Exhibit 2.
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PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N585FE)
Dated as of June 15, 1998
Amended and Restated as of September 1, 1998
among
FEDERAL EXPRESS CORPORATION,
Lessee and Initial Owner Participant
PYRGOS, INC.,
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
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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
AMENDMENTS; ADJUSTMENTS
Section 2.01. [Reserved]............................................... 3
Section 2.02. [Reserved]............................................... 3
Section 2.03. Amendments on Delivery Date.............................. 4
ARTICLE 3
PARTICIPATION IN INVESTMENT ON DELIVERY DATE;
DELIVERY OF AIRCRAFT
Section 3.01. Lessee's Notices......................................... 4
Section 3.02. Commitments to Participate in Purchase Price............. 5
Section 3.03. Owner Participant's Instructions to Owner Trustee........ 8
Section 3.04. Transaction Costs........................................ 8
Section 3.05. Postponement of Delivery Date............................ 8
Section 3.06. Delivery Mechanics....................................... 10
Section 3.07. Closing.................................................. 10
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent..................................... 10
Section 4.02. Opinions of Special Aviation Counsel..................... 24
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations............. 25
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties.................. 25
Section 6.02. Offering by Lessee....................................... 31
Section 6.03. Further Assurances; Aircraft Registration................ 32
Section 6.04. Survival of Representations and Warranties............... 40
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in Lessor's
Estate................................................... 40
Section 7.02. Citizenship.............................................. 40
Section 7.03. Representations, Warranties and Covenants of Owner
Participant.............................................. 42
Section 7.04. Representations, Covenants and Warranties of SSB and the
Owner Trustee............................................ 46
Section 7.05. Representations, Warranties and Covenants of the Indenture
Trustee.................................................. 49
Section 7.06. Indenture Trustee's Notice of Default.................... 50
Section 7.07. Releases from Indenture.................................. 50
Section 7.08. Covenant of Quiet Enjoyment.............................. 51
Section 7.09. Pass Through Trustee's Representations and Warranties.... 51
Section 7.10. Survival of Representations, Warranties and Covenants.... 52
Section 7.11. Lessee's Assumption of the Certificates.................. 52
Section 7.12. Indebtedness of Owner Trustee............................ 54
Section 7.13. Compliance with Trust Agreement, Etc..................... 54
Section 7.14. Subordination Agent's Representations, Warranties and
Covenants................................................ 55
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes......................... 57
Section 8.02. After-Tax Basis.......................................... 61
Section 8.03. Time of Payment.......................................... 61
Section 8.04. Contests................................................. 62
Section 8.05. Refunds.................................................. 64
Section 8.06. Lessee's Reports......................................... 64
Section 8.07. Survival of Obligations.................................. 64
Section 8.08. Payment of Taxes......................................... 64
Section 8.09. Reimbursements by Indemnitees Generally.................. 65
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally................................................ 65
Section 9.02. After-Tax Basis.......................................... 69
Section 9.03. Subrogation.............................................. 70
Section 9.04. Notice and Payment....................................... 70
Section 9.05. Refunds.................................................. 70
Section 9.06. Defense of Claims........................................ 70
Section 9.07. Survival of Obligations.................................. 71
Section 9.08. Effect of Other Indemnities.............................. 72
Section 9.09. Interest................................................. 72
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs....................... 72
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee.................. 75
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant.................... 76
Section 12.02. Interest of Holders of Certificates..................... 77
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents.................... 77
Section 13.02. Further Assurances...................................... 77
Section 13.03. Pass Through Trustee's and Subordination Agent's
Acknowledgment.......................................... 77
Section 13.04. No Retroactive Application.............................. 78
ARTICLE 14
NOTICES
Section 14.01. Notices................................................. 78
ARTICLE 15
REFINANCING
Section 15.01. Refinancing............................................. 79
ARTICLE 16
[RESERVED]
ARTICLE 17
MISCELLANEOUS
Section 17.01. [Reserved].............................................. 82
Section 17.02. Collateral Account...................................... 82
Section 17.03. Counterparts............................................ 84
Section 17.04. No Oral Modifications................................... 84
Section 17.05. Captions................................................ 84
Section 17.06. Successors and Assigns.................................. 84
Section 17.07. Concerning the Owner Trustee, Indenture Trustee and
the Pass Through Trustee................................ 85
Section 17.08. Severability............................................ 85
Section 17.09. Public Release of Information........................... 85
Section 17.10. Certain Limitations on Reorganization................... 86
Section 17.11. GOVERNING LAW........................................... 86
Section 17.12. Section 1110 Compliance................................. 86
Section 17.13. Reliance of Liquidity Providers......................... 86
ARTICLE 18
CONFIDENTIALITY
Section 18.01. Confidentiality......................................... 87
SCHEDULE I Owner Participant's Commitment; Debt Portion
SCHEDULE II Definitions
SCHEDULE III Permitted Country List
EXHIBIT A(1)(a) Opinion of Lessee's Counsel
EXHIBIT A(1)(b) Opinion of Lessee's Special Counsel
EXHIBIT A(2)(a) Opinion of Owner Participant's and Owner Participant
Guarantor's Counsel
EXHIBIT A(2)(b) Opinion of Owner Participant's and Owner Participant
Guarantor's Special 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) 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
EXHIBIT F-1 Form of Owner Participant Transfer Agreement
EXHIBIT F-2 Form of Owner Participant Guaranty
PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N585FE)
PARTICIPATION AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO.
N585FE) dated as of June 15, 1998, as amended and restated as of September 1,
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"), PYRGOS, INC., a Delaware
corporation (herein, together with its successors and permitted assigns, the
"Owner Participant"), STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, a national banking association, not in its individual
capacity, except as otherwise expressly stated herein, but solely as owner
trustee under the Trust Agreement referred to below (in such capacity as
trustee, together with its successors and permitted assigns, the "Owner
Trustee"), FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, not in its individual capacity, except as otherwise expressly
stated herein, but solely as indenture trustee under the Indenture referred to
below (in such capacity as trustee, together with its successors and permitted
assigns, the "Indenture Trustee"), FIRST SECURITY BANK, NATIONAL ASSOCIATION,
a national banking association, not in its individual capacity, except as
otherwise expressly stated herein, but solely as pass through trustee of three
separate Pass Through Trusts (in such capacity as trustee, together with its
successors and permitted assigns, the "Pass Through Trustee"), and FIRST
SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, not in
its individual capacity, except as otherwise expressly stated herein, but
solely as subordination agent (in such capacity as trustee, together with its
successors and permitted assigns, the "Subordination Agent").
W I T N E S S E T H :
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WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article 1 hereof.
WHEREAS, on the Certificate Closing Date, the Lessee, the Initial
Owner Participant, the Owner Trustee, the Indenture Trustee, the Pass Through
Trustee and the Subordination Agent entered into the Original Participation
Agreement (such term, and all other terms not heretofore defined, having the
meanings assigned thereto as provided in Article 1 below);
WHEREAS, immediately prior to the execution and delivery of the
Original Participation Agreement, the Initial Owner Participant entered into
the Original Trust Agreement relating to the Aircraft with SSB, pursuant to
which SSB agreed, among other things, to hold the Lessor's Estate for the
benefit of the Initial Owner Participant on the terms specified in the Trust
Agreement, subject to the Lien of the Indenture;
WHEREAS, on the Pass Through Closing Date, a closing occurred with
respect to the public offering of Pass Through Certificates issued by each Pass
Through Trust, an allocable amount of the proceeds of which offering was used
by the Pass Through Trustee to purchase for each such Pass Through Trust the
Certificates of the Series and Maturity applicable thereto;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Trustee and the Indenture Trustee entered
into the Original Indenture for the benefit of the Pass Through Trustee,
pursuant to which the Owner Trustee issued the Certificates to the
Subordination Agent on behalf of the Pass Through Trustee as evidence of the
loans made by the Pass Through Trustee to the Owner Trustee, the proceeds of
which loans were deposited by the Indenture Trustee on behalf of the Owner
Trustee in the Collateral Account;
WHEREAS, the Certificates are held by the Subordination Agent
pursuant to the Intercreditor Agreement on behalf of the Pass Through Trustee
for each of the Pass Through Trusts;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, (i) the Liquidity Provider entered into two revolving
credit agreements (each, a "Liquidity Facility"), one for the benefit of the
holders of Pass Through Certificates of each of the Pass Through Trusts for
the Series A Certificates and the Series B Certificates, with the
Subordination Agent, as agent for the Pass Through Trustee on behalf of each
such Pass Through Trust; and (ii) the Pass Through Trustee, each Liquidity
Provider and the Subordination Agent entered into the Intercreditor Agreement;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement, the Owner Trustee and the Lessee entered into the
Original Lease relating to the Aircraft, whereby, subject to the terms and
conditions set forth in said Lease, the Owner Trustee agreed to lease the
Aircraft to the Lessee on the Delivery Date (as defined in the Original
Lease), and the Lessee agreed to lease the Aircraft from the Owner Trustee on
the Delivery Date (as defined in the Original Lease);
WHEREAS, the Owner Participant and the Lessee have agreed that (i) the
Owner Trustee will purchase the Aircraft on the Delivery Date, (ii) pursuant
to the Agency Agreement, the Lessee will fly the Aircraft to a destination
outside the United States on the Delivery Date and (iii) the Lease Supplement
will be executed on the Lease Commencement Date;
WHEREAS, the Initial Owner Participant wishes to transfer its
Beneficial Interest to the Owner Participant on the Delivery Date and the
Owner Participant wishes to acquire such Beneficial Interest from the Initial
Owner Participant;
WHEREAS, pursuant to the terms of the Trust Agreement, the Owner
Trustee will be authorized and directed by the Owner Participant to purchase
the Aircraft from the Lessee on the Delivery Date subject to the terms and
conditions of this Agreement, the Engine Warranty Assignment and the Bills of
Sale;
WHEREAS, to fund the Owner Trustee's purchase of the Aircraft on the
Delivery Date, the Owner Trustee will, subject to the conditions precedent set
forth herein, issue the Note;
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, the
Indenture Trustee, the Pass Through Trustee and the Subordination Agent have
agreed, to the extent they are parties thereto and, subject to the terms and
conditions hereinafter provided, to amend and restate the Original
Participation Agreement, the Original Indenture, the Original Lease and the
Original Trust Agreement; 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
AMENDMENTS; ADJUSTMENTS
Section 2.01. [Reserved].
Section 2.02. [Reserved].
Section 2.03. Amendments on Delivery Date. Amendment and Restatement
of Certain Documents. Upon transfer by the Initial Owner Participant of its
Beneficial Interest on the Delivery Date (as contemplated by Section 3.02(a)
hereof), the parties hereto are entering into amendments and restatements of
the Original Trust Agreement, the Original Lease and the Original Indenture,
which amendments and restatements 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).
In connection with the foregoing adjustments, (i) on the Delivery
Date the Subordination Agent, on behalf of the Pass Through Trustee, shall
submit the Certificates to the Indenture Trustee, on behalf of the Owner
Trustee, for attachment thereto of an amended Schedule I and the making of
other related amendments and (ii) the Pass Through Trustee shall mail to the
holders of Pass Through Certificates a statement pursuant to Section 5.03 of
the Pass Through Agreement setting forth the revised Pool Balance and Pool
Factors as if the Delivery Date were a Special Distribution Date.
The Owner Trustee will, as soon as practicable, give notice of any
such proposed amendment which is to be effected prior to or on the Delivery
Date.
The Certificates and the amendments and restatements of the Original
Lease and the Original Indenture shall each reflect the amendments
contemplated by this Section 2.03.
ARTICLE 3
PARTICIPATION IN INVESTMENT ON DELIVERY DATE;
DELIVERY OF AIRCRAFT
Section 3.01. Lessee's Notices. (a) Upon receipt of a corresponding
notice from FSC, 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 estimated amount of the Owner Participant's
Commitment, the estimated 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.
(b) On or prior to the Delivery Date the Lessee, on behalf of the
Owner Trustee, shall deliver to the Indenture Trustee a notice setting forth
(i) the principal amount, if any, by which the Series C Certificates shall be
decreased on the Delivery Date upon receipt of such notice pursuant to Section
2.19 of the Indenture, and (ii) the amount or amounts, if any, to be released
on the Delivery Date by the Indenture Trustee from the Collateral Account
pursuant to Section 2.19 of the Indenture and transferred into one or more
Outstanding C Accounts specified in such notice.
Section 3.02. Commitments to Participate in Purchase Price. (a)
Participation in Purchase Price. Subject to the terms and conditions of this
Agreement, on the Delivery Date, (i) the 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 by making an investment in the beneficial ownership of the Lessor's
Estate in an amount equal to that percentage of the Purchase Price set forth
opposite the Owner Participant's name in Schedule I hereto, (ii) the Owner
Trustee shall issue the Note in favor of the Lessee in an amount equal to the
Debt Portion, (iii) the Lessee shall sell the Aircraft to the Owner Trustee
and the Owner Trustee shall thereupon enter into the Agency Agreement with the
Lessee and (iv) the Lessee shall pay to the Indenture Trustee the excess, if
any, of (I) the Debt Portion over (II) such amounts as may then be held in the
Collateral Account as provided in Section 17.02(a) hereof. 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
Owner Trustee shall make a cash payment by wire transfer of immediately
available funds on the Delivery Date to the Lessee in an amount equal to the
Owner Participant's Commitment. In addition to the foregoing, on the Delivery
Date, the Indenture Trustee, on behalf of the Owner Trustee shall transfer to
one or more Outstanding C Accounts specified by the Lessee the amounts held in
the Collateral Account required to be specified by the Lessee pursuant to
Section 2.19 of the Indenture.
Immediately upon transfer of title to the Aircraft to the Owner
Trustee on the Delivery Date, the Lessee will, pursuant to the Agency
Agreement, fly the Aircraft to a point outside the United States which shall
be the non-revenue producing flight referred to in Section 3.06 hereof. Upon
receipt of notice by the Owner Trustee and the Indenture Trustee from the
Lessee that the Aircraft has left United States airspace (i) the Lease
Supplement and the Indenture and Security Agreement Supplement shall be duly
filed for recordation (or shall be in the process of being duly filed for
recordation) with the Aeronautics Authority and (ii) subject to the proviso to
this Section 3.02(a)(ii), the Indenture Trustee shall release the Debt Portion
from the Collateral Account (or such lesser amount as may then be held in the
Collateral Account) for application to repayment of the Note; provided,
however, that if (1) the Lease Commencement 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 Lease Commencement 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 defer payment of the Note until the end of the
applicable investment period referred to in Section 2.14(b) of the Indenture
at which time the Indenture Trustee will transfer to the Lessee an amount
equal to the Debt Portion or such lesser amount as may then be held in the
Collateral Account.
(b) Payment of Commitment. The Owner Participant agrees, subject to
the terms and conditions of this Agreement, to make the amount of its
Commitment available for and on account of the Owner Trustee on the Delivery
Date specified in the Delivery Notice pursuant to Section 3.01(a) hereof by
wire transfer, initiated by 10:00 a.m. (New York City time on such day) of
such amount in immediately available funds, to the Owner Trustee for deposit
in its account at State Street Bank and Trust Company, Boston, Massachusetts,
ABA Number: 011-000-028, Account Name: FedEx Equity Payments, Account Number:
104954-010, Attention: Chrissey Mullen, Re: FedEx Equity Payment Account. The
amount of the Owner Participant's Commitment shall be held for the sole
account of the Owner Participant by the Owner Trustee until released by
written instructions of the Owner Participant at closing or until returned to
the Owner Participant in accordance with Section 3.02(c) hereof.
(c) No Obligation to Increase Commitment; Delayed Delivery. (i) (A)
Subject to Section 3.05 hereof, if the closing of the transactions
contemplated by the Operative Agreements shall not have been consummated by
2:00 p.m. (New York City time), or such earlier time as directed by the
Lessee, on the Scheduled Delivery Date, the Owner Trustee shall, if instructed
in writing by the Lessee, at the risk and expense of the Lessee, use its
reasonable best efforts to cause the Owner Participant's Commitment to be
invested pursuant to clause (B) of this Section 3.02(c)(i).
(B) The Owner Trustee shall 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; 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 under Section 3.02(c)(iii) hereof
to the extent of such obligations, and the balance, if any, of such earnings
remaining after such application shall be paid in accordance with the Lessee's
written instructions.
(ii) The Lessee shall reimburse the Owner Trustee on demand for any
loss incurred by the Owner Trustee as a result of the investment of funds by
the Owner Trustee in accordance with the terms of this Section 3.02(c).
Further, the Lessee shall indemnify the Owner Trustee and hold it harmless
from and against any cost or expense the Owner Trustee may incur as a result
of any investment of funds or transfer of funds referred to herein in
accordance with the terms hereof. The Owner Trustee shall not be liable for
failure to invest such funds except as otherwise provided herein or for any
losses incurred on such investments except for any losses arising out of its
own gross negligence or willful misconduct.
(iii) 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, if
earlier, September 30, 1998, or (ii) the Lessee has notified the Owner Trustee
(with a copy to the Owner Participant) prior to 2:00 p.m. (New York City time)
on any date after the Scheduled Delivery Date that it does not intend to go
forward to close the transactions contemplated hereby for such Delivery Date,
the Owner Participant may cancel any funding arrangements made to fund its
Commitment on the Scheduled Delivery Date but the Owner Participant's
Commitment hereunder with respect to the Aircraft shall not be terminated
thereby until September 30, 1998, whereupon the Owner Participant's Commitment
hereunder shall terminate as provided in said Section. If the event specified
in Section 3.05(d) hereof shall have occurred as provided above in this clause
(iii), the Owner Trustee shall return the amounts held by it hereunder to the
Owner Participant on the earliest practicable Business Day, 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 clause (ii)(B) of
this Section 3.02(c) 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 rate applicable to overnight Eurodollar time
deposits, 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
clause (iii) to have been returned on the next succeeding Business Day.
(d) Lessee's Obligations upon a Failure of the Lease to Commence.
If within seven (7) Business Days after the Delivery Date, the Lease
Commencement Date has not occurred, then on such seventh Business Day, except
as otherwise may be agreed to in writing by the Owner Participant, the Lessee
or its designee shall purchase from the Owner Participant and the Owner
Participant shall sell to the Lessee or its designee, the Beneficial Interest
without representation, warranty or recourse, except with respect to the
existence of any Lessor's Lien attributable to the Owner Participant, the
Owner Participant Guarantor or any Affiliate thereof on the date of such
purchase and sale. The consideration for such purchase shall consist of (a) a
payment on such seventh Business Day by wire transfer of immediately available
funds to an account or accounts specified by the Owner Participant of an
amount equal to the sum of (i) the Owner Participant's Commitment, (ii) any
and all Transaction Costs paid by the Owner Participant prior to such purchase
pursuant to Section 10.01 hereof and (iii) interest on the amounts described
in subsections (i) and (ii) of this Section 3.02(d) accrued at the rate
applicable to overnight Eurodollar time deposits, such interest to be payable
for the period from and including the Delivery Date to but excluding the date
of such payment, (b) cancellation of the Note and (c) assumption by the Lessee
of the Owner Participant Guaranty dated the Delivery Date in accordance with
the terms of Section 3.05 thereof. Notwithstanding anything to the contrary
contained herein or in any of the other Operative Agreements or Lessee
Documents, from and after the date of the sale by the Owner Participant of the
Beneficial Interest to the purchaser thereof in accordance with this Section
3.02(d), such purchaser shall be deemed to be the Owner Participant referred
to herein or in any of the other Operative Agreements or Lessee Documents;
provided however, that the Lessee shall continue to be obligated to indemnify
Pyrgos, Inc. for Expenses as provided in Section 9.01 hereof as if Pyrgos,
Inc. were still an Indemnitee under such Section 9.01.
Section 3.03. Owner Participant's Instructions to Owner Trustee. The
Owner Participant agrees that the release of its Commitment in accordance with
Section 3.02(b) hereof shall constitute, without further act, authorization
and direction by the Owner Participant to the Owner Trustee to take the action
specified in Section 1.01 of the Trust Agreement and confirmation that all
conditions to closing set forth in Article 4 hereof were either met to the
satisfaction of the Owner Participant or, if not so met, were in any event
waived by it.
Section 3.04. Transaction Costs. If the transactions contemplated
by this Agreement are consummated by the Owner Participant on or before the
Cut-Off Date, as and when any portion of Transaction Costs becomes due and
payable, the Owner Participant shall, on the Delivery Date, with respect to
invoices theretofore presented, and thereafter as soon as practicable upon
receipt of bills or invoices for the amounts payable make such payments or, if
the Lessee shall have already made such payment, shall reimburse the Lessee
therefor or shall, as soon as practicable, furnish the Owner Trustee funds
sufficient to, and the Owner Trustee shall, as soon as practicable, make
payment of such portion to the Person or Persons entitled to payment upon
presentation to the Owner Trustee of bills or invoices for the amount of such
payment.
Section 3.05. Postponement of Delivery Date. (a) If the Owner
Participant shall for any reason fail or refuse to make the full amount of its
Commitment available 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 the Owner Participant shall for any reason fail or refuse to
make the full amount of its Commitment available in accordance with the terms
of Section 3.02 hereof on such postponed Delivery Date, 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, the 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 3.05(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) neither the Owner
Participant's nor the Lessee's obligation to pay any Transaction Costs as
provided in Section 3.04 hereof (to the extent such section is applicable) and
to indemnify such parties to the extent provided in such documents, shall be
diminished or modified in any respect, (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, and (iii) the termination of
such Operative Agreements shall not be deemed to constitute a waiver or
release of any right which the Lessee or the Owner Participant may have
against any defaulting party.
(c) Optional Postponement. Without limiting the provisions of
Section 3.02(c) hereof (which shall apply to any postponement under this
Section 3.05(c)), the Scheduled Delivery Date may be postponed from time to
time (but in no event shall the Delivery Date be later than the Cut-Off Date)
for any reason, other than pursuant to Section 3.05(a) hereof, if the Lessee
gives the Owner Participant, the Indenture Trustee, the Owner Trustee and the
Pass Through Trustee confirmed facsimile notice (or telephone notice followed
by written confirmation) of such postponement and notice of the date to which
the Delivery Date has been postponed, such notice of postponement to be
received by each party no later than 11:00 a.m. (New York City time) on the
Business Day preceding the Scheduled Delivery Date.
(d) Termination of Commitment. Notwithstanding the other provisions
of this Article 3, the Owner Participant shall not be under any obligation to
make its Commitment available after September 30, 1998 and its Commitment
hereunder shall terminate at 3:00 p.m. (New York City time) on such date, and
such time shall be of the essence under this Agreement.
Section 3.06. Delivery Mechanics. The first flight of the Aircraft
after the Lessee's acceptance of the Aircraft under Section 2.01 of the Lease
will be made as promptly as practicable after such acceptance and will be a
non-revenue producing flight to a jurisdiction outside of the United States.
The Aircraft will not begin to return to the United States prior to the
expiration of twelve hours after its arrival in such jurisdiction, and the
first return flight to the United States shall be a revenue producing flight.
The Lessee will cause to be executed and delivered to the Owner Participant
within 90 days after the Delivery Date an officer's certificate in the form
attached as Exhibit A to the Tax Indemnity Agreement, together with a copy of
the flight log for the flights mentioned above.
Section 3.07. 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 and at a
location in Toronto, Canada mutually agreed to by the parties hereto, or at
such other place as the parties hereto shall mutually agree.
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent. Subject to the last paragraph
of this Section 4.01, the obligations of the Owner Trustee, the Owner
Participant, the Indenture Trustee, the Subordination Agent and the Pass
Through Trustee on behalf of each Pass Through Trust to participate in the
transactions contemplated hereby on the Delivery Date are subject to the
fulfillment to the satisfaction of each party (or waiver by such party), prior
to or on the Delivery Date of the following conditions precedent (it being
understood that receipt by the Lessee of any of the following documents shall
not be a condition precedent to the obligations of any party):
(a) Notice, Etc. Each party hereto shall have received a Delivery
Notice pursuant to Section 3.01(a) hereof.
(b) Certificates. Schedule I to the Certificates shall have been
amended as contemplated hereby and by the Indenture.
(c) Legal Investment. No change shall have occurred after the date
which is two days prior to the signing 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
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.
(d) Commitment; Approvals. The Owner Participant shall have made
available the required amount of its Commitment. All approvals and
consents of any trustees or holders of any indebtedness or obligations of
the Lessee, which in the opinion of the Owner Participant are required in
connection with any transaction contemplated by this Agreement, shall have
been duly obtained.
(e) Documents. The following documents shall have been duly
authorized, executed and delivered by the respective party or parties
thereto, shall, to the extent that the forms thereof are not attached
hereto, 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, the Owner Participant and the Owner Participant
Guarantor (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, the Owner Participant or the
Owner Participant Guarantor, as the case may be, of such documents shall
have been delivered to the LC Bank, the Owner Participant, the Owner
Participant Guarantor, the Lessee, the Indenture Trustee, the Pass Through
Trustee and the Owner Trustee (provided that the sole original of the
Warranty Bill of Sale and the sole chattel-paper original of each of the
amended and restated Lease, 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 date hereof;
(ii) the Lease, as amended and restated as of the date hereof;
(iii) the Trust Agreement, as amended and restated as of the date
hereof;
(iv) the Indenture, as amended and restated as of the date hereof;
(v) the Lease Supplement covering the Aircraft, dated the Lease
Commencement Date;
(vi) the Indenture and Security Agreement Supplement covering the
Aircraft, dated the Lease Commencement Date;
(vii) in the case of the Owner Participant only, the Tax Indemnity
Agreement;
(viii) the Ancillary Agreement I;
(ix) the Agency Agreement;
(x) the Note;
(xi) the Invoice;
(xii) the Engine Warranty Assignment;
(xiii) the Engine Consent;
(xiv) the Bills of Sale;
(xv) the GTA;
(xvi) a redacted version of the Modification Agreement; and
(xvii) the Owner Participant Guaranty.
(f) Insurance. Each of the Indenture Trustee, the Pass Through
Trustee, the Owner Trustee, the Owner Participant and the Owner Participant
Guarantor shall have received such evidence as it deems appropriate,
including, without limitation, an independent insurance broker's report,
together with the underwriters' certificate of insurance (which may be duly
signed on behalf of the underwriters by such broker), in form and substance
satisfactory to the Indenture Trustee, the Pass Through Trustee, the Owner
Trustee, the Owner Participant and the Owner Participant Guarantor to
establish that the insurance required by Article 13 of the Lease is in
effect.
(g) Financing Statements. (i) a UCC-1 financing statement covering
all the security interests (and other interests) created by or pursuant to
the Granting Clause of the Original Indenture shall have been executed and
delivered by the Owner Trustee, as debtor, and by the Indenture Trustee, as
secured party, for and on behalf of the Holders, and such financing
statement shall have been duly filed in the State of Connecticut; (ii) a
UCC-3 financing statement to amend and restate the financing statement
referred to in the immediately preceding sentence shall have been executed
and delivered by the Owner Trustee, as debtor, and by the Indenture Trustee
as secured party, and a UCC-1 financing statement covering all the security
interests (and other interests) created by or pursuant to the Granting
Clause of the Indenture shall have been executed and delivered by the Owner
Trustee, as debtor, and by the Indenture Trustee, as secured party, for and
on behalf of the Holders, and concurrently with the transactions
contemplated on the Delivery Date such UCC-3 financing statement and UCC-1
financing statement shall have been duly filed or duly submitted for filing
in the State of Connecticut, and all other actions shall have been taken
which, in the opinion of special counsel for the Pass Through Trustee or
for the Underwriters, are necessary or desirable to maintain the perfection
of the security interest created by or pursuant to the Granting Clause of
the Indenture, and (iii) a UCC-1 notice filing describing the Lease as a
lease shall have been executed and delivered by the Owner Trustee, as
lessor, and the Lessee, as lessee (which filing shall name the Indenture
Trustee as assignee of the Owner Trustee), and shall have been duly filed
in the State of Tennessee.
(h) Corporate Documents. Except when such Person is the delivering
party, the LC Bank, the Owner Participant, the Owner Participant Guarantor,
the Owner Trustee, the Pass Through Trustee, the Lessee and the Indenture
Trustee (acting directly or by authorization to its special counsel) shall
have received the following, in each case in form and substance
satisfactory to it:
(i) a copy of the certificate of incorporation and by-laws of the
Lessee, certified by the Secretary or an Assistant Secretary of the
Lessee as of the Delivery Date, and a copy of the minutes of the
regular meeting of the board of directors of the Lessee, certified as
such as of the Delivery Date by such Secretary or Assistant
Secretary, duly authorizing the lease by the Lessee of the Aircraft
under the Lease and the execution, delivery and performance by the
Lessee of this Agreement, the Lease, the Tax Indemnity Agreement, the
Lease Supplement, 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 corporate charter and bylaws of the Owner
Participant and the Owner Participant Guarantor, each certified by
the Secretary or an Assistant Secretary of the Owner Participant or
the Owner Participant Guarantor 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 Assistant Secretary, generally and duly authorizing the
execution, delivery and performance by the Owner Participant of this
Agreement, the Trust Agreement, the Tax Indemnity 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 Delivery Date by the Secretary or an Assistant Secretary,
generally and duly authorizing the execution, delivery and
performance by the Owner Participant Guarantor of the Owner
Participant Guaranty 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, certified by the Secretary or an
Assistant Secretary of the Owner Trustee as of the Delivery Date (or
other like instruments satisfactory to the Lessee and the Owner
Participant) and evidence authorizing the execution, delivery and
performance by the Owner Trustee in its individual capacity or as
Owner Trustee, as the case may be, of this Agreement, the Trust
Agreement and each of the other Operative Agreements to which it is
or is to be a party, whether in its individual capacity or as Owner
Trustee, and each other document to be executed and delivered by the
Owner Trustee in connection with the transactions contemplated hereby;
(iv) a copy of the articles of association and by-laws and other
instruments of the Indenture Trustee, certified by the Secretary or an
Assistant Secretary of the Indenture Trustee as of the Delivery Date
(or other like instruments satisfactory to the Lessee and the Owner
Participant) and evidence authorizing the execution, delivery and
performance by the Indenture Trustee of each of this Agreement, the
Indenture and each of the other Operative Agreements to which it is
or is to be a party, and each other document to be executed and
delivered by the Indenture Trustee in connection with the
transactions contemplated hereby;
(v) a copy of the articles of association and by-laws and other
instruments of the Pass Through Trustee, certified by the Secretary
or an Assistant Secretary of the Pass Through Trustee as of the
Delivery Date (or other like instruments satisfactory to the Lessee
and the Owner Participant) and evidence authorizing the execution,
delivery and performance by the Pass Through Trustee of this
Agreement and each of the other Operative Agreements to which it is
or is to be a party, and each other document to be executed and
delivered by the Pass Through Trustee in connection with the
transactions contemplated hereby;
(vi) a copy of the articles of association and by-laws and other
instruments of the Subordination Agent, certified by the Secretary or
an Assistant Secretary of the Subordination Agent as of the Delivery
Date (or other like instruments satisfactory to the Lessee and the
Owner Participant) and evidence authorizing the execution, delivery
and performance by the Subordination Agent of this Agreement 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 and the Owner
Participant Guarantor as the Indenture Trustee, the Pass Through
Trustee, the Owner Participant, the Owner Participant Guarantor or
the LC Bank may reasonably request in order to establish the
consummation of the transactions contemplated by this Agreement.
(i) Title, Airworthiness and Registration. On the Delivery Date
and, with respect to the Lease Supplement and the Indenture and Security
Agreement Supplement, on the Lease Commencement 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 on the
Lease Commencement Date 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 on the Lease Commencement Date 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.
(j) Officer's Certificate of Lessee. On the Delivery Date, the
following statements shall be true, and the LC Bank, the Owner Participant,
the Owner Participant Guarantor, 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 at the closing
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 under "Legal Proceedings" in
the Lessee's Annual Report on Form 10-K for the fiscal year ended May
31, 1998, 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, 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;
(iii) all of the conditions precedent to the obligations of the
parties to effect the transactions to be consummated on the
Certificate Closing Date, as such conditions precedent were described
in Section 4.01 of the Original Participation Agreement, were met and
or waived on or before the Certificate Closing Date; and
(iv) no event has occurred and is continuing, or would result from
the purchase, sale, mortgage, or lease of the Aircraft, which
constitutes an Event of Loss (or event which with the passage of time
would become an Event of Loss) with respect to the Airframe or any
Engine, or a Default or an Event of Default under the Lease.
(k) Officer's Certificates of Owner Participant and Owner Participant
Guarantor. 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 (a) 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 to which it is a party and in any certificate
delivered at the closing 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,
due to any action or inaction on the part of the Owner Participant
(which does not arise from any action or inaction of the Lessee), an
Indenture Default or an Indenture Event of Default.
and (b) from the Owner Participant Guarantor, signed by a duly authorized
officer of the Owner Participant Guarantor dated the Delivery Date, stating
that the representations and warranties of the Owner Participant Guarantor
contained in its Owner Participant Guaranty and in any certificate
delivered at the closing pursuant hereto 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).
(l) Other Officer's Certificates. On the Delivery Date, the
following statements shall be true, and the LC Bank, the Owner Participant,
the Owner Participant Guarantor, 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 Owner Participant Guarantor, 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
Owner Participant Guarantor, 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 Owner Participant
Guarantor, 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 Owner Participant Guarantor, 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 at the
closing pursuant hereto or thereto are true and correct on and as of
the Delivery Date as though made on and as of such date (except to
the extent that such representations and warranties relate solely to
an earlier date, in which case such certificate shall state that such
representations and warranties were true and correct on and as of such
earlier date);
(ii) to the best of its knowledge, no event has occurred and is
continuing, which constitutes or which, but for the lapse of time or
the giving of notice, or both, would constitute, due to any action or
omission on the part of SSB in its individual capacity or as Owner
Trustee, of FSB in its individual capacity or as Indenture Trustee,
of FSB in its individual capacity or as Pass Through Trustee, an
Event of Default or an Indenture Event of Default or of FSB in its
individual capacity or as Subordination Agent, an Event of Default or
an Indenture Event of Default; and
(iii) there are no Lessor's Liens attributable to the Owner
Trustee or SSB and no Indenture Trustee's Liens affecting the Trust
Indenture Estate or the Lessor's Estate or any part thereof.
(m) Legal Opinions. The Owner Participant, the Owner Participant
Guarantor, 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 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) hereto and addressed to
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 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) Paul, Weiss, Rifkind, Wharton & Garrison, special counsel
for the Owner Participant and the Owner Participant Guarantor, in the
form of Exhibit A(2)(a) hereto and the Bank of America Legal
Department, counsel for the Owner Participant and the Owner
Participant Guarantor, in the form of Exhibit A(2)(b) hereto, each
addressed to 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
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, in
the form of Exhibit A(4) hereto and addressed to 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 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) counsel for the Engine Manufacturer, in the form of Exhibit
A(6) hereto and addressed to 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; and
(viii) in the case of the Owner Participant only, Paul, Weiss,
Rifkind, Wharton & Garrison, special tax counsel to the Owner
Participant, addressed to the Owner Participant, covering such
matters as the Owner Participant may reasonably request.
(n) 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, dated the
Delivery Date and stating, among other things:
(i) the current fair market value of the Aircraft on the
Delivery Date, which value is equal to the Purchase Price;
(ii) the estimated fair market value of the Aircraft at the
end of the Basic Term, taking into account the maintenance and return
requirements of the Lease but ignoring any increase or decrease for
inflation or deflation during such period, which value is greater
than 20% of the Purchase Price;
(iii) that, based upon a review of the rental rate schedule
provided to BK Associates, Inc., the rental rates throughout the
Basic Term are considered to be reasonable and approximately equal to
the fair rental rate and the Rents for the Aircraft set forth in the
Lease for the period from July 15, 2016 until the end of the Basic
Term are not in excess of market rents for the Aircraft and,
therefore, would not affect the fair market value of the Aircraft on
July 15, 2016, nor would the Rent that the Lessee would avoid by
exercising its option to purchase the Aircraft on that date result in
an economic incentive for the Lessee to exercise such purchase option.
(iv) the estimated fair market value of the Aircraft at the
EBO Date, taking into account the maintenance and return requirements
of the Lease and Ancillary Agreement I and inflation at a rate
reasonably acceptable to Owner Participant, which value will not
exceed the EBO Price;
(v) the estimated fair market value of the Aircraft at the
end of the Basic Term, taking into account the maintenance and return
requirements of the Lease and inflation at a rate reasonably
acceptable to Owner Participant, the present value (as of the EBO
Date) of which, when added to the present value (as of the EBO Date)
of the rents specified for the remaining Base Term, determined using
a discount rate equal to Lessee's weighted average cost of capital as
determined by Owner Participant, will not exceed the EBO Price;
(vi) the estimated useful economic life of the Aircraft
remaining at the end of the Basic Term, which life is at least 20% of
the estimated useful life of the Aircraft remaining on the Delivery
Date, and the estimated useful life of the Aircraft remaining on the
Delivery Date, which life is at least 133% of the Basic Term;
(vii) that on the Delivery Date, the Aircraft will not require
any modifications, improvements or additions in order to be rendered
complete for its intended use by the Lessee (other than ancillary
items of removable equipment of a kind customarily selected by
purchasers or lessees of similar aircraft), taking into account any
non-severable improvements which reasonably can be anticipated to be
made by the Lessee to the Aircraft under the terms of the Lease;
(viii) that, at the end of the Basic Term, the Aircraft will not
be "limited use property" as defined in Rev. Proc. 76-30, 1976-2 C.B.
647 and the use of the Aircraft at the end of the Basic Term, by
Lessor or by a Person, other than Lessee or any Person related to
Lessee within the meaning of Section 318 of the Code, who could lease
or purchase the Aircraft from Lessor, will be commercially feasible
from an economic and aeronautics engineering viewpoint to the Lessor
or such other Person and it is accordingly concluded that the Lessor
could realize the residual value referred to in clause (ii) above in
a transaction with a Person other than the Lessee or any person
related to the Lessee within the meaning of Section 318 of the Code;
(ix) that the operations conducted by the Manufacturer in
connection with the conversion or modification of the Aircraft from
passenger aircraft to cargo aircraft are substantial in nature and
are generally considered to constitute "manufacturing, production or
construction of aircraft" in the commercial aviation industry and the
cost of such operations accounts for 12% or more of the Purchase
Price;
(x) that the conversion of a passenger aircraft to a dedicated
freighter model requires a supplementary FAA type certificate for a
major alteration, and the construction of the cargo door, operations
systems, cutting or aperture in the fuselage for the 140" x 102" and
other extensive modifications require the same manufacturing
processes, skills, design and structural stress analysis as would
have been employed in the original manufacture of the Aircraft (a
summary description of the process to be included in an appendix to
such report);
(xi) that at the time that the Aircraft initially was sold by
the Manufacturer to American Airlines, Inc., greater than 70% of the
fair market value of the Aircraft was attributable to articles or
components manufactured or produced in the United States;
(xii) that the cost of the U.S.-manufactured General Electric
engines, principle avionics, landing gear, hydraulic and electrical
systems, as well as most of the airframe structure was in excess of
70% of the fair market value of the Aircraft at the time of its
delivery new to American Airlines, Inc. on April 19, 1992 (a
statement by the Manufacturer regarding foreign content to be
included in an appendix to such report);
(xiii) that the Aircraft has not been improved or advanced in
value in any way while it was located outside the United States by
American Airlines, Inc., i.e., by manufacture, improvement,
modification, addition, maintenance and repair other than ordinary
maintenance and repair, or other process (a statement by American
Airlines, Inc. confirming such conclusion to be included in an
appendix to such report); and
(xiv) that at the time of the original sale of the Aircraft by
the Manufacturer to American Airlines, Inc. on April 19, 1992, the
Aircraft had a then current fair market value of at least
$100,000,000.
(o) Payment of Taxes. (A) All taxes, fees, charges, assessments,
costs and other expenses then due and payable in connection with the
execution, delivery, recording and filing of all financing statements and
the documents and instruments referred to in subparagraphs (g) and (i) of
this Section 4.01, or in connection with the sale of the Aircraft by the
Lessee, 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 then due and payable shall have been duly paid in full.
(p) Indenture Event of Default; Indenture Default. No Indenture
Event of Default or Indenture Default attributable to either SSB or the
Owner Trustee has occurred and is continuing.
(q) Event of Default; Default; Event of Loss. No Default or Event
of Default under the Lease and no 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.
(r) 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 or the Lease Commencement Date, as the case may be, 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 or the Lease Commencement Date, as the case may
be, 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 or the Lease Commencement Date, as the case may
be.
(s) [Reserved].
(t) Outstanding C Accounts. Any amount withdrawn by the Indenture
Trustee from the Collateral Account on the Delivery Date pursuant to
Section 2.19 of the Indenture and not required to pay the Note shall be
deposited into one or more Outstanding C Accounts.
(u) Officer's Certificate of Lessee Regarding Mandatory Economic
Terms and Mandatory Document Terms. On the Delivery Date in connection
with the amendments contemplated by Section 2.03 hereof, the Lessee shall
have delivered a certificate to the Owner Participant, the Owner Trustee,
the Pass Through Trustee and the Liquidity Providers signed by the Vice
President and Treasurer or any other duly authorized officer of the Lessee
stating that (i) the Operative Agreements which are amended and restated as
of the Delivery Date do not vary the Mandatory Economic Terms and contain
the Mandatory Document Terms and (ii) any substantive modification of such
documents from those in effect on the Certificate Closing Date does not
materially and adversely affect the Holders of Pass Through Certificates or
any Liquidity Provider and such certification shall be true and correct.
(v) Rating Agency Confirmation. A Rating Agency Confirmation shall
have been delivered to the Pass Through Trustee.
(w) 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.
Notwithstanding anything else to the contrary in this Section 4.01, it shall
not be a condition precedent to the obligations of the Indenture Trustee, the
Pass Through Trustee or the Subordination Agent that the conditions in
Sections 4.01(j) and (k) be satisfied if the Lessee certifies that the failure
to fulfill such condition precedent is not reasonably likely to materially
adversely affect the Holders of Pass Through Certificates and, in the event of
such failure, there has been delivered to the Indenture Trustee written
confirmation from both Moody's and S&P of the rating on any class of Pass
Through Certificates.
Section 4.02. Opinions of Special Aviation Counsel. (a) On the Lease
Commencement Date, the Lessee shall cause Daugherty, Fowler & Peregrin, special
aviation counsel, to deliver its opinion in the form of Exhibit A(7) hereto
and addressed to 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.
(b) Promptly upon the registration of the Aircraft and the filing
and, where appropriate, the 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 sell the Aircraft to the Owner Trustee and to lease the
Aircraft from the Owner Trustee pursuant to the Lease is subject to the
conditions that, prior to or on the Delivery Date, the Lessee shall have
received the certificates and other documents which are referred to in, or the
opinions to be addressed to it under, as the case may be, Section 4.01(e),
(h)(ii)-(vi), (i)(ii)-(iv), (k), (l) and (m)(ii)-(viii) hereof, and the Owner
Participant shall have made its Commitment available in accordance with the
terms of Section 3.02 hereof.
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties. The Lessee
represents and warrants to the Owner Participant, the Owner Trustee (in its
individual capacity and as Owner Trustee), the Pass Through Trustee (in its
individual capacity and as Pass Through Trustee), each Liquidity Provider and
the Indenture Trustee (in its individual capacity and as Indenture Trustee)
that, as of the Delivery Date:
(a) the Lessee is a corporation duly organized and validly existing
and is in good standing under the laws of the State of Delaware with its
principal place of business and chief executive office (as such terms are
used in Article 9 of the 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 other than the Lease
Supplement and the Bills of Sale has been duly executed and delivered by
the Lessee and constitutes (and the Lease Supplement and the Bills of Sale
when executed and delivered by the Lessee will constitute) 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 filing with the
SEC of the Current Report on Form 8-K pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934) is required for the execution,
delivery or performance by the Lessee of the Lessee Documents or for the
use and maintenance of the Aircraft except for such registrations,
applications and recordings referred to in the opinions of Special Aviation
Counsel delivered or to be delivered pursuant to Sections 4.01(m)(viii) and
4.02 hereof and except for the filings referred to in Section 4.01(g)
hereof, all of which shall have been duly obtained or made and shall be in
full force and effect on and as of the Delivery Date or as contemplated by
said Sections;
(g) neither the execution, delivery or performance by the Lessee of
the Lessee Documents nor compliance with the terms and provisions hereof or
thereof, conflicts or will conflict with or results or will result in a
breach or violation of any of the terms, conditions or provisions of, or
will require any consent or approval under, any law, governmental rule or
regulation or the charter documents, as amended, or bylaws, as amended, of
the Lessee or any order, writ, injunction or decree of any court or
governmental authority against the Lessee or by which it or any of its
Properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which the Lessee is a party or by which it or
any of its Properties is bound, or constitutes or will constitute a default
thereunder or results or will result in the imposition of any Lien upon any
of its Properties;
(h) there are no pending or, to the knowledge of the Lessee,
threatened actions, suits, investigations or proceedings (whether or not
purportedly on behalf of the Lessee) against or affecting the Lessee or any
of its Property before or by any court or administrative agency which (A)
involve the Aircraft, (B) except for the matters described under "Legal
Proceedings" in the Lessee's Annual Report on Form 10-K for the fiscal year
ended May 31, 1998, as to which no representation is made concerning the
Lessee's liability (if any) or the effect of any adverse determination upon
the consolidated financial condition, business or operations of the Lessee,
if adversely determined, would materially and adversely affect the
consolidated financial condition, business or operations of the Lessee, or
(C) if adversely determined would adversely affect the ability of the
Lessee to perform its obligations under the Lessee Documents;
(i) the Lessee and its subsidiaries have filed or caused to be filed
all tax returns which are required to be filed and has paid or caused to be
paid all taxes shown to be due and payable pursuant to such returns or
pursuant to any assessment received by the Lessee (other than assessments
the payment of which is being contested in good faith by the Lessee by
appropriate proceedings that do not involve any material danger of the
sale, forfeiture or loss of the Aircraft or any part thereof or interest
therein), 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 Section 4.01(g) hereof
and (D) the taking of possession by the Indenture Trustee of the original
counterpart of the Lease, the Lease Supplement covering the Aircraft and
Ancillary Agreement I, no further action, including any filing or recording
of any document, is necessary or advisable in order (i) to establish the
Owner Trustee's title to and interest in the Aircraft and the Lessor's
Estate as against the Lessee and any third parties, or (ii) to perfect the
first security interests in and mortgage Lien on the Trust Indenture Estate
in favor of the Indenture Trustee;
(k) on the Delivery Date, the Owner Participant will receive good and
marketable title to the Beneficial Interest, free and clear of all Liens,
except the rights of the Indenture Trustee under the Indenture, and the
Owner Trustee will receive good and marketable title to the Aircraft, free
and clear of all Liens, except the rights of the Lessee under the Lease
and, on the Lease Commencement Date, 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, 1998, and of the audited consolidated balance
sheet of the Lessee for the fiscal year ended May 31, 1998, and the related
consolidated statements of income, changes in common stockholders'
investment and cash flows for the fiscal year ended on such date,
accompanied 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 and financial statements did not, as of their respective
dates of filing with the SEC, contain any untrue statement of a material
fact or omit a material fact necessary to make the statements contained
therein not misleading and there has been no material adverse change in the
consolidated financial condition of the Lessee since May 31, 1998;
(m) with respect to ERISA:
(i) none of the Pension Plans (as defined at the end of this
Section 6.01(m)) nor their related trusts have been terminated in a
distress termination pursuant to Section 4041(c) of ERISA or by the
Pension Benefit Guaranty Corporation or any successor agency or
instrumentality thereto (the "PBGC") pursuant to Section 4042 of
ERISA, nor have any actions been taken to so terminate any Pension
Plan or related trust and neither the Lessee nor any ERISA Affiliate
has incurred or could reasonably be expected to incur any material
liability with respect to a Pension Plan under Section 4062, 4063,
4064 or 4069 of ERISA;
(ii) there have been no "reportable events" (as such term is
defined in Section 4043(b) of ERISA) with respect to any Pension Plan
which have resulted or could reasonably be expected to result in any
material liability of the Lessee;
(iii) no "accumulated funding deficiency" (as such term is defined
in Section 302 of ERISA or Section 412 of the Code) exists with
respect to any Pension Plan, whether or not waived, nor has any
request for a waiver under Section 412(d) of the Code been, or is
reasonably likely to be, filed with respect to any of the Pension
Plans;
(iv) neither the Lessee nor any ERISA Affiliate has failed to make
any contribution or payment to any Pension Plan which has resulted or
could reasonably be expected to result in the imposition of a Lien
under Section 302(f) of ERISA or Section 412(n) of the Code;
(v) all Pension Plans are in compliance in all material respects
with all applicable provisions of ERISA and the Code;
(vi) neither the Lessee nor any ERISA Affiliate has incurred or is
reasonably likely to incur any material withdrawal liability pursuant
to Section 4201 or 4204 of ERISA or any material liability under
Section 515 of ERISA;
(vii) to the best of the Lessee's knowledge, neither the Lessee
nor any ERISA Affiliate has engaged in a non-exempt "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;
(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; and
(ix) no material liability to the PBGC (other than required
insurance premiums, all of which have been paid) has been incurred
with respect to any Pension Plan.
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 and the regulations
thereunder (other than a multiemployer plan as defined in Section
4001(a)(3) of ERISA) which is covered by Title IV of ERISA or subject to
the minimum funding standards under Section 412 of the Code and which is
maintained, or contributed to, by the Lessee or any ERISA Affiliate, and
the term "ERISA Affiliate" means any entity which together with the Lessee
would be treated as a single employer under Section 414(b), (c), (m) or (o)
of the Code;
(n) the Lessee is a Citizen of the United States;
(o) except for the filings referred to in Sections 4.01(g), 4.01(i)
and 4.02 hereof, no governmental approval of any kind is required of the
Owner Participant or for the Owner Participant's execution of or
performance under this Agreement or any agreement contemplated hereby by
reason of any fact or circumstance of the Lessee, the nature of the
Aircraft or the Lessee's proposed operations or use of the Aircraft;
(p) on the Delivery Date, all premiums with respect to the insurance
required to be provided by the Lessee on or prior to the Delivery Date
under Article 13 of the Lease shall have been paid by the Lessee;
(q) on the Delivery Date, all sales or use taxes 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 and on the Delivery Date will not be in default
under the Modification Agreement or 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; and 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;
(u) 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;
(v) on the Delivery Date, the Aircraft will, upon delivery, be in
the condition required by the Lease, will be fully equipped to operate in
commercial service and will comply with all governmental requirements
governing such service;
(w) 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;
(x) 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;
(y) the Lessee's sale of the Aircraft to the Owner Trustee under the
Warranty Bill of Sale is made without any intent to hinder, delay or
defraud either present or future creditors; 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
Certificate Closing Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
warranties and representations were correct on and as of such earlier date).
Section 6.02. Offering by Lessee. The Lessee represents and
warrants that it has authorized no one to act on its behalf in connection with
the offer or sale of any interest in the Lessor's Estate or the Trust
Agreement other than First Chicago Leasing Corporation. The Lessee represents
and warrants that neither it, nor, based on representations of First Chicago
Leasing Corporation acting on its behalf, has taken or will take any action
which would subject 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, or
any state securities law. 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 10
other accredited investors (as such term is defined in Regulation D
promulgated under the Securities Act of 1933, as amended).
Section 6.03. Further Assurances; Aircraft Registration. 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) Further Assurances. 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 Bills of Sale, 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
Lessee Documents and 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) Aircraft Registration. The Lessee shall maintain the
certificates referred to in Section 7.01 of the Lease and shall cause the
Aircraft to be duly registered, and at all times to remain duly registered,
in the name of the Owner Trustee, under the Transportation Code, and shall
furnish to the Owner Trustee such information as may be required to enable
the Owner Trustee to make application for such registration; provided,
however, that the Owner Participant, the Owner Trustee and the Indenture
Trustee agree that, so long as no Default or Event of Default shall exist,
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),
(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 and (z) would not impose
requirements which materially increase the administrative or other
burdens or obligations of the Owner Participant under the Operative
Agreements unless indemnified by the Lessee;
(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 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; 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, (i) on the Delivery Date, the FAA Bill of Sale,
the Application with the Trust Agreement and the Affidavits and (ii) on the
Lease Commencement Date, the Lease, the Lease Supplement, the Indenture and
the Indenture and Security Agreement Supplement. The following documents
shall be filed and, where appropriate, recorded (i) on the Delivery Date
with the Aeronautics Authority in the following order of priority: first,
the FAA Bill of Sale and second, the Application with the Trust Agreement
and the Affidavits and (ii) on the Lease Commencement Date, first, the
Indenture with the Indenture and Security Agreement Supplement attached
thereto and second, 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 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 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 a Default not capable of
cure within the applicable grace period therefor or an Event of Default.
Upon any consolidation or merger, or any conveyance, transfer or
lease of all or substantially all of the assets of the Lessee and the
satisfaction of the conditions specified in this Section 6.03(g), the
successor corporation formed by such consolidation or into which the Lessee
is merged or the Person to which such conveyance, transfer or lease is made
shall succeed to, and be substituted for, and may exercise every right and
power of, the Lessee under this Agreement and the Lease and each other
Operative Agreement and any other document contemplated hereby and thereby
to which the Lessee is a party with the same effect as if such successor
corporation had been named as the Lessee herein and therein. No such
conveyance, transfer or lease of all or substantially all of the assets of
the Lessee as an entirety shall have the effect of releasing the Lessee or
any successor corporation which shall theretofore have become such in the
manner prescribed in this Section 6.03(g) from its liability hereunder or
under the other Operative Agreements. Nothing contained herein shall
permit any lease, sublease, or other arrangement for the use, operation or
possession of the Aircraft except in compliance with the applicable
provisions of the Lease.
(h) The Lessee agrees to give prompt written notice to the Owner
Participant, the Owner Trustee and the Indenture Trustee of any change in
the address of its chief executive office (as such term is used in Section
9-103(3) of the Tennessee 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 all of its
stockholders;
(D) promptly after filing with the SEC, copies of the Lessee's
Annual Reports on Form 10-K (including all corresponding annual
reports to shareholders), Quarterly Reports on Form 10-Q and, if
requested, any registration statement or prospectus filed by the
Lessee with any securities exchange or with the SEC;
(E) promptly upon (and in any event within five (5) Business Days
after) any Responsible Officer of the Lessee obtaining actual
knowledge of any condition or event which constitutes a Default or
any officer of the Lessee obtaining knowledge of any condition or
event which constitutes an Event of Default, an officer's certificate
specifying the nature and period of existence thereof and what action
the Lessee has taken or is taking or proposes to take with respect
thereto; and
(F) from time to time, such other financial information as the
Lessor, the Owner Participant or the Indenture Trustee may reasonably
request.
Concurrently with the delivery of the financial statements referred
to in clause (A) above, the Lessee shall deliver to the Lessor, the Owner
Participant, the 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 making available
by the Owner Participant of its Commitment, the assignment of the Beneficial
Interest to the Owner Participant, the sale and lease of the Aircraft and the
expiration or other termination of this Agreement and the other Operative
Agreements.
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in Lessor's
Estate. (a) [Reserved.]
(b) Owner Participant. The Owner Participant represents and
warrants that its interest in the Lessor's Estate and the Trust Agreement will
be 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 security
similar thereto, 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 Pass Through Trustee, 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.
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 as of the date hereof and the
Delivery Date that it is a Citizen of the United States. 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 (i) it shall cease to be, or believes that it is 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 promptly give notice thereof to
the Lessee and the Indenture Trustee and shall (at its own expense and without
any reimbursement or indemnification from the Lessee) promptly (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 as may be necessary to
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 direct (but not consequential or special) damages 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 any damages incurred directly 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 as of Delivery
Date, that:
(i) it is a corporation duly organized and validly existing in good
standing under the laws of the State of Delaware and it has full corporate
power, authority and legal right to carry on its present business and
operations, to own or lease its Properties and to enter into and to carry
out the transactions contemplated by this Agreement, the Tax Indemnity
Agreement and the Trust Agreement;
(ii) the execution, delivery and performance by it of this
Agreement, the Tax Indemnity Agreement, and the Trust Agreement have been
duly authorized by all necessary corporate action on its part and, assuming
the accuracy of the Lessee's representations in Section 6.01(o) hereof, do
not require any governmental approvals that would be required to be
obtained by the Owner Participant;
(iii) based on the representations, warranties and covenants
contained in Sections 6.01(m)(viii) 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 and the Trust Agreement nor compliance with the terms and
provisions hereof or thereof, conflicts or will conflict with or results or
will result in a breach or violation of any of the terms, conditions or
provisions of, or will require any consent or approval under any law,
governmental rule or regulation applicable to the Owner Participant or the
charter documents, as amended, or bylaws, as amended, of the Owner
Participant or any order, writ, injunction or decree of any court or
governmental authority against the Owner Participant or by which it or any
of its Properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which the Owner Participant is a party or by
which it or any of its Properties is bound, or constitutes or will
constitute a default thereunder or results or will result in the imposition
of any Lien upon any of its Properties;
(iv) this Agreement, the Tax Indemnity Agreement and the Trust
Agreement 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;
(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 or the Trust Agreement 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 it 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 Taxes that may
be imposed on such Holder as a result of the Owner Participant's failure to
be such a "U.S. Person" and 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 failure to be such a "U.S. Person";
and
(x) it has, together with the Owner Participant Guarantor, a
consolidated tangible net worth of not less than $50,000,000.
Notwithstanding the foregoing or anything else contained in this
Agreement, the Owner Participant makes no representation or warranty in this
Agreement with respect to laws, rules or regulations relating to aviation or
to the nature or use of the equipment owned by the Owner Trustee, including,
without limitation, the airworthiness, value, condition, workmanship, design,
patent or trademark infringement, operation, merchantability or fitness for
use of the Aircraft, other than such laws, rules or regulations relating to
the citizenship requirements of the Owner Participant under applicable
aviation law.
(b) Lessor's Liens. The Owner Participant further represents,
warrants and covenants that there are no Lessor's Liens attributable to it (or
an Affiliate thereof) and that there will not be any Lessor's Lien
attributable to it (or an Affiliate thereof) on the Delivery Date. The Owner
Participant agrees with and for the benefit of the Lessee, the Owner Trustee,
the Indenture Trustee and the Pass Through Trustee 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 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
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) incurred on or before the date
of such transfer and provided that the transferee agrees by a written
instrument substantially in the form of Exhibit F-1 attached hereto or in such
other form as may be reasonably satisfactory to the Indenture Trustee, the
Owner Trustee and the Lessee 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 incurred after the date
of transfer and the Owner Participant shall remain secondarily liable for all
such obligations assumed by its successor as Owner Participant; provided, that
the Owner Participant need not so agree to remain and shall not be so
secondarily liable if (a) such transferee is (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 that has a combined capital and surplus (or, if applicable,
consolidated tangible net worth or its equivalent) of not less than
$50,000,000, (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 F-2 attached hereto or in such other form as may be
reasonably satisfactory to the Indenture Trustee, the Owner Trustee and the
Lessee of such transferee subsidiary's obligations, or (iii) an Affiliate of
the transferring Owner Participant if that Affiliate has a combined capital
and surplus (or, if applicable, consolidated tangible net worth or its
equivalent) of not less than $50,000,000, (b) such transferee is legally
capable of binding itself to the obligations of the Owner Participant and
expressly agrees to assume all obligations of the Owner Participant under the
Trust Agreement and this Agreement and (c) such transferee shall provide
representations substantially similar to those contained in Section 7.03(a)
hereof. In the event of any such assignment, conveyance or transfer, the
transferee shall become a party to the Trust Agreement and shall agree to be
bound by all the terms of and will undertake all of the obligations of the
Owner Participant contained in the Trust Agreement and the other Operative
Agreements in such manner as is reasonably satisfactory to the Owner Trustee,
the Indenture Trustee and the Lessee. 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) or if the transferee shall not be such "U.S. Person" then
(A) each Certificate Holder shall be provided an indemnity in form and
substance satisfactory to each such Certificate Holder, for any Taxes that may
be imposed on such Certificate Holder (currently or in the future) due to such
transferee's failure to be such a "U.S. Person" and (B) such transferee shall
be personally liable for any debt service to the extent that its receipt of
rentals is reduced by reason of any withholding Taxes that result from such
transferee's failure to be such a "U.S. Person" and (ii) a Citizen of the
United States or has established a voting trust, voting powers or other
arrangement reasonably satisfactory to the Indenture Trustee and the Lessee
to permit the Owner Trustee to be the registered owner of the Aircraft under
the Transportation Code. A transferee hereunder shall not be, and in
acquiring the Beneficial Interest shall not use the assets of, an employee
benefit plan subject to Title I of ERISA or an individual retirement account
or a plan subject to Section 4975 of the Code. Assuming the truth of the
representations made in 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 assignment, conveyance or
transfer 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 and which
competes with the Lessee in one of its principal lines of business.
(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), (v), (vi), (vii) and (viii) below and SSB represents to its
knowledge and warrants with respect to item (iv) below, and as the Owner
Trustee with respect to items (iii)(B) and, to the extent applicable to its
trust capacity, (v) and (vii) as of 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, assuming the Trust Agreement has been duly authorized,
executed and delivered by the Owner Participant, has full corporate power
and authority, in its individual capacity or as the Owner Trustee, as the
case may be, to carry on its business as now conducted, and to execute,
deliver and perform 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, 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, constitute the legal, valid and binding
obligation of SSB 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),
(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 or any judgment or
order applicable to or binding on it;
(iv) the performance by SSB of any of its obligations thereunder
does not contravene any lease, regulation or contractual restriction
binding on SSB in its individual capacity;
(v) 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;
(vi) 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;
(vii) 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 nor the
performance of its obligations hereunder or thereunder, 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;
(viii) 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; and
(ix) 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 Certificate Closing Date (except to the extent such
representations expressly related solely to a specified earlier date, in
which case such warranties and representations were correct on and as of
such earlier date).
(b) Lessor's Liens. SSB, in its individual capacity, further
represents, warrants and covenants that there are no Lessor's Liens
attributable to it in its individual capacity and that there will not be any
such Lessor's Liens on the Delivery Date. The Owner Trustee, in its trust
capacity, and at the cost and expense of the Lessor's Estate, 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, and not at the cost and expense of the
Lessor's Estate, 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
or the consolidated group of taxpayers of which it (in such capacity) is a
part which may arise at any time after the date of this Agreement.
(c) Indemnity for Lessor's Liens. 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 security similar thereto relating to the
Lessor's Estate, or in any interest 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 interests to, or solicited any
offer to acquire any of the same from, any Person. SSB further represents and
warrants, in its individual capacity and as the Owner Trustee, that neither it
nor anyone acting on its behalf shall own the Certificates.
Section 7.05. Representations, Warranties and Covenants of the
Indenture Trustee. (a) The Indenture Trustee in its individual capacity (other
than as the Pass Through Trustee) represents as of the Delivery Date as
follows:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America
and has the power and authority to enter into and perform its obligations
under the Indenture, this Agreement and the other Operative Agreements to
which it is or is to be a party and to authenticate the Certificates
delivered on the Certificate Closing Date;
(ii) the Indenture and this Agreement and the other Operative
Agreements to which it is or is to be a party, and the authentication of
the Certificates delivered on the Certificate Closing Date, have been duly
authorized by all necessary corporate action on its part, and neither the
execution and delivery thereof nor its performance of any of the terms and
provisions thereof will violate any Federal or Utah law or regulation
relating to its banking or trust powers or contravene or result in any
breach of, or constitute any default under, its articles of association or
by-laws;
(iii) each of the Indenture and this Agreement, and the other
Operative Agreements to which it is or is to be a party, has been duly
executed and delivered by it and, assuming that each such agreement is the
legal, valid and binding obligation of each other party thereto, is the
legal, valid and binding obligation of the Indenture Trustee, enforceable
against the Indenture Trustee in accordance with its terms except as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
other similar laws or equitable principles of general application to or
affecting the enforcement of creditors' rights (regardless of whether
enforceability is considered in a proceeding in equity or at law);
(iv) neither the execution and delivery by it of the Indenture and
this Agreement and the other Operative Agreements to which it is or is to
be a party, nor the performance by it of any of the transactions
contemplated hereby or thereby, requires the consent or approval of, the
giving of notice to, the registration with, or the taking of any other
action in respect of, any Federal or state governmental authority or agency
governing its banking and trust powers;
(v) on the Delivery Date, the Indenture Trustee will hold the
original counterparts of the Lease and the Ancillary Agreement I and on the
Lease Commencement Date, the Indenture Trustee will hold the Lease
Supplement; and
(vi) the representations and warranties of the Indenture Trustee set
forth in the Original Agreements to which it is a party were correct on and
as of the Certificate Closing Date (except to the extent such
representations expressly related solely to a specified earlier date, in
which case such warranties and representations were correct on and as of
such earlier date).
(b) Indenture Trustee's Liens. The Indenture Trustee, in its
individual capacity, further represents, warrants and covenants as of the date
hereof and as of the Delivery Date 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 as of 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 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 exists, 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. Pass Through Trustee's Representations and Warranties.
The Pass Through Trustee, in its individual capacity (except with respect to
clause (iii) below), represents and warrants as of the Delivery Date that:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America
and has the power and authority to enter into and perform its obligations
under this Agreement;
(ii) the execution, delivery and performance of this Agreement and
the performance of its obligations hereunder have been fully authorized by
all necessary corporate action on its part, and neither the execution and
delivery hereof nor its performance of any of the terms and provisions
hereof will violate any Federal or Utah law or regulation relating to its
banking or trust powers or contravene or result in any breach of, or
constitute any default under its articles of association, or bylaws or the
provisions of any indenture, mortgage, contract or other agreement to which
it is a party or by which it or its properties may be bound or affected;
(iii) this Agreement has been duly executed and delivered by it (in
its individual and trust capacities) and, assuming that this Agreement is
the legal, valid and binding obligation of each other party thereto, is or
will be, as the case may be, the legal, valid and binding obligation of the
Pass Through Trustee (in its individual and trust capacities), enforceable
in accordance with its respective terms except as limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of
creditors' rights generally (regardless of whether such enforceability is
considered in a proceeding in equity or at law); and
(iv) the representations and warranties of the Pass Through Trustee
set forth in the Original Agreements to which it is a party were correct on
and as of the Certificate Closing Date (except to the extent such
representations expressly related solely to a specified earlier date, in
which case such warranties and representations were correct on and as of
such earlier date).
Section 7.10. Survival of Representations, Warranties and Covenants.
The representations, warranties and covenants of the Owner 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 making
available by the Owner Participant of its Commitment, the sale and lease 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 exists 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 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, including reasonable allocated time
charges of internal counsel for the Owner Participant) 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 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 Section 6.02 or
6.06 of the Trust Agreement without the prior written consent of a Majority in
Interest of Certificate Holders, 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. If and so long as the Indenture shall not have been discharged the
consent of the Indenture Trustee shall also be required and in addition, the
Owner Participant will promptly and duly execute and deliver to the Indenture
Trustee such documents and assurances including, without limitation,
conveyances, financing statements and continuation statements with respect to
financing statements and take such further action as the Indenture Trustee may
from time to time reasonably request and furnish in order to protect the
rights and remedies created or intended to be created in favor of the
Indenture Trustee under the Indenture and to create for the benefit of the
Certificate Holders a valid first priority Lien with respect to, and a first
and prior perfected security interest in, the Trust Indenture Estate.
Section 7.14. Subordination Agent's Representations, Warranties and
Covenants. (a) Representations and Warranties. The Subordination Agent
represents and warrants as of the Delivery Date that:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America
and has the corporate power and authority to enter into and perform its
obligations under this Agreement;
(ii) the execution, delivery and performance of this Agreement and
the performance of its obligations hereunder have been fully authorized by
all necessary corporate action on its part, and, neither the execution and
delivery thereof nor its performance of any of the terms and provisions
thereof will violate any Federal or Utah law or regulation relating to its
banking or trust powers or contravene or result in any breach of, or
constitute any default under its articles of association, or bylaws or the
provisions of any indenture, mortgage, contract or other agreement to which
it is a party or by which it or its properties may be bound or affected;
(iii) this Agreement has been duly executed and delivered by it and,
assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is or will be, as the case may be,
the legal, valid and binding obligation of the Subordination Agent,
enforceable in accordance with its respective terms except as limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws or
equitable principles of general application to or affecting the enforcement
of creditors' rights generally (regardless of whether such enforceability
is considered in a proceeding in equity or at law);
(iv) there are no Taxes payable by the Subordination Agent imposed by
the State of Utah or any political subdivision or taxing authority thereof
in connection with the execution, delivery and performance by the
Subordination Agent of this Agreement, any of the Liquidity Facilities or
the Intercreditor Agreement (other than franchise or other taxes based on
or measured by any fees or compensation received by the Subordination Agent
for services rendered in connection with the transactions contemplated by
the Intercreditor Agreement or any of the Liquidity Facilities), and there
are no Taxes payable by the Subordination Agent imposed by the State of
Utah or any political subdivision thereof in connection with the
acquisition, possession or ownership by the Subordination Agent of any of
the Certificates other than franchise or other taxes based on or measured
by any fees or compensation received by the Subordination Agent for
services rendered in connection with the transactions contemplated by the
Intercreditor Agreement or any of the Liquidity Facilities);
(v) there are no pending or threatened actions or proceedings
against the Subordination Agent before any court or administrative agency
which individually or in the aggregate, if determined adversely to it,
would materially adversely affect the ability of the Subordination Agent to
perform its obligations under this Agreement, the Intercreditor Agreement
or any Liquidity Facility;
(vi) the Subordination Agent has not directly or indirectly offered
any Certificate for sale to any Person or solicited any offer to acquire
any Certificates from any Person, nor has the Subordination Agent
authorized anyone to act on its behalf to offer directly or indirectly any
Certificate for sale to any Person, or to solicit any offer to acquire any
Certificate from any Person; and the Subordination Agent is not in default
under any Liquidity Facility;
(vii) the Subordination Agent is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter or the Lessee; and
(viii) the representations and warranties of the Subordination Agent
set forth in the Original Agreements to which it is a party were correct on
and as of the Certificate Closing Date (except to the extent such
representations expressly related solely to a specified earlier date, in
which case such warranties and representations were correct on and as of
such earlier date).
(b) Covenants. (i) The Subordination Agent agrees not to amend any
Liquidity Facility without the consent of the Lessee (so long as no Event of
Default shall have occurred and be continuing) and of the Owner Participant
(such consents not to be unreasonably withheld).
(ii) In connection with the deposit in the applicable Cash Account of
amounts drawn pursuant to any Downgrade Drawing under a Liquidity Facility, the
Subordination Agent agrees, so long as no Event of Default shall have occurred
and be continuing, to pay to the Lessee promptly following each Regular
Distribution Date any Investment Earnings on the amount so deposited which
remain after application of such Investment Earnings pursuant to Section 2.06
of such Liquidity Facility to the interest payable on such Downgrade Drawing
under Section 3.07 of such Liquidity Facility. Capitalized terms used in this
Section shall have the meanings specified in the Intercreditor Agreement.
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes. (a) Generally. All
payments of Rent will be free and clear of withholding of any Tax imposed by
any foreign or international taxing authority and, so long as the Owner
Participant is a U.S. Person, imposed by the United States, any state or local
government or taxing authority in the United States, or the taxing authority
of any United States possession or territory and at the time that the Lessee
is required to make any such payment upon which any withholding is required,
the Lessee shall pay an additional amount of Rent such that the net amount of
Rent actually received by the Person entitled to receive such Rent will be
equal to the amount of Rent that such Person would have been due absent such
withholding. In addition, the Lessee agrees promptly to pay when due, and to
indemnify and hold each Indemnitee harmless from all license, recording,
documentary, registration and other fees and all taxes (including, without
limitation, income, gross receipts, sales, rental, use, value added, property
(tangible and intangible), ad valorem, excise and stamp taxes), fees, levies,
imposts, recording duties, 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 relating
to:
(i) the acquisition, financing, use or operation of the Aircraft;
(ii) payments under the Operative Agreements;
(iii) the Property, or the income or other proceeds received with
respect to the Property after an Event of Default under the Lease, or by
the Indenture Trustee under the Indenture;
(iv) otherwise with respect to or by reason of the transactions
described in or contemplated by the Operative Agreements;
(v) the payment of the principal or interest or other amounts
payable with respect to the Certificates; or
(vi) the Certificates or the Pass Through Certificates or the
issuance, acquisition, or refinancing thereof or the beneficial interests
in the Trust Estate or the creation thereof under the Trust Agreement.
(b) Exceptions. The indemnity provided for in Section 8.01(a)
hereof shall not extend to any of the following:
(i) Taxes of an Indemnitee imposed by the United States or by any
state or local or foreign jurisdiction based upon, measured by, or with
respect to the net income, items of tax preference or minimum tax, excess
profits, net receipts, capital, franchise or net worth (whether denominated
income, excise, capital stock, or doing business taxes) (including without
limitation any U.S. withholding taxes with respect to the foregoing taxes)
other than sales, use, transfer, rental, ad valorem, stamp or property
Taxes (the Taxes excluded pursuant to this clause (b)(i) being hereinafter
referred to as "Income Taxes"); provided, that any gross income, gross
receipts, value added or consumption Tax shall be treated as an Income Tax
if such Tax is imposed in lieu of or in the nature of an income or similar
Tax, and shall not be treated as an Income Tax if such Tax is imposed in
lieu of or in the nature of a sales, use or similar Tax; provided, however,
that the exclusion set forth in this clause (b)(i) shall not apply (A) to
Taxes that would not have been imposed absent the location, use or
registration of the Aircraft, Airframe, any Engine or any Part in, the
presence, operations or activities of the Lessee or any other user of the
Aircraft, Airframe, any Engine or any Part (or any Affiliates of any of the
foregoing) in, or the making of payments from, such jurisdiction (it being
understood that any such indemnification will be payable only to the extent
of the net harm incurred by such Indemnitee and its Affiliates from such
Taxes, taking into account, without limitation, any incremental current Tax
Benefit in the same or another tax jurisdiction resulting from the
liability for or payment of such Taxes) or (B) to Taxes on the Lessor, the
Owner Trustee or Trust Estate if the Owner Participant would not have been
subject to such taxes in the absence of the participation of the Owner
Trustee in this transaction;
(ii) Taxes imposed on the Owner Trustee, the Lessor or the Owner
Participant or any successor, assign or Affiliate thereof resulting from a
voluntary transfer or disposition by such Indemnitee subsequent to the
Delivery Date, including, without limitation, revocation of the Trust, or
any disposition in connection with the bankruptcy or insolvency of the
Owner Trustee, the Lessor or the Owner Participant or any of their
respective Affiliates or from a foreclosure proceeding of any of the
foregoing, in any case of (x) an interest in the Lessor's estate or (y) the
Aircraft, Airframe, Engines or Parts thereof, except, in each such case, a
transfer or disposition required by any Operative Agreement or as the result
of the exercise of remedies while an Event of Default exists;
(iii) Taxes imposed on an Indemnitee resulting from the breach by such
Indemnitee of any representation, warranty, or covenant contained in the
Operative Agreements or any document delivered in connection therewith;
(iv) Taxes imposed with respect to the Aircraft and arising out of or
measured by acts, omissions, events or periods 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 and (B) the earliest of (w)
the expiration of the Term of the Lease and return of the Aircraft to the
Lessor in accordance with the provisions of the Lease, (x) the termination
of the Lease in accordance with the applicable provisions of the Lease and
return of the Aircraft in accordance with the Lease and (y) 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 (iv) shall not apply (a) 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 (b) to any Taxes
imposed as the result of the exercise of remedies while an Event of Default
exists;
(v) Taxes imposed against the Owner Trustee or the Indenture Trustee
upon or with respect to any fees for services rendered in connection with
the transaction;
(vi) Taxes imposed on the Owner Participant for which the Lessee is
obligated to indemnify the Owner Participant pursuant to the Tax Indemnity
Agreement;
(vii) Taxes which have been included in the Purchase Price or
Transaction Costs and which have been paid to the applicable taxing
authorities;
(viii) [Reserved];
(ix) 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;
(x) 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 (x), 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 (i) the Aircraft or any part thereof,
(ii) the Lessor's estate or Indenture, (iii) any interest in or under any
Operative Agreement, or (iv) any proceeds thereunder; provided, however,
that the exclusion provided by this clause (x) shall not apply in the case
of a succession, assignment or other transfer (A) to a transferee that is a
United States Person within the meaning of Section 7701(a)(30) of the Code,
(B) required by any provision of the Operative Agreements or (C) while an
Event of Default under the Lease or the Indenture has occurred and is
continuing;
(xi) [Reserved]; and
(xii) Any interest, penalties or additions to tax resulting in whole
or part from a failure of such Indemnitee (or its Affiliate) to file a
return that is timely and proper, unless such failure was due to a breach
of the Lessee's obligations set forth in Section 8.06 hereof.
(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 or any of their
Affiliates for any withholding tax, the Lessee will indemnify the Owner
Trustee and the Owner Participant and their Affiliates (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
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, 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) hereof. 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 or
indemnification, 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 such payment made by such
Indemnitee pursuant to this sentence and (y) the amount of such payments made
pursuant to Section 8.01 hereof and this Section 8.02 by the Lessee to such
Indemnitee with respect to the Tax that gave rise to such Tax benefits plus
the amount of any other payments by the Lessee to such Indemnitee theretofore
required to be made under Section 8.01 hereof and this Section 8.02 (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 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 such Indemnitee on an After-Tax Basis 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)
without regard to Section 8.01(b) hereof.
Section 8.03. Time of Payment. The Lessee will pay any Taxes for
which it has responsibility pursuant to Section 8.01 hereof not later than the
due date therefor. 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 or
copy. 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:
(w) 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
(x) 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 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 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 be consulted in good faith regarding 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 (y) agreed to pay and shall pay the
Indemnitee on a current basis (following presentation of properly certified
and supported invoices) all reasonable fees and expenses which such Indemnitee
may incur as a result of contesting such Taxes, and (z) made all payments and
indemnities then due to the Indemnitee hereunder or with respect to any of the
transactions contemplated by or under the Operative Agreements. In no event
shall such Indemnitee be required to contest pursuant to this Section 8.04 the
imposition of any Tax for which the Lessee is obligated to indemnify any
Indemnitee hereunder unless (i) such Indemnitee shall have received an opinion
of independent tax counsel (including without limitation Davis Polk &
Wardwell), at the Lessee's expense, selected by the Lessee and reasonably
satisfactory to such Indemnitee ("Tax Counsel") to the effect that a
Reasonable Basis exists for contesting such claim, (ii) if an Event of Default
exists, the Lessee shall have provided security for its obligations hereunder
reasonably satisfactory to the Indemnitee, (iii) 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) ("Substantial Authority") for contesting such claim, (iv)
if such contest shall be conducted in a manner requiring payment of the claim
in advance, the Lessee shall have advanced sufficient funds, on an interest
free basis, to make the payment required, and agreed to indemnify the
Indemnitee against any additional net adverse tax consequences on an After-Tax
Basis to such Indemnitee of such advance and (v) the amount of the indemnity
payments the Lessee would be required to make with respect to such claim, when
aggregated with similar claims that could be raised in other taxable years of
such Indemnitee is at least $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, if (A) no
material risk described in Section 8.04(w) hereof exists, (B) the requirement
set forth in clause (ii) of this Section 8.04 has been satisfied and (C) such
contest does not involve any claims of or upon an Indemnitee for which the
Lessee is not obligated to indemnify such Indemnitee, then the Lessee may
contest such Tax liability in the name of the Lessee, if permitted by law.
The Indemnitee shall not appeal and shall not be required to permit Lessee to
appeal any judicial decision unless it receives an opinion of Tax Counsel, at
the Lessee's sole expense, to the effect that a Substantial Authority exists
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 (and any related claims, then or at another time the resolution of
which would have been determined by such contest) other than the amounts
described in Section 8.04(y) above that have accrued as of the date of waiver.
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
and (y) all payments then due to such Indemnitee under 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 without
regard to the provisions of 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 (other than any report or return relating to Income Taxes), the
Lessee shall make such report or return if legally permitted to do so, 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 any related information that it considers
confidential.
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 Owner Participant of its Commitment, the
assignment of the Beneficial Interest to the Owner Participant 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 the 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. If, for any
reason, the 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; it being understood that any such
damages are payable to the Owner Trustee or (to the extent assigned to the
Indenture Trustee and subject to the Lien of the Indenture) to the Indenture
Trustee and provided, that any amount so recovered as damages shall be deemed
to be a payment by the Lessee of Basic Rent, Stipulated Loss Value or interest
thereon due pursuant to the Lease and shall satisfy the Lessee's obligations
under the Lease to the extent of such recovery), penalties, claims, actions,
suits, costs, disbursements and expenses (including reasonable legal fees and
expenses (including, without limitation, the allocated reasonable costs and
expenses of internal counsel to the Owner Participant) and all costs and
expenses relating to amendments, supplements, adjustments, consents,
refinancings and waivers under the Operative Agreements except as otherwise
provided in Section 10.01(d)(i) or Article 15 hereof) of every kind and nature
(whether based on negligence, warranty, absolute, strict or product liability
or any other theory of liability) (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 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, ownership, title to, 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 loss or requisition or taking of title to or of 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 Collateral Account and the Liquid Collateral;
(vi) the enforcement of the terms of the Operative Agreements or the
Original Agreements and the administration of the Trust Indenture Estate;
and
(vii) the offer, issuance, sale or delivery of any Certificate or any
Pass Through Certificate, or any refunding or refinancing thereof, or
interest in the Lessor's Estate or the Trust Agreement or the Original
Trust Agreement or any similar interest or in any way relating to or
arising out of the Trust Agreement or the Original Trust Agreement and the
Lessor's Estate, the Indenture or the Original Indenture or the Trust
Indenture Estate (including, without limitation, any claim arising out of
the Securities Act of 1933, as amended, the Securities Exchange Act of
1934, as amended, or any other federal or state statute, law or regulation,
or at common law or otherwise relating to securities), or the action or
inaction of the Owner Trustee or Indenture Trustee as trustees, in the
manner contemplated by this Agreement, the Original Participation
Agreement, the Indenture, the Original Indenture, the Indenture and
Security Agreement Supplement, the Trust Agreement or the Original Trust
Agreement and in the case of the Owner Participant or the Initial Owner
Participant, as the case may be, its obligations arising under Section 6.01
of the Trust Agreement or the Original Trust Agreement.
The foregoing indemnity by the Lessee is intended to include and cover, but is
not limited to, any Expense to which the Indemnitees may be subject as a
result of their respective ownership or leasing of any interest in or holding
of any Lien on the Aircraft, Airframe, any Engine or Part during the Term,
whether or not in the Lessee's possession or control, insofar as such Expense
relates to any activity or event whatsoever involving such item while it is
under lease to the Lessee (or after termination of the Lease in connection
with the exercise of remedies thereunder to the extent that such Expense is
attributable to the transactions contemplated hereby and by the other
Operative Agreements and the Original Agreements), and such Expense does not
fall within any of the exceptions listed in Section 9.01(b) hereof.
(b) Exceptions. The indemnity provided for in Section 9.01(a) shall
not extend to any Expense of any Indemnitee to the extent it:
(i) would not have occurred but for the willful misconduct or gross
negligence of such Indemnitee unless imputed to such Indemnitee by
operation of law or actions or inactions of others unrelated to 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 leased under the Lease or, if the Aircraft remains a part of the
Lessor's Estate, after the expiration of the Term (other than pursuant to
Article 17 of the Lease, in which case the indemnity provided in Section
9.01(a) hereof shall survive for so long as Lessor 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, including without limitation the
Lessee's failure to fully discharge all of its obligations under the Lease
or the other Operative Agreements or the Original Agreements;
(iii) 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, the Original Agreements or
any other Operative Agreement to which it is a party unless such breach or
default is 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,
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
exercise of remedies under Article 17 of the Lease or (z) in connection
with a sale to the Lessee or its designee; and
(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 (or any funded
participation therein) (i) over which purchase or holding the Owner
Participant or any Affiliate thereof has discretion or control (other than
in the capacity of a directed trustee or custodian), or (ii) by an employee
benefit plan, within the meaning of Section 3(3) of ERISA, or individual
retirement account or plan subject to Section 4975 of the Code with respect
to which the Owner Participant (or any Affiliate thereof) has the power,
directly or indirectly, to appoint or terminate, or to negotiate the terms
of the management agreement with, the person or persons having discretion
or control (other than in the capacity of a directed trustee or custodian),
over such purchase or holding.
Section 9.02. After-Tax Basis. The amount which the Lessee shall be
required to pay with respect to any Expense indemnified against under Section
9.01 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 Original Agreements, the Tax Indemnity Agreement and any other
Operative Agreement, an amount equal to the lesser of (x) the sum of such Tax
benefit plus any other permanent Tax benefit actually realized by such
Indemnitee as the result of any payment made by such Indemnitee pursuant to
this sentence and (y) the amount of such payment pursuant to this Section 9.02
by the Lessee to such Indemnitee plus the amount of any other payments by the
Lessee to such Indemnitee theretofore made pursuant to this Section 9.02 less
the amount of any payments by such Indemnitee to the Lessee theretofore made
pursuant to this Section 9.02 (and the excess, if any, of the amount described
in clause (x) above over the amount described in clause (y) above shall be
carried forward and applied to reduce pro tanto any subsequent obligations of
the Lessee to make payments to such Indemnitee pursuant to this Section 9.02),
it being intended that no Indemnitee should realize a net Tax benefit pursuant
to this Section 9.02 unless the Lessee shall first have been made whole for
any payments by it to such Indemnitee pursuant to this Section 9.02; provided,
however, that notwithstanding the foregoing portions of this sentence, such
Indemnitee shall not be obligated to make any payment to the Lessee pursuant
to this sentence so long as an Event of Default shall have occurred and be
continuing. Any Taxes that are imposed on any Indemnitee as a result of the
disallowance or reduction of such Tax benefit referred to in the next preceding
sentence in a taxable year subsequent to the year of allowance and utilization
by such Indemnitee (including the expiration of any tax credit carryovers or
carrybacks of such Indemnitee that would not otherwise have expired) shall be
indemnifiable pursuant to the provisions of Section 8.01 hereof without regard
to Section 8.01(b) hereof.
Section 9.03. Subrogation. Upon the payment in full of any indemnity
pursuant to this Article 9 by the Lessee (but not earlier), the Lessee shall be
subrogated to any right of the Indemnitee, other than with respect to any of
such Indemnitee's insurance policies or in connection with any indemnity claim
the Person indemnified may have against any other Indemnitee in respect of the
matter against which such indemnity has been made.
Section 9.04. Notice and Payment. Each Indemnitee and the Lessee
shall give prompt written notice one to the other of any liability of which
such party has 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, but
without regard to Section 8.01(b) hereof, other than Section 8.01(b)(v) hereof.
Section 9.06. Defense of Claims. With respect to any claim by an
Indemnitee for indemnification by the Lessee of an Expense, 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 exists and (iii) the Lessee shall have first acknowledged in
writing to such Indemnitee the Lessee's obligation to indemnify such
Indemnitee hereunder in respect of such claim, defend any such claim covered by
insurance for which indemnification is sought pursuant to this Article 9 and
each Indemnitee shall cooperate with the Lessee or its insurers with respect
thereto, and provided, further, the Lessee shall not be entitled to assume and
control the defense of any such claim if and to the extent such Indemnitee
reasonably objects to such control on the ground that an actual or potential
material conflict of interest exists where it is advisable for such Indemnitee
to be represented by separate counsel. 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.
Section 9.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 9 and the Lessee's obligations under any and all of them shall survive
the making available by the Owner Participant of its Commitment, the
assignment of the Beneficial Interest to the Owner Participant and the
expiration or other termination of this Agreement, the Tax Indemnity
Agreement, the Trust Agreement, the Indenture, the Engine Warranty Assignment,
the Lease and the other Operative Agreements 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. The Owner Participant shall pay (or reimburse the Lessee if the Lessee
shall have previously made such payment) all fees and expenses of the
following persons relating to the public offering of the Pass Through
Certificates contemplated by the Underwriting Agreement and related to the
transactions contemplated hereby: (i) the fees and expenses of counsel for the
Owner Participant and the Owner Participant Guarantor; (ii) the fees and
expenses of Davis Polk & Wardwell, as special transaction documentation
counsel, and the fees and expenses of 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 (including computer time-sharing charges) of
First Chicago Leasing Corporation; (xi) the reasonable out-of-pocket expenses
of the Owner Participant and the Owner Participant Guarantor; (xii)
reimbursement to the Owner Participant, the Owner Participant Guarantor, the
Owner Trustee, the Indenture Trustee, the Subordination Agent, each Liquidity
Provider, the LC Bank and the Pass Through Trustee for any and all reasonable
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, reasonable
travel expenses and disbursements which shall have been paid by such party
(including reasonable allocated time charges of internal counsel for the Owner
Participant and any amounts paid in connection with any appraisal report
prepared on behalf of the Owner Participant); (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 after
the Delivery Date) 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 (xv) of this paragraph shall be
allocable to the Owner Participant under this Agreement (1) to the extent
incurred specifically with respect to the Owner Participant, and (2) to the
extent such fees and expenses are incurred but are not specifically
attributable to the Owner Participant, in the proportion that the principal
amount of the Certificates bears to the total amount of the Pass Through
Certificates.
The Owner Participant, the Owner Trustee and the Lessee acknowledge
that the percentages for Basic Rent, Stipulated Loss Value, Termination Value
and EBO Price set forth in the Lease have been prepared assuming the aggregate
amount payable by the Owner Participant pursuant to the preceding paragraph is
1.37% 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 3.04 hereof, and (iii) the Transaction Costs to be paid by
the Owner Participant pursuant to Section 10.01 hereof exceed, in the
aggregate, $25,000,000.00, 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
$25,000,000.00, 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) Payment. Transaction Costs shall be paid in the manner provided
in Section 3.04 hereof.
(c) 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.
(d) 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 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 Section 7.03(d)
hereof or otherwise) by the Owner Participant or the Owner Trustee after
the Delivery Date of any interest in the Aircraft, the Lessor's Estate, the
Beneficial Interest 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 exists 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 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 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, 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 Bills of Sale, the Lease,
the Trust Agreement, the Engine Warranty Assignment, any other Operative
Agreement, any Original Agreement, the ownership of the Aircraft, the
administration of the Lessor's Estate or the Trust Indenture Estate or
otherwise, whether or not such action or inaction is caused by the willful
misconduct or gross negligence of the Owner Trustee or the Indenture Trustee.
Section 12.02. Interest of Holders of Certificates. A Holder of a
Certificate shall have no further interest in, or other right with respect to,
the Trust Indenture Estate when and if the principal and interest on all
Certificates held by such Holder and all other sums payable to such Holder
under this Agreement, under the Indenture and under such Certificates shall
have been paid in full.
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents. The Lessee
hereby consents in all respects to the execution and delivery of the 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 which materially adversely affects
the Lessee without its consent.
Section 13.02. Further Assurances. The Lessee hereby confirms to the
Owner Participant its covenants set forth in and obligations under the Lease.
The Lessee agrees that, except as otherwise provided in the Indenture, the
Owner Trustee may not enter into any amendment, modification or supplement of,
or give any waiver or consent with respect to, or approve any matter or
document as being satisfactory under the Lease without the prior consent of
the Owner Participant and, so long as the Lien of the Indenture is in effect,
the Indenture Trustee and that, except as otherwise provided in the Indenture,
upon an Indenture Event of Default the Indenture Trustee may act as the Lessor
under the Lease to the exclusion of the Owner Trustee. The Lessee further
agrees to deliver to the Indenture Trustee and the Owner Participant a copy of
each notice, statement, request, report or other communication given or
required to be given to the Owner Trustee under the Lease.
Section 13.03. Pass Through Trustee's and Subordination Agent's
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.
Section 13.04. No Retroactive Application. This Agreement, the
Lease, the Indenture and the Trust Agreement each amend and restate 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 are not intended to waive or
modify the obligations of any party which accrued or were to have been
performed on or prior to the Delivery Date under such unamended agreements
(or, in the case of this Agreement, the effective date hereof) or to deprive
any party of its rights and remedies in respect thereof and no provisions of
such Original Agreements shall in any way affect or be binding on the Owner
Trustee and the Owner Participant hereunder or under the other Operative
Agreements except to the extent restated therein with respect to periods
following the Delivery Date.
ARTICLE 14
NOTICES
Section 14.01. Notices. All notices, demands, declarations and other
communications required by this Agreement shall be in writing and shall be
deemed received (a) if given by telecopier, when transmitted and the
appropriate telephonic confirmation received if transmitted on a Business Day
and during normal business hours of the recipient, and otherwise on the next
Business Day following transmission, (b) if given by certified mail, return
receipt requested, postage prepaid five Business Days after being deposited in
the United States mail and (c) if given by FedEx service (or, if a Default or
Event of Default exists, 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 c/o Bank America
Leasing & Capital Group, 555 California Street, 4th Floor, San Francisco,
California 94104, Attention: Contract Administration, telephone: (415)
765-7427, facsimile: (415) 765-7373; or to such other address as the Owner
Participant may from time to time designate in writing to the Lessee and
the Indenture Trustee;
(d) If to the Indenture Trustee, the Subordination Agent or the Pass
Through Trustee, to its office at 79 South Main Street, Salt Lake City,
Utah 84111, Attention: Corporate Trust Department, telephone (801)
246-5053, facsimile (801) 246-5630; or to such other address as the
Indenture Trustee or the Pass Through Trustee, as the case may be, shall
from time to time designate in writing to the Lessor, the Lessee and the
Owner Participant; and
(e) If to a Liquidity Provider, to its office at 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 one refinancing, in whole but not in part, of the
Certificates prior to the end of the Basic Term (a "Refinancing"). Such
Refinancing 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 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 such 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 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 such
Refinancing shall be the same as the aggregate principal amount outstanding on
the Certificates being refinanced (assuming no principal on the old
Certificates was due on the date of such Refinancing).
(b) Notwithstanding anything herein to the contrary, the Refinancing
will not be permitted unless the Owner Participant shall have received at
least ten (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 and
has not received the opinion referred to in the proviso to Section
15.01(d)(iii) hereof.
Prior to the consummation of the Refinancing pursuant to this Section
15.01, the Owner Participant and the Lessee shall agree upon a schedule
setting forth each installment of Basic Rent, Stipulated Loss Values,
Termination Values and EBO Price 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 the 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 (including
reasonable allocated time charges of internal counsel) 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 such
Refinancing transaction.
(d) Each party agrees to take or cause to be taken all requested
action, including, without limitation, the execution and delivery of any
documents and instruments, including, without limitation, amendments or
supplements to the Lease, which may be reasonably necessary or desirable to
effect such Refinancing, including, in the case of the Owner Participant,
direction to the Owner Trustee by the Owner Participant to prepay the
Certificates then outstanding; provided, however, that such Refinancing shall
be subject to the satisfaction of each of the 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 Section 6.02 of 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,
certificates and other documents as it may reasonably request, each in form
and substance reasonably satisfactory to such party, 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, provided, however, that if such indemnity is required, the
Owner Participant shall also have received an opinion from independent tax
counsel to the effect that a reasonable basis exists for the tax filing
position taken by the Owner Participant in respect of which such indemnity
is given;
(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) 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; and
(ix) The Lessee shall pay all costs and expenses (including legal
fees (including allocated time charges of internal counsel)) incurred in
connection with any proposed or actually consummated Refinancing.
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 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.
(b) The Lessee shall pay to the Subordination Agent, on behalf of the
Owner Trustee on the first Payment Date subsequent to the Lease Commencement
Date interest accrued on the Certificates from and including the last Payment
Date (or, if none, the Certificate Closing Date), to, but excluding, the Lease
Commencement Date 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) 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.
(e) 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.
(f) 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
(f), the proceeds of such drawing shall be applied in accordance with the
Intercreditor Agreement. For purposes of this subsection (f), "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 21, 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 and executed by the Owner Trustee and the Indenture Trustee. A
copy of each such termination, amendment, supplement, waiver or modification
shall also be delivered to each other party to this Agreement.
The consent of 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 any
such 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 in writing 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
the case of the Indenture Trustee, to the Indenture Trustee, (v) 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, (vi) to a subsidiary or Affiliate of the parties hereto, (vii) 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 (viii) in the case of the Owner Participant or the Owner
Trustee (in its individual or trust capacity) to the Owner Trustee (in its
individual or trust capacity) or to the Owner Participant, as the case may be.
IN WITNESS WHEREOF, the parties have caused this Participation
Agreement to be executed by their respective, duly authorized officers as of
the date first above written.
LESSEE:
FEDERAL EXPRESS CORPORATION
By:
--------------------------------
Name: Robert D. Henning
Title: Vice President and Treasurer
INITIAL OWNER PARTICIPANT:
FEDERAL EXPRESS CORPORATION
By:
--------------------------------
Name: Robert D. Henning
Title: Vice President and Treasurer
OWNER PARTICIPANT:
PYRGOS, INC.
By:
--------------------------------
Name:
Title:
INDENTURE TRUSTEE:
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity except as
otherwise expressly provided herein,
but solely as Indenture Trustee
By:
--------------------------------
Name: Greg A. Hawley
Title: Vice President
PASS THROUGH TRUSTEE:
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity except as
otherwise expressly provided herein,
but solely as Pass Through Trustee
By:
--------------------------------
Name: Greg A. Hawley
Title: Vice President
SUBORDINATION AGENT:
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity except as
otherwise expressly provided herein,
but solely as Subordination Agent
By:
--------------------------------
Name: Greg A. Hawley
Title: Vice President
OWNER TRUSTEE:
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity,
except as otherwise expressly provided herein,
but solely as Owner Trustee
By:
--------------------------------
Name: Paul D. Allen
Title: Vice President
SCHEDULE I
OWNER PARTICIPANT'S COMMITMENT;
DEBT PORTION
(as a percentage of Purchase Price)
Owner Participant's Commitment 28.006211%
- ------------------------------
Debt Portion 71.993789%
- ------------
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 Article 13 of the Lease.
Adjustment Date. The date of any 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.
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 simultaneous payment to such Person so that the sum of the two
payments shall be equal to the Original Payment, after taking into account (x)
all Taxes that would result from the receipt or accrual of such payments and
(y) any current reduction in Taxes 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 an
8% state and local tax rate.
Agency Agreement. The Agency Agreement (Federal Express Corporation
Trust No. N585FE), dated the Delivery Date, between the Lessee and the Owner
Trustee.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier" (as
defined in the Transportation Code) as to which there is in force a permit
granted under Section 41302 of the Transportation Code.
Aircraft. The Airframe to be sold by the Lessee to the Owner Trustee
pursuant to the Participation Agreement and to be leased under the Lease (or
any permitted substitute airframe thereunder) together with three Engines
(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 manufacturer's serial number and initially having the U.S. FAA
registration number specified in the initial Lease Supplement, including (i)
all Parts in respect thereof and (ii) any Replacement Airframe which may be
substituted pursuant to Section 11.03 of the Lease.
Ancillary Agreement I. The Ancillary Agreement I (Federal Express
Corporation Trust No. 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.
Ancillary Agreements. Ancillary Agreement I and any other written
agreement of the Lessee to which the Lessor is a party or to which the Lessor
(and, so long as the Lien of the Indenture has not been discharged, the
Indenture Trustee) has consented in writing entered into on the date that the
Participation Agreement is entered into or on the Delivery Date or at any time
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.
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 delivered
to the Owner Participant (with a copy of the fair market value letter to the
Lessee) on the Delivery Date pursuant to Section 4.01(n) of the Participation
Agreement.
Average Life Date. For any Certificate, the date which follows the
prepayment date by a period equal to the Remaining Weighted Average Life of
such Certificate.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended, and
any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f) or
(g) of the Lease which either does or, with the giving of notice or lapse of
time or both, would constitute an Event of Default.
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
Lease Commencement Date and ending at the end of the day on the date set forth
in Section 4 of the Lease Supplement, 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.
Burdensome Indemnity Payment. Has the meaning specified in paragraph
(E) of Schedule V to the Lease.
Burdensome Indemnity Payment Date. Has the meaning specified in
paragraph (E) of Schedule V to the Lease.
Business Day. Any day on which commercial banks are not authorized or
required to close in New York, New York, San Francisco, California, Memphis,
Tennessee, Boston, Massachusetts 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.
Certificate Closing Date. July 7, 1998.
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).
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 on the Delivery Date,
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 I to the
Participation Agreement.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which, with the lapse of time or the
giving of notice, or both, would constitute an Event of Default.
Delivery Date. The date on which the Aircraft is delivered and sold
by the Lessee to the Owner Trustee.
Delivery Notice. Notice of the Aircraft's Delivery Date, given by
the Lessee as provided in Section 3.01(a) of the Participation Agreement and
including any notice with respect to a postponed Delivery Date given by the
Lessee pursuant to Section 3.05(c) of the Participation Agreement.
EBO. The purchase option provided in Section 4.02(a)(F) of the Lease.
EBO Date. As defined in Section 4.02(a)(F) of the Lease.
EBO Price. As defined in Section 4.02(a)(F) of the Lease.
Eligible Deposit Account. Either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution with corporate trust powers
organized under the laws of the United States or any state thereof, or the
District of Columbia, and whose deposits are insured by the Federal Deposit
Insurance Corporation, provided that such institution also has a combined
capital and surplus of at least $100,000,000 and a rating of A or better from
the Thomson Bank Watch.
Eligible Institution. A depository institution organized under the
laws of the United States or any one of the states thereof, or the District of
Columbia, or any domestic branch of a foreign bank, which in any such case at
all times (a) has either (x) a long-term unsecured debt rating of at least Aa2
by Moody's or (y) a short-term certificate of deposit rating of P-1 by
Moody's, (b) has either (x) a long-term unsecured debt rating of a least AA by
S&P or (y) a short-term certificate of deposit rating of A-1+ by S&P and (c)
is a member of the Federal Deposit Insurance Corporation.
Engine. Each of the three General Electric CF6-80C2-D1F engines
listed by its manufacturer's serial number in the initial Lease Supplement and
leased pursuant to the Lease, whether or not from time to time installed on
the Airframe or installed on any other airframe or on any other aircraft, and
any Replacement Engine which may from time to time be substituted for an
Engine pursuant to Section 7.02(a)(vii), 10.03, 11.03, 11.04 or 12.02 of the
Lease, together with all Parts related thereto. Except as otherwise provided,
at such time as a Replacement Engine shall be so substituted and the Engine
for which the substitution is made shall be released from the Lien of the
Indenture, such replaced Engine shall cease to be an "Engine" under the Lease.
The term "Engines" means, as of any date of determination, all Engines then
leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of September 1, 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 September 1, 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 60 days (or in any event if such loss is continuing
on the last day of the Term) due to theft or disappearance or (B) for a period
in excess of 60 days (or in any event if such loss is continuing on the last
day of the Term) 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 as
of the end of the Term 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 aircraft of the same type for a period of 12 consecutive months,
unless the Lessee, prior to the expiration of such 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
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 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 or the end of the Term, if earlier; (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; or (y) the last day of the 12 month or 24
month period, referred to in clause (iv) above (or if earlier, the end of the
Term or abandonment of the Lessee's efforts to restore the normal use of the
Aircraft). An Event of Loss with respect to the Aircraft shall be deemed to
have occurred if any Event of Loss occurs with respect to the Airframe. If an
Event of Loss described in any of clauses (i) (A), (iii) or (iv) above shall
occur, Lessor may elect, within 30 days following the date upon which such
Event of Loss is deemed to have occurred, to waive such Event of Loss and the
consequences thereof.
Excepted Payments. Collectively, (i) indemnity 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
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) 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 and (vi) any
right to demand, collect or otherwise receive and enforce the payment of any
amount described in clauses (i) through (v) above.
Expense; Expenses. As defined 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
the second paragraph of Section 4.01(a) are met.
Fair Market Rental. An amount determined, in accordance with Section
4.03 of the Lease, on the basis of, and equal in amount to, the rental which
would be obtained in an arm's-length transaction between an informed and
willing lessee and an informed and willing lessor unaffiliated with such
lessee, neither being under any compulsion to lease the Aircraft, assuming (a)
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, or (b) in
connection with any determination pursuant to or for the purposes of Article
17 of the Lease, the Aircraft is "as is" and "where is" and without giving
effect to the EBO under Article 4 of the Lease.
Fair Market Value. An amount determined, in accordance with Section
4.03 of the Lease, on the basis of, and equal in amount to, the value which
would be obtained in an arm's-length transaction between an informed and
willing purchaser under no compulsion to buy and an informed and willing
seller unaffiliated with such purchaser and under no compulsion to sell,
assuming that the Aircraft (or other property) is unencumbered by the Lease
assuming, unless otherwise provided in the applicable provisions of any
Operative Agreement, (a) 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, or (b) in connection with any determination pursuant to or for the
purposes of Article 17 of the Lease, the Aircraft is "as is" and "where is"
and without giving effect to the EBO under Article 4 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.
FSB. First Security Bank, National Association, a national banking
association.
FSC. Pyrgos FSC, Inc., a U.S. Virgin Islands 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 No. 6-6327A dated as of June 28,
1991 between the Engine Manufacturer and American Airlines, Inc., 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, 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, as amended
and restated as of September 1, 1998, between the Lessor and the Indenture
Trustee, as supplemented by the Indenture and Security Agreement Supplement.
Indenture and Security Agreement Supplement. A supplement to the
Indenture, substantially in the form of Exhibit A to the Indenture.
Indenture Default. Any event or condition which, with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in Section
7.01 of the Indenture.
Indenture Trustee. First Security Bank, National Association, a
national banking association, not in its individual capacity but solely as
Indenture Trustee under the Indenture.
Indenture Trustee's Liens. Any Lien against, on or with respect to
the Aircraft, the Lessor's Estate or the Trust Indenture Estate or any part
thereof resulting from (i) claims against the Indenture Trustee not related to
the administration of the Trust Indenture Estate or any transactions pursuant
to the Indenture or any document included in the Trust Indenture Estate, (ii)
any act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of
any of the terms of the Operative Agreements or (iii) Taxes 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 1.1 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.
Lease. The Lease Agreement (Federal Express Corporation Trust No.
N585FE) dated as of June 15, 1998, as amended and restated as of September 1,
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 Commencement Date. The effective date of the Lease Supplement.
Lease Supplement. Any Lease Supplement, substantially in the form of
Exhibit A to the Lease, entered into between the Lessor and the Lessee for the
purpose of leasing the Aircraft pursuant to the terms of the Lease, which
Lease Supplement shall incorporate by reference the provisions of the Lease
including any amendments entered into subsequent to the Lease Commencement
Date.
Lease Term. The period commencing on the Lease Commencement Date and
ending at the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation.
Lessee Documents. Has the meaning set forth in Section 6.01(b) of the
Participation Agreement.
Lessor. State Street Bank and Trust Company of Connecticut, National
Association, a national banking association, not in its individual capacity
but solely as Owner Trustee under the Trust Agreement.
Lessor's Estate. All estate, right, title and interest of the Owner
Trustee in and to the Collateral Account, the Liquid Collateral, the Aircraft,
the Lease, any Lease Supplement, the Participation Agreement, the Bills of
Sale, the Modification Agreement, 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). Notwithstanding the foregoing, "Lessor's Estate"
shall not include any Excepted Payment.
Lessor's Liens. Liens against, on or with respect to the Aircraft,
the Lessor's Estate or the Trust Indenture Estate or any part thereof, title
thereto or any interest therein arising as a result of (i) claims against the
Lessor, in its individual capacity or as Owner Trustee, or the Owner
Participant, in each case not related to the transactions contemplated by the
Operative Agreements, (ii) acts or omissions of the Lessor in its individual
capacity or as Owner Trustee, 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.
Letter of Credit. The Irrevocable Standby Letter of Credit, dated the
Certificate Closing Date, in the form of Exhibit F to the Original
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
Original 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. As defined 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
Original Participation Agreement.
Mandatory Economic Terms. The terms set forth on Schedule VI to the
Original 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 Original 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 (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.
Note. The Demand Note issued by the Owner Trustee on the Delivery
Date in favor of the Lessee.
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, the Bills of Sale, the Modification Agreement, the GTA, the Engine
Warranty Assignment, the Agency Agreement, the Note, the Lease, the Lease
Supplement, the Owner Participant Guaranty, the Owner Trustee Guaranty, if
any, the Ancillary Agreement I, any other 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.
Original Agreements. The documents and instruments delivered on the
Certificate Closing Date in connection with the transactions contemplated by
the Original Participation Agreement.
Original Indenture. The Trust Indenture and Security Agreement
(Federal Express Corporation Trust No. N585FE), dated as of June 15, 1998,
between the Owner Trustee and the Indenture Trustee originally executed and
delivered on the Certificate Closing Date.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N585FE), dated as of June 15, 1998, between the Owner Trustee as
lessor, and the Lessee originally executed and delivered on the Certificate
Closing Date.
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N585FE), dated as of June 15, 1998,
among the Lessee, the Initial Owner Participant, the Indenture Trustee, the
Owner Trustee, the Pass Through Trustee and the Subordination Agent originally
executed and delivered on the Certificate Closing Date.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N585FE), dated as of June 15, 1998, between the Initial
Owner Participant and the Owner Trustee originally executed and delivered on
the Certificate Closing Date.
Outstanding. When used with respect to Certificates, as of the date
of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary amount
has been theretofore deposited with the Indenture Trustee in trust
for the Holders of such Certificates pursuant to Section 14.01 of the
Indenture; provided, that if such Certificates are to be prepaid,
notice of such prepayment has been duly given pursuant to the
Indenture or provision therefor satisfactory to the Indenture Trustee
has been made; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article II
of the Indenture.
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 the
Initial Owner Participant shall transfer its Beneficial Interest pursuant to
Section 3.02 of the Original Participation Agreement and any successors
thereto, and any Person to which the Owner Participant transfers, in
accordance with the Participation Agreement, its right, title and interest in
and to the Operative Agreements and the Lessor's Estate.
Owner Participant Guarantor. Bank of America National Trust and
Savings Association, a national banking association with respect to Pyrgos,
Inc., and any other provider of an Owner Participant Guaranty.
Owner Participant Guaranty. The Owner Participant Guaranty (Federal
Express Corporation Trust No. N585FE) dated the Delivery Date, provided by
Bank of America National Trust and Savings Association with respect to Pyrgos,
Inc. in favor of the Lessee, the Owner Trustee and the Indenture Trustee, and
any guaranty delivered in compliance with Section 7.03(d) of the Participation
Agreement.
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 of the Participation Agreement.
Owner's Economic Return. As defined in Ancillary Agreement I.
Participation Agreement. The Participation Agreement (Federal Express
Corporation Trust No. N585FE), dated as of June 15, 1998, as amended and
restated as of September 1, 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, 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. July 7, 1998.
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).
Pool Balance. Has the meaning specified in Article I to the Series
Supplement.
Pool Factors. Has the meaning specified in Article I to the Series
Supplement.
Preliminary Notice. Has the meaning specified in Section 4.01(a) of
the Lease.
Premium Termination Date. With respect to the Series A Certificates,
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. The amount 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 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.
Reference Rate. The rate of interest publicly announced from time to
time by Bank of America National Trust and Savings Association in San
Francisco, California, as its reference rate. The Reference Rate is set by
Bank of America National Trust and Savings Association based upon various
factors, including Bank of America National Trust and Savings Association's
costs and desired return, general economic conditions and other factors, and
is used as a reference point for pricing some loans. Bank of America National
Trust and Savings Association may price loans at, above or below the Reference
Rate. Any change in the Reference Rate shall take effect at the opening of
business on the day specified in the public announcement of such change.
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. 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, 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, the Trust
Indenture and Security Agreement for Federal Express Corporation Trust No.
N676FE, dated as of June 15, 1998, as amended and restated as of July 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. N677FE, dated as of June 15, 1998, as
amended and restated on August 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.
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.
Replacement Aircraft. Any aircraft substituted for the Aircraft
pursuant to Section 11.03(a) of the Lease.
Replacement Airframe. As defined in Section 11.03 of the Lease.
Replacement Engine. A General Electric CF6-80C2-D1F engine (or an
engine of the same or another manufacturer) of the same 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 or the
Indenture Trustee, any officer in its Corporate Trust Department or Corporate
Trust Administration, as the case may be, designated by such Person to perform
obligations under the Operative Agreements, with respect to the Owner
Participant, the president or any vice president with direct responsibility
for the transactions contemplated by the Operative Agreements, and with
respect to any other party, any corporate officer or (except in the case of
the Owner Participant) other employee of a party who, in the normal
performance of his or her operational responsibilities, with respect to the
subject matter of any covenant, agreement or obligation of such party pursuant
to any Operative Agreement, would have responsibility for and knowledge of
such matter and the requirements of any Operative Agreement with respect
thereto.
S&P. Standard & Poor's Ratings Group.
Scheduled Delivery Date. The Delivery Date specified in the Delivery
Notice pursuant to Section 3.01(a) 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 Supplement or Series Supplements. The Series Supplement
1998-1-A, the Series Supplement 1998-1-B or the Series Supplement 1998-1-C,
each dated the Certificate Closing Date, between the Lessee and the Pass
Through Trustee.
Sinking Fund Redemption Date. Has the meaning specified in Section
6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in Section
6.06 of the Indenture.
Special Aviation Counsel. Daugherty, Fowler & Peregrin.
Special Distribution Date. Has the meaning specified in Article I to
the Series Supplement.
Specified Investments. Shall mean (a) direct obligations of the
United States of America or obligations fully guaranteed by the United States
of America; (b) commercial paper rated A-1/P-1 by S&P and Moody's,
respectively or, if such ratings are unavailable, rated by any nationally
recognized rating organization in the United States equal to the highest
rating assigned by such rating organization; (c) investments in negotiable
certificates of deposit, time deposits, banker's acceptances, commercial paper
or other direct obligations of, or obligations guaranteed by, commercial banks
organized under the laws of the United States or of any political subdivision
thereof (or any U.S. branch of a foreign bank) with issuer ratings of at least
B/C by Thomson Bankwatch, having maturities no later than 90 days following
the date of such investment; (d) overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers; or
(e) overnight repurchase agreements with respect to the securities described
in clause (a) above entered into with an office of a bank or trust company
which is located in the United States of America or any bank or trust company
which is organized under the laws of the United States or any state thereof
and has capital, surplus and undivided profits aggregating at least $500
million.
SSB. State Street Bank and Trust Company of Connecticut, National
Association, a national banking association 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.
Substantial Authority. For Federal income tax purposes, has the
meaning applicable for purposes of Section 6662 of the Code and relevant
Treasury regulations.
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. As defined 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 September 1, 1998, between the
Lessee and the Owner Participant.
Term. The Basic Term of the lease of the Aircraft under the Lease
and any Renewal Term, 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, 2012 or July 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 seventh
anniversary of the Delivery Date and (iii) Section 4.02(a)(F) of the Lease,
July 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. N585FE), dated as of June 15, 1998, as amended and restated as of
September 1, 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 dated the Delivery
Date.
SCHEDULE III
PERMITTED COUNTRY LIST
Australia Japan
Austria Luxembourg
Belgium Malaysia
Brazil Netherlands
Canada New Zealand
Denmark Norway
Finland Philippines
France Portugal
Germany Singapore
Hong Kong South Korea
Iceland Sweden
Indonesia Switzerland
Ireland Thailand
Italy United Kingdom
EXHIBIT A(1)(a)
[Letterhead of Federal Express Corporation]
[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 September 1, 1998 (the "Participation Agreement"), among
Federal, as Lessee and Initial Owner Participant, Pyrgos, Inc., as Owner
Participant, State Street Bank and Trust Company of Connecticut, National
Association, not in its individual capacity, except as otherwise stated, but
solely as Owner Trustee, and First Security Bank, National Association, not
in its individual capacity, except as otherwise stated, but solely as
Indenture Trustee, Pass Through Trustee and Subordination Agent, relating to
the Aircraft. This opinion is being delivered pursuant to Section 4.01(m)(i)
of the Participation Agreement. Capitalized terms not otherwise defined
herein have the 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. We have relied upon originals or copies,
certified or otherwise identified to our satisfaction, of such corporate
records, documents and other instruments as in our judgment are relevant to
rendering the opinions expressed below. As to any facts material to the
opinions expressed below (other than any thereof relating to Federal), we have
relied upon the representations and warranties made in the Operative
Agreements, the accuracy of which we have not independently investigated or
verified. In such examination, we have assumed the genuineness of all
signatures (other than the signatures of Federal) and the authenticity of all
documents submitted to us as originals and the conformity with the originals
of all documents submitted to us as copies. We have also assumed that each of
the parties to each of the Operative Agreements, other than Federal, has full
power, authority and legal right to enter into such Operative Agreements and
that each such Operative Agreement has been duly authorized, executed and
delivered by each of such parties.
Based on the foregoing, it is my opinion that:
1. Federal is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, is a "citizen of
the United States" within the meaning of Section 40102(a)(15) of the
Transportation Code, and has and 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 Operative Agreements
to which it is a party. Federal is duly qualified to do business and is in
good standing in the State of Tennessee and each other state of the United
States in which its operations or the nature of its business requires Federal
to so qualify, except where the failure to so qualify would not have a
material adverse impact on Federal or its business.
2. Federal possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents which are material to
the operation of the routes flown by it and the conduct of its business and
operations as currently conducted, and each such certificate, franchise,
license, permit, right and concession and consent is in full force and effect.
3. Each of the Operative Agreements to which Federal is a party
has and 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 Operative
Agreements to which Federal is a party, nor the consummation of any of the
transactions by Federal contemplated thereby, nor the performance of the
obligations thereunder by Federal, 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 Operative
Agreements to which it is a party, nor the consummation of any transactions by
Federal contemplated thereby, nor the performance of the obligations
thereunder by Federal, 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 under "Legal Proceedings" in Federal's Annual
Report on Form 10-K for the fiscal year ended May 31, 1998, 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 Operative Agreements, or (ii)
involves the Aircraft.
7. Except for the registration in the Owner Trustee's name of the
Aircraft pursuant to the Transportation Code, and except for the filing and,
where appropriate, recording, pursuant to the Transportation Code of (A) the
FAA Bill of Sale, (B) the Trust Agreement, (C) the Lease (with the Lease
Supplement covering the Aircraft, the Indenture and the Indenture and Security
Agreement Supplement covering the Aircraft attached as exhibits) and (D) the
Indenture (with the Indenture and Security Agreement Supplement covering the
Aircraft attached as an exhibit), no further action, including any filing or
recording of any document is necessary or advisable in order to establish and
perfect the Owner Trustee's title to and interest in the Aircraft as against
Federal and any third parties, or to perfect the first mortgage lien on the
Aircraft in favor of the Indenture Trustee in each case with respect to such
portion of the Aircraft as is covered by the recording system established by
the Transportation Code.
8. Federal is a duly certificated "air carrier" within the meaning
of the Transportation Code, and a holder of a certificate under Sections
41102(a) and 41103 of the Transportation Code, and an "air carrier operating
certificate" issued under Chapter 447 of the Transportation Code for aircraft
capable of carrying ten (10) or more individuals or 6,000 pounds or more of
cargo, and each such certificate is in full force and effect.
9. On the date hereof the Owner Trustee received good and valid
title to the Aircraft free and clear of all liens on file with the FAA, except
for Liens permitted under Section 6.01(a) of the Lease.
10. Federal's principal place of business and chief executive
office (as such term is defined in the Uniform Commercial Code in effect in
the State of Tennessee) are located at 2005 Corporate Avenue, Memphis, Shelby
County, Tennessee.
11. Federal is not, and is not directly or indirectly controlled by
or acting on behalf of any Person which is, an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
The opinions expressed in paragraph 3 above as to the enforceability
of the Operative Agreements to which Federal is a party are based upon the
assumption for purposes of such opinions and without independent analysis
that, notwithstanding the respective choice of laws clauses in the Operative
Agreements, the governing law with respect to each of the Operative Agreements
is identical in all relevant respects to the law of the State of Tennessee.
Insofar as the foregoing opinion relates to the enforceability of any
instrument, such enforceability is subject to applicable bankruptcy,
insolvency and other similar laws affecting the enforcement of creditors'
rights generally (whether such enforceability is considered in a proceeding in
equity or at law). The enforceability of the remedies provided under the
Lease may also be limited by applicable laws which may affect the remedies
provided therein but which do not in my opinion affect the validity of the
Lease or make such remedies inadequate for the practical realization of the
benefits intended to be provided thereby.
I do not express any opinion as to matters governed by any law other
than the Federal laws of the United States of America, the corporation law of
the State of Delaware and the laws of the State of Tennessee.
As to the matters referred to in paragraphs 5, 7 and 9, I have relied
on the opinion of Daugherty, Fowler & Peregrin, 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
- -----------------
Pyrgos, Inc.
Owner Participant Guarantor
- ---------------------------
Bank of America National Trust and Savings Association
EXHIBIT A(1)(b)
[Letterhead of Davis Polk & Wardwell]
[Delivery Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. 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
September 1, 1998 (the "Participation Agreement"), among Federal Express, as
Lessee and Initial Owner Participant, Pyrgos, Inc., as Owner Participant,
State Street Bank and Trust Company of Connecticut, National Association, not
in its individual capacity, except as otherwise stated, but solely as Owner
Trustee, and First Security Bank, National Association, not in its individual
capacity, except as otherwise stated, but solely as Indenture Trustee, Pass
Through Trustee and Subordination Agent, relating to the Aircraft. This
opinion is being delivered pursuant to Section 4.01(m)(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, as supplemented by
the related Indenture and Security Agreement Supplement.
In connection with the opinions expressed below, we have examined
executed counterparts of the Operative Agreements. We have also examined
originals, or copies certified to our satisfaction, of such other agreements,
documents, certificates and statements of governmental officials and corporate
officers as we have deemed necessary or advisable as a basis for such
opinions. In such examination, we have assumed the genuineness of all
signatures and the authenticity of all documents submitted to us as originals
and the conformity with the originals of all documents submitted to us as
copies.
As to any facts material to our opinions expressed below, we have,
with your consent, relied on the representations and warranties made in or
pursuant to the Participation Agreement and the other documents referred to
therein, the accuracy of which we have not independently verified. In
addition, we have, when relevant facts were not independently established by
us, relied, to the extent we deemed such reliance proper, upon certificates of
public officials and certificates, telegrams and other written or telephoned
statements of officers of the parties referred to herein.
Based on the foregoing, it is our opinion that:
1. With respect to that portion, if any, of the Aircraft and the
other property included in the Lessor's Estate as may not be covered by the
recording system established by the FAA pursuant to Section 44107 of the
Transportation Code, no filing or recording of any document or other action
was or is necessary in order to establish the Owner Trustee's title thereto
and interest therein as against Federal Express and any third parties.
2. Subject to execution and delivery of the Lease Supplement and
the Indenture and Security Agreement Supplement for the Aircraft and to the
registration of the Aircraft with the FAA in the name of the Owner Trustee,
the Lease, as supplemented, will create a valid leasehold interest in the
Aircraft, the entitlement thereof to the benefits of recordation under the
Transportation Code being subject to the due and timely filing and, where
appropriate, recording of (A) the FAA Bill of Sale, (B) the Trust Agreement,
(C) the Lease (with the Lease Supplement covering the Aircraft, the Indenture
and the Indenture and Security Agreement Supplement covering the Aircraft
attached as exhibits) and (D) the Indenture (with the Indenture and Security
Agreement Supplement covering the Aircraft attached as an exhibit), pursuant
to the Transportation Code, and assuming that at the time of such filing no
other documents relating to the Aircraft have been filed pursuant to the
Transportation Code.
3. Assuming (i) the due authorization, execution and delivery of
the Operative 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 Operative
Agreements, (iii) that the execution, delivery and performance of each of the
Operative 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, and (v) that the form
of each Operative Agreement is in compliance with all applicable laws and
governmental rules and regulations (other than the laws of the United States
and the State of New York), then: (A) to the extent governed by New York law,
each Operative Agreement constitutes a legal, valid and binding agreement of
each party thereto enforceable against each such party in accordance with its
terms; (B) the Indenture creates, for the benefit of the Holders, the security
interest in the Trust Indenture Estate that it purports to create; (C) the
Certificates are legal, valid and binding obligations of the Owner Trustee
enforceable against the Owner Trustee in accordance with their terms and the
terms of the Indenture and are entitled to the benefits of the Indenture,
including the benefit of the security interest created thereby; and (D) the
beneficial interest of the Owner Participant under the Trust Agreement in and
to the properties which are part of the Trust Indenture Estate is subject, to
the extent provided in the Indenture, as supplemented by the Indenture and
Security Agreement Supplement, to the Lien of the Indenture in favor of the
Holders. The opinions set forth in this paragraph 3 are subject to the due
filing and, where appropriate, recording with the FAA of the documents
referred to in paragraph 2 above.
4. (a) Each of the Operative 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 Operative Agreements to which Federal Express is a party do not
violate, and fully comply with, any laws and governmental rules and
regulations of the State of New York that may be applicable to Federal
Express. The opinion set forth in this paragraph 4(b) is rendered without
regard to the taking of any action or the conduct of any other business by
Federal Express in the State of New York other than the transactions
contemplated by the Operative Agreements.
5. The execution, delivery and performance of the Operative
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 Operative 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 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 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, 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,
other than as set forth in paragraph 8 above.
(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
- -----------------
Pyrgos, Inc.
Owner Participant Guarantor
- ---------------------------
Bank of America National Trust and Savings Association
EXHIBIT A(2)(a)
[Letterhead of Paul, Weiss, Rifkind, Wharton & Garrison]
[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 to Pyrgos, Inc., a Delaware
corporation (the "Owner Participant") and Bank of America National Trust and
Savings Association, a national banking association (the "Owner Participant
Guarantor"), 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 September 1, 1998, among
Federal Express Corporation, as Lessee and Initial 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, 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.
This opinion is being delivered pursuant to Section 4.01(m)(iii) of the
Participation Agreement. Unless otherwise defined herein, capitalized terms
used herein shall have the meanings assigned to them in Schedule II to the
Participation Agreement.
In connection with this opinion, we have examined executed copies of
the Participation Agreement, the Trust Agreement, the Tax Indemnity Agreement
and the Ancillary Agreement I (the "Owner Participant Documents") and the
Owner Participant Guaranty. We have also examined originals or copies
certified or otherwise identified to our satisfaction of such corporate
records and documents, certificates and statements of public officials and
other documents and records as we have deemed necessary to enable us to render
the opinions expressed herein.
In our examination of the foregoing documents, we have assumed,
without independent investigation, the genuineness of all signatures, the due
authorization, execution and delivery of the Owner Participant Documents and
the Owner Participant Guaranty by all parties thereto, the legality, validity
and binding effect of the Owner Participant Documents as to each party thereto
other than the Owner Participant and the legal capacity of the parties which
executed the Owner Participant Documents and the Owner Participant Guaranty.
In addition, in rendering the opinions expressed herein, we have assumed that:
(i) the Owner Participant has been duly organized and is validly existing and
in good standing under the laws of the State of Delaware; (ii) the Owner
Participant has the legal power and authority to enter into and perform its
obligations under the Owner Participant Documents; (iii) the execution,
delivery and performance of the Owner Participant Documents by the Owner
Participant do not conflict with its charter or by-laws or any agreement or
instrument to which it or any of its property is subject, (iv) the Owner
Participant Guarantor has been duly organized and is validly existing under
the laws of the United States of America holding a valid certificate to do
business as a national banking association; (v) the Owner Participant
Guarantor has the legal power and authority to enter into and perform its
obligations under the Owner Participant Guaranty; and (vi) the execution,
delivery and performance of the Owner Participant Guaranty by the Owner
Participant Guarantor does not conflict with its charter or by-laws or any
agreement or instrument to which it or any of its property is subject.
In expressing the opinions set forth herein, we have relied upon the
factual matters contained in the representations and warranties of (i) the
Owner Participant made in the Owner Participant Documents and (ii) the Owner
Participant Guarantor made in the Owner Participant Guaranty.
Based upon the foregoing, and subject to the assumptions, exceptions
and qualifications set forth herein, we are of the opinion that:
1. Each of the Owner Participant Documents (other than the Trust
Agreement as to which we express no opinion) constitutes the legal, valid and
binding obligation of the Owner Participant and is enforceable against the
Owner Participant in accordance with its terms.
2. The Owner Participant Guaranty constitutes the legal, valid and
binding obligation of the Owner Participant Guarantor and is enforceable
against the Owner Participant Guarantor in accordance with its terms.
3. The execution, delivery and performance by the Owner
Participant of the Owner Participant Documents and the consummation by it of
the transactions contemplated thereby do not violate any applicable law or
regulation in effect on the date hereof of the United States of America or the
State of New York.
4. The execution, delivery and performance by the Owner Participant
Guarantor of the Owner Participant Guaranty and the consummation by it of the
transactions contemplated thereby do not violate any applicable law or
regulation in effect on the date hereof of the United States of America or the
State of New York.
5. No consents, declarations, authorizations or approvals of, and
no notices to or filings or registrations with, any governmental or regulatory
authority or agency of the United States of America or the State of New York
are necessary for the execution, delivery or performance by the Owner
Participant of any Owner Participant Document or the consummation by it of the
transactions contemplated thereby.
6. No consents, declarations, authorizations or approvals of, and
no notices to or filings or registrations with, any governmental or regulatory
authority or agency of the United States of America or the State of New York
are necessary for the execution, delivery or performance by the Owner
Participant Guarantor of the Owner Participant Guaranty or the consummation by
it of the transactions contemplated thereby.
The foregoing opinion is subject to the following assumptions,
exceptions and qualifications:
(a) The enforceability of the Owner Participant Documents and the
Owner Participant Guaranty may be subject to: (i) bankruptcy, insolvency,
liquidation, receivership, conservatorship, reorganization, fraudulent
conveyance or transfer, moratorium or other similar laws relating to or
affecting rights of creditors generally or, in the case of the Owner
Participant Guarantor, of creditors of banks the accounts of which are insured
by the Federal Deposit Insurance Corporation, and (ii) general equitable
principles (regardless of whether such enforceability is considered in a
proceeding at law or in equity).
(b) We express no opinion as to: (i) the enforceability of any
provision contained in any Owner Participant Document or the Owner Participant
Guaranty relating to jurisdiction or service of process other than in respect
of the Supreme Court of the State of New York, County of New York, or the
United States District Court for the Southern District of New York; (ii) the
enforceability of forum selection clauses in the federal courts; (iii) whether
any court outside the State of New York would honor the choice of New York law
in any Owner Participant Document or the Owner Participant Guaranty; (iv)
title (including, without limitation, for purposes of any tax laws) to any
part of the Aircraft or the Lessor's Estate, the absence of liens on any
property or their perfection, priority or attachment of any mortgage, lien or
other security interest; (v) the enforceability of any provision in the Owner
Participant Guaranty purporting to preserve and maintain the liability of the
Owner Participant Guarantor despite the fact that the guarantied debt is
unenforceable due to illegality; or (vi) the enforceability of any provision
contained in any Owner Participant Document or the Owner Participant Guaranty
that purports to establish (or may be construed to establish) evidentiary
standards.
The opinions expressed above are limited to the laws of the State of
New York and the Federal laws of the United States of America which in our
experience are normally applicable to transactions of the type contemplated by
the Owner Participant Documents and the Owner Participant Guaranty but
specifically excluding (i) laws relating to banks and their subsidiaries, (ii)
Federal and New York securities laws, (iii) any Federal or state law dealing
with ownership or operation of any equipment similar to the Aircraft or any
part thereof, (iv) aviation or customs laws, (v) environmental laws or matters
arising under the Employee Retirement Income Security Act of 1974, and (vi)
United States international trade laws. The opinions expressed above are
rendered only with respect to the laws, and the rules, regulations and orders
thereunder, that are currently in effect.
This opinion is furnished by us solely for your benefit in connection
with the transactions referred to in the Participation Agreement and may not
be relied upon by any other Person or used in any other context 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
- -----------------
Pyrgos, Inc.
Owner Participant Guarantor
- ---------------------------
Bank of America National Trust and Savings Association
EXHIBIT A(2)(b)
[Letterhead of In-House Counsel of Owner Participant]
[Delivery Date]
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N585FE
Ladies and Gentlemen:
I have acted as counsel for Pyrgos, Inc., a Delaware corporation
("Owner Participant") and Bank of America National Trust and Savings
Association, a national banking association ("Owner Participant Guarantor"),
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 September 1, 1998 (the "Participation
Agreement"), among Federal Express Corporation, as Lessee and Initial 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, 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. This opinion letter is furnished pursuant to Section 4.01(m)(iii) of
the Participation Agreement. Unless otherwise defined herein, capitalized
terms used herein shall have the meanings assigned to them in Schedule II to
the Participation Agreement.
In this connection, I have participated in the preparation, execution
and delivery of the Participation Agreement, the Trust Agreement, the Tax
Indemnity Agreement and the Ancillary Agreement I (collectively, the "Owner
Participant Documents") and the Owner Participant Guaranty. I have examined
originals, or copies certified or otherwise identified to my satisfaction, of
the Operative Agreements and have considered such questions of law and fact as
I have considered necessary or appropriate for the purposes of rendering the
opinions set forth below. I have also examined originals, or copies certified
to my satisfaction, of such other agreements, documents, certificates and
statements of governmental officials and corporate officers as I have deemed
necessary or advisable as a basis for such opinions. In such examination, I
have assumed the genuineness of all signatures (other than those of the Owner
Participant and the Owner Participant 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. I have, when relevant facts were
not independently established by me, relied, to the extent I deemed such
reliance proper, upon certificates of public officials and certificates and
other written or telephone statements of officers of the parties referred to
herein. I also have examined and relied as to certain factual matters upon
the representations and warranties contained in or made pursuant to the
Operative Agreements.
I have also assumed the due authorization, execution and delivery of
the Operative Agreements executed on or before the date hereof by each party
thereto other than the Owner Participant and the Owner Participant Guarantor,
that such acts by such parties and the Operative Agreements comply with
applicable law other than the laws of California and the General Corporation
Law of the State of Delaware ("GCL") that each of the Operative Agreements
(other than the Trust Agreement with respect to the Owner Participant)
constitutes under such laws the legal, valid and binding obligation of each of
the parties thereto enforceable against each of such parties in accordance
with its terms.
Based on the foregoing, and subject to the qualifications and
assumptions set forth below, I am of the opinion that:
1. The Owner Participant is a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware and has the
requisite corporate power and authority to carry on its business as now
conducted, to own or hold under lease its properties and to enter into and
perform its obligations under the Owner Participant Documents.
2. The Owner Participant Guarantor 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 and has the requisite corporate power and authority to carry on
its business as now conducted, to own or hold under lease its properties and
to enter into and perform its obligations under the Owner Participant Guaranty.
3. The Owner Participant Documents have been duly authorized,
executed and delivered by the Owner Participant.
4. The Owner Participant Guaranty has been duly authorized, executed
and delivered by the Owner Participant Guarantor.
5. The execution and delivery by the Owner Participant of the Owner
Participant Documents and compliance by the Owner Participant with all of the
provisions thereof (i) do not require any approval not already obtained of its
stockholder(s) or any trustee or holder of any of its indebtedness, (ii) do not
contravene any law, rule or regulation of the United States or the GCL or any
judgment or order of any government authority applicable to or binding on the
Owner Participant (it being understood that no opinion is given in respect of
any law (including any aviation law) governing the ownership or operation of
equipment similar to the Aircraft or any law, rule or regulation relating to
aviation other than any law, rule or regulation relating to the citizenship
requirements of the Owner Participant), or (iii) do not contravene the
provisions of, or constitute a default under its Articles of Incorporation or
By-laws or any material indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, bank loan or credit agreement or other agreement
or instrument to which it is a party or by which it or its properties may be
bound or affected.
6. The execution and delivery by the Owner Participant Guarantor of
the Owner Participant Guaranty and compliance by the Owner Participant
Guarantor with all of the provisions thereof (i) do not require any approval
not already obtained of its stockholder(s) or any trustee or holder of any of
its indebtedness, (ii) do not and will not contravene any law, rule or
regulation of the United States or California or any judgment or order of any
government authority applicable to or binding on the Owner Participant
Guarantor (it being understood that no opinion is given in respect of any law
(including any aviation law) governing the ownership or operation of equipment
similar to the Aircraft or any law, rule or regulation relating to aviation),
or (iii) do not contravene the provisions of, or constitute a default under
its charter or by-laws or any material indenture, mortgage, chattel mortgage,
deed of trust, conditional sales contract, bank loan or credit agreement or
other agreement or instrument to which it is a party or by which it or its
properties may be bound or affected.
7. No consent, authorization or approval or other action by, and no
notice to or filing with, any governmental authority of the United States or
under the GCL is required under any law, rule or regulation of the United
States or under the GCL for the due execution, delivery or performance by the
Owner Participant of the Owner Participant Documents, other than approval by
the FAA of the Owner Participant's Affidavit (it being understood that no
opinion is given with respect to the Transportation Code other than with
respect to the requirement of United States citizenship in connection with
registration of the Aircraft in the name of the Owner Trustee).
8. No consent, authorization or approval or other action by, and no
notice to or filing with, any governmental authority of the United States or
California is required under any law, rule or regulation of the United States
or California for the due execution, delivery or performance by the Owner
Participant Guarantor of the Owner Participant Guaranty.
9. There are no proceedings pending against the Owner Participant,
or to the best of my knowledge threatened against it, in or before any court or
administrative agency which, individually or in the aggregate, if determined
adversely to the Owner Participant, would materially adversely affect the
Owner Participant's ability to perform its obligations under the Owner
Participant Documents or would question the binding effect, validity or
enforceability of any thereof.
10. There are no proceedings pending against the Owner Participant
Guarantor, or to the best of my knowledge threatened against it, in or before
any court or administrative agency which, individually or in the aggregate, if
determined adversely to the Owner Participant Guarantor, would materially
adversely affect the Owner Participant Guarantor's ability to perform its
obligations under the Owner Participant Guaranty or would question the binding
effect, validity or enforceability of any thereof.
I am admitted to practice law in the State of California and do not
purport to be expert in, or to render any opinion herein concerning, the laws
of any jurisdiction other than the GCL, the laws of the State of California
and the United States (other than (i) the Transportation Code (except in
connection with the opinion in Paragraph 7 with respect to United States
citizenship), (ii) customs laws and (iii) United States international trade
laws). My opinions are rendered only with respect to the laws, and the rules,
regulations and orders thereunder, that are currently in effect.
This opinion is rendered to you and is solely for your benefit, and
the benefit of your successors in interest, in connection with the above
transactions.
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
- -----------------
Pyrgos, Inc.
Owner Participant Guarantor
- ---------------------------
Bank of America National Trust and Savings Association
EXHIBIT A(3)
[Letterhead of Ray, Quinney & Nebeker]
[Delivery Date]
To the Persons Listed in Schedule A Attached Hereto
Re: Federal Express Corporation Trust No. 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, as amended and restated as of September 1,
1998 (the "Participation Agreement"), among Federal Express Corporation, as
Lessee and Initial Owner Participant, Pyrgos, Inc., as Owner Participant,
State Street Bank and Trust Company of Connecticut, National Association, not
in its individual capacity, except as otherwise stated, but solely as Owner
Trustee, and First Security, not in its individual capacity, except as
otherwise stated, but solely as Indenture Trustee, Pass Through Trustee and
Subordination Agent. Pursuant to the Participation Agreement, one McDonnell
Douglas MD-11F aircraft bearing U.S. Registration No. N585FE (the "Aircraft")
is being financed. This opinion is furnished pursuant to Section 4.01(m)(iv)
of the Participation Agreement. Capitalized terms used herein and not
otherwise defined are used as defined in the Participation Agreement, except
that references herein to any instrument shall mean such instrument as in
effect on the date hereof.
We have examined executed counterparts or copies otherwise identified
to our satisfaction of the following documents:
(a) The Participation Agreement;
(b) The Indenture; and
(c) The Ancillary Agreement I.
(Each of the documents identified in paragraphs (a) through (c) above are
collectively referred to as the "Indenture Trustee Documents".)
We have also examined originals or copies of such other documents,
corporate records, certificates and other statements of governmental officials
and corporate officers and other representatives of the corporations or
entities referred to herein and such other instruments as we have deemed
necessary or appropriate for the purposes of this opinion. Moreover, as to
certain facts material to the opinions expressed herein, we have relied upon
representations and warranties contained in the Indenture Trustee Documents.
Based upon the foregoing and upon an examination of such questions of
law as we have considered necessary or appropriate, and subject to the
assumptions, exceptions and qualifications set forth below, we advise you
that, in our opinion:
1. First Security is a national banking association duly organized
and validly existing under the laws of the United States of America holding
a valid certificate to do business as a national banking association, with
banking and trust powers, and each of First Security and the Indenture
Trustee, as the case may be, has full corporate power, authority and legal
right to execute, deliver and perform each of the Indenture Trustee
Documents to which it is or is to be a party.
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 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. To our knowledge, there are no actions, suits, investigations or
proceedings pending or 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 to our
knowledge, there are no pending or 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) Title 49 of the United States Code Annotated
(previously known as 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).
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
Owner Participant
- -----------------
Pyrgos, Inc.
Owner Participant Guarantor
- ---------------------------
Bank of America National Trust and Savings Association
EXHIBIT A(4)
[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 September
1, 1998 between State Street and Pyrgos, Inc., 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 September 1, 1998 (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 4.01(m)(v) 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
Trustee 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
- -----------------
Pyrgos, Inc.
Owner Participant Guarantor
- ---------------------------
Bank of America National Trust and Savings Association
EXHIBIT A(5)
[Letterhead of Ray, Quinney & Nebeker]
[Delivery 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
July 7, 1998 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, as amended and restated as of September 1, 1998 (the "Participation
Agreement"), among Federal Express Corporation, as Lessee and Initial Owner
Participant, Pyrgos, Inc., as Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, not in its individual capacity,
except as otherwise stated, but solely as Owner Trustee, and First Security,
not in its individual capacity, except as otherwise stated, but solely as
Indenture Trustee, Pass Through Trustee and Subordination Agent. Pursuant to
the Participation Agreement, one McDonnell Douglas MD-11F aircraft bearing
U.S. Registration No. N585FE (the "Aircraft") is being financed. This opinion
is furnished pursuant to Section 4.01(m)(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,
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. To our knowledge, there are no actions, suits, investigations or
proceedings pending or 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 to our knowledge, there are no pending or 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) Title 49 of the United States Code Annotated
(previously known as 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).
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
Owner Participant
- -----------------
Pyrgos, Inc.
Owner Participant Guarantor
- ---------------------------
Bank of America National Trust and Savings Association
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 September 1, 1998 (the "Participation Agreement") by and
among Federal Express Corporation, as Lessee and Initial Owner Participant
("Fed Ex"), Pyrgos, Inc., 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), and 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 September 1,
1998 (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 September 1,
1998 (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 September 1,
1998 (the "Trust Agreement") between SSB (not in its individual capacity), as
Owner Trustee and Pyrgos, Inc., 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 702-826, 702-849 and 702-547, 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 Lease, the Trust Indenture and the Trust
Agreement.
In making such examinations, I have relied upon the accuracy of original,
certified, conformed, photocopied or telecopied copies of such records,
agreements, certificates and other documents as I have deemed necessary or
appropriate to enable me to render the opinions expressed herein. In all such
examinations, I have assumed the genuineness of signatures on original
documents and the conformity to such original documents of all copies
submitted to me as certified, conformed, photocopied or telecopied copies, and
as to certificates and telegraphic and telephonic confirmations given by
public officials, I have assumed the same to have been properly given and to
be accurate. As to various questions of fact material to such opinions, I
have relied, when such relevant facts were not independently established by
me, solely upon the accuracy of the statements, representations and warranties
made in the Participation Agreement, the Lease, the Trust Indenture and the
Trust Agreement.
With your consent, and for the purposes of this opinion, I have assumed
(other than with respect to the Engine Manufacturer), the accuracy of the
following matters, but I have not made any independent investigation or
inquiry with respect thereto and I render no opinion on such matters:
(a) each of the Participation Agreement, the Lease, the Trust
Indenture, and the Trust Agreement have been duly and validly authorized,
executed and delivered by all parties thereto and constitutes the legal,
valid and binding obligations of each of such parties in accordance with
the respective terms thereof; and
(b) the respective parties to the Participation Agreement, the
Lease, the Trust Indenture, and the Trust Agreement have obtained, and
there are in full force and effect, any and all federal, state, local or
foreign governmental agencies and authorities in connection with the
transactions contemplated thereby, to the extent necessary for the
legality, validity and binding effect or enforceability of the Consent and
the Engine Warranty Assignment.
Based upon the foregoing, and subject to the specific assumptions,
qualifications and reliances herein set forth, and on the basis of my
consideration of such facts and law as I have deemed necessary for purposes of
this letter, it is my opinion that:
(1) The Engine Manufacturer has the full corporate power, authority
and the legal right to enter into and perform its obligations under the
General Terms Agreement, the Consent and the Engine Warranty Assignment.
The execution, delivery and performance by the Engine Manufacturer of each
of the General Terms Agreement, the Consent and the Engine Warranty
Assignment was duly authorized by all necessary corporate action on the
part of the Engine Manufacturer.
(2) Each of the General Terms Agreement, the Consent and Engine
Warranty Assignment has been duly authorized, executed and delivered by and
constitutes a legal, valid and binding obligation of the Engine
Manufacturer, enforceable against the Engine Manufacturer in accordance
with the respective terms thereof, except as the enforceability thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally and by general
equity principles.
(3) The Engine Product Support Plan insofar as it relates to the
Engine Warranties (as such term is defined in the Engine Warranty
Assignment), constitutes a legal, valid and binding obligation of the
Engine Manufacturer, enforceable against the Engine Manufacturer in
accordance with the terms thereof, except as the enforceability thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally and by general
equity principles.
The foregoing opinions are limited to the laws of the State of Ohio
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
- -----------------
Pyrgos, Inc.
Owner Participant Guarantor
- ---------------------------
Bank of America National Trust and Savings Association
EXHIBIT A(7)
[Letterhead of Daugherty, Fowler & Peregrin]
[Lease Commencement 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 4.01(m)(viii) of
the Participation Agreement (Federal Express Corporation Trust No. N585FE),
dated as of June 15, 1998, as amended and restated as of September 1, 1998
(the "Participation Agreement") among Federal Express Corporation, as Lessee
(the "Lessee") and Initial Owner Participant, Pyrgos, Inc., as Owner
Participant (the "Owner Participant"), State Street Bank and Trust Company of
Connecticut, National Association, as Owner Trustee (the "Owner Trustee"),
First Security Bank, National Association, as Indenture Trustee (the
"Indenture Trustee"), First Security Bank, National Association, as Pass
Through Trustee (the "Pass Through Trustee") and First Security Bank, National
Association, as Subordination Agent (the "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 with the Federal Aviation Administration
(the "FAA") the following described instruments on the following dates at the
respective times listed below:
(a) AC Form 8050-2 Aircraft Bill of Sale dated September __, 1998
(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 on September __, 1998 at ____ _.m., C.D.T.;
(b) AC Form 8050-1 Aircraft Registration Application dated September
__, 1998 (the "Aircraft Registration Application") by the Owner
Trustee, as applicant, covering the Airframe, which Aircraft
Registration Application was filed on September __, 1998 at ____
_.m., C.D.T.;
(c) Affidavit of the Owner Trustee dated September __, 1998 (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 September __, 1998
(the "Owner Participant Affidavit") attached thereto, which
Owner Trustee Affidavit with the Owner Participant Affidavit
attached was filed on September __, 1998 at ____ _.m., C.D.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 September 1, 1998 (the "Trust
Agreement") between the Owner Participant and the Owner Trustee,
which Trust Agreement was filed on September __, 1998 at ____
_.m., C.D.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 September 1, 1998 (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 September __, 1998 (the "Trust Indenture
Supplement") by the Owner Trustee, covering the Aircraft,
attached thereto, which Trust Indenture with the Trust
Indenture Supplement attached was filed on September __, 1998
at ____ _.m., C.D.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 September 1, 1998 (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 September __, 1998 (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 on September __, 1998 at ____ _.m., C.D.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 authorization, issuance and delivery of the
Certificates, the execution and delivery by the parties thereto
of the Trust Agreement, the Trust Indenture, the Trust
Indenture Supplement, the Participation Agreement, the FAA Bill
of Sale, the Lease and the Lease Supplement or the performance
by the parties thereto of: (i) the Trust Agreement; (ii) the
Trust Indenture, as supplemented by the Trust Indenture
Supplement; (iii) the Participation Agreement; and (iv) 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, the registration with or the taking of any other
action in respect of, the FAA except for the filings and the
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 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 702-826, 702-849 and 702-547 (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) 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 I, which was not attached to the FAA filing
counterpart of the Lease or otherwise filed with the FAA for recordation.
The Trust Indenture was filed with the FAA, with Schedule I (Schedule
of Principal Payments) intentionally omitted from the FAA filing counterpart
thereof as containing confidential financial information.
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
- -----------------
Pyrgos, Inc.
Owner Participant Guarantor
- ---------------------------
Bank of America National Trust and Savings Association
EXHIBIT B
[Form of Lease Agreement - See Exhibit 4. of this Form 8K]
EXHIBIT C
[Form of Indenture - See Exhibit 1. of this Form 8K]
EXHIBIT D
[Form of Trust Agreement - See Exhibit 3. of 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 June 17, 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 702-826, 702-849 and 702-547,
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, as amended and restated as of
September 1, 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
exercise 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, as amended and restated
as of September 1, 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:
Date:
Federal Express Corporation
- -------------------------------
Name: Robert D. Henning
Title: Vice President and Treasurer
Date:
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
Date:
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, as
amended and restated as of September 1, 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, as amended and
restated as of September 1, 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 702-826, 702-849 and 702-547,
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:
Date:
EXHIBIT F-1
FORM OF OWNER PARTICIPANT TRANSFER AGREEMENT
OWNER PARTICIPANT TRANSFER AGREEMENT (this "Agreement"), dated as of
_______ __, ____, between ______________, a ______________ ("Transferor") and
______________, a ______________ ("Transferee").
W I T N E S S E T H :
WHEREAS, the parties hereto desire to effect (a) the transfer by the
Transferor to the Transferee of all of the rights, title and interest of the
Transferor in and to its interest (the "Beneficial Interest") under the Trust
Agreement (Federal Express Corporation Trust No. N585FE), dated as of June 15,
1998, as amended and restated as of September 1, 1998 (as heretofore and
hereafter amended, the "Trust Agreement"), between the Transferor and State
Street Bank and Trust Company of Connecticut, National Association, and the
Lessor's Estate created thereunder, and all of the Transferor's rights and
obligations under the Participation Agreement (Federal Express Corporation
Trust No. N585FE), dated as of June 15, 1998, as amended and restated as of
September 1, 1998 (as heretofore and hereafter amended, 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, the
Transferee, as Owner Participant, First Security Bank, National Association,
not in its individual capacity, except as otherwise stated therein, but solely
as Indenture Trustee, Pass Through Trustee and Subordination Agent, and under
the other Operative Agreements and (b) the acceptance by the Transferee of
such transfer and the assumption by the Transferee of such obligations of the
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. The Transferor does hereby sell, convey, assign,
transfer and set over, unto the Transferee, as of the Effective Time (as
defined below), all of the 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 the Transferor as have arisen or accrued to the Transferor prior to
the Effective Time (including without limitation, the right to receive any
amounts due or accrued to the 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. The Transferee hereby accepts the transfer of the
Transferred Interest and, for the benefit of the 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 the Transferor with
respect to the Transferred Interest whenever and wherever accrued (other than
duties and obligations of the Transferor required to be performed by it on or
prior to the Effective Time). The Transferee hereby confirms that, from and
after the Effective Time, the Transferee (a) shall be deemed, to the extent set
forth in Section 2 hereof, to be 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, the Transferor
shall be relieved of all of its duties and obligations with respect to the
Transferred Interest under the Operative Agreements, provided, however, that
the 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 the 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 the Transferor or any Lessor's Lien attributable to the 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 and/or
Transferee].
6. Payments. The Transferor hereby covenants and agrees to pay over
to the 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 the Transferor,
and the Transferee hereby covenants and agrees to pay over to the 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 the
Transferee that are not attributable to the Transferred Interest and to which
the Transferor is otherwise entitled.
7. Investment Purpose. The 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 the
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 Transferee. The Transferee
represents and warrants to the Transferor and to the other parties to the
Participation Agreement that as of the Effective Time:
(a) The Transferee hereby makes, as to itself as of the date
hereof, each of the representations and warranties of the Owner Participant
contained in Section 7.03(a) of the Participation Agreement and such
Section 7.03(a) is hereby incorporated by reference herein.
(b) The Transferee hereby additionally represents and warrants that:
(i) Securities Laws. The transfer of the Transferred
Interest to it will not violate any provision of, or create a
relationship that would be in violation of, the Securities Act of
1933, as amended, or the Securities and Exchange Act of 1934, as
amended, or any other applicable law (including, without limitation,
any "Blue Sky" or securities laws of any relevant state).
(ii) Qualified Transferee. It is a transferee satisfying the
requirements set forth in Section 7.03(d) of the Participation
Agreement and either (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 of its own account that has a combined capital
and surplus (or, if applicable, consolidated tangible net worth or
its equivalent) of not less than $50,000,000, or (B) is a subsidiary
or an affiliate of an entity described in clause (A), and an entity
described in clause (A) has, or on or before the Effective Date
shall, assume the obligations of the Owner Participant Guarantor
under the Owner Participant Guaranty in accordance with the terms
thereof or (C) has been approved in writing by the Lessee, the
Indenture Trustee and the Owner Trustee.
(iii) U.S. Person. It is a "U.S. Person" as defined in Section
7701(a)(3) of the Code and if it shall at any time cease to be 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 Taxes that may be imposed on such Holder
as a result of the Owner Participant's failure to be such a "U.S.
Person" and 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 failure to be such a "U.S.
Person".
(iv) Citizen. It [is a Citizen of the United States] [has
established a voting trust, voting powers or other arrangement to
permit the Owner Trustee to be the registered owner of the Aircraft
under the Transportation Code].
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.
9. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
10. Effectiveness. This Agreement shall be effective upon the mutual
execution and delivery of this Agreement and the acknowledgment and consent by
the Owner Trustee, the Indenture Trustee and the Lessee (the "Effective Time").
11. 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.
12. Beneficiaries. Each of the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Lessee and, with respect to the
representations and warranties made herein by the Transferee, each Liquidity
Provider, together with their respective successors and permitted assigns, is
and shall be deemed a third party beneficiary of this Agreement (or such
representations and warranties, as the case may be) entitled to enforce this
Agreement directly and in its own name and enforce any rights or claims of the
parties hereto.
13. 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:
Acknowledged and Consented to:
[LESSEE]
By:
-------------------------------
Name:
Title:
[OWNER TRUSTEE]
By:
-------------------------------
Name:
Title:
[INDENTURE TRUSTEE]
By:
-------------------------------
Name:
Title:
EXHIBIT F-2
FORM OF OWNER PARTICIPANT GUARANTY
(FEDERAL EXPRESS CORPORATION TRUST NO. N585FE)
OWNER PARTICIPANT GUARANTY (FEDERAL EXPRESS CORPORATION TRUST NO.
N585FE) dated ___________________, from ____________________________, a
_________________ (together with its successors and permitted assigns, the
"Owner Participant Guarantor"), for the benefit of FEDERAL EXPRESS
CORPORATION, a Delaware corporation, (together with its successors and
permitted assigns, the "Lessee"), 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 (as
defined 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,
but solely as indenture trustee under the Indenture (as defined 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, but solely as
subordination agent (in such capacity as subordination agent, together with
its successors and permitted assigns, the "Subordination Agent") (the Owner
Trustee, the Indenture Trustee, the Subordination Agent and the Lessee each, a
"Beneficiary").
Terms not otherwise defined herein shall have the meaning ascribed
such terms in the Participation Agreement (Federal Express Corporation Trust
No. N585FE), dated as of June 15, 1998, as amended and restated as of
September 1, 1998 (the "Participation Agreement"), among the Lessee, Pyrgos,
Inc., a Delaware corporation (the "Owner Participant"), the Owner Trustee, the
Indenture Trustee, the Subordination Agent and FIRST SECURITY BANK, NATIONAL
ASSOCIATION, a national banking association, not in its individual capacity,
but solely as pass through trustees of three separate pass through trusts.
As a condition to the Beneficiaries' participation in the transactions
contemplated by the Participation Agreement, the Owner Participant Guarantor
is required to guarantee the performance and compliance with the covenants,
agreements, terms and conditions applicable to the Owner Participant contained
in the Participation Agreement, the Tax Indemnity Agreement and the Trust
Agreement (each such Agreement, an "Owner Participant's Agreement").
Accordingly, in consideration of the foregoing, the Owner Participant
Guarantor agrees with each Beneficiary as follows:
ARTICLE I.
GUARANTY
Section 1.01. Guaranty of Obligations. The Owner Participant
Guarantor irrevocably, absolutely and unconditionally, as primary obligor and
not merely as surety, guarantees to each Beneficiary and its successors and
permitted assigns the due and punctual payment of any and all sums required to
be paid by the Owner Participant in accordance with the Owner Participant's
Agreements and performance of and compliance with all other covenants,
agreements, representations, warranties, terms and conditions required to be
performed or complied with by the Owner Participant contained in the Owner
Participant's Agreements (herein collectively, the "Obligations").
This Guaranty shall in no circumstance extend to any payment,
performance or compliance by any transferee of the Owner Participant permitted
by Section 7.03(d) of the Participation Agreement or Section 4.02 of the Lease
unless the conditions to such transfer require the continuance of this Owner
Participant Guaranty.
Section 1.02. Obligation Unconditional. The guaranty by the Owner
Participant Guarantor contained in Section 1.01 is a primary obligation of the
Owner Participant Guarantor and is an unconditional, irrevocable, absolute,
present and continuing obligation and is not conditioned in any way upon the
institution of suit or the taking of any other action with respect to the
representations and warranties of the Owner Participant contained in the Owner
Participant's Agreements or any attempt to enforce performance of, or
compliance with, the Obligations and, to the extent permitted by law, shall be
binding upon and enforceable against the Owner Participant Guarantor without
regard to the validity or enforceability of any of the Obligations with
respect to the Owner Participant to the extent such validity or enforceability
is affected by any bankruptcy, insolvency, reorganization, arrangement,
adjustment, composition, dissolution, liquidation or the like, of the Owner
Participant, or upon or as a result of the appointment of a custodian,
receiver, trustee or other officer with similar powers with respect to the
Owner or the Owner Parent or any substantial part of its property. To the
extent that performance of, or compliance with, the guaranty by the Owner
Participant Guarantor contained in Section 1.01 requires the payment of money,
such guaranty is an absolute, unconditional, present and continuing guaranty
of payment and not of collectability and is in no way conditioned or
contingent upon any attempt to collect from the Owner Participant or any other
person or to institute a suit against the Owner Participant or any other
person or to perfect or enforce any security or upon any other condition or
contingency, other action, occurrence or circumstances whatsoever. Such
guaranty will continue to be effective, or be reinstated, as the case may be,
if at any time payment, in whole or in part, by the Owner Participant pursuant
to the terms of any Obligation is rescinded or must otherwise be restored or
returned upon the bankruptcy, insolvency, reorganization, arrangement,
adjustment, composition, dissolution, liquidation or the like, of the Owner
Participant, or upon, or as a result of, the appointment of a custodian,
receiver, trustee or other officer with similar powers with respect to the
Owner Participant or any substantial part of its property, or otherwise, all
as though such payment had not been made. This Owner Participant Guaranty
shall remain in full force and effect until such time as all the Obligations
and all the obligations of the Owner Participant Guarantor hereunder are paid,
performed and observed in full, unless earlier terminated pursuant to Section
1.01 or 3.05 hereof.
Section 1.03. Obligations of the Owner Participant Guarantor Not
Affected. The obligations of the Owner Participant Guarantor under this Owner
Participant Guaranty shall remain in full force and effect without regard to,
and shall not be released, discharged or in any way impaired or affected by,
any of the following (except for the full payment and performance of all
Obligations):
(a) any extension or indulgence in respect of the payment by
the Owner Participant of any amount payable, or the performance by
the Owner Participant of any covenant, agreement, term or condition,
under any Owner Participant's Agreement;
(b) any amendment or modification of, addition or supplement
to, or deletion of, any of the terms of any Owner Participant's
Agreement, or any renewal, assignment, mortgage, pledge or transfer
(subject to the second paragraph of Section 1.01) of any thereof or
of any interest therein;
(c) any compromise, waiver, release, consent, extension,
indulgence or other action or inaction in respect of any of the terms
of any Owner Participant's Agreement;
(d) any exercise or nonexercise by any Beneficiary of any
right, power, privilege or remedy under, or in respect of, any Owner
Participant's Agreement, or any waiver of any such right, power,
privilege or remedy, or of any default in respect of any Owner
Participant's Agreement;
(e) any bankruptcy, insolvency, reorganization, arrangement,
adjustment, composition, dissolution, liquidation or similar
proceeding with respect to the Owner Participant or its properties;
(f) any merger or consolidation of the Owner Participant or
the Owner Participant Guarantor into or with any other person, or any
sale, lease or transfer of any or all of the assets of the Owner
Participant (subject to the second paragraph of Section 1.01), or the
Owner Participant Guarantor to any other person or any other change
in the corporate structure of the Owner Participant or the Owner
Participant Guarantor (subject to the second paragraph of Section
1.01 and Section 3.05);
(g) any indebtedness of the Owner Participant to any person;
(h) any claim, set off (except as expressly provided in the
Owner Participant's Agreements), deduction or defense (except a
defense of payment or performance in full) that the Owner Participant
may have against any Beneficiary, whether hereunder or under any
Owner Participant's Agreement or independent of or unrelated to the
transactions contemplated by the Owner Participant's Agreements;
(i) any change in law;
(j) any sale, transfer or other disposition of any right,
title or interest in any Owner Participant's Agreement or the
Aircraft covered thereby (subject to the second paragraph of Section
1.01 and Section 3.05);
(k) any change in the ownership of any shares of capital
stock of the Owner Participant or by the Owner Participant Guarantor
(except as expressly provided in Section 3.05);
(l) to the extent waivable by applicable law, all principles
or provisions of law, statutory or otherwise, that may be in conflict
with the terms hereof;
(m) any failure of any Beneficiary to file or enforce a claim
in bankruptcy or other proceeding with respect to any person;
(n) any agreement or stipulation with respect to the
provision of adequate protection in any bankruptcy proceeding; or
(o) any other circumstances that might otherwise constitute a
legal or equitable discharge, release or defense of a guarantor or
surety, or which might otherwise limit recourse against the Owner
Participant Guarantor (it being agreed that the obligations of the
Owner Participant Guarantor hereunder shall not be discharged except
as herein provided or as expressly provided in the Owner
Participant's Agreements).
Section 1.04. Waiver. The Owner Participant Guarantor
unconditionally waives, to the fullest extent permitted by law (a) notice of
any of the matters referred to in Section 1.03 (without derogation of any
express requirement that notice be provided pursuant to the Owner
Participant's Agreements), (b) except to the extent provided in this Owner
Participant Guaranty, all notices that may be required by statute or rule of
law, now or hereafter in effect, to preserve intact any rights of any
Beneficiary against the Owner Participant Guarantor, including any demand,
presentment, protest, proof of notice of nonpayment, or notice of default or
failure on the part of the Owner Participant to perform and comply with any of
the Obligations, (c) any right to the enforcement, assertion or exercise,
whether in whole or in part, by any Beneficiary of any right, power, privilege
or remedy conferred herein or in any Owner Participant's Agreement, (d) any
requirement of promptness or diligence on the part of any Beneficiary
hereunder, (e) any requirement on the part of any Beneficiary to mitigate the
damages resulting from any default hereunder or under any Owner Participant's
Agreement, (f) all principles and provisions of law, statutory or otherwise,
that may be in conflict with the terms of this Owner Participant Guaranty and
(g) any other circumstances that might otherwise constitute a legal or
equitable discharge, release or defense of a guarantor or surety, or that
might otherwise limit recourse against the Owner Participant Guarantor (it
being agreed that the obligations of the Owner Participant Guarantor hereunder
shall not be discharged except as herein provided or as expressly provided in
the Owner Participant's Agreements), provided that nothing in this Owner
Participant Guaranty shall require the Owner Participant Guarantor to make any
payment without 5 days prior written notice.
Notwithstanding any loss of, or prejudice to, any right or remedy of
the Owner Participant Guarantor through any means, the occurrence of one or
more of the following shall not affect, release or diminish the liability of
the Owner Participant Guarantor hereunder: (i) at any time or from time to
time, with or without notice to the Owner Participant Guarantor, the time for
the Owner Participant's performance of or compliance with any of the
Obligations may be extended, or such performance or compliance may be waived,
or (ii) modification or amendment of any of the Owner Participant's Agreements
pursuant to their terms.
Section 1.05. Full Recourse Obligation. The obligations of the Owner
Participant Guarantor set forth herein constitute the full recourse
obligations of the Owner Participant Guarantor enforceable against it to the
fullest extent of all of its assets and properties.
Section 1.06. Waiver of Rights of Subrogation and Contribution. The
Owner Participant Guarantor will not assert any right to which it may become
entitled, whether by subrogation, contribution or otherwise, against the Owner
Participant or any of its properties by reason of the performance by the Owner
Participant Guarantor of its obligations under this Owner Participant Guaranty
until such time as all of the obligations of the Owner Participant under the
Owner Participant's Agreements shall have been duly and fully performed.
Section 1.07. No Reliance. The Owner Participant Guarantor has not
relied and will not hereafter rely on any Beneficiary (a) to check or inquire
on behalf of the Owner Participant Guarantor into the adequacy, accuracy or
completeness of any information or document provided by the Owner Participant
under or in connection with any of the Owner Participant's Agreements
including this Owner Participant Guaranty or the transactions therein or
herein contemplated (whether or not such information or document has been or
is hereafter distributed to the Owner Participant Guarantor by such
Beneficiary) or (b) to assess or review on behalf of the Owner Participant
Guarantor the condition (financial or otherwise), creditworthiness, affairs,
status or nature of the Owner Participant.
ARTICLE II.
REPRESENTATIONS
Section 2.01. Representations of the Owner Participant Guarantor.
The Owner Participant Guarantor represents and warrants that:
(a) The Owner Participant Guarantor is a national banking
association duly organized and validly existing under the laws of the
United States of America.
(b) The Owner Participant Guarantor is duly authorized and
empowered to execute and deliver this Owner Participant Guaranty and
to fulfill and comply with the terms, conditions and provisions
hereof.
(c) This Owner Participant Guaranty has been duly authorized,
executed and delivered by the Owner Participant Guarantor and
constitutes a legal, valid and binding agreement of the Owner
Participant Guarantor, enforceable against the Owner Participant
Guarantor in accordance with its terms.
(d) Neither the execution and delivery of this Owner
Participant Guaranty nor the consummation of the transactions herein
contemplated, or the fulfillment of, or compliance with, the terms
and conditions hereof, will result in a breach of any of the terms,
conditions or provisions of the charter documents or the by-laws of
the Owner Participant Guarantor or of any bond, debenture, note,
mortgage, indenture, agreement or other instrument to which the Owner
Participant Guarantor is now a party or by which it or its property
may be bound, or constitutes (with the giving of notice or the
passage of time or both) a default thereunder, which breach or
default could have a material adverse effect on the Owner Participant
Guarantor or the transactions contemplated hereby.
(e) The Owner Participant Guarantor is an affiliate of the
Owner Participant.
(f) The Owner Participant Guarantor has a combined capital and
surplus in excess of $50,000,000.
ARTICLE III.
MISCELLANEOUS
Section 3.01. Costs and Expenses. The Owner Participant Guarantor
will pay all costs and expenses (including reasonable legal fees and expenses)
incurred by or on behalf of any Beneficiary in connection with the enforcement
of the Owner Participant Guarantor's obligations under this Owner Participant
Guaranty.
Section 3.02. United States Dollars. Any payments required to be
made hereunder shall be made in United States dollars, in immediately
available funds.
Section 3.03. Notices. All notices, demands, requests, consents,
approvals and other communications required under the terms and provisions
hereof shall be in writing and shall be effective when delivered (a) if to the
Owner Participant Guarantor at the address of the Owner Participant Guarantor
specified for notices under its signature below or at such other address as
the Owner Participant Guarantor shall from time to time designate in writing
to the Indenture Trustee and the Lessee and (b) if to any Beneficiary, at the
address specified for notices in the Participation Agreement, or at such other
address as such Beneficiary shall from time to time designate in writing to
the Owner Participant Guarantor. Notices for Holders shall be sufficient if
delivered to the Indenture Trustee.
Section 3.04. Amendments and Waivers. No term or provision of this
Owner Participant Guaranty may be changed, modified, amended, waived,
discharged or terminated orally, but only by an instrument in writing signed
by the Owner Participant Guarantor and the Beneficiary to be charged therewith.
Section 3.05. Termination; Assignment. This Owner Participant
Guaranty shall remain in full force and effect until the earlier of (a) the
payment and performance in full of the Obligations and (b) the Owner
Participant's release from the Obligations pursuant to Section 7.03(d) of the
Participation Agreement or Section 4.02 of the Lease but only to the extent
of the release provided therein. Except as provided herein, none of the
obligations of the Owner Participant Guarantor under this Owner Participant
Guaranty shall be assigned, conveyed or transferred without the prior written
consent of the Beneficiaries provided, that the Owner Participant Guarantor
may assign its obligations under this Owner Participant Guaranty to a
successor Owner Participant Guarantor upon (i) a sale of the Beneficial
Interest in accordance with Section 3.02(d) of the Participant Agreement or
(ii) a transfer of the capital stock of the Owner Participant by the Owner
Participant Guarantor or any of its affiliates, so long as in the case of (ii)
above, such successor Owner Participant Guarantor (A) has a consolidated
tangible net worth of not less than $50,000,000, (B) shall provide
representations substantially similar to those contained in Section 2.01
hereof and (C) agrees in writing to assume all of the obligations hereunder
as if such successor Owner Participant Guarantor were the Owner Participant
Guarantor originally named herein. Upon the effectiveness of any assignment
of this Owner Participant Guaranty referred to in subsections (i) and (ii) of
the preceding sentence, the Owner Participant Guarantor shall be released from
all of its obligations hereunder and the successor Owner Participant Guarantor
shall be the Owner Participant Guarantor for all purposes hereunder. Subject
to the preceding sentence, this Agreement shall inure to the benefit of, and
be binding on and enforceable against, the successors and permitted assigns of
the Owner Participant Guarantor and each Beneficiary except that no
Beneficiary may assign this Owner Participant Guaranty without the consent of
the Owner Participant Guarantor other than by the Lessee to a successor by
merger, consolidation or sale of substantially all its assets in accordance
with the terms of Section 6.03(g) of the Participation Agreement. The
headings contained in this Agreement are for reference only and shall not
affect the meaning or interpretation of this Owner Participant Guaranty. This
Owner Participant Guaranty constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, between the Owner
Participant Guarantor and the Beneficiaries with respect to the subject matter
hereof.
Section 3.06. Law Governing; Severability. This Owner Participant
Guaranty shall be governed in all respects 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. Any provision of this
Agreement that is prohibited or unenforceable shall be ineffective to the
extent of such prohibition or unenforceability, without invalidating the
remaining provisions hereof.
Section 3.07. Rights of Beneficiaries. This Owner Participant
Guaranty shall not be construed to create any right in any person other than a
Beneficiary or to be a contract in whole or in part for the benefit of any
person other than the Beneficiaries (except to the extent provided in Section
3.05).
IN WITNESS WHEREOF, the undersigned has duly executed this Owner
Participant Guaranty as of the date first above written.
-------------------------------
By:
---------------------------
Name:
Title:
Address for Notices:
___________________
___________________
___________________
Attention: _________________
Telecopy: (___) ___-____
Telephone: (___) ___-____