties
and prospects of Lessee.
Notwithstanding the foregoing or anything else contained in this
Agreement, it makes no representation or warranty in this Agreement with
respect to laws, rules or regulations relating to aviation or to the nature or
use of the equipment owned by the Owner Trustee, including, without
limitation, the airworthiness, value, condition, workmanship, design, patent
or trademark infringement, operation, merchantability or fitness for use of
the Aircraft, other than such laws, rules or regulations relating to the
citizenship requirements of it under applicable aviation law.
10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
11. Effectiveness. This Agreement shall be effective upon
the mutual execution and delivery of this Agreement (the "Effective Time").
12. Counterparts. This Agreement may be executed in any
number of counterparts, all of which together shall constitute a single
instrument. It shall not be necessary that any counterpart be signed by both
parties so long as each party shall sign at least one counterpart.
13. Beneficiaries. Each of the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Lessee, together with their
respective successors and permitted assigns, is and shall be deemed a third
party beneficiary of this Agreement entitled to enforce this Agreement
directly and in its own name and enforce any rights or claims of the parties
hereto.
14. Further Assurances. Each party agrees that from time to
time after the Effective Time, it shall execute and deliver or cause to be
executed and delivered such instruments, documents and papers, and take all
such further action as may be reasonably required in order to consummate fully
the purposes of this Agreement and to implement the transactions contemplated
hereby.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
[TRANSFEROR]
By:_____________________________________
Name:
Title:
[TRANSFEREE]
By:_____________________________________
Name:
Title:
EXHIBIT E-2
FORM OF OWNER PARTICIPANT GUARANTY
TRANSFEREE'S PARENT GUARANTY, dated as of ___________ __, ____,
(this "Guaranty") by ____________________, a ___________ corporation (the
"Guarantor"), to State Street Bank and Trust Company of Connecticut, National
Association, in its individual capacity and as Owner Trustee, First Security
Bank, National Association, as Indenture Trustee and Pass Through Trustee, and
Federal Express Corporation, as Lessee (collectively, together with their
successors and assigns and the holders from time to time of the Certificates,
the "Beneficiaries").
W I T N E S S E T H :
WHEREAS, ___________, a ____________ corporation (the
"Transferor"), is party to the Participation Agreement (Federal Express
Corporation Trust No. N675FE), dated as of June 1, 1998, as amended and
restated as of June 15, 1998 (as amended, modified or supplemented from time
to time, the "Participation Agreement"), among Federal Express Corporation, as
Lessee, PMCC Leasing Corporation, as Owner Participant, State Street Bank and
Trust Company of Connecticut, National Association, not in its individual,
except as otherwise stated therein, but solely as Owner Trustee, First Security
Bank, National Association, not in its individual, except as otherwise stated
therein, but solely as Indenture Trustee, First Security Bank, National
Association, not in its individual, except as otherwise stated therein, but
solely as Pass Through Trustee and First Security Bank, National Association,
as Subordination Agent and Morgan Guaranty Trust Company of New York, as Loan
Participant; and
WHEREAS, the Transferor wishes to transfer, among other things,
all of the rights, title and interest of the Transferor in and to the
Beneficial Interest under the Trust Agreement and the Lessor's Estate created
thereunder, and all of the Transferor's rights and obligations under the
Participation Agreement, the Trust Agreement and the other Operative
Agreements to __________________, a _______________ [corporation] (together
with its successors and assigns, the "Transferee"), a subsidiary of the
Guarantor, pursuant to the Beneficial Interest Transfer Agreement, dated as of
the date hereof (the "Transfer Agreement"), between the Transferor and the
Transferee; and
WHEREAS, the terms of the Participation Agreement provide that
the aforementioned transfer is conditioned upon the execution and delivery of
this Guaranty by the Guarantor;
NOW, THEREFORE, in order that the Transferor may make the
aforementioned transfer to the Transferee, the Guarantor hereby agrees with
and for the benefit of the Beneficiaries as follows:
1. Definitions. Capitalized terms used herein without
definition shall have the respective meanings assigned thereto in the
Participation Agreement or the Transfer Agreement.
2. Guaranty. The Guarantor hereby unconditionally and
irrevocably guarantees, as primary obligor and not merely surety, to the
Beneficiaries the prompt and complete payment by the Transferee when due of
all payment obligations of the Transferee under the Operative Agreements
without offset or deduction and the timely performance of all other
obligations of the Transferee thereunder (such payment and other obligations,
the "Obligations"), and the Guarantor further agrees to pay any and all
expenses (including, without limitation, reasonable fees and expenses of
counsel) that may be paid or incurred by the Beneficiaries in enforcing any
rights with respect to, or collecting, any or all of the Obligations and/or
enforcing any rights with respect to, or collecting against, the Guarantor
under this Guaranty.
The Guarantor will not exercise any rights that it may now or
hereafter acquire against Transferee that arise from the existence, payment,
performance or enforcement of the Guarantor's Obligations under this Guaranty,
the Transferred Interest or the Operative Agreements, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution
or indemnification and any right to participate in any claim or remedy of any
Beneficiary against Transferee or any collateral, whether or not such claim,
remedy or right arises in equity or under contract, statute or common law,
including, without limitation, the right to take or receive from Transferee,
directly or indirectly, in cash or other property or by set-off or in any
other manner, payment or security on account of such claim, remedy or right,
unless and until all of the Obligations have been performed in full and all
other amounts payable under this Guaranty shall have been paid in full in
cash. If any amount shall be paid to the Guarantor in violation of the
preceding sentence at any time prior to the final payment in full in cash of
the Obligations and all other amounts payable under this Guaranty, such amount
shall be held in trust for the benefit of any Beneficiary and shall forthwith
be paid to such Beneficiary to be credited and applied to the Obligations and
all other amounts payable under this Guaranty, whether matured or unmatured,
in accordance with the terms of the Operative Agreements, or to be held as
collateral for any Obligations or other amounts payable under this Guaranty
thereafter arising.
3. No Subrogation. Notwithstanding anything to the contrary
in this Guaranty, the Guarantor hereby agrees not to assert any rights which
may have arisen in connection with this Guaranty to be subrogated to any of
the rights (whether contractual, under the Bankruptcy Code, under common law
or otherwise) of any Beneficiary against the Transferee for the payment of the
Obligations until all of the Obligations shall have been satisfied by payment
and performance in full.
4. Amendments with Respect to the Obligations; Waiver of
Rights. The Guarantor shall remain fully obligated hereunder notwithstanding
that, without any reservation of rights against the Guarantor and without
notice to or further assent by the Guarantor, any demand for payment or
performance of any of the Obligations made by any Beneficiary may be rescinded
by such party and any of the obligations continued, and the Obligations, may,
from time to time, in whole or part, be renewed, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by any Beneficiary
and any Operative Agreement may be amended, modified, supplemented or
terminated, in whole or in part, in accordance with the provisions thereof
from time to time. When making any demand hereunder against the Guarantor, a
Beneficiary may, but shall be under no obligation to, make a similar demand on
the Transferee, and any failure by a Beneficiary to make any such demand or to
collect any payments from the Transferee or any release of the Transferee
shall not relieve the Guarantor of its obligations or liabilities hereunder,
and shall not impair or affect the rights and remedies, express or implied, or
as a matter of law, of any Beneficiary against the Guarantor. For the purposes
hereof, "demand" shall include the commencement and continuance of any legal
proceedings. The Guarantor represents and warrants that it is the parent of
the Transferee, and agrees that its obligations hereunder shall continue
unimpaired, even if the Guarantor is no longer an Affiliate of the Transferee.
5. Guaranty Absolute and Unconditional. The Guarantor
guarantees that the Obligations will be paid and performed strictly in
accordance with the terms of the Transfer Agreement and the Operative
Agreements, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any such terms or the rights of any
Beneficiary with respect thereto. The obligations of the Guarantor under this
Guaranty are independent of the Obligations or any other obligations of any
other party, and a separate action or actions may be brought and prosecuted
against the Guarantor to enforce this Guaranty, irrespective of whether the
Transferee or any other party is joined in any such action or actions. The
Guarantor waives any and all notice of the creation, renewal, extension or
accrual of any of the Obligations and notice of or proof of reliance by any
Beneficiary upon this Guaranty or acceptance of this Guaranty; the
Obligations, and any of them, shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or waived, in
reliance upon this Guaranty; and all dealings between the Transferee or the
Guarantor and any Beneficiary shall likewise be conclusively presumed to have
been had or consummated in reliance upon this Guaranty. The Guarantor waives,
to the fullest extent permitted by applicable law, diligence, presentment,
promptness, protest, mitigation of damages by the Beneficiaries demand for
payment and notice of default or nonpayment to or upon the Transferee or the
Guarantor with respect to the Obligations. The Guarantor further waives any
right to revoke this Guaranty, and acknowledges that this Guaranty is
continuing in nature and applies to all Obligations, whether existing now or
in the future. The Guarantor understands and agrees that, to the fullest
extent permitted by applicable law, this Guaranty shall be construed as a
continuing, absolute and unconditional guaranty of payment and performance
(and not merely of collectibility) without regard to:
(a) the validity, regularity or enforceability of the Transfer
Agreement, any Operative Agreement, or any of the Obligations at any time
or from time to time held by any Beneficiary;
(b) any defense, set-off, rebate, adjustment, withholding, deduction
or counterclaim (other than a defense of payment or performance) that may
at any time be available to or be asserted by the Transferee against any
Beneficiary or any agreement or instrument relating thereto or;
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the obligations or any other obligations of
any other party under the Transfer Agreement, the Operative Agreements, or
any other amendment or waiver of or any consent to departure from the
Transfer Agreement or other Operative Agreements;
(d) any taking, release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Obligations;
(e) any change, restructuring or termination of the corporate
structure or existence of the Guarantor or the Transferee or any of the
Affiliates of either;
(f) any defect in the title, condition, design, operation or
fitness of, or any interference with the operation, use or possession of,
the Aircraft;
(g) any failure to establish, perfect or preserve title to or any
security interest in or to the Aircraft or any other collateral security
for the Obligations; or
(h) any other circumstance whatsoever or any existence of or
reliance on any representation by any Beneficiary that might otherwise
constitute a defense available to, or a discharge of, the Guarantor or any
other guarantor or surety.
When pursuing its rights and remedies hereunder against the
Guarantor, any Beneficiary may, but shall be under no obligation to, pursue
such rights and remedies as it may have against the Transferee for the
Obligations, and any failure by any Beneficiary to pursue such other rights or
remedies or to collect any payments from the Transferee, or any release of the
Transferee, shall not, to the fullest extent permitted by applicable law,
relieve the Guarantor of any liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of any Beneficiary against the Guarantor. This Guaranty is a
continuing guaranty and shall remain in full force and effect until the
earlier of (x) the date that all of the Obligations are satisfied by payment
and performance in full and (y) the date that all right, title and interest of
the Transferee shall have been transferred to a Person meeting the
requirements of Section 7.03(d) of the Participation Agreement in accordance
with said section; provided that this Guaranty shall remain in full force and
effect with respect to obligations relating to the period prior to such
transfer.
6. Reinstatement. This Guaranty shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or
any part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by any Beneficiary upon the insolvency, bankruptcy
dissolution, liquidation or reorganization of the Transferee or the Guarantor,
or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, the Transferee or the
Guarantor or any substantial part of its property, or otherwise, all as though
such payments had not been made and the Guarantor agrees that it will
indemnify any such Beneficiary on demand for all reasonable costs and expenses
(including, without limitation, reasonable fees and expenses of counsel) by
such Beneficiary in connection with such rescission or restoration.
7. Payments. The Guarantor hereby guarantees that payments
hereunder shall be paid without set-off, counterclaim, deduction, rebate,
adjustment or withholding, and shall be made in U.S. Dollars in immediately
available funds.
8. Representations and Warranties. The Guarantor hereby
represents and warrants that:
(a) the Guarantor is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation and the Transferee is currently a subsidiary of the
Guarantor;
(b) the Guarantor has the power and authority and the legal right
to execute and deliver, and to perform its obligations under, this
Guaranty, and has taken all necessary corporate action to authorize its
execution, delivery and performance of this Guaranty;
(c) this Guaranty constitutes a legal, valid and binding obligation
of the Guarantor enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally;
(d) the execution, delivery and performance of this Guaranty will
not violate any provision of any requirement of law or contractual
obligation of the Guarantor or any of its constitutive documents;
(e) no consent or authorization of, filing with, or other act by or
in respect of, any arbitrator or governmental authority and no consent of
any other person is required in connection with the execution, delivery,
performance, validity or enforceability of this Guaranty;
(f) the Guarantor is a [a bank, savings institution, finance
company, leasing company or trust company, national banking association
acting for its own account or in a fiduciary capacity as trustee or agent
under any pension, retirement, profit sharing or similar trust or fund,
insurance company, fraternal benefit society or corporation acting for its
own account having a combined capital and surplus (or, if applicable,
consolidated tangible net worth or its equivalent)] of not less than
$75,000,000 [and has, if the same have been requested by the Lessee or the
Indenture Trustee, heretofore furnished to the Lessee and the Indenture
Trustee copies of its most recent audited financial statements];
(g) there are no conditions precedent to the effectiveness of this
Guaranty that have not been satisfied or waived; and
(h) the Guarantor has, independently and without reliance upon any
Beneficiary and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Guaranty, and the Guarantor has established adequate means of obtaining
from Transferee on a continuing basis information pertaining to, and is now
and on a continuing basis will be completely familiar with, the financial
condition, operations, properties and prospects of Transferee.
9. Severability. Any provision of this Guaranty that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
10. Jurisdiction; Waiver of Jury Trial, Etc.
(a) The Guarantor hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
New York State court or federal court of the United States of America sitting
in New York, New York, and any appellate court from any thereof, in any action
or proceeding arising out of or relating to this Guaranty, the Transfer
Agreement or any Operative Agreement to which it is or is to be a party, or
for recognition or enforcement of any judgment, and the Guarantor hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in any such New York State
court or, to the extent permitted by law, in such federal court. The
Guarantor agrees that a final judgment in any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Guaranty
shall affect any right that any party may otherwise have to bring any action
or proceeding relating to this Guaranty, the Transfer Agreement or any
Operative Agreement to which it is or is to be a party in the courts of any
jurisdiction.
(b) The Guarantor irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Guaranty, the Transfer Agreement
or any Operative Agreement to which it is or is to be a party in any New York
State or federal court. The Guarantor hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
11. Section Headings. The Section headings used in this
Guaranty are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation
hereof.
12. No Waiver; Cumulative Remedies. No Beneficiary shall by
any act (except by a written instrument pursuant to Section 13 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising, on
the part of any Beneficiary, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right power or privilege. A waiver by a
Beneficiary of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy that such Beneficiary would
otherwise have on any future occasion. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are not
exclusive of any rights or remedies provided by law.
13. Amendments and Waivers. None of the terms or provisions
of this Guaranty may be waived, amended or supplemented or otherwise modified
except by a written instrument executed by the Guarantor and each Beneficiary.
14. Successors and Assigns. This Guaranty shall be binding
upon the successors and assigns of the Guarantor and shall inure to the
benefit of the Beneficiaries and their respective successors and permitted
assigns but Guarantor may not assign this Guaranty without prior written
consent of the Beneficiaries except to an assignee making, as of the date of
such assignment, (i) representations and warranties substantially similar to
those contained in Section 8 hereof and (ii) a representation that it is a
U.S. citizen, unless, in the case of the preceding clause (ii) any of (a) the
aircraft is not then registered in the United States nor contemplated to be so
registered or (b) a voting trust or similar arrangement reasonably
satisfactory to the Beneficiaries is in place with respect to such
registration or (c) it is not necessary for the Guarantor to be a U.S. citizen
in order for the aircraft to remain registered in the United States.
15. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY AND BE
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
16. Notices. All notices, requests and demands to or upon the
Guarantor or any Beneficiary to be effective shall be in writing and, unless
otherwise expressly provided herein, shall be deemed to have been duly given
or made, when delivered by hand or by mail, upon receipt, or, when delivered
by facsimile transmission, upon being sent and confirmed, addressed (a) in the
case of the Guarantor, to the Guarantor at its office at
[_________________________________], and (b) in the case of any Beneficiary,
to such Beneficiary at the address provided for such Beneficiary in or pursuant
to the Participation Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be
duly executed and delivered by its duly authorized officer as of the day and
year first above written.
[NAME OF GUARANTOR]
By:_____________________________________
Name:
Title: