-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UqZxaX5kGZH99yNBGi0QQb7Udc46X+NsvgfCwEHqPy0ObYp69kanoywaN9hb6CTl aYRTfvlixsGMqI6HXruWRg== /in/edgar/work/20000609/0000950103-00-000717/0000950103-00-000717.txt : 20000919 0000950103-00-000717.hdr.sgml : 20000919 ACCESSION NUMBER: 0000950103-00-000717 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 12 FILED AS OF DATE: 20000609 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FEDERAL EXPRESS CORP CENTRAL INDEX KEY: 0000230211 STANDARD INDUSTRIAL CLASSIFICATION: [4513 ] IRS NUMBER: 710427007 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-39006 FILM NUMBER: 652751 BUSINESS ADDRESS: STREET 1: 2005 CORPORATE AVE CITY: MEMPHIS STATE: TN ZIP: 38132 BUSINESS PHONE: 9013693600 MAIL ADDRESS: STREET 1: 2005 CORPORATE AVE CITY: MEMPHIS STATE: TN ZIP: 38132 S-3 1 0001.txt As filed with the Securities and Exchange Commission on June 9, 2000 Registration No. __________ ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ----------------------- FEDERAL EXPRESS CORPORATION (Exact name of Registrant as specified in its charter) Delaware 71-0427007 (State or jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2005 Corporate Avenue Memphis, Tennessee 38132 (901) 369-3600 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) Karen M. Clayborne, Esq. Senior Vice President and General Counsel Federal Express Corporation 1980 Nonconnah Boulevard Memphis, Tennessee 38132 (901) 395-3392 (Name, address, including zip code, and telephone number, including area code, of agent for service) ----------------------- Copies to: Sarah Beshar, Esq. Juliet Cain, Esq. Davis Polk & Wardwell 450 Lexington Avenue New York, New York 10017 (212) 450-4000 ----------------------- Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this registration statement as determined in light of market conditions and other factors. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 (the "Securities Act"), other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] CALCULATION OF REGISTRATION FEE ========================================================================================================== Proposed Proposed Maximum Maximum Aggregate Aggregate Amount of Title of Each Class of Amount to Be Price Offering Registration Securities Being Registered Registered(1) Per Unit Price(1) Fee - ---------------------------------------------------------------------------------------------------------- Pass Through Certificates........................ Owned Aircraft Equipment Certificates(2)......... Leased Aircraft Equipment Trust Certificates..... Debt Securities.................................. Total......................................... $380,721,000 100% $380,721,000 $100,511 ==========================================================================================================
(1) Estimated solely for purposes of determining the registration fee. (2) Owned Aircraft Equipment Certificates will only be issued as part of the trust property of the relevant pass through trust. Pursuant to Rule 429 under the Securities Act, the Prospectuses filed as part of this Registration Statement relate to the securities registered hereby and to the remaining unsold $69,279,000 amount of Equipment Trust Certificates, Pass Through Certificates and Debt Securities previously registered by Federal Express Corporation under its Registration Statement on Form S-3, File No. 333-80001 in respect of which a filing fee of $19,260 was paid. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. ================================================================================ EXPLANATORY NOTE This Registration Statement contains three forms of prospectus. Each prospectus is accompanied by a prospectus supplement. The forms of prospectus and their supplements will be used respectively to offer for sale: o leased aircraft equipment trust certificates o pass through certificates o debt securities. Sales of the above securities may not be consummated without both the applicable prospectus and the prospectus supplement. THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. SUBJECT TO COMPLETION PRELIMINARY PROSPECTUS DATED JUNE 9, 2000 PROSPECTUS $450,000,000 [COMPANY LOGO] LEASED AIRCRAFT EQUIPMENT TRUST CERTIFICATES ----------------------- This prospectus relates to the issuance of Certificates by an Owner Trustee, acting not in its individual capacity but solely as the Owner Trustee of a separate Owner Trust. The Certificates: o will have an aggregate public offering price of up to $450,000,000 o will be issued in one or more series o will be issued to finance or refinance a portion of the payment by the Owner Trustee of the cost of the Aircraft o of each series will have a principal amount, maturity date and interest rate specified in a prospectus supplement o will be payable at the times and in the amount specified in a prospectus supplement o will be secured by a security interest in the related Aircraft and by the Lease of that Aircraft to Federal Express, including the right to receive rent payable by Federal Express as lessee under the Lease, and o will not be obligations of, or guaranteed by, Federal Express but the amounts payable by Federal Express under the Lease will be sufficient to pay in full when due all principal of and any premium and interest on the Certificates, subject to any limitations specified in a prospectus supplement. Each Owner Trust will own: o the specified Aircraft or, if the delivery of the Aircraft is delayed, the proceeds of sale of the related Certificates, and o the rights of the Owner Trustee under documentation relating to the Aircraft. The obligations of the Owner Trustee with respect to each series of Certificates will rank equally with the obligations of the Owner Trustee with respect to each other series of Certificates. There was no public market for the Certificates of any series before their issuance and there is no assurance that one will develop or continue. Federal Express does not intend to apply for the listing of any series of Certificates on a national securities exchange, unless otherwise indicated in a prospectus supplement. This prospectus will be accompanied by a prospectus supplement which will describe the specific terms of the particular series of Certificates being sold, the Indentures, Leases, leveraged lease transactions and Aircraft relating to the Certificates. Sales of any Certificates may not be consummated without both this prospectus and the prospectus supplement. Investing in the Certificates involves risks. See the "Risk Factors" section beginning on page 3 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. ----------------------- The date of this prospectus is June __, 2000. ABOUT THIS PROSPECTUS This prospectus is part of a Registration Statement on Form S-3 that we filed with the SEC utilizing a "shelf" registration process. Under this shelf process, we may sell the Certificates described in this prospectus in one or more offerings. This prospectus provides you with a general description of the Certificates we may offer. Each time we sell Certificates, we will provide a prospectus supplement that will contain specific information about the terms of that offering. The prospectus supplement may also add, update or change information contained in this prospectus. You should read carefully both this prospectus and any prospectus supplement, together with the additional information described below under "Where You Can Find More Information." You should also refer to the "Glossary of Terms" at the back of this prospectus and in any prospectus supplement for definitions of specialized terms that we are using in this prospectus and any prospectus supplement. This prospectus does not contain all the information provided in the Registration Statement that we filed with the SEC. For further information about Federal Express or the Certificates, you should refer to that Registration Statement. Statements contained in this prospectus or in any prospectus supplement as to the contents of any contract or other document are not necessarily complete, and you should review the full text of those contracts and other documents. The Registration Statement that we filed with the SEC relating to the Certificates can be obtained from the SEC as described below under "Where You Can Find More Information." WHERE YOU CAN FIND MORE INFORMATION We file annual, quarterly and special reports with the SEC. These SEC filings are available to the public over the Internet at the SEC's web site at http://www.sec.gov. You may also read and copy any such document we file at the SEC's public reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549, and in New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms and copy charges. The SEC allows us to "incorporate by reference" the information we file with it, which means: o we can disclose important information to you by referring you to those documents o information incorporated by reference is considered to be part of this prospectus, even though it is not repeated in this prospectus or in any prospectus supplement, and o information that we file with the SEC will automatically update and supersede this prospectus and any prospectus supplement. We incorporate by reference the documents listed below and any future filings made with the SEC under Section 13(a), 13(c), 14, or 15(d) of the Exchange Act after the date of the filing of this Registration Statement and prior to its effectiveness, and until we complete our offering of the Certificates: o Annual Report on Form 10-K for the fiscal year ended May 31, 1999, filed August 27, 1999, and o Quarterly Reports on Form 10-Q for the fiscal quarters ended August 31, 1999, November 30, 1999 and February 29, 2000, filed October 13, 1999, January 14, 2000 and April 13, 2000, respectively. You may obtain a copy of these filings, other than their exhibits, unless those exhibits are specifically incorporated by reference in the filings, at no cost by writing or telephoning us at the following address: James H. Clippard Investor Relations 2 FedEx Corporation 942 South Shady Grove Road Memphis, Tennessee 38120 (901) 818-7200 You should rely only on the information incorporated by reference or provided in this prospectus or any prospectus supplement. We have not authorized anyone else to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to sell any Certificates in any jurisdiction where the offer or sale is not permitted. You should not assume that the information in this prospectus or any prospectus supplement is accurate as of any date other than the date on the front page of those documents. Also, you should not assume that there has been no change in the affairs of Federal Express since the date of this prospectus or any prospectus supplement. FEDERAL EXPRESS CORPORATION Federal Express is a wholly-owned subsidiary of FedEx Corporation. Federal Express offers a wide range of express services for the time-definite transportation of documents, packages and freight throughout the world using an extensive fleet of aircraft and vehicles and leading-edge information technologies. The corporate headquarters of Federal Express are located at 2005 Corporate Avenue, Memphis, Tennessee 38132, telephone (901) 369-3600. RATIO OF EARNINGS TO FIXED CHARGES (Unaudited) Year Ended May 31, Nine Months Ended -------------------------------- ------------------------- February 28, February 29, 1995 1996 1997 1998 1999 1999 2000 ---- ---- ---- ---- ---- ------------ ------------ Ratio of Earnings to Fixed Charges.... 2.0x 1.9x 2.0x 2.1x 2.1x 1.9x 2.0x Earnings included in the calculation of the ratio of earnings to fixed charges represent income before income taxes plus fixed charges, other than capitalized interest. Fixed charges include interest expense, capitalized interest, amortization of debt issuance costs and a portion of rent expense representative of interest. As a result of this offering of Certificates, Federal Express may be more highly leveraged than currently reflected in this table. RISK FACTORS You should consider carefully the risk factors described below before you invest. You should read the information below together with the other information in this prospectus and the accompanying prospectus supplement. Federal Express' business is subject to risks and uncertainties The operations and financial condition of Federal Express are subject to risks and uncertainties, including: o economic conditions in the markets in which Federal Express operates affecting demand for Federal Express' services o competition from other providers of express services with new or improved services 3 o changes in customer demand patterns o increases in aviation and motor fuel prices o strikes, work stoppages and slowdowns by Federal Express' employees o Federal Express' ability to match aircraft, vehicle and sort capacity with customer volume levels o Federal Express' ability to obtain aviation rights in important international markets o contributions to financial results from the sale of engine noise reduction kits o changes in government regulation, weather and technological changes, and o availability of financing on terms acceptable to Federal Express. Proposed new OSHA regulations could have a material adverse effect on our business On November 22, 1999, the U.S. Occupational Safety and Health Administration, or OSHA, proposed regulations to mandate an ergonomics standard that could require many businesses, including Federal Express, to make significant changes in the workplace in order to reduce the incidence of musculoskeletal disorders such as lower back pain. The proposal does not specify which workplace changes would be required in order to comply with the proposed new regulations. We, our competitors and other affected parties have submitted comments to OSHA challenging the economic and technical feasibility of the proposed regulations. In April 2000, OSHA completed public hearings on the proposed regulations and is expected to release final rules later this year. If OSHA adopts the proposed regulations and applies them in the same way as it attempted unsuccessfully in the past to impose ergonomic measures under its general authority, we would be required to make extensive changes to the layout of our sorting facilities and hire a significant number of additional employees. We believe that the cost of compliance would be substantial and have a material adverse effect on our business. We expect that our competitors, along with the rest of the American industry, would also incur substantial compliance costs. Proceeds from the sale of an aircraft may be less than its appraised value The prospectus supplement will contain the appraised value of each Aircraft based upon the lesser of the average and the median value of the Aircraft as appraised by several independent appraisers who will be named in the prospectus supplement. The prospectus supplement may contain reports or summaries of these appraisals. These appraisals will be based on various assumptions and methodologies, which may vary, resulting in different appraised values. We expect that these appraisals will be "desktop appraisals" and that the appraisers will not physically inspect any of the Aircraft. An appraisal is only an estimate of value and you should not rely upon it as a measure of realizable value. The proceeds realized upon the sale of any Aircraft may be less than the appraised value of that Aircraft because of: o market and economic conditions at the time o the availability of buyers o the condition of the Aircraft o whether the Aircraft are sold separately or as a block, and 4 o other factors. Therefore, we cannot assure you that the proceeds realized upon any sale of an Aircraft will be as appraised or sufficient to satisfy in full payments due on the Certificates. Excess proceeds from the sale of one Aircraft will not be available to cover losses on other Certificates relating to other Aircraft and events resulting in a default under one Indenture may not result in a default under other Indentures The Certificates are not cross-collateralized, which means that liquidation proceeds from the sale of an Aircraft in excess of the principal amount of the Certificates related to that Aircraft will not be available to cover any losses on any other Certificates. There will be no cross-default provisions in the Indentures relating to the Certificates and consequently events resulting in an Indenture Event of Default under any particular Indenture may not result in an Indenture Event of Default under any other Indenture. Rating agencies may change their rating on the Certificates at any time The Certificates are expected to be assigned an "investment grade" rating by one or more Rating Agencies. The prospectus supplement will indicate the rating assigned to the Certificates being sold. A rating is not a recommendation to purchase, hold or sell the Certificates because a rating does not address market price or suitability for a particular investor. We cannot assure you that a rating will remain for any given period of time or that a rating will not be lowered or withdrawn entirely by a Rating Agency if in its judgment circumstances in the future so warrant, including the downgrading of Federal Express. The ratings of the Certificates will be based primarily on the default risk of the Certificates and the collateral value provided by the Aircraft. The ratings are expected to address the likelihood of timely payment of interest when due on the Certificates, at the non-default rate, and the ultimate payment of principal of the Certificates on the final expected distribution date. The ratings are not expected to address the possibility of a Lease Event of Default or Indenture Event of Default or other circumstances, such as an Event of Loss, which may result in the payment of the outstanding principal amount of the Certificates prior to the final expected distribution date. The reduction, suspension or withdrawal of the ratings of the Certificates will not, in and of itself, constitute an Indenture Event of Default, unless the prospectus supplement specifies otherwise. The indenture does not limit the amount of debt Federal Express may incur or protect against a highly leveraged transaction involving Federal Express The Indenture does not limit the amount of secured or unsecured indebtedness which Federal Express or its subsidiaries may incur. The Indenture does not contain debt covenants or provisions that would give the holders protection in the event of a highly leveraged transaction involving Federal Express. A public market for the Certificates may not develop or continue There was no public market for the Certificates of any series before their issuance and we cannot assure you that one will develop or continue. Federal Express does not intend to apply for the listing of any Certificates on a national securities exchange, unless otherwise indicated in a prospectus supplement. If an active public market does not develop or continue, the market price and liquidity of the Certificates may be adversely affected. USE OF PROCEEDS The Owner Trustee for each Owner Trust will use the proceeds from the sale of the Certificates to finance or refinance the debt portion and, in cases where the Owner Participant wishes for tax purposes to prevent specific allocation of interest expense to the related Aircraft, to repay some of the equity portion of a separate leveraged lease transaction entered into by Federal Express, as lessee, with respect to the Aircraft specified in the prospectus 5 supplement. For each Aircraft, Federal Express does not expect the debt portion to be financed or refinanced to exceed 80% of the purchase price for the Aircraft. The related Owner Participant will pay the discounts and commissions relating to the offering of the related Certificates. The other expenses relating to the issuance and offering of those Certificates, other than various expenses to be paid directly by Federal Express, will be paid by the related Owner Participant as such other expenses become due or, if previously paid by Federal Express, will be reimbursed to Federal Express by the related Owner Participant. OUTLINE OF LEVERAGED LEASE TRANSACTIONS Each Aircraft in a leveraged lease transaction: o has been or will be sold to the Owner Trustee for the benefit of the Owner Participant, and o has been or will be leased by the Owner Trustee to Federal Express pursuant to a Lease. Each Owner Participant will have provided or will provide at least 20% of the purchase price of the Aircraft from sources other than the Certificates, unless otherwise specified in the prospectus supplement. Each prospectus supplement will specify the type and model of the applicable Aircraft, the engines with which the Aircraft is equipped and whether the Aircraft is already in use in Federal Express' fleet, has been used in another operator's fleet or will be delivered new by the manufacturer to Federal Express or to the Owner Trustee, as the case may be. DESCRIPTION OF THE CERTIFICATES The following is a summary description of the Certificates which we expect will be common to all series of Certificates. The prospectus supplement will describe the specific terms of any series of Certificates. Therefore, you should rely on the information in the prospectus supplement, in particular if the information in the prospectus supplement is different from the information provided below. Because the following description is a summary, it does not describe every aspect of the Certificates, and it is qualified in its entirety by the detailed information appearing in the prospectus supplement, the form of Certificates and the related Indenture, Lease and Participation Agreement which will be filed with the SEC, as exhibits to a post-effective amendment to the Registration Statement of which this prospectus is a part or a Current Report on Form 8-K, a Quarterly Report on Form 10-Q or an Annual Report on Form 10-K. In the following description, we have included references to section numbers of the Indenture so that you can easily locate those provisions. General The Owner Trustee will issue the Certificates as nonrecourse obligations. Federal Express will be obligated to make rental payments under each Lease that will be sufficient to pay the principal of and interest on the related Certificates when and as due and payable. The rental and other payments will be general obligations of Federal Express but the Certificates themselves will not be guaranteed by Federal Express. The Certificates will not be obligations of the Owner Trustee, in its individual capacity, or of the Owner Participant. The Owner Trustee, in its individual capacity, and the Owner Participant will not be liable for payment of any principal of or any premium or interest on the Certificates. 6 Book-Entry Procedures The Certificates will be fully registered and issued in the form of one or more temporary or permanent global security or securities without coupons, in minimum denominations of $1,000 or any integral multiple of $1,000. Each global certificate will be deposited with, or on behalf of, DTC, and registered in its name or in the name of Cede, its nominee. A Certificateholder holding a Certificate initially issued as a global security will not be entitled to receive a Certificate in certificated form, except as indicated below. DTC has advised Federal Express that: o DTC is: - a limited purpose trust company organized under the laws of the State of New York - a member of the Federal Reserve System - a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and - a "clearing agency" registered pursuant to Section 17A of the Exchange Act. o DTC was created to hold securities for DTC Participants and to facilitate the clearance and settlement of securities transactions between DTC Participants through electronic book-entries, thereby eliminating the need for physical movement of certificates. o DTC Participants include securities brokers and dealers, banks, trust companies and clearing corporations. o Access to DTC's book-entry system is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly. Certificateholders that are not DTC Participants but desire to purchase, sell or otherwise transfer ownership of, or other interests in, Certificates may do so only through DTC Participants. In addition, Certificateholders will receive all distributions of principal and interest from the Indenture Trustee through the DTC Participants. Under the rules, regulations and procedures creating and affecting DTC and its operation, DTC is required to make book- entry transfers of Certificates among DTC Participants on whose behalf it acts and to receive and transmit distributions of principal of, and interest on, the Certificates. Under the book-entry system, Certificateholders may experience some delay in receipt of payments, since such payments will be forwarded by the Indenture Trustee to Cede, as nominee for DTC, and DTC in turn will forward the payments to the appropriate DTC Participants. The DTC Participants will be responsible for distributions to Certificateholders and such distributions will be made in accordance with customary industry practices. Although Certificateholders will not have possession of the Certificates, the rules of DTC provide a mechanism by which the Certificateholders will receive payments and will be able to transfer their interests. Although the DTC Participants are expected to convey the rights represented by their interests in any global security to the related Certificateholders, because DTC can only act on behalf of DTC Participants, the ability of Certificateholders to pledge Certificates to persons or entities that are not DTC Participants or to otherwise act with respect to such Certificates, may be limited due to the lack of physical certificates for such Certificates. Neither Federal Express nor the Indenture Trustee nor any agent of either of them will be responsible or liable for any aspect of the records relating to, or payments made on account of, beneficial ownership interests in the Certificates or for supervising or reviewing any records relating to such beneficial ownership interests. Since the only "Certificateholder", for purposes of the Indenture, will be Cede, as nominee of DTC, Certificateholders will not be recognized by the Indenture Trustee as "Certificateholders", and Certificateholders will be permitted to exercise the rights of "Certificateholders" only indirectly through DTC and DTC Participants. DTC has advised Federal 7 Express that it will take any action permitted to be taken by a Certificateholder under the Indenture and any prospectus supplement only at the direction of one or more DTC Participants to whose accounts with DTC the related Certificates are credited. Additionally, DTC has advised Federal Express that it will take such actions with respect to any percentage of the beneficial interest of Certificateholders only at the direction of and on behalf of DTC Participants whose holders include undivided interests that satisfy any such percentage. DTC may take conflicting actions with respect to other undivided interests to the extent that such actions are taken on behalf of DTC Participants whose holders include such undivided interests. Same-Day Settlement and Payment. All payments Federal Express makes to the Indenture Trustee under each Lease will be in immediately available funds and will be passed through to DTC in immediately available funds. The Certificates will trade in DTC's Same-Day Funds Settlement System until maturity, and DTC will require secondary market trading activity in the Certificates to settle in immediately available funds. Certificated Form. The Owner Trustee will issue physical certificates to holders of a global security or their nominees if: o DTC advises the Indenture Trustee in writing that it is no longer willing or able to discharge properly its responsibilities as depositary with respect to the Certificates and Federal Express is unable to locate a qualified successor, or o if Federal Express, at its option, elects to terminate the book-entry system through DTC. In such event, the Indenture Trustee will notify all Certificateholders through DTC Participants of the availability of such certificated Certificates. Upon surrender by DTC of the definitive global certificate representing the series of Certificates and receipt of instructions for reregistration, the Indenture Trustee will reissue the Certificates in certificated form to Certificateholders or their nominees. Principal and Interest Payments Interest: o will be payable on the Certificates on the dates and at the rates per annum indicated in the prospectus supplement, and o will be calculated on the basis of a 360-day year consisting of twelve 30-day months. Principal will be payable on the Certificates in scheduled amounts and on specified dates indicated in the prospectus supplement. In general, the record date for each interest and principal payment date will be the fifteenth day prior to a payment date. If the Certificates are issued in certificated form as discussed above, principal of and any premium and interest on the Certificates will be payable at the corporate trust office of the Indenture Trustee in Salt Lake City, Utah or at such other office or agency, including the office or agency of a Paying Agent, maintained for the payment of the Certificates of a series. At their option, the Indenture Trustee or Paying Agent may make payments by check mailed to the person entitled to the payments at the address shown in the register maintained by the Indenture Trustee or any other registrar. (Indenture, Sections 2.04, 3.02 and 3.04) Certificates may be surrendered for registration of transfer or exchange for Certificates of the same series, maturity and interest rate at facilities established for such purpose by the Indenture Trustee in Salt Lake City, Utah. No service charge will be levied on any Certificateholder for any transfer or exchange of Certificates, but the Certificateholder may be required to pay any tax or other governmental charges. (Indenture, Sections 2.04, 2.06 and 3.02) 8 Prepayment The prospectus supplement will describe: o the circumstances, whether voluntary or involuntary, under which the related Certificates may or must be prepaid, in whole or in part, prior to the stated maturity date, o any premium applicable upon a prepayment, and o other terms applying to the prepayment of the Certificates. Security The Certificates will be secured by: o an assignment by the Owner Trustee to the Indenture Trustee of the Owner Trustee's rights under the related Lease, including the right to receive rent and other payments, but excluding the rights described below o a security interest in the related Aircraft, subject to the rights of Federal Express under the Lease and to the rights of any other entity under a sublease or assignment permitted under the Lease, so that the Indenture Trustee will not have the right to disturb Federal Express' quiet enjoyment of the Aircraft so long as no Lease Event of Default has occurred and is continuing, and o an assignment to the Indenture Trustee of the Owner Trustee's rights relating to the Aircraft and the related engines under any agreements for the purchase of the Aircraft between Federal Express and the manufacturers of the Aircraft and the engines. See "Registration of the Aircraft" below. The assignment by the Owner Trustee to the Indenture Trustee of its rights under each Lease will exclude rights of the Owner Trustee and the Owner Participant relating to: o indemnification by Federal Express for some matters o proceeds of public liability insurance payable to the Owner Trustee in its individual capacity and to the Owner Participant under insurance maintained by Federal Express under the Lease, and o proceeds of any insurance policies separately maintained by the Owner Trustee in its individual capacity or by the Owner Participant. The right of the Indenture Trustee to exercise any of the rights of the Owner Trustee under the related Lease, except the right to receive payments of rent due under the Lease, will be subject to the limitations described in the prospectus supplement. (Indenture, Granting Clause and Section 8.01) The Certificates are not cross-collateralized, which means that liquidation proceeds from the sale of an Aircraft in excess of the amounts due on the Certificates related to that Aircraft will not be available to cover any losses on any other Certificates. There will be no cross-default provisions in the Indentures and consequently events resulting in an Indenture Event of Default under any particular Indenture may not result in an Indenture Event of Default under any other Indenture. The Indenture Trustee will deposit the proceeds from the sale of the Certificates of any series received on a day that is prior to the delivery date for the related Aircraft or, in the case of a refinancing, the refunding date for the related original loan certificate, in the investments described below, to hold as security for the Certificates pending the delivery of the Aircraft or the consummation of the refunding. The Indenture Trustee may also hold funds as a result of other events, including: 9 o the occurrence of an Indenture Event of Default, which may cause the Indenture Trustee to hold funds otherwise distributable to the Owner Trustee, or o an Event of Loss with respect to the Aircraft. These funds will be invested in: o obligations either of, or fully guaranteed by, the United States of America o certificates of deposit, bankers' acceptances and time deposits with banks and trust companies meeting the criteria specified in the prospectus supplement, or o commercial paper issued by a U.S. corporation whose commercial paper is rated at least A-1/P-1 by Standard & Poor's and Moody's Investors Service, Inc., respectively, or if neither of these organizations rates commercial paper, the highest rating by another nationally recognized rating organization. The Indenture Trustee will hold and apply any income realized as a result of the investments, net of the Indenture Trustee's reasonable fees and expenses incurred in making the investments, in the same manner as the principal amount of the investment is to be applied. Any losses, after taking into account such earnings and such reasonable fees and expenses, will be charged against the principal amount invested. Federal Express will be responsible for those losses. (Indenture, Section 5.08) Registration of the Aircraft Federal Express will be required, except under some circumstances, to register and keep each Aircraft registered under the Transportation Code, in the name of the Owner Trustee, and to record and maintain the recordation of the Indenture and the Lease relating to each Aircraft under the Transportation Code. The recordation will give the Indenture Trustee a perfected security interest under the Transportation Code in each such Aircraft. The perfected security interest will, with limited exceptions, be recognized in those jurisdictions that have ratified the Convention. Federal Express will be able, in some circumstances, to re-register any Aircraft in some countries other than the United States. In general, prior to any change in the jurisdiction of registry, the Indenture Trustee and the related Owner Participant must receive assurances, including that the other country would provide substantially equivalent protection for the rights of owner participants, lessors and lenders in similar transactions as is provided under United States law, except that, for the purpose of such determination, rights and remedies similar to those available under Section 1110 of the Bankruptcy Code will not be required in the absence of restrictions of rights and remedies of lessors and secured parties that are similar to those imposed by Sections 362, 363 and 1129 of the Bankruptcy Code. While the assurances are intended to provide that Federal Express or the Owner Trustee's title to the Aircraft and the Indenture Trustee's Lien on the Aircraft will be recognized in such jurisdiction and that the Indenture Trustee may exercise the rights granted to it in the Indentures, there is no guarantee that, even if such jurisdiction is a party to the Convention, as a practical matter, the Indenture Trustee would be able to realize upon its security interest in the case of an Indenture Event of Default. Each Aircraft may also be operated by Federal Express or placed under sublease or interchange arrangements with carriers domiciled outside of the United States. The ability of the Indenture Trustee in the case of an Indenture Event of Default to realize upon its security interest in the Aircraft could be adversely affected as a legal or practical matter if the Aircraft were located outside the United States. Payments and Limitations of Liability All payments of principal of and any premium and interest on the Certificates of each series will be made only from the assets subject to the Lien of the applicable Indenture or the income and proceeds received by the Indenture Trustee, including rent payable by Federal Express under the related Lease. See "The Leases -- Terms and 10 Rentals" below. Federal Express' obligations to pay rent and to cause other payments to be made under each Lease will be general obligations of Federal Express. The Certificates will not be direct obligations of, and will not be guaranteed by, Federal Express. The Owner Trustee and the Indenture Trustee, in their individual capacities, will not be liable to any Certificateholder or, in the case of the Owner Trustee, in its individual capacity, to Federal Express or the Indenture Trustee for any amounts payable or for any liability under the Certificates or the Indentures, except as provided in the Indentures and the Participation Agreements and except for the gross negligence or willful misconduct of the Owner Trustee. (Indenture, Section 2.05) Merger, Consolidation and Transfer of Assets Federal Express will be prohibited from consolidating with or merging into any other corporation under circumstances in which Federal Express is not the surviving corporation, or from transferring all or substantially all of its assets as an entirety to any other corporation, unless: o the successor is a U.S. Citizen, and an "air carrier" within the meaning of and operating under the Transportation Code and a corporation organized and existing under the laws of the United States or a political subdivision of the United States o the successor expressly assumes all the obligations of Federal Express contained in the related Indenture, the Participation Agreement, the Lease, the Purchase Agreement and the Purchase Agreement Assignment o immediately after giving effect to the consolidation, merger or transfer, the successor or transferee is in compliance with all of the terms and conditions of the documents, and o the consolidation, merger or transfer does not give rise to a Lease Event of Default. The Indentures contain no debt covenants or provisions that would afford the Certificateholders protection in the event of a highly leveraged transaction involving Federal Express. Events of Default, Notice and Waiver The prospectus supplement will indicate the Indenture Events of Default under each Indenture. Each Indenture will provide that the Indenture Trustee: o must give notice to the holders of outstanding Certificates of an Indenture Default if a responsible officer of the Indenture Trustee has actual knowledge of its occurrence o must give the notice within 90 days after the occurrence of the Indenture Default but not earlier than 60 days from the date of its occurrence, and o may withhold the notice in the manner described above, except in the case of a default in the payment of the principal of and any interest on any Certificate, if the Indenture Trustee in good faith determines that the withholding of the notice is in the interests of the holders of outstanding Certificates. (Indenture, Section 7.12) The holders of not less than 50% in aggregate principal amount of the outstanding Certificates may waive some past Indenture Defaults. Consent from each holder of an outstanding Certificate is however required for a waiver of: o an Indenture Default in the payment of the principal of and any premium and interest on any Certificate then outstanding, and 11 o any covenant or provision of the Indenture or any other related Operative Agreement which, pursuant to the Indenture, cannot be modified or amended without the consent of all holders of outstanding Certificates. (Indenture, Section 7.11) The Owner Trustee or the related Owner Participant will have the right, as specified in the prospectus supplement, to cure an Indenture Event of Default that results from the occurrence of a Lease Event of Default under the related Lease. If the Owner Trustee or the related Owner Participant exercises the cure right, the Indenture Event of Default will be deemed to be cured. Remedies Exercise of Rights and Remedies. The Indenture Trustee may exercise the rights or remedies available to it if an Indenture Event of Default has occurred or is continuing, including a Lease Event of Default. If a Lease Event of Default has occurred, the Indenture Trustee may exercise the remedies available to it under the Lease with respect to the Aircraft pledged under the Indenture. The Indenture Trustee's rights or remedies are subject to any right of the Owner Trustee or the related Owner Participant to cure defaults or to prepay the Certificates and to any limitation described in the prospectus supplement. The Indenture Trustee may exercise the remedies to the exclusion of the Owner Trustee and the Owner Participant. Any Aircraft sold in the exercise of the remedies will be free and clear of any rights of those parties, including the rights of Federal Express under the applicable Lease, provided that no exercise of any remedies by the Indenture Trustee may affect the rights of Federal Express under a Lease unless a Lease Event of Default under such Lease has occurred and is continuing. (Indenture, Section 7.02(a)) Resale Value. It is impossible to predict the resale value for any Aircraft to be sold upon the exercise of the Indenture Trustee's remedies under the related Indenture. The market for aircraft, whether new or used, is and will be affected by many factors including the supply of similarly equipped aircraft of the same make and model, the demand for such aircraft by air carriers and the cost and availability of financing to potential purchasers of such aircraft. Each of these factors, in turn, will be affected by various circumstances including current and anticipated demand for passenger and cargo air services, the relative capacity of air carriers to provide such services, the current and projected profitability of providing such services, the economic condition of the domestic and international airline industries and global economic and financial developments generally. The marketability of a particular aircraft will be affected by factors such as the reputation and actual performance record of the air carrier operating the aircraft with respect to maintenance, the compliance of the aircraft with federal noise and other environmental standards and the degree of technical and other support available from the manufacturer of the aircraft. Since the market for aircraft will fluctuate over time to reflect changes in these circumstances, and because of the unique factors that would affect market value in a forced disposition of an aircraft, there can be no assurance that the net proceeds realized from the sale or other disposition of any Aircraft in the exercise of such remedies will be sufficient to satisfy in full amounts due and payable on the related Certificates. Declaration. If an Indenture Event of Default occurs as a result of specified events of bankruptcy, insolvency or reorganization of the Owner Trustee, the related Owner Participant or Federal Express, then the unpaid principal of all outstanding Certificates issued under the Indenture, together with interest accrued but unpaid on the principal and all other amounts due under the Certificates and under the Indenture, immediately and without further act, will become due and payable. If any other Indenture Event of Default occurs and is continuing under an Indenture, the Indenture Trustee, acting on its own or at the direction of the holders of not less than 25% in aggregate principal amount of the outstanding Certificates issued under the Indenture, may declare the principal of all the Certificates immediately due and payable, together with interest accrued but unpaid on the principal and all other amounts due under the Certificates and under the Indenture, by written notice or notices to the Owner Trustee and Federal Express. Rescind Declaration. The holders of not less than 50% in aggregate principal amount of the outstanding Certificates may rescind any declaration by the Indenture Trustee or by holders at any time prior to the sale or disposition of the property subject to the Lien of the Indenture, provided there has been paid to or deposited with the Indenture Trustee an amount sufficient to pay: 12 o all overdue installments of interest on all the Certificates, together, to the extent permitted by law, with interest on the overdue installments of interest o the principal on any Certificates that has become due otherwise than by the declaration o all amounts paid or advanced by the Indenture Trustee, and o other specified expenses or all Indenture Events of Default under the Indenture, other than the non-payment of principal that has become due solely because of the declaration, have been cured or waived. (Indenture, Sections 7.02(b) and (c)) Bankruptcy. In the event of the bankruptcy of the Owner Participant, it is possible that, notwithstanding that the Aircraft will be owned by the Owner Trustee in trust, the Aircraft and the related Lease and Certificates might become part of such bankruptcy proceeding. In this event, payments under the Lease or Certificates might be interrupted and the ability of the Indenture Trustee to exercise its remedies under the Indenture might be restricted, although the Indenture Trustee would retain its status as a secured creditor in respect of the Lease and Aircraft. The right of any holder of a Certificate to institute an action for any remedy under the Indenture pursuant to which the Certificate was issued, including the right to enforce payment of the principal of and any premium and interest on the Certificates when due, will be subject to certain conditions precedent, including a written request to the Indenture Trustee by the holders of not less than 25% in aggregate principal amount of outstanding Certificates issued pursuant to the Indenture to take action, and an offer to the Indenture Trustee of reasonable indemnification against costs, expenses and liabilities incurred by it in doing so. (Indenture, Sections 7.08 and 7.09) The holders of not less than 50% in aggregate principal amount of outstanding Certificates may direct the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee or of exercising any trust or power conferred on the Indenture Trustee but, in such event, the Indenture Trustee is entitled to be indemnified by those holders of that series before proceeding to act and the Indenture Trustee may not be held liable for any such action taken in good faith. (Indenture, Section 7.10 and Article XI) Section 1110 of the Bankruptcy Code provides that the right of lessors, conditional vendors and holders of security interests with respect to aircraft capable of carrying ten or more individuals or 6,000 pounds or more of cargo used by air carriers operating under certificates issued by the Secretary of Transportation under Chapter 447 of the Transportation Code to take possession of the aircraft in compliance with the provisions of the lease, conditional sale contract or security agreement, as the case may be, is not affected by: o the automatic stay provision of the Bankruptcy Code, which provision enjoins the taking of any action against a debtor by a creditor o the provision of the Bankruptcy Code allowing the trustee in reorganization or the debtor-in-possession to use, sell or lease property of the debtor o the confirmation of a plan by the bankruptcy court, and o any power of the bankruptcy court to enjoin a repossession. Section 1110 provides, however, that the right of a lessor, conditional vendor or holder of a security interest to take possession of an aircraft in the event of a default may not be exercised for 60 days following the date of commencement of the reorganization proceedings, unless specifically permitted by the bankruptcy court, and may not be exercised at all if, within such 60-day period, the trustee in reorganization or the debtor-in-possession agrees to perform the debtor's obligations that become due on or after such date and cures all existing defaults, other than defaults resulting solely from the financial condition, bankruptcy, insolvency or reorganization of the debtor. The 13 prospectus supplement for each offering will discuss the availability of the benefits of Section 1110 of the Bankruptcy Code with respect to the related Aircraft. Payments. If an Indenture Event of Default occurs and is continuing, any amounts held or received by the Indenture Trustee may be applied to reimburse the Indenture Trustee for any tax, expense, charge or other loss incurred by it and to pay any other amounts due to the Indenture Trustee prior to any payments to holders of the Certificates with respect to which the Indenture Event of Default relates. (Indenture, Sections 5.03 and 9.11) Modification of Agreements The provisions of the Indenture, the Lease, the Participation Agreement and the Trust Agreement with respect to any series may be amended or modified, except to the extent indicated below, with the consent of the holders of more than 50% in aggregate principal amount of outstanding Certificates. (Indenture, Section 13.02) The following changes may be made to the Indenture pursuant to which a Certificate was issued or the related Lease or Participation Agreement only with the consent of all holders of the outstanding Certificates affected by the changes: o reductions in the principal amount of or any premium and interest payment payable on the Certificate or changes in the date on which any principal and any premium or interest payment is due and payable or which otherwise affect the terms of payment of the Certificate o reductions in, and modifications or amendments to, any indemnities payable by the related Owner Participant in favor of those holders o reductions in the amount of any rent payable by Federal Express below the amount required to pay all principal of and any premium and interest on all the Certificates as and when due and payable o creations of any security interest with respect to the property subject to the Lien of the Indenture ranking prior to or on a parity with the security interest created by the Indenture or deprivation of the holder of any such Certificate of the benefit of the Lien of the Indenture upon the property subject to the Lien, or o reductions in the percentage of the aggregate principal amount of the Certificates necessary to modify or amend any provision of the Indenture or to waive compliance with any provision. (Indenture, Article XIII) Some provisions of the Indentures, the Leases, the Participation Agreements and the Trust Agreements may be modified by the Owner Trustee, Federal Express and the Indenture Trustee without the consent of the holders of the outstanding Certificates. (Indenture, Section 13.01) The Indenture Trustee Unless otherwise indicated in the prospectus supplement, First Security Bank, National Association will be the Indenture Trustee under each Indenture. First Security Bank, National Association acts as trustee under other indentures with respect to other indebtedness of Federal Express, and Federal Express from time to time borrows from, and maintains deposit accounts with, First Security Bank, National Association and its affiliates. Each Indenture will be deemed to provide that in the case of any Indenture Event of Default, the Indenture Trustee will exercise the rights and powers vested in it by the Indenture and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of its own affairs. Generally, the Indenture Trustee will not be liable for any error of judgment made in good faith, unless the Indenture Trustee was negligent in ascertaining the pertinent facts, or for any action taken or omitted to be taken by it in good faith in accordance with the direction of the holders of not less than 50% in aggregate principal amount of the outstanding Certificates issued under the Indenture. Subject to such provisions, the Indenture Trustee will be under no obligation to exercise any of its rights or powers under such Indenture at the request of any holders of 14 Certificates unless they shall have offered to the Indenture Trustee reasonable security or indemnity. Each Indenture will provide that the Indenture Trustee and the Owner Trustee may acquire and hold Certificates and, subject to some conditions, the Indenture Trustee may otherwise deal with the Owner Trustee with the same rights it would have if it were not the Indenture Trustee. (Indenture, Sections 9.02, 9.03 and 9.05) The Indenture Trustee may resign as trustee under any Indenture at any time. If the Indenture Trustee ceases to be eligible to continue as Indenture Trustee under an Indenture or becomes incapable of acting as Indenture Trustee or becomes insolvent, the Owner Trustee may remove the Indenture Trustee. Any holder of a related Certificate who has been a holder of a related Certificate for at least six months may, on behalf of itself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Indenture Trustee and the appointment of a successor trustee. In addition, the Indenture Trustee under any Indenture may be removed without cause by the holders of more than 50% in aggregate unpaid principal amount of the related outstanding Certificates or by the Owner Trustee, with the consent of Federal Express and those holders. (Indenture, Section 12.02) In the case of the resignation or removal of the Indenture Trustee under an Indenture, the holders of more than 50% in aggregate unpaid principal amount of the related outstanding Certificates, or the Owner Trustee, with the consent of Federal Express and such holders, may appoint a successor Indenture Trustee. The resignation or removal of the Indenture Trustee under any Indenture and the appointment of the successor trustee under such Indenture does not become effective until acceptance of the appointment by the successor trustee. (Indenture, Section 12.02) It is possible that a different trustee could be appointed to act as the successor trustee under each Indenture. All references in this prospectus to the Indenture Trustee are to the trustee acting in such capacity under each of the Indentures and should be read to take into account the possibility that each of the Indentures could have a different successor trustee in the event of such a resignation or removal. The Leases Terms and Rentals. Each Aircraft will be leased separately by the related Owner Trustee to Federal Express for a term commencing on the date of the delivery of the related Aircraft to the Owner Trustee and expiring on a date not earlier than the latest maturity date of the Certificates issued with respect to such Aircraft, unless previously terminated or extended, as permitted by the related Lease. The scheduled rental payments by Federal Express under each Lease will be payable on the dates specified in the prospectus supplement. The respective payments will be assigned under the related Indenture by the Owner Trustee to the Indenture Trustee to provide the funds necessary to make payments of principal and interest due from such Owner Trustee on the Certificates issued under such Indenture. Although in some cases the scheduled rental payments under the Leases may be adjusted, under no circumstances will the payments that Federal Express will be unconditionally obligated to make or cause to be made under any Lease be less than the scheduled payments of principal of and interest on the Certificates issued under the Indenture relating to such Lease. See "Payments and Limitations of Liability" above. Scheduled payments of principal of and interest on the Certificates will be made on the dates specified in the prospectus supplement. Net Lease. Federal Express' obligations under each Lease in respect of the related Aircraft will be those of a lessee under a "net lease." Accordingly, Federal Express will be obligated to pay all costs of operating the Aircraft and, at its expense, to maintain, service, repair and overhaul the Aircraft so as to keep the Aircraft in good condition, ordinary wear and tear excepted, and to enable the airworthiness certification of the Aircraft to be maintained in good standing at all times under the Transportation Code or, under certain circumstances, under the applicable requirements of the aeronautical authority of another country of registry. If, however, the Aircraft loses its airworthiness certification and such loss is curable and Federal Express, using its reasonable best efforts, undertakes such cure promptly, diligently and continuously, then Federal Express will not be in default with respect to such obligation. Generally, Federal Express will be obligated to replace or cause to be replaced all Aircraft parts that may become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use. Federal Express will have the right to make other modifications and additions to an Aircraft so long as such modifications or additions do not materially decrease the value or utility of such Aircraft or impair its condition or airworthiness below its value, utility, condition and airworthiness immediately prior to such modification or 15 addition, assuming that the Aircraft was then in the condition and airworthiness required by the related Lease. Also, in some circumstances, Federal Express will be permitted to remove parts, without replacement, from an Aircraft or any engine, and therefore from the Lien of the applicable Indenture, if Federal Express deems such parts to be obsolete or no longer suitable or appropriate for use so long as the removals do not decrease the utility, condition or airworthiness of the Aircraft or any engine, although the value of the Aircraft or any engine may be reduced by the removal. The prospectus supplement will contain a description of any limitations applicable to the provisions described above. Insurance. The prospectus supplement will contain a description of the insurance arrangements applicable to each Aircraft. In general, Federal Express will be obligated to carry comprehensive aircraft liability insurance, including property damage liability insurance and cargo legal liability insurance as described below. The insurance must be in the amounts, against the risks and with the retentions as Federal Express customarily maintains. The insurance must also be with insurers of recognized responsibility and against the other risks as are usually insured against by corporations situated similarly to Federal Express and engaged in the same business as, or business similar to, Federal Express and owning or operating aircraft and engines similar to the related Aircraft and related engines. In general, Federal Express will also be obligated to carry, with insurers of recognized responsibility, all-risk ground and flight aircraft hull insurance covering the related Aircraft and all-risk coverage with respect to the related engines and parts while temporarily removed from the Aircraft and not replaced by similar engines or parts, as described below. The insurance includes war-risk and allied perils, hijacking and governmental confiscation and expropriation insurance, except in the country of registry, must be in such form and amounts, and with such retentions as Federal Express customarily maintains with respect to other aircraft in Federal Express' fleet of the same type and model and operating on the same routes as the related Aircraft, and may not be in an amount below stipulated values. Federal Express may self-insure against the risks required to be insured against under the related Lease in the reasonable amounts as are then applicable to other aircraft or engines of Federal Express of value comparable to the related Aircraft. The self-insurance with respect to all aircraft in Federal Express' fleet may not, however, in the aggregate exceed an amount equal to the lesser of 50% of the highest replacement value of any single aircraft in such fleet, or 1.5% of the average aggregate insured value from time to time of Federal Express' entire aircraft fleet, provided that a standard deductible per occurrence per aircraft no greater than the amount customarily allowed as a deductible in the industry will be permitted in addition to such self-insurance. Federal Express and any permitted sublessee of an Aircraft will be named as insured parties under all insurance policies required by the related Lease. The Indenture Trustee, Owner Trustee and related Owner Participant will be named additional insureds, which will afford each of them the rights but not the obligations of an additional insured. In general, liability insurance proceeds will be distributed to the respective parties entitled to such proceeds and hull insurance proceeds in excess of certain specified amounts will be distributed to the Indenture Trustee. The prospectus supplement will contain a description of any limitations applicable to the provisions described in this paragraph. Lease Events of Default; Remedies. The prospectus supplement will describe the Lease Events of Default under the related Leases, the remedies that the Owner Trustee may exercise with respect to the related Aircraft, and other provisions relating to the occurrence of a Lease Event of Default and the exercise of remedies. The Participation Agreements Federal Express will be required to indemnify each Owner Participant, the Owner Trustee, the Indenture Trustee and the parties affiliated with the above, but not including Certificateholders, for the liabilities, losses, fees and expenses and for the other matters arising out of the transactions described in this prospectus or relating to the applicable Aircraft or the use of the Aircraft. In addition, under some circumstances, Federal Express will be required to indemnify these persons against some taxes, levies, duties and withholdings and for some other matters relating to the transactions or the applicable Aircraft. Subject to some restrictions and unless otherwise limited in the prospectus supplement, each Owner Participant may convey all of its interest in the related Owner Trust. Davis Polk & Wardwell has advised Federal Express based on law in effect on the date of this prospectus that an Owner Participant's conveyance of its right, title and 16 interest in the related Owner Trust will not constitute a taxable event to the holders of the related Certificates. However, the prospectus supplement may provide that in some limited instances Federal Express may assume an Owner Trust's obligations under the related Certificates on a full recourse basis. In this event, the Certificateholders will recognize gain or loss on the related Certificates for federal income tax purposes. ERISA CONSIDERATIONS Unless otherwise indicated in the prospectus supplement, Certificates may not be purchased by, or with the assets of, any employee benefit plan subject to Title I of ERISA, or individual retirement account or plan subject to Section 4975 of the Internal Revenue Code. Certain governmental plans and non-electing church plans, however, are not subject to Title I of ERISA or Section 4975 of the Internal Revenue Code, and, therefore, may purchase the Certificates. PLAN OF DISTRIBUTION The Certificates may be sold to or through underwriters, directly to other purchasers or through agents. The distribution of the Certificates may be effected from time to time in one or more transactions at a fixed price or prices, which may be changed, or at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. Underwriters or agents may receive compensation from Federal Express or from purchasers of Certificates for whom they may act as agents in the form of discounts, concessions or commissions. Underwriters may sell Certificates to or through dealers, and the dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters or commissions from the purchasers for whom they may act as agents. Underwriters, dealers and agents that participate in the distribution of Certificates may be deemed to be underwriters, and any discounts or commissions received by them from Federal Express and any profit on the resale of Certificates by them may be deemed to be underwriting discounts and commissions, under the Securities Act. Any underwriter or agent will be identified, and any such compensation received from Federal Express will be described, in the prospectus supplement. Offers to purchase Certificates may be solicited directly and the sale of Certificates may be made directly to institutional investors or others, who may be deemed to be underwriters within the meaning of the Securities Act with respect to any resale of Certificates. The terms of any sales will be described in the prospectus supplement. Underwriters and agents who participate in the distribution of Certificates may be entitled to indemnification by Federal Express against some liabilities, including liabilities under the Securities Act. Federal Express does not intend to apply for the listing of any series of Certificates on a national securities exchange. If the Certificates of any series are sold to or through underwriters, the underwriters may make a market in the Certificates, as permitted by applicable laws and regulations. No underwriter would be obligated, however, to make a market in the Certificates, and any market-making could be discontinued at any time at the sole discretion of the underwriters. Accordingly, no assurance can be given as to the liquidity of, or trading markets for, the Certificates of any series. Some of the underwriters or agents and their associates may be customers of, engage in transactions with, and perform services for, Federal Express in the ordinary course of business. 17 LEGAL MATTERS Unless otherwise indicated in the prospectus supplement, the legality of the Certificates offered by this prospectus will be passed upon for Federal Express by Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017, and by Underwriters' Counsel. Unless otherwise indicated in the prospectus supplement, both Davis Polk & Wardwell and Underwriters' Counsel may rely on the opinion of counsel for the Owner Trustee, individually and as Owner Trustee, as to matters relating to the authorization, execution and delivery of each Indenture and of the related series of Certificates by the Owner Trustee, and of Karen M. Clayborne, Senior Vice President and General Counsel of Federal Express, as to Federal Express' authorization, execution and delivery of the Indentures. At June 1, 2000, Ms. Clayborne owned 13,556 shares of FedEx Corporation's common stock and had been granted options to purchase 53,450 shares of FedEx Corporation's common stock. Of the options granted, 6,250 were vested at such date. EXPERTS The consolidated financial statements and schedule of Federal Express included or incorporated by reference in Federal Express' Annual Report on Form 10-K for the year ended May 31, 1999 and incorporated by reference in this prospectus, have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with respect to the consolidated financial statements and schedule, and are incorporated by reference in this prospectus in reliance upon the authority of Arthur Andersen LLP as experts in giving those reports. With respect to the unaudited interim financial information for the quarters ended August 31, 1999, November 30, 1999 and February 29, 2000, included in Federal Express' Quarterly Reports on Form 10-Q for such periods, which are incorporated by reference in this prospectus, Arthur Andersen LLP has applied limited procedures in accordance with professional standards for a review of such information. However, their separate reports on the unaudited interim financial information state that they did not audit and they do not express an opinion on that interim financial information. Accordingly, the degree of reliance on their reports on that information should be restricted in light of the limited nature of the review procedures applied. In addition, the accountants are not subject to the liability provisions of Section 11 of the Securities Act for their reports on the unaudited interim financial information because those reports are not "reports" or a "part" of the Registration Statement, of which this prospectus is a part, prepared or certified by the accountants within the meaning of Sections 7 and 11 of the Securities Act. 18 GLOSSARY OF TERMS The following is a glossary of terms used in this prospectus. The glossary may contain definitions which are different from definitions used in the prospectus supplement. You should read the prospectus supplement in conjunction with the glossary or other definition of terms contained in the prospectus supplement. "Aircraft" means an aircraft specified in a prospectus supplement which has been or will be leased to Federal Express in connection with a leveraged lease transaction. "Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C. et seq.), as amended, or any successor thereto. "Cede" means Cede & Co., as nominee for DTC. "Certificateholder" means, as of any particular time, the person in whose name a Certificate shall be registered. "Certificates" means the leased aircraft equipment trust certificates issued by the Owner Trustee pursuant to the related Indenture and any certificate issued in exchange therefor or replacement thereof pursuant to the related Indenture. "Convention" means the Convention on the International Recognition of Rights in Aircraft. "DTC" means The Depository Trust Company. "DTC Participants" means the participants of DTC. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "Event of Loss" means, for any Aircraft, each of the events designated as such in the related Lease. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Federal Express" means Federal Express Corporation. "Indenture" means a trust indenture and security agreement among the Owner Trustee, the Indenture Trustee and Federal Express. "Indenture Default" means any event or condition, which, with the lapse of time or the giving of notice, or both, would constitute an Indenture Event of Default. "Indenture Event of Default" means, for any Indenture, each of the events designated as an event of default in such Indenture. "Indenture Trustee" means First Security Bank, National Association, or another bank or trust company, in its capacity as indenture trustee under the related Indenture and any successor under the related Indenture. "Internal Revenue Code" means the United States Internal Revenue Code of 1986, as amended. "Lease" means a lease agreement between the Owner Trustee, as lessor, and Federal Express, as lessee, in each case under which the Owner Trustee leases, or is expected to lease, the related Aircraft to Federal Express. "Lease Event of Default" means, for any Lease, each of the events designated as an event of default in such Lease. 19 "Lien" means any mortgage, pledge, lien, charge, encumbrance, lease or security interest or other similar interest. "Operative Agreements" means, for any Aircraft, the related Indenture, Equipment Certificates, Participation Agreement, Lease, Trust Agreement and any other related documents defined as such in the Participation Agreement. "Owner Participant" means the owner participant named in the related Trust Agreement. "Owner Trust" means a trust created pursuant to a Trust Agreement. "Owner Trustee" means State Street Bank and Trust Company of Connecticut, National Association, or another bank or trust company, not in its individual capacity but solely as owner trustee of an Owner Trust. "Participation Agreement" means a participation agreement among the Owner Participant, the Owner Trustee, the Indenture Trustee, Federal Express and, in the case of a refinancing, each holder of a loan certificate issued under the related Indenture as originally executed. "Paying Agent" means a paying agent appointed by the related Indenture Trustee. "Purchase Agreement" means, for any Aircraft, the purchase agreement between the manufacturer and Federal Express, including all exhibits, appendices and letter agreements attached thereto as originally executed or as modified, amended or supplemented in accordance with the terms thereof, but only to the extent that the foregoing relate to such Aircraft and to the extent assigned pursuant to the Purchase Agreement Assignment. "Purchase Agreement Assignment" means, for any Aircraft, the purchase agreement assignment between the related Owner Trustee and Federal Express. "Rating Agency" means a "nationally recognized statistical rating organization", as such term is defined in Rule 436(g)(2) under the Securities Act. "Registration Statement" means a registration statement on Form S-3 (together with all amendments and exhibits). "SEC" means the Securities and Exchange Commission of the United States. "Securities Act" means the Securities Act of 1933, as amended. "Transportation Code" means Title 49 of the United States Code, as amended. "Trust Agreement" means a trust agreement between the Owner Trustee and the Owner Participant. "U.S. Citizen" means a citizen of the United States as defined in Section 40102(a)(15) of the Transportation Code, or any analogous part of any successor or substituted legislation or regulation at the time in effect. "Underwriters' Counsel" means the counsel for any agents, dealers or underwriters. 20 =================================================== =============================================== No dealer, salesperson or other individual has been authorized to give any information or to make any representations not contained in this prospectus in connection with the offering covered by this $450,000,000 prospectus. If given or made, such information or representation must not be relied upon as having been authorized by Federal Express or the [COMPANY LOGO] Underwriters. This prospectus does not constitute an offer to sell, or the solicitation of an offer to buy, the Certificates in any jurisdiction where, or to any person to whom, it is unlawful to make such offer or solicitation. Neither the delivery of this prospectus nor any sale made hereunder shall, under any circumstances, create an implication that there has not been any change in the facts set forth in this prospectus or in the affairs of Federal Express since the date of this Leased Aircraft Prospectus. Equipment Trust Certificates ---------------------- ---------------------------- TABLE OF CONTENTS PROSPECTUS Page ----------------------------- About this Prospectus.............................2 Where You Can Find More Information...............2 Federal Express Corporation.......................3 Ratio of Earnings to Fixed Charges................3 Risk Factors......................................3 Use of Proceeds...................................5 Outline of Leveraged Lease Transactions...........6 Description of the Certificates...................6 ERISA Considerations.............................17 Plan of Distribution.............................17 June __, 2000 Legal Matters....................................18 Experts..........................................18 Glossary of Terms................................19 =================================================== ===============================================
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. SUBJECT TO COMPLETION PRELIMINARY PROSPECTUS DATED JUNE 9, 2000 PROSPECTUS $450,000,000 [COMPANY LOGO] PASS THROUGH CERTIFICATES ----------------------- This prospectus relates to the issuance of Pass Through Certificates by one or more Pass Through Trusts. The Pass Through Certificates: o will have an aggregate public offering price of up to $450,000,000 o will be issued in one or more series o will be payable at the times and in the amounts specified in a prospectus supplement o will represent interests in the relevant Pass Through Trust only, will be paid only from the assets of that Pass Through Trust and will not represent obligations of, or be guaranteed by, Federal Express, and o may have one or more forms of credit or liquidity enhancement. Each Pass Through Trust: o will issue one or more series of Pass Through Certificates o will own Equipment Certificates of one or more series and any other property described in this prospectus or in a prospectus supplement, and o will pass through payments on the Equipment Certificates and any other property that it owns, subject to any applicable subordination provisions. The Equipment Certificates: o will be issued in one or more series, and o will be either: - Owned Aircraft Certificates issued by Federal Express with recourse to Federal Express either to finance or refinance all or a portion of the cost of the Owned Aircraft, or - Leased Aircraft Certificates issued on a non-recourse basis by owner trustees pursuant to leveraged lease transactions to finance or refinance a portion of the cost of the Leased Aircraft. The amounts due from Federal Express under such leases will be sufficient to pay in full when due all principal of and any premium and interest on the related Equipment Certificates, subject to any limitations specified in a prospectus supplement. There was no public market for the Pass Through Certificates of any series before their issuance and there is no assurance that one will develop or continue. Federal Express does not intend to apply for the listing of any series of the Pass Through Certificates on a national securities exchange, unless otherwise indicated in a prospectus supplement. This prospectus will be accompanied by a prospectus supplement which will describe the specific terms of the particular series of Pass Through Certificates being sold and the underlying Equipment Certificates. Sales of any Pass Through Certificates may not be consummated without both this prospectus and the prospectus supplement. Investing in the Pass Through Certificates involves risks. See the "Risk Factors" section beginning on page 4 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is June __, 2000. ABOUT THIS PROSPECTUS This prospectus is part of a Registration Statement on Form S-3 that we filed with the SEC utilizing a "shelf" registration process. Under this shelf process, we may sell the Pass Through Certificates described in this prospectus in one or more offerings. This prospectus provides you with a general description of the Pass Through Certificates we may offer. Each time we sell Pass Through Certificates, we will provide a prospectus supplement that will contain specific information about the terms of that offering. The prospectus supplement may also add, update or change information contained in this prospectus. You should read carefully both this prospectus and any prospectus supplement, together with the additional information described below under "Where You Can Find More Information." You should also refer to the "Glossary of Terms" at the back of this prospectus and in any prospectus supplement for the definitions of specialized terms that we are using in this prospectus and any prospectus supplement. This prospectus does not contain all the information provided in the Registration Statement that we filed with the SEC. For further information about Federal Express or the Pass Through Certificates, you should refer to that Registration Statement. Statements contained in this prospectus or in any prospectus supplement as to the contents of any contract or other document are not necessarily complete, and you should review the full text of those contracts and other documents. The Registration Statement that we filed with the SEC relating to the Pass Through Certificates can be obtained from the SEC as described below under "Where You Can Find More Information." WHERE YOU CAN FIND MORE INFORMATION We file annual, quarterly and special reports with the SEC. These SEC filings are available to the public over the Internet at the SEC's web site at http://www.sec.gov. You may also read and copy any such document we file at the SEC's public reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549, and in New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms and copy charges. The SEC allows us to "incorporate by reference" the information we file with it, which means: o we can disclose important information to you by referring you to those documents o information incorporated by reference is considered to be part of this prospectus, even though it is not repeated in this prospectus or in any prospectus supplement, and o information that we file with the SEC will automatically update and supersede this prospectus and any prospectus supplement. We incorporate by reference the documents listed below and any future filings made with the SEC under Section 13(a), 13(c), 14, or 15(d) of the Exchange Act after the date of the filing of this Registration Statement and prior to its effectiveness, and until we complete our offering of Pass Through Certificates: o Annual Report on Form 10-K for the fiscal year ended May 31, 1999, filed August 27, 1999, and o Quarterly Reports on Form 10-Q for the fiscal quarters ended August 31, 1999, November 30, 1999 and February 29, 2000, filed October 13, 1999, January 14, 2000 and April 13, 2000, respectively. You may obtain a copy of these filings, other than their exhibits, unless those exhibits are specifically incorporated by reference in the filings, at no cost by writing or telephoning us at the following address: 2 James H. Clippard Investor Relations FedEx Corporation 942 South Shady Grove Road Memphis, Tennessee 38120 (901) 818-7200 You should rely only on the information incorporated by reference or provided in this prospectus or any prospectus supplement. We have not authorized anyone else to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to sell any Pass Through Certificates in any jurisdiction where the offer or sale is not permitted. You should not assume that the information in this prospectus or any prospectus supplement is accurate as of any date other than the date on the front page of those documents. Also, you should not assume that there has been no change in the affairs of Federal Express since the date of this prospectus or any prospectus supplement. REPORTS TO PASS THROUGH CERTIFICATEHOLDERS The Pass Through Trustee under each Pass Through Trust will provide each Certificateholder with periodic statements concerning the distributions made from such Pass Through Trust. See "Description of the Pass Through Certificates - -- Statements to Certificateholders." FEDERAL EXPRESS CORPORATION Federal Express is a wholly-owned subsidiary of FedEx Corporation. Federal Express offers a wide range of express services for the time-definite transportation of documents, packages and freight throughout the world using an extensive fleet of aircraft and vehicles and leading-edge information technologies. The corporate headquarters of Federal Express are located at 2005 Corporate Avenue, Memphis, Tennessee 38132, telephone (901) 369-3600. RATIO OF EARNINGS TO FIXED CHARGES (Unaudited) Year Ended May 31, Nine Months Ended -------------------------------- ------------------------- February 28, February 29, 1995 1996 1997 1998 1999 1999 2000 ---- ---- ---- ---- ---- ------------ ------------ Ratio of Earnings to Fixed Charges.... 2.0x 1.9x 2.0x 2.1x 2.1x 1.9x 2.0x Earnings included in the calculation of the ratio of earnings to fixed charges represent income before income taxes plus fixed charges, other than capitalized interest. Fixed charges include interest expense, capitalized interest, amortization of debt issuance costs and a portion of rent expense representative of interest. As a result of this offering of Pass Through Certificates, Federal Express may be more highly leveraged than currently reflected in this table. 3 RISK FACTORS You should consider carefully the risk factors described below before you invest. You should read the information below together with the other information in this prospectus and the accompanying prospectus supplement. Federal Express' business is subject to risks and uncertainties The operations and financial condition of Federal Express are subject to risks and uncertainties, including: o economic conditions in the markets in which Federal Express operates affecting demand for Federal Express' services o competition from other providers of express services with new or improved services o changes in customer demand patterns o increases in aviation and motor fuel prices o strikes, work stoppages and slowdowns by Federal Express' employees o Federal Express' ability to match aircraft, vehicle and sort capacity with customer volume levels o Federal Express' ability to obtain aviation rights in important international markets o contributions to financial results from the sale of engine noise reduction kits o changes in government regulation, weather and technological changes, and o availability of financing on terms acceptable to Federal Express. Proposed new OSHA regulations could have a material adverse effect on our business On November 22, 1999, the U.S. Occupational Safety and Health Administration, or OSHA, proposed regulations to mandate an ergonomics standard that could require many businesses, including Federal Express, to make significant changes in the workplace in order to reduce the incidence of musculoskeletal disorders such as lower back pain. The proposal does not specify which workplace changes would be required in order to comply with the proposed new regulations. We, our competitors and other affected parties have submitted comments to OSHA challenging the economic and technical feasibility of the proposed regulations. In April 2000, OSHA completed public hearings on the proposed regulations and is expected to release final rules later this year. If OSHA adopts the proposed regulations and applies them in the same way as it attempted unsuccessfully in the past to impose ergonomic measures under its general authority, we would be required to make extensive changes to the layout of our sorting facilities and hire a significant number of additional employees. We believe that the cost of compliance would be substantial and have a material adverse effect on our business. We expect that our competitors, along with the rest of the American industry, would also incur substantial compliance costs. 4 Proceeds from the sale of an aircraft may be less than its appraised value The prospectus supplement will contain the appraised value of each Aircraft based upon the lesser of the average and the median value of the Aircraft as appraised by several independent appraisers who will be named in the prospectus supplement. The prospectus supplement may contain reports or summaries of these appraisals. These appraisals will be based on various assumptions and methodologies, which may vary, resulting in different appraised values. We expect that these appraisals will be "desk-top appraisals" and that the appraisers will not physically inspect any of the Aircraft. An appraisal is only an estimate of value and you should not rely upon it as a measure of realizable value. The proceeds realized upon the sale of any Aircraft may be less than the appraised value of that Aircraft because of: o market and economic conditions at the time o the availability of buyers o the condition of the Aircraft o whether the Aircraft are sold separately or as a block, and o other factors. Therefore, we cannot assure you that the proceeds realized upon any sale of an Aircraft will be as appraised or sufficient to satisfy in full payments due on the related Equipment Certificates or the Pass Through Certificates. Some classes of Pass Through Certificates may be subordinate to other classes of Pass Through Certificates The Pass Through Trustee may enter into an intercreditor agreement which will provide for the subordination of some classes of Pass Through Certificates to other classes which may result in the subordinated classes receiving less than the full amount due to them after a payment default on any Equipment Certificates. The prospectus supplement will describe any such intercreditor agreement and cross-subordination provisions and any related terms. Excess proceeds from the sale of one Aircraft will not be available to cover losses on other Equipment Certificates relating to other Aircraft and events resulting in a default under one Indenture may not result in a default under other Indentures The Equipment Certificates are not cross-collateralized, which means that liquidation proceeds from the sale of an Aircraft in excess of the principal amount of the Equipment Certificates related to that Aircraft will not be available to cover any losses on any other Equipment Certificates. There will be no cross-default provisions in the Indentures relating to the Equipment Certificates and consequently events resulting in an Indenture Event of Default under any particular Indenture may not result in an Indenture Event of Default under any other Indenture. Rating Agencies may change their rating on the Pass Through Certificates at any time The Pass Through Certificates are expected to be assigned an "investment grade" rating by one or more Rating Agencies. The prospectus supplement will indicate the rating assigned to the Pass Through Certificates being sold. A rating is not a recommendation to purchase, hold or sell Pass Through Certificates because a rating does not address market price or suitability for a particular investor. We cannot assure you that a rating will remain for any given period of time or that a rating will not be lowered or withdrawn entirely by a Rating Agency if in its judgment circumstances in the future so warrant, including the downgrading of Federal Express or the provider of a Liquidity Facility. The ratings of the Pass Through Certificates will be based primarily on the default risk of the Equipment Certificates, the availability of the Liquidity Facility for the Certificateholders, the collateral value provided by the Aircraft and any intercreditor and cross-subordination arrangements. The ratings are expected to address the likelihood of timely payment of interest when due on the Pass Through Certificates, at the non-default rate, and the 5 ultimate payment of principal of the Pass Through Certificates on the final expected distribution date. The ratings are not expected to address the possibility of an Event of Default or an Indenture Event of Default or other circumstances, such as an Event of Loss, which may result in the payment of the outstanding principal amount of the Pass Through Certificates prior to the final expected distribution date. The reduction, suspension or withdrawal of the ratings of the Pass Through Certificates will not, in and of itself, constitute an Event of Default, unless the prospectus supplement specifies otherwise. Owner Participants may request changes to the underlying agreements A prospectus supplement may specify that at the time of issuance of Pass Through Certificates, Federal Express may still be seeking or negotiating with Owner Participants with respect to the trusts relating to some of the Aircraft. Federal Express will hold the beneficial interest under the Trust Agreement relating to each of those Aircraft until the date upon which an Owner Participant commits to purchase or purchases an Aircraft. Federal Express will transfer to the Owner Participant on that date its beneficial interest under the Trust Agreement. The purchase date may be up to 90 days after the scheduled delivery date of the Aircraft. Those Owner Participants may request revisions to the Participation Agreement, Lease, Trust Agreement and Indenture, and we cannot assure you that the terms of the agreements applicable to those Aircraft will be the same as the description of the agreements contained in the prospectus supplement. However, the terms of those agreements will be required to contain some mandatory document terms and not vary some other mandatory economic terms. Also, Federal Express will be obligated to certify to the Pass Through Trustee that any modifications to these agreements will not materially and adversely affect the Certificateholders and if the documents are modified in any material respect, to obtain written confirmation from each Rating Agency that the use of modified versions of those agreements will not result in a withdrawal, suspension or downgrading of the rating of any class of Pass Through Certificates. The Indentures do not protect against a highly leveraged transaction involving Federal Express The Equipment Certificates in any Pass Through Trust, and therefore the related Pass Through Certificates, will not have the benefit of any debt covenants or provisions in the Indentures relating to those Equipment Certificates or Pass Through Certificates that would give the holders of Equipment Certificates and Pass Through Certificates any protection in the event of a highly leveraged transaction involving Federal Express. In addition, the Indentures relating to the Equipment Trust Certificates and the Pass Through Certificates do not limit the amount of secured or unsecured indebtedness which Federal Express or its subsidiaries may incur. A public market for the Pass Through Certificates may not develop or continue There was no public market for the Pass Through Certificates of any series before their issuance and we cannot assure you that one will develop or continue. Federal Express does not intend to apply for the listing of any series of Pass Through Certificates on a national securities exchange, unless otherwise indicated in a prospectus supplement. If an active public market does not develop or continue, the market price and liquidity of the Pass Through Certificates may be adversely affected. OUTLINE OF PASS THROUGH TRUST STRUCTURE Federal Express will offer one or more series of Pass Through Certificates pursuant to this prospectus and a related prospectus supplement. Each series of Pass Through Certificates will be issued by a separate Pass Through Trust. Each Pass Through Trust will be formed pursuant to a Series Supplement. The Pass Through Certificates issued by a particular Pass Through Trust will represent fractional undivided interests in such Pass Through Trust. Each Pass Through Trust will own the Owned Aircraft Certificates or the Leased Aircraft Certificates or both, as specified in the prospectus supplement. 6 Upon or following the execution and delivery of each Series Supplement, the Pass Through Trustee, on behalf of the Pass Through Trust formed by the Series Supplement, will enter into one or more Participation Agreements to purchase one or more Equipment Certificates. All of the Equipment Certificates that constitute the property of a Pass Through Trust will have an identical priority of payment relative to the other Equipment Certificates and an identical interest rate, and this interest rate will be equal to the rate applicable to the Pass Through Certificates issued by such Pass Through Trust. The maturity date for the Equipment Certificates acquired by each Pass Through Trust will occur on or before the final distribution date applicable to the Pass Through Certificates issued by such Pass Through Trust. For each Pass Through Trust, the aggregate amount of the related series of Pass Through Certificates will equal the aggregate principal amount of the Equipment Certificates constituting the Trust Property of such Pass Through Trust. The Pass Through Trustee will distribute the amount of payments of principal, any premium, and interest, received by it as holder of the Equipment Certificates to the Certificateholders of the Pass Through Trust holding such Equipment Certificates. See "Description of the Pass Through Certificates" and "Description of the Equipment Certificates." USE OF PROCEEDS Subject to the next paragraph, the Pass Through Trustee for each Pass Through Trust will use the proceeds from the sale of the Pass Through Certificates to purchase Owned Aircraft Certificates or Leased Aircraft Certificates. The prospectus supplement will specify the particular use of proceeds for the related Equipment Certificates. We will specify in each prospectus supplement the type and model of the applicable Aircraft, the engines with which the Aircraft is equipped and whether the aircraft is already in use in Federal Express' fleet, has been used in another operator's fleet or will be delivered new by the manufacturer to Federal Express or to the Owner Trustee, as the case may be. To the extent that the Pass Through Trustee does not use all of the proceeds from the sale of the Pass Through Certificates to purchase Equipment Certificates on the date of issuance of the Pass Through Certificates, it will invest those proceeds during the pre-funding period with a depositary, pursuant to some other escrow arrangement or in interim debt instruments issued by Federal Express. We will describe in the prospectus supplement how the proceeds from an offering of Pass Through Certificates will be held or applied during any pre-funding period. If the Pass Through Trustee does not subsequently use any portion of those proceeds to purchase Equipment Certificates by the cut-off date specified in the prospectus supplement, the Pass Through Trustee will return those proceeds to the holders of the Pass Through Certificates. In addition, we may offer Pass Through Certificates subject to the following arrangements: o A Pass Through Trust may purchase Leased Aircraft Certificates issued by an Owner Trustee prior to the purchase of the Leased Aircraft by the Owner Trustee or the commencement of the related Lease o A Pass Through Trust may purchase Owned Aircraft Certificates issued by Federal Express prior to the expected delivery date of the Owned Aircraft. DIAGRAM OF PAYMENTS We illustrate in the diagram below some aspects of the payment flows in the Pass Through Trust structure for a possible Leased Aircraft transaction and a possible Owned Aircraft transaction. This illustration is merely intended as an example and you should refer to the prospectus supplement for the particular features of the Pass Through Trust structure in which you are making an investment. 7 Leased Aircraft Transaction Federal Express: o will lease each Leased Aircraft from the Owner Trustee under a separate Lease o will make scheduled rental payments for each Leased Aircraft under the related Lease, and o will make scheduled rental payments directly to the Indenture Trustee. The Indenture Trustee: o will, from the scheduled rental payments, pay principal and any interest due from the Owner Trustee on the Leased Aircraft Certificates, to the Pass Through Trustee, and o will pay the remaining balance of scheduled rental payments to the Owner Trustee for the benefit of the related Owner Participant. The Pass Through Trustee for each Pass Through Trust will distribute to the related Certificateholders payments received on the Leased Aircraft Certificates held in that Pass Through Trust. See "Description of the Pass Through Certificates -- Payments and Distributions" and "Description of the Equipment Certificates --Pre-Funding Period" for a discussion of payments during any Pre-Funding Period. Owned Aircraft Transaction Federal Express will make scheduled payments on the Owned Aircraft Certificates relating to each Owned Aircraft to the Indenture Trustee. The Indenture Trustee will, from these payments, pay to the Pass Through Trustee the principal and any interest due on the Owned Aircraft Certificates. The Pass Through Trustee for each Pass Through Trust will distribute to the related Certificateholders, payments received on the Owned Aircraft Certificates held in that Pass Through Trust. 8 [GRAPHIC - A diagram is included here which contains boxes representing the parties and payment flows described above.] DESCRIPTION OF THE PASS THROUGH CERTIFICATES The following is a summary description of the Pass Through Certificates which we expect will be common to all series of Pass Through Certificates. The prospectus supplement will describe the specific terms of any series of Pass Through Certificates. Therefore, you should rely on the information in the prospectus supplement, in particular if the information in the prospectus supplement is different from the information provided below. Because the following description is a summary, it does not describe every aspect of the Pass Through Certificates, and it is qualified in its entirety by reference to all the provisions of the Pass Through Agreement and the applicable Series Supplements. Federal Express has filed the form of Pass Through Agreement as an exhibit to the Registration Statement of which this prospectus is a part. Federal Express will file with the SEC the Series Supplement relating to each series of Pass Through Certificates and the forms of the related Indentures and any participation agreement, lease, intercreditor agreement, liquidity facility, trust agreement, collateral agreement and 9 depositary arrangement relating to any offering of Pass Through Certificates as exhibits to a post-effective amendment to the Registration Statement of which this prospectus is a part or a Current Report on Form 8-K, a Quarterly Report on Form 10-Q or an Annual Report on Form 10-K. The Pass Through Certificates offered pursuant to this prospectus and one or more prospectus supplements will have an aggregate public offering price of up to $450,000,000. To the extent that any provision in any prospectus supplement is inconsistent with any provision of this summary, the provision of the prospectus supplement will control. In the following description, we have included references to section numbers of the Pass Through Agreement so that you can easily locate those provisions. General Form. The Pass Through Certificates will be issued in fully registered form only. The Pass Through Certificates will be issued in book-entry form and registered in the name of a nominee of the depositary, unless otherwise specified in the prospectus supplement. See "-- Book-Entry Procedures" below. Trust Property. Each Pass Through Certificate will represent a fractional undivided interest in the separate Pass Through Trust formed by the Pass Through Agreement and the related Series Supplement pursuant to which such Pass Through Certificate is issued, and all payments and distributions will be made only from the property of the Pass Through Trust. The property of each Pass Through Trust will include the Equipment Certificates held in such Pass Through Trust, all monies at any time paid on the Equipment Certificates, all monies due and to become due under the Equipment Certificates and funds from time to time deposited with the Pass Through Trustee in accounts relating to such Pass Through Trust, and, if specified in the prospectus supplement, rights under any intercreditor agreement relating to cross-subordination arrangements, monies receivable under any additional security or liquidity facility and any other rights or property described in the prospectus supplement. Denomination. Each Pass Through Certificate will represent a pro rata share of the outstanding principal amount of the Equipment Certificates and other property held in the related Pass Through Trust and will be issued, unless otherwise specified in the prospectus supplement, in minimum denominations of $1,000 or any integral multiple of $1,000. (Pass Through Agreement, Article II) Terms. The prospectus supplement will describe the specific terms of each series of Pass Through Certificates offered pursuant to the prospectus supplement, including: o the specific designation and title of the Pass Through Certificates o the Pass Through Trustee for such series of Pass Through Certificates o the Regular Distribution Dates and Special Distribution Dates applicable to such Pass Through Certificates and any applicable Cut-off Date o the specific form of the Pass Through Certificates o a description of: - the Equipment Certificates to be purchased by such Pass Through Trust, including the period or periods within which, the price or prices at which, and the terms and conditions upon which those Equipment Certificates may or must be repaid in whole or in part, by Federal Express or, with respect to Leased Aircraft Certificates, the related Owner Trustee - the payment priority of such Equipment Certificates in relation to any other Equipment Certificates issued with respect to the related Aircraft 10 - any additional security or liquidity enhancements for those Equipment Certificates - any intercreditor issues between or among the holders of Equipment Certificates having different priorities issued by the same Owner Trustee, and - specific terms of the Equipment Certificates during any Pre-Funding Period o a description of the related Aircraft, including whether the Aircraft is a Leased Aircraft or an Owned Aircraft o a description of the related Participation Agreements and Indentures, including a description of the events of default under the related Indentures, the remedies exercisable upon the occurrence of such events of default and any limitations on the exercise of remedies with respect to the Equipment Certificates o if such Pass Through Certificates relate to Leased Aircraft, a description of the related Lease, Trust Agreement and Collateral Agreement or Depositary Arrangement, including: - the name of the related Owner Trustee - a description of the events of default under the related Lease, the remedies exercisable upon the occurrence of such events of default and any limitations on the exercise of remedies with respect to those Leased Aircraft Certificates, and - any rights of the related Owner Trustee or Owner Participant to cure failures of Federal Express to pay rent under the related Lease o the extent to which the provisions of the operative documents applicable to such Equipment Certificates may be amended by the parties to those documents without the consent of the Holders, or upon the consent of the Holders of a specified percentage of aggregate principal amount of such Equipment Certificates o a description of any cross-default or cross-collateralization provisions in the related Indenture o a description of any subordination provisions among Certificateholders, including any cross- subordination provisions among the Certificateholders in separate Pass Through Trusts o any additional security or liquidity facilities for the Pass Through Certificates o any arrangements for the investment or other use of proceeds of the Pass Through Certificates prior to the purchase of Equipment Certificates, and any delayed aircraft financing arrangements, and o any other special terms pertaining to such Pass Through Certificates, including any modification of the general terms described in this prospectus (Pass Through Agreement, Article II) Equipment Certificates. Equipment Certificates may be issued in different classes, which means that Equipment Certificates may have different payment priorities even though issued by the same Owner Trustee and relate to the same Aircraft. The Equipment Certificates issued under an Indenture may be held in more than one Pass Through Trust and one Pass Through Trust may hold Equipment Certificates issued under more than one Indenture. Unless otherwise provided in the prospectus supplement, only Equipment Certificates of the same class may be held in the same Pass Through Trust. Interest. Interest will be passed through to Certificateholders of each Pass Through Trust at the rate per annum payable on the Equipment Certificates held in such Pass Through Trust, as specified for that Pass Through Trust on the cover page of the prospectus supplement. 11 Payments. The Pass Through Certificates represent interests in the related Pass Through Trust only and all payments and distributions shall be made only from the Trust Property of such Pass Through Trust. The Pass Through Certificates do not represent an interest in or obligation of Federal Express, the Pass Through Trustee, any related Owner Participant, the Owner Trustee in its individual capacity or any affiliate of any of the above. Each Certificateholder by its acceptance of a Pass Through Certificate agrees to look solely to the income and proceeds from the Trust Property of the related Pass Through Trust as provided in the Pass Through Agreement and the Series Supplement. (Pass Through Agreement, Section 3.06) Highly Leveraged Transactions. The Pass Through Agreement does not, and the Indentures will not, contain any debt covenants or provisions that would give Certificateholders protection in the event of a highly leveraged transaction involving Federal Express. However, the Certificateholders of each series will have the benefit of a lien on the specific Aircraft securing the related Equipment Certificates held in the related Pass Through Trust. See "Description of the Equipment Certificates-- Security" below for a discussion of security for Leased Aircraft Certificates during any Pre-Funding Period. Book-Entry Procedures Unless Pass Through Certificates in fully registered certificated form are issued as described below, each series of Pass Through Certificates will be represented by one or more fully registered global certificates. Each global certificate will be deposited with, or on behalf of, DTC, and registered in its name or in the name of Cede, its nominee. A Certificateholder of a Pass Through Certificate initially issued as a global certificate will not be entitled to receive a certificated Pass Through Certificate, except as described below. DTC has advised Federal Express that: o DTC is: - a limited purpose trust company organized under the laws of the State of New York - a member of the Federal Reserve System - a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and - a "clearing agency" registered pursuant to Section 17A of the Exchange Act. o DTC was created to hold securities for DTC Participants and to facilitate the clearance and settlement of securities transactions between DTC Participants through electronic book-entries, thereby eliminating the need for physical movement of certificates. o DTC Participants include securities brokers and dealers, banks, trust companies and clearing corporations. o Access to DTC's book-entry system is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly. Certificateholders that are not DTC Participants but desire to purchase, sell or otherwise transfer ownership of, or other interests, in Pass Through Certificates may do so only through DTC Participants. In addition, Certificateholders will receive all distributions of principal and interest from the Pass Through Trustee through the DTC Participants. Under the rules, regulations and procedures creating and affecting DTC and its operation, DTC is required to make book-entry transfers of Pass Through Certificates among DTC Participants on whose behalf it acts and to receive and transmit distributions of principal of, and interest on, the Pass Through Certificates. Under the book-entry system, Certificateholders may experience some delay in receipt of payments, since such payments will be forwarded by the Pass Through Trustee to Cede, as nominee for DTC, and DTC in turn will forward the payments to the appropriate DTC Participants. 12 The DTC Participants will be responsible for distributions to Certificateholders and such distributions will be made in accordance with customary industry practices. Although Certificateholders will not have possession of the Pass Through Certificates, the rules of DTC provide a mechanism by which the Certificateholders will receive payments and will be able to transfer their interests. Although the DTC Participants are expected to convey the rights represented by their interests in any global security to the related Certificateholders, because DTC can only act on behalf of DTC Participants, the ability of Certificateholders to pledge Pass Through Certificates to persons or entities that are not DTC Participants or to otherwise act with respect to such Pass Through Certificates, may be limited due to the lack of physical certificates for such Pass Through Certificates. Neither Federal Express nor the Pass Through Trustee nor any agent of either of them will be responsible or liable for any aspect of the records relating to, or payments made on account of, beneficial ownership interests in the Pass Through Certificates or for supervising or reviewing any records relating to such beneficial ownership interests. Since the only "Certificateholder", for purposes of the Pass Through Agreement, will be Cede, as nominee of DTC, Certificateholders will not be recognized by the Pass Through Trustee as "Certificateholders", and Certificateholders will be permitted to exercise the rights of "Certificateholders" only indirectly through DTC and DTC Participants. DTC has advised Federal Express that it will take any action permitted to be taken by a Certificateholder under the Pass Through Agreement and any prospectus supplement only at the direction of one or more DTC Participants to whose accounts with DTC the related Pass Through Certificates are credited. Additionally, DTC has advised Federal Express that it will take such actions with respect to any percentage of the beneficial interest of Certificateholders held in each Pass Through Trust only at the direction of and on behalf of DTC Participants whose holders include undivided interests that satisfy any such percentage. DTC may take conflicting actions with respect to other undivided interests to the extent that such actions are taken on behalf of DTC Participants whose holders include such undivided interests. Same-Day Settlement and Payment. All payments made by Federal Express to the Indenture Trustee under each Lease will be in immediately available funds and will be passed through to DTC in immediately available funds. The Pass Through Certificates will trade in DTC's Same-Day Funds Settlement System until maturity, and DTC will require secondary market trading activity in the Pass Through Certificates to settle in immediately available funds. Certificated Form. The Owner Trustee will issue physical certificates to holders of a global security or their nominees if: o DTC advises the Pass Through Trustee in writing that it is no longer willing or able to discharge properly its responsibilities as depositary with respect to the Pass Through Certificates and Federal Express is unable to locate a qualified successor, or o if Federal Express, at its option, elects to terminate the book-entry system through DTC. In such event, the Pass Through Trustee will notify all Certificateholders through DTC Participants of the availability of such certificated Pass Through Certificates. Upon surrender by DTC of the definitive global certificate representing the series of Pass Through Certificates and receipt of instructions for reregistration, the Pass Through Trustee will reissue the Pass Through Certificates in certificated form to Certificateholders or their nominees. Pass Through Certificates in certificated form will be freely transferable and exchangeable at the office of the Pass Through Trustee upon compliance with the requirements set forth in the Pass Through Agreement and the applicable Series Supplements. There will be no service charge imposed for any registration of transfer or exchange, but payment of a sum sufficient to cover any tax or other governmental charge may be required. 13 Payments and Distributions Federal Express will make scheduled payments of principal of, and interest on, the unpaid amount of the Owned Aircraft Certificates to the Indenture Trustee under the related Owned Aircraft Indenture, and the Indenture Trustee will distribute such principal and interest payments to the Pass Through Trustee for each of the Pass Through Trusts that hold such Owned Aircraft Certificates. Upon commencement of the Lease for any Leased Aircraft, Federal Express will make scheduled rental payments for each Leased Aircraft under the related Lease. These scheduled rental payments will be assigned under the applicable Leased Aircraft Indenture by the related Owner Trustee to the Indenture Trustee to provide the funds necessary to make the corresponding payments of principal and interest due from the Owner Trustee on the Leased Aircraft Certificates issued under such Leased Aircraft Indenture. Pre-Funding Period. Until Federal Express has entered into a Lease in connection with a Leased Aircraft, Federal Express will not be obligated to make any scheduled rental payments and the related Leased Aircraft Certificates will not be secured by such Leased Aircraft or the related Lease. See "Description of the Equipment Certificates - Pre-Funding Period" for a description of the arrangements in the event that Equipment Certificates are issued prior to the delivery of the related Aircraft. In the event that, on the issuance date of any Pass Through Certificates, all of the proceeds from the sale of those Pass Through Certificates are not used to purchase Equipment Certificates on that date, the proceeds from the sale of those Pass Through Certificates relating to the Equipment Certificates to be purchased subsequently will be held under an arrangement described in the prospectus supplement, including investment of the proceeds in permitted investments, with a depositary or pursuant to another escrow arrangement or in interim debt instruments issued by Federal Express, which may be collateralized or otherwise secured with other property. The prospectus supplement will also describe any arrangements for the payment of any amounts due on the Pass Through Certificates during the pre-funding period. Following any Pre-Funding Period. Upon commencement of the Lease for any Leased Aircraft, after the Indenture Trustee has made principal and interest payments to the Pass Through Trustee for each of the Pass Through Trusts on the Leased Aircraft Certificates held in such Pass Through Trust, the Indenture Trustee will, except under certain circumstances, pay any remaining balance to the Owner Trustee for the benefit of the related Owner Participant. The Pass Through Trustee for each Pass Through Trust will distribute to the Certificateholders of such Pass Through Trust payments received on the Equipment Certificates held in such Pass Through Trust as described below. During any Pre-Funding Period for a Leased Aircraft, the Indenture Trustee will not make any payments to the Owner Trustee for the benefit of the related Owner Participant. Payments of principal of, and interest on, the unpaid amount of the Equipment Certificates held in each Pass Through Trust will be scheduled to be received by the Pass Through Trustee on the dates specified in the prospectus supplement. Subject to the effect of any cross-subordination provisions set forth in the prospectus supplement, for each Pass Through Trust, the Pass Through Trustee will distribute on each Regular Distribution Date to the related Certificateholders any Scheduled Payment received by the Pass Through Trustee on such Regular Distribution Date. (Pass Through Agreement, Section 5.02) If a Scheduled Payment is not received by the Pass Through Trustee on or before a Regular Distribution Date but is received within seven Business Days after the Regular Distribution Date, it will be distributed on the date received to Certificateholders. Each distribution of a Scheduled Payment will be made by the Pass Through Trustee to Certificateholders of record of such Pass Through Trust on the fifteenth day prior to such Regular Distribution Date, subject to some exceptions. Each Certificateholder will be entitled to receive a pro rata share of any distribution, except as provided in any cross-subordination provisions of the prospectus supplement. (Pass Through Agreement, Section 5.01 and 5.02) If a Scheduled Payment is received more than seven Business Days after the applicable Regular Distribution Date, it will be treated as a Special Payment and will be distributed as described below. Subject to the effect of any cross-subordination provisions set forth in the prospectus supplement, after any prepayment of principal, any redemption or any default in respect of some or all of the Equipment Certificates held in any Pass Through Trust, any Certificateholder of such Pass Through Trust should refer to the Pool Balance and 14 the Pool Factor for such Pass Through Trust reported periodically by the Pass Through Trustee, in order to calculate such Certificateholder's pro rata share of such Pass Through Trust. See "Pool Factors" and "Statements to Certificateholders" below. For any Pass Through Trust, any payments of principal, any premium, or interest, other than Scheduled Payments, received by the Pass Through Trustee on any of the Equipment Certificates held in such Pass Through Trust, including payments received: o for the prepayment of such Equipment Certificates in connection with events specified in the prospectus supplement (including payments upon unavailability of Trust Property and prepayments during any Pre- Funding Period) o upon the prepayment by the related Owner Trustee of such Equipment Certificates following a default in respect of such Equipment Certificates, and o on account of the sale of such Equipment Certificates by the Pass Through Trustee will be distributed on the dates indicated in the prospectus supplement except that, unless otherwise specified in the prospectus supplement, payments received by the Pass Through Trustee following a default in respect of the Equipment Certificates on a Regular Distribution Date as a result of a drawing under any Liquidity Facility specified in the prospectus supplement, will be distributed on such Regular Distribution Date. See "Description of the Equipment Certificates -- Mandatory Prepayment During the Pre-Funding Period" for a discussion of the funding of prepayments during any Pre-Funding Period. Prior to any Special Payment for any Pass Through Trust, the Pass Through Trustee will notify the Certificateholders of record of such Pass Through Trust of such Special Payment and the Special Distribution Date. Each distribution of a Special Payment, other than the final distribution, for any Pass Through Trust will be made by the Pass Through Trustee to the Certificateholders of record of such Pass Through Trust on the fifteenth day prior to such Special Distribution Date, unless another date is specified in the prospectus supplement. Subject to the effect of any cross-subordination provisions set forth in the prospectus supplement, each such Certificateholder will be entitled to receive a pro rata share of any such distribution. (Pass Through Agreement, Section 5.02) See "Description of the Equipment Certificates -- Prepayment" and "Description of the Pass Through Certificates -- Events of Default and Certain Rights Upon an Event of Default." The Pass Through Trustee is required to establish and maintain, for each Pass Through Trust and for the benefit of the related Certificateholders, one or more Certificate Accounts and one or more Special Payments Accounts. The Pass Through Trustee is required to deposit any Scheduled Payments relating to a Pass Through Trust received by it in the related Certificate Account and to deposit any Special Payment received by it in the related Special Payments Account pending distribution of such Special Payments. (Pass Through Agreement, Section 5.01) A Special Payment that is not promptly distributed by the Pass Through Trustee will, to the extent practicable, be invested by the Pass Through Trustee in Permitted Investments pending the distribution of such funds on a Special Distribution Date, and the income and earnings on investment will be distributed with such Special Payment. (Pass Through Agreement, Section 5.04) If at any time the Pass Through Certificates of any Pass Through Trust are issued in the form of certificated Pass Through Certificates and not to Cede, as nominee for DTC, distributions by the Pass Through Trustee from a Certificate Account or a Special Payments Account of any Pass Through Trust on any Distribution Date will be paid to each Certificateholder of record of such Pass Through Trust on the applicable record date at its address appearing on the register maintained for such Pass Through Trust. (Pass Through Agreement, Section 5.02) The final distribution for each Pass Through Trust, however, will be made only upon presentation and surrender of the Pass Through Certificates for such Pass Through Trust at the office or agency of the Pass Through Trustee specified in the notice given by the Pass Through Trustee of such final distribution. The Pass Through Trustee will mail such notice of the final distribution to the Certificateholders of such Pass Through Trust, specifying the date set for such 15 final distribution and the amount of such distribution. (Pass Through Agreement, Section 12.01) See "Termination of Pass Through Trusts" below. If any Distribution Date is not a Business Day, distributions scheduled to be made on such Distribution Date may be made on the next succeeding Business Day without additional interest. (Pass Through Agreement, Section 13.15) Pool Factors Except as provided below, the Pool Factor for any Pass Through Trust will decline in proportion to the scheduled repayments of principal on the Equipment Certificates held in such Pass Through Trust as described in the prospectus supplement. Where any Equipment Certificates held in a Pass Through Trust have been prepaid, a scheduled repayment of principal thereon has not been made or certain actions have been taken following a default thereon, as discussed in the prospectus supplement or below in "Events of Default and Certain Rights Upon an Event of Default," the Pool Factor and the Pool Balance of such Pass Through Trust will be recomputed after giving effect thereto and notice thereof will be mailed to the Certificateholders of such Pass Through Trust. Each Pass Through Trust will have a separate Pool Factor. The Pool Balance for each Pass Through Trust as of any Distribution Date will be computed after giving effect to any payment of principal on the Equipment Certificates held in such Pass Through Trust and its distribution on that date. (Pass Through Agreement, Article I) The Pool Factor for each Pass Through Trust as of any Distribution Date shall be computed after giving effect to the payment of any principal on the Equipment Certificates held in such Pass Through Trust and its distribution on that date. The Pool Factor for each Pass Through Trust will initially be 1.0000000; thereafter, the Pool Factor for each Pass Through Trust will decline as described above to reflect reductions in the Pool Balance of such Pass Through Trust. For any Pass Through Trust, the amount of any Certificateholder's pro rata share of the Pool Balance of such Pass Through Trust can be determined by multiplying the original denomination of such Certificateholder's Pass Through Certificate by the Pool Factor for such Pass Through Trust as of the applicable Distribution Date. (Pass Through Agreement, Article I) Statements to Certificateholders On each Distribution Date, the Pass Through Trustee will include with each distribution of a Scheduled Payment or Special Payment to Certificateholders of record of the related Pass Through Trust a statement, giving effect to that distribution being made on that Distribution Date, setting forth the following information (per $1,000 in aggregate amount of Pass Through Certificates for the related Pass Through Trust, as to the first and second categories of information listed below): o the amount of that distribution allocable to principal and allocable to any premium for the related Equipment Certificates o the amount of that distribution allocable to interest for the related Equipment Certificates, and o the Pool Balance and the Pool Factor for such Pass Through Trust (Pass Through Agreement, Section 5.03) So long as the Pass Through Certificates of any related Pass Through Trust are registered in the name of Cede, as nominee for DTC, on the record date prior to each Distribution Date, the Pass Through Trustee will request from DTC a securities position listing setting forth the names of all DTC Participants reflected on DTC's books as holding interests in the Pass Through Certificates of such related Pass Through Trust on such record date. On each Distribution Date, the Pass Through Trustee will mail to each such DTC Participant the statement described above, and will make available additional copies as requested by such DTC Participant, to be available for forwarding to Certificateholders. 16 In addition, after the end of each calendar year, the Pass Through Trustee will prepare and deliver to each Certificateholder of each Pass Through Trust at any time during the preceding calendar year a report containing the sum of the amounts determined pursuant to the first and second categories of information listed above with respect to each such Pass Through Trust for such calendar year or, in the event such person was a Certificateholder during a portion of such calendar year, for the applicable portion of such calendar year. Such report and such other items will be prepared on the basis of information supplied to the Pass Through Trustee by the DTC Participants, and shall be delivered by the Pass Through Trustee to such DTC Participants to be available for forwarding by such DTC Participants to Certificateholders in the manner described above. (Pass Through Agreement, Section 5.03) At any time when the Pass Through Certificates of a related Pass Through Trust are issued in certificated form, the related Pass Through Trustee will prepare and deliver the information described above to each Certificateholder of record of such Pass Through Trust as the name and period of record ownership of such Certificateholder appears on the records on the registrar for such Pass Through Trust. Voting of Equipment Certificates Subject to the effect of any cross-subordination provisions and any intercreditor provisions described in the prospectus supplement, the Pass Through Trustee, as holder of the Equipment Certificates held in each Pass Through Trust, has the right to vote and give consents and waivers in respect of such Equipment Certificates under the related Indentures. The Pass Through Agreement describes the circumstances in which the Pass Through Trustee will direct any action or cast any vote as the holder of the Equipment Certificates held in the applicable Pass Through Trust at its own discretion and the circumstances in which the Pass Through Trustee is required to obtain instructions from the Certificateholders of such Pass Through Trust. Prior to an Event of Default with respect to any Pass Through Trust, the principal amount of the Equipment Certificates held in such Pass Through Trust directing any action or being voted for or against any proposal will be in proportion to the principal amount of Pass Through Certificates held by the Certificateholders of such Pass Through Trust taking the corresponding position. (Pass Through Agreement, Section 11.08) If specified in the prospectus supplement, the right of the Pass Through Trustee to vote and give consents and waivers with respect to the Equipment Certificates held in the related Pass Through Trust may, in the circumstances described in an intercreditor agreement to be executed by such Pass Through Trustee, be exercisable by another person specified in such prospectus supplement. Events of Default and Rights Upon an Event of Default An Event of Default for any Pass Through Trust is the occurrence and continuance of an Indenture Event of Default under one or more of the Indentures. The Indenture Events of Default will be described in the prospectus supplement and, for the Leased Aircraft, will include each Lease Event of Default. For any Equipment Certificates which are supported by a Liquidity Facility, the Events of Default or Indenture Events of Default may include events of default under such Liquidity Facility. No cross defaults. Since the Equipment Certificates outstanding under an Indenture may be held in more than one Pass Through Trust, a continuing Indenture Event of Default under the Indenture would result in an Event of Default with respect to each such Pass Through Trust. All of the Equipment Certificates issued under the same Indenture, however, will relate to a specific Aircraft and there will be no cross-collateralization or cross- default provisions in the Indentures, unless otherwise specified in the prospectus supplement. Consequently, events resulting in an Indenture Event of Default under any particular Indenture will not necessarily result in an Indenture Event of Default under any other Indenture. If an Indenture Event of Default occurs in fewer than all of the Indentures related to a Pass Through Trust, the Equipment Certificates issued pursuant to the Indentures with respect to which an Indenture Event of Default has not occurred will continue to be held in such Pass Through Trust and payments of principal of, any premium and interest on such Equipment Certificates will continue to be distributed to the Certificateholders of such Pass Through Trust as originally scheduled. If the prospectus supplement contains any cross-subordination provisions among Certificateholders of separate Pass Through Trusts, however, payments made pursuant to an Indenture under 17 which no Indenture Event of Default has occurred will be distributed first to holders of Pass Through Certificates issued under the Pass Through Trust which holds the most senior Equipment Certificates issued under all Indentures. Cure rights. Under each Leased Aircraft Indenture, the related Owner Trustee and the Owner Participant will have the right under some circumstances to cure an Indenture Event of Default that results from the occurrence of a Lease Event of Default under the related Lease. If the Owner Trustee or the Owner Participant chooses to exercise its cure right, the Indenture Event of Default and consequently the Event of Default under any Pass Through Trust holding the related Leased Aircraft Certificates will be deemed to be cured. The prospectus supplement will contain a more detailed discussion of the provisions described in this paragraph. Remedies. If an Indenture Event of Default under an Indenture relating to Equipment Certificates held in a Pass Through Trust has occurred and is continuing, the Pass Through Trustee may vote all of the Equipment Certificates issued under such Indenture that are held in such Pass Through Trust, and upon the direction of the Certificateholders evidencing fractional undivided interests aggregating not less than a majority in interest of such Pass Through Trust, will vote a corresponding majority of such Equipment Certificates, in each case in favor of directing the Indenture Trustee to declare the unpaid principal amount of all Equipment Certificates issued under such Indenture, any accrued and unpaid interest, and all other amounts due under such Equipment Certificates to be due and payable. If an Indenture Event of Default has occurred and is continuing, the Pass Through Trustee may, unless any intercreditor agreement provides otherwise, and upon the direction of the Certificateholders evidencing fractional undivided interests aggregating not less than a majority in interest of such Pass Through Trust, will vote all of the Equipment Certificates issued under such Indenture that are held in such Pass Through Trust in favor of directing the Indenture Trustee as to the time, method and place of conducting any proceeding for any remedy available to such Indenture Trustee or of exercising any trust or power conferred on such Indenture Trustee under such Indenture. (Pass Through Agreement, Sections 7.01 and 7.09) Whether the Certificateholders of any one Pass Through Trust are able to cause the Indenture Trustee for any Equipment Certificates held in such Pass Through Trust to accelerate the payment on such Equipment Certificates under the related Indenture or to direct the exercise of remedies by such Indenture Trustee under the related Indenture, will depend, in part, upon the proportion of the aggregate principal amount of the Equipment Certificates outstanding under such Indenture and held in such Pass Through Trust to the aggregate principal amount of all Equipment Certificates outstanding under such Indenture. In addition, if cross-subordination provisions are applicable to the Pass Through Certificates, the ability of the Certificateholders of any one Pass Through Trust holding Equipment Certificates issued under related Indentures to cause the Indenture Trustee to accelerate such Equipment Certificates or to direct the exercise of remedies by the Indenture Trustee under the related Indenture will depend, in part, on the class of Equipment Certificates held in such Pass Through Trust. Conflict of Interest. Each Pass Through Trust will hold Equipment Certificates with different terms from those of the Equipment Certificates held in any other Pass Through Trust and, therefore, the Certificateholders of a Pass Through Trust may have divergent or conflicting interests from those of the Certificateholders of the other Pass Through Trusts holding Equipment Certificates relating to the same Indenture. In addition, so long as the same institution or one of its affiliates acts as Pass Through Trustee of one or more Pass Through Trusts holding Equipment Certificates issued under such Indenture, in the absence of instructions from the Certificateholders of any such Pass Through Trust, the Pass Through Trustee for that Pass Through Trust could for the same reason be faced with a potential conflict of interest upon an Indenture Event of Default. In that case, the initial Pass Through Trustee has indicated that it would resign as Pass Through Trustee of one or all of those Pass Through Trusts, and a successor pass through trustee would be appointed in accordance with the terms of the Pass Through Agreement and the applicable Series Supplement. See "The Pass Through Trustee; the Indenture Trustee" below for a discussion of resignation procedures. Sale. As an additional remedy, if an Indenture Event of Default under an Indenture has occurred and is continuing, the Pass Through Trustee of a Pass Through Trust holding Equipment Certificates issued under such Indenture may, and upon the direction of the Certificateholders evidencing fractional undivided interests aggregating 18 not less than a majority in interest of such Pass Through Trust will, sell all or part of such Equipment Certificates for cash to any person at a price or prices that it may reasonably deem advisable. Any proceeds received by the Pass Through Trustee upon any such sale will be deposited in the Special Payments Account for such Pass Through Trust and will be distributed to the Certificateholders of such Pass Through Trust on a Special Distribution Date. (Pass Through Agreement, Sections 7.01 and 7.02) The market for Equipment Certificates in default may be very limited and there can be no assurance that they could be sold for a reasonable price. Furthermore, so long as the same institution or an affiliate of such institution acts as Pass Through Trustee of one or more Pass Through Trusts holding Equipment Certificates issued under such Indenture, it may be faced with a conflict in deciding from which Pass Through Trust to sell Equipment Certificates to available buyers. If the Pass Through Trustee sells any such Equipment Certificates with respect to which an Indenture Event of Default exists for less than the outstanding principal amount of such Equipment Certificates, the Certificateholders of such Pass Through Trust will receive a smaller amount of principal distributions than anticipated and will not have any claim for the shortfall against the Pass Through Trustee, or Federal Express or, in the case of Leased Aircraft Certificates, the Owner Trustee or any related Owner Participant, as the case may be. Furthermore, neither the Pass Through Trustee nor the Certificateholders of such Pass Through Trust could take any action with respect to any remaining Equipment Certificates held in such Pass Through Trust so long as no Indenture Event of Default existed with respect to those remaining Equipment Certificates. Distribution. For any Pass Through Trust, any amount distributed to the Pass Through Trustee by the Indenture Trustee under any Indenture on account of the Equipment Certificates held in that Pass Through Trust following an Indenture Event of Default under such Indenture will be deposited in the Special Payments Account for that Pass Through Trust and will be distributed to the Certificateholders of such Pass Through Trust on a Special Distribution Date. In addition, if, following an Indenture Event of Default under any Leased Aircraft Indenture, the related Owner Trustee or Owner Participant, as the case may be, exercises any option it has to prepay or purchase the outstanding Leased Aircraft Certificates issued under such Indenture as described in the related prospectus supplement, the price paid by it to the Pass Through Trustee for such Leased Aircraft Certificates held in such Pass Through Trust will be deposited in the related Special Payments Account and will be distributed to the Certificateholders of such Pass Through Trust on a Special Distribution Date. (Pass Through Agreement, Sections 5.01 and 5.02) Permitted Investments. Any funds representing payments received with respect to any Equipment Certificates held in a Pass Through Trust in default, or the proceeds from the sale by the Pass Through Trustee of any such Equipment Certificates, held by the Pass Through Trustee in the Special Payments Account for such Pass Through Trust will, to the extent practicable, be invested by the Pass Through Trustee in Permitted Investments pending the distribution of those funds on a Special Distribution Date. (Pass Through Agreement, Article I and Section 5.04) Notice. The Pass Through Trustee will, within 90 days after the occurrence of a default, as defined below, under any Pass Through Trust, notify the Certificateholders of such Pass Through Trust by mail of all uncured or unwaived defaults with respect to such Pass Through Trust known to a responsible officer of it. Under no circumstances, however, may the Pass Through Trustee give notice until the expiration of a period of 60 days from the occurrence of such default. The Pass Through Trustee will be protected in withholding notice if it in good faith determines that withholding notice is in the interests of such Certificateholders, except in the case of default in the payment of principal of or any premium, interest or other amount due on, any of the Equipment Certificates held in such Pass Through Trust. The term "default" means the occurrence of any Event of Default with respect to a Pass Through Trust as described above, except that in determining whether any such Event of Default has occurred any grace period or notice in connection therewith is disregarded. (Pass Through Agreement, Section 7.11) Indemnity. For each Pass Through Trust, the Pass Through Trustee is entitled to be indemnified by the Certificateholders of that Pass Through Trust before proceeding to exercise any right or power under that Pass Through Trust or any intercreditor agreement at the request of those Certificateholders. The Pass Through Trustee's 19 entitlement to be indemnified by the Certificateholders is subject to the duty of the Pass Through Trustee during a default to act with the required standard of care. (Pass Through Agreement, Section 8.03) Waivers. Subject to any intercreditor agreement, in some cases, the Certificateholders of a Pass Through Trust evidencing fractional undivided interests aggregating not less than a majority in interest of such Pass Through Trust may on behalf of all the Certificateholders of such Pass Through Trust or if the Pass Through Trustee is the controlling party under an intercreditor agreement, may direct the Pass Through Trustee to instruct the applicable Indenture Trustee to, waive any past default or Event of Default with respect to such Pass Through Trust and in doing so annul any direction given by such Certificateholders to the Pass Through Trustee or the Indenture Trustee with respect to such default, except a default in payment of the principal of or any premium, interest or other amount due on, any of the Equipment Certificates held in that Pass Through Trust or a default in respect of any covenant or provision of the Pass Through Agreement or the related Series Supplement that cannot be modified or amended without the consent of each Certificateholder of such Pass Through Trust affected by such default. Any waiver, however, will be effective to waive any such past default or Event of Default if, but only if, the correlative Indenture Event of Default has been waived under the related Indenture by the requisite holders of the Equipment Certificates outstanding under that Indenture. (Pass Through Agreement, Section 7.10) Modifications of the Pass Through Agreement Without the Consent of Certificateholders. Federal Express and the Pass Through Trustee may enter into an agreement supplemental to any Pass Through Trust, without the consent of the Certificateholders of such Pass Through Trust, to: o provide for the formation of any Pass Through Trust and the issuance of the related Pass Through Certificates o evidence the succession of another corporation to Federal Express and the assumption by that corporation of Federal Express' obligations under the Pass Through Agreement and the applicable Series Supplement o add to the covenants of Federal Express for the protection of the related Certificateholders o surrender any right or power conferred upon Federal Express in the Pass Through Agreement or any Series Supplement o cure any ambiguity or correct any mistake or supplement any defective or inconsistent provision of such Pass Through Agreement or the applicable Series Supplement, any intercreditor agreement or any Liquidity Facility o modify any other provisions in regard to matters or questions arising under the Pass Through Agreement or the applicable Series Supplement, any intercreditor agreement or any Liquidity Facility that will not adversely affect the interests of the related Certificateholders o correct or amplify the description of property that constitutes Trust Property or the conveyance of such property to the Pass Through Trustee o evidence and provide for a successor Pass Through Trustee for some or all of the Pass Through Trusts o modify, eliminate or add to the provisions of the Pass Through Agreement or any Series Supplement to the extent necessary to continue to qualify the Pass Through Agreement or that Series Supplement under the Trust Indenture Act of 1939, as amended, or any similar federal statute enacted after the date of the Pass Through Agreement o make any other amendments or modifications to the Pass Through Agreement which shall only apply to one or more Series issued after the date of such supplemental agreement, and 20 o add, eliminate or change any provision under the Pass Through Agreement that will not adversely affect the interests of the Certificateholders. However, in each of the above cases such supplemental agreement must not cause the Pass Through Trust to become taxable as an association for federal income tax purposes. (Pass Through Agreement, Section 11.01) With the Consent of Certificateholders. Federal Express and the Pass Through Trustee, with the consent of the Certificateholders evidencing fractional undivided interests aggregating not less than a majority in interest of the affected Pass Through Trust, may execute supplemental agreements adding any provisions to or changing or eliminating any of the provisions of the Pass Through Agreement, to the extent relating to such Pass Through Trust, and the applicable Series Supplement, any intercreditor agreement or any Liquidity Facility or modifying the rights of such Certificateholders. No such supplemental agreement may, however, without the consent of each Certificateholder so affected: o reduce the amount of, or delay the timing of, any receipt by the Pass Through Trustee of payments on the Equipment Certificates held in such Pass Through Trust, or distributions in respect of any Pass Through Certificate of such Pass Through Trust, or make distributions payable in a currency other than that provided for in such Pass Through Certificates, or impair the right of any such Certificateholder to institute suit for the enforcement of any payment when due o reduce, modify or amend any indemnities in favor of any Certificateholder (unless consented to by each such holder adversely affected by such reduction, modification or amendment) o create or permit the creation of any lien on the Trust Property or deprive any holder of any such Pass Through Certificate of the benefit of the related Pass Through Trust with respect to the Trust Property whether by disposition or otherwise, except as provided in the Pass Through Agreement or the applicable Series Supplement o waive, amend or modify the priority of distributions of any intercreditor agreement in a manner adverse to the Certificateholders o reduce the percentage of the aggregate fractional undivided interests of the Pass Through Trust that is required to approve any supplemental agreement or any waiver provided for in the Pass Through Agreement or such Series Supplement, or o cause the Pass Through Trust to become taxable as an association for federal income tax purposes. (Pass Through Agreement, Section 11.02) Modification, Consents and Waivers under the Indenture and Related Agreements If the Pass Through Trustee, as the holder of any Equipment Certificates held in a Pass Through Trust, receives a request for its consent to any amendment, modification or waiver under the Indenture, or other document relating to such Equipment Certificates (including any Lease with respect to Leased Aircraft Certificates), the Pass Through Trustee will mail a notice of such proposed amendment, modification or waiver to each Certificateholder of such Pass Through Trust as of the date of such notice. The Pass Through Trustee will request instructions from such Certificateholders as to whether or not to consent to such amendment, modification or waiver. The Pass Through Trustee will vote or consent with respect to such Equipment Certificates in the same proportion as the Pass Through Certificates of such Pass Through Trust are actually voted by such Certificateholders by a specific date. If an Event of Default relating to such Indenture has occurred and is continuing under such Pass Through Trust, the Pass Through Trustee may, in the absence of instructions from Certificateholders holding a majority in interest of such Pass Through Trust and subject to any intercreditor agreement, in its own discretion consent to such amendment, modification or waiver, and may so notify the Indenture Trustee. (Pass Through Agreement, Section 11.08) 21 Cross-Subordination Issues The Pass Through Trustee may enter into an intercreditor agreement which provides that payments made to Certificateholders of a Pass Through Trust may be subordinated to the prior payment of all amounts owing to Certificateholders of another Pass Through Trust which holds senior Equipment Certificates issued under all Indentures. The prospectus supplement will describe the circumstances under which those payments may be subordinated. The prospectus supplement will describe any such intercreditor agreement and the cross- subordination provisions and any related terms, including who is permitted to grant waivers of defaults under any related Indenture, consent to the amendment or modification of any related Indentures or direct the exercise of remedial actions under any related Indentures. Termination of Pass Through Trusts The obligations of Federal Express and the Pass Through Trustee with respect to a Pass Through Trust will terminate upon the distribution to the Certificateholders of the Pass Through Trust of all amounts required to be distributed to them pursuant to the Pass Through Agreement and the applicable Series Supplement and the disposition of all property held in the Pass Through Trust. The Pass Through Trustee will notify each Certificateholder of record of the Pass Through Trust by mail of, among other things, the termination of the Pass Through Trust, the amount of the proposed final payment and the proposed date for the distribution of such final payment for the Pass Through Trust. The final distribution for each Certificateholder of the Pass Through Trust will be made only upon surrender of the Certificateholder's Pass Through Certificates at the office or agency of the Pass Through Trustee specified in the termination notice. (Pass Through Agreement, Section 12.01) Pre-funding In the event that, on the issuance date of any Pass Through Certificates, all of the proceeds from the sale of those Pass Through Certificates are not used to purchase Equipment Certificates, the Equipment Certificates may be purchased by the Pass Through Trustee at any time on or prior to the date specified in the prospectus supplement. In that case, the proceeds from the sale of those Pass Through Certificates will be held under an arrangement described in the prospectus supplement. Examples of these arrangements include: o investment of the proceeds by the Pass Through Trustee in permitted investments o deposit of the proceeds in a deposit or escrow account held by a separate depositary or escrow agent or o purchase by the Pass Through Trustee of debt instruments issued on an interim basis by Federal Express, which debt instrument may be secured by a collateral account or other security or property described in the prospectus supplement. The arrangements with respect to the payment of interest on the invested funds will be also be described in the prospectus supplement. The prospectus supplement will also describe any arrangements for the payment of any amounts due to holders of Pass Through Certificates during the pre-funding period. If any of the proceeds are not subsequently utilized to purchase Equipment Certificates by the relevant date specified in the applicable prospectus supplement, including by reason of casualty to one or more Aircraft, those proceeds will be returned to the holders of the Pass Through Certificates. Special Payment Upon Unavailability of Trust Property For any Pass Through Trust, to the extent that any of the proceeds from the sale of the related Pass Through Certificates are not applied on or prior to the date specified in the prospectus supplement to purchase the Equipment Certificates that were contemplated to be held in such Pass Through Trust, Federal Express will cause an amount equal to such unapplied proceeds to be paid from the deposit trust account to the Pass Through Trustee. The Pass Through Trustee will distribute such proceeds to the Certificateholders of such Pass Through Trust on a pro rata basis upon not less than 20 days' prior notice to them as a Special Payment on the date specified in the prospectus 22 supplement, together with interest thereon at a rate equal to the rate applicable to such Pass Through Certificates, but without premium. Federal Express will also pay to the Pass Through Trustee on such date an amount equal to such interest. Federal Express will be responsible for any losses in the deposit trust account. (Pass Through Agreement, Section 2.02) Liquidity Facility The prospectus supplement may provide that one or more payments of interest on the Pass Through Certificates of one or more series will be supported by a Liquidity Facility. The provider of such Liquidity Facility will have a claim senior to the Certificateholders' as specified in the prospectus supplement. The Pass Through Trustee; the Indenture Trustee The Pass Through Trustee for each of the Pass Through Trusts will be First Security Bank, National Association, unless otherwise specified in the related prospectus supplement. The Pass Through Trustee and any of its affiliates may hold Pass Through Certificates in their own names. (Pass Through Agreement, Section 8.05) First Security Bank, National Association will be the Indenture Trustee under the Indentures under which the Equipment Certificates have been or will be issued, unless otherwise specified in the related prospectus supplement. First Security Bank, National Association acts as trustee under other indentures with respect to other indebtedness of Federal Express, and Federal Express from time to time borrows from, and maintains deposit accounts with, First Security Bank, National Association and its affiliates. The Pass Through Trustee may resign as trustee under any or all of the Pass Through Trusts at any time. If the Pass Through Trustee ceases to be eligible to continue as Pass Through Trustee with respect to a Pass Through Trust or becomes incapable of acting as Pass Through Trustee or becomes insolvent, Federal Express may remove the Pass Through Trustee, or any Certificateholder of such Pass Through Trust holding Pass Through Certificates for at least six months may, on behalf of that Certificateholder and all others similarly situated, petition any court of competent jurisdiction for the removal of the Pass Through Trustee and the appointment of a successor trustee. In addition, the Certificateholders holding more than 50% in aggregate amount of the related Pass Through Certificates may remove the Pass Through Trustee of any Pass Through Trust without cause. (Pass Through Agreement, Section 10.01) In the case of the resignation or removal of the Pass Through Trustee, Federal Express or the Certificateholders holding more than 50% in aggregate amount of the related Pass Through Certificates may appoint a successor Pass Through Trustee. The resignation or removal of the Pass Through Trustee for any Pass Through Trust and the appointment of the successor trustee for such Pass Through Trust does not become effective until acceptance of the appointment by the successor trustee. (Pass Through Agreement, Article X) Pursuant to the resignation and successor trustee provisions of the Pass Through Agreement, it is possible that a different trustee could be appointed to act as the successor trustee with respect to each Pass Through Trust. All references in this prospectus to the Pass Through Trustee are to the trustee acting in such capacity under each of the Pass Through Trusts and should be read to take into account the possibility that each of the Pass Through Trusts could have a different successor trustee in the event of a resignation or removal. The Pass Through Agreement provides that Federal Express will pay the Pass Through Trustee's fees and expenses and that the Pass Through Trustee will have a priority claim on the related Trust Property to the extent such fees and expenses are not paid. The Pass Through Agreement further provides that the Pass Through Trustee in its individual capacity will be entitled to indemnification by Federal Express for, and will be held harmless against, any loss, liability or expenses (other than income or similar taxes) incurred by the Pass Through Trustee in its individual capacity in connection with the administration of any Pass Through Trust, except to the extent incurred through its own willful misconduct, bad faith or negligence or by reason of a breach of any of its representations or warranties made in the Pass Through Agreement, the applicable Series Supplement or any related documents. In some circumstances, the Pass Through Trustee is entitled to reimbursement from the applicable Pass Through Trust 23 for any tax (other than income or similar taxes) incurred in its trust capacity in connection with the administration of that Pass Through Trust. (Pass Through Agreement, Articles VIII and IX) DESCRIPTION OF THE EQUIPMENT CERTIFICATES The following is a summary description of the Equipment Certificates which we expect will be common to all Equipment Certificates. Where no distinction is made between the Leased Aircraft Certificates and the Owned Aircraft Certificates or between their respective Indentures, such statements refer to any Equipment Certificates and any Indenture. The prospectus supplement will describe the specific terms of any series of Equipment Certificates. Therefore, you should rely on the information in the prospectus supplement, in particular if the information in the prospectus supplement is different from the information provided below. Because the following description is a summary, it does not describe every aspect of the Equipment Certificates, and is qualified in its entirety by reference to all the provisions of the applicable Equipment Certificates, the Indentures, the Participation Agreements, any Leases, any Collateral Agreements or Depositary Arrangement, and other agreements and arrangements relating to any particular offering of Equipment Certificates. To the extent that any provision in any prospectus supplement is inconsistent with any provision of this summary, the provision of the prospectus supplement will control. General Owned Aircraft. For each Owned Aircraft, the related Owned Aircraft Certificates will be issued as direct obligations of Federal Express and will be authenticated under an Owned Aircraft Indenture by the Indenture Trustee. All of the Owned Aircraft Certificates issued under the same Owned Aircraft Indenture will relate to a specific Owned Aircraft and will not be secured by any other Aircraft. The prospectus supplement will specify the Owned Aircraft relating to each Owned Aircraft Indenture and the related Owned Aircraft Certificates. Federal Express will be directly obligated under each Owned Aircraft Indenture to make payments of principal of, any premium and interest on the related Owned Aircraft Certificates. Leased Aircraft. For each Leased Aircraft, the related Leased Aircraft Certificates will be issued as nonrecourse obligations by the Owner Trustee, in each case acting for a separate Owner Trust for the benefit of an Owner Participant, and will be authenticated under a Leased Aircraft Indenture by the Indenture Trustee. All of the Leased Aircraft Certificates issued under the same Leased Aircraft Indenture will relate to and, after any related Pre-Funding Period, as discussed below under "Delayed Lease Commencement," will be secured by a specific Leased Aircraft and will not be secured by any other Aircraft. In each case, the Owner Trustee will lease the related Leased Aircraft to Federal Express pursuant to a separate Lease between such Owner Trustee and Federal Express. See "Pre-Funding Period" below for a discussion of the circumstances under which the Lease for an Aircraft may commence after the date of issuance of the related Leased Aircraft Certificates. Rental Payments. The prospectus supplement will specify the Leased Aircraft subject to each Lease and the Leased Aircraft Certificates issued under the related Leased Aircraft Indenture. Upon the commencement of the Lease for any Leased Aircraft, Federal Express will be obligated to make rental payments under such Lease that will be sufficient to pay the principal of and accrued interest on the related Leased Aircraft Certificates when and as due and payable except that, for a Delayed Lease Aircraft on the first scheduled payment date after the related Pre-Funding Period, any difference between the rental payment due on such date by Federal Express and the scheduled payment of principal, if any, and interest then due on such Leased Aircraft Certificates will be payable from amounts payable under a depositary or other escrow arrangement described in the prospectus supplement or, if Leased Aircraft Certificates have been issued in respect of Delayed Lease Aircraft, such difference will be paid pursuant to arrangements described in the prospectus supplement. See "Pre-Funding Period" below. The Leased Aircraft Certificates will not, however, be obligations of, or guaranteed by, Federal Express. Federal Express' obligations to pay rent and to cause other payments to be made under each Lease will be general obligations of Federal Express. 24 In circumstances described in the prospectus supplement, Federal Express will have the right to purchase an Owner Trustee's right, title and interest in and to the related Aircraft and to assume the related Leased Aircraft Certificates on a full recourse basis, similar to a financing contemplated by an Owned Aircraft Indenture. Sale and Leaseback. For any Owned Aircraft, if specified in the prospectus supplement, Federal Express may arrange for an Owner Trustee, acting for an Owner Trust for the benefit of an Owner Participant, to purchase that Owned Aircraft from Federal Express and lease such Aircraft back to Federal Express under a "net lease," subsequent to the sale of the related Owned Aircraft Certificates to the Pass Through Trustee for each applicable Pass Through Trust and the offering and sale of the related Pass Through Certificates pursuant to that prospectus supplement. In that case, the Owner Trustee will assume, on a nonrecourse basis, the obligations of Federal Express to make payments of principal and interest on the related Equipment Certificates. However, the related Equipment Certificates will no longer be direct obligations of, and will not be guaranteed by, Federal Express, although Federal Express will be obligated under the related Lease to make rental payments that will be sufficient to pay the principal of and accrued interest on the related Equipment Certificates when and as due and payable, and such Equipment Certificates will continue to be secured by a security interest in the related Aircraft, in addition to being secured by an assignment by the Owner Trustee to the Indenture Trustee of the Owner Trustee's rights under such Lease and the agreements relating to the purchase of such Aircraft. See "Security," "Payments and Limitation of Liability" and "Federal Income Tax Consequences" below. The prospectus supplement will specify the terms and conditions under which any sale and leaseback transactions may be consummated. Principal and Interest Payments Interest received by the Pass Through Trustee on the Equipment Certificates constituting Trust Property of each Pass Through Trust will be passed through to the Certificateholders of such Pass Through Trust on a pro rata basis on the dates and at the rate per annum specified in the prospectus supplement. Interest on the Equipment Certificates will be calculated on the basis of a 360-day year consisting of twelve 30-day months. Each Pass Through Trust will hold Equipment Certificates on which principal is payable in scheduled amounts and on specified dates as specified in the prospectus supplement. Principal received by the Pass Through Trustee on the Equipment Certificates will be passed through to the Certificateholders of such Pass Through Trust as specified in the prospectus supplement. If specified in the prospectus supplement, payments of interest and principal due on senior Equipment Certificates issued in respect of an Aircraft will be made prior to payments of interest and principal on Equipment Certificates issued in respect of such Aircraft which are subordinated to such senior Equipment Certificates. Prepayment The prospectus supplement will describe the circumstances, whether voluntary or involuntary, under which the related Equipment Certificates may or must be prepaid in whole or in part prior to their stated maturity date, any premium applicable upon prepayment and other terms applying to the prepayment. See "Mandatory Prepayment During the Pre-Funding Period" below for a discussion of events which would require prepayment of Leased Aircraft Certificates during any related Pre-Funding Period. Security Except during any related Pre-Funding Period, the Leased Aircraft Certificates issued under each Leased Aircraft Indenture will be secured by: o an assignment by the related Owner Trustee to the Indenture Trustee of the Owner Trustee's rights (except for limited rights described below) under the applicable Lease, including the right to receive rent and other payments under the Lease 25 o a security interest granted to the Indenture Trustee in the related Leased Aircraft, subject to the rights of Federal Express under the applicable Lease, so that the Indenture Trustee will not have the right to disturb Federal Express' quiet enjoyment of such Aircraft so long as no Lease Event of Default has occurred and is continuing, and o an assignment to the Indenture Trustee of the Owner Trustee's rights relating to such Leased Aircraft and the related engines under the agreements for the purchase of the Leased Aircraft and engines between Federal Express and the respective manufacturers. See "Registration of the Aircraft" below. The assignment by the Owner Trustee to the Indenture Trustee of its rights under the related Lease will exclude rights of the Owner Trustee and the related Owner Participant relating to: o indemnification by Federal Express for some matters o proceeds of public liability insurance payable to the Owner Trustee in its individual capacity and to the Owner Participant under insurance maintained by Federal Express under such Lease, and o proceeds of any insurance policies separately maintained by the Owner Trustee in its individual capacity or by the Owner Participant. The right of the Indenture Trustee, however, to exercise any of the rights of the Owner Trustee under the related Lease, except the right to receive payments of rent due thereunder, will be subject to the limitations described in the prospectus supplement. The Owned Aircraft Certificates issued under each Owned Aircraft Indenture will be secured by a security interest granted to the Indenture Trustee in all of Federal Express' right, title and interest in and to the related Owned Aircraft and an assignment to the Indenture Trustee of some of Federal Express' rights relating to such Owned Aircraft and the related engines under the agreements for the purchase of such Owned Aircraft and engines between Federal Express and the respective manufacturers. See "Registration of the Aircraft" below. Unless otherwise specified in the prospectus supplement, there will be no cross-collateralization provisions in the Indentures and consequently, the Equipment Certificates issued in respect of one of the Aircraft will be secured only by that Aircraft and will not be secured by any other Aircraft or, in the case of Leased Aircraft Certificates, the Leases related to any other Aircraft. Unless otherwise specified in the prospectus supplement, there will be no cross-default provisions in the Indentures and consequently, an Indenture Event of Default under any particular Indenture may not result in an Indenture Event of Default under any other Indenture. However, if an Indenture Event of Default occurs in fewer than all of the Indentures related to a Pass Through Trust, the Equipment Certificates issued pursuant to the Indentures with respect to which an Indenture Event of Default has not occurred will continue to be held in such Pass Through Trust and payments of principal of and any premium and interest on such Equipment Certificates will continue to be distributed to the Certificateholders of such Pass Through Trust as originally scheduled, subject to any Intercreditor Agreement. Section 1110 of the Bankruptcy Code provides that the right of lessors, conditional vendors and holders of security interests with respect to aircraft capable of carrying ten (10) or more individuals or 6,000 pounds or more of cargo used by air carriers operating under certificates issued by the Secretary of Transportation under Chapter 447 of the Transportation Code to take possession of such aircraft in compliance with the provisions of the lease, conditional sale contract or security agreement, as the case may be, is not affected by: o the automatic stay provision of the Bankruptcy Code, which provision enjoins the taking of any action against a debtor by a creditor o the provision of the Bankruptcy Code allowing the trustee in reorganization or the debtor-in-possession to use, sell or lease property of the debtor 26 o the confirmation of a plan by the bankruptcy court, and o any power of the bankruptcy court to enjoin a repossession. Section 1110 provides, however, that the right of a lessor, conditional vendor or holder of a security interest to take possession of an aircraft in the event of a default may not be exercised for 60 days following the date of commencement of the reorganization proceedings, unless specifically permitted by the bankruptcy court, and may not be exercised at all if, within such 60-day period, the trustee in reorganization or the debtor-in-possession agrees to perform the debtor's obligations that become due on or after such date and cures all existing defaults, other than defaults resulting solely from the financial condition, bankruptcy, insolvency or reorganization of the debtor. The prospectus supplement for each offering will discuss the availability of the benefits of Section 1110 of the Bankruptcy Code with respect to the related Aircraft. If the prospectus supplement provides that a Pre-Funding Period will apply to a Leased Aircraft, then during such Pre-Funding Period the related Leased Aircraft Certificates will not be secured by such Leased Aircraft or a related Lease. During such Pre-Funding Period, however, such Leased Aircraft Certificates will be secured by the related Collateral Account and, if the prospectus supplement so provides, Additional Collateral or by a Depositary Arrangement. See "Pre-Funding Period" below. Registration of the Aircraft Federal Express will be required, except under some circumstances, to register and keep each Aircraft registered under Title 49 of the Transportation Code, in the name of Federal Express, in the case of an Owned Aircraft, or in the name of the Owner Trustee, in the case of a Leased Aircraft, and to record and maintain the recordation of the Indenture and any Lease relating to each Aircraft under the Transportation Code. The recordation of the Indenture and any Lease relating to each Aircraft will give the Indenture Trustee a security interest in each such Aircraft perfected under the Transportation Code, which perfected security interest will, with limited exceptions, be recognized in those jurisdictions that have ratified to the Convention. Federal Express will be able, in some circumstances, to re-register any Aircraft in specified countries other than the United States. Unless otherwise specified in the prospectus supplement, prior to any change in the jurisdiction of registry, the Indenture Trustee and, for Leased Aircraft, the related Owner Participant must receive various assurances, including that such other country would provide substantially equivalent protection for the rights of owner participants, lessors and lenders in similar transactions as is provided under United States law, except that, for the purpose of such determination, rights and remedies similar to those available under Section 1110 of the Bankruptcy Code will not be required in the absence of restrictions of rights and remedies of lessors and secured parties that are similar to those imposed by Sections 362, 363 and 1129 of the Bankruptcy Code. While those assurances are intended to provide that Federal Express' (in the case of an Owned Aircraft) or the Owner Trustee's (in the case of a Leased Aircraft) title to the Aircraft and the Indenture Trustee's lien thereon will be recognized in such jurisdiction and that the Indenture Trustee may exercise the rights granted to it in the Indentures, there is no guarantee that, even if that jurisdiction is a party to the Convention, as a practical matter, the Indenture Trustee would be able to realize upon its security interest in the case of an Indenture Event of Default. Also, each Aircraft may be operated by Federal Express or placed under lease, sublease or interchange arrangements with carriers domiciled outside of the United States. The ability of the Indenture Trustee in the case of an Indenture Event of Default, to realize upon its security interest in the Aircraft could be adversely affected as a legal or practical matter if the Aircraft were located outside the United States. Merger, Consolidation and Transfer of Assets In the case of each Aircraft, Federal Express will be prohibited from consolidating with or merging into any other corporation under circumstances in which Federal Express is not the surviving corporation, or from transferring all or substantially all of its assets as an entirety to any other corporation, unless, among other things: 27 o the successor or transferee corporation is a U.S. Citizen, an "air carrier" within the meaning of and operating under the Transportation Code and a corporation organized and existing under the laws of the United States or a political subdivision thereof, and such corporation expressly assumes all the obligations of Federal Express contained in the related Indenture, the Participation Agreement, the Lease, the Pass Through Agreement, the Purchase Agreement and the related Purchase Agreement Assignment o immediately after giving effect to the consolidation, merger or transfer, the successor or transferee is in compliance with all of the terms and conditions of those documents, and o the consolidation, merger or transfer does not (or would not, if prior to commencement of the related Lease) give rise to a Lease Event of Default under the related Lease or, in the case of an Owned Aircraft, an Indenture Event of Default under the related Owned Aircraft Indenture. Pre-Funding Period Equipment Certificates may be issued in connection with any pre-funding arrangement, such as the following: o The Owner Trustee may issue Leased Aircraft Certificates prior to the purchase of the related Leased Aircraft by the Owner Trustee or the commencement of the related Leases o Federal Express may issue Owned Aircraft Certificates prior to the expected delivery date of the Owned Aircraft. The prospectus supplement will describe any of these pre-funding arrangements, including any arrangements for the collateralization of any Leased Aircraft Certificates or Owned Aircraft Certificates with cash, permitted investments or other property and the arrangements for payment of any amounts due to holders of Pass Through Certificates during the pre-funding period. If the anticipated aircraft financing transactions have not been completed by the date specified in the prospectus supplement, including by reason of a casualty to one or more Aircraft, such Leased Aircraft Certificates or Owned Aircraft Certificates will be prepaid at the price specified in the prospectus supplement. Alternatively, if the Lease related to any Leased Aircraft Certificates has not commenced by the date specified in the prospectus supplement, Federal Express, at its option, may convert the proposed leveraged lease financing into a type of financing available for Owned Aircraft and those Leased Aircraft Certificates will become Owned Aircraft Certificates. Owned Aircraft Indenture Covenants Maintenance. Federal Express will be obligated to pay all costs of operating the Owned Aircraft and, at its expense, to maintain, inspect, service, repair and overhaul the Owned Aircraft so as to keep the Owned Aircraft in good condition, ordinary wear and tear excepted, and to enable the airworthiness certification of such Owned Aircraft to be maintained in good standing at all times under the Transportation Code or, in some circumstances, under the applicable requirements of the aeronautical authority of another country of registry. If, however, the Aircraft loses its airworthiness certification and such loss is curable and Federal Express, using its reasonable best efforts, undertakes such cure promptly, diligently and continuously, then Federal Express will not be in default with respect to such obligation. Generally, Federal Express will be obligated to replace or cause to be replaced all Owned Aircraft parts that become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use. Federal Express will have the right to make other modifications and additions to an Owned Aircraft so long as the modifications or additions do not materially decrease the value or utility of such Owned Aircraft or impair its condition or airworthiness below its value, utility, condition and airworthiness immediately prior to the modification or addition, assuming that such Owned Aircraft was then in the condition and airworthiness required by the related Indenture. Also, in some circumstances, Federal Express will be permitted to remove parts (without replacement) from an Owned Aircraft or any engine (and therefore from the Lien of the applicable Indenture) if Federal Express 28 deems such parts to be obsolete or no longer suitable or appropriate for use thereon so long as such removals do not decrease the utility, condition or airworthiness of such Owned Aircraft or any such engine, although the value of such Owned Aircraft or any such engine may be reduced by such removal. The prospectus supplement will contain a description of any limitations applicable to provisions described in this paragraph. Insurance. The prospectus supplement will contain a description of the insurance arrangements applicable to each Aircraft. In general, Federal Express will be obligated to carry comprehensive aircraft liability insurance, including property damage liability insurance and cargo legal liability insurance as described below. The insurance must be in the amounts, against such risks and with such retentions as Federal Express customarily maintains. The insurance must also be with insurers of recognized responsibility and against such other risks as are usually insured against by similar corporations situated similarly to Federal Express and engaged in the same or similar business to Federal Express and owning or operating aircraft and engines similar to the related Aircraft and related engines. Unless otherwise indicated in the prospectus supplement, Federal Express will also be obligated to carry, with insurers of recognized responsibility, all-risk ground and flight aircraft hull insurance covering the related Aircraft and all-risk coverage with respect to the related engines and parts while temporarily removed from such Aircraft and not replaced by similar engines or parts, as described below. That insurance includes war-risk and allied perils, hijacking and governmental confiscation and expropriation insurance, except in the country of registry, and must be in such form and amounts, and with such retentions as Federal Express customarily maintains for other aircraft in Federal Express' fleet of the same type and model and operating on the same routes as the related Aircraft. Federal Express may self-insure against the risks required to be insured against under the related Lease in such reasonable amounts as are then applicable to other aircraft or engines of Federal Express of value comparable to the related Aircraft. Self-insurance for all aircraft in Federal Express' fleet may not, however, in the aggregate exceed an amount equal to the lesser of 50% of the highest insured value of any single aircraft in such fleet, or 1.5% of the average aggregate insured value from time to time of Federal Express' entire aircraft fleet, although a standard deductible per occurrence per aircraft no greater than the amount customarily allowed as a deductible in the industry will be permitted in addition to such self-insurance. Federal Express and any permitted lessee of an Owned Aircraft will be named as insured parties under all insurance policies required by the related Indenture. The Indenture Trustee will be named as an additional insured, which will afford such Indenture Trustee the rights but not the obligations of an additional insured. In general, liability insurance proceeds will be distributed to the respective parties as their interests may appear and hull insurance proceeds will be distributed to the Indenture Trustee if the amount of such proceeds exceeds specified amounts. The prospectus supplement will contain a description of any limitations applicable to provisions described in this paragraph. Ranking of Equipment Certificates Some of the Equipment Certificates related to one or more Aircraft, as described in the prospectus supplement, may be subordinated and junior in right of payment to other Equipment Certificates related to the same Aircraft. The prospectus supplement will specify the terms of any subordination. Payments and Limitations of Liability All payments of principal of, any premium and interest on any Leased Aircraft Certificates will be made only from the assets subject to the Lien described in the related Leased Aircraft Indenture or the income and proceeds received by the Indenture Trustee from those assets or from other payments received by the Indenture Trustee to be applied pursuant to the Leased Aircraft Indenture. Those other payments include, during any Pre-Funding Period relating to a Leased Aircraft, the Collateral Account and any Additional Collateral provided in connection with such Pre-Funding Period or amounts payable under a Depositary Arrangement and, on and after the commencement of the related Lease, rent payable by Federal Express under the related Lease. Additionally, if the prospectus supplement provides for a Liquidity Facility to support payments of interest on one or more series of Leased Aircraft Certificates, interest payments on the Leased Aircraft Certificates will be made under such Liquidity Facility to the extent provided in the Liquidity Facility. The Leased Aircraft Certificates will not be direct obligations of, or 29 guaranteed by, Federal Express. Federal Express' obligations to pay rent and to cause other payments to be made under each Lease will be general obligations of Federal Express. Neither the Owner Trustee nor the Indenture Trustee (in their individual capacities) will be liable to any Certificateholder or, in the case of the Owner Trustee, in its individual capacity, to Federal Express or the Indenture Trustee for any amounts payable or for any liability under the Equipment Certificates or the Indentures, except as provided in the Indentures and the Participation Agreements and except for the gross negligence or willful misconduct of the Owner Trustee. Federal Express' obligations under each Owned Aircraft Indenture and under the related Owned Aircraft Certificates will be general obligations of Federal Express. Indenture Events of Default and Remedies For any Pass Through Trust, the prospectus supplement will describe the Indenture Events of Default under the Indentures related to the Equipment Certificates to be held by such Pass Through Trust, the remedies that the Indenture Trustee may exercise with respect to the related Aircraft, either at its own initiative or upon instruction from holders of the related Equipment Certificates, and other provisions relating to the occurrence of an Indenture Event of Default and the exercise of remedies. Unless otherwise specified in the prospectus supplement, there will be no cross-default provisions in the Indentures and, unless so specified, events resulting in an Indenture Event of Default under any particular Indenture will not necessarily result in an Indenture Event of Default under any other Indenture. The Leases Upon the commencement of any Lease, the following terms will be applicable: Terms and Rentals. Each Leased Aircraft will be leased separately by the related Owner Trustee to Federal Express for a term commencing on the date of the delivery of the related Leased Aircraft to such Owner Trustee and expiring on a date not earlier than the latest maturity date of the Leased Aircraft Certificates issued with respect to such Leased Aircraft, unless previously terminated or extended, as permitted by the related Lease. Federal Express will make the scheduled rental payments under each Lease on the dates specified in the prospectus supplement. The Owner Trustee will assign to the Indenture Trustee the respective payments necessary to make payments of principal and interest due from such Owner Trustee on the Leased Aircraft Certificates issued under such Leased Aircraft Indenture. Although in certain cases the scheduled rental payments under the Leases may be adjusted, under no circumstances will such payments that Federal Express will be unconditionally obligated to make or cause to be made under any Lease be less than the scheduled payments of principal and interest on the Leased Aircraft Certificates issued under the Leased Aircraft Indenture relating to such Lease. See "Payments and Limitations of Liability" above. For any Delayed Lease Aircraft, upon the commencement of the Lease for such Aircraft, Federal Express will be obligated to make scheduled rental payments under the related Lease that will be sufficient to pay in full when due all principal of and interest on, to the extent accrued from and after the related Pre-Funding Period, the related Leased Aircraft Certificates, except that on the first scheduled payment date after the related Pre-Funding Period, the difference between the rental payment due on such date by Federal Express and the scheduled payment of principal, if any, and interest then due on such Leased Aircraft Certificates will be payable from the related Collateral Account and any related Additional Collateral or from amounts payable under a Depositary Arrangement. See "Payments and Limitations of Liability" above. Scheduled payments of principal and interest on the Leased Aircraft Certificates will be made on the dates specified in the prospectus supplement. Net Lease. Federal Express' obligations under each Lease in respect of the related Leased Aircraft will be those of a lessee under a "net lease." Accordingly, Federal Express will be obligated to pay all costs of operating the Leased Aircraft and, at its expense, to maintain, service, repair and overhaul the Leased Aircraft so as to keep the Leased Aircraft in good condition, ordinary wear and tear excepted, and to enable the airworthiness certification 30 to be maintained in good standing at all times under the Transportation Code or, in some circumstances, under the applicable requirements of the aeronautical authority of another country of registry. Generally, Federal Express will be obligated to replace or cause to be replaced all Leased Aircraft parts that become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use. Federal Express will have the right to make other modifications and additions to a Leased Aircraft so long as the modifications or additions do not materially decrease the value or utility of such Leased Aircraft or impair its condition or airworthiness below its value, utility, condition and airworthiness immediately prior to the modification or addition, assuming that such Leased Aircraft was then in the condition and airworthiness required by the related Lease. Also, in some circumstances, Federal Express will be permitted to remove parts (without replacement) from a Leased Aircraft or any engine (and therefore from the Lien of the applicable Indenture) if Federal Express deems such parts to be obsolete or no longer suitable or appropriate for use on such Leased Aircraft so long as such removals do not decrease the utility, condition or airworthiness of such Leased Aircraft or any such engine, although the value of such Leased Aircraft or any such engine may be reduced by such removal. The prospectus supplement will contain a description of any limitations applicable to provisions described above. Insurance. The prospectus supplement will contain a description of the insurance arrangements applicable to each Aircraft. In general, Federal Express will be obligated to carry comprehensive aircraft liability insurance, including property damage liability insurance and cargo legal liability insurance as described below. The insurance must be in such amounts, against such risks and with such retentions as Federal Express customarily maintains. Such insurance must also be with insurers of recognized responsibility and against such other risks as are usually insured against by similar corporations situated similarly to Federal Express and engaged in the same or similar business to Federal Express and owning or operating aircraft and engines similar to the related Aircraft and related engines. In general, Federal Express will also be obligated to carry, with insurers of recognized responsibility, all-risk ground and flight aircraft hull insurance covering the related Aircraft and all-risk coverage with respect to the related engines and parts while temporarily removed from such Aircraft and not replaced by similar engines or parts, as described below. The insurance includes war-risk and allied perils, hijacking and governmental confiscation and expropriation insurance, except in the country of registry, must be in such form and amounts, and with such retentions as Federal Express customarily maintains with respect to other aircraft in Federal Express' fleet of the same type and model and operating on the same routes as the related Aircraft, and may not be in an amount below certain stipulated values. Federal Express may self-insure against the risks required to be insured against under the related lease in such reasonable amounts as are then applicable to other aircraft or engines of Federal Express of value comparable to the related Aircraft. Self-insurance for all aircraft in Federal Express' fleet may not, however, in the aggregate exceed an amount equal to the lesser of 50% of the highest insured value of any single aircraft in such fleet or 1.5% of the average aggregate insured value from time to time of Federal Express' entire aircraft fleet, provided that a standard deductible per occurrence per aircraft no greater than the amount customarily allowed as a deductible in the industry will be permitted in addition to such self-insurance. Federal Express and any permitted sublessee of a Leased Aircraft will be named as insured parties under all insurance policies required by the related Lease. The Indenture Trustee, Owner Trustee and related Owner Participant will be named additional insureds, which will afford each of them the rights but not the obligations of an additional insured. In general, liability insurance proceeds will be distributed to the respective parties as their interests may appear and hull insurance proceeds will be distributed to the Indenture Trustee if the amount of such proceeds exceeds specified amounts. The prospectus supplement will contain a description of any limitations applicable to provisions described in this paragraph. Lease Events of Default; Remedies. The prospectus supplement will describe the Lease Events of Default under the related Leases, the remedies that the Owner Trustee may exercise with respect to the related Leased Aircraft, and other provisions relating to the occurrence of a Lease Event of Default and the exercise of remedies. 31 The Participation Agreements Federal Express will be required to indemnify each Indenture Trustee and, in the case of Leased Aircraft Certificates, each Owner Participant and each Owner Trustee, and certain parties affiliated with the foregoing (but not including Holders or the Certificateholders), for certain liabilities, losses, fees and expenses and for certain other matters arising out of the transactions described in this prospectus or relating to the applicable Aircraft or the use of such Aircraft. In addition, under certain circumstances Federal Express will be required to indemnify such persons against certain taxes, levies, duties, withholdings and for certain other matters relating to such transactions or the applicable Aircraft. Subject to some restrictions, each Owner Participant may convey all of its right, title and interest relating to any Leased Aircraft. Moreover, if so provided in the prospectus supplement, in certain limited instances Federal Express may assume an Owner Trust's obligations under the related Leased Aircraft Certificates on a full recourse basis. Liquidity Facility The prospectus supplement may provide that one or more payments of interest on the related Equipment Certificates of one or more series or distributions made by the Pass Through Trustee of the related Pass Through Trust will be supported by a liquidity facility issued by an institution identified in the prospectus supplement. Unless otherwise provided in the prospectus supplement, the provider of the liquidity facility will have a senior claim upon the assets securing the Equipment Certificates. Intercreditor Issues Equipment Certificates may be issued in different classes, which means that the Equipment Certificates may have different payment priorities even though issued by the same Owner Trustee and relate to the same Aircraft. In that case, the prospectus supplement will describe the priority of distributions among the Equipment Certificates (and any related liquidity facilities), the ability of any class to exercise and enforce any or all remedies with respect to the related Aircraft (and, if the Equipment Certificates are Leased Aircraft Certificates, the related Leases) and other intercreditor terms and provisions. FEDERAL INCOME TAX CONSEQUENCES In the opinion of Davis Polk & Wardwell, tax counsel to Federal Express, the following discussion accurately describes the principal United States federal income tax consequences of ownership and disposition of the Pass Through Certificates to the initial purchasers of the Pass Through Certificates at the "issue price" who hold such Pass Through Certificates as a capital asset, and should be read in conjunction with any additional discussion of federal income tax consequences included in the prospectus supplement. This opinion is based on laws, regulations, rulings and decisions in effect as of the date of this prospectus. Changes to existing law, which could have retroactive effect, may alter the consequences described below. This discussion only applies to owners of Pass Through Certificates that are either: o a citizen or resident of the United States for United States federal income tax purposes o a corporation or other entity created or organized under the laws of the United States or any state of the United States, or o an estate or trust the income of which is subject to United States federal income tax without regard to its source and does not address federal income tax consequences applicable to particular categories of investors, some of which (for example, insurance companies, financial institutions, dealers in securities and foreign investors) may be subject to special rules. Persons considering purchasing interests in Pass Through Certificates should consult their own tax advisors with regard to the application of the United States federal income tax laws to their particular 32 situations as well as any tax consequences arising under the laws of any state, local or foreign jurisdiction. The Pass Through Trusts are not indemnified for any federal income taxes that may be imposed upon them, and the imposition of any such taxes on a Pass Through Trust could result in a reduction in the amounts available for distribution to the Certificateholders of such Pass Through Trust. General The Pass Through Trusts will not themselves be subject to federal income taxation. Each Certificateholder will be required to report on its federal income tax return its pro rata share of the entire income from each of the Equipment Certificates held in the related Pass Through Trust, in accordance with such Certificateholder's method of accounting. A purchaser of an interest in a Pass Through Certificate should be treated as purchasing an interest in each Equipment Certificate held in the related Pass Through Trust at a price determined by allocating the purchase price paid for the Pass Through Certificate among such Equipment Certificates in proportion to their fair market values at the time of purchase of the Pass Through Certificate. Unless otherwise indicated in a prospectus supplement, Federal Express anticipates that when all the Equipment Certificates have been acquired by the related Pass Through Trust the purchase price paid for a Pass Through Certificate of such Pass Through Trust by an original purchaser of such Pass Through Certificate should be allocated among the Equipment Certificates held in such Pass Through Trust in proportion to their respective principal amounts. If an Equipment Certificate held by a Pass Through Trust is prepaid for an amount that differs from a Certificateholder's aggregate adjusted basis in the Equipment Certificate, the Certificateholder will be considered to have sold its pro rata share of that Equipment Certificate, and will recognize any gain or loss equal to the difference between the Certificateholder's adjusted basis and the amount realized from such prepayment (except to the extent attributable to accrued interest, which would be taxable as interest income if not previously included in income). Any such gain or loss will be long-term capital gain or loss if the Equipment Certificate is considered to have been held for more than one year. Net capital gains of individuals are, under certain circumstances, taxed at lower rates than items of ordinary income. In the case of Equipment Certificates, an Owner Participant's conveyance of its interest in an Owner Trust will not constitute a taxable event to the holders of interests in the related Equipment Certificates. However, if Federal Express assumes an Owner Trust's obligations under the related Equipment Certificates upon a purchase of the related Aircraft by Federal Express, or an Owner Trust assumes Federal Express' obligations under the Owned Aircraft Certificates, such assumption would be treated for federal income tax purposes as a taxable exchange of the respective Equipment Certificates resulting in the recognition of taxable gain or loss under the rules discussed above. Immediately following a taxable exchange of Equipment Certificates described in the previous sentence, the Equipment Certificates owned by a Certificateholder will be deemed to be newly issued Equipment Certificates (the "New Equipment Certificates"). For this purpose, the amount realized, as determined under current Treasury regulations on original issue discount, will be equal to a Certificateholder's pro rata share of the New Equipment Certificate's stated principal amount or, in the event the New Equipment Certificates do not bear "adequate stated interest" within the meaning of Section 1274 of the Code, their "imputed principal amount," which is generally the sum of the present values of all payments due under the New Equipment Certificates, discounted from the date of payment to their issue date at the appropriate "applicable federal rate." In addition, and unless de minimis rules apply, if after a taxable exchange the Equipment Certificates do not provide for "adequate stated interest" and the principal amount of the New Equipment Certificates is more than the "imputed principal amount," then the New Equipment Certificates would have "original issue discount" ("OID"). Certificateholders would be required to include the OID attributable to their pro rata share of the New Equipment Certificates in income for federal tax purposes as it accrues, in advance of receiving payment attributable to such income, under a constant yield to maturity method. Sales or Exchanges of Pass Through Certificates A Certificateholder that sells or exchanges a Pass Through Certificate will be considered to have sold its pro rata portion of the property held by the Pass Through Trust, and will recognize gain or loss as described in the preceding paragraph. 33 Effect of Subordination of Subordinated Certificateholders If any Pass Through Trust with respect to a series is subordinated with respect to other Pass Through Trusts of a different series, and receives less than the full amount of the receipts of principal or interest paid with respect to the Equipment Certificates held by it because of the subordination of the Equipment Certificates held by such Pass Through Trust under the Intercreditor Agreement, the corresponding owners of beneficial interests in the Subordinated Certificates could be treated for federal income tax purposes as if they had: o received as distributions their full share of such receipts o paid over to the relevant preferred class of Certificateholders an amount equal to their share of such Shortfall Amount, and o retained the right to reimbursement of such amounts to the extent of future amounts payable to the Subordinated Certificateholders with respect to such Shortfall Amount. Under this analysis: o Subordinated Certificateholders incurring a Shortfall Amount would be required to include as current income any interest or other income of the corresponding Pass Through Trust which is subordinated to other Pass Through Trusts that was a component of the Shortfall Amount, even though such amount was in fact paid to the relevant preferred class of Certificateholders o a loss would only be allowed to such Subordinated Certificateholders when their right to receive reimbursement of such Shortfall Amount became worthless, that is, when it becomes clear that funds will not be available from any source to reimburse such loss, and o reimbursement of such Shortfall Amount prior to such a claim of worthlessness would not be taxable income to Subordinated Certificateholders because such amount was previously included in income. These results should not significantly affect the inclusion of income for Subordinated Certificateholders on the accrual method of accounting, but could accelerate inclusion of income to Subordinated Certificateholders on the cash method of accounting by, in effect, placing them on the accrual method. Backup Withholding Payments made on the Pass Through Certificates, and proceeds from the sale or exchange of the Pass Through Certificates to or through certain brokers, may be subject to a "backup" withholding tax of 31% unless the Certificateholder complies with certain reporting procedures or is an exempt recipient under the Internal Revenue Code. Any such withheld amounts will be allowed as a credit against the Certificateholder's federal income tax and may entitle such Certificateholder to a refund, provided that the required information is furnished to the Internal Revenue Service. UTAH TAXES The summary set forth below is based upon applicable tax statutes, regulations and rules promulgated thereunder, government agency rulings and court decisions published to date, each of which is subject to change. The Pass Through Trustee is a national banking association with its principal corporate trust office in Salt Lake City, Utah. Ray, Quinney & Nebeker, special state tax counsel to the Pass Through Trustee, has advised Federal Express that, in its opinion, under currently applicable Utah laws and assuming the accuracy of the statements with respect to federal income taxes in this prospectus, including the assumption that each Pass Through Trust will not itself be subject to federal income taxation, assuming that the Equipment Certificates will be treated as debt for federal income tax purposes and assuming that the Pass Through Trustee will not hold legal or equitable title to, or 34 lease any real or tangible property located in Utah and will engage in only those activities contemplated in this prospectus, that is, engaging in no activity other than holding the Equipment Certificates, issuing the Pass Through Certificates, distributing the payments thereon and performing other incidental activities: o the Pass Through Trusts will not be subject to any tax, including, without limitation, net or gross income, tangible or intangible property, net worth, capital, franchise or doing business tax, governmental fee or similar charge imposed by the state of Utah or any political subdivision of the state of Utah as a result of the transactions contemplated by the Pass Through Agreement and o Certificateholders who are not residents of, or otherwise subject to tax in or by, the state of 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 similar charge imposed by the state of Utah or any political subdivision of the state of Utah as a result of purchasing, holding, including receiving payments with respect to, or selling a Pass Through Certificate. Neither the Pass Through Trusts nor the Certificateholders will be indemnified for any state or local taxes imposed on them, and the imposition of any such taxes on a Pass Through Trust could result in a reduction in the amounts available for distribution to the Certificateholders of such Pass Through Trust. In general, should a Certificateholder or any Pass Through Trust be subject to any state or local tax which would not be imposed if such Pass Through Trust were administered in a different jurisdiction in the United States or if the Pass Through Trustee were located in a different jurisdiction in the United States, the Pass Through Trustee will either relocate the administration of such Pass Through Trust to such other jurisdiction or resign and, in the event of the Pass Through Trustee's resignation, a new Pass Through Trustee in such other jurisdiction will be appointed. ERISA CONSIDERATIONS Unless otherwise indicated in the prospectus supplement, Pass Through Certificates may not be purchased by, or with the assets of, any employee benefit plan subject to Title I of ERISA, or individual retirement account or plan subject to Section 4975 of the Internal Revenue Code. Some governmental plans and non-electing church plans, however, are not subject to Title I of ERISA or Section 4975 of the Internal Revenue Code and, therefore, may purchase the Pass Through Certificates. PLAN OF DISTRIBUTION The Pass Through Certificates may be sold to or through underwriters, directly to other purchasers or through agents. The distribution of the Pass Through Certificates may be effected from time to time in one or more transactions at a fixed price or prices, which may be changed, or at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. In connection with the sale of Pass Through Certificates, underwriters or agents may receive compensation from Federal Express or from purchasers of Pass Through Certificates for whom they may act as agents in the form of discounts, concessions or commissions. Underwriters may sell Pass Through Certificates to or through dealers, and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters or commissions from the purchasers for whom they may act as agents. Underwriters, dealers and agents that participate in the distribution of Pass Through Certificates may be deemed to be underwriters, and any discounts or commissions received by them from Federal Express and any profit on the resale of Pass Through Certificates by them may be deemed to be underwriting discounts and commissions, under the Securities Act. Any such underwriter or agent will be identified, and any such compensation received from Federal Express will be described, in the prospectus supplement. 35 Offers to purchase Pass Through Certificates may be solicited directly and the sale thereof may be made directly to institutional investors or others, who may be deemed to be underwriters within the meaning of the Securities Act with respect to any resale thereof. The terms of any such sales will be described in the prospectus supplement relating to such sales. Under agreements which may be entered into by Federal Express, underwriters and agents who participate in the distribution of Pass Through Certificates may be entitled to indemnification by Federal Express against certain liabilities, including liabilities under the Securities Act. Unless otherwise indicated in the prospectus supplement, Federal Express does not intend to apply for the listing of any series of Pass Through Certificates on a national securities exchange. If the Pass Through Certificates of any series are sold to or through underwriters, the underwriters may make a market in such Pass Through Certificates, as permitted by applicable laws and regulations. No underwriter would be obligated, however, to make a market in such Pass Through Certificates, and any such market-making could be discontinued at any time at the sole discretion of the underwriters. Accordingly, no assurance can be given as to the liquidity of, or trading markets for, the Pass Through Certificates of any series. Some of the underwriters or agents and their associates may be customers of, engage in transactions with, and perform services for, Federal Express in the ordinary course of business. LEGAL MATTERS Unless otherwise indicated in the prospectus supplement, the legality of the Pass Through Certificates offered hereby will be passed upon for Federal Express by Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017, and by Underwriters' Counsel. Unless otherwise indicated in the prospectus supplement, both Davis Polk & Wardwell and Underwriters' Counsel may rely on the opinion of counsel for the Pass Through Trustee, as to matters relating to the authorization, execution and delivery of the Pass Through Agreement and of each series of Pass Through Certificates by the Pass Through Trustee, and of Karen M. Clayborne, Senior Vice President and General Counsel of Federal Express, as to Federal Express' authorization, execution and delivery of the Pass Through Agreement. At June 1, 2000, Ms. Clayborne owned 13,556 shares of FedEx Corporation's common stock and had been granted options to purchase 53,450 shares of FedEx Corporation's common stock. Of the options granted, 6,250 were vested at such date. EXPERTS The consolidated financial statements and schedule of Federal Express included or incorporated by reference in Federal Express' Annual Report on Form 10-K for the year ended May 31, 1999 and incorporated by reference in this prospectus, have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with respect to the consolidated financial statements and schedule, and are incorporated by reference in this prospectus in reliance upon the authority of Arthur Andersen LLP as experts in giving those reports. With respect to the unaudited interim financial information for the quarters ended August 31, 1999, November 30, 1999 and February 29, 2000, included in Federal Express' Quarterly Reports on Form 10-Q for such periods, which are incorporated by reference in this prospectus, Arthur Andersen LLP has applied limited procedures in accordance with professional standards for a review of such information. However, their separate reports on the unaudited interim financial information state that they did not audit and they do not express an opinion on that interim financial information. Accordingly, the degree of reliance on their reports on that information should be restricted in light of the limited nature of the review procedures applied. In addition, the accountants are not subject to the liability provisions of Section 11 of the Securities Act for their reports on the unaudited interim financial information because those reports are not "reports" or a "part" of the Registration Statement, of which this prospectus is a part, prepared or certified by the accountants within the meaning of Sections 7 and 11 of the Securities Act. 36 GLOSSARY OF TERMS The following is a glossary of terms used in this prospectus. This glossary may contain definitions which are different from definitions used in the prospectus supplement. You should read the prospectus supplement in conjunction with the glossary or other definition of terms contained in the prospectus supplement. "Aircraft" means, collectively, the Owned Aircraft and the Leased Aircraft. "Additional Collateral" means certain additional security which may include, unless otherwise specified in the prospectus supplement, payments to be made by Federal Express or a letter of credit or other facility issued by a bank (within the meaning of Section 3(a)(2) of the Securities Act) whose obligations at the time of the relevant Pass Through Certificate offering carry a credit rating at least as high as Federal Express'. "Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C. et seq.), as amended, or any successor thereto. "Business Day" means any day other than a Saturday, a Sunday or other day on which commercial banks in New York City, Memphis, Tennessee or the city in which the office or agency in the United States is maintained by the Pass Through Trustee for the payment of the Pass Through Certificates are authorized or required by law to close. "Cede" means Cede & Co., as nominee for DTC. "Certificate Account" means a non-interest bearing account for the deposit of Scheduled Payments on the Equipment Certificates held in the related Pass Through Trust. "Certificateholder" means, for any Pass Through Trust, the registered holder of any Pass Through Certificate issued by such Pass Through Trust. "Collateral Account" means an account into which proceeds from the sale of the related Leased Aircraft Certificates will be deposited by the related Owner Trustee for the benefit of the related Indenture Trustee as set forth in this prospectus and the prospectus supplement. "Collateral Agreement" means a collateral agreement between the Owner Trustee and the Indenture Trustee with respect to the related Collateral Account. "Convention" means the Convention on the International Recognition of Rights in Aircraft. "Cut-off Date" means, if applicable to an Aircraft, the date 90 days after the scheduled delivery date for such Aircraft. "DTC" means The Depository Trust Company. "DTC Participants" means the participants of DTC. "Delayed Lease Aircraft" means a Leased Aircraft to which a Pre-Funding Period applies, which term shall be applicable to such Leased Aircraft until commencement of the related Lease. "Deposit Account" means the deposit account established under a Depositary Arrangement. "Depositary Arrangement" means the agreement of a person to pay amounts corresponding to amounts payable on the Leased Aircraft Certificates in respect of any related Pre-Funding Period and the debt portion of the purchase price of the related Aircraft upon delivery thereof. 37 "Distribution Date" means, collectively, the Regular Distribution Date and the Special Distribution Date. "Equipment Certificates" means, collectively, the Owned Aircraft Certificates and the Leased Aircraft Certificates. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "Event of Default" means each of the events designated as an event of default under the Pass Through Agreement with respect to the related Pass Through Trust. "Event of Loss" means, for any Aircraft, each of the events designated as such in the related Lease or the related Owned Aircraft Indenture, as the case may be. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Federal Express" means Federal Express Corporation. "Holders" means the registered holders of the related Equipment Certificates. "Indentures" means, collectively, the Owned Aircraft Indentures and the Leased Aircraft Indentures. "Indenture Event of Default" means, for any Indenture, each of the events designated as an event of default in such Indenture. "Indenture Trustee" means First Security Bank, National Association, or another bank or trust company, in its capacity as indenture trustee under the related Indenture and any successor thereunder. "Intercreditor Agreement" means the agreement among the Pass Through Trustee of each Pass Through Trust, the subordination agent named therein and the Liquidity Provider specified in the prospectus supplement. "Internal Revenue Code" means the United States Internal Revenue Code of 1986, as amended. "Lease" means a lease agreement between the Owner Trustee, as lessor, and Federal Express, as lessee, in each case under which the Owner Trustee leases, or is expected to lease, the related Aircraft to Federal Express. "Lease Event of Default" means, for any Lease, each of the events designated as an event of default in such Lease. "Leased Aircraft" means one or more aircraft specified in a prospectus supplement which has been or will be leased to Federal Express. "Leased Aircraft Certificates" means the equipment trust certificates issued as nonrecourse obligations by the related Owner Trustee, each acting not in its individual capacity but solely as the Owner Trustee of a separate Owner Trust in connection with a separate leveraged lease transaction relating to an Aircraft. "Leased Aircraft Indenture" means a trust indenture and security agreement between the Owner Trustee and the Indenture Trustee relating to a Leased Aircraft. "Lien" means any mortgage, pledge, lien, charge, encumbrance, lease or security interest or other similar interest. "Liquidity Facility" means a liquidity facility issued by the related Liquidity Provider as provided in the prospectus supplement. 38 "Liquidity Provider" means an institution identified in the prospectus supplement which will enter into a Liquidity Facility to support certain payments of interest on the related Equipment Certificates of one or more series or distributions made by the Pass Through Trustee of the related Pass Through Trust as provided in such prospectus supplement. "Owned Aircraft" means one or more aircraft specified in a prospectus supplement that have been or will be purchased and owned by Federal Express. "Owned Aircraft Certificates" means the equipment purchase certificates relating to an Owned Aircraft issued as recourse obligations by Federal Express. "Owned Aircraft Indenture" means a trust indenture and security agreement between Federal Express and the Indenture Trustee relating to an Owned Aircraft. "Owner Participant" means the owner participant named in the related Trust Agreement. "Owner Trust" means a trust created pursuant to a Trust Agreement. "Owner Trustee" means State Street Bank and Trust Company of Connecticut, National Association, or another bank or trust company, not in its individual capacity but solely as owner trustee of an Owner Trust. "Participation Agreement" means a participation agreement among the Indenture Trustee, the Pass Through Trustee, Federal Express, any subordination agent, in the case of a refinancing, each holder of a loan certificate issued under the related Indenture as originally executed, and, in the case of a Leased Aircraft, the related Owner Participant and the related Owner Trustee. "Pass Through Agreement" means the Pass Through Trust Agreement between Federal Express and First Security Bank, National Association, in accordance with which each of the Pass Through Trusts will be formed pursuant to the related Series Supplement. "Pass Through Certificates" means the pass through certificates to be issued by the related Pass Through Trustee pursuant to the Pass Through Agreement and the related Series Supplements and which represent fractional undivided interests in the related Pass Through Trusts. "Pass Through Trust" means the pass through trust to be formed pursuant to the related Series Supplement in accordance with the Pass Through Agreement. "Pass Through Trustee" means First Security Bank, National Association in its capacity as pass through trustee under the Pass Through Agreement, as supplemented by the related Series Supplement, for the related Pass Through Trust, and its successors and assigns thereunder. "Permitted Investments" means: o direct obligations of the United States of America or obligations fully guaranteed by the United States of America, o commercial paper rated A-1/P-1 by Standard & Poor's, a Division of the McGraw-Hill Company, Inc., and Moody's Investors Service, Inc., respectively or, if such ratings are unavailable, rated by any nationally recognized rating organization in the United States equal to the highest rating assigned by such rating organization, o overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, and 39 o overnight repurchase agreements with respect to the securities described in the first bullet point above entered into with an office of a bank or trust company which is located in the United States of America of any bank or trust company which is organized under the laws of the United States or any state thereof and has capital, surplus and undivided profits aggregating at least $500 million. "Pool Balance" means, unless otherwise described in the prospectus supplement, for each Pass Through Trust, as of any date, the aggregate unpaid principal amount of the Equipment Certificates held in such Pass Through Trust on such date plus any amounts in respect of principal on such Equipment Certificates held by the Pass Through Trustee and not yet distributed plus any amounts transferred to Federal Express and deposited in a deposit trust account in connection with a delayed purchase of such Equipment Certificates. "Pool Factors" means, unless otherwise described in the prospectus supplement, for each Pass Through Trust, as of any Distribution Date, the quotient (rounded to the seventh decimal place) computed by dividing the Pool Balance, by the aggregate original principal amount of the Equipment Certificates held in such Pass Through Trust. "Pre-Funding Period" means: o with respect to any Leased Aircraft, the period, if any, commencing on the date of the issuance of the related Pass Through Certificates to but not including the date on which the related Lease commences, and o with respect to any Owned Aircraft, the period, if any, commencing on the date of the issuance of the related Pass Through Certificate to but not including the delivery date of the Owned Aircraft. "Purchase Agreement" means, for any Aircraft, the purchase agreement between the manufacturer and Federal Express, including all exhibits, appendices and letter agreements attached thereto as originally executed or as modified, amended or supplemented in accordance with the terms thereof, but only to the extent that the foregoing relates to that Aircraft and to the extent assigned pursuant to the Purchase Agreement Assignment. "Purchase Agreement Assignment" means, for any Aircraft, the purchase agreement assignment between the related Owner Trustee and Federal Express. "Rating Agency" means a "nationally recognized statistical rating organization," as such term is defined in Rule 436(g)(2) under the Securities Act. "Registration Statement" means a registration statement on Form S-3 (together with all amendments and exhibits). "Regular Distribution Date" means, for each Pass Through Trust, any date specified in the prospectus supplement for distribution of a Scheduled Payment to the related Pass Through Trustee. "Scheduled Payment" means the payment of principal of, and interest on, the Equipment Certificates scheduled to be received by the related Pass Through Trustee on a Regular Distribution Date. "SEC" means the Securities and Exchange Commission of the United States. "Securities Act" means the Securities Act of 1933, as amended. "Series Supplement" means each of the Series Supplements between Federal Express and the Pass Through Trustee, in each case pursuant to which the related Pass Through Trust will be formed in accordance with the Pass Through Agreement and the related Pass Through Certificates will be issued. "Shortfall Amount" means any amount less than the full amount of the receipts of principal or interest paid with respect to the related Equipment Certificates. 40 "Special Distribution Date" means any Business Day on which a Special Payment is to be distributed. "Special Payment" means, for any Pass Through Trust, any payment of principal, any premium or interest, other than a Scheduled Payment, received by the related Pass Through Trustee on any of the Equipment Certificates held in such Pass Through Trust and any proceeds from the sale of any such Equipment Certificates by such Pass Through Trustee. "Special Payments Account" means a non-interest bearing account for the deposit of Special Payments on the Equipment Certificates held in the related Pass Through Trust. "Subordinated Certificateholder" means the corresponding owners of beneficial interests in the Subordinated Certificates. "Subordinated Certificates" means any Pass Through Certificate relating to a Subordinated Trust. "Subordinated Trust" means any Pass Through Trust with respect to a series which is subordinated with respect to other Pass Through Trusts of the same series. "Transportation Code" means Title 49 of the United States Code, as amended. "Trust Agreement" means a trust agreement between the Owner Trustee and the Owner Participant. "Trust Property" means the property held in the related Pass Through Trust. "U.S. Citizen" means a citizen of the United States as defined in Section 40102(a)(15) of the Transportation Code, or any analogous part of any successor or substituted legislation or regulation at the time in effect. "Underwriters' Counsel" means the counsel for any agents, dealers or underwriters. 41 ==================================================== ============================================= No dealer, salesperson or other individual has been authorized to give any information or to make any representations not contained in this prospectus in connection with the offering covered by this $450,000,000 prospectus. If given or made, such information or representation must not be relied upon as having been authorized by Federal Express or the Underwriters. [COMPANY LOGO] This prospectus does not constitute an offer to sell, or the solicitation of an offer to buy, the Pass Through Certificates in any jurisdiction where, or to any person to whom, it is unlawful to make such offer or solicitation. Neither the delivery of this prospectus nor any sale made hereunder shall, under any circumstances, create an implication that there has not been any change in the facts set forth in this prospectus or in the affairs of Federal Express since the date of this Pass Through Certificates prospectus. ------------------------------------ --------------------- PROSPECTUS TABLE OF CONTENTS ------------------------------------ Page ---- About This Prospectus.............................2 Where You Can Find More Information...............2 Reports to Pass Through Certificateholders........3 Federal Express Corporation.......................3 Ratio of Earnings to Fixed Charges................3 Risk Factors......................................4 Outline of Pass Through Trust Structure...........6 Use of Proceeds...................................7 Diagram of Payments...............................7 Description of the Pass Through Certificates......9 June__, 2000 Description of the Equipment Certificates........24 Federal Income Tax Consequences..................32 Utah Taxes.......................................34 ERISA Considerations.............................35 Plan of Distribution.............................35 Legal Matters....................................36 Experts..........................................36 Glossary of Terms................................37 ==================================================== =============================================
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. SUBJECT TO COMPLETION PRELIMINARY PROSPECTUS DATED JUNE 9, 2000 PROSPECTUS $450,000,000 [COMPANY LOGO] DEBT SECURITIES ----------------------- We may offer and sell from time to time up to $450,000,000 aggregate initial public offering price of our debt securities. The debt securities: o will be offered in one or more series o will be unsecured obligations of Federal Express o will rank equally with all other unsecured and unsubordinated indebtedness of Federal Express, and o will be payable at the times, in the amounts and on the terms specified in a prospectus supplement. There was no public market for the debt securities of any series before their issuance and there is no assurance that one will develop or continue. We do not intend to apply for the listing of any series of debt securities on a national securities exchange, unless otherwise indicated in the prospectus supplement. This prospectus will be accompanied by a prospectus supplement which will describe the specific terms of the particular series of debt securities being sold and the Indenture relating to the debt securities. Sales of the debt securities may not be consummated without both this prospectus and the prospectus supplement. Investing in the debt securities involves risks. See the "Risk Factors" section beginning on page 3 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is June __, 2000. ABOUT THIS PROSPECTUS This prospectus is part of a Registration Statement on Form S-3 that we filed with the SEC utilizing a "shelf" registration process. Under this shelf process, we may sell the debt securities described in this prospectus in one or more offerings. This prospectus provides you with a general description of the debt securities we may offer. Each time we sell debt securities, we will provide a prospectus supplement that will contain specific information about the terms of that offering. The prospectus supplement may also add, update or change information contained in this prospectus. You should read carefully both this prospectus and any prospectus supplement, together with the additional information described below under "Where You Can Find More Information." You should also refer to the "Glossary of Terms" at the back of this prospectus and in any prospectus supplement for definitions of specialized terms that we are using in this prospectus and any prospectus supplement. This prospectus does not contain all the information provided in the Registration Statement that we filed with the SEC. For further information about Federal Express or the debt securities, you should refer to that Registration Statement. Statements contained in this prospectus or in any prospectus supplement as to the contents of any contract or other document are not necessarily complete, and you should review the full text of those contracts and other documents. The Registration Statement that we filed with the SEC relating to the debt securities can be obtained from the SEC as described below under "Where You Can Find More Information." WHERE YOU CAN FIND MORE INFORMATION We file annual, quarterly and special reports with the SEC. These SEC filings are available to the public over the Internet at the SEC's web site at http://www.sec.gov. You may also read and copy any such document we file at the SEC's public reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549, and in New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms and copy charges. The SEC allows us to "incorporate by reference" the information we file with it, which means: o we can disclose important information to you by referring you to those documents o information incorporated by reference is considered to be part of this prospectus, even though it is not repeated in this prospectus or in any prospectus supplement, and o information that we file with the SEC will automatically update and supersede this prospectus and any prospectus supplement. We incorporate by reference the documents listed below and any future filings made with the SEC under Section 13(a), 13(c), 14, or 15(d) of the Exchange Act after the date of the filing of this Registration Statement and prior to its effectiveness, and until we complete our offering of debt securities: o Annual Report on Form 10-K for the fiscal year ended May 31, 1999, filed August 27, 1999, and o Quarterly Reports on Form 10-Q for the fiscal quarters ended August 31, 1999, November 30, 1999 and February 29, 2000, filed October 13, 1999, January 14, 2000 and April 13, 2000, respectively. You may obtain a copy of these filings, other than their exhibits, unless those exhibits are specifically incorporated by reference in the filings, at no cost by writing or telephoning us at the following address: James H. Clippard Investor Relations 2 FedEx Corporation 942 South Shady Grove Road Memphis, Tennessee 38120 (901) 818-7200 You should rely only on the information incorporated by reference or provided in this prospectus or any prospectus supplement. We have not authorized anyone else to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to sell any debt securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information in this prospectus or any prospectus supplement is accurate as of any date other than the date on the front page of those documents. Also, you should not assume that there has been no change in the affairs of Federal Express since the date of this prospectus or any prospectus supplement. FEDERAL EXPRESS CORPORATION Federal Express is a wholly-owned subsidiary of FedEx Corporation. Federal Express offers a wide range of express services for the time-definite transportation of documents, packages and freight throughout the world using an extensive fleet of aircraft and vehicles and leading-edge information technologies. The corporate headquarters of Federal Express are located at 2005 Corporate Avenue, Memphis, Tennessee 38132, telephone (901) 369-3600. RATIO OF EARNINGS TO FIXED CHARGES (Unaudited) Year Ended May 31, Nine Months Ended -------------------------------- ------------------------- February 28, February 29, 1995 1996 1997 1998 1999 1999 2000 ---- ---- ---- ---- ---- ------------ ------------ Ratio of Earnings to Fixed Charges.... 2.0x 1.9x 2.0x 2.1x 2.1x 1.9x 2.0x ------------------------------------------------ Earnings included in the calculation of the ratio of earnings to fixed charges represent income before income taxes plus fixed charges, other than capitalized interest. Fixed charges include interest expense, capitalized interest, amortization of debt issuance costs and a portion of rent expense representative of interest. As a result of an offering of debt securities, Federal Express may be more highly leveraged than currently reflected in this table. RISK FACTORS You should consider carefully the risk factors described below before you invest. You should read the information below together with the other information in this prospectus and the accompanying prospectus supplement. Federal Express' business is subject to risks and uncertainties The operations and financial condition of Federal Express are subject to risks and uncertainties, including: o economic conditions in the markets in which Federal Express operates affecting demand for Federal Express' services o competition from other providers of express services with new or improved services o changes in customer demand patterns 3 o increases in aviation and motor fuel prices o strikes, work stoppages and slowdowns by Federal Express' employees o Federal Express' ability to match aircraft, vehicle and sort capacity with customer volume levels o Federal Express' ability to obtain aviation rights in important international markets o contributions to financial results from the sale of engine noise reduction kits o changes in government regulation, weather and technological change, and o availability of financing on terms acceptable to Federal Express. Proposed new OSHA regulations could have a material adverse effect on our business On November 22, 1999, the U.S. Occupational Safety and Health Administration, or OSHA, proposed regulations to mandate an ergonomics standard that could require many businesses, including Federal Express, to make significant changes in the workplace in order to reduce the incidence of musculoskeletal disorders such as lower back pain. The proposal does not specify which workplace changes would be required in order to comply with the proposed new regulations. We, our competitors and other affected parties have submitted comments to OSHA challenging the economic and technical feasibility of the proposed regulations. In April 2000, OSHA completed public hearings on the proposed regulations and is expected to release final rules later this year. If OSHA adopts the proposed regulations and applies them in the same way as it attempted unsuccessfully in the past to impose ergonomic measures under its general authority, we would be required to make extensive changes to the layout of our sorting facilities and hire a significant number of additional employees. We believe that the cost of compliance would be substantial and have a material adverse effect on our business. We expect that our competitors, along with the rest of the American industry, would also incur substantial compliance costs. The indenture does not limit the amount of debt we may incur or protect against a highly leveraged transaction involving us The Indenture does not limit the amount of secured or unsecured indebtedness which we or our subsidiaries may incur. The Indenture does not contain any debt covenants or provisions which would give protection to the holders of the debt securities in the event of a highly leveraged transaction. Other indebtedness of Federal Express ranking equally with the debt securities have covenants that would give privileges to holders of such indebtedness in the event of a change of control of Federal Express. Rating agencies may change their rating on our debt securities at any time The debt securities are expected to be assigned an "investment grade" rating by one or more Rating Agencies. The prospectus supplement will indicate the rating assigned to the debt securities being sold. A rating is not a recommendation to purchase, hold or sell debt securities because a rating does not address market price or suitability for a particular investor. We cannot assure you that a rating will remain for any given period of time or that a rating will not be lowered or withdrawn entirely by a Rating Agency if in its judgment circumstances in the future so warrant. The rating of the debt securities will be based primarily on the default risk of the debt securities and is expected to address the likelihood of timely payment of interest when due on the debt securities and the ultimate payment of principal of the debt securities on the final maturity date. The reduction, suspension or withdrawal of the ratings of the debt securities will not, in and of itself, constitute an Event of Default, unless we otherwise specify in a prospectus supplement. 4 A public market for the debt securities may not develop or continue There was no public market for the debt securities of any series before their issuance and we cannot assure you that one will develop or continue. Federal Express does not intend to apply for the listing of any debt securities on a national securities exchange, unless we otherwise indicate in a prospectus supplement. If an active public market does not develop or continue, the market price and liquidity of the debt securities may be adversely affected. USE OF PROCEEDS We intend to use the net proceeds from the sale of debt securities for our general corporate purposes. If we decide to use the net proceeds from a particular offering of debt securities for a specific purpose, we will describe that in a prospectus supplement. DESCRIPTION OF DEBT SECURITIES The following is a summary description of the material terms of the Indenture and the debt securities. When we offer to sell a particular series of debt securities, we will describe the specific terms of the Indenture and the debt securities in a prospectus supplement. The form of Indenture, which includes the form of debt securities, has been filed as an exhibit to the Registration Statement of which this prospectus is a part. You should read the Indenture and the form of debt securities for provisions that may be important to you. In the following description, we have included references to section numbers of the Indenture so that you can easily locate those provisions. Terms; Form and Denomination The debt securities are to be issued under an Indenture. The Indenture does not limit the aggregate amount of debt securities which may be issued under the Indenture and provides that debt securities may be issued under the Indenture in one or more series. The debt securities will be unsecured obligations of Federal Express and will rank equally with all other unsecured and unsubordinated indebtedness of Federal Express. The Indenture does not contain any debt covenants or provisions which would give protection to the holders of the debt securities in the event of a highly leveraged transaction. Other indebtedness of Federal Express ranking equally with the debt securities have covenants that would give privileges to the holders of such indebtedness in the event of a change in control of Federal Express. A prospectus supplement will include some or all of the following terms: o the title of the debt securities and the series in which the debt securities will be included o the authorized denominations and aggregate principal amount of the debt securities o whether the debt securities are to be issuable in global or certificated form o the date or dates on which the debt securities will mature o the rate or rates, which may be fixed or variable, per annum at which the debt securities will bear interest, if any, and if such rate is variable, the manner of calculation of interest and the date from which interest will accrue 5 o the place or places where the principal of and any premium and interest on the debt securities will be payable o the dates on which the interest will be payable and the corresponding record dates o any mandatory or optional sinking fund or purchase fund or analogous provisions o the terms and conditions of any redemption of the debt securities and any redemption price o the portion of the principal amount of the debt securities payable upon declaration of acceleration of the Maturity of the debt securities pursuant to Section 502 of the Indenture o any provision for the defeasance of the debt securities o if the series is denominated other than in United States dollars, the currency in which the debt securities will be denominated and the currency in which the principal and any premium and interest on the debt securities will be payable, which may be United States dollars based upon the exchange rate for the other currency unit existing on or about the time a payment is due o whether Additional Amounts are payable on any debt securities o any additional Events of Default or covenants applicable to the series, and o any other terms of the series which are not inconsistent with the Indenture. (Indenture, Section 301). Unless we otherwise indicate in a prospectus supplement, all outstanding debt securities will be exchangeable and transfers of debt securities will be registrable, and principal of and any premium and interest on all debt securities will be payable, at the corporate trust office of the Trustee at Bank One Trust Company, National Association, Global Corporate Trust Services, 1 Bank One Plaza, Suite IL1-0126, Chicago, Illinois 60670-0126; provided that payment of interest may, at our option, be made by check mailed to the address of the person entitled to such payment as it appears in the Security Register or by transfer to an account maintained by the payee with a bank located in the United States. (Indenture, Sections 301, 307 and 1002) Unless we otherwise indicate in a prospectus supplement, all debt securities will be issued only in fully registered form without coupons in denominations of $1,000 and any integral multiples of $1,000. We will not impose any service charge for any transfer or exchange of a debt security; however, we may ask you to pay any taxes or other governmental charges in connection with a transfer or exchange of debt securities. (Indenture, Section 305) We may issue the debt securities in permanent global form. (Indenture, Section 203) See "Permanent Global Securities." The Indenture does not limit the amount of secured or unsecured indebtedness which we may incur. We may issue some of the debt securities at a substantial discount below their stated principal amount because they bear no interest or bear interest at below market rates. We will describe the United States federal income tax consequences and any other special considerations relating to an investment in discount securities in the prospectus supplement. Book-Entry Procedures Unless debt securities in certificated form are issued, each series of debt securities will be represented by one or more fully registered global certificates. Each global note will be deposited with, or on behalf of, DTC, and registered in its name or in the name of Cede, its nominee. No holder of a debt security initially issued as a global certificate will be entitled to receive a note in certificated form, except as set forth below. 6 DTC has advised us as follows: o DTC is: - a limited purpose trust company organized under the laws of the State of New York - a member of the Federal Reserve System - a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and - a "clearing agency" registered pursuant to Section 17A of the Securities Exchange Act o DTC was created to hold securities for DTC Participants and to facilitate the clearance and settlement of securities transactions between DTC Participants through electronic book-entries, thereby eliminating the need for physical movement of certificates. o DTC Participants include securities brokers and dealers, banks, trust companies and clearing corporations. o Access to DTC's book-entry system is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly. Holders that are not DTC Participants but desire to purchase, sell or otherwise transfer ownership of, or other interests in, debt securities may do so only through DTC Participants. In addition, Holders will receive all distributions of principal and interest from the Trustee through the DTC Participants. Under the rules, regulations and procedures creating and affecting DTC and its operation, DTC is required to make book-entry transfers of debt securities among DTC Participants on whose behalf it acts and to receive and transmit distributions of principal of, and interest on, the debt securities. Under the book-entry system, Holders may experience some delay in receipt of payments, since such payments will be forwarded by the Trustee to Cede, as nominee for DTC, and DTC in turn will forward the payments to the appropriate DTC Participants. The DTC Participants will be responsible for distributions to Holders and those distributions will be made in accordance with customary industry practices. Although Holders will not have possession of the debt securities, the rules of DTC provide a mechanism by which those Holders will receive payments and will be able to transfer their interests. Although the DTC Participants are expected to convey the rights represented by their interests in any global security to the related Holders, because DTC can only act on behalf of DTC Participants, the ability of Holders to pledge debt securities to persons or entities that are not DTC Participants or to otherwise act with respect to such debt securities, may be limited due to the lack of physical certificates for such debt securities. Neither Federal Express nor the Trustee nor any agent of either of them will be responsible or liable for any aspect of the records relating to, or payments made on account of, beneficial ownership interests in the debt securities or for supervising or reviewing any records relating to such beneficial ownership interests. Since the only "Holder", for purposes of the Indenture, will be Cede, as nominee of DTC, Holders will not be recognized by the Trustee as "Holders", and Holders will be permitted to exercise the rights of "Holders" only indirectly through DTC and DTC Participants. DTC has advised us that it will take any action permitted to be taken by a Holder under the Indenture and any prospectus supplement only at the direction of one or more DTC Participants to whose accounts with DTC the related debt securities are credited. Same-Day Settlement and Payment. All payments we make to the Trustee will be in immediately available funds and will be passed through to DTC in immediately available funds. The debt securities will trade in DTC's Same-Day Funds Settlement System until maturity, and secondary market trading activity in the debt securities will be required by DTC to settle in immediately available funds. 7 Certificated Form. We will issue physical certificates to holders of a global security, or their nominees, if: o DTC advises the Trustee in writing that it is no longer willing, able or eligible to discharge properly its responsibilities as depository and we are unable to locate a qualified successor or o We decide in our sole discretion to terminate the book-entry system through DTC. In such event, the Trustee will notify all Holders through DTC Participants of the availability of such certificated debt securities. Upon surrender by DTC of the definitive global note representing the series of debt securities and receipt of instructions for reregistration, the Trustee will reissue the debt securities in certificated form to Holders or their nominees. (Indenture, Section 305) Debt securities in certificated form will be freely transferable and exchangeable at the office of the Trustee upon compliance with the requirements set forth in the Indenture. There will be no service charge imposed for any registration of transfer or exchange, but payment of a sum sufficient to cover any tax or other governmental charge may be required. (Indenture, Section 305) Merger and Consolidation We have agreed not to consolidate or merge with or into any other person or convey or transfer substantially all of our properties and assets as an entirety, to any person, unless: o the successor is a corporation organized and existing under the laws of the United States of America, any State or the District of Columbia and expressly assumes, by a supplemental indenture, the due and punctual payment of the principal of and any premium and interest on and any Additional Amounts with respect to all the debt securities and the performance of every covenant of the Indenture that we would otherwise have to perform o immediately after giving effect to the merger, there will not be any defaults under the Indenture, and o we have delivered to the Trustee an Officers' Certificate or an Opinion of Counsel, each stating that the merger and the supplemental indenture comply with the Indenture. (Indenture, Section 801) We would be relieved of our obligations and covenants under the Indenture and the debt securities when the successor has complied with the provisions indicated above. (Indenture, Section 802) Modification, Amendment and Waiver Federal Express and the Trustee may modify and amend the Indenture with the consent of the Holders of a majority in principal amount of each series of debt securities to be affected if less than all series are to be affected by such modification. However, no modification or amendment may, without the consent of the Holder of each debt security affected thereby: o change the Stated Maturity of the principal of, or any installment of interest on, any debt security o reduce the principal amount of, rate of interest on, or premium payable upon the redemption of, any debt security o change any place of payment where, or the currency in which, any debt security or the interest or any premium is payable o impair the right to institute suit for the enforcement of any payment on or with respect to any debt security on or after the Stated Maturity, or, in the case of redemption, on or after the Redemption Date, or 8 o reduce the percentage in principal amount of outstanding debt securities the consent of whose Holders is required for modification or amendment of the Indenture, for waiver of compliance with some provisions of the Indenture or for waiver of some defaults. (Indenture Section 902) The Holders of a majority in principal amount of the outstanding debt securities of any series may on behalf of the Holders of all debt securities of such series waive any past default under the Indenture and its consequences, except a default in the payment of the principal, premium, if any, or interest on any debt securities or in respect of a covenant or provision which under the Indenture cannot be modified or amended without the consent of the Holder of each outstanding debt security affected. (Indenture, Section 513) Events of Default When we use the term "Event of Default" in the Indenture, here are some examples of what we mean. Unless we indicate otherwise in a prospectus supplement, an Event of Default with respect to a series of debt securities occurs if: o we fail to pay interest when due on any debt security of that series for 30 days o we fail to pay the principal or any premium on any debt security of that series when due o we fail to perform any covenant in the Indenture and this failure continues for 60 days after we receive written notice as provided in the Indenture o we fail to deposit any sinking fund payment when and as due by the terms of a debt security of that series, or o we or a court take certain actions relating to the bankruptcy, insolvency or reorganization of our company for the benefit of our creditors (Indenture, Section 5.01) If an Event of Default with respect to all debt securities of any series occurs and continues, the Trustee or the Holders of not less than 50% in aggregate principal amount of the outstanding debt securities of that series may, by a notice in writing to us (and to the Trustee if given by the Holders), declare to be due and payable immediately the principal amount of all debt securities of that series. The Holders of a majority in principal amount of the outstanding debt securities of that series may rescind and annul such acceleration if all Events of Default with respect to the debt securities of that series, other than the nonpayment of accelerated principal, have been cured or waived as provided in the Indenture. (Indenture, Section 502) For information as to waiver of defaults, see "Modification and Waiver." Other than its duties in case of default, the Trustee is not obligated to exercise any of its rights or powers under the Indenture at the request or direction of any of the Holders of the debt securities of that series, unless the Holders offer to the Trustee reasonable indemnity. (Indenture, Sections 601 and 603) If they provide this reasonable indemnity, the Holders of a majority in principal amount of the outstanding debt securities of that series will have the right, subject to certain limitations, to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee with respect to the debt securities of that series. (Indenture, Section 512) No Holder of any debt security of any series will have any right to institute any proceeding with respect to the Indenture or for any remedy under the Indenture unless: o the Holder has previously given to the Trustee written notice of a continuing Event of Default o the Holders of at least 50% in principal amount of the outstanding debt securities of that series have made written request, and offered reasonable indemnity, to the Trustee to institute a proceeding as trustee, and 9 o the Trustee has not received from the Holders of a majority in principal amount of the outstanding debt securities of that series a direction inconsistent with the request and the Trustee has failed to institute a proceeding within 60 days. (Indenture, Section 507) However, the Holder of any debt security will have an absolute right to receive payment of the principal of and any premium and interest on the debt security on the dates expressed in the debt security, or, in the case of redemption, on the Redemption Date, and to institute suit for the enforcement of any such payment. (Indenture, Section 508) We are required to furnish to the Trustee annually a statement as to the absence of defaults under the Indenture. (Indenture, Section 1005) The Trustee may withhold notice to the Holders of debt securities of any default, except as to payment of principal or interest with respect to such debt securities, if it considers such withholding to be in the interest of the Holders of the debt securities. (Indenture, Section 602) Defeasance and Covenant Defeasance When we use the term defeasance, we mean discharge from some or all of our obligations under the Indenture. If we deposit with the Trustee sufficient cash or Government Obligations to pay the principal, interest, any premium and any mandatory sinking fund or analogous payments due to the Stated Maturity or a redemption date of the debt securities of a particular series, then at our option: o we will be discharged from our obligations with respect to the debt securities of that series, or o we will no longer be under any obligation to comply with certain restrictive covenants under the Indenture, and certain Events of Default will no longer apply to us. If this happens, the holders of the debt securities of the affected series will not be entitled to the benefits of the Indenture except for registration of transfer and exchange of debt securities and replacement of lost, stolen or mutilated debt securities. Those holders may look only to such deposited funds or obligations for payment. We must deliver to the Trustee an Opinion of Counsel to the effect that the deposit and related defeasance would not cause the holders of the debt securities to recognize income, gain or loss for Federal income tax purposes. We must also deliver a ruling to such effect received from or published by the United States Internal Revenue Service if we are discharged from our obligations with respect to the debt securities. Concerning the Trustee The Trustee acts as trustee under other indentures with respect to other indebtedness of Federal Express which ranks equally with the debt securities. We lease facilities financed with the proceeds of such indebtedness and our obligations under the leases secure payment of such indebtedness. We also from time to time borrow from, and maintain deposit accounts with, the Trustee. PLAN OF DISTRIBUTION We may sell the debt securities through underwriters or dealers, agents or directly to one or more purchasers, through a specific bidding or auction process or otherwise. We may distribute the debt securities from time to time in one or more transactions either: o at a fixed price or prices, which may be changed o at market prices prevailing at the time of sale 10 o at prices related to such prevailing market prices, and o at negotiated prices. In connection with the sale of debt securities, underwriters or agents may receive compensation from us or from purchasers of debt securities for whom they may act as agents in the form of discounts, concessions or commissions. Underwriters may sell debt securities to or through dealers, and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters or commissions from the purchasers for whom they may act as agents. If a dealer is utilized to sell the debt securities, we will sell the debt securities to the dealer as principal. The dealer may then resell the debt securities to the public at varying prices to be determined by the dealer at any time of resale. Underwriters, dealers and agents that participate in the distribution of debt securities may be deemed to be underwriters, and any discounts or commissions received by them from us and any profit on the resale of debt securities by them may be deemed to be underwriting discounts and commissions, under the Securities Act. We will identify any underwriters, dealers or agents, and describe their compensation, in a prospectus supplement. We may solicit offers to purchase our debt securities, and we may directly sell our debt securities to institutional investors or others, who may be deemed to be underwriters within the meaning of the Securities Act with respect to any resale thereof. We will describe the terms of our direct sales in a prospectus supplement. We may authorize underwriters, dealers or agents to solicit offers by specified institutions to purchase debt securities from us at the public offering price set forth in the prospectus supplement pursuant to delayed delivery contracts providing for payment and delivery on a specified date in the future. If we use delayed delivery contracts, they will be subject only to those conditions set forth in the prospectus supplement and the prospectus supplement will indicate the commission payable for the solicitation of these contracts. We may indemnify underwriters, dealers and agents who participate in the distribution of debt securities against certain liabilities, including liabilities under the Securities Act. Unless we otherwise indicate in a prospectus supplement, we do not intend to apply for the listing of any series of debt securities on a national securities exchange. If the debt securities of any series are sold to or through underwriters, the underwriters may make a market in such debt securities, as permitted by applicable laws and regulations. No underwriter would be obligated, however, to make a market in such debt securities, and any such market-making could be discontinued at any time at the sole discretion of the underwriters. Accordingly, we cannot assure you as to the liquidity of, or trading markets for, the debt securities of any series. Underwriters, dealers or agents and their associates may be customers of, engage in transactions with, and perform services for, us in the ordinary course of business. LEGAL MATTERS Karen M. Clayborne, Senior Vice President and General Counsel of Federal Express, will issue an opinion about the legality of our debt securities. At June 1, 2000, Ms. Clayborne owned 13,556 shares of FedEx Corporation's common stock and had been granted options to purchase 53,450 shares of FedEx Corporation's common stock. Of the options granted, 6,250 were vested at such date. Any underwriters, dealers or agents will be advised about other issues relating to any offering by their own legal counsel. 11 EXPERTS The consolidated financial statements and schedule of Federal Express included or incorporated by reference in Federal Express' Annual Report on Form 10-K for the year ended May 31, 1999 and incorporated by reference in this prospectus, have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with respect to the consolidated financial statements and schedule, and are incorporated by reference in this prospectus in reliance upon the authority of Arthur Andersen LLP as experts in giving those reports. With respect to the unaudited interim financial information for the quarters ended August 31, 1999, November 30, 1999 and February 29, 2000, included in Federal Express' Quarterly Reports on Form 10-Q for such periods, which are incorporated by reference in this prospectus, Arthur Andersen LLP has applied limited procedures in accordance with professional standards for a review of such information. However, their separate reports on the unaudited interim financial information state that they did not audit and they do not express an opinion on that interim financial information. Accordingly, the degree of reliance on their reports on that information should be restricted in light of the limited nature of the review procedures applied. In addition, the accountants are not subject to the liability provisions of Section 11 of the Securities Act for their reports on the unaudited interim financial information because those reports are not "reports" or a "part" of the Registration Statement, of which this prospectus is a part, prepared or certified by the accountants within the meaning of Sections 7 and 11 of the Securities Act. 12 GLOSSARY OF TERMS The following is a glossary of terms used in this prospectus. The glossary may contain definitions which are different from definitions used in the prospectus supplement. You should read the prospectus supplement in conjunction with the glossary or other definition of terms contained in the prospectus supplement. "Additional Amounts" means any additional amounts which are required by any debt security or related Indenture, under circumstances specified in the debt security or related Indenture, to be paid by us in respect of taxes, assessments or other governmental charges imposed on Holders specified in the debt security or related Indenture and which are owing to such Holders. "Cede" means Cede & Co., as nominee for DTC. "Commission" means the Securities and Exchange Commission of the United States. "DTC" means The Depository Trust Company. "DTC Participants" means the participants of DTC. "Debt securities" means unsecured debt securities (or their equivalent in foreign currency) relating to this prospectus and the applicable prospectus supplement. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Event of Default" means each of the events designated as an event of default in the related Indenture. "Federal Express" means Federal Express Corporation. "Foreign Currency" means any currency, currency unit or composite currency issued by the government of one or more countries other than the United States or by any recognized confederation or association of such governments. "Government Obligations" means securities which are: o direct obligations of the United States of America or such other government or governments which issued the Foreign Currency in which the principal of or any premium or interest on any debt security or any Additional Amounts will be payable, in each case where the payment or payments under any debt security or Additional Amounts are supported by the full faith and credit of such government or governments o obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America or such other government or governments, in each case where the payment or payments under any debt security or Additional Amounts are unconditionally guaranteed as a full faith and credit obligation by the United States of America or such other government or governments, which, in either case, are not callable or redeemable at the option of their issuer, and will also include a depository receipt issued by a bank as custodian with respect to any Government Obligation or a specific payment of principal of or interest on any Government Obligation held by such custodian for the account of the holder of a depository receipt provided that, except as required by law, such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect to the Government Obligation or the specific payment of principal of or interest on the Government Obligation evidenced by such depository receipt. "Holder" means a Person in whose name a debt security is registered in the Security Register. 13 "Indenture" means an indenture agreement between the Trustee and Federal Express with respect to the related debt securities. "Maturity," with respect to any debt security, means the date on which the principal of such debt security, or an installment of principal, becomes due and payable, whether at the Stated Maturity or by declaration of acceleration, notice of redemption or repurchase or otherwise and includes the Redemption Date. "Offered Debt Securities" means a particular series or issue of debt securities which is offered pursuant to this prospectus and the applicable prospectus supplement. "Officer's Certificate" means a certificate signed by the Chairman of the Board, the President or any Vice President, and attested by the Secretary or any Assistant Secretary of Federal Express, and delivered to the Trustee. "Opinion of Counsel" means a written opinion of counsel, who may be an employee of or of counsel to Federal Express, or other counsel reasonably satisfactory to the Trustee. "Person" means any individual, sole proprietorship, partnership, joint venture, joint stock company, trust, unincorporated organization, association, corporation, institution, entity or government (federal, state, local, foreign or any agency, instrumentality, division or body thereof). "Rating Agency" means a "nationally recognized statistical rating organization", as such term is defined in Rule 436(g)(2) under the Securities Act. "Redemption Date," with respect to any debt security or portion of any debt security to be redeemed, means the date fixed for such redemption by or pursuant to the Indenture or the debt security. "Registration Statement" means a registration statement on Form S-3 (together with all amendments and exhibits). "Securities Act" means the Securities Act of 1933, as amended. "Security Register" means a register in which, subject to such reasonable regulations as it may prescribe, we will provide for the registration of debt securities and of transfers of debt securities. "Stated Maturity" means, with respect to any debt security or any installment of principal or interest or any Additional Amounts, the date established by or pursuant to the Indenture or such debt security as the fixed date on which the principal of such debt security or such installment of principal or interest is, or such Additional Amounts are, due and payable. "Trustee" means Bank One Trust Company, National Association (as successor-in-interest to The First National Bank of Chicago), as trustee under the related Indenture. 14 ==================================================== ================================================== No dealer, salesperson or other individual has been authorized to give any information or to make any representations not contained in this prospectus in connection with the offering covered by this $450,000,000 prospectus. If given or made, such information or representation must not be relied upon as having been authorized by Federal Express or the [COMPANY LOGO] Underwriters. This prospectus does not constitute an offer to sell, or the solicitation of an offer to buy, the Securities in any jurisdiction where, or to any person to whom, it is unlawful to make such offer or solicitation. Neither the delivery of this prospectus nor any sale made hereunder shall, under any circumstances, create an implication that there has not been any change in the facts set forth in this prospectus or in the affairs of Federal Express since the date of this prospectus. Debt Securities the date of this prospectus. ------------------------------------ ---------------------- PROSPECTUS TABLE OF CONTENTS ------------------------------------ Page ---- About this Prospectus.............................2 Where You Can Find More Information...............2 Federal Express Corporation.......................3 Ratio of Earnings to Fixed Charges................3 Risk Factors......................................3 Use of Proceeds...................................5 Description of Debt Securities....................5 Plan of Distribution.............................10 Legal Matters....................................11 June __, 2000 Experts..........................................12 Glossary of Terms................................13 ==================================================== ===================================================
PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution The following are the estimated expenses of the issuance and distribution of the securities (other than underwriting discounts and commissions) being registered, all of which will be paid by the Registrant: SEC Registration Fee................................................ $100,511 Printing and Engraving.............................................. 25,000 Fees of Transfer Agent and Registrar................................ 10,000 Attorneys' Fees and Expenses........................................ 500,000 Trustees' Fees...................................................... 20,000 Accounting Fees and Expenses........................................ 20,000 Blue Sky Fees and Expenses.......................................... 5,000 Rating Agency Fees.................................................. 125,000 Miscellaneous....................................................... 5,000 -------- Total............................................................ $810,511 ======== All of the above amounts, other than the SEC Registration Fee, are estimated. Item 15. Indemnification of Directors and Officers (a) Reference is made to Section 145 of the Delaware General Corporation Law ("DGCL") as to indemnification by the Registrant of officers and directors. (b) Section 13 of Article III of the by-laws of the Registrant provides for indemnification of directors as follows: Section 13. The corporation shall indemnify to the full extent authorized or permitted by the General Corporation Law of the State of Delaware any person made, or threatened to be made, a party to any threatened, pending or completed action, suit or proceeding (whether civil, criminal, administrative or investigative) by reason of the fact that he, his testator or intestate is or was a director of the corporation or serves or served as a director, officer, employee or agent of any other enterprise at the request of the corporation. Section 18 of Article V of the by-laws of the Registrant provides for indemnification of officers as follows: Section 18. The corporation shall indemnify to the full extent authorized or permitted by the General Corporation Law of the State of Delaware any person made, or threatened to be made, a party to any threatened, pending or completed action, suit or proceeding (whether civil, criminal, administrative or investigative) by reason of the fact that he, his testator or intestate is or was an officer or Managing Director of the corporation or serves or served as a director, officer, employee or agent of any other enterprise at the request of the corporation. (c) The Underwriting Agreements filed as Exhibits 1(a), 1(b) and 1(c) to this Registration Statement provide, under certain circumstances, for indemnification for the Registrant and certain other persons against certain liabilities. (d) The Registrant has purchased insurance designed to protect the Registrant and its directors and officers against losses arising from certain claims, including claims under the Securities Act of 1933, as amended. II-1 Item 16. Exhibits 1(a) Form of Underwriting Agreement relating to Equipment Trust Certificates (Filed as Exhibit 1(a) to Registrant's Registration Statement on Form S-3, Commission File No. 33-52142, and incorporated herein by reference, except that reference in such Exhibit to such File Number shall be left blank) 1(b) Form of Underwriting Agreement relating to Pass Through Certificates (Filed as Exhibit 1(b) to Registrant's Registration Statement on Form S-3, Commission File No. 333-07691, and incorporated herein by reference) 1(c) Form of Underwriting Agreement relating to Debt Securities (Filed as Exhibit 1(c) to Registrant's Registration Statement on Form S-3, Commission File No. 333-07691, and incorporated herein by reference) 4(a)(1) Form of Pass Through Trust Agreement between Federal Express Corporation and First Security Bank, National Association 4(a)(2) Form of Pass Through Certificate (included in Exhibit 4(a)(1)) 4(b)(1) Form of Trust Indenture and Security Agreement among the Owner Trustee, the Indenture Trustee and Federal Express Corporation, as Lessee, for an offering of Equipment Trust Certificates (Filed as Exhibit 4(b)(1) to Registrant's Registration Statement on Form S-3, Commission File No. 33-52142, and incorporated herein by reference) 4(b)(2) Form of Equipment Trust Certificate (included in Exhibit 4(b)(1)) 4(c)(1) Form of Indenture between the Registrant and Bank One Trust Company, National Association (as successor-in-interest to The First National Bank of Chicago), as Trustee (Filed as Exhibit 4(i) to Registrant's Registration Statement on Form S-3, Commission File No. 333-07691, and incorporated herein by reference) 4(c)(2) Form of Debt Security (included in Exhibit 4(c)(1)) 5(a)(1) Opinion of Davis Polk & Wardwell, counsel for Federal Express Corporation, relating to Equipment Trust Certificates 5(a)(2) Opinion of Davis Polk & Wardwell, counsel for Federal Express Corporation, relating to Pass Through Certificates 5(b) Opinion of Ray, Quinney & Nebeker, counsel for the Pass Through Trustee 5(c) Opinion of Bingham Dana LLP, counsel for the Owner Trustee 5(d)(1) Opinion of Karen M. Clayborne, Senior Vice President and General Counsel of Federal Express Corporation, relating to Equipment Trust Certificates and Pass Through Certificates 5(d)(2) Opinion of Karen M. Clayborne, Senior Vice President and General Counsel of Federal Express Corporation, relating to Debt Securities 8(a) Tax Opinion of Davis Polk & Wardwell, counsel for Federal Express Corporation (included under the caption "Federal Income Tax Consequences" in the Prospectus relating to Pass Through Certificates) II-2 8(b) Tax Opinion of Ray, Quinney & Nebeker, special counsel for the Pass Through Trustee (included under the caption "Utah Taxes" in the Prospectus relating to Pass Through Certificates) 12 Computation of Ratio of Earnings to Fixed Charges (Filed as Exhibit 12.1 to Registrant's Form 10-Q for the quarter ended February 29, 2000, and incorporated herein by reference) 15 Letter of Arthur Andersen LLP, independent public accountants 23(a) Consent of Davis Polk & Wardwell, counsel for Federal Express Corporation (included in Exhibits 5(a)(1) and 5(a)(2)) 23(b) Consent of Ray, Quinney & Nebeker, counsel for the Pass Through Trustee (included in Exhibit 5(b)) 23(c) Consent of Bingham Dana LLP, counsel for the Owner Trustee (included in Exhibit 5(c)) 23(d) Consent of Karen M. Clayborne (included in Exhibits 5(d)(1) and 5(d)(2)) 23(e) Consent of Arthur Andersen LLP, independent public accountants 25(a) Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of Bank One Trust Company, National Association (as successor-in-interest to The First National Bank of Chicago), as Trustee 25(b) Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of First Security Bank, National Association, as Indenture Trustee and as Pass Through Trustee II-3 Item 17. Undertakings The undersigned Registrant hereby undertakes: (a) (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) under the Securities Act of 1933 if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; provided, however, the paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the Registration Statement is on Form S-3, Form S-8 or Form F-3 and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the Registrant pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post- effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) That, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions referred to in Item 15 of this Registration Statement, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-4 (d) To file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act of 1939 in accordance with the rules and regulations prescribed by the Commission under Section 305(b)(2) of the Trust Indenture Act of 1939. II-5 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Memphis, State of Tennessee, on this 9th day of June, 2000. FEDERAL EXPRESS CORPORATION By: /s/ Michael W. Hillard ------------------------------------- Name: Michael W. Hillard Title: Vice President and Controller (Principal Accounting Officer) POWER OF ATTORNEY Each person whose signature appears below hereby constitutes and appoints Alan B. Graf, Jr. and Michael W. Hillard, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) and supplements to this registration statement and any related registration statement filed pursuant to Rule 462(b), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Signature Capacity Date - --------------------------- ---------------------------------- ------------ /s/ Frederick W. Smith - --------------------------- Chairman of the Board and Director June 9, 2000 Frederick W. Smith /s/ Alan B. Graf, Jr. - --------------------------- Director June 9, 2000 Alan B. Graf, Jr. /s/ Theodore L. Weise - --------------------------- Director June 9, 2000 Theodore L. Weise /s/ Kenneth R. Masterson - --------------------------- Director June 9, 2000 Kenneth R. Masterson /s/ T. Michael Glenn - --------------------------- Director June 9, 2000 T. Michael Glenn II-6 Signature Capacity Date - --------------------------- ---------------------------------- ------------ /s/ Dennis H. Jones - --------------------------- Director June 9, 2000 Dennis H. Jones /s/ David J. Bronczek - --------------------------- Chief Executive Officer, President June 9, 2000 David J. Bronczek and Director (Principal Executive Officer) /s/ George W. Hearn - --------------------------- Director June 9, 2000 George W. Hearn /s/ Michael L. Ducker - --------------------------- Executive Vice President - June 9, 2000 Michael L. Ducker International and Director /s/ David F. Rebholz - --------------------------- Executive Vice President - June 9, 2000 David F. Rebholz Operations and Systems Support and Director /s/ Michael W. Hillard - --------------------------- Vice President and Controller June 9, 2000 Michael W. Hillard (Principal Accounting Officer) /s/ Tracy G. Schmidt - --------------------------- Senior Vice President and Chief June 9, 2000 Tracy G. Schmidt Financial Officer (Principal Financial Officer) II-7 EXHIBIT INDEX Exhibits Exhibit Description - -------- --------------------- 1(a) Form of Underwriting Agreement relating to Equipment Trust Certificates (Filed as Exhibit 1(a) to Registrant's Registration Statement on Form S-3, Commission File No. 33-52142, and incorporated herein by reference, except that reference in such Exhibit to such File Number shall be left blank) 1(b) Form of Underwriting Agreement relating to Pass Through Certificates (Filed as Exhibit 1(b) to Registrant's Registration Statement on Form S-3, Commission File No. 333-07691, and incorporated herein by reference) 1(c) Form of Underwriting Agreement relating to Debt Securities (Filed as Exhibit 1(c) to Registrant's Registration Statement on Form S-3, Commission File No. 333-07691, and incorporated herein by reference) 4(a)(1) Form of Pass Through Trust Agreement between Federal Express Corporation and First Security Bank, National Association 4(a)(2) Form of Pass Through Certificate (included in Exhibit 4(a)(1)) 4(b)(1) Form of Trust Indenture and Security Agreement among the Owner Trustee, the Indenture Trustee and Federal Express Corporation, as Lessee, for an offering of Equipment Trust Certificates (Filed as Exhibit 4(b)(1) to Registrant's Registration Statement on Form S-3, Commission File No. 33-52142, and incorporated herein by reference) 4(b)(2) Form of Equipment Trust Certificate (included in Exhibit 4(b)(1)) 4(c)(1) Form of Indenture between the Registrant and Bank One Trust Company, National Association (as successor-in-interest to The First National Bank of Chicago), as Trustee (Filed as Exhibit 4(i) to Registrant's Registration Statement on Form S-3, Commission File No. 333-07691, and incorporated herein by reference) 4(c)(2) Form of Debt Security (included in Exhibit 4(c)(1)) 5(a)(1) Opinion of Davis Polk & Wardwell, counsel for Federal Express Corporation, relating to Equipment Trust Certificates 5(a)(2) Opinion of Davis Polk & Wardwell, counsel for Federal Express Corporation, relating to Pass Through Certificates 5(b) Opinion of Ray, Quinney & Nebeker, counsel for the Pass Through Trustee 5(c) Opinion of Bingham Dana LLP, counsel for the Owner Trustee 5(d)(1) Opinion of Karen M. Clayborne, Senior Vice President and General Counsel of Federal Express Corporation, relating to Equipment Trust Certificates and Pass Through Certificates 5(d)(2) Opinion of Karen M. Clayborne, Senior Vice President and General Counsel of Federal Express Corporation, relating to Debt Securities 8(a) Tax Opinion of Davis Polk & Wardwell, counsel for Federal Express Corporation (included under the caption "Federal Income Tax Consequences" in the Prospectus relating to Pass Through Certificates) 1 8(b) Tax Opinion of Ray, Quinney & Nebeker, special counsel for the Pass Through Trustee (included under the caption "Utah Taxes" in the Prospectus relating to Pass Through Certificates) 12 Computation of Ratio of Earnings to Fixed Charges (Filed as Exhibit 12.1 to Registrant's Form 10-Q for the quarter ended February 29, 2000, and incorporated herein by reference) 15 Letter of Arthur Andersen LLP, independent public accountants 23(a) Consent of Davis Polk & Wardwell, counsel for Federal Express Corporation (included in Exhibits 5(a)(1) and 5(a)(2)) 23(b) Consent of Ray, Quinney & Nebeker, counsel for the Pass Through Trustee (included in Exhibit 5(b)) 23(c) Consent of Bingham Dana LLP, counsel for the Owner Trustee (included in Exhibit 5(c)) 23(d) Consent of Karen M. Clayborne (included in Exhibits 5(d)(1) and 5(d)(2)) 23(e) Consent of Arthur Andersen LLP, independent public accountants 25(a) Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of Bank One Trust Company, National Association (as successor-in-interest to The First National Bank of Chicago), as Trustee 25(b) Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of First Security Bank, National Association, as Indenture Trustee and as Pass Through Trustee 2 EX-4.A1 2 0002.txt Exhibit 4(a)(1) ================================================================================ PASS THROUGH TRUST AGREEMENT Dated as of ______, 200__ between FIRST SECURITY BANK, NATIONAL ASSOCIATION, as Pass Through Trustee and FEDERAL EXPRESS CORPORATION ================================================================================ CROSS REFERENCE SHEET Between Provisions of the Trust Indenture Act of 1939, as amended, and the Pass Through Trust Agreement: Section of the Section of the Act Agreement - ------------------ -------------- 310(a)(1) and (2).........................................10.02 310(a)(3).................................................10.05 310(a)(4).................................................Art. VII 310(a)(5).................................................10.02 310(b)(i)-(iii)...........................................10.01, 10.03 310(b)(remainder).........................................* 310(c)....................................................Inapplicable 311(a)....................................................* 311(b)....................................................10.06 311(c)....................................................Inapplicable 312(a)....................................................2.12, 4.01 312(b)....................................................* 312(c)....................................................4.02 313(a)....................................................4.04 313(b)(1).................................................* 313(b)(2).................................................* 313(c)....................................................4.04 313(d)....................................................* 314(a)....................................................4.03 314(b)....................................................Inapplicable 314(c)(1) and (2).........................................13.07 314(c)(3).................................................Inapplicable 314(d)(1).................................................* 314(d)(2).................................................* 314(d)(3).................................................* 314(e)....................................................13.07 314(f)....................................................Inapplicable 315(a), (c) and (d).......................................* 315(b)....................................................7.11 315(e)....................................................* 316(a)(1).................................................7.09, 7.10 316(a)(2).................................................11.01 - -------- * Intentionally deleted. Section of the Section of the Act Agreement - ------------------ -------------- 316(a)(last sentence).....................................6.04 316(b)....................................................7.08 316(c)....................................................6.01(b) 317(a)....................................................7.03, 7.05 317(b)....................................................3.04 318(a)....................................................13.08 TABLE OF CONTENTS --------------- Page ---- ARTICLE I Definitions ARTICLE II Issuance of Pass Through Certificates; Acquisition of Equipment Certificates Section 2.01. Amount Unlimited; Issuable in Series; Series Supplements.......13 Section 2.02. Acquisition of Equipment Certificates..........................15 Section 2.03. Initial Certificateholders as Grantors.........................17 Section 2.04. Limitation of Powers...........................................18 Section 2.05. Execution of Pass Through Certificates.........................18 Section 2.06. Certificate of Authentication..................................18 Section 2.07. Form and Denomination of Pass Through Certificates.............19 Section 2.08. Registration, Transfer and Exchange............................19 Section 2.09. Mutilated, Defaced, Destroyed, Lost and Stolen Pass Through Certificates................................................20 Section 2.10. Cancellation of Pass Through Certificates; Destruction Thereof.22 Section 2.11. Temporary Pass Through Certificates............................22 Section 2.12. Pass Through Certificates Issuable in the Form of a Registered Global Certificate..........................................23 ARTICLE III Certain Representations, Warranties and Covenants Section 3.01. Covenants of the Company.......................................25 Section 3.02. Offices for Payments; Registrar................................26 Section 3.03. Representations and Warranties of the Pass Through Trustee.....27 Section 3.04. Paying Agents..................................................28 Section 3.05. No Representations or Warranties as to Documents...............28 Section 3.06. Payments from Trust Property Only..............................29 Section 3.07. Limitation of the Company's Liability..........................29 Page ---- ARTICLE IV Certificateholder Lists and Reports by the Company and the Pass Through Trustee Section 4.01. Certificateholder Lists; Ownership of Pass Through Certificates..............................................29 Section 4.02. Disclosure of Certificateholder Lists..........................30 Section 4.03. Reports by the Company.........................................30 Section 4.04. Reports by the Pass Through Trustee............................31 ARTICLE V Receipt and Distribution of Income and Proceeds from the Trust Property Section 5.01. Certificate Account and Special Payments Account...............31 Section 5.02. Distributions from Certificate Account and Special Payments Account.....................................................32 Section 5.03. Statements to Certificateholders...............................33 Section 5.04. Investment of Special Payment Moneys...........................34 Section 5.05. Withholding Taxes..............................................35 ARTICLE VI Concerning the Certificateholders Section 6.01. Evidence of Action Taken by Certificateholders.................35 Section 6.02. Proof of Execution of Instruments and of Holding of Certificates..............................................36 Section 6.03. Certificateholders to Be Treated as Owners.....................36 Section 6.04. Pass Through Certificates Owned by the Company and Related Owner Trustees Deemed Not Outstanding.......................36 Section 6.05. Right of Revocation of Action Taken............................38 Section 6.06. ERISA..........................................................38 ARTICLE VII Remedies of Pass Through Trustee and Certificateholders Section 7.01. Events of Default..............................................39 Section 7.02. Incidents of Sale of Equipment Certificates....................41 Section 7.03. Pass Through Trustee May Prove Debt............................42 Section 7.04. Remedies Cumulative............................................43 Section 7.05. Suits for Enforcement..........................................43 Section 7.06. Discontinuance of Proceedings..................................43 Section 7.07. Limitations on Suits by Certificateholders.....................44 ii Page ---- Section 7.08. Unconditional Right of Certificateholders to Receive Principal, Interest and Premium, and to Institute Certain Suits........44 Section 7.09. Control by Certificateholders..................................45 Section 7.10. Waiver of Past Events of Default...............................46 Section 7.11. Notice of Pass Through Defaults................................46 ARTICLE VIII Concerning the Pass Through Trustee Section 8.01. Acceptance by Pass Through Trustee.............................47 Section 8.02. Pass Through Trustee's Liens...................................47 Section 8.03. Certain Rights of the Pass Through Trustee.....................47 Section 8.04. Pass Through Trustee Not Responsible for Recitals..............49 Section 8.05. Pass Through Trustee and Agents May Hold Pass Through Certificates; Collections...................................49 Section 8.06. Moneys Held by Pass Through Trustee............................49 Section 8.07. Right of Pass Through Trustee to Rely on Officer's Certificate.50 Section 8.08. Compensation...................................................50 ARTICLE IX Indemnification of Pass Through Trustee by the Company ARTICLE X Successor Trustees Section 10.01. Resignation and Removal of Pass Through Trustee; Appointment of Successor.............................................52 Section 10.02. Persons Eligible for Appointment as Pass Through Trustee......54 Section 10.03. Acceptance of Appointment by Successor Trustee................54 Section 10.04. Merger, Conversion, Consolidation or Succession to Business of Pass Through Trustee..................................56 Section 10.05. Appointment of Separate Pass Through Trustees.................56 Section 10.06. Preferential Claims...........................................58 ARTICLE XI Supplements and Amendments to This Pass Through Agreement and Other Documents Section 11.01. Supplemental Agreements Without Consent of Certificateholders........................................59 Section 11.03. Effect of Supplemental Agreements.............................62 Section 11.04. Documents to Be Given to Trustee..............................63 Section 11.05. Notation on Pass Through Certificates in Respect of Supplemental Agreements..................................63 Section 11.06. Trust Indenture Act...........................................63 Section 11.07. Revocation and Effect of Consents.............................63 iii Page ---- Section 11.08. Amendments, Waivers, Etc. of Related Indenture Documents......63 ARTICLE XII Termination of Pass Through Trusts; Unclaimed Moneys Section 12.01. Termination of Pass Through Trusts............................64 Section 12.02. Application by Pass Through Trustee of Funds Deposited for Payment of Pass Through Certificates.....................65 Section 12.03. Repayment of Moneys Held by Paying Agent......................65 ARTICLE XIII Miscellaneous Section 13.01. Capacity in Which Acting......................................66 Section 13.02. No Legal Title to Trust Property in Certificateholders........66 Section 13.03. Certificates Nonassessable and Fully Paid.....................66 Section 13.04. Pass Through Agreement for the Benefit of the Company, the Pass Through Trustee and the Certificateholders..........66 Section 13.05. Limitation on Rights of Certificateholders....................67 Section 13.06. Notices.......................................................67 Section 13.07. Officer's Certificate and Opinion of Counsel; Statements to Be Contained Therein.....................................68 Section 13.08. Conflict of Any Provision of Pass Through Agreement with the Trust Indenture Act......................................69 Section 13.09. Severability..................................................69 Section 13.10. No Oral Modifications or Continuing Waivers...................69 Section 13.11. Successors and Assigns........................................70 Section 13.12. Headings......................................................70 Section 13.13. Normal Commercial Relations...................................70 Section 13.14. Governing Law; Counterpart Form...............................70 Section 13.15. Distributions Due on Days Other than Business Days............70 Section 13.16. Registration of Equipment Certificates in Name of Subordination Agent......................................70 Exhibit A Form of Pass Through Certificate Exhibit B Form of Series Supplement iv PASS THROUGH TRUST AGREEMENT PASS THROUGH TRUST AGREEMENT dated as of ______, 200__, between FEDERAL EXPRESS CORPORATION, a Delaware corporation (together with its permitted successors and assigns, the "Company"), and FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, as Pass Through Trustee (together with any successor hereunder or under any Pass Through Trust as herein provided, the "Pass Through Trustee"). RECITALS WHEREAS, capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, from time to time the Company will enter into a Series Supplement with the Pass Through Trustee named therein in accordance with this Pass Through Agreement pursuant to which the Pass Through Trustee will declare the creation of a separate Pass Through Trust for the benefit of the Certificateholders of the Series of Pass Through Certificates to be issued pursuant to such Pass Through Trust, and the initial Certificateholders of such Series, as the grantors of such Pass Through Trust, by their respective acceptances of such Pass Through Certificates, will join in the creation of such Pass Through Trust; WHEREAS, the Pass Through Certificates of each Series will evidence fractional undivided interests in the Pass Through Trust pursuant to which they will be issued, and will have no rights, benefits or interest in respect of any other separate Pass Through Trust or the Trust Property held in any such other Pass Through Trust subject, however, to the provisions of any Intercreditor Agreement to which one or more Pass Through Trusts may be a party; WHEREAS, for each Pass Through Trust, the Pass Through Trustee will purchase one or more issues of Equipment Certificates of the same interest rate and ranking in respect of priority of payment as, and final maturity dates not later than the final scheduled Regular Distribution Date of, the Series of Pass Through Certificates to be issued in respect of such Pass Through Trust and will hold such Equipment Certificates in trust as Trust Property for the benefit of the Certificateholders of such Series; WHEREAS, to facilitate the sale of Equipment Certificates to, and the purchase of Equipment Certificates by, the Pass Through Trustee on behalf of each such Pass Through Trust, the Company has duly authorized the execution and delivery of this Pass Through Agreement and each Series Supplement as the "issuer," as such term is defined in and solely for purposes of the Securities Act, of the Pass Through Certificates to be issued in respect of each Pass Through Trust and as the "obligor," as such term is defined in and solely for purposes of the Trust Indenture Act, with respect to all such Pass Through Certificates and is undertaking to perform certain administrative duties hereunder and to pay the fees and expenses of the Pass Through Trustee; WHEREAS, this Pass Through Agreement, as amended or supplemented from time to time, is subject to the provisions of the Trust Indenture Act and shall, to the extent applicable, be governed by such provisions; IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows: ARTICLE I Definitions The following terms (except as otherwise expressly provided or unless the context otherwise clearly requires) for all purposes of this Pass Through Agreement have the respective meanings specified in this Article I, as amended or supplemented by the provisions of the Series Supplement for a particular Series. All other terms used in this Pass Through Agreement that are defined in the Trust Indenture Act or the definitions of which in the Securities Act are referred to in the Trust Indenture Act (except as herein otherwise expressly provided or unless the context otherwise clearly requires), have the meanings assigned to such terms in the Trust Indenture Act and in the Securities Act. All accounting terms used and not expressly defined herein have the meanings given to them in accordance with generally accepted accounting principles, and the term "generally accepted accounting principles" means the accounting principles that are generally accepted at the date or time of any computation or otherwise at the date hereof. The words "herein," "hereof" and "hereunder" and other words of similar import refer to this Pass Through Agreement as a whole and not to any particular Article, Section or other subdivision. References to designated "Articles," "Sections," "subsections" and other subdivisions of this Pass Through Agreement are to the designated Articles, Sections, subsections and other subdivisions of this Pass Through Agreement. The terms defined in this Article include the plural as well as the singular. 2 "Affiliate," has for any Person, the meaning specified in Rule 0-2 under the Trust Indenture Act. "Business Day" means, for any Series, any day other than Saturday, Sunday or other day on which commercial banks in Salt Lake City, Utah, New York, New York or Memphis, Tennessee, or any other city in which the Pass Through Trustee for the Pass Through Trust for such Series maintains an office for the receipt or disbursement of funds for the transactions contemplated herein are authorized or required by law to close. "Certificate Account" means, for any Pass Through Trust, the account or accounts created and maintained for such Pass Through Trust pursuant to Section 5.01(a) hereof and the related Series Supplement. "Certificateholder" means, for any Series, the Person who is the registered holder of any Pass Through Certificate as evidenced on the Register for such Series. "Code" means the Internal Revenue Code of 1986, as amended. "Commission" means the Securities and Exchange Commission of the United States, or if at any time after the execution and delivery of this Pass Through Agreement such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. "Controlling Party" means the Person entitled to act as such pursuant to the terms of any Intercreditor Agreement. "Corporate Trust Office" means the office of the Pass Through Trustee identified in Section 13.06 hereof or such other office as the Pass Through Trustee shall have specified by notice in writing to the Company and the Certificateholders of each Series, or the office of any successor Pass Through Trustee. "Cut-off Date for Pass Through Trust" means, for any Pass Through Trust, the date specified as such in the related Series Supplement. "Delivery Date" means, for any Pass Through Trust, the date specified in the related Series Supplement for the purchase of the related Equipment Certificates, which date may be delayed for any such Equipment Certificates as provided in Section 2.02 hereof. 3 "Delayed Delivery Notice" means, for any Pass Through Trust, a certificate signed by a Responsible Officer of the Company (i) requesting that the Pass Through Trustee temporarily delay purchase of any related Equipment Certificates to a date later than the applicable Issuance Date, (ii) stating the amount of the purchase price of each such Equipment Certificate and the aggregate purchase price of all such Equipment Certificates, (iii) stating the reasons for such delay and (iv) with respect to any Participation Agreement for such delayed Equipment Certificates, either (1) setting or resetting the Delivery Date (which shall be on or prior to the applicable Cut-off Date for Pass Through Trust), or (2) indicating that such Delivery Date will be set by subsequent written notice not less than one Business Day prior to such new Delivery Date (which shall be on or prior to the applicable Cut-off Date for Pass Through Trust). "Delayed ECs" means, for any Pass Through Trust, any Equipment Certificates that are the subject of a Delayed Delivery Notice. "Deposit Trust" means a separate trust created pursuant to a Deposit Trust Agreement. "Deposit Trust Account" means, for any Deposit Trust, the deposit account established and maintained for such Deposit Trust pursuant to the related Deposit Trust Agreement. "Deposit Trust Agreement" means an agreement in form and substance reasonably satisfactory to the Company and the Pass Through Trustee for the purposes described in Section 2.02 hereof, between the Company, as depositor, the Pass Through Trustee and the Deposit Trustee. "Deposit Trust Funds" means, for any Delayed ECs, an amount equal to the purchase price of such Delayed ECs. "Deposit Trustee" means, for any Deposit Trust, the Person, acceptable to the Pass Through Trustee, defined as such in the related Deposit Trust Agreement. "Depository" means, for any Series, the depository of the Registered Global Certificate, if any, representing the Pass Through Certificates of such Series and any successor to such depository appointed by the Company pursuant hereto. Such depository initially shall be The Depository Trust Company, a New York corporation, or any successor thereto registered under the Exchange Act or other applicable statute or regulation. "Distribution Date" means, for any Series, any Regular Distribution Date or Special Distribution Date or both for such Series. 4 "Dollars" and "$" mean lawful currency of the United States of America. "Equipment Certificate" means, for any Pass Through Trust, any of the Equipment Trust Certificates or Equipment Purchase Certificates, issued pursuant to an Indenture and described in, or on a schedule attached to, the Series Supplement for such Pass Through Trust. "Equipment Purchase Certificate" means, for any Pass Through Trust, any "Equipment Purchase Certificate," as such term is defined in the related Indenture, issued by the Company pursuant to an Indenture and described in, or on a schedule attached to, the Series Supplement for such Pass Through Trust, which is to be held by the Pass Through Trustee as part of the Trust Property of such Pass Through Trust. "Equipment Trust Certificate" means, for any Pass Through Trust, any "Equipment Trust Certificate," as such term is defined in the related Indenture, issued by an Owner Trustee pursuant to such Indenture and described in, or on a schedule attached to, the Series Supplement for such Pass Through Trust, which is to be held by the Pass Through Trustee as part of the Trust Property of such Pass Through Trust. "Event of Default" has the meaning specified in Section 7.01 hereof. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Fractional Undivided Interest" means, for any Pass Through Certificate, the fractional undivided interest in the related Pass Through Trust that is evidenced thereby. "Government Obligations" means direct obligations of the United States of America which are not callable, redeemable or payable prior to maturity, in whole or in part, directly or indirectly, by any Person. "Indenture" means (i) for any Equipment Trust Certificate, the trust indenture and security agreement among the Indenture Trustee, the Owner Trustee and, if applicable, the Company pursuant to which such Equipment Trust Certificate is issued and (ii) for any Equipment Purchase Certificate, the trust indenture and security agreement between the Indenture Trustee and the Company pursuant to which such Equipment Purchase Certificate is issued, in each case as such agreement may be modified, supplemented or amended from time to time in accordance with the related Indenture Documents. 5 "Indenture Default" means, for any Indenture, any event or condition defined as a "Default" in such Indenture. "Indenture Documents" means (i) for any Equipment Trust Certificate, the related Indenture, the related Trust Agreement and the related Lease, in each case as defined in such Indenture, and the related Participation Agreement and (ii) for any Equipment Purchase Certificate, the related Indenture, the related Indenture Addendum, as defined in such Indenture, and the related Participation Agreement. "Indenture Event of Default" means, for any Indenture, any event or condition defined as an "Indenture Event of Default" in such Indenture. "Indenture Trustee" means, for any Equipment Certificate, the Person defined as such in the related Indenture. "Initial Regular Distribution Date" means, for any Pass Through Trust, the first Regular Distribution Date on which a Scheduled Payment is to be made following the Issuance Date for such Pass Through Trust. "Intercreditor Agreement" means any agreement by and among one or more Pass Through Trusts, one or more Liquidity Providers and a Subordination Agent providing for the distribution of payments made in respect of Equipment Certificates held by such Pass Through Trusts. "Issuance Date" means, for any Pass Through Trust, the date of the issuance of the related Pass Through Certificates. "Lease" means, for any Equipment Trust Certificate, the agreement between the Company, as lessee, and an Owner Trustee, as lessor, that is defined as the "Lease" in the related Indenture. "Letter of Representations" means, for any Series, a letter from the Company and the Pass Through Trustee to, and accepted by, the Depository in form and substance satisfactory to the Company and the Pass Through Trustee for the purposes of the related Series Supplement, as such letter may be modified or supplemented, or any successor letter thereto. "Lien" means any mortgage, pledge, lien, charge, disposition of title, encumbrance, lease or security interest. "Liquidity Facility" means, with respect to the Pass Through Certificates of any Series, any revolving credit agreement or similar facility or letter of credit 6 relating to the Pass Through Certificates of such Series between a Liquidity Provider and a Subordination Agent, as amended, replaced, supplemented or otherwise modified from time to time in accordance with its terms and the terms of any Intercreditor Agreement. "Liquidity Provider" means, with respect to the Pass Through Certificates of any Series, a bank or other financial institution that agrees to provide Liquidity Facilities with respect to the Pass Through Certificates of such Series for the benefit of the Certificateholders. "Majority in Interest of Certificateholders" means, for any Series at any time, Pass Through Certificates of such Series then Outstanding (or the proxy therefor) representing in the aggregate not less than a majority of the aggregate Fractional Undivided Interests of the Pass Through Certificates then Outstanding under the related Pass Through Trust. "Officer's Certificate" means a certificate signed by a Responsible Officer of the Company, any Indenture Trustee or any Owner Trustee, as the case may be, delivered to the Pass Through Trustee. Each such certificate shall include the statements provided for in Section 13.07 hereof. "Opinion of Counsel" means a written opinion of legal counsel, who in the case of counsel (a) for the Company may be (i) an attorney employed by the Company who is generally empowered to deliver such written opinions, or (ii) other counsel designated by the Company and reasonably satisfactory to the Pass Through Trustee and (b) for any Owner Trustee or Indenture Trustee, an attorney selected by such Person and reasonably satisfactory to the Pass Through Trustee and the Company. "Outstanding" means, when used with respect to Pass Through Certificates of any Series, as of the date of determination and subject to the provisions of Section 6.04 hereof, all Pass Through Certificates theretofore authenticated and delivered for such Series, with the exception of the following: (i) Pass Through Certificates theretofore cancelled by the Pass Through Trustee or delivered to the Pass Through Trustee for cancellation pursuant to Section 2.10 hereof; (ii) All Pass Through Certificates of such Series if money in the amount required to make the final distribution thereon in accordance with Section 12.01 hereof has been theretofore deposited with the Pass Through Trustee in trust for the Certificateholders of such Series pending such final distribution; and 7 (iii) Pass Through Certificates in exchange for or in lieu of which other Pass Through Certificates have been authenticated and delivered pursuant to Article II hereof. "Overdue Scheduled Payment" means, for any Pass Through Trust, any Scheduled Payment that is not received within seven Business Days after the Regular Distribution Date applicable to such Scheduled Payment. "Owner Participant" means, for any Equipment Trust Certificate, the Person defined as such in the related Indenture. "Owner Trustee" means, for any Equipment Trust Certificate, the Person defined as such in the related Indenture. "Participation Agreement" means (i) for any Equipment Trust Certificate, the agreement among the Company, the Owner Participant, the Owner Trustee, the Indenture Trustee, the Subordination Agent, if applicable, the Pass Through Trustee and, if applicable, each Original Loan Participant (as defined in such Participation Agreement), that is defined as the "Participation Agreement" in the related Indenture and pursuant to which the Pass Through Trustee agrees to purchase such Equipment Trust Certificate upon the issuance thereof by such Owner Trustee and (ii) for any Equipment Purchase Certificate, the agreement among the Company, the Indenture Trustee and the Pass Through Trustee that is defined as the "Transfer Agreement" in the related Indenture and pursuant to which the Pass Through Trustee agrees to purchase such Equipment Purchase Certificate from the Banks (as defined in such Participation Agreement). "Pass Through Agreement," "this Pass Through Agreement" and other like words mean this Pass Through Trust Agreement as the same may be modified, supplemented or amended from time to time in accordance with the provisions hereof, but does not include, unless otherwise specified, any Series Supplement. "Pass Through Certificate" means, for any Series, any of the certificates executed, authenticated and delivered for such Series by the Pass Through Trustee, in accordance with this Pass Through Agreement and pursuant to the related Series Supplement. "Pass Through Default" means, for any Pass Through Trust, an Event of Default or an event or condition that, with the giving of notice or the lapse of time or both, would become an Event of Default. 8 "Pass Through Trust" means a separate trust created in accordance with this Pass Through Agreement by a Series Supplement incorporating the provisions hereof, as such provisions may be amended or supplemented thereby, the estate of which consists of the related Trust Property. "Pass Through Trustee" means the institution executing this Pass Through Agreement as Pass Through Trustee, or its successor in interest, and any successor or other trustee appointed as provided herein; provided that if the same institution is not acting as the Pass Through Trustee in respect of all Series, the phrase "the Pass Through Trustee" shall, unless the context otherwise requires, mean, as to any Series, the institution named in the applicable Series Supplement as Pass Through Trustee in respect of such Series, or its successor in interest and any successor or other trustee appointed as provided herein. "Paying Agent" has the meaning set forth in Section 3.04 hereof. "Permitted Investments" means (a) direct obligations of the United States of America or obligations fully guaranteed by the United States of America; (b) commercial paper rated A-1/P-1 by Standard & Poor's Ratings Group and Moody's Investors Service, Inc., respectively or, if such ratings are unavailable, rated by any nationally recognized rating organization in the United States equal to the highest rating assigned by such rating organization; (c) overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers; and (d) overnight repurchase agreements with respect to the securities described in clause (a) above entered into with an office of a bank or trust company which is located in the United States of America of any bank or trust company which is organized under the laws of the United States or any state thereof and has capital, surplus and undivided profits aggregating at least $500 million. "Person" means any individual, corporation, partnership, joint venture, limited liability company, association, joint-stock company, trust, nonincorporated organization or government or any agency or political subdivision thereof. "Pool Balance" means, unless otherwise provided in the Series Supplement, for any Pass Through Trust, as of any date of determination the aggregate unpaid principal amount of the Equipment Certificates that constitute Trust Property of such Pass Through Trust on such date plus the amount of the principal payments on such Equipment Certificates held by the Pass Through Trustee and not yet distributed plus the amount of any moneys transferred to the Company and deposited in the related Deposit Trust Account (other than earnings thereon and without giving effect to any losses on investments thereof). The Pool Balance as of any Regular Distribution Date or Special Distribution Date shall be 9 computed after giving effect to the payment of principal, if any, on such Equipment Certificates and the distribution thereof being made on that date. "Pool Factor" means, unless otherwise provided in the Series Supplement, for any Pass Through Trust, as of any date of determination the quotient (rounded to the seventh decimal place) computed by dividing (i) the Pool Balance by (ii) the aggregate original amount of the Pass Through Certificates of the related Series. The Pool Factor as of any Regular Distribution Date or Special Distribution Date shall be computed after giving effect to the payment of principal, if any, on such Equipment Certificates and the distribution thereof being made on that date. "Principal Corporate Trust Office" means the Corporate Trust Department of the Pass Through Trustee located at 79 South Main Street, Salt Lake City, Utah 84111, or the office designated as such by the Pass Through Trustee. "PTC Event of Default," if applicable, has the meaning set forth in the related Series Supplement. "Record Date," for any Series, means, (i) for any Regular Distribution Date, the date specified in the related Series Supplement as the Record Date for such Regular Distribution Date and (ii) for any Special Distribution Date, the 15th day preceding such Special Distribution Date, in any event, whether or not such date is a Business Day. "Register" has the meaning set forth in Section 3.02 hereof. "Registered Global Certificate" means, for any Series, each Pass Through Certificate, if any, issued to the Depository in accordance with Article II hereof and bearing the legend prescribed in Section 2.12(a) hereof. "Registrar" has the meaning set forth in Section 3.02 hereof. "Regular Distribution Date" means, for any Pass Through Trust, any date specified in the related Series Supplement for the distribution of any Scheduled Payment from such Pass Through Trust to the related Certificateholders. "Related Indenture Trustee" means, for any Pass Through Trust, any Indenture Trustee under an Indenture relating to any Equipment Certificate that constitutes Trust Property thereof, and "Related Indenture Trustees" means all 10 such Indenture Trustees for all such Equipment Certificates constituting Trust Property thereof. "Related Owner Participant" means, for any Pass Through Trust, any Owner Participant under a Trust Agreement relating to any Equipment Trust Certificate that constitutes Trust Property, and "Related Owner Participants" means all such Owner Participants for all such Equipment Trust Certificates constituting Trust Property thereof. "Related Owner Trustee" means, for any Pass Through Trust, any Owner Trustee under a Trust Agreement relating to any Equipment Trust Certificate that constitutes Trust Property, and "Related Owner Trustees" means all such Owner Trustees for all such Equipment Trust Certificates constituting Trust Property thereof. "Responsible Officer" means the president or any vice president; or, in the case of the Pass Through Trustee, an officer or authorized agent in its Corporate Trust Department. "Scheduled Payment" means, for any Pass Through Trust, any scheduled payment of principal of (whether by installment or redemption or otherwise) and interest on any Equipment Certificate that constitutes Trust Property thereof to be made in the amounts and on the date set forth for such payment in such Equipment Certificate, but does not include any Overdue Scheduled Payment. "Securities Act" means the Securities Act of 1933, as amended. "Series" means a separate series of Pass Through Certificates issued pursuant to this Pass Through Agreement and a Series Supplement. "Series Supplement" means an agreement executed and delivered by the Company and the Pass Through Trustee in accordance with this Pass Through Agreement, incorporating the provisions hereof, as amended or supplemented thereby, and creating a separate Pass Through Trust for the benefit of the Certificateholders of the Series of Pass Through Certificates to be issued under such Pass Through Trust. "Special Distribution Date" means, for any Pass Through Trust, any date specified in the related Series Supplement for the distribution of any Special Payment from such Pass Through Trust to the related Certificateholders. "Special Payment" means, for any Pass Through Trust, any payment (including any Overdue Scheduled Payment) other than a Scheduled Payment on 11 any Equipment Certificate that constitutes Trust Property thereof, any proceeds from the sale of such Equipment Certificate pursuant to Article VII hereof or any payment by the Company pursuant to the last two paragraphs of Section 2.02(b) hereof. "Special Payments Account" means, for any Pass Through Trust, the account or accounts created and maintained for such Pass Through Trust pursuant to Section 5.01(b) hereof and the related Series Supplement. "Specified Investments" has, for any Deposit Trust, the meaning set forth for such term in the related Deposit Trust Agreement. "Subordination Agent" has the meaning specified therefor in any Intercreditor Agreement. "Triggering Event" has the meaning specified therefor in any Intercreditor Agreement. "Trust Agreement" means, for any Equipment Trust Certificate, the agreement between an Owner Trustee and an Owner Participant that is defined as the "Trust Agreement" in the related Indenture. "Trust Indenture Act" means (except as otherwise provided in Section 11.06 hereof) the Trust Indenture Act of 1939, as amended, as in force at the date as of which this Pass Through Agreement was first qualified under such Act. "Trust Property" means, for any Pass Through Trust, (i) all money, instruments, including the related Equipment Certificates, and other property held as the property of such Pass Through Trust, including all distributions thereon and proceeds thereof and (ii) all rights of the Pass Through Trust and the Pass Through Trustee, on behalf of the Pass Through Trust, under any Intercreditor Agreement or any Liquidity Facility, including, without limitation, all rights to receive certain payments thereunder, and all monies paid to the Pass Through Trustee on behalf of the Pass Through Trust pursuant to any Intercreditor Agreement or any Liquidity Facility. 12 ARTICLE II Issuance of Pass Through Certificates; Acquisition of Equipment Certificates Section 2.01. Amount Unlimited; Issuable in Series; Series Supplements. (a) The aggregate amount of Pass Through Certificates that may be authenticated and delivered in accordance with this Pass Through Agreement is unlimited. The Pass Through Certificates may be issued from time to time in one or more Series, each Series relating to a separate Pass Through Trust, and shall be designated generally as the "Pass Through Certificates," with further designations added or incorporated in the title for the Pass Through Certificates of any Series as specified in the related Series Supplement. Each Pass Through Certificate shall bear upon its face the designation so selected for the Series to which it belongs. All Pass Through Certificates of the same Series shall be substantially identical except as to denomination and as may otherwise be provided in the related Series Supplement. The Pass Through Certificates of each Series will evidence fractional undivided interests in the separate Pass Through Trust formed by the related Series Supplement, and, except as may be contained in any Intercreditor Agreement, will have no rights, benefits or interest in respect of any other separate Pass Through Trust or the Trust Property held in such other Pass Through Trust. All Pass Through Certificates of the same Series shall be in all respects equally and ratably entitled to the benefits of the related Pass Through Trust without preference, priority, or distinction on account of the actual time or times of authentication and delivery, all in accordance with the terms and provisions of this Pass Through Agreement and the related Series Supplement. (b) The following matters shall be established for the Pass Through Certificates of each Series in a Series Supplement executed and delivered by the Company and the Pass Through Trustee: (1) the formation of the Pass Through Trust in which the Pass Through Certificates of such Series evidence fractional undivided interests and its designation (which designation shall distinguish such Pass Through Trust from each other Pass Through Trust); (2) the specific title of the Pass Through Certificates of such Series (which title shall distinguish the Pass Through Certificates of the Series from each other Series); 13 (3) subject to Section 2.02(a) hereof, any limit upon the aggregate amount of the Pass Through Certificates of such Series that may be authenticated and delivered under this Pass Through Agreement; (4) the related Cut-off Date for the Pass Through Trust; (5) the related Regular Distribution Dates; (6) the related Special Distribution Dates; (7) if other than as provided in Section 3.02 hereof, the Registrar or the Paying Agent for such Series, including any Co-Registrar or additional Paying Agent; (8) if other than as provided in Section 2.07 hereof, the denominations in which the Pass Through Certificates of such Series are issuable; (9) the specific form of the Pass Through Certificates of such Series and whether or not the Pass Through Certificates of such Series are to be issued as one or more Registered Global Certificates and if the Pass Through Certificates are to be issued as one or more Registered Global Certificates, the Depository for the Registered Global Certificates and the Letter of Representations; (10) a description of the Equipment Certificates to be acquired by and held in the related Pass Through Trust and of the related Indenture Documents; (11) provisions with respect to the terms for which the definitions set forth in Article I hereof permit or require further specification in the related Series Supplement; (12) whether the Pass Through Certificates are eligible for purchase by ERISA Plans (as defined in Section 6.06 hereof) and, if applicable, any restrictions on purchases of Pass Through Certificates by ERISA Plans; (13) the acceptance of appointment by the institution named to act as Pass Through Trustee with respect to such Series if different from the institution executing this Pass Through Agreement or its successor; 14 (14) whether such series will be subject to an Intercreditor Agreement and, if so, the specific designation of such Intercreditor Agreement; (15) any other terms of the Pass Through Certificates of such Series (which terms shall not be inconsistent with the provisions of the Trust Indenture Act as in effect at the time of the execution and delivery of such Series Supplement or adversely affect the interest of the Certificateholders of any Series outstanding at the time), including any terms that may be required or advisable under United States laws or regulations or advisable in connection with the marketing of the Series; (16) a description of any cross-default or cross-collateralization provisions in the related Indenture; and (17) a description of any subordination provisions among the holders of Pass Through Certificates, including any cross-subordination provisions among the holders of Pass Through Certificates in separate Pass Through Trusts. (c) At any time and from time to time after the execution and delivery of this Pass Through Agreement, the Company and the Pass Through Trustee may execute and deliver one or more Series Supplements, each forming a separate Pass Through Trust and establishing the terms of the Pass Through Certificates of the related Series, and pursuant to which the Pass Through Certificates of such Series shall be executed, authenticated and delivered by the Pass Through Trustee to the Person specified by the Company upon request of the Company and upon satisfaction of any conditions precedent set forth in the related Series Supplement on the Issuance Date for such Series. Section 2.02. Acquisition of Equipment Certificates. (a) Pass Through Certificates of a Series executed, authenticated and delivered by the Pass Through Trustee upon request of the Company in accordance with Section 2.01(c) hereof shall equal the aggregate principal amount of the Equipment Certificates to be purchased by the Pass Through Trustee pursuant to the related Participation Agreements, and evidence the entire ownership of the related Pass Through Trust. The Pass Through Trustee shall issue and sell such Pass Through Certificates, in authorized denominations and in such Fractional Undivided Interests, so as to result in the receipt of consideration in an amount equal to the aggregate principal amount of such Equipment Certificates and, concurrently therewith, the Pass Through Trustee shall purchase, pursuant to the terms and conditions of the Participation Agreements, the Equipment Certificates (except Delayed ECs, if any) at a purchase price equal to the amount of such consideration so received. 15 Except as provided in Sections 2.08 and 2.09 hereof, the Pass Through Trustee shall not execute, authenticate or deliver Pass Through Certificates of such Series in excess of the aggregate amount determined in accordance with this subsection (a). The provisions of this subsection (a) are subject to the provisions of subsection (b) below. (b) Unless otherwise specified in the Series Supplement, if, on or prior to an Issuance Date, the Company delivers to the Pass Through Trustee a Delayed Delivery Notice relating to one or more Delayed ECs, then (i) the Pass Through Trustee shall postpone the purchase of the specified Delayed ECs, (ii) the Company, the Pass Through Trustee and the Deposit Trustee shall form a Deposit Trust, (iii) the Pass Through Trustee shall transfer to the Company the Deposit Trust Funds relating to such Delayed ECs and (iv) the Company shall deposit such Deposit Trust Funds into the Deposit Trust Account for such Deposit Trust. The Deposit Trust Funds so deposited shall be invested pursuant to the related Deposit Trust Agreement by the Deposit Trustee at the direction and risk of, and for the benefit of, the Company in Specified Investments. The Company agrees that withdrawals shall be made from any Deposit Trust Account only as provided in the related Deposit Trust Agreement. Upon notice from the Company on one or more occasions that any Delayed ECs are available for purchase and upon the satisfaction of the closing conditions specified in the applicable Participation Agreements and the related Series Supplement on or prior to the related Cut-off Date for Pass Through Trust, the Company shall cause the related Deposit Trust Funds to be withdrawn from the related Deposit Trust Account and paid to the Pass Through Trustee, free and clear of any Lien under the Deposit Trust Agreement, and the Pass Through Trustee shall purchase the applicable Delayed ECs with such Deposit Trust Funds. The purchase price for such Delayed ECs shall equal the principal amount of such Delayed ECs. On the Initial Regular Distribution Date for any Pass Through Trust for which Delayed ECs are purchased pursuant to this subsection, the Company shall pay, in immediately available funds, to the Pass Through Trustee an amount equal to the interest that would have accrued on any Delayed ECs purchased after the related Issuance Date as if such Delayed ECs had been purchased on such Issuance Date, from such Issuance Date to, but not including, the date of the purchase of such Delayed ECs for such Pass Through Trust. If the Company notifies the Pass Through Trustee prior to any Cut-off Date for Pass Through Trust that any related Delayed ECs will not be issued on or prior to such Cut-off Date for Pass Through Trust for any reason, on the next Special Distribution Date for such Pass Through Trust occurring more than 20 16 days following the date of such notice (i) the Company shall (A) pay to the Pass Through Trustee for deposit in the related Special Payments Account, in immediately available funds, an amount equal to the interest that would have accrued on the Delayed ECs designated in such notice at a rate equal to the interest rate applicable to the related Series from the related Issuance Date to, but not including, such Special Distribution Date and (B) cause an amount equal to the amount of Deposit Trust Funds that would have been used to purchase such Delayed ECs to be withdrawn from the related Deposit Trust Account and paid to the Pass Through Trustee, free and clear of any Lien under the Deposit Trust Agreement, and (ii) the Pass Through Trustee shall deposit in the related Special Payments Account, upon receipt from the Deposit Trustee pursuant to the related Deposit Trust Agreement, the amount received pursuant to clause (i)(B) above, and the amount paid by the Company pursuant to clause (i)(A) above, and such amounts shall be distributed as a Special Payment in accordance with the provisions hereof. If, on the Cut-off Date for Pass Through Trust for any Pass Through Trust, an amount equal to less than all of the Deposit Trust Funds (other than Deposit Trust Funds referred to in the immediately preceding paragraph) has been used to purchase related Delayed ECs, on the next Special Distribution Date for such Pass Through Trust occurring more than 20 days following such Cut-off Date for Pass Through Trust (i) the Company shall (A) pay to the Pass Through Trustee for deposit in the related Special Payments Account, in immediately available funds, an amount equal to the interest that would have accrued on such Delayed ECs contemplated to be purchased with such unused Deposit Trust Funds (other than any Deposit Trust Funds referred to in the immediately preceding paragraph) but not so purchased at a rate equal to the interest rate applicable to the related Series from the related Issuance Date to, but not including, such Special Distribution Date and (B) cause such unused Deposit Trust Funds to be withdrawn from the related Deposit Trust Account and paid to the Pass Through Trustee, free and clear of any Lien under the Deposit Trust Agreement, and (ii) the Pass Through Trustee shall deposit in such Special Payments Account, upon receipt from the Deposit Trustee pursuant to the related Deposit Trust Agreement, such unused Deposit Trust Funds received pursuant to clause (i)(B) above, and the amount paid by the Company pursuant to clause (i)(A) above, and such amounts shall be distributed as a Special Payment in accordance with the provisions hereof. Section 2.03. Initial Certificateholders as Grantors. By its acceptance of any Pass Through Certificate of any Series issued to it under the related Pass Through Trust, each initial Certificateholder of such Series as grantor of such Pass Through Trust shall join in the creation and declaration of such Pass Through Trust. 17 Section 2.04. Limitation of Powers. Each Pass Through Trust shall be constituted solely for the purpose of making the investment in the Equipment Certificates provided for in the related Series Supplement and, except as set forth herein or in such Series Supplement, the Pass Through Trustee shall not be authorized or empowered to acquire any other investments or engage in any other activities and, in particular, the Pass Through Trustee shall not be authorized or empowered to do anything that would cause such Pass Through Trust to fail to qualify as a "grantor trust" for federal income tax purposes (including as subject to this restriction, acquiring any Aircraft (as defined in the respective related Indentures) by bidding such Equipment Certificates or otherwise, or taking any action with respect to any such Aircraft once acquired). Section 2.05. Execution of Pass Through Certificates. The Pass Through Certificates of each Series shall be signed on behalf of the Pass Through Trustee by a Responsible Officer of the Pass Through Trustee. Such signatures may be the manual or facsimile signatures of such officer and minor errors or defects in any reproduction of any such signature shall not affect the validity or enforceability of any Pass Through Certificate which has been duly authenticated and delivered by the Pass Through Trustee. If any Responsible Officer of the Pass Through Trustee who signs any of the Pass Through Certificates subsequently ceases to be such officer or authorized agent before the Pass Through Certificate so signed is authenticated and delivered or disposed of by the Pass Through Trustee, such Pass Through Certificate nevertheless may be authenticated and delivered or disposed of as though the person who signed such Pass Through Certificate had not ceased to be such officer or authorized agent of the Pass Through Trustee; and any Pass Through Certificate may be signed on behalf of the Pass Through Trustee by such person or persons as, at the actual date of the execution of such Pass Through Certificate, are the proper officers or authorized agents of the Pass Through Trustee, although at the date of the execution and delivery of the related Series Supplement any such person was not such officer. Section 2.06. Certificate of Authentication. The Pass Through Trustee shall duly authenticate and deliver Pass Through Certificates for each Series in authorized denominations equaling the aggregate principal amount of the Equipment Certificates to be purchased for the related Pass Through Trust by the Pass Through Trustee pursuant to the related Participation Agreements, and evidencing the entire ownership of the related Pass Through Trust. Only such Pass Through Certificates of such Series as shall bear thereon a certificate of authentication substantially in the form set forth in Exhibit A, executed by the Pass Through Trustee by manual or facsimile signature of a Responsible Officer, shall be entitled to the benefits of the related Pass Through Trust or be valid or 18 obligatory for any purpose. Such certificate of authentication by the Pass Through Trustee upon any Pass Through Certificate for such Series executed by the Pass Through Trustee shall be conclusive evidence that the Pass Through Certificate so authenticated has been duly authenticated and delivered hereunder and that the Certificateholder, as evidenced on the Register for such Series, is entitled to the benefits of the related Pass Through Trust. Section 2.07. Form and Denomination of Pass Through Certificates. The Pass Through Certificates of each Series shall be substantially in the form set forth in Exhibit A hereto. The Pass Through Certificates shall be issuable as registered securities without coupons and shall be numbered, lettered, or otherwise distinguished in such manner or in accordance with such plans as set forth in the related Series Supplement. The Pass Through Certificates of each Series shall be issued in minimum denominations of $1,000 and integral multiples thereof and shall be dated the date of their authentication. The Pass Through Certificates of any Series may be issued with appropriate insertions, omissions, substitutions and variations, and may have imprinted or otherwise reproduced thereon such legend, not inconsistent with the provisions of this Pass Through Agreement or the related Series Supplement, as may be required to comply with any law or with any rules or regulations pursuant thereto, or with the rules of the Depository or any securities market in which such Pass Through Certificates are admitted to trading, or to conform to general usage. Section 2.08. Registration, Transfer and Exchange. The Pass Through Trustee will keep at each office or agency to be maintained for any Series for the purpose as provided in Section 3.02 hereof a Register in which, subject to such reasonable regulations as it may prescribe, it will register, and will register the transfer of, Pass Through Certificates of the related Series as provided in this Article II. Such Register shall be in written form in the English language. Upon due presentation for registration of transfer of any Pass Through Certificate of the related Series at any such office or agency, the Pass Through Trustee shall execute, authenticate and deliver in the name of the transferee or transferees a new Pass Through Certificate of such Series in authorized denominations and for a like aggregate Fractional Undivided Interest. Subject to the provisions of Section 2.12 hereof, any Pass Through Certificate or Pass Through Certificates may be exchanged for a Pass Through Certificate or Pass Through Certificates of the same Series in other authorized denominations and for a like aggregate Fractional Undivided Interest. Pass Through Certificates to be exchanged shall be surrendered at any office or agency to be maintained by the Pass Through Trustee for the related Series for the 19 purpose as provided in Section 3.02 hereof, and the Pass Through Trustee shall execute, authenticate and deliver in exchange therefor the Pass Through Certificate or Pass Through Certificates which the Certificateholder making the exchange shall be entitled to receive, bearing numbers not contemporaneously or previously outstanding. All Pass Through Certificates presented for registration of transfer, exchange, redemption or payment shall (if so required by the Pass Through Trustee) be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Pass Through Trustee duly executed by, the Certificateholder or such Person's attorney duly authorized in writing. The Pass Through Trustee may require payment from the Certificateholder of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any exchange or registration of transfer of Pass Through Certificates. No service charge to the Certificateholder shall be made for any such transaction. All Pass Through Certificates issued upon any transfer or exchange of Pass Through Certificates shall evidence ownership in the same Pass Through Trust and be entitled to the same benefits under this Pass Through Agreement and the applicable Series Supplement, as the Pass Through Certificates surrendered upon such transfer or exchange. Resales or other transfers of Pass Through Certificates represented by a Registered Global Certificate will be conducted in accordance with the provisions of this Pass Through Agreement, including without limitation Section 6.06 hereof, and the rules and procedures of the Depository applicable to U.S. corporate pass through certificates and without notice to, or action by, the Pass Through Trustee. Neither the Company nor the Pass Through Trustee will have any responsibility or liability for any aspect of the records relating to, or payments made on account of, beneficial ownership interests of a Registered Global Certificate or for maintaining, supervising or reviewing any records relating to such beneficial interests. Section 2.09. Mutilated, Defaced, Destroyed, Lost and Stolen Pass Through Certificates. If any Pass Through Certificate becomes mutilated, defaced or is apparently destroyed, lost or stolen, the Pass Through Trustee in its discretion may execute, authenticate and deliver a new Pass Through Certificate of like Fractional Undivided Interest in the related Pass Through Trust, bearing a number not contemporaneously or previously outstanding, in exchange and 20 substitution for the mutilated or defaced Pass Through Certificate, or in lieu of and in substitution for the Pass Through Certificate so apparently destroyed, lost or stolen. In every case the applicant for a substitute Pass Through Certificate shall furnish to the Pass Through Trustee and any agent of the Pass Through Trustee such security or indemnity as may be required by them to indemnify and defend and to save each of them harmless from any such substitution and, in every case of destruction, loss or theft, evidence to their satisfaction of the apparent destruction, loss or theft of such Pass Through Certificate and of the ownership thereof. Upon the issuance of any substitute Pass Through Certificate, the Pass Through Trustee may require payment from the Certificateholder of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses (including the reasonable fees and expenses of the Pass Through Trustee) connected therewith. If any Pass Through Certificate of a Pass Through Trust for which a notice of termination has been or is about to be given pursuant to Section 12.01 hereof becomes mutilated or defaced or is apparently destroyed, lost or stolen, the Pass Through Trustee may, instead of issuing a substitute Pass Through Certificate, pay or authorize the payment of the same (without surrender thereof except in the case of a mutilated or defaced Pass Through Certificate), if the applicant for such payment furnishes to the Pass Through Trustee and any agent of the Pass Through Trustee such security or indemnity as any of them may require to save each of them harmless from all risks, however remote, resulting from such payment and, in every case of apparent destruction, loss or theft, the applicant shall also furnish to the Pass Through Trustee and any agent of the Pass Through Trustee evidence to their satisfaction of the apparent destruction, loss or theft of such Pass Through Certificate and of the ownership thereof. Every substitute Pass Through Certificate issued pursuant to the provisions of this Section 2.09 by virtue of the fact that any Pass Through Certificate is apparently destroyed, lost or stolen will constitute conclusive evidence of the Fractional Undivided Interest in the applicable Pass Through Trust evidenced by the Pass Through Certificate that it replaces, whether or not the apparently destroyed, lost or stolen Pass Through Certificate may be enforceable at any time by anyone and will be entitled to all the benefits of (but will be subject to all the limitations of rights set forth in) the applicable Pass Through Trust equally and proportionately with any and all other Pass Through Certificates duly authenticated and delivered therefor. All Pass Through Certificates will be held and owned upon the express condition that, to the extent permitted by law, the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, defaced, or apparently destroyed, lost or stolen Pass Through Certificates and will preclude any and all other rights or remedies notwithstanding 21 any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender. Section 2.10. Cancellation of Pass Through Certificates; Destruction Thereof. All Pass Through Certificates surrendered for payment, redemption, registration of transfer or exchange, if surrendered to any agent of the Pass Through Trustee, shall be delivered to the Pass Through Trustee for cancellation or, if surrendered to the Pass Through Trustee, shall be cancelled by it; and no Pass Through Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Pass Through Agreement or the applicable Series Supplement. The Pass Through Trustee shall destroy cancelled Pass Through Certificates held by it. Section 2.11. Temporary Pass Through Certificates. Pending the preparation of definitive Pass Through Certificates of any Series, the Pass Through Trustee may execute, authenticate and deliver temporary Pass Through Certificates for such Series (produced in a form satisfactory to the executing officer or authorized agent of the Pass Through Trustee, as evidenced by such officer's or authorized agent's execution thereof). Such temporary Pass Through Certificates shall be issuable as registered Pass Through Certificates without coupons, of any authorized denomination, and substantially in the form of the definitive Pass Through Certificates of such Series but with such omissions, insertions and variations as may be appropriate for temporary Pass Through Certificates, all as may be determined by the executing officer of the Pass Through Trustee, as evidenced by such officer's or authorized agent's execution thereof. Temporary Pass Through Certificates may contain such reference to any provisions of this Pass Through Agreement or the applicable Series Supplement as may be appropriate. Every such temporary Pass Through Certificate shall be executed and authenticated by the Pass Through Trustee upon the same conditions and in substantially the same manner, and with like effect, as the definitive Pass Through Certificates of such Series. Without unreasonable delay the Company shall furnish definitive Pass Through Certificates for such Series and thereupon temporary Pass Through Certificates shall be surrendered in exchange therefor without charge at any office or agency to be maintained by the Pass Through Trustee for the purpose pursuant to Section 3.02 hereof, and the Pass Through Trustee shall execute, authenticate and deliver in exchange for such temporary Pass Through Certificates such definitive Pass Through Certificates evidencing a like aggregate Fractional Undivided Interest in the applicable Pass Through Trust in authorized denominations. Until so exchanged, temporary Pass Through Certificates shall be entitled to the same benefits under the applicable Pass 22 Through Trust and this Pass Through Agreement as definitive Pass Through Certificates of the applicable Series. Section 2.12. Pass Through Certificates Issuable in the Form of a Registered Global Certificate. For any Series, at the sole option of the Company as set forth in the related Series Supplement, this Section 2.12 shall apply to such Series or may be amended with respect to any Series. To the extent that the provisions of this Section 2.12 conflict with any other provisions of this Pass Through Agreement, the provisions of this Section 2.12 shall control. (a) If the Company shall establish pursuant to Section 2.01(b)(9) hereof that the Pass Through Certificates of a particular Series are to be issued in whole in the form of a Registered Global Certificate, then the Pass Through Trustee shall, in accordance with this Article II, execute, authenticate and deliver, one or more Registered Global Certificates which (i) shall represent, and shall be denominated in an amount equal to, the aggregate Fractional Undivided Interests of all of the Pass Through Certificates in the related Pass Through Trust, (ii) shall be registered in the name of the Depository or its nominee, (iii) shall be delivered by the Pass Through Trustee to the Depository or pursuant to the Depository's instruction, and (iv) shall bear a legend substantially to the following effect: "Unless this Registered Global Certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Pass Through Trustee or its agent for registration of transfer, exchange or payment, and any Registered Global Certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein." No Person acquiring a beneficial interest in a Pass Through Certificate will be entitled to receive a definitive Pass Through Certificate representing such Person's interest in the Pass Through Trust, except as provided in subsection (d) below. (b) Notwithstanding any other provision of this Section 2.12 or of Section 2.08 hereof, the Registered Global Certificate for any Series may be transferred, in whole but not in part and in the manner provided in Section 2.08 hereof, by the Depository to a nominee of such Depository or by a nominee of such Depository to such Depository or another nominee of such Depository or by such Depository or any such nominee to a successor Depository selected or 23 approved by the Company upon notice to the Pass Through Trustee or to a nominee of such successor Depository. (c) The Depository shall be an organization registered as a clearing agency under the Exchange Act and any other applicable statute or regulation. (d) If at any time the Depository notifies the Company that it is unwilling or unable to continue as Depository for such Series or if at any time the Depository for such Series shall no longer be eligible under subsection (c) above, and a successor Depository is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such condition, as the case may be, this Section 2.12 shall no longer be applicable to the Pass Through Certificates of such Series and the Pass Through Trustee will execute, authenticate and deliver Pass Through Certificates of such Series in definitive registered form without coupons, in authorized denominations, and in an aggregate Fractional Undivided Interest in the related Pass Through Trust equal to the Fractional Undivided Interest in the related Pass Through Trust of the Registered Global Certificate then outstanding in exchange for such Registered Global Certificate. The Company may at any time and in its sole discretion determine that the Pass Through Certificates of any Series shall no longer be represented by a Registered Global Certificate and that the provisions of this Section 2.12 shall no longer apply to such Pass Through Certificates. In such event the Pass Through Trustee, upon receipt of an Officer's Certificate evidencing such determination by the Company, will notify the Depository of the availability of such Pass Through Certificates in definitive form and will execute, authenticate and deliver, Pass Through Certificates of such Series in definitive registered form without coupons, in authorized denominations and in an aggregate Fractional Undivided Interest in the related Pass Through Trust equal to the Fractional Undivided Interest in the related Pass Through Trust of the Registered Global Certificate then outstanding in exchange for such Registered Global Certificate. Upon the exchange of the Registered Global Certificate for such Pass Through Certificates in definitive registered form, such Registered Global Certificate shall be cancelled by the Pass Through Trustee. Such Pass Through Certificates in definitive registered form issued in exchange for the Registered Global Certificate pursuant to this subsection (d) shall be registered in such names and in such authorized denominations as the Depository shall instruct the Pass Through Trustee. The Pass Through Trustee shall deliver such Pass Through Certificates to the Persons in whose names such Pass Through Certificates are so registered. Upon the issuance of Pass Through Certificates in definitive registered form without coupons, the Pass Through Trustee shall recognize the Person in whose name such definitive Pass Through Certificates are registered in the Register from time to time as Certificateholders hereunder. 24 (e) As long as the Pass Through Certificates of a Series are represented by a Registered Global Certificate, all distributions for such Series shall be made to the holder of such Registered Global Certificate as the Certificateholder of such Series, or to such Persons as such holder may designate, by wire transfer of immediately available funds on the date such distributions are due, and the Company shall or shall cause the Pass Through Trustee to provide to the Depository any notices referred to in the related Letter of Representations in accordance with such Letter of Representations. ARTICLE III Certain Representations, Warranties and Covenants Section 3.01. Covenants of the Company. (a) The Company will preserve and maintain all of its rights, privileges and franchises necessary in the normal conduct of its business; provided that the Company shall not be required to preserve any right, privilege or franchise if the Company shall reasonably determine that the loss thereof will not materially adversely affect the Company's ability to perform its obligations hereunder or under any Series Supplement. (b) The Company shall not (i) consolidate with or merge into any other corporation under circumstances in which the Company is not the surviving corporation or (ii) convey, transfer or lease all or substantially all of its assets as an entirety to any Person, unless the corporation formed by such consolidation or into which the Company is merged or the Person which acquired by conveyance, transfer or lease substantially all of the assets of the Company as an entirety shall be a corporation organized and existing under the laws of the United States of America or any State or the District of Columbia, and shall execute and deliver to the Pass Through Trustee an agreement reasonably satisfactory in form and substance to the Pass Through Trustee containing an effective assumption by such successor corporation of the due and punctual performance and observance of each covenant and condition to be performed or observed by the Company hereunder and under each Series Supplement. (c) Upon any consolidation or merger, or any conveyance, transfer or lease of substantially all the assets of the Company as an entirety in accordance with this Section 3.01, the successor corporation formed by such consolidation or the Person into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company hereunder and under each Series Supplement with the same effect as if such successor corporation or such Person, as the case may be, had been named as the Company herein and therein. No such 25 conveyance, transfer or lease of substantially all of the assets of the Company as an entirety shall have the effect of releasing the Company or any successor corporation which shall theretofore have become such in the manner prescribed in this Section 3.01 from its liability hereunder or under any Series Supplement. (d) The Pass Through Trustee shall receive an Opinion of Counsel of the Company as conclusive evidence that any consolidation, merger, sale, lease or conveyance, and any assumption complies with the provisions of this Section 3.01 and the Pass Through Trustee shall be entitled to rely upon the same for all purposes hereof. Section 3.02. Offices for Payments; Registrar. So long as any Pass Through Certificates of a Series remain outstanding, the Pass Through Trustee will maintain the following for such Series: (a) an office or agency where such Pass Through Certificates may be presented for payment and (b) a facility or agency in New York, New York where such Pass Through Certificates may be presented or surrendered for registration of transfer and for exchange and for redemption as provided in this Pass Through Agreement (the "Registrar"). Written notice of the location of each such other office or agency and of any change of location thereof shall be given by the Pass Through Trustee to the Company, any Owner Trustees, the Indenture Trustees and the Certificateholders of such Series. In the event that no such office or agency shall be maintained or no such notice of location or of change of location shall be given, presentations and demands may be made and notices may be served at the Principal Corporate Trust Office of the Pass Through Trustee. The Registrar shall keep a register ("Register") with respect to the Pass Through Certificates of each Series and their transfer and exchange. The Pass Through Trustee may appoint one or more co-registrars ("Co-Registrars") for any Series and may terminate any such appointment at any time upon written notice. The term "Registrar" includes any Co-Registrar. Any Registrar shall be a bank or trust company organized and doing business under the laws of the United States or any state, with a combined capital and surplus of at least $100,000,000, or a direct or indirect subsidiary of such an entity, or a member of a bank holding company group, having a combined capital and surplus of at least $100,000,000 and such subsidiary or member itself having a capital and surplus of at least $10,000,000. The Pass Through Trustee shall initially act as Registrar and shall initially serve as an office where Pass Through Certificates can be presented for payment. 26 Section 3.03. Representations and Warranties of the Pass Through Trustee. (a) The Pass Through Trustee, in its individual capacity (except with respect to clause (iv) below), represents, warrants and agrees that: (i) it is a validly existing national banking association or a bank or trust company organized or chartered under the laws of a State of the United States of America and duly organized under the laws of the United States of America or such State, as the case may be, holding a valid certificate to do business as a national banking association or a bank or trust company under the State of the United States of America where it is organized or chartered, as the case may be, with banking and trust powers and has the corporate power and authority to enter into and perform its obligations under this Pass Through Agreement and any Intercreditor Agreement; (ii) each of this Pass Through Agreement and any Intercreditor Agreement has been duly authorized by all necessary corporate action on its part, and neither the execution and delivery hereof or thereof nor its performance of any of the terms and provisions hereof or thereof will violate any federal law or the law of the State of the United States of America where it is located or regulation relating to its banking or trust powers or any judgment or order applicable to or binding on the Pass Through Trustee and will not contravene or result in any breach of, or constitute any default under its charter or by-laws or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it or its properties may be bound or affected; (iii) the execution, delivery and performance by the Pass Through Trustee of this Pass Through Agreement or any Intercreditor Agreement will not require the authorization, consent, or approval of, the giving of notice to, the filing or registration with, or the taking of any other action in respect of, any governmental authority or agency of the United States of America or the State of the United States of America where it is located regulating the banking and corporate trust activities of the Pass Through Trustee other than (i) the registration of the Pass Through Certificates under the Securities Act and under the securities laws of any state in which the Pass Through Certificates may be offered for sale if the laws of such state require such action and (ii) the qualification of the Pass Through Agreement under the Trust Indenture Act pursuant to an order of the Securities and Exchange Commission; (iv) each of this Pass Through Agreement and any Intercreditor Agreement has been duly executed and delivered by it and, assuming that 27 such documents are the legal, valid and binding obligation of the other parties thereto, is the legal, valid and binding obligation of the Pass Through Trustee, enforceable against the Pass Through Trustee in accordance with its terms except as may be limited by bankruptcy, insolvency, moratorium, reorganization, receivership, fraudulent conveyance or similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights and remedies generally from time to time in effect, regardless of whether such enforceability is considered in a proceeding in equity or at law; and (v) each Series Supplement executed by such Pass Through Trustee will be, upon the date of execution and delivery of such Series Supplement, executed and delivered by one of its officers or authorized agents duly authorized to execute and deliver such Series Supplement on its behalf. (b) The representations and warranties set forth in subsection (a) above shall be deemed to be made by the applicable Pass Through Trustee on each Issuance Date, except as otherwise provided in the applicable Series Supplement. Section 3.04. Paying Agents. Whenever the Pass Through Trustee in its sole discretion shall appoint a paying agent (the "Paying Agent") for any Pass Through Trust, it will cause the Paying Agent to execute and deliver an instrument in which the Paying Agent shall agree with the Pass Through Trustee, subject to the provisions of this Section 3.04, (a) that it will hold all sums received by it as such agent for distribution to the Certificateholders of the related Series (whether such sums have been paid to it by the Pass Through Trustee or the Related Owner Trustee or Indenture Trustee) in trust for the benefit of the Certificateholders of the related Series or of the Pass Through Trustee, and (b) that it will notify the Pass Through Trustee if the principal of or interest or premium on the Equipment Certificates that constitute Trust Property of such Pass Through Trust is not paid when the same is due and payable. Anything in this Section 3.04 to the contrary notwithstanding, the agreements to hold sums in trust as provided in this Section 3.04 are subject to the provisions of Sections 12.03 and 12.04 hereof. Section 3.05. No Representations or Warranties as to Documents. The Pass Through Trustee neither makes nor shall be deemed to have made any representation or warranty as to the validity, legality or enforceability of any 28 Series Supplement, any related Pass Through Certificates, any Intercreditor Agreement or any related Indenture Documents or as to the correctness of any statement contained in any thereof, except for the representations and warranties of the Pass Through Trustee made in its individual capacity under this Pass Through Agreement, in any Series Supplement, in any related Participation Agreement or in any Intercreditor Agreement. Section 3.06. Payments from Trust Property Only. For any Pass Through Trust, all payments or distributions to be made to Certificateholders of any Series under the related Series Supplement by the Pass Through Trustee under such Pass Through Trust shall be made only from the income and the proceeds from the related Trust Property and only to the extent that the Pass Through Trustee shall have received sufficient income or proceeds from such Trust Property to enable the Pass Through Trustee to make distributions of the amounts due in respect of the Pass Through Certificates thereunder. Each Certificateholder of such Series by its acceptance of a related Pass Through Certificate agrees that it will look solely to the income and proceeds from the related Trust Property to the extent available for distribution to it as provided herein and in the related Series Supplement and that the Pass Through Trustee is not personally or individually liable to such Certificateholder for any amounts payable under such Pass Through Trust except as expressly provided herein. Section 3.07. Limitation of the Company's Liability. The Company is a party to this Pass Through Agreement solely for purposes of meeting the requirements of the Trust Indenture Act, and therefore shall not be liable hereunder, except as otherwise expressly provided herein, or under the terms of any Series Supplement or any Pass Through Certificates, except as otherwise expressly provided therein. ARTICLE IV Certificateholder Lists and Reports by the Company and the Pass Through Trustee Section 4.01. Certificateholder Lists; Ownership of Pass Through Certificates. (a) For each Series, the Pass Through Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of the Certificateholders of such Series. If the Pass Through Trustee is not the Registrar for such Series, the Company shall cause the Registrar to furnish to the Pass Through Trustee semi-annually not more than 15 days after 29 each Record Date, as of such Record Date, or at such other times as the Pass Through Trustee may request in writing, a list, in such form and as of such date as the Pass Through Trustee may reasonably require, containing all the information in the possession or control of the Registrar as to the names and addresses of the Certificateholders of such Series and the amounts of the Pass Through Certificates held by such Certificateholders. (b) For each Series, ownership of the Pass Through Certificates shall be proved by the Register for such Series kept by the Registrar. Section 4.02. Disclosure of Certificateholder Lists. Each and every Certificateholder, by receiving and holding such Pass Through Certificate, agrees with the Company and the Pass Through Trustee that neither the Company, the Pass Through Trustee, the Pass Through Trustee in its individual capacity nor any agent of any of the foregoing shall be held accountable by reason of the disclosure of any such information as to the names and addresses of any Certificateholders in accordance with the provisions of Section 312 of the Trust Indenture Act, regardless of the source from which such information was derived, and that the Pass Through Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 312(b) of the Trust Indenture Act. Section 4.03. Reports by the Company. The Company covenants: (a) to file with the Pass Through Trustee, within 30 days after the Company is required to file the same with the Commission, copies of the reports and documents, which the Company is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act; (b) to file with the Pass Through Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents, and reports with respect to compliance by the Company with the conditions and covenants provided for in this Pass Through Agreement as may be required from time to time by such rules and regulations; (c) to transmit to the Certificateholders of each Series in the manner and to the extent required by Section 313(c) of the Trust Indenture Act, within 30 days after the filing thereof with the Pass Through Trustee, such summaries of any information, documents and reports required to be filed by the Company pursuant to subsections (a) and (b) of this Section 4.03 as may be required by rules and regulations prescribed from time to time by the Commission; and 30 (d) furnish to the Pass Through Trustee, on or before each March 15, a brief certificate from the principal executive officer, principal financial officer or principal accounting officer of the Company as to his or her knowledge of the Company's compliance with all conditions and covenants under this Pass Through Agreement and each Series Supplement. For purposes of this subsection (d), such compliance shall be determined without regard to any period of grace or requirement of notice provided under this Pass Through Agreement or any Series Supplement. Section 4.04. Reports by the Pass Through Trustee. For each Series, on or before each May 15, the Pass Through Trustee in respect of such Series shall transmit, in the manner and to the extent required by Section 313(c) of the Trust Indenture Act, any report required by Section 313(b) of the Trust Indenture Act to be transmitted by the Pass Through Trustee to the related Certificateholders. ARTICLE V Receipt and Distribution of Income and Proceeds from the Trust Property Section 5.01. Certificate Account and Special Payments Account. (a) The Pass Through Trustee shall establish and maintain for each Pass Through Trust, on behalf of the related Certificateholders of each Series, a Certificate Account as one or more non-interest bearing accounts. In each case, the Pass Through Trustee shall hold such Certificate Account in trust for the benefit of such Certificateholders, respectively, and shall make or permit withdrawals therefrom only as provided in this Pass Through Agreement, the related Series Supplement or any Intercreditor Agreement. Upon receipt of any Scheduled Payment, the Pass Through Trustee shall immediately deposit such Scheduled Payment in the applicable Certificate Account. (b) The Pass Through Trustee shall establish and maintain, as and when required, for each Pass Through Trust, on behalf of the related Certificateholders of each Series, a Special Payments Account as one or more accounts, which shall be non-interest bearing except as provided in Section 5.04 hereof. In each case, the Pass Through Trustee shall hold such Special Payments Account in trust for the benefit of such Certificateholders, respectively, and shall make or permit withdrawals therefrom only as provided in this Pass Through Agreement, the related Series Supplement or any Intercreditor Agreement. Upon receipt of any Special Payment, the Pass Through Trustee shall immediately deposit such Special Payment in the applicable Special Payments Account. 31 Section 5.02. Distributions from Certificate Account and Special Payments Account. (a) Subject to any Intercreditor Agreement, for each Pass Through Trust, on each related Regular Distribution Date, or as soon thereafter as the Pass Through Trustee has confirmed receipt of any Scheduled Payment due on the related Equipment Certificates on such Regular Distribution Date, the Pass Through Trustee shall distribute out of the applicable Certificate Account the entire amount deposited therein pursuant to Section 5.01(a) hereof by paying to each Certificateholder of the related Series of record at the close of business on the Record Date for such Regular Distribution Date (except as provided in Section 12.01 hereof concerning the final distribution), at the address for such Certificateholder appearing in the related Register, such Certificateholder's pro rata share (based on the aggregate Fractional Undivided Interest in the related Pass Through Trust held by such Certificateholder) of the aggregate amount in the applicable Certificate Account. (b) Subject to any Intercreditor Agreement, for each Pass Through Trust, on each related Special Distribution Date, or as soon thereafter as the Pass Through Trustee has confirmed receipt of any Special Payment due on the related Equipment Certificates or realized upon the sale of any such Equipment Certificates, the Pass Through Trustee shall distribute out of the applicable Special Payments Account the entire amount of such Special Payment deposited therein pursuant to Section 5.01(b) hereof by paying to each Certificateholder of the related Series of record at the close of business on the Record Date for such Special Distribution Date (except as provided in Section 12.01 hereof concerning the final distribution), at the address for such Certificateholder appearing in the related Register, such Certificateholder's pro rata share (based on the aggregate Fractional Undivided Interest in the related Pass Through Trust held by such Certificateholder) of the aggregate amount in the applicable Special Payments Account on account of such Special Payment. (c) For each Pass Through Trust, the Pass Through Trustee shall at the expense of the Company notify each Certificateholder of the related Series by mail at its address as it appears in the related Register of each related Special Payment for such Series. If the related Equipment Certificates are to be redeemed or purchased in whole prior to their respective maturities, or if a Special Payment is to be made pursuant to either of the last two paragraphs of Section 2.02(b) hereof or if the Pass Through Trustee receives sufficient notice of such Special Payment, such notice shall be mailed not less than 15 days prior to the date any such Special Payment is scheduled to be distributed. For any other Special Payment, such notice shall be mailed as soon as practicable after the Pass Through Trustee has received funds for or notice of such Special Payment. Such notices of Special Payments shall set forth: 32 (i) the Special Distribution Date and the Record Date therefor (except as otherwise provided in Section 12.01 hereof); (ii) the amount of the Special Payment for each $1,000 face amount Pass Through Certificate and the amount thereof constituting principal, premium, if any, and interest on the related Equipment Certificates; (iii) the reason for the Special Payment; and (iv) if the Special Distribution Date is the same date as a Regular Distribution Date for such Series, the total amount to be received on such date for each $1,000 face amount Pass Through Certificate. If the amount of premium, if any, payable upon the redemption or purchase in whole of an Equipment Certificate has not been calculated at the time that the Pass Through Trustee mails the notice of the related Special Payment, it shall be sufficient if the notice sets forth the other amounts to be distributed and states that any premium received will also be distributed. If, for any Pass Through Trust, any cancelable redemption of the related Equipment Certificates is cancelled, the Pass Through Trustee, as soon as possible after learning thereof, shall notify by mail each Certificateholder of the related Series at its address as it appears on the related Register. (d) At such time, if ever, as the Pass Through Certificates are issued in certificated form, for each Pass Through Trust, any Scheduled Payment or Special Payment to be distributed pursuant to this Article V shall be payable at the Corporate Trust Office of the Pass Through Trustee or at any office or agency maintained for such purpose for the related Series pursuant to Section 3.02 hereof, provided that any Scheduled Payment or Special Payment may be payable at the option of the Pass Through Trustee or its Paying Agent for the related Series by mailing checks for such Scheduled Payment or Special Payment payable to or upon the written order of the related Certificateholders entitled thereto as they appear on the related Register. (e) The Pass Through Trustee shall present any Equipment Certificate to the applicable Related Indenture Trustee on the date of its stated final maturity, or on such earlier date as such Equipment Certificate is to be redeemed or purchased in whole pursuant to the relevant Indenture. Section 5.03. Statements to Certificateholders. (a) On each Regular Distribution Date and Special Distribution Date, the Pass Through Trustee shall 33 mail to Certificateholders of the related Series a statement, giving effect to such distribution to be made on such Regular Distribution Date or Special Distribution Date, as the case may be, setting forth the following information (as to (i) and (ii) below, for each $1,000 face amount Pass Through Certificate): (i) the amount of such distribution allocable to principal and the amount allocable to premium, if any, on the related Equipment Certificates; (ii) the amount of such distribution allocable to interest on the related Equipment Certificates; and (iii) the Pool Balance and the Pool Factor of the related Pass Through Trust. (b) For each Series, within a reasonable period of time after the end of each calendar year but not later than the latest date permitted by law, the Pass Through Trustee shall furnish to each Person who at any time during such calendar year was a Certificateholder of such Series a statement containing the sum of the amounts determined pursuant to clauses (a)(i) and (a)(ii) of this Section 5.03 for the related Pass Through Trust for such calendar year or, in the event such Person was a Certificateholder of such Series during a portion of such calendar year, for the applicable portion of such year. Section 5.04. Investment of Special Payment Moneys. Any money received by the Pass Through Trustee pursuant to Section 5.01(b) hereof representing a Special Payment that is not to be promptly distributed shall, to the extent practicable, be invested by the Pass Through Trustee in Permitted Investments selected by the Company by written notice to the Pass Through Trustee pending distribution of such Special Payment pursuant to Section 5.02 hereof. Any investment made pursuant to this Section 5.04 shall be in such Permitted Investments having maturities not later than the date that such moneys are required to be used to make the payment required under Section 5.02 hereof on the applicable Special Distribution Date and the Pass Through Trustee shall hold any such Permitted Investments until maturity. The proceeds upon maturity of any Permitted Investment shall not be reinvested pending distribution. The Pass Through Trustee shall have no liability with respect to any investment made pursuant to this Section 5.04, other than by reason of the willful misconduct or negligence of the Pass Through Trustee. All income and earnings from such investments shall be distributed on such Special Distribution Date as part of such Special Payment. 34 Section 5.05. Withholding Taxes. The Pass Through Trustee shall withhold any taxes required to be withheld on payments to any Certificateholder of any Series, except to the extent that such Certificateholder has furnished evidence reasonably satisfactory to the Pass Through Trustee of any exemption from withholding claimed by such Certificateholder, and under no circumstances shall the failure of any such Certificateholder to receive any amounts so withheld constitute an Event of Default. The Pass Through Trustee agrees to act as such withholding agent and, in connection therewith, whenever any taxes or similar charges are required to be withheld with respect to any amounts payable in respect of the Pass Through Certificates of such Series, to withhold such amounts and timely pay the same to the appropriate authority in the name of and on behalf of the Certificateholders of such Series, that it will file any necessary withholding tax returns or statements when due, and that, as promptly as possible after the payment thereof, it will deliver to each such Certificateholder appropriate documentation showing the payment thereof, together with such additional documentary evidence as any such Certificateholder of such Series may reasonably request from time to time. The Pass Through Trustee agrees to file any other information reports as it may be required to file under law. Notwithstanding any provision to the contrary herein, if the Company is required to pay any withholding tax or any interest or penalty thereon, or to indemnify an Owner Participant or Owner Trustee pursuant to Section 8.01(c) of any related Participation Agreement with respect to the Pass Through Trustee's failure to withhold with respect to any Certificateholder, the Pass Through Trustee shall be entitled to retain any payments otherwise distributable to such Certificateholder that was subject to such withholding until such amounts shall have been recovered in full by the Pass Through Trustee. ARTICLE VI Concerning the Certificateholders Section 6.01. Evidence of Action Taken by Certificateholders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Pass Through Agreement to be given or taken by Certificateholders of any Series may be embodied in and evidenced by one or more substantially similar instruments signed by such Certificateholders in person or by an agent duly appointed in writing, and, except as otherwise expressly provided herein, such action shall become effective when such instrument or instruments are delivered to the Pass Through Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Pass Through Agreement and (subject to Sections 8.02 and 8.03 35 hereof) conclusive in favor of the Pass Through Trustee, if made in the manner provided in this Article VI. (b) For the purpose of determining the Certificateholders of any Series entitled to vote or consent to any direction, waiver or other action of such Certificateholders under Section 7.10 or 7.11 hereof, the Company may set a record date for such vote or consent by specifying such record date in an Officer's Certificate delivered to the Pass Through Trustee. Notwithstanding Section 316(c) of the Trust Indenture Act, such record date shall be a date not more than 15 days prior to the first solicitation of such vote or consent. Section 6.02. Proof of Execution of Instruments and of Holding of Certificates. Subject to Sections 8.02 and 8.03 hereof, the execution of any instrument by a Certificateholder or its, his or her agent or proxy may be proved in accordance with such reasonable rules and regulations as may be prescribed by the Pass Through Trustee. The holding of Pass Through Certificates shall be proved by the Register or by a certificate of the Registrar. Section 6.03. Certificateholders to Be Treated as Owners. Prior to due presentment for registration of transfer of any Pass Through Certificate, each related Indenture Trustee, the Pass Through Trustee, any agent of any such related Indenture Trustee or the Pass Through Trustee, the Paying Agent, if any, the Registrar and the Company may deem and treat the Person in whose name such Pass Through Certificate shall be registered upon the Register as the absolute owner of such Pass Through Certificate (whether or not such Pass Through Certificate shall be overdue and notwithstanding any notation of ownership or other writing thereon) for the purpose of receiving payment on account of the principal payable with respect to and, subject to the provisions of this Pass Through Agreement, interest payable with respect to such Pass Through Certificate and for all other purposes; and neither any such related Indenture Trustee nor the Pass Through Trustee (nor any agent of any such related Indenture Trustee or the Pass Through Trustee) nor the Paying Agent, if any, nor the Registrar nor the Company shall be affected by any notice to the contrary. All such payments so made to any such Person, or upon such Person's order, shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Pass Through Certificate. Section 6.04. Pass Through Certificates Owned by the Company and Related Owner Trustees Deemed Not Outstanding. In determining whether the Certificateholders of the requisite aggregate Fractional Undivided Interest of Pass Through Certificates of any Series have concurred in any direction, consent or waiver under this Pass Through Agreement, Pass Through Certificates of such 36 Series that are owned by the Company, any Related Owner Trustee or Related Owner Participant or any obligor on such Pass Through Certificates or by any Affiliate of the Company, any such Related Owner Trustee or Related Owner Participant or any obligor on such Pass Through Certificates shall be disregarded and deemed not to be Outstanding for the purpose of any such determination; provided that for the purpose of determining whether the Pass Through Trustee shall be protected in relying on any such direction, consent or waiver, only if a Responsible Officer of the Pass Through Trustee has actual knowledge that certain Pass Through Certificates are so owned shall such Pass Through Certificates be so disregarded; and provided further that if all Pass Through Certificates of such Series that would be deemed Outstanding in the absence of the foregoing provision are owned by the Company, any Related Owner Trustee or Related Owner Participant or any obligor on such Pass Through Certificates or by any Affiliate of the Company, any such Related Owner Trustee or Related Owner Participant or any obligor on such Pass Through Certificates, then such Pass Through Certificates shall be deemed Outstanding for the purpose of any such determination. Pass Through Certificates so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Pass Through Trustee the pledgee's right so to act with respect to such Pass Through Certificates and that the pledgee is not the Company, any Related Owner Trustee or Related Owner Participant or any obligor upon the Pass Through Certificates or any Affiliate of the Company, any Related Owner Trustee or Related Owner Participant or any obligor on such Pass Through Certificates. In case of a dispute as to such right, the advice of counsel shall be full protection in respect of any decision made by the Pass Through Trustee in accordance with such advice. For any Series, upon request of the Pass Through Trustee, the Company, the Related Owner Trustees and the Related Owner Participants promptly shall furnish to the Pass Through Trustee an Officer's Certificate listing and identifying all Pass Through Certificates of such Series, if any, known by the Company or any such Related Owner Trustee or Related Owner Participant to be owned or held by or for the account of any of the above-described persons; and the Pass Through Trustee shall be entitled to accept such Officer's Certificate as conclusive evidence of the facts set forth therein and of the fact that all Pass Through Certificates of such Series not listed therein are Outstanding for the purpose of any such determination. For the purpose of determining whether Pass Through Certificates of a Series are Outstanding as described in this Section 6.04, an "obligor" on such Pass Through Certificates shall include any obligor or any Affiliate of any such obligor on any Equipment Certificates that constitute Trust Property of the related Pass Through Trust. 37 Section 6.05. Right of Revocation of Action Taken. For any Series, at any time prior to (but not after) the evidencing to the Pass Through Trustee, as provided in Section 6.01 hereof, of any action taken by the related Certificateholders of the percentage in aggregate of Fractional Undivided Interests in the related Pass Through Trust specified in this Pass Through Agreement in connection with such action, any Certificateholder of a Pass Through Certificate of such Series, the serial number of which is shown by the evidence to be included among the outstanding serial numbers of the Pass Through Certificates of such Series, the Certificateholders of which have consented to such action, may, by filing written notice at the Corporate Trust Office and upon proof of holding as provided in this Article VI, revoke such action so far as concerns such Pass Through Certificate. Except as aforesaid, any such action taken shall be conclusive and binding upon such Certificateholder for such Pass Through Certificate and upon all future Certificateholders and owners of such Pass Through Certificate and of any Pass Through Certificates issued in exchange or substitution therefor, irrespective of whether or not any notation in regard thereto is made upon any such Pass Through Certificate or otherwise. Any action taken by such Certificateholders of the percentage in aggregate of Fractional Undivided Interests in the related Pass Through Trust specified in this Pass Through Agreement in connection with such action shall be conclusively binding upon the Pass Through Trustee and all the Certificateholders of such Series. Section 6.06. ERISA. Unless otherwise specified in the applicable Series Supplement, no employee benefit plan subject to Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or individual retirement account or plan subject to Section 4975 of the Code (hereinafter collectively referred to as an "ERISA Plan"), may acquire or hold any of the Pass Through Certificates. If the Pass Through Certificates are not described in the applicable Series Supplement as being eligible for purchase by ERISA Plans, the purchase by any person of any Pass Through Certificate constitutes a representation by such person to the Company, the Related Owner Participants, the Related Owner Trustees, the Related Indenture Trustees and the Pass Through Trustee that such person is not an ERISA Plan and that such person is not acquiring, and has not acquired, such Pass Through Certificate with assets of an ERISA Plan. 38 ARTICLE VII Remedies of Pass Through Trustee and Certificateholders Section 7.01. Events of Default. (a) Exercise of Remedies. If, for any Pass Through Trust, an Indenture Event of Default under an Indenture relating to any Equipment Certificate that constitutes Trust Property of such Pass Through Trust (an "Event of Default") shall occur and be continuing, then, subject to the provisions of any Intercreditor Agreement, the Pass Through Trustee may vote all of the Equipment Certificates under such Indenture held by such Pass Through Trust, and upon the direction of the Majority In Interest of Certificateholders of the related Series, the Pass Through Trustee shall vote a corresponding majority of such Equipment Certificates in favor of directing the applicable Related Indenture Trustee to declare the unpaid principal of such Equipment Certificates then outstanding, together with interest accrued but unpaid thereon and all other amounts due under such Equipment Certificates and the related Indenture, to be due and payable under, and in accordance with the provisions of, such Indenture. In addition, if such Event of Default shall have occurred and be continuing, subject to the provisions of any Intercreditor Agreement, the Pass Through Trustee may in accordance with such related Indenture vote such Equipment Certificates to direct the applicable Related Indenture Trustee regarding the exercise of remedies provided in such Indenture. If, for any Pass Through Trust, an Event of Default shall have occurred and be continuing, subject to the provisions of any Intercreditor Agreement, the Pass Through Trustee may, and upon the direction of the Majority In Interest of Certificateholders of the related Series shall, by such officer or agent as it may appoint, sell, convey, transfer and deliver any Equipment Certificates held in such Pass Through Trust that are subject to the corresponding Indenture Event of Default, without recourse to or warranty by the Pass Through Trustee or any Certificateholder of such Series, to any Person. In any such case, the Pass Through Trustee shall sell, assign, contract to sell or otherwise dispose of and deliver any such Equipment Certificates in one or more parcels at public or private sale or sales, at any location or locations at the option of the Pass Through Trustee, all upon such terms and conditions as it may reasonably deem advisable and at such prices as it may reasonably deem advisable, for cash. If the Pass Through Trustee so decides or is required to sell or otherwise dispose of any Equipment Certificates pursuant to this Section 7.01, the Pass Through Trustee shall take such of the actions described above as it may reasonably deem most effective to complete the sale or other disposition of such Equipment Certificates, so as to provide for the payment in full of all amounts due on such Equipment Certificates with respect to the related Series. Notwithstanding the foregoing, any action taken by the Pass Through Trustee 39 under this Section 7.01 shall not, in the reasonable judgment of the Pass Through Trustee, be adverse to the best interests of the Certificateholders of such Series. If an Intercreditor Agreement is applicable and the Pass Through Trustee is the Controlling Party thereunder, the Pass Through Trustee upon the occurrence of an Indenture Event of Default may direct the exercise of remedies in connection therewith. (b) Purchase Rights of Certificateholders. If an Intercreditor Agreement is applicable, by acceptance of its Pass Through Certificate, each Certificateholder agrees that at any time after the occurrence and during the continuation of a Triggering Event, with ten days' written notice to the Pass Through Trustee and each other Certificateholder of the same class, each Certificateholder of Pass Through Certificates of a Series will have certain rights, the exercise of which will be specified in the applicable Series Supplement, to purchase all, but not less than all, of the class of Pass Through Certificates senior to the Pass Through Certificates held by the purchasing Certificateholder. The purchase price with respect to the Pass Through Certificates of any series shall be equal to the Pool Balance of the Pass Through Certificates of such series, together with accrued and unpaid interest thereon to the date of such purchase, without premium, but including any other amounts then due and payable to the Certificateholders under this Pass Through Agreement, any Intercreditor Agreement or any other Indenture Document or on or in respect of the Pass Through Certificate of such Series; provided, however, that no such purchase of Pass Through Certificates of such Series shall be effective unless the purchaser shall certify to the Pass Through Trustee that contemporaneously with such purchase, such purchaser is purchasing, pursuant to the terms of this Pass Through Agreement and the other Agreements, if any, relating to Pass Through Certificates of a series that are subject to the same Intercreditor Agreement (such other Agreements, the "Other Agreements"), the Pass Through Certificates of each such series that is senior to the Pass Through Certificates held by such purchaser. If prior to the end of the ten-day period, any other Certificateholder of the same class notifies the purchasing Certificateholder that the other Certificateholder wants to participate in such purchase, then such other Certificateholder may join with the purchasing Certificateholder to purchase the Pass Through Certificates pro rata based on the interest in the Pass Through Trust held by each Certificateholder. Each payment of the purchase price of the Pass Through Certificates of any Series shall be made to an account or accounts designated by the Pass Through Trustee and each such purchase shall be subject to the terms of this Section. Each Certificateholder of any Series agrees by its acceptance of Pass 40 Through Certificates of such Series that it will, upon payment from any such Certificateholders of Pass Through Certificates with a lower seniority of the purchase price specified herein, forthwith sell, assign, transfer and convey to the purchaser thereof (without recourse, representation or warranty of any kind except for its own acts), all of the right, title, interest and obligation of such Certificateholder in this Pass Through Agreement, any Intercreditor Agreement, the Liquidity Facility, the Indenture Documents and all Pass Through Certificates of such Series held by such Certificateholder (excluding all right, title and interest under any of the foregoing to the extent such right, title or interest is with respect to an obligation not then due and payable as respects any action or inaction or state of affairs occurring prior to such sale) and the purchaser shall assume all of such Certificateholder's obligations under this Pass Through Agreement, any Intercreditor Agreement, the Liquidity Facility and the Indenture Documents. The Pass Through Certificates of such Series will be deemed to be purchased on the date of payment of the purchase price is made notwithstanding the failure of the Certificateholders to deliver any Pass Through Certificates of such Series and, upon such a purchase, (i) the only rights of the Certificateholders will be to deliver the Pass Through Certificates to the purchaser and receive the purchase price for such Pass Through Certificates of such series and (ii) if the purchaser shall so request, such Certificateholder will comply with all of the provisions of Section 2.08 hereof to enable new Pass Through Certificates of such Series to be issued to the purchaser in such denominations as it shall request. All charges and expenses in connection with the issuance of any such new Pass Through Certificates shall be borne by the purchaser thereof. Section 7.02. Incidents of Sale of Equipment Certificates. Upon any sale of all or any part of the Equipment Certificates held in any Pass Through Trust made either under the power of sale given under this Pass Through Agreement or the related Series Supplement or otherwise for the enforcement of this Pass Through Agreement and the related Series Supplement, the following shall be applicable: (1) Certificateholders and Pass Through Trustee May Purchase Equipment Certificates. Any Certificateholder of the related Series, the Pass Through Trustee in its individual or any other capacity or any other Person may bid for and purchase any of such Equipment Certificates, and upon compliance with the terms of sale, may hold, retain, possess and dispose of such Equipment Certificates in its or their own absolute right without further accountability. (2) Receipt of Pass Through Trustee Shall Discharge Purchaser. The receipt of the Pass Through Trustee or of the officer making such sale shall be a sufficient discharge to any purchaser for its, his or her purchase 41 money, and, after paying such purchase money and receiving such receipt, such purchaser or its, his or her personal representative or assigns shall not be obliged to see to the application of such purchase money, or be in any way answerable for any loss, misapplication or non-application thereof. (3) Application of Moneys Received upon Sale. Any moneys collected by the Pass Through Trustee upon any sale made either under the power of sale given by this Pass Through Agreement or the related Series Supplement or otherwise for the enforcement of the related Pass Through Trust, shall be deposited and distributed as a Special Payment as provided in Article V hereof. Section 7.03. Pass Through Trustee May Prove Debt. If any amount payable under any Equipment Certificate held by any Pass Through Trust is not paid when due and payable, the Pass Through Trustee, in its own name and as trustee of an express trust, as holder of such Equipment Certificate shall be, to the extent permitted by and in accordance with the terms of the related Indenture Documents and any Intercreditor Agreement, entitled and empowered to institute any action or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceedings to judgment or final decree, and may enforce any such judgment or final decree against the applicable Owner Trustee, in the case of an Equipment Trust Certificate, or the Company, in the case of an Equipment Purchase Certificate, or other obligor upon such Equipment Certificate and collect in the manner provided by law out of the property of such Owner Trustee, or the Company or such other obligor upon such Equipment Certificate, as the case may be, wherever situated, the moneys adjudged or decreed to be payable. All rights of action and of asserting claims under this Pass Through Agreement, or under any of the Pass Through Certificates, may be prosecuted and enforced by the Pass Through Trustee without the possession of any of such Pass Through Certificates or the production thereof in any trial or other proceedings relative thereto, and any such action or proceedings instituted by the Pass Through Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Pass Through Trustee, each predecessor Pass Through Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Certificateholders of the related Series. In any proceedings brought by the Pass Through Trustee (and also any proceedings involving the interpretation of any provision of this Pass Through Agreement, any Series Supplement or any Intercreditor Agreement to which the Pass Through Trustee shall be a party) the Pass Through Trustee shall be held to 42 represent all the Certificateholders of the related Series, and it shall not be necessary to make any such Certificateholders parties to any such proceedings. Section 7.04. Remedies Cumulative. Each and every right, power and remedy given to the Pass Through Trustee or to any of the Certificateholders of any Series specifically or otherwise under any Pass Through Trust shall be cumulative and shall be in addition to every other right, power and remedy specifically given thereunder or now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy whether specifically given thereunder or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by the Pass Through Trustee or the Certificateholders of the related Series, and the exercise or the beginning of the exercise of any power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy. No delay or omission by the Pass Through Trustee or of any such Certificateholder in the exercise of any right, remedy or power or in the pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the applicable Owner Trustee, if any, or the Company, as the case may be, or to be an acquiescence therein. Section 7.05. Suits for Enforcement. If an Indenture Event of Default has occurred, has not been waived and is continuing, the Pass Through Trustee may in its discretion and subject to its rights of appropriate indemnification under Sections 7.07 and 8.03 and Article IX hereof, to the extent permitted by and in accordance with any Intercreditor Agreement and the Indenture Documents, proceed to protect and enforce its rights and rights of the Certificateholders of the related Series by such appropriate judicial proceedings as the Pass Through Trustee shall deem most effectual to protect and enforce any of such rights, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement under the related Pass Through Trust or in aid of the exercise of any power granted thereunder or to enforce any other legal or equitable right vested in the Pass Through Trustee or the Certificateholders under such Pass Through Trust or by law; provided that any sale of any portion of the related Trust Property shall be made in accordance with Section 7.02 hereof. Section 7.06. Discontinuance of Proceedings. If the Pass Through Trustee or any Certificateholder of any Series institutes any proceeding to enforce any right, power or remedy under the related Pass Through Trust, and such proceeding is discontinued or abandoned for any reason or is determined adversely to the Pass Through Trustee or such Certificateholder, then and in every such case the applicable Owner Trustee, if any, and the applicable Indenture Trustee, the Pass Through Trustee, the Certificateholders of such Series and the 43 Company shall, subject to any determination in such proceeding, be restored to their former positions and rights under such Pass Through Trust with respect to the Trust Property and all rights, remedies and powers of the Pass Through Trustee and such Certificateholders shall continue as if no such proceeding had been instituted. Section 7.07. Limitations on Suits by Certificateholders. No Certificateholder of any Series shall have any right by virtue or by availing of any provision of the related Pass Through Trust to institute any action or proceeding at law or in equity or in bankruptcy or otherwise upon or under or with respect to such Pass Through Trust, or for the appointment of a trustee, receiver, liquidator, custodian or other similar official or for any other remedy thereunder, unless such Certificateholder previously has notified the Pass Through Trustee in writing of an Event of Default under such Pass Through Trust and of the continuance thereof, as provided herein, and the Certificateholders of the related Pass Through Certificates then Outstanding (or the proxy therefor) representing in the aggregate not less than 50% of the Fractional Undivided Interests of Pass Through Certificates then Outstanding under such Pass Through Trust have requested in writing that the Pass Through Trustee institute such action or proceedings in its own name as trustee under such Pass Through Trust and have offered to the Pass Through Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby, and the Pass Through Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such action or proceedings and no direction inconsistent with such written request has been given to the Pass Through Trustee pursuant to Section 7.10 hereof; it being understood and intended, and being expressly covenanted by such Certificateholder with every other Certificateholder of such Series and the Pass Through Trustee, that no one or more Certificateholders of such Series shall have any right in any manner whatever to affect, disturb or prejudice the rights of any other Certificateholder of such Series or to obtain or seek to obtain priority over or preference to any other Certificateholder of such Series or to enforce any right under the related Pass Through Trust, except in the manner provided therein and for the equal, ratable and common benefit of all Certificateholders of such Series. For the protection and enforcement of the provisions of this Section 7.07, each and every Certificateholder of the related Series and the Pass Through Trustee shall be entitled to such relief as can be given either at law or in equity. Section 7.08. Unconditional Right of Certificateholders to Receive Principal, Interest and Premium, and to Institute Certain Suits. Notwithstanding any other provision in this Pass Through Agreement, any Series Supplement or any Pass Through Certificate issued pursuant to such Series Supplement, but subject to any Intercreditor Agreement, the right of any Certificateholder of the 44 related Series to receive distributions on such Pass Through Certificate of Scheduled Payments or Special Payments pursuant to Article V hereof on or after the respective due dates set forth in such Series Supplement, or, subject to Section 7.07 hereof, to institute suit for the enforcement of any such distribution on or after such respective dates as provided herein or therein, shall not be impaired or affected without the consent of such Certificateholder. The purchase by any Certificateholder of any Pass Through Certificate constitutes the consent of such Certificateholder to the retention by the Pass Through Trustee of certain amounts otherwise distributable to such Certificateholder in accordance with Section 5.05 hereof. Section 7.09. Control by Certificateholders. Subject to any Intercreditor Agreement, a Majority In Interest of Certificateholders of any Series has the right with respect to the related Pass Through Trust to direct the Pass Through Trustee as to the time, method, and place of conducting any proceeding for any remedy available to the Pass Through Trustee with respect to such Pass Through Trust or pursuant to the terms of any Intercreditor Agreement, or exercising any trust or power conferred on the Pass Through Trustee under this Pass Through Agreement or any Intercreditor Agreement, including any right of the Pass Through Trustee as Controlling Party under any Intercreditor Agreement or as holder of the Equipment Certificates; provided that such direction is not otherwise than in accordance with law and the provisions of such Pass Through Trust and the Pass Through Trustee has received, to the extent provided in Sections 7.07 and 8.03 and Article IX hereof, such reasonable indemnification as it may require against the costs, expenses and liabilities to be incurred by the Pass Through Trustee; and provided further that the Pass Through Trustee has the right to decline to follow any such direction if the Pass Through Trustee, being advised by counsel, determines that the action or proceeding so directed may not lawfully be taken or if the Pass Through Trustee in good faith by its board of directors, the executive committee, or a trust committee of directors or Responsible Officers of the Pass Through Trustee determines that the action or proceedings so directed would involve the Pass Through Trustee in personal liability or if the Pass Through Trustee in good faith so determines that the actions or forebearances specified in or pursuant to such direction would be unduly prejudicial to the interests of the Certificateholders of such Series not joining in the giving of said direction, it being understood that the Pass Through Trustee shall have no duty to ascertain whether or not such actions or forebearances are unduly prejudicial to such Certificateholders. Nothing in this Pass Through Agreement or any Series Supplement shall impair the right of the Pass Through Trustee in its discretion to take any action deemed proper by the Pass Through Trustee with respect to the related Pass 45 Through Trust and which is not inconsistent with such direction by Certificateholders of the related Series. Section 7.10. Waiver of Past Events of Default. Subject to any Intercreditor Agreement, the Majority in Interest of Certificateholders of any Series (i) may on behalf of all of the Certificateholders waive any past Event of Default under the related Pass Through Trust or the related Series Supplement and its consequences or (ii) if the Pass Through Trustee is the Controlling Party, may direct the Pass Through Trustee to instruct the applicable Indenture Trustee to waive, any past Indenture Default under any Indenture and its consequences, and thereby annul any direction given by such Certificateholders or the Pass Through Trustee to such Indenture Trustee with respect thereto. Upon such waiver such Event of Default will cease to exist and any Event of Default arising therefrom will be deemed to have been cured for every purpose of such Pass Through Trust, but no such waiver will extend to any subsequent or other Event of Default thereunder or impair any right consequent thereon; provided that any such waiver will be effective to waive any such past Event of Default and its consequences as described above if, but only if, the correlative Indenture Event of Default has been waived under the related Indenture by the requisite holders of the Equipment Certificates outstanding thereunder; and provided further that in the absence of written instructions from all Certificateholders of any Series (or the proxy therefor), the Pass Through Trustee shall not waive any Event of Default (i) consisting of the failure to pay any principal of, or premium (if any), or interest on, or other amounts due under, any Equipment Certificate held by the related Pass Through Trust and the consequent failure to distribute any related Scheduled Payment or Special Payment pursuant to Article V hereof on or after the respective due date therefor set forth in the related Series Supplement or (ii) in respect of a covenant or provision under any Pass Through Trust that, under Article XI hereof or the related Series Supplement, cannot be modified or amended without the consent of each Certificateholder of the related Series (or the proxy therefor). Section 7.11. Notice of Pass Through Defaults. The Pass Through Trustee shall, in the manner and to the extent required by Section 313(c) of the Trust Indenture Act, notify the Certificateholders of any Series of all Pass Through Defaults under the related Pass Through Trust known to a Responsible Officer of the Pass Through Trustee, unless such Pass Through Defaults have been cured before the giving of such notice; provided that under no circumstances shall the Pass Through Trustee give such notice until the earlier of the time at which such Pass Through Default becomes an Event of Default or the expiration of a period of 60 days from the occurrence of such Pass Through Default; and provided further that, except in the case of the failure to pay any principal of or interest on or any other amount due under any of the Equipment Certificates held 46 by any Pass Through Trust and the consequent failure to distribute any related Scheduled Payment or Special Payment pursuant to Article V hereof on or after the respective due date therefor set forth in the related Series Supplement, the Pass Through Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trust committee of directors or trustees or Responsible Officers of the Pass Through Trustee in good faith determines that the withholding of such notice is in the interests of the Certificateholders of the related Series. ARTICLE VIII Concerning the Pass Through Trustee Section 8.01. Acceptance by Pass Through Trustee. The Pass Through Trustee, upon the execution and delivery of a Series Supplement creating a Pass Through Trust and providing for the issuance of a Series of Pass Through Certificates, shall acknowledge its acceptance of all right, title and interest in and to the Equipment Certificates to be acquired as Trust Property of such Pass Through Trust pursuant to the applicable Participation Agreements and Section 2.02 hereof, and shall declare that the Pass Through Trustee holds and will hold such right, title, and interest, together with all other property constituting the Trust Property of such Pass Through Trust, for the benefit of all then present and future Certificateholders of such Series, upon the trusts set forth in such Pass Through Trust. Section 8.02. Pass Through Trustee's Liens. The Pass Through Trustee agrees that it will, in its individual capacity and at its own cost and expense (without any right of indemnity in respect of any such cost or expense under Article IX hereof) promptly take such action as may be necessary to duly discharge all Liens on any part of the Trust Property of any Pass Through Trust that result from claims (i) against it in its individual capacity not related to the administration of such Trust Property or any other transaction pursuant to this Pass Through Agreement, the related Series Supplement, the Participation Agreement or any Intercreditor Agreement, or (ii) against it as Pass Through Trustee hereunder or in its individual capacity which arise out of the negligence or willful misconduct of the Pass Through Trustee as such negligence or willful misconduct shall be determined by a final decision of a court of competent jurisdiction. Section 8.03. Certain Rights of the Pass Through Trustee. Subject to the Trust Indenture Act: 47 (a) the Pass Through Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, Officer's Certificate or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, note, coupon, security or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request of any Related Indenture Trustee or Related Owner Trustee in connection with any Pass Through Trust shall be sufficiently evidenced by an Officer's Certificate (unless other evidence in respect thereof is specifically prescribed herein) upon which the Pass Through Trustee may rely to prove or establish a matter set forth therein; (c) the Pass Through Trustee in the administration of this Pass Through Agreement or any Intercreditor Agreement may consult with counsel and any advice or Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in good faith and in accordance with such advice or Opinion of Counsel; (d) the Pass Through Trustee shall not be obligated to exercise any of the trusts or powers vested in it under any Pass Through Trust or any Intercreditor Agreement at the request, order or direction of the Certificateholders of the related Series in accordance with the provisions thereof, unless such Certificateholders have offered to the Pass Through Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred therein or thereby; (e) the Pass Through Trustee shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion, rights or powers conferred upon it under any Pass Through Trust, under this Pass Through Agreement or under any Intercreditor Agreement; (f) prior to the occurrence of an Event of Default under any Pass Through Trust and after the curing or waiving of all Events of Default thereunder, the Pass Through Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, note, security, or other paper or document unless requested in writing to do so by the Majority in Interest of Certificateholders of the related Series; provided that if the payment within a reasonable time to the Pass Through Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Pass Through Trustee, not reasonably assured to the Pass Through Trustee by the security afforded to it by the terms of such Pass Through Trust, the Pass Through Trustee may require reasonable 48 indemnity from the Certificateholders against such expenses or liabilities as a condition to proceeding; subject to (h) below, the reasonable expenses of every such examination shall be paid by the Pass Through Trustee or any predecessor trustee, and shall be repaid by the Company upon demand or indemnification by the Certificateholders; (g) the Pass Through Trustee may execute any of the trusts or powers under any Pass Through Trust or any Intercreditor Agreement or perform any duties hereunder or thereunder either directly or by or through agents or attorneys not regularly in its employ and the Pass Through Trustee shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed by it with due care under this Pass Through Agreement or any Intercreditor Agreement; and (h) the Pass Through Trustee shall not be required to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers under any Pass Through Trust, if the Pass Through Trustee has determined in good faith that the repayment of such funds or adequate indemnity against such liability is not reasonably assured to it. Section 8.04. Pass Through Trustee Not Responsible for Recitals. The Pass Through Trustee assumes no responsibility for the correctness of the recitals contained herein or in any Pass Through Certificates, except for the execution and authentication of such Pass Through Certificates by the Pass Through Trustee in accordance with Sections 2.05 and 2.06 hereof, respectively. Section 8.05. Pass Through Trustee and Agents May Hold Pass Through Certificates; Collections. The Pass Through Trustee and any agent of the Pass Through Trustee, in its individual or any other capacity, may become the owner or pledgee of Pass Through Certificates with the same rights it would have if it were not the Pass Through Trustee or such agent and, subject to the applicable provisions of the Trust Indenture Act, may otherwise deal with the Company, any Related Indenture Trustee or Related Owner Trustee and receive, collect, hold and retain collections therefrom with the same rights it would have if it were not the Pass Through Trustee or such agent. Section 8.06. Moneys Held by Pass Through Trustee. Subject to Sections 5.04 and 12.04 hereof, all moneys received by the Pass Through Trustee shall, until used or applied as provided herein, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by mandatory provisions of law. Subject to Section 5.04 49 hereof, neither the Pass Through Trustee nor any agent thereof shall be under any liability for interest on any moneys received by it hereunder. Section 8.07. Right of Pass Through Trustee to Rely on Officer's Certificate. Subject to Section 8.03 hereof, whenever in the administration of any Pass Through Trust the Pass Through Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting any action thereunder, such matter (unless other evidence in respect thereof is specifically prescribed herein) may, in the absence of bad faith on the part of the Pass Through Trustee, be deemed to be conclusively proved and established by an Officer's Certificate delivered to the Pass Through Trustee by the Company, any Related Indenture Trustee or any Related Owner Trustee, as the case may be, and such certificate, in the absence of bad faith on the part of the Pass Through Trustee, shall be full warrant to the Pass Through Trustee for any action taken, suffered or omitted by it under the provisions of this Pass Through Agreement upon the faith thereof. Section 8.08. Compensation. The Company agrees to pay, and the Pass Through Trustee shall be entitled to receive, reasonable compensation and payment or reimbursement for its reasonable advances, expenses and disbursements (including the reasonable compensation and expenses and disbursements of its counsel, agents and other persons not regularly in its employ) incurred in connection with its services rendered hereunder or in any way relating to or arising out of the administration of any Pass Through Trust or the related Trust Property, except any such advance, expense or disbursement attributable to the Pass Through Trustee's negligence, willful misconduct or bad faith or incurred as a result of the breach of its representation, warranty or covenant set forth in Sections 3.03(iv) and 8.02 hereof, and shall have a priority claim on such Trust Property for the payment of such compensation, advances, expenses and disbursements to the extent that such compensation, advances, expenses and disbursements shall not be paid by the Company. In addition, the Pass Through Trustee shall be entitled to reimbursement from, and shall have a priority claim on, all property and funds held or collected by the Pass Through Trustee with respect to any Series or the related Pass Through Trust in its capacity as Pass Through Trustee for any tax incurred without negligence, bad faith or willful misconduct on its part, arising out of or in connection with the acceptance or administration of such Pass Through Trust (excluding any taxes payable by the Pass Through Trustee on or measured by any compensation received by the Pass Through Trustee for its services under this Pass Through Agreement), including any costs and expenses incurred in contesting the imposition of any such tax. If the Pass Through Trustee reimburses itself from the Trust Property of such Pass Through Trust for any such tax it shall 50 within 20 days mail a brief report setting forth the circumstances thereof to all Certificateholders of the related Series as their names and addresses appear in the related Register. ARTICLE IX Indemnification of Pass Through Trustee by the Company The Company hereby agrees to assume liability for, and does hereby indemnify, save and keep harmless the Pass Through Trustee, in its individual capacity, and its successors, assigns, agents and servants, with respect to the claims of the Pass Through Trustee for payment or reimbursement under Section 8.08 hereof and from and against any and all liabilities, losses, damages, penalties, taxes (excluding any taxes payable by the Pass Through Trustee on or measured by any compensation received by the Pass Through Trustee for its services under this Pass Through Agreement), claims, actions, suits, costs, expenses or disbursements (including legal fees and expenses) of any kind and nature whatsoever which may be imposed on, or incurred by, the Pass Through Trustee in its individual capacity in any way relating to or arising out of this Pass Through Agreement, or any Series Supplement or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the administration of any Pass Through Trust or the related Trust Property or the action or inaction of the Pass Through Trustee hereunder, except only (i) in the case of negligence, willful misconduct or bad faith of the Pass Through Trustee in the performance of its duties hereunder or under any Series Supplement, (ii) as may result from the inaccuracy of any representation or warranty of the Pass Through Trustee herein or in any Participation Agreement or (iii) as otherwise provided in Section 8.02 hereof. The Pass Through Trustee in its individual capacity shall be entitled to indemnification, from the related Trust Property, for any liability, loss, damage, penalty, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this Article IX to the extent not reimbursed by the Company or others, but without releasing any of them from their respective agreements of reimbursement; and to secure the same the Pass Through Trustee shall have a prior Lien on such Trust Property. The indemnities contained in this Article IX shall survive the termination of this Pass Through Agreement or any Pass Through Trust and the resignation or removal of the Pass Through Trustee hereunder or thereunder. 51 ARTICLE X Successor Trustees Section 10.01. Resignation and Removal of Pass Through Trustee; Appointment of Successor. (a) The Pass Through Trustee may resign at any time as trustee of any Pass Through Trust without cause by giving at least 45 days prior written notice to the Company, the Related Indenture Trustees and the Related Owner Trustees, if any, such resignation to be effective upon the acceptance of the trusteeship by a successor Pass Through Trustee. In addition, a Majority in Interest of Certificateholders of any Series or the Company may at any time remove the related Pass Through Trustee without cause by an instrument in writing delivered to the Company (in the case of removal by a Majority in Interest of Certificateholders of any Series), the Related Owner Trustees, if any, the Related Indenture Trustees and the Pass Through Trustee, and the Pass Through Trustee shall promptly notify each Certificateholder of such Series of such removal in writing, such removal to be effective upon the acceptance of the trusteeship by a successor Pass Through Trustee. In the case of the resignation or removal of the Pass Through Trustee, the Company or a Majority in Interest of Certificateholders of the related Series may appoint a successor Pass Through Trustee by an instrument signed by the Company or such Certificateholders, as the case may be. If a successor Pass Through Trustee shall not have been appointed within 90 days after such notice of resignation or removal, the Pass Through Trustee, the Company or any Certificateholder of the related Series may apply to any court of competent jurisdiction to appoint a successor Pass Through Trustee to act until such time, if any, as a successor shall have been appointed as provided above. The successor Pass Through Trustee so appointed by such court shall immediately and without further act be superseded by any successor Pass Through Trustee appointed by the Company or a Majority in Interest of Certificateholders as provided above within one year from the date of the appointment by such court. (b) If at any time any of the following occurs with respect to any Pass Through Trust: (i) the Pass Through Trustee fails to comply with the requirements of Section 310(G) of the Trust Indenture Act after written request for such compliance by any Certificateholder of the related Series who has been a bona fide Certificateholder of such Series for at least six months; 52 (ii) the Pass Through Trustee ceases to be eligible in accordance with the provisions of Section 10.02 hereof to act as trustee for such Pass Through Trust and fails to resign after written request for such resignation by the Company or by any such bona fide Certificateholder; or (iii) the Pass Through Trustee becomes incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver or liquidator of the Pass Through Trustee or of its property shall be appointed, or any public officer takes charge or control of the Pass Through Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; then the Company may remove the Pass Through Trustee and appoint a successor trustee by written instrument, one copy of which instrument shall be delivered to the Pass Through Trustee so removed and one copy to the successor trustee, or, subject to the provisions of Section 315(e) of the Trust Indenture Act, any Certificateholder of the related Series who has been a bona fide Certificateholder of such Series for at least six months may, on behalf of itself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Pass Through Trustee and the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Pass Through Trustee and appoint a successor trustee, which removal and appointment shall become effective upon acceptance of appointment by the successor trustee as provided in Section 10.03 hereof. The successor Pass Through Trustee so appointed by such court shall immediately and without further act be superseded by any successor Pass Through Trustee appointed by the Company or the Certificateholders of the related Series as provided in subsection (a) above within one year from the date of appointment by such court. (c) If a Responsible Officer of the Pass Through Trustee shall obtain actual knowledge of an Avoidable Tax (as hereinafter defined) in respect of any Pass Through Trust which has been or is likely to be asserted, the Pass Through Trustee shall promptly notify the Company and shall, within 30 days of such notification, resign as Pass Through Trustee of such Pass Through Trust hereunder unless within such 30-day period the Pass Through Trustee shall have received notice that the Company has agreed to pay such tax. The Company shall promptly appoint a successor Pass Through Trustee of such Pass Through Trust in a jurisdiction where there are no Avoidable Taxes. As used herein, an "Avoidable Tax" in respect of such Pass Through Trust means a state or local tax: (i) upon (w) such Pass Through Trust, (x) such Trust Property, (y) Certificateholders of such Pass Through Trust or (z) the Pass Through Trustee for which the Pass Through Trustee is entitled to seek reimbursement from the Trust Property of such Pass Through Trust, and (ii) which would be avoided if the Pass 53 Through Trustee were located in another state, or jurisdiction within a state, within the United States. A tax shall not be an Avoidable Tax in respect of any Pass Through Trust if the Company or any Owner Trustee shall agree to pay, and shall pay, such tax. Section 10.02. Persons Eligible for Appointment as Pass Through Trustee. Each Pass Through Trust shall at all times have a Pass Through Trustee which shall be a Person eligible to act as trustee under Section 310(a) of the Trust Indenture Act and shall be a corporation organized and doing business under the laws of the United States of America or of any State or the District of Columbia having a combined capital and surplus of at least $100,000,000, or a direct or indirect subsidiary of such a corporation, or a member of a bank holding company group, having a combined capital and surplus of at least $100,000,000 and such subsidiary or member itself having a capital and surplus of at least $10,000,000, which corporate trustee shall be a citizen of the United States of America as defined under Title 49 of the United States Code, as amended, and which is authorized under such laws to exercise corporate trust powers and is subject to supervision of examination by federal, State or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section 10.02, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Pass Through Trustee ceases to be eligible in accordance with the provisions of this Section 10.02 to act as trustee for any Pass Through Trust, the Pass Through Trustee shall resign immediately as Pass Through Trustee for such Pass Through Trust in the manner and with the effect specified in Section 10.01 hereof. Section 10.03. Acceptance of Appointment by Successor Trustee. Any successor trustee appointed as provided in Section 10.01 hereof for any Pass Through Trust shall execute and deliver to the Company and to its predecessor trustee an instrument accepting such appointment with respect to such Pass Through Trust, and thereupon the resignation or removal of the predecessor trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all rights, powers, duties and obligations of its predecessor with respect to such Pass Through Trust, as if such successor trustee was originally named as trustee of such Pass Through Trust. Notwithstanding the foregoing, on the written request of the Company or the successor trustee, the trustee ceasing to act shall, upon payment of its charges then unpaid and subject to Section 12.04 hereof, pay over to the successor trustee 54 all moneys at the time held by it with respect to such Pass Through Trust and shall execute and deliver an instrument transferring to such successor trustee all such rights, powers, duties and obligations. Upon request of any such successor trustee, the Company shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers. Any trustee ceasing to act shall, nevertheless, retain a prior claim upon all property or funds held or collected by such trustee with respect to such Pass Through Trust to secure any amounts then due it pursuant to the provisions of Article IX hereof. If a successor trustee is appointed with respect to one or more (but not all) of the Pass Through Trusts created pursuant to this Pass Through Agreement, the predecessor trustee and each successor trustee with respect to such Pass Through Trusts shall execute and deliver a supplemental agreement hereto which shall be sufficient with respect to each such Pass Through Trust to effect the removal of any predecessor trustee retiring and to vest the successor trustee with all rights, powers, duties and obligations of its predecessor under each such Pass Through Trust as to which the predecessor Pass Through Trustee is retiring, as if such successor trustee was originally named as Pass Through Trustee hereunder or under the applicable Series Supplement, and shall add to or change any of the provisions of this Pass Through Agreement and the applicable Series Supplement as shall be necessary to provide for or facilitate the administration of such Pass Through Trust hereunder by more than one Pass Through Trustee. An institution satisfying the criteria specified in Section 10.02 hereof may be appointed, including pursuant to the relevant Series Supplement, as the Pass Through Trustee in respect of any Series issued or proposed to be issued if such institution shall execute and deliver to the Company with respect to the relevant Pass Through Trust an instrument (which may be the relevant Series Supplement) accepting such appointment and shall thereupon become vested with all the rights, powers, trusts and duties of the Pass Through Trustee in respect of such Pass Through Trust. It is understood that except as provided in Section 10.05 hereof nothing herein or in any supplemental agreement or Series Supplement shall constitute any Pass Through Trustee a co-trustee of any Pass Through Trustee and that each Pass Through Trustee may be the Pass Through Trustee of one or more separate Pass Through Trusts. No institution shall accept appointment as a Pass Through Trustee as provided in this Section 10.03 unless at the time of such acceptance such institution shall be eligible under the provisions of Article X hereof to act as trustee of the relevant Pass Through Trust. 55 Upon acceptance of appointment by a successor trustee as provided in this Section 10.03, the successor trustee shall notify the Certificateholders of the related Series of such appointment by first-class mail at their last addresses as they shall appear in the Register, and shall mail a copy of such notice to the Company, the Related Indenture Trustees and the Related Owner Trustees, if any. If the acceptance of appointment is substantially contemporaneous with the resignation, then the notice called for by the preceding sentence may be combined with the notice called for by Section 10.01 hereof. Section 10.04. Merger, Conversion, Consolidation or Succession to Business of Pass Through Trustee. Any corporation into which the Pass Through Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Pass Through Trustee is a party, or any corporation succeeding to the corporate trust business of the Pass Through Trustee, shall be the successor to the Pass Through Trustee hereunder, provided that, anything herein to the contrary notwithstanding, such corporation shall be eligible under the provisions of Section 10.02 hereof to act as trustee hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto. If, with respect to any Pass Through Trusts at the time of such succession to the Pass Through Trustee, any of the Pass Through Certificates of the related Series have been authenticated but not delivered, such successor may adopt the certificate of authentication of any such predecessor Pass Through Trustee and deliver such Pass Through Certificates so authenticated; and, if at that time any of such Pass Through Certificates have not been authenticated, such successor may authenticate such Pass Through Certificates either in the name of any of its predecessor or in its own name as the successor Pass Through Trustee; and in all such cases such certificate of authentication shall have the full force of the certificate of authentication of the Pass Through Trustee set forth in Section 2.01 hereof; provided that the right to adopt the certificate of authentication of any predecessor Pass Through Trustee or to authenticate Pass Through Certificates in the name of any predecessor Pass Through Trustee shall apply only to its successor or successors by merger, conversion or consolidation. Section 10.05. Appointment of Separate Pass Through Trustees. (a) At any time or times, for the purpose of meeting any legal requirements of any jurisdiction in which any part of the Trust Property of any Pass Through Trust may at the time be located or in which any action of the Pass Through Trustee may be required to be performed or taken, the Pass Through Trustee, by an instrument in writing signed by it, may appoint one or more individuals or corporations to act as separate trustee or separate trustees or co-trustee, acting jointly with the Pass Through Trustee, of all or any part of such Trust Property, to 56 the full extent that local law makes it necessary for such separate trustee or separate trustees or co-trustee, acting jointly with the Pass Through Trustee, to act. (b) The Pass Through Trustee and, at the request of the Pass Through Trustee, the Company, shall execute, acknowledge and deliver all such instruments as may be required by the legal requirements of any jurisdiction or by any such separate trustee or separate trustees or co-trustee for the purpose of more fully confirming such title, rights or duties to such separate trustee or separate trustees or co-trustee. Upon the acceptance in writing of such appointment by any such separate trustee or separate trustees or co-trustee, it, he, she or they shall be vested with such title to such Trust Property or any part thereof, and with such rights, powers, duties and obligations, as shall be specified in the instrument of appointment, and such rights, powers, duties and obligations shall be conferred or imposed upon and exercised or performed by the Pass Through Trustee, or the Pass Through Trustee and such separate trustee or separate trustees or co-trustee jointly with the Pass Through Trustee subject to all the terms of this Pass Through Agreement, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed the Pass Through Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations shall be exercised and performed by such separate trustee or separate trustees or co-trustee, as the case may be. Any separate trustee or separate trustees or co-trustee may, at any time by an instrument in writing, constitute the Pass Through Trustee its, her or his attorney-in-fact and agent with full power and authority to do all acts and things and to exercise all discretion on its, her or his behalf and in its, her or his name. In case any such separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, the title to any Trust Property and all assets, property, rights, powers, duties and obligations and duties of such separate trustee or co-trustee shall, so far as permitted by law, vest in and be exercised by the Pass Through Trustee, without the appointment of a successor to such separate trustee or co-trustee unless and until a successor is appointed. (c) All provisions of this Pass Through Agreement which are for the benefit of the Pass Through Trustee (including without limitation Article IX hereof) shall extend to and apply to each separate trustee or co-trustee appointed pursuant to the foregoing provisions of this Section 10.06. (d) For any Pass Through Trust, every additional trustee and separate trustee hereunder shall, to the extent permitted by law, be appointed and act and the Pass Through Trustee shall act, subject to the following provisions and conditions: 57 (i) all powers, duties, obligations and rights conferred upon the Pass Through Trustee in respect of the receipt, custody, investment and payment of moneys shall be exercised solely by the Pass Through Trustee; (ii) all other rights, powers, duties and obligations conferred or imposed upon the Pass Through Trustee shall be conferred or imposed and exercised or performed by the Pass Through Trustee and such additional trustee or trustees and separate trustee or trustees jointly except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed, the Pass Through Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust Property in any such jurisdiction) shall be exercised and performed by such additional trustee or trustees or separate trustee or trustees; (iii) no power hereby given to, or exercisable by, any such additional trustee or separate trustee shall be exercised hereunder by such additional trustee or separate trustee except jointly with, or with the consent of, the Pass Through Trustee; and (iv) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder. If at any time the Pass Through Trustee shall deem it no longer necessary or prudent in order to conform to any such law, the Pass Through Trustee shall execute and deliver all instruments and agreements necessary or proper to remove any additional trustee or separate trustee. (e) Any request, approval or consent in writing by the Pass Through Trustee to any additional trustee or separate trustee shall be sufficient warrant to such additional trustee or separate trustee, as the case may be, to take such action as may be so requested, approved or consented to. (f) Notwithstanding any other provision of this Section 10.06, the powers of any additional trustee or separate trustee shall not exceed those of the Pass Through Trustee hereunder. Section 10.06. Preferential Claims. Reference is made to Section 311 of the Trust Indenture Act. For purposes of Section 311(b)(4) and (6) of such Act: (a) "cash transaction" means any transaction in which full payment for goods or securities sold is made within seven days after delivery of the goods or 58 securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand; and (b) "self-liquidating paper" means any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred by the Company for the purpose of financing the purchase, processing, manufacturing, shipment, storage or sale of goods, wares or merchandise and which is secured by documents evidencing title to, possession of, or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship with the Company arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation. ARTICLE XI Supplements and Amendments to This Pass Through Agreement and Other Documents Section 11.01. Supplemental Agreements Without Consent of Certificateholders. The Company and the Pass Through Trustee may enter into an agreement or agreements supplemental hereto or to any applicable Intercreditor Agreement or Liquidity Facility for one or more of the following purposes: (a) to provide for the formation of any Pass Through Trust, the issuance of the related Series and the other matters contemplated by Section 2.01(b) hereof; (b) to evidence the succession of another corporation to the Company, or successive successions, and the assumption by the successor corporation of the covenants, agreements and obligations of the Company herein and in each Series Supplement; (c) to add to the covenants of the Company such further covenants, restrictions, conditions or provisions as the Pass Through Trustee shall consider to be for the protection of the Certificateholders of any Series; (d) to surrender any right or power conferred upon the Company herein or in any Series Supplement; (e) to cure any ambiguity or to correct any mistake or supplement any provision contained herein or in any Series Supplement, any Intercreditor Agreement or any Liquidity Facility that may be defective or inconsistent with any 59 other provision contained herein or in such Series Supplement, Intercreditor Agreement or Liquidity Facility; (f) to modify any other provisions in regard to matters or questions arising under this Pass Through Agreement or under any Series Supplement, any Intercreditor Agreement and any Liquidity Facility as the Company may deem necessary or desirable and that will not adversely affect the interests of the related Certificateholders; (g) to correct or amplify the description of any property at any time that constitutes Trust Property or better to assure, convey and confirm unto the Pass Through Trustee any such property to be included in any such Trust Property; (h) to evidence and provide for the acceptance and appointment under this Pass Through Agreement by the Pass Through Trustee or a successor trustee with respect to one or more Pass Through Trusts and to add to or change any of the provisions hereof as may be necessary to provide for or facilitate the administration of one or more Pass Through Trusts by more than one trustee, pursuant to the requirements of Section 10.03 hereof; (i) to modify, eliminate or add to the provisions of this Pass Through Agreement or any Series Supplement to the extent necessary to continue the qualification of this Pass Through Agreement or such Series Supplement (including any supplemental agreement) under the Trust Indenture Act, or under any similar federal statute enacted after the date hereof, and to add to this Pass Through Agreement or any Series Supplement such other provisions as may be expressly permitted by the Trust Indenture Act, excluding, however, the provisions referred to in Section 316(a)(2) of the Trust Indenture Act as in effect on the date hereof or any corresponding provision in any similar federal statute enacted after the date hereof; (j) to make any other amendments or modifications to this Pass Through Agreement, provided such amendments or modifications shall only apply to one or more Series to be issued after the date of such amendment or modification; or (k) to add, eliminate or change any provision hereunder so long as such action shall not adversely affect the interests of the Certificateholders of any Series; provided that no such supplemental agreement shall cause any Pass Through Trust to become taxable as an association for U.S. federal income tax purposes. 60 The Pass Through Trustee is hereby authorized to join in the execution of any such supplemental agreement, to make any further appropriate agreements and stipulations that may be contained therein and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Pass Through Trustee shall not be obligated to enter into any such supplemental agreement that adversely affects the Pass Through Trustee's own rights, duties or immunities under this Pass Through Agreement, any Series Supplement or otherwise, whether in its official or individual capacity. Any supplemental agreement contemplated by this Section 11.01 may be executed without the consent of the Certificateholders of the Outstanding Pass Through Certificates of any Series, notwithstanding any of the provisions of Section 11.02 hereof. Section 11.02. Supplemental Agreements with Consent of Certificateholders. With the consent (evidenced as provided in Article VI) of the Majority in Interest of Certificateholders of any Series, the Company and the Pass Through Trustee may, from time to time and at any time, enter into an agreement or agreements supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Pass Through Agreement or of the related Series Supplement, any Intercreditor Agreement or any Liquidity Facility or of modifying in any manner the rights of the related Certificateholders; provided, that no such supplemental agreement shall cause any Pass Through Trust to become taxable as an association for U.S. federal income tax purposes; and provided further that, without the consent of each Certificateholder of such Series (or the proxy therefor), no such amendment of or supplement to this Pass Through Agreement or such related Series Supplement, or modification of the terms of, or consent under, any thereof, shall: (a) modify any of the provisions of Section 7.10 hereof or this Section 11.02, (b) reduce the amount or extend the time of payment of any amount owing or payable on the related Equipment Certificates or distributions to be made on any related Pass Through Certificate pursuant to Article V, or alter the currency in which any amount payable under any such Pass Through Certificate is to be paid, or impair the right of any related Pass Through Certificateholder to commence legal proceedings to enforce a right to receive payment hereunder, (c) reduce, modify or amend any indemnities in favor of any Certificateholder (except as consented to by each such Certificateholder adversely affected thereby (or the proxy therefor)), or 61 (d) create or permit the creation of any Lien on the related Trust Property or any part thereof, or deprive any related Certificateholder of the benefit of the related Pass Through Trust with respect to the related Trust Property, whether by disposition of such Trust Property or otherwise, except as provided in Section 7.02 hereof or in connection with the exercise of remedies under Article VII hereof. (e) waive, amend or modify the priority of distributions of any Intercreditor Agreement in a manner adverse to the Certificateholder. Upon the request of the Company and upon the filing with the Pass Through Trustee of evidence of the consent of the applicable Certificateholders required under this Section 11.02 and other documents, if any, required by Section 6.01 hereof, the Pass Through Trustee shall join with the Company in the execution of such supplemental agreement unless such supplemental agreement affects the Pass Through Trustee's own rights, duties or immunities under this Pass Through Agreement or the related Series Supplement or otherwise, in which case the Pass Through Trustee may in its discretion, but shall not be obligated to, enter into such supplemental agreement. It shall not be necessary for the consent of the Certificateholders of any Series under this Section 11.02 to approve the particular form of any proposed supplemental agreement, but it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution by the Company and the Pass Through Trustee of any supplemental agreement relating to any Pass Through Trust pursuant to the provisions of this Section 11.02, the Pass Through Trustee shall mail a notice thereof by first-class mail to the related Certificateholders at their addresses as they shall appear on the related Register, setting forth in general terms the substance of such supplemental agreement. Any failure of the Pass Through Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental agreement. Section 11.03. Effect of Supplemental Agreements. Upon the execution of any supplemental agreement pursuant to the provisions hereof and of any applicable Series Supplement, this Pass Through Agreement and such Series Supplement shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities hereunder and under the related Pass Through Trust of the Pass Through Trustee, the Company and the related Certificateholders shall thereafter be determined, exercised and enforced hereunder and thereunder subject in all respects to such modifications and amendments, and all the terms and conditions 62 of any such supplemental agreement shall be and be deemed to be part of the terms and conditions of this Pass Through Agreement and such Pass Through Trust for any and all purposes. Section 11.04. Documents to Be Given to Trustee. The Pass Through Trustee, subject to the provisions of Sections 8.02 and 8.03 hereof, may receive and rely upon an Opinion of Counsel as conclusive evidence that any such supplemental agreement complies with the applicable provisions of this Pass Through Agreement and any applicable Series Supplement. Section 11.05. Notation on Pass Through Certificates in Respect of Supplemental Agreements. Pass Through Certificates of any Series authenticated and delivered after the execution of any supplemental agreement relating to such Series pursuant to the provisions of this Article XI may bear a notation in form approved by the Pass Through Trustee as to any matter provided for by such supplemental agreement. If the Company or the Pass Through Trustee shall so determine, new Pass Through Certificates for such Series so modified as to conform, in the opinion of the Company and the Pass Through Trustee, to any modification of this Pass Through Agreement contained in any such supplemental agreement may be provided by the Company, executed and authenticated by the Pass Through Trustee and delivered in exchange for the Outstanding Pass Through Certificates of such Series. Section 11.06. Trust Indenture Act. Any supplemental agreement executed pursuant to the terms of this Article XI shall on the date of the execution thereof conform to the provisions of the Trust Indenture Act as in force on such date. Section 11.07. Revocation and Effect of Consents. Until an amendment or waiver becomes effective, a consent to it by a Certificateholder is a continuing consent by such Certificateholder and every subsequent Certificateholder of the related Pass Through Certificate, even if notation of the consent is not made on such Pass Through Certificate. However, any such Certificateholder or subsequent Certificateholder may revoke the consent as to its, his or her Pass Through Certificate if the Pass Through Trustee receives the notice of revocation before the date the amendment or waiver becomes effective. After an amendment or waiver becomes effective, it shall bind every Certificateholder affected by such amendment or waiver. Section 11.08. Amendments, Waivers, Etc. of Related Indenture Documents. If the Pass Through Trustee, as holder of any Equipment Certificate in trust for the benefit of the Certificateholders of any Series or as Controlling Party, receives a request for a consent to any modification, amendment or 63 supplement to any related Indenture or other related Indenture Document or to give any consent, waiver, authorization or approval under such related Indenture or such other related Indenture Documents, the Pass Through Trustee shall forthwith notify each Certificateholder of such Series, as shown on the related Register as of such date, of such request. Such notice shall request instructions from such Certificateholders with respect to such request. Subject to Section 7.10 hereof, the Pass Through Trustee shall, as the holder of such Equipment Certificate, consent or vote with respect thereto in the same proportion as so instructed by the respective Certificateholders of the related Pass Through Certificates. Notwithstanding the foregoing, but subject to Section 7.09 hereof and any Intercreditor Agreement, if an Event of Default shall have occurred and be continuing, the Pass Through Trustee may, in its own discretion and at its own direction, consent and notify the Related Indenture Trustee of such consent to any modification, amendment, supplement or waiver under any related Indenture Document. ARTICLE XII Termination of Pass Through Trusts; Unclaimed Moneys Section 12.01. Termination of Pass Through Trusts. For any Pass Through Trust created by this Pass Through Agreement as supplemented by a related Series Supplement, such Pass Through Trust and the respective obligations and responsibilities of the Company and the Pass Through Trustee under such Pass Through Trust shall terminate upon the distribution to all Certificateholders of the related Series and the Pass Through Trustee of all amounts required to be distributed to them pursuant to this Pass Through Agreement and the related Series Supplement and the disposition of all property held as part of the Trust Property of such Pass Through Trust; provided that in no event shall such Pass Through Trust continue beyond the final expiration date determined as provided in such Series Supplement. Notice of termination of any Pass Through Trust, specifying the applicable Distribution Date upon which the Certificateholders of the related Series may surrender their Pass Through Certificates to the Pass Through Trustee for payment of the final distribution and cancellation thereof, shall be mailed promptly by the Pass Through Trustee to such Certificateholders not earlier than the 60th day and not later than the 20th day next preceding such final distribution specifying (i) the Distribution Date upon which such final distribution will be made and that such distribution will be made only upon presentation and surrender of the related Pass Through Certificates at the office or agency of the Pass Through Trustee specified therein, (ii) the amount of any such final distribution, and (iii) that the Record 64 Date otherwise applicable to such Distribution Date is not applicable. The Pass Through Trustee shall notify the related Registrar at the time such Certificateholders are notified of such final distribution. Upon presentation and surrender of the Pass Through Certificates of such Series, the Pass Through Trustee shall distribute all amounts distributable on such Pass Through Certificates on such Distribution Date pursuant to Section 5.02 hereof. Section 12.02. Application by Pass Through Trustee of Funds Deposited for Payment of Pass Through Certificates. Subject to Section 12.04 hereof, all moneys deposited with the Pass Through Trustee for payment pursuant to Section 12.01 hereof shall be held in trust and applied by it to the prompt payment, either directly or through any Paying Agent, to the Certificateholders of the particular Pass Through Certificates for the payment or redemption of which such moneys have been deposited with the Pass Through Trustee, of all sums due and to become due thereon; but such money need not be segregated from other funds except to the extent required by law. In the event that all of the Certificateholders of such Series shall not surrender their Certificates for cancellation within six months after the date specified in the above-mentioned written notice, the Pass Through Trustee shall give a second written notice to the remaining Certificateholders of such Series to surrender their Certificates for cancellation and to receive the final distribution with respect thereto. Section 12.03. Repayment of Moneys Held by Paying Agent. In connection with the satisfaction and discharge of any Pass Through Trust, all moneys then held by any Paying Agent for such Pass Through Trust shall, upon demand of the Pass Through Trustee, be repaid to it and thereupon such Paying Agent shall be released from all further liability with respect to such moneys. Section 12.04. Transfer of Moneys Held by Pass Through Trustee and Paying Agent Unclaimed for Two Years and Eleven Months. Any moneys deposited with or paid to the Pass Through Trustee or any Paying Agent to be distributed on any Pass Through Certificate and not applied but remaining unclaimed for two years and eleven months after the date upon which such amount has become due and payable, shall, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, be paid to the applicable Related Indenture Trustees by the Pass Through Trustee or such Paying Agent and the applicable Certificateholder shall, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property laws, thereafter look only to such Related Indenture Trustees for any payment which such Certificateholder may be entitled to collect, and all 65 liability of the Pass Through Trustee, or any Paying Agent with respect to such moneys shall thereupon cease. ARTICLE XIII Miscellaneous Section 13.01. Capacity in Which Acting. The Pass Through Trustee acts hereunder and under any Pass Through Trust not in its individual capacity but solely as trustee except as expressly provided herein or in the related Series Supplement. Section 13.02. No Legal Title to Trust Property in Certificateholders. No Certificateholder of any Series shall have legal title to any part of the Trust Property of the related Pass Through Trust. No transfer, by operation of law or otherwise, of any Pass Through Certificate or other right, title and interest of any Certificateholder in and to such Trust Property or under the related Pass Through Trust shall operate to terminate such Pass Through Trust or entitle such Certificateholder or any successor or transferee of such Certificateholder to an accounting or to the transfer to it of legal title to any part of such Trust Property. Section 13.03. Certificates Nonassessable and Fully Paid. No Certificateholder of any Series shall be personally liable for obligations of the related Pass Through Trust, the Fractional Undivided Interests represented by the Pass Through Certificates of such Series shall be nonassessable for any losses or expenses of such Pass Through Trust or for any reason whatsoever, and upon authentication of such Pass Through Certificates by the Pass Through Trustee pursuant to Section 3.02 hereof, such Pass Through Certificates will be and shall be deemed fully paid. No Certificateholder of such Series shall have any right (except as expressly provided herein) to vote or in any manner otherwise control the operation and management of the related Trust Property, the related Pass Through Trust, or the obligations of the parties hereto, nor shall anything set forth herein, in the related Series Supplement or in the related Pass Through Certificates be construed so as to constitute the Certificateholders of such Series from time to time as partners or members of an association. Section 13.04. Pass Through Agreement for the Benefit of the Company, the Pass Through Trustee and the Certificateholders. Nothing in this Pass Through Agreement, in any Series Supplement or in any Pass Through Certificate, whether express or implied, shall be construed to give to any person other than the Company, the Pass Through Trustee, as trustee and in its individual capacity, and the Certificateholders of the respective related Series any legal or equitable right, 66 remedy or claim under or in respect of this Pass Through Agreement, any Pass Through Trust or any such Pass Through Certificate. Section 13.05. Limitation on Rights of Certificateholders. The death or incapacity of any Certificateholder of any Series shall not operate to terminate this Pass Through Agreement or the related Pass Through Trust, nor entitle such Certificateholder's legal representatives or heirs to claim an accounting or to take any action or commence any proceeding in any court for a partition or winding up of such Pass Through Trust, nor otherwise affect the rights, obligations, and liabilities of the parties hereto or any of them. No Certificateholder of any Series shall be entitled to revoke the related Pass Through Trust. Section 13.06. Notices. Unless otherwise expressly specified or permitted by the terms hereof or the applicable Series Supplement with respect to any Pass Through Trust, all notices, requests, demands, authorizations, directions, consents, waivers or documents provided or permitted by this Pass Through Agreement or such Series Supplement to be made, given, furnished or filed with respect to such Pass Through Trust shall be in writing, mailed by certified mail, postage prepaid, or by confirmed facsimile, and (i) if to the Pass Through Trustee, addressed to it at its Principal Corporate Trust Office, telephone (801) 246-5053, facsimile (801) 246-5630 or (ii) if to the Company, addressed to it at its office at 942 Shady Grove Road, Memphis, Tennessee 38120, Attention: Vice President and Treasurer, facsimile (901) 818-7246 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, and as to any Series, as otherwise specified in the Series Supplement related thereto. The Company or the Pass Through Trustee as to any Series, by notice to the other, may designate additional or different addresses for subsequent notices or communications. Any party hereto may change the address to which notices to such party will be sent by giving notice of such change to the other party to this Pass Through Agreement. Where this Pass Through Agreement or any Series Supplement provides for notice to Certificateholders of any Series, such notice shall be sufficiently given (unless otherwise expressly provided herein) if in writing and mailed, first-class postage prepaid, to each such Certificateholder entitled thereto, at his or her last address as it appears in the related Register. In any case where notice to Certificateholders of any Series is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Certificateholder shall affect the sufficiency of such notice with respect to other Certificateholders of such Series. Where this Pass Through Agreement or any Series Supplement provides for notice in any manner, such notice may be waived in writing by the person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by 67 Certificateholders shall be filed with the Pass Through Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail notice to any Certificateholders when such notice is required to be given pursuant to any provision of this Pass Through Agreement or any related Series Supplement, then any manner of giving such notice as shall be satisfactory to the Pass Through Trustee shall be deemed to be a sufficient giving of such notice. Section 13.07. Officer's Certificate and Opinion of Counsel; Statements to Be Contained Therein. Upon any application or demand by the Company to the Pass Through Trustee to take any action, the Company shall furnish to the Pass Through Trustee (i) an Officer's Certificate stating that all conditions precedent, if any, provided for in this Pass Through Agreement and the applicable Series Supplement relating to the proposed action have been complied with and that the proposed action is in conformity with the requirements of this Pass Through Agreement and such Series Supplement, or (ii) an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or demand as to which the furnishing of such documents is specifically required by any provision of this Pass Through Agreement or such Series Supplement relating to such particular application or demand, no additional certificate or opinion need be furnished. Each certificate or opinion required by this Pass Through Agreement or any Series Supplement and delivered to the Pass Through Trustee with respect to compliance with a condition or covenant provided for in this Pass Through Agreement or such Series Supplement, except for the certificate required by Section 4.03(d) hereof shall include (a) a statement that the person making such certificate or opinion has read such covenant or condition, (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based, (c) a statement that, in the opinion of such person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with and (d) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. Any certificate, statement or opinion of counsel may be based, insofar as it relates to factual matters information with respect to which is in the possession of the Company, upon the certificate, statement or opinion of or representations by 68 an officer or officers of the Company unless such counsel knows that the certificate, statement or opinion or representations with respect to the matters upon which his or her certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of an officer of the Company or of counsel thereto may be based, insofar as it relates to accounting matters, upon a certificate or opinion of or representations by an accountant or firm of accountants employed by the Company unless such officer or counsel, as the case may be, knows that the certificate or opinion or representations with respect to the accounting matters upon which such certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate or opinion of any independent firm of public accountants filed with the Pass Through Trustee shall contain a statement that such firm is independent. Section 13.08. Conflict of Any Provision of Pass Through Agreement with the Trust Indenture Act. If and to the extent that any provision of this Pass Through Agreement limits, qualifies or conflicts with another provision included in this Pass Through Agreement by operation of Sections 310 to 317, inclusive, of the Trust Indenture Act (an "incorporated provision"), such incorporated provision shall control. Section 13.09. Severability. Any provision of this Pass Through Agreement or any Series Supplement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or thereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Section 13.10. No Oral Modifications or Continuing Waivers. No terms or provisions of this Pass Through Agreement, any Series Supplement, or any Pass Through Certificates may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party or other person against whom enforcement of the change, waiver, discharge or termination is sought; and any waiver of the terms hereof or thereof shall be effective only in the specific instance and for the specific purpose given. 69 Section 13.11. Successors and Assigns. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, each of the parties hereto and the successors and permitted assigns of each, all as herein provided. Any request, notice, direction, consent, waiver or other instrument or action by any Certificateholder shall bind the successors and assigns of such Certificateholder. Section 13.12. Headings. The headings of the various Articles and Sections herein and in the table of contents hereto are for the convenience of reference only and shall not define or limit any of the terms or provisions hereof. Section 13.13. Normal Commercial Relations. Anything contained in this Pass Through Agreement to the contrary notwithstanding, the Pass Through Trustee and any Certificateholder, or any bank or other affiliate of any such party, may conduct any banking or other financial transactions, and have banking or other commercial relationships, with the Company fully to the same extent as if this Pass Through Agreement were not in effect, including without limitation the making of loans or other extensions of credit to the Company for any purpose whatsoever, whether related to any of the transactions contemplated hereby or otherwise. Section 13.14. Governing Law; Counterpart Form. THIS PASS THROUGH AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Pass Through Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. Section 13.15. Distributions Due on Days Other than Business Days. If, for any Pass Through Trust, any Distribution Date is not a Business Day, then such distribution need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the applicable Distribution Date, and no interest shall accrue for the intervening period. Section 13.16. Registration of Equipment Certificates in Name of Subordination Agent. If a Pass Through Trust is party to an Intercreditor Agreement, the Pass Through Trustee agrees that all Equipment Certificates to be purchased by such Pass Through Trust shall be issued in the name of the Subordination Agent under such Intercreditor Agreement or its nominee and held by such Subordination Agent in trust for the benefit of the Certificateholders, or, if 70 not so held, such Subordination Agent or its nominee shall be reflected as the owner of such Equipment Certificates in the register of the issuer of such Equipment Certificates. 71 IN WITNESS WHEREOF, the parties hereto have caused this Pass Through Agreement to be duly executed this ____ day of ____, 200__ by their respective officers or authorized agents thereunto duly authorized, and acknowledge that this Pass Through Agreement has been made and delivered in the City of New York, and this Pass Through Agreement shall be effective only upon such execution and delivery. FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity, except as otherwise expressly provided herein, but solely as Pass Through Trustee By: ---------------------------------------- Name: Title: FEDERAL EXPRESS CORPORATION By: ---------------------------------------- Name: Title: 72 Exhibit A to Pass Through Agreement FORM OF PASS THROUGH CERTIFICATE [THIS IS A REGISTERED GLOBAL CERTIFICATE REFERRED TO IN SECTION 2.12 OF THE PASS THROUGH TRUST AGREEMENT. Unless this pass through certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Pass Through Trustee or its agent for registration or transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE THEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.]* FEDERAL EXPRESS CORPORATION PASS THROUGH TRUST, 200__ - __ 200_ Pass Through Certificate, Class ___ CUSIP ______ Final Regular Distribution Date: _______ evidencing a fractional undivided interest in a pass through trust. Certificate No. _______ Applicable interest rate on Equipment Certificates held in Pass Through Trust, 200__ - _____: ____%. $___________ Fractional Undivided Interest representing _______% of the Pass Through Trust per $1,000 face amount. THIS CERTIFIES THAT ______________, for value received, is the registered owner of a $_________ (_____________ dollars) Fractional Undivided Interest in the Federal Express Corporation Pass Through Trust, 200_-_ (the "Pass - -------- * This paragraph is required only if the Pass Through Certificates are to be represented by the Registered Global Certificate. Through Trust") created and declared by ___________________________________, as pass through trustee (the "Pass Through Trustee"), pursuant to the Pass Through Trust Agreement dated as of __________, _____ (the "Pass Through Agreement"), as supplemented by Series Supplement __ thereto dated ____________, 200_ (the "Series Supplement") between the Pass Through Trustee and Federal Express Corporation, a Delaware corporation (the "Company"), a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Pass Through Agreement and the Series Supplement. This Pass Through Certificate is one of the duly authorized Pass Through Certificates designated as "Federal Express Corporation 200_ Pass Through Certificates, Class _______." This Pass Through Certificate is issued under and is subject to the terms, provisions, and conditions of the Pass Through Agreement, the Series Supplement, any Intercreditor Agreement or any Liquidity Facility, to which the Certificateholder of this Pass Through Certificate by virtue of the acceptance hereof assents and by which such Certificateholder is bound. The property of the Pass Through Trust includes (i) the Equipment Certificates held in such Pass Through Trust, (ii) the rights of such Pass Through Trust under any Intercreditor Agreement (including all monies receivable in respect of such rights), (iii) all monies receivable under any Liquidity Facility for such Pass Through Trust, and (iv) funds from time to time deposited with the Pass Through Trustee in accounts relating to such Pass Through Trust (the "Trust Property"). Equipment Certificates of each series are secured by a security interest in (A) an aircraft leased to or, if any of the Aircraft have been purchased by the Company pursuant to the related Participation Agreement, owned by the Company and, in the case of a leased aircraft, an assignment of the rights of the Related Owner Trustee with respect to such aircraft, including the right to receive rent and other amounts payable under the related Lease or Indenture with respect to such aircraft or (B) a collateral account containing the proceeds of the sale of such series of Equipment Certificates, which shall be invested in Specified Investments pursuant to the related Indenture. Each of the Pass Through Certificates represents a Fractional Undivided Interest in the Pass Through Trust and the Trust Property, and has no rights, benefits or interests in respect of any other separate trust established pursuant to the terms of the Pass Through Agreement for any other class of Pass Through Certificates issued pursuant thereto. Subject to and in accordance with the terms of the Pass Through Agreement, the Series Supplement, any Intercreditor Agreement or any Liquidity Facility, from funds then available to the Pass Through Trustee, there will be distributed on each ______ and _____ (a "Regular Distribution Date"), commencing on _______, __, to the Person in whose name this Pass Through A-2 Certificate is registered at the close of business on the 15th day preceding the applicable Regular Distribution Date, an amount in respect of the Scheduled Payments on the Equipment Certificates due on such Regular Distribution Date, equal to the product of the percentage interest in the Pass Through Trust evidenced by this Pass Through Certificate and an amount equal to the sum of such Scheduled Payments so received. Subject to and in accordance with the terms of the Pass Through Agreement, the Series Supplement and any Intercreditor Agreement, if Special Payments on the Equipment Certificates are received by the Pass Through Trustee, from funds then available to the Pass Through Trustee, there shall be distributed on the applicable Special Distribution Date, to the Person in whose name this Pass Through Certificate is registered at the close of business on the 15th day preceding such Special Distribution Date, an amount in respect of such Special Payments on the Equipment Certificates, equal to the product of the percentage interest in the Pass Through Trust evidenced by this Pass Through Certificate and an amount equal to the sum of such Special Payments so received. If a Distribution Date is not a Business Day, distribution shall be made on the immediately following Business Day with the same force and effect as if made on such Distribution Date and no interest shall accrue during the intervening period. The Special Distribution Date shall be any Business Day on which a Special Payment is to be distributed. Distributions on this Pass Through Certificate will be made by the Pass Through Trustee to the Person entitled thereto, without the presentation or surrender of this Pass Through Certificate or the making of any notation hereon. Except as otherwise provided in the Pass Through Agreement and notwithstanding the above, the final distribution on this Pass Through Certificate will be made after notice is mailed by the Pass Through Trustee of the pendency of such distribution and only upon presentation and surrender of this Pass Through Certificate at the office or agency of the Pass Through Trustee specified in such notice. [NO EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR INDIVIDUAL RETIREMENT ACCOUNT OR PLAN SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (HEREINAFTER COLLECTIVELY REFERRED TO AS AN "ERISA" PLAN), MAY ACQUIRE OR HOLD ANY OF THE PASS THROUGH CERTIFICATES. THE PURCHASE BY ANY PERSON OF ANY PASS THROUGH CERTIFICATE CONSTITUTES A REPRESENTATION BY SUCH PERSON TO FEDERAL EXPRESS CORPORATION, THE RELATED A-3 OWNER PARTICIPANTS, THE RELATED OWNER TRUSTEES, THE RELATED INDENTURE TRUSTEES AND THE PASS THROUGH TRUSTEE OR THEIR RESPECTIVE SUCCESSORS, AS THE CASE MAY BE, THAT SUCH PERSON IS NOT AN ERISA PLAN AND THAT SUCH PERSON IS NOT ACQUIRING, AND HAS NOT ACQUIRED, SUCH PASS THROUGH CERTIFICATE WITH ASSETS OF AN ERISA PLAN.]** THIS PASS THROUGH CERTIFICATE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANC. Reference is hereby made to the further provisions of this Pass Through Certificate set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Pass Through Trustee, by manual signature, this Pass Through Certificate shall not be entitled to any benefit under the Pass Through Trust or be valid for any purpose. - -------- ** Subject to revision as set forth in Section 6.06 hereof. A-4 IN WITNESS WHEREOF, the Pass Through Trustee has caused this Pass Through Certificate to be duly executed. FEDERAL EXPRESS CORPORATION PASS THROUGH TRUST, SERIES 200__-__ By: ---------------------------------------- as Pass Through Trustee By: ------------------------------------ Authorized Signatory [FORM OF THE PASS THROUGH TRUSTEE'S CERTIFICATE OF AUTHENTICATION] Dated: This is one of the Pass Through Certificates referred to in the within-mentioned Pass Through Agreement and related Series Supplement. ------------------------------------------- as Pass Through Trustee By: -------------------------------- Authorized Signatory A-5 [Reverse of Pass Through Certificate] The Pass Through Certificates do not represent a direct obligation of, or an obligation guaranteed by, or an interest in, the Company or the Pass Through Trustee or any affiliate thereof. The Pass Through Certificates are limited in right of payment, all as more specifically set forth on the face hereof and in the Pass Through Agreement, any Intercreditor Agreement, any Liquidity Facility and the Series Supplement. Subject to the Intercreditor Agreement, all payments or distributions made to Certificateholders under the Pass Through Agreement shall be made only from the Trust Property and only to the extent that the Pass Through Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of the Pass Through Agreement and the Series Supplement. Each Certificateholder of this Pass Through Certificate, by its acceptance hereof, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to such Certificateholder as provided in the Pass Through Agreement, any Intercreditor Agreement, any Liquidity Facility and the Series Supplement. In connection with withholding taxes, under certain circumstances the Pass Through Trustee may retain certain amounts otherwise distributable to a Certificateholder. The purchase by any Certificateholder of any Pass Through Certificate constitutes the consent of such Certificateholder to such retention in accordance with the terms of the Pass Through Agreement. This Pass Through Certificate does not purport to summarize the Pass Through Agreement, any Intercreditor Agreement, any Liquidity Facility and the Series Supplement and reference is made to the Pass Through Agreement, any Intercreditor Agreement, any Liquidity Facility and the Series Supplement for information with respect to the interests, rights, benefits, obligations, proceeds and duties evidenced hereby. A copy of the Pass Through Agreement, any Intercreditor Agreement, any Liquidity Facility and the Series Supplement may be examined by any Certificateholder upon request during normal business hours at the Principal Corporate Trust Office of the Pass Through Trustee, and at such other places designated by the Pass Through Trustee. As of the date of issuance of this Pass Through Certificate, and assuming that no prepayment or default in respect of payment on the Equipment Certificates shall occur and assuming there will be no change in the payment terms of the Equipment Certificates, the aggregate scheduled repayments of principal on the Equipment Certificates for the Pass Through Trust and the resulting Pool Factors for the Pass Through Trust after taking into account each such repayment are set forth below: A-6 Pass Through Trust, 200__-___ Regular Scheduled Principal Distribution Date Payments on Pool Factor Equipment Certificates $ 0.0000000 The Pass Through Agreement, any Intercreditor Agreement, any Liquidity Facility and the Series Supplement permit, with certain exceptions provided therein, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Certificateholders under the Pass Through Trust at any time by the Company and the Pass Through Trustee with the consent of the Majority In Interest of Certificateholders in the Pass Through Trust. Any such consent by the Certificateholder of this Pass Through Certificate shall be conclusive and binding on such Certificateholder and upon all future Certificateholders of this Pass Through Certificate and of any Pass Through Certificate issued upon the transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent is made upon this Pass Through Certificate. The Pass Through Agreement, any Intercreditor Agreement, any Liquidity Facility and the Series Supplement also permit the amendment thereof, in certain limited circumstances, without the consent of the Certificateholders of any of the Pass Through Certificates. As provided in the Pass Through Agreement and the Series Supplement and subject to certain limitations set forth therein, the transfer of this Pass Through Certificate is registrable in the Register upon surrender of this Pass Through Certificate for registration of transfer to the Pass Through Trustee in its capacity as Registrar, or by any successor Registrar, duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Pass Through Trustee and the Registrar duly executed by the Certificateholder hereof or such Certificateholder's attorney duly authorized in writing, and thereupon one or more new Pass Through Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Pass Through Trust will be issued to the designated transferee or transferees. The Pass Through Certificates are issuable only as registered Pass Through Certificates without coupons in minimum denominations of $1,000 fractional undivided interests and integral multiples thereof. As provided in the Pass Through Agreement and the Series Supplement and subject to certain limitations set forth therein, the Pass Through Certificates are exchangeable for new Pass Through Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Pass Through Trust, as requested by the Certificateholder surrendering the same. A-7 No service charge will be made for any such registration of transfer or exchange, but the Pass Through Trustee may require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith. The Pass Through Trustee, the Registrar, and any agent of the Pass Through Trustee or the Registrar may treat the person in whose name this Pass Through Certificate is registered as the owner hereof for all purposes, and neither the Pass Through Trustee, the Registrar, nor any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Pass Through Agreement and the Series Supplement and the Pass Through Trust created thereby shall terminate upon the distribution to Certificateholders of all amounts required to be distributed to them pursuant to the Pass Through Agreement, any Intercreditor Agreement, any Liquidity Facility and the Series Supplement and the disposition of all property held as part of the Trust Property. A-8 Exhibit B to Pass Through Agreement ----------------------------------------------------- SERIES SUPPLEMENT 200__-___ Dated __________, 200__ between ----------------------------------- as Pass Through Trustee and FEDERAL EXPRESS CORPORATION to PASS THROUGH TRUST AGREEMENT Dated as of _________, ____ $------------------ Federal Express Corporation Pass Through Trust, 200__-___ Federal Express Corporation 200__ Pass Through Certificates, Series ___ ----------------------------------------------------- SERIES SUPPLEMENT 200__-___ SERIES SUPPLEMENT 200__-___, dated _________, 200__ (this "Series Supplement"), between FEDERAL EXPRESS CORPORATION, a Delaware corporation (together with its permitted successors and assigns, the "Company") and ______________________________________, a _____________________ company, as Pass Through Trustee (the "Pass Through Trustee"), to the Pass Through Trust Agreement, dated as of ________, ____ (the "Pass Through Agreement"), between the Company and _______________________________, a ___________________________. RECITALS WHEREAS, capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, Section 2.01 of the Pass Through Agreement provides, among other things, that the Company and the Pass Through Trustee may execute and deliver one or more series supplements, each for the purpose of forming a separate pass through trust for the benefit of the certificateholders of the series of pass through certificates to be issued pursuant to such pass through trust, appointing an institution to act as Pass Through Trustee if different from the institution executing the Pass Through Agreement, establishing certain terms of such pass through certificates, and pursuant to which the pass through certificates of such series shall be executed and authenticated by the Pass Through Trustee and delivered as directed by the Company; WHEREAS, pursuant to the Participation Agreements, the Company has agreed to cause the Equipment Certificates to be issued and sold to the Pass Through Trustee, and the Pass Through Trustee has agreed to purchase the Equipment Certificates, which will be held in trust as Trust Property for the benefit of the Certificateholders; WHEREAS, in order to facilitate such sale, the Company has agreed, pursuant to the Underwriting Agreement, to cause the Pass Through Trustee to issue and sell the Pass Through Certificates to the Underwriters; WHEREAS, pursuant to the Pass Through Agreement and the terms of this Series Supplement, the Pass Through Trustee will execute, authenticate and deliver the Pass Through Certificates to the Underwriters upon receipt by the Pass Through Trustee of the purchase price therefor, which will be applied in accordance with this Series Supplement to purchase the Equipment Certificates; WHEREAS, the Pass Through Trustee hereby declares the creation of this Pass Through Trust for the benefit of the Certificateholders, and the initial Certificateholders of such Pass Through Certificates, as the grantors of such Pass Through Trust, by their respective acceptances of such Pass Through Certificates, join in the creation of such Pass Through Trust; WHEREAS, to facilitate the sale of the Equipment Certificates to, and the purchase of the Equipment Certificates by, the Pass Through Trustee on behalf of this Pass Through Trust, the Company has duly authorized the execution and delivery of this Series Supplement as the "issuer," as such term is defined in and solely for purposes of the Securities Act, of the Pass Through Certificates and as the "obligor," as such term is defined in and solely for purposes of the Trust Indenture Act, with respect to all such Pass Through Certificates; and WHEREAS, this Series Supplement is subject to the provisions of the Trust Indenture Act and shall, to the extent applicable, be governed by such provisions; IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows: ARTICLE I Certain Definitions All terms used in this Series Supplement that are defined in the Pass Through Agreement, either directly or by reference therein, have the meanings assigned to them therein as supplemented by this Article I, if applicable, except to the extent the context requires otherwise. Any such defined term that is defined in the Pass Through Agreement as relating to a particular Pass Through Trust or Series rather than to any Pass Through Trust or Series generally shall, when used in this Series Supplement, relate solely to the Federal Express Corporation Pass Through Trust, 200__-___, or the Federal Express Corporation 200__ Pass Through Certificates, Series ___, as the case may be, whether or not expressly so stated herein. "Aircraft" means ___________________________ aircraft , including the Engines (as such term is defined in the related Participation Agreement) relating thereto, (i) leased or expected to be leased by the Owner Trustee to the B-2 Company pursuant to a Lease or (ii) to be purchased by the Company as provided, and under the circumstances specified, in Section 3.07 hereof) and, collectively, means all of the foregoing. "Authenticating Agent" has the meaning set forth in Section 3.06 hereof. "Certificate Account" means the Certificate Account specified in Section 3.03 hereof. "Certificateholders" means the Certificateholders of the Series of Pass Through Certificates designated in Section 2.01 hereof. "Collateral Account" means the Collateral Account established pursuant to the Indenture for Federal Express Corporation Trust No. N_____FE into which the proceeds of sale of the related Equipment Certificates will be deposited. "Cut-off Date for Pass Through Trust" is inapplicable. "Delivery Date" means, for any Equipment Certificates, the Refunding Date or the Pass Through Closing Date (as such term is defined in the related Participation Agreement) for such Equipment Certificates. "Equipment Certificates" means those Equipment Trust Certificates listed in Schedule I hereto. "Intercreditor Agreement" has the meaning defined in Article I of the Pass Through Agreement. "Issuance Date" means the date defined as the Closing Time in the Underwriting Agreement. "Liquidity Facility" has the meaning defined in Article I of the Pass Through Agreement. "Liquidity Provider" means _______________________________. "Participation Agreements" means those Participation Agreements listed in Schedule I hereto. "Pass Through Certificates" means the Pass Through Certificates designated in Section 2.01 hereof. B-3 "Pass Through Trust," "this Pass Through Trust" and other like words means the Pass Through Trust designated in Section 2.01 hereof. "Paying Agent" means the Person specified as such in Section 3.06 hereof. "Record Date" means any Record Date specified in Section 3.02 hereof. "Registrar" means the Person specified as such in Section 3.06 hereof. "Regular Distribution Date" means any Regular Distribution Date specified in Section 3.01 hereof. "Special Distribution Date" means, for any Special Payment, the Special Distribution Date for such Special Payment specified in Section 3.01 hereof. "Special Payments Account" means the Special Payments Account specified in Section 3.03 hereof. "Subordination Agent" means ___________________________. "Trust Property" means (i) all money, instruments, including the Equipment Certificates that have been issued by the related Owner Trustee and delivered to and accepted by the Pass Through Trustee for the benefit of the Certificateholders, and other property held as the property of this Pass Through Trust, including all distributions thereon and proceeds thereof and (ii) all rights of the Pass Through Trust and the Pass Through Trustee, on behalf of the Pass Through Trust, under any Intercreditor Agreement and the Liquidity Facility, including, without limitation, all rights to receive certain payments thereunder, and all monies paid to the Pass Through Trustee on behalf of the Pass Through Trust pursuant to any Intercreditor Agreement or the Liquidity Facility. "Underwriters" means the several Underwriters named in the Underwriting Agreement. "Underwriting Agreement" means the Underwriting Agreement dated _________, 200__ among the Company and ____________________________. B-4 ARTICLE II Designations; Trust Formation; Issuance of Pass Through Certificates Section 2.01. Designations; Aggregate Amount. The Pass Through Trust created hereby shall be designated Federal Express Corporation Pass Through Trust, 200__-___ (herein sometimes called this "Pass Through Trust"). The Pass Through Certificates evidencing Fractional Undivided Interests in such Pass Through Trust shall be designated as the Federal Express Corporation 200__ Pass Through Certificates, Series ___ (herein sometimes called the "Series ___ Pass Through Certificates"). The Series ___ Pass Through Certificates shall be the only instruments evidencing a fractional undivided interest in such Pass Through Trust. Except as provided in Sections 2.08, 2.09 and 2.11 of the Pass Through Agreement, the aggregate amount of Series ___ Pass Through Certificates that may be authenticated, delivered and outstanding under this Series Supplement is limited to $_________________. Section 2.02. Declaration of Trust; Authorization. Each initial Certificateholder, by its acceptance of any Series ___ Pass Through Certificate is hereby deemed (1) as grantor, to join in the creation and declaration of this Pass Through Trust and (2) as beneficiary of such Pass Through Trust, to authorize and direct the Pass Through Trustee to execute and deliver all documents to which the Pass Through Trustee is a party that may be necessary or desirable to consummate the transactions contemplated hereby and to exercise its rights and perform its duties under the Participation Agreements, the Indentures, the Pass Through Agreement, the Intercreditor Agreement and this Series Supplement. The Pass Through Trustee hereby acknowledges and accepts this grant of trust and declares that it will hold the Trust Property as Pass Through Trustee of this Pass Through Trust for the use and benefit of the Certificateholders. Section 2.03. Issuance of Pass Through Certificates. Subject to the terms set forth herein, on the Issuance Date (i) the Company shall direct the Underwriters to execute a wire transfer or intra-bank transfer to the Pass Through Trustee in the amount of the total proceeds payable by such Underwriters pursuant to the Underwriting Agreement with respect to the Series ___ Pass Through Certificates and (ii) the Pass Through Trustee shall deliver the Series ___ Pass Through Certificates to the Underwriters as provided in the Underwriting Agreement upon receipt by the Pass Through Trustee of such proceeds. Section 2.04. Purchase of Equipment Certificates. On the Issuance Date, the Pass Through Trustee shall purchase, in accordance with Section 2.02 of the B-5 Pass Through Agreement, each of the Equipment Certificates upon the satisfaction or waiver of the conditions for such purchase by the Pass Through Trustee set forth in the related Participation Agreement. Section 2.05. Representations and Warranties of the Company. All of the representations and warranties of the Company set forth or incorporated by reference in Section 1 of the Underwriting Agreement are incorporated by reference in this Series Supplement as if set forth herein and the Company represents and warrants that such representations and warranties are true and correct on the date hereof, except to the extent that such representations and warranties expressly relate solely to an earlier date or later date (in which case such representations and warranties were correct on and as of such earlier date or will be correct on and as of such later date, as the case may be). Section 2.06. The Intercreditor Agreement. The Pass Through Trustee is hereby directed to execute and deliver the Intercreditor Agreement on or prior to the Issuance Date in the form delivered to the Pass Through Trustee by the Company. The Pass Through Trustee represents and warrants that the Intercreditor Agreement will be duly executed and delivered by one of its officers or authorized agents who is duly authorized to execute and deliver such document on its behalf. Section 2.07. Conditions Precedent. The obligations of the Pass Through Trustee to participate in the transactions described in Sections 2.03 and 2.04 hereof are subject to (i) receipt by the Pass Through Trustee of a certificate of the Company to the same effect as the certificate of the Company delivered to the Underwriters pursuant to Section 5(c) of the Underwriting Agreement, and (ii) satisfaction or waiver of the conditions for the purchase by the Underwriters of the Pass Through Certificates set forth in Section 5 of the Underwriting Agreement, which satisfaction or waiver for the purposes hereof shall be conclusively demonstrated by the receipt by the Pass Through Trustee of the total proceeds payable by such Underwriters pursuant to the Underwriting Agreement with respect to the Series ___ Pass Through Certificates. Section 2.08. Acceptance of Appointment of Pass Through Trustee. __________________________ represents and warrants that it is qualified to serve as Pass Through Trustee and satisfies the criteria specified in Section 10.02 of the Pass Through Agreement for eligibility as a Pass Through Trustee. _______________________________ hereby agrees to serve as Pass Through Trustee for the Pass Through Certificates and acknowledges its appointment as Pass Through Trustee in accordance with the provisions of, and subject to all of the terms and conditions set forth in, the Pass Through Agreement and this related Series Supplement upon the execution and delivery of this Series Supplement. B-6 ARTICLE III DISTRIBUTION AND RECORD DATES; CERTIFICATE AND SPECIAL PAYMENT ACCOUNTS; CONCERNING AUTHENTICATING AGENT, PAYING AGENT AND REGISTRAR AND THE CERTIFICATEHOLDERS Section 3.01. Distribution Dates. The Regular Distribution Dates are each _____________ and ____________, commencing on ____________, 200__. The Special Distribution Date is any Business Day on which a Special Payment is to be distributed. Section 3.02. Record Dates. The Record Dates for the Regular Distribution Dates are __________ and ___________, respectively, and the Record Date for any Special Distribution Date is the fifteenth day preceding such Special Distribution Date, in any event, whether or not such date is a Business Day. Section 3.03. Certificate Account and Special Payments Account. In accordance with Section 5.01(a) of the Pass Through Agreement and upon receipt of any Scheduled Payment, the Pass Through Trustee shall immediately deposit such Scheduled Payment into the Certificate Account, a separate and non-interest bearing account designated by the Pass Through Trustee to be used for such purpose. In accordance with Section 5.01(b) of the Pass Through Agreement and upon receipt of any Special Payment, the Pass Through Trustee shall immediately deposit such Special Payment into the Special Payments Account, a separate and, except as provided in Section 5.04 of the Pass Through Agreement, non-interest bearing account designated by the Pass Through Trustee to be used for such purpose. Section 3.04. Form of Pass Through Certificates. Subject to Section 2.07 of the Pass Through Agreement, each of the Series ___ Pass Through Certificates will be substantially in the form of Exhibit A hereto. The Series ___ Pass Through Certificates will be issued pursuant to a book-entry system in the form of one or more Registered Global Certificates and subject to the conditions set forth in the Letter of Representations among the Company, the Pass Through Trustee and The Depository Trust Company. Section 3.05. Indenture Documents. The related Indenture Documents are listed in Schedule I hereto. Section 3.06. Appointment of Authenticating Agent; Paying Agent and Registrar. (a) The Pass Through Trustee may appoint an authenticating agent (the "Authenticating Agent") with respect to the Pass Through Certificates B-7 which shall be authorized to act on behalf of the Pass Through Trustee to authenticate the Pass Through Certificates issued upon original issue and upon exchange or registration of transfer thereof or pursuant to Section 2.09 of the Pass Through Agreement. Pass Through Certificates so authenticated shall be entitled to the benefits of the Pass Through Agreement and this Series Supplement and shall be valid and obligatory for all purposes as if authenticated by the Pass Through Trustee. Whenever reference is made in the Pass Through Agreement or this Series Supplement to the authentication and delivery of Pass Through Certificates by the Pass Through Trustee or the Pass Through Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Pass Through Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Pass Through Trustee by an Authenticating Agent. (b) The Paying Agent, Registrar and Authenticating Agent for the Series ___ Pass Through Certificates initially shall be ______________________________. ______________________________________ hereby represents and warrants to the Company that it is qualified to serve as Paying Agent, Registrar and Authenticating Agent under the provisions of, and subject to all of the terms and conditions set forth in, the Pass Through Agreement and this related Series Supplement. Section 3.07. Predelivery Funding. During the period between the date of issuance of Equipment Certificates by the Owner Trustee in respect of Federal Express Corporation Trust No. N_____FE and the delivery date of the related Aircraft, such Equipment Certificates will not be secured by such Aircraft or the related Lease, but will be secured by the Collateral Account. Pursuant to the related Indenture, the Owner Trustee will deposit the proceeds from the sale of the related Equipment Certificates into the Collateral Account for the benefit of the related Indenture Trustee. Sums deposited in the Collateral Account will be invested as set forth in the Related Indenture. Section 3.08. ERISA. [Any Person who is, or who in acquiring a Pass Through Certificate is or may be using the assets of, an employee benefit plan subject to Title I of The Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or an individual retirement account or plan subject to Section 4975 of the Code, or any trust established under any such plan or account, may acquire or hold any of the Pass Through Certificates, if such Person determines either that an administrative or a statutory exemption from the prohibited transaction rules under Section 406 of ERISA and Section 4975 of the B-8 Code is applicable to its purchase and holding of a Pass Through Certificate or that its purchase and holding of a Pass Through Certificate will not result in a prohibited transaction under Section 406 of ERISA and Section 4975 of the Code.]* Section 3.09. Registered Global Certificate. The Series ___ Pass Through Certificates are to be issued in whole in the form of a Registered Global Certificate, and Section 2.12 of the Pass Through Agreement shall, accordingly, be applicable. The Depository for the Registered Global Certificate and the Letter of Representations is The Depository Trust Company.* - -------- * Subject to revision as set forth in Section 6.06 of The Pass Through Agreement. B-9 ARTICLE IV MISCELLANEOUS Section 4.01. Governing Law; Counterpart Form. AS PROVIDED IN SECTION 13.14 OF THE PASS THROUGH AGREEMENT, THIS SERIES SUPPLEMENT AND EACH SERIES ___ PASS THROUGH CERTIFICATE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Series Supplement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. Section 4.02. Reports by the Company. In addition to the reports required to be provided by the Company pursuant to Section 4.03 of the Pass Through Agreement, the Company agrees to furnish to the Pass Through Trustee from time to time, such other financial information as the Pass Through Trustee may reasonably request. Section 4.03. Modification and Ratification of Pass Through Agreement. The Pass Through Agreement is incorporated herein by reference in its entirety, and shall be deemed to be a part of this Series Supplement as if set forth in full herein, and is in all respects ratified and confirmed, as supplemented and modified by this Series Supplement. Section 4.04. Termination. In no event shall this Pass Through Trust continue beyond the expiration of 21 years after the death of the last survivor of George Pataki, Governor of New York State, living on the date of this Series Supplement. B-10 IN WITNESS WHEREOF, the parties have caused their names to be signed hereto by their respective officers or authorized agents thereunto duly authorized, all on the day and year first above written. ----------------------------------, not in its individual capacity, except as otherwise expressly provided herein, but solely as Pass Through Trustee By: ---------------------------------------- Name: Title: FEDERAL EXPRESS CORPORATION By: ---------------------------------------- Name: Title: B-11 Exhibit A to Series Supplement FORM OF PASS THROUGH CERTIFICATE [THIS IS A REGISTERED GLOBAL CERTIFICATE REFERRED TO IN SECTION 2.12 OF THE PASS THROUGH TRUST AGREEMENT. Unless this pass through certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Pass Through Trustee or its agent for registration or transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE THEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.]* FEDERAL EXPRESS CORPORATION PASS THROUGH TRUST, 200__ - __ 200_ Pass Through Certificate, Class ___ CUSIP ______ Final Regular Distribution Date: _______ evidencing a fractional undivided interest in a pass through trust. Certificate No. _______ Applicable interest rate on Equipment Certificates held in Pass Through Trust, 200__ - _____: ____%. $___________ Fractional Undivided Interest representing _______% of the Pass Through Trust per $1,000 face amount. THIS CERTIFIES THAT ______________, for value received, is the registered owner of a $_________ (_____________ dollars) Fractional Undivided Interest in the Federal Express Corporation Pass Through Trust, 200_-_ (the "Pass - -------- * This paragraph is required only if the Pass Through Certificates are to be represented by the Registered Global Certificate. Through Trust") created and declared by ___________________________________, as pass through trustee (the "Pass Through Trustee"), pursuant to the Pass Through Trust Agreement dated as of __________, _____ (the "Pass Through Agreement"), as supplemented by Series Supplement __ thereto dated ____________, 200_ (the "Series Supplement") between the Pass Through Trustee and Federal Express Corporation, a Delaware corporation (the "Company"), a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Pass Through Agreement and the Series Supplement. This Pass Through Certificate is one of the duly authorized Pass Through Certificates designated as "Federal Express Corporation 200_ Pass Through Certificates, Class _______." This Pass Through Certificate is issued under and is subject to the terms, provisions, and conditions of the Pass Through Agreement, the Series Supplement, any Intercreditor Agreement or any Liquidity Facility, to which the Certificateholder of this Pass Through Certificate by virtue of the acceptance hereof assents and by which such Certificateholder is bound. The property of the Pass Through Trust includes (i) the Equipment Certificates held in such Pass Through Trust, (ii) the rights of such Pass Through Trust under any Intercreditor Agreement (including all monies receivable in respect of such rights), (iii) all monies receivable under any Liquidity Facility for such Pass Through Trust, and (iv) funds from time to time deposited with the Pass Through Trustee in accounts relating to such Pass Through Trust (the "Trust Property"). Equipment Certificates of each series are secured by a security interest in (A) an aircraft leased to or, if any of the Aircraft have been purchased by the Company pursuant to the related Participation Agreement, owned by the Company and, in the case of a leased aircraft, an assignment of the rights of the Related Owner Trustee with respect to such aircraft, including the right to receive rent and other amounts payable under the related Lease or Indenture with respect to such aircraft or (B) a collateral account containing the proceeds of the sale of such series of Equipment Certificates, which shall be invested in Specified Investments pursuant to the related Indenture. Each of the Pass Through Certificates represents a Fractional Undivided Interest in the Pass Through Trust and the Trust Property, and has no rights, benefits or interests in respect of any other separate trust established pursuant to the terms of the Pass Through Agreement for any other class of Pass Through Certificates issued pursuant thereto. Subject to and in accordance with the terms of the Pass Through Agreement, the Series Supplement, any Intercreditor Agreement or any Liquidity Facility, from funds then available to the Pass Through Trustee, there will be distributed on each ______ and _____ (a "Regular Distribution Date"), commencing on _______, __, to the Person in whose name this Pass Through B-A-2 Certificate is registered at the close of business on the 15th day preceding the applicable Regular Distribution Date, an amount in respect of the Scheduled Payments on the Equipment Certificates due on such Regular Distribution Date, equal to the product of the percentage interest in the Pass Through Trust evidenced by this Pass Through Certificate and an amount equal to the sum of such Scheduled Payments so received. Subject to and in accordance with the terms of the Pass Through Agreement, the Series Supplement and any Intercreditor Agreement, if Special Payments on the Equipment Certificates are received by the Pass Through Trustee, from funds then available to the Pass Through Trustee, there shall be distributed on the applicable Special Distribution Date, to the Person in whose name this Pass Through Certificate is registered at the close of business on the 15th day preceding such Special Distribution Date, an amount in respect of such Special Payments on the Equipment Certificates, equal to the product of the percentage interest in the Pass Through Trust evidenced by this Pass Through Certificate and an amount equal to the sum of such Special Payments so received. If a Distribution Date is not a Business Day, distribution shall be made on the immediately following Business Day with the same force and effect as if made on such Distribution Date and no interest shall accrue during the intervening period. The Special Distribution Date shall be any Business Day on which a Special Payment is to be distributed. Distributions on this Pass Through Certificate will be made by the Pass Through Trustee to the Person entitled thereto, without the presentation or surrender of this Pass Through Certificate or the making of any notation hereon. Except as otherwise provided in the Pass Through Agreement and notwithstanding the above, the final distribution on this Pass Through Certificate will be made after notice is mailed by the Pass Through Trustee of the pendency of such distribution and only upon presentation and surrender of this Pass Through Certificate at the office or agency of the Pass Through Trustee specified in such notice. [Any Person who is, or who in acquiring this Pass Through Certificate is or may be using the assets of, an employee benefit plan subject to Title I of The Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or an individual retirement account or plan subject to Section 4975 of the Code, or any trust established under any such plan or account, may acquire or hold any of the Pass Through Certificates, if such Person determines either that an administrative or a statutory exemption from the prohibited transaction rules under Section 406 of ERISA and Section 4975 of the Code is applicable to its purchase and holding of this Pass Through Certificate or that its purchase and B-A-3 holding of this Pass Through Certificate will not result in a prohibited transaction under Section 406 of ERISA and Section 4975 of the Code.]* THIS PASS THROUGH CERTIFICATE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE Reference is hereby made to the further provisions of this Pass Through Certificate set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Pass Through Trustee, by manual signature, this Pass Through Certificate shall not be entitled to any benefit under the Pass Through Trust or be valid for any purpose. - -------- * Subject to revision as set forth in Section 6.06 of The Pass Through Agreement. B-A-4 IN WITNESS WHEREOF, the Pass Through Trustee has caused this Pass Through Certificate to be duly executed. FEDERAL EXPRESS CORPORATION PASS THROUGH TRUST, SERIES 200__-__ By: ---------------------------------------- as Pass Through Trustee By: ----------------------------------- Authorized Signatory [FORM OF THE PASS THROUGH TRUSTEE'S CERTIFICATE OF AUTHENTICATION] Dated: This is one of the Pass Through Certificates referred to in the within-mentioned Pass Through Agreement and Series Supplement. ------------------------------------------- as Pass Through Trustee By: -------------------------------- Authorized Signatory B-A-5 [Reverse of Pass Through Certificate] The Pass Through Certificates do not represent a direct obligation of, or an obligation guaranteed by, or an interest in, the Company or the Pass Through Trustee or any affiliate thereof. The Pass Through Certificates are limited in right of payment, all as more specifically set forth on the face hereof and in the Pass Through Agreement, any Intercreditor Agreement, any Liquidity Facility and the Series Supplement. Subject to the Intercreditor Agreement, all payments or distributions made to Certificateholders under the Pass Through Agreement shall be made only from the Trust Property and only to the extent that the Pass Through Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of the Pass Through Agreement and the Series Supplement. Each Certificateholder of this Pass Through Certificate, by its acceptance hereof, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to such Certificateholder as provided in the Pass Through Agreement, any Intercreditor Agreement, any Liquidity Facility and the Series Supplement. In connection with withholding taxes, under certain circumstances the Pass Through Trustee may retain certain amounts otherwise distributable to a Certificateholder. The purchase by any Certificateholder of any Pass Through Certificate constitutes the consent of such Certificateholder to such retention in accordance with the terms of the Pass Through Agreement. This Pass Through Certificate does not purport to summarize the Pass Through Agreement, any Intercreditor Agreement, any Liquidity Facility and the Series Supplement and reference is made to the Pass Through Agreement, any Intercreditor Agreement, any Liquidity Facility and the Series Supplement for information with respect to the interests, rights, benefits, obligations, proceeds and duties evidenced hereby. A copy of the Pass Through Agreement, any Intercreditor Agreement, any Liquidity Facility and the Series Supplement may be examined by any Certificateholder upon request during normal business hours at the Principal Corporate Trust Office of the Pass Through Trustee, and at such other places designated by the Pass Through Trustee. As of the date of issuance of this Pass Through Certificate, and assuming that no prepayment or default in respect of payment on the Equipment Certificates shall occur and assuming there will be no change in the payment terms of the Equipment Certificates, the aggregate scheduled repayments of principal on the Equipment Certificates for the Pass Through Trust and the resulting Pool Factors for the Pass Through Trust after taking into account each such repayment are set forth below: B-A-6 Pass Through Trust, 200__-___ Scheduled Principal Regular Payments on Pool Factor Distribution Date Equipment Certificates $ 0.0000000 The Pass Through Agreement, any Intercreditor Agreement, any Liquidity Facility and the Series Supplement permit, with certain exceptions provided therein, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Certificateholders under the Pass Through Trust at any time by the Company and the Pass Through Trustee with the consent of the Majority In Interest of Certificateholders in the Pass Through Trust. Any such consent by the Certificateholder of this Pass Through Certificate shall be conclusive and binding on such Certificateholder and upon all future Certificateholders of this Pass Through Certificate and of any Pass Through Certificate issued upon the transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent is made upon this Pass Through Certificate. The Pass Through Agreement, any Intercreditor Agreement, any Liquidity Facility and the Series Supplement also permit the amendment thereof, in certain limited circumstances, without the consent of the Certificateholders of any of the Pass Through Certificates. As provided in the Pass Through Agreement and the Series Supplement and subject to certain limitations set forth therein, the transfer of this Pass Through Certificate is registrable in the Register upon surrender of this Pass Through Certificate for registration of transfer to the Pass Through Trustee in its capacity as Registrar, or by any successor Registrar, duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Pass Through Trustee and the Registrar duly executed by the Certificateholder hereof or such Certificateholder's attorney duly authorized in writing, and thereupon one or more new Pass Through Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Pass Through Trust will be issued to the designated transferee or transferees. The Pass Through Certificates are issuable only as registered Pass Through Certificates without coupons in minimum denominations of $1,000 fractional undivided interests and integral multiples thereof. As provided in the Pass Through Agreement and the Series Supplement and subject to certain limitations set forth therein, the Pass Through Certificates are exchangeable for new Pass Through Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Pass Through Trust, as requested by the Certificateholder surrendering the same. B-A-7 No service charge will be made for any such registration of transfer or exchange, but the Pass Through Trustee may require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith. The Pass Through Trustee, the Registrar, and any agent of the Pass Through Trustee or the Registrar may treat the person in whose name this Pass Through Certificate is registered as the owner hereof for all purposes, and neither the Pass Through Trustee, the Registrar, nor any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Pass Through Agreement and the Series Supplement and the Pass Through Trust created thereby shall terminate upon the distribution to Certificateholders of all amounts required to be distributed to them pursuant to the Pass Through Agreement, any Intercreditor Agreement, any Liquidity Facility and the Series Supplement and the disposition of all property held as part of the Trust Property. B-A-8 Schedule I to Series Supplement Federal Express Corporation Pass Through Trust, 200__-___ Equipment Certificates; Related Indenture Documents Equipment Certificates (Federal Express Corporation Trust No. N___ FE): Interest Rate: ________% Maturity: _____________ Principal Amount: $____________ Related Indenture Documents: B-A-9 EX-5.A.1 3 0003.txt EXHIBIT 5(A)(1) DAVIS POLK & WARDWELL 450 Lexington Avenue New York, N.Y. 10017 212-450-4000 FAX 212-450-3800 June 9, 2000 Federal Express Corporation 2005 Corporate Avenue Memphis, Tennessee 38132 Ladies and Gentlemen: We have acted as special counsel for Federal Express Corporation, a Delaware corporation (the "Corporation"), in connection with the preparation and filing with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"), of a shelf Registration Statement on Form S-3 (the "Registration Statement"). The Registration Statement relates to up to $450,000,000 aggregate principal amount of Equipment Trust Certificates (the "Certificates") that may be issued by the Corporation in one or more series from time to time on a delayed basis. Each series of Certificates will be issued pursuant to the provisions of a separate Trust Indenture and Security Agreement to be entered into among State Street Bank and Trust Company of Connecticut, National Association, as Owner Trustee (the "Owner Trustee"), the Corporation, as Lessee and First Security Bank, National Association, as Indenture Trustee (the "Indenture Trustee"), substantially in the form filed as Exhibit 4(b)(1) to the Registration Statement (each, an "Indenture" and, in the case of a refinancing transaction, each originally executed Trust Indenture and Security Agreement, an "Original Indenture"). In connection with the opinions expressed below, we have examined originals, or copies certified to our satisfaction, of such agreements, documents and certificates of governmental officials and corporate officers as we have deemed necessary or advisable as a basis for such opinions. In such examination, we have assumed the genuineness of all signatures and the authenticity of all documents submitted to us as originals and the conformity with the originals of all documents submitted to us as copies. We have also examined the form of Indenture filed with the Commission. Unless otherwise defined herein, capitalized terms used herein have the meanings assigned thereto in the related Indentures. Based on the foregoing, it is our opinion that: Assuming (i) the due authorization, execution and delivery of the Indentures and, in the case of a refinancing transaction, the Original Indentures and the related Indenture Supplements by each of the parties thereto, (ii) that the Original Indentures, if any, and the related Indenture Supplements have not been terminated, varied, transferred or assigned, (iii) the due authorization, execution, issuance and delivery by the Owner Trustee, and the due authentication and delivery by the Indenture Trustee, of the Certificates to be issued under each such Indenture, in each case in accordance with the terms of such Indenture and (iv) in the case of a refinancing transaction, that the outstanding Original Loan Certificate under each Original Indenture is delivered by the holder thereof to the Indenture Trustee thereunder for cancellation and is cancelled, (A) the Indentures, when duly executed and delivered, will constitute valid and binding agreements of each of the parties thereto, and (B) the Certificates, when duly authorized, executed, issued and delivered by the Owner Trustee and duly authenticated and delivered by the Indenture Trustee in accordance with the terms of the respective Indentures and sold in accordance with the related purchase agreement or underwriting agreement between the Corporation and the purchasers or underwriters, as the case may be, named therein, will be valid and binding obligations of the Owner Trustee and will be entitled to the benefits of the applicable Indenture. In giving the foregoing opinion we do not purport to be experts on, or to express any opinion herein concerning, any laws other than the laws of the state of New York and the laws of the United States. In giving the forgoing opinion, we express no opinion as to the priority of the security interests created by the Original Indentures, if any, or the Indentures. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to our firm under the caption "Legal Matters" in the prospectus, and in any subsequently filed prospectus supplements, relating to the Certificates that constitutes part of the Registration Statement. Very truly yours, /s/ Davis Polk & Wardwell Davis Polk & Wardwell EX-5.A2 4 0004.txt EXHIBIT 5(A)(2) DAVIS POLK & WARDWELL 450 Lexington Avenue New York, N.Y. 10017 212-450-4000 FAX 212-450-3800 June 9, 2000 Federal Express Corporation 2005 Corporate Avenue Memphis, Tennessee 38132 Ladies and Gentlemen: We have acted as special counsel for Federal Express Corporation, a Delaware corporation (the "Corporation"), in connection with the preparation and filing with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"), of a shelf Registration Statement on Form S-3 (the "Registration Statement"). The Registration Statement relates to up to $450,000,000 aggregate principal amount of Pass Through Certificates (the "Pass Through Certificates") that may be issued by the Corporation in one or more series from time to time on a delayed basis. The Pass Through Certificates will be issued pursuant to the provisions of a Pass Through Trust Agreement to be entered into between the Corporation and First Security Bank, National Association (the "Pass Through Trustee"), substantially in the form filed as Exhibit 4(a)(1) to the Registration Statement (the "Pass Through Agreement"), as supplemented by a separate Series Supplement for each series of Pass Through Certificates (each, a "Series Supplement"). In connection with the opinions expressed below, we have examined originals, or copies certified to our satisfaction, of such agreements, documents and certificates of governmental officials and corporate officers as we have deemed necessary or advisable as a basis for such opinions. In such examination, we have assumed the genuineness of all signatures and the authenticity of all documents submitted to us as originals and the conformity with the originals of all documents submitted to us as copies. We have also examined the form of Pass Through Agreement filed with the Commission. Unless otherwise defined herein, capitalized terms used herein have the meanings assigned thereto in the Pass Through Agreement. Based on the foregoing, it is our opinion that: Assuming (i) the due authorization, execution and delivery of the Pass Through Agreement and each applicable Series Supplement by each of the parties thereto (other than the Corporation), (ii) that the Pass Through Agreement and each applicable Series Supplement have not been terminated, varied, transferred or assigned, (iii) the due authorization, execution, issue, delivery and authentication by the Pass Through Trustee of the Pass Through Certificates to be issued under the Pass Through Agreement and each applicable Series Supplement, in each case in accordance with the terms of such Pass Through Agreement and each such Series Supplement and (iv) in the case of a refinancing transaction, that any outstanding equipment trust certificates previously issued by the Owner Trustee under any related Indenture have been delivered to the Indenture Trustee thereunder for cancellation and have been cancelled, (A) the Pass Through Agreement and each applicable Series Supplement, when duly executed and delivered, will constitute, valid and binding agreements of each of the parties thereto, and (B) the Pass Through Certificates, when duly authorized, executed, issued, delivered and authenticated by the Pass Through Trustee in accordance with the terms of the Pass Through Agreement and each applicable Series Supplement and sold in accordance with the related purchase agreement or underwriting agreement between the Corporation and the purchasers or underwriters, as the case may be, named therein, will be valid and binding obligations of the Pass Through Trustee and will be entitled to the benefits of the Pass Through Agreement and each applicable Series Supplement. In giving the foregoing opinion we do not purport to be experts on, or to express any opinion herein concerning, any laws other than the laws of the state of New York and the laws of the United States. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the references to our firm under the captions "Legal Matters" and "Federal Income Tax Consequences" in the prospectus, and in any subsequently filed prospectus supplements, relating to the Pass Through Certificates that constitutes part of the Registration Statement. Very truly yours, /s/ Davis Polk & Wardwell ------------------------------------ Davis Polk & Wardwell EX-5.B 5 0005.txt EXHIBIT 5(B) RAY, QUINNEY & NEBEKER Professional Corporation Attorneys At Law 79 South Main Street Suite 400 P.O. Box 45385 Salt Lake City, Utah 84145-0385 Telephone (801) 532-1500 Facsimile No. (801) 532-7583 June 9, 2000 Federal Express Corporation 2005 Corporate Avenue Memphis, Tennessee 38132 Re: Federal Express Corporation --------------------------- Ladies and Gentlemen: We are acting as counsel to First Security Bank, National Association, a national banking association, individually ("FSB"), and as Pass Through Trustee (the "Pass Through Trustee") under a Pass Through Trust Agreement to be entered into between Federal Express Corporation (the "Company") and the Pass Through Trustee (the "Agreement"). Pursuant to the Agreement, the form of which has been filed as Exhibit 4(a)(1) to the Registration Statement (as defined below) and one or more supplemental agreements to be entered into from time to time between the Company and the Pass Through Trustee, the Pass Through Trustee will execute, authenticate and deliver, upon the Company's request, Pass Through Certificates in one or more series in an aggregate principal amount of up to $450,000,000 ("Pass Through Certificates"), to be registered with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "1933 Act"), under the Company's Registration Statement on Form S-3 (the "Registration Statement"). Except as otherwise defined herein, terms used herein shall have the meanings set forth in the Agreement. Our representation of the Pass Through Trustee has been as special counsel for the purposes stated above. As to all matters of fact (including factual conclusions and characterizations and descriptions of purpose, intention or other state of mind), we have relied entirely upon (i) the representations of the parties set forth in the Operative Agreements and (ii) certificates delivered to us by the management of FSB and have assumed, without independent inquiry, the accuracy of those representations and certificates. We have examined the forms of the Agreement and the Pass Through Certificates, and originals, or copies certified or otherwise identified to our satisfaction, of such other records, documents, certificates, or other instruments as we have deemed necessary or advisable for the purposes of this opinion. Based on and subject to the foregoing, we are of the opinion that: 1. FSB is a national banking association duly organized and validly existing in good standing under the law of the United States of America with the power and authority to execute, deliver and carry out, individually or as Pass Through Trustee, as the case may be, the terms of the Agreement, the supplements contemplated thereby and the Pass Through Certificates. 2. With respect to the Pass Through Certificates, when (a) the Agreement establishing the terms of the Pass Through Certificates of such series and forming the related Pass Through Trust shall have been duly authorized, executed and delivered by the Company and the Pass Through Trustee in accordance with the terms and conditions of the Agreement, and (b) the Pass Through Certificates shall have been duly executed, authenticated, issued and delivered by the Pass Through Trustee and sold as contemplated by each of the Registration Statement and the prospectus included therein relating to the Pass Through Certificates, the supplement or supplements to such prospectus relating to the Pass Through Certificates of such series, the purchase agreement or underwriting agreement between the Company and the purchasers or underwriters named therein, as the case may be, relating thereto and the Agreement, assuming that the terms of the Pass Through Certificates are in compliance with then applicable law, (i) the Agreement will constitute a valid and binding obligation of the Pass Through Trustee enforceable against the Pass Through Trustee in accordance with its terms, and (ii) the Pass Through Certificates will be validly issued and will be entitled to the benefits of the Agreement pursuant to which it was issued. 3. The discussion in the prospectus forming part of the Registration Statement entitled "Utah Taxes", insofar as it relates to statements of law or legal conclusions, is correct in all material respects. The foregoing opinions are subject to the following assumptions, exceptions and qualifications: A. 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 FSB. In addition, without limiting the foregoing we express no opinion with respect to (i) federal securities laws, including the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the Trust Indenture Act of 1939, as amended, (ii) the Federal Aviation Act of 1958, as amended or (iii) state securities or blue sky laws. Insofar as the foregoing opinions relate to the legality, validity, binding effect and enforceability of the documents involved in these transactions, which by their terms are governed by the laws of a state other than Utah, we have assumed that such documents, when duly executed and delivered, will constitute legal, valid, binding and enforceable agreements under the laws of such other state, 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. As to the documents involved in these transactions, we have assumed that each, when duly executed and delivered, will constitute legal, valid and binding obligations of each party thereto, other than FSB or the Pass Through Trustee, and will be enforceable against each such party in accordance with their respective terms. D. We have assumed that all signatures, other than those of the Pass Through Trustee or FSB, on documents and instruments involved in these transactions 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 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. F. In addition to any other limitation by operation of law upon the scope, meaning, or purpose of this opinion, this opinion speaks only as of the date hereof. We have no obligation to advise the recipients of this opinion (or any third party) of changes of law or fact that may occur after the date hereof, even though the change may affect the legal analysis, a legal conclusion or an information confirmation herein. G. The opinions expressed in this letter are solely for the use of the parties to which it is addressed in matters directly related to the Agreement and the transactions contemplated thereunder and these opinions may not be relied on by any other persons or for any other purpose without our prior written approval. The opinions expressed in this letter are limited to the matter set forth in this letter, and no other opinions should be inferred beyond the matters expressly stated. We hereby consent to the filing of this opinion as an Exhibit to the Registration Statement, and to the reference to us under the captions "Legal Matters" and "Utah Taxes" in the prospectus and in any subsequently filed prospectus supplements. In giving this consent, we do not thereby admit that we are in the category of person whose consent is required under Section 7 of the 1933 Act or the Rules and Regulations of the Securities and Exchange Commission. Very truly yours, RAY, QUINNEY & NEBEKER /s/ M. John Ashton ------------------------------------ M. John Ashton EX-5.C 6 0006.txt EXHIBIT 5(C) BINGHAM DANA LLP One State Street Hartford, Connecticut 06103-3178 tel: (860) 240-2700 fax: (860) 240-2800 www.bingham.com June 9, 2000 Federal Express Corporation 2005 Corporate Avenue Memphis, Tennessee 38132 Re: Federal Express Corporation $450,000,000 Shelf Registration ----------------------------------------------------------- Ladies and Gentlemen: We have acted as special counsel in the State of Connecticut to State Street Bank and Trust Company of Connecticut, National Association, a national banking association in its individual capacity ("State Street") and in its capacity as Owner Trustee (the "Owner Trustee") in connection with the filing by Federal Express Corporation ("Federal Express") with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "1933 Act"), of the Registration Statement on Form S-3 to which this opinion is attached as Exhibit 5(c), which Registration Statement we understand is to be filed with the Securities and Exchange Commission on the date hereof (as such Registration Statement may be amended from time to time, the "Registration Statement"). The Registration Statement relates to the issuance from time to time of up to $450,000,000 aggregate principal amount of Equipment Trust Certificates (the "Certificates") that will be issued by the Owner Trustee in connection with certain leveraged lease finance transactions pursuant to one or more Trust Indenture and Security Agreements (individually an "Indenture", collectively the "Indentures") between the Owner Trustee, Federal Express and First Security Bank, National Association ("First Security") as indenture trustee. Capitalized terms not otherwise defined herein shall have the meanings specified in, or defined by reference in or set forth in, the Indentures. State Street has requested that we deliver this opinion to you. Our representation of State Street has been as special counsel for the limited purposes stated above. As to all matters of fact (including factual conclusions and characterizations and descriptions of purpose, intention or other state of mind), we have relied, with your permission, entirely upon (i) the representations and warranties of the parties set forth in the Indentures and (ii) certificates delivered to us by the management of State Street and have assumed, with your permission, without independent inquiry, the accuracy of those representations, warranties and certificates. We have examined a form of Indenture which you have furnished to us and which has been filed as an exhibit to the Registration Statement by incorporation by reference to the Registration Statement on Form S-3 of Federal Express, File No. 33-52142, the Certificate of the Comptroller of the Currency relating to State Street and originals, or copies certified or otherwise identified to our satisfaction, of such other corporate and public records and agreements, documents, certificates and other instruments as we have deemed necessary or appropriate for the purposes of rendering this opinion. For purposes of our opinion rendered in paragraph 1 below, with respect to the authority of State Street to transact the business of banking and exercise fiduciary powers, our opinion relies upon and is limited by such Certificate of the Comptroller of the Currency. We have assumed, with your permission, the genuineness of all signatures (other than those on behalf of the Owner Trustee), the conformity to the originals of all documents reviewed by us as copies, the authenticity and completeness of all original documents reviewed by us in original or copy form and the legal competence of each individual executing any document (other than those individuals executing documents on behalf of the Owner Trustee). Each opinion set forth below relating to the enforceability of any agreement or instrument against the Owner Trustee is subject to the following exceptions, qualifications and assumptions: (a) We have assumed without any independent investigation that (i) each party to the Indentures, other than the Owner Trustee, at all times relevant thereto, is validly existing and in good standing under the laws of the jurisdiction in which it is organized, and is qualified to do business and in good standing under the laws of each jurisdiction where such qualification is required generally or necessary in order for such party to enforce its rights under such Indenture, and (ii) each party to the Indentures, at all times relevant thereto, had and has the full power, authority and legal right under its certificate of incorporation, partnership agreement, by-laws, and other governing organizational documents, and the 2 applicable corporate, partnership, or other enterprise legislation and other applicable laws, as the case may be (other than the Owner Trustee with respect to the laws of the United States of America and the internal substantive laws of the State of Connecticut) to execute, and to perform its obligations under, the Indentures. (b) We have assumed without any independent investigation (i) that each Indenture is a valid, binding and enforceable obligation of each party thereto other than the Owner Trustee and (ii) that each Indenture is a valid, binding and enforceable obligation of the Owner Trustee to the extent that laws other than those of the State of Connecticut are relevant thereto. (c) The enforcement of any obligations of the Owner Trustee under the Indentures may be limited by bankruptcy, insolvency, reorganization, moratorium, marshaling or other laws and rules of law affecting the enforcement generally of creditors' rights and remedies (including such as may deny giving effect to waivers of debtors' or guarantors' rights); and we express no opinion as to the status under any fraudulent conveyance laws or fraudulent transfer laws of any of the obligations of the Owner Trustee under the Indentures. (d) We express no opinion as to the enforceability of any particular provision of the Indentures relating to remedies after default. (e) We express no opinion as the availability of any specific or equitable relief of any kind. (f) The enforcement of any of your rights may in all cases be subject to an implied duty of good faith and fair dealing and to general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity) and, as to any of your rights to collateral security, will be subject to a duty to act in a commercially reasonable manner. (g) We express no opinion as to the enforceability of any particular provision of the Indentures relating to (i) waivers of rights to object to jurisdiction or venue, or consents to jurisdiction or venue, (ii) waivers of rights to (or methods of) service of process, or rights to trial by jury, or other rights or benefits bestowed by operation of law, (iii) waivers of any applicable defenses, setoffs, recoupments, or counterclaims, (iv) waivers or variations of provisions which are not capable of waiver or variation under Sections 1-102(3), 9-501(3) or other provisions of the Uniform Commercial Code ("UCC") of the State of Connecticut (the "Connecticut UCC"), (v) the grant of powers of attorney to any person or entity, (vi) exculpation or exoneration clauses, indemnity clauses, and clauses relating to releases or waivers of unmatured claims or rights, (vii) the imposition or 3 collection of interest on overdue interest or providing for a penalty rate of interest or late charges on overdue or defaulted obligations, or the payment of any premium, liquidated damages, or other amount which may be held by any court to be a "penalty" or a "forfeiture," or (viii) so-called "usury savings clauses" purporting to specify methods of (or otherwise assure) compliance with usury laws or other similar laws of any jurisdiction. (h) We express no opinion as to the effect of events occurring, circumstances arising, or changes of law becoming effective or occurring, after the date hereof on the matters addressed in this opinion letter, and we assume no responsibility to inform you of additional or changed facts, or changes in law, of which we may become aware. (i) No opinion is given herein as to the effect of usury laws (or other similar laws) of any jurisdiction with respect to the Indentures. (j) We express no opinion as to any requirement that any party to the Indentures (or any other persons or entities purportedly entitled to the benefits thereof) qualify or register to do business in any jurisdiction in order to be able to enforce its rights thereunder or obtain the benefits thereof. (k) We have made no examination of, and no opinion is given herein as to the Owner Trustee's title to or other ownership rights in, the accuracy of the descriptions of, or the existence of any liens, charges, encumbrances, restrictions or limitations on, or adverse claims against, the Indenture Estates. We express no opinion as to the creation, attachment, validity, perfection or priority of any security interest, mortgage, or other lien or encumbrance with respect to any of the property or assets of the Owner Trustee. Subject to the limitations set forth herein, we have made such examination of law as we have deemed necessary for the purposes of this opinion. The opinions expressed herein are limited solely to the internal substantive laws of the State of Connecticut as applied by courts located in the State of Connecticut and the Federal laws of the United States of America governing the banking and trust powers of State Street and, solely with respect to the validity and binding nature of the Indentures and the Certificates, the laws of the State of New York. We express no opinion as to the laws of any other jurisdiction. No opinion is given herein as to the choice of law or internal substantive rules of law that any court or other tribunal may apply to the transactions contemplated by the Indentures. Insofar as the opinions expressed herein involve the laws of the State of New York, we have with your permission and without independent investigation relied entirely upon the opinion letter dated the date hereof of Davis Polk & Wardwell, and the opinions set forth herein are subject to each of the assumptions, 4 exceptions, qualifications and limitations contained in such opinion letter. We have assumed that the Indentures will not differ in any material respect from the form of Indenture filed as an exhibit to the Registration Statement and that no relevant provision of Connecticut, New York or United States of America federal law will have differed in any material respect from such law as in effect on the date hereof. No opinion is expressed herein as to the application or effect of federal securities laws or as to the securities or so-called "Blue Sky" laws of any state or other jurisdiction. In addition, no opinion is expressed as to matters governed by the Transportation Code, or by any other law, statute, rule or regulation of the United States relating to the acquisition, ownership, registration, use, operation, maintenance, repair, replacement or sale of or the nature of the Aircraft, Airframe or the Engines. This opinion is rendered solely for your benefit in connection with the transactions contemplated by the Indentures and may not be used or relied upon by any other person or for any other purpose. Based upon the foregoing and subject to the assumptions, exceptions and qualifications set forth below, we are of the opinion that: 1. State Street is a national banking association validly formed and validly existing under the laws of the United States of America, authorized to transact the business of banking under the laws of the United States of America as a national banking association and exercise fiduciary powers. 2. Assuming (i) the due authorization, execution and delivery of each of the Indentures by each of the parties to each such document (other than the Owner Trustee), (ii) that each such party has, at the time of execution, the corporate power, authority and legal right to execute, deliver and perform each Indenture to which it is a party, (iii) that each such party continues to have such power, authority and legal right, (iv) that the execution, delivery and performance of each such Indenture by each such party will not violate such party's respective charter or by-laws and fully complies with all laws and governmental rules and regulations (federal, state, or otherwise) that may be applicable to such party, in its individual or trust capacity, as the case may be, (v) that no such document has been terminated, amended, transferred or assigned, (vi) that the conditions to the closing of the transactions contemplated by the Indentures set forth therein will have been satisfied, and (vii) that the Owner Trustee has maintained its current full corporate power and authority to enter into and perform the Indentures and to enter into, issue and perform the Certificates to be issued under each Indenture, (a) upon the execution and delivery of the Indentures by the Owner Trustee, the Indentures will constitute valid and binding agreements of the Owner Trustee and (b) upon the due execution by the Owner Trustee and the due authentication by 5 First Security as indenture trustee of each Certificate to be issued under each such Indenture, in each case in accordance with the terms of each such Indenture, each such Certificate, when issued and sold in accordance with the purchase agreement or underwriting agreement between Federal Express and the purchasers or underwriters, as the case may be, named therein will be a valid and binding obligation of the Owner Trustee and will be entitled to the benefits of the Indenture pursuant to which it was issued. We consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to us under the caption "Legal Matters" in any subsequently filed prospectus supplements forming part of the Registration Statement. In giving this consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the 1933 Act or the rules and regulations of the Securities and Exchange Commission. Very truly yours, /s/ Bingham Dana LLP --------------------------- Bingham Dana LLP 6 EX-5.D1 7 0007.txt EXHIBIT 5(D)(1) FEDERAL EXPRESS CORPORATION Legal Department 1980 Nonconnah Boulevard Memphis, TN 38132 US Mail: PO Box 727 Memphis, TN 38194-1842 Telephone: 901-395-3382 June 9, 2000 Federal Express Corporation 2005 Corporate Avenue Memphis, Tennessee 38132 Ladies and Gentlemen: I am Senior Vice President and General Counsel of Federal Express Corporation (the "Company") and have acted as such in connection with the preparation and filing of a Registration Statement on Form S-3, as amended (the "Registration Statement") and the three prospectuses contained therein (collectively, the "Prospectuses") with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Securities Act"). The Registration Statement relates to: (i) Equipment Trust Certificates, to be issued in one or more series in an aggregate principal amount of up to $450 million pursuant to one or more Trust Indenture and Security Agreements (the "Indentures") to be entered into among the Company, First Security Bank, National Association, a national banking association, as Indenture Trustee, and State Street Bank and Trust Company of Connecticut, National Association, as Owner Trustee; (ii) Pass Through Certificates, to be issued in one or more series in an aggregate principal amount of up to $450 million pursuant to a Pass Through Trust Agreement (the "Pass Through Agreement") to be entered into between the Company and First Security Bank, National Association, a national banking association, as Pass Through Trustee; or (iii) Debt Securities, to be issued in one or more series in an aggregate principal amount of up to $450 million pursuant to a Trust Indenture to be entered into between the Company and Bank One Trust Company, National Association (as successor-in-interest to The First National Bank of Chicago), as Trustee. In connection with the opinions expressed below, I or attorneys under my supervision have examined originals, or copies certified to my satisfaction, of such agreements, documents, certificates and statements of government officials and other papers as we have deemed necessary or advisable as a basis for such opinions. In such examination we have assumed the genuineness of all signatures and the authenticity of all documents submitted to us as originals, and the conformity with the originals of all documents submitted to us as copies. I or attorneys under my supervision have also examined the forms of Pass Through Agreement and the Indentures filed with the Securities and Exchange Commission. Based upon the foregoing, it is my opinion that: 1. The Company is a corporation duly organized and validly existing in good standing under the laws of the State of Delaware and is duly authorized to carry on the business in which it is engaged. 2. The execution and delivery by the Company of each Indenture and the Pass Through Agreement has been duly authorized by the Company. I am qualified to practice law in the State of Tennessee and I do not purport to be an expert on, or to express any opinion herein concerning, any laws other than the laws of the State of Tennessee, the corporate laws of the State of Delaware and the federal laws of the United States. I hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to me under the heading "Legal Matters" in the Prospectuses and in any subsequently filed Prospectus Supplements. In giving such consent, I do not admit that I am in the category of persons whose consent is required under Section 7 of the Securities Act. Sincerely, FEDERAL EXPRESS CORPORATION /s/ Karen M. Clayborne ----------------------------------------- Karen M. Clayborne Senior Vice President and General Counsel 2 EX-5.D2 8 0008.txt EXHIBIT 5(D)(2) FEDERAL EXPRESS CORPORATION Legal Department 1980 Nonconnah Boulevard Memphis, TN 38132 US Mail: PO Box 727 Memphis, TN 38194-1842 Telephone: 901-395-3382 June 9, 2000 Federal Express Corporation 2005 Corporate Avenue Memphis, Tennessee 38132 Ladies and Gentlemen: I am Senior Vice President and General Counsel of Federal Express Corporation (the "Company") and have acted as such in connection with the preparation and filing of a Registration Statement on Form S-3, as amended (the "Registration Statement") and the three prospectuses contained therein (collectively, the "Prospectuses") with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Securities Act"). The Registration Statement relates to: (i) Equipment Trust Certificates, to be issued in one or more series in an aggregate principal amount of up to $450 million pursuant to one or more Trust Indenture and Security Agreements to be entered into among the Company, First Security Bank, National Association, a national banking association, as Indenture Trustee, and State Street Bank and Trust Company of Connecticut, National Association, as Owner Trustee; (ii) Pass Through Certificates, to be issued in one or more series in an aggregate principal amount of up to $450 million pursuant to a Pass Through Trust Agreement to be entered into between the Company and First Security Bank, National Association, a national banking association, as Pass Through Trustee; or (iii) Debt Securities, to be issued in one or more series in an aggregate principal amount of up to $450 million pursuant to a Trust Indenture (the "Trust Indenture") to be entered into between the Company and Bank One Trust Company, National Association (as successor-in-interest to The First National Bank of Chicago), as Trustee. In connection with the opinions expressed below, I or attorneys under my supervision have examined originals, or copies certified to my satisfaction, of such agreements, documents, certificates and statements of government officials and other papers as we have deemed necessary or advisable as a basis for such opinions. In such examination we have assumed the genuineness of all signatures and the authenticity of all documents submitted to us as originals, and the conformity with the originals of all documents submitted to us as copies. I or attorneys under my supervision have also examined the form of Trust Indenture filed with the Securities and Exchange Commission. Based upon the foregoing, it is my opinion that: 1. The Company is a corporation duly organized and validly existing in good standing under the laws of the State of Delaware and is duly authorized to carry on the business in which it is engaged. 2. The execution and delivery by the Company of the Trust Indenture has been duly authorized by the Company. 3. Subject to (i) the determination of the terms of the Debt Securities in accordance with the Trust Indenture, (ii) the issuance, sale, authentication and delivery of the Debt Securities as contemplated by the Trust Indenture and the underwriting agreement for debt securities in substantially the form filed as Exhibit 1(c) to the Registration Statement, and (iii) the Registration Statement being declared effective, the Debt Securities, when issued and sold, will be legally issued and the valid and binding obligations of the Company enforceable in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors' rights generally. I do not find it necessary for purposes of this opinion and accordingly, do not purport to cover herein the application of the "Blue Sky" or securities laws of the various states to the sales of the Debt Securities. I am qualified to practice law in the State of Tennessee and I do not purport to be an expert on, or to express any opinion herein concerning, any laws 2 other than the laws of the State of Tennessee, the corporate laws of the State of Delaware and the federal laws of the United States. I hereby consent to the filing of this opinion as a exhibit to the Registration Statement and to the reference to me under the heading "Legal Matters" in the Prospectuses and in any subsequently filed Prospectus Supplements. In giving such consent, I do not admit that I am in the category of persons whose consent is required under Section 7 of the Securities Act. Sincerely, FEDERAL EXPRESS CORPORATION /s/ Karen M. Clayborne ----------------------------------------- Karen M. Clayborne Senior Vice President and General Counsel 3 EX-15 9 0009.txt EXHIBIT 15 June 5, 2000 Federal Express Corporation: We are aware that Federal Express Corporation has incorporated by reference in this Form S-3 Registration Statement its Form 10-Q's for the quarters ended August 31, 1999, November 30, 1999 and February 29, 2000, which include our reports dated September 15, 1999, December 15, 1999 and March 22, 2000, respectively, covering the unaudited interim financial information contained therein. Pursuant to Regulation C of the Securities Act of 1933, those reports are not considered a part of this registration statement prepared or certified by our firm or a report prepared or certified by our firm within the meaning of Sections 7 and 11 of the Act. Very truly yours, /s/ Arthur Andersen LLP Arthur Andersen LLP EX-23.E 10 0010.txt EXHIBIT 23(E) CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this Form S-3 registration statement filed with the Securities and Exchange Commission, of our reports dated June 29, 1999, included in Federal Express Corporation's Form 10-K for the year ended May 31, 1999, and to all references to our firm included in this registration statement. /s/ Arthur Andersen LLP - ----------------------- ARTHUR ANDERSEN LLP Memphis, Tennessee June 5, 2000. EX-25.A 11 0011.txt EXHIBIT 25(A) SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) __ BANK ONE TRUST COMPANY, NATIONAL ASSOCIATION (Exact name of trustee as specified in its charter) A National Banking Association 31-0838515 (I.R.S. employer identification number) 100 East Broad Street, Columbus, Ohio 43271-0181 (Address of principal executive offices) (Zip Code) Bank One Trust Company, National Association 1 Bank One Plaza, Suite IL1-0126 Chicago, Illinois 60670-0126 Attn: Sandra L. Caruba, Vice President, (312) 336-9436 (Name, address and telephone number of agent for service) Federal Express Corporation (Exact name of obligor as specified in its charter) Delaware 71-0427007 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification number) 2005 Corporate Avenue Memphis, Tennessee 38132 (Address of principal executive offices) (Zip Code) Debt Securities (Title of Indenture Securities) Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. Comptroller of Currency, Washington, D.C.; Federal Deposit Insurance Corporation, Washington, D.C.; The Board of Governors of the Federal Reserve System, Washington D.C. (b) Whether it is authorized to exercise corporate trust powers. The trustee is authorized to exercise corporate trust powers. Item 2. Affiliations With the Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. No such affiliation exists with the trustee. Item 16. List of exhibits. List below all exhibits filed as a part of this Statement of Eligibility. 1. A copy of the articles of association of the trustee now in effect.* 2. A copy of the certificate of authority of the trustee to commence business.* 3. A copy of the authorization of the trustee to exercise corporate trust powers.* 4. A copy of the existing by-laws of the trustee.* 5. Not Applicable. 6. The consent of the trustee required by Section 321(b) of the Act. 7. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. 8. Not Applicable. 9. Not Applicable. Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, Bank One Trust Company, National Association, a national banking association organized and existing under the laws of the United States of America, has duly caused this Statement of Eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Chicago and State of Illinois, on the 5th day of June, 2000. Bank One Trust Company, National Association, Trustee By /s/ Sandra L. Caruba -------------------------- Sandra L. Caruba Vice President *Exhibits 1, 2, 3, and 4 are herein incorporated by reference to Exhibits bearing identical numbers in Item 16 of the Form T-1 of Bank One Trust Company, National Association, filed as Exhibit 25 to the Registration Statement on Form S-4 of U S WEST Communications, Inc., filed with the Securities and Exchange Commission on March 24, 2000 (Registration No. 333-32124). EXHIBIT 6 THE CONSENT OF THE TRUSTEE REQUIRED BY SECTION 321(b) OF THE ACT June 5, 2000 Securities and Exchange Commission Washington, D.C. 20549 Ladies and Gentlemen: In connection with the qualification of an indenture between Federal Express Corporation and Bank One Trust Company, National Association, as Trustee, the undersigned, in accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby consents that the reports of examinations of the undersigned, made by Federal or State authorities authorized to make such examinations, may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor. Very truly yours, Bank One Trust Company, National Association By: /s/ Sandra L. Caruba ------------------------ Sandra L. Caruba Vice President EXHIBIT 7 Legal Title of Bank: Bank One Trust Company, N.A. Call Date: 03/31/00 State #: 391581 FFIEC 032 Address: 100 Broad Street Vendor ID: D Cert #: 21377 Page RC-1 City, State Zip: Columbus, OH 43271 Transit #: 04400003 Consolidated Report of Condition for Insured Commercial and State-Chartered Savings Banks for March 31, 2000 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding of the last business day of the quarter. Schedule RC--Balance Sheet Dollar Amounts in thousands C300 ---- ASSETS 1. Cash and balances due from depository institutions (from Schedule RC-A): RCON ---- a. Noninterest-bearing balances and currency and coin(1) ................... 0081 48,450 1.a b. Interest-bearing balances(2)............................................. 0071 17,750 1.b 2. Securities a. Held-to-maturity securities(from Schedule RC-B, column A) ............... 1754 0 2.a b. Available-for-sale securities (from Schedule RC-B, column D)............. 1773 5,714 2.b 3. Federal funds sold and securities purchased under agreements to resell ..... 1350 396,644 3. 4. Loans and lease financing receivables: RCON a. Loans and leases, net of unearned income (from Schedule ---- RC-C)....................................................................... 2122 87,817 4.a b. LESS: Allowance for loan and lease losses................................ 3123 10 4.b c. LESS: Allocated transfer risk reserve.................................... 3128 0 4.c d. Loans and leases, net of unearned income, allowance, and reserve (item 4.a minus 4.b and 4.c)..................................... 2125 87,807 4.d 5. Trading assets (from Schedule RD-D)......................................... 3545 0 5. 6. Premises and fixed assets (including capitalized leases) ................... 2145 25,200 6. 7. Other real estate owned (from Schedule RC-M) ............................... 2150 0 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M).............................................. 2130 0 8. 9. Customers' liability to this bank on acceptances outstanding ............... 2155 0 9. 10. Intangible assets (from Schedule RC-M)...................................... 2143 26,345 10. 11. Other assets (from Schedule RC-F)........................................... 2160 176,297 11. 12. Total assets (sum of items 1 through 11).................................... 2170 784,207 12. (1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held for trading.
Legal Title of Bank: Bank One Trust Company, N.A. Call Date: 03/31/00 State #: 391581 FFIEC 032 Address: 100 Broad Street Vendor ID: D Cert #: 21377 Page RC-2 City, State Zip: Columbus, OH 43271 Transit #: 04400003 Schedule RC-Continued Dollar Amounts in Thousands --------- LIABILITIES 13. Deposits: a. In domestic offices (sum of totals of columns A and C RCON ---- from Schedule RC-E, part 1).............................................. 2200 567,764 13.a (1) Noninterest-bearing(1)............................................... 6631 506,455 13.a1 (2) Interest-bearing..................................................... 6636 61,309 13.a2 b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, part II)... (1) Noninterest bearing.................................................. (2) Interest-bearing..................................................... 14. Federal funds purchased and securities sold under agreements to repurchase: RCFD 2800 0 14 15. a. Demand notes issued to the U.S. Treasury RCON 2840 0 15.a b. Trading Liabilities(from Sechedule RC-D)................................. RCFD 3548 0 15.b 16. Other borrowed money: RCON ---- a. With original maturity of one year or less............................... 2332 0 16.a b. With original maturity of more than one year. .......................... A547 0 16.b c. With original maturity of more than three years......................... A548 0 16.c 17. Not applicable 18. Bank's liability on acceptance executed and outstanding .................... 2920 0 18. 19. Subordinated notes and debentures........................................... 3200 0 19. 20. Other liabilities (from Schedule RC-G)...................................... 2930 83,885 20. 21. Total liabilities (sum of items 13 through 20)... .......................... 2948 651,649 21. 22. Not applicable EQUITY CAPITAL 23. Perpetual preferred stock and related surplus............................... 3838 0 23. 24. Common stock................................................................ 3230 800 24. 25. Surplus (exclude all surplus related to preferred stock) ................... 3839 45,157 25. 26. a. Undivided profits and capital reserves................................... 3632 86,585 26.a b. Net unrealized holding gains (losses) on available-for-sale securities............................................................... 8434 16 26.b c. Accumulated net gains (losses) on cash flow hedges....................... 4336 0 26.c 27. Cumulative foreign currency translation adjustments ........................ 28. Total equity capital (sum of items 23 through 27) .......................... 3210 132,558 28. 29. Total liabilities, limited-life preferred stock, and equity capital (sum of items 21, 22, and 28)............ .......................... 3300 784,207 29. Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the statement below that best describes the most comprehensive level of auditing work performed for the bank by independent external auditors as of any date during 1996 ................................... RCFD 6724 N/A M.1 ------ 1 = Independent audit of the bank conducted in accordance 4. = Directors' examination of the bank performed by other with generally accepted auditing standards by a certified external auditors (may be required by state chartering public accounting firm which submits a report on the bank authority) 2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external conducted in accordance with generally accepted auditing auditors standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external submits a report on the consolidated holding company auditors (but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work) 3 = Directors' examination of the bank conducted in 8 = No external audit work accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority) (1) Includes total demand deposits and noninterest-bearing time and savings deposits.
EX-25.B 12 0012.txt EXHIBIT 25(B) FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) FIRST SECURITY BANK, NATIONAL ASSOCIATION (Exact name of trustee as specified in its charter) NOT APPLICABLE 87-0131890 (Jurisdiction of Incorporation (I.R.S. Employer if not a U.S. national bank) identification No.) 79 SOUTH MAIN STREET SALT LAKE CITY, UTAH 84111 (Address of principal executive offices) (Zip Code) NOT APPLICABLE (Name, address and telephone number of agent for service) FEDERAL EXPRESS CORPORATION (Exact name of obligor as specified in its charter) DELAWARE 71-0427007 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 2005 Corporate Avenue Memphis, Tennessee 38132 (Address or principal executive offices) (Zip Code) Equipment Trust Certificates; Pass Through Certificates (Title of the Indenture securities) Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining of supervising authority to which it is subject. Comptroller of the Currency, Washington, D.C. 20230; Federal Reserve Bank of San Francisco, San Francisco, CA 94120; Federal Deposit Insurance Corporation, Washington, D.C. 20429. (b) Whether it is authorized to exercise corporate trust powers. The Trustee is authorized to exercise corporate trust powers. Item 2. Affiliations With The Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. Neither the obligor nor any underwriter for the obligor is an affiliate of the Trustee. Item 16. List of Exhibits. List below all exhibits filed as part of this statement of eligibility and qualification. Exhibit 1: copy of the articles of association as now in effect Exhibit 2: certificate of authority to commence business including a certificate of the Comptroller of the Currency evidencing the change of the Trustee's name Exhibit 3: copy of the authorization of the trustee to exercise corporate trust powers Exhibit 4: copy of the bylaws of the trustee Exhibit 5: Not applicable Exhibit 6: Not applicable Exhibit 7: A copy of the latest report published pursuant to law or its supervising or examining authority Exhibit 8: Not applicable Exhibit 9: Not applicable Signature Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, First Security Bank, National Association, a national banking association organized and existing under the laws of the United States, has duly caused this statement of eligibility and qualification to be signed on its behalf by the undersigned thereunder duly authorized, all in the City of Salt Lake City, and State of Utah, on the 2nd day of June, 2000. FIRST SECURITY BANK, NATIONAL ASSOCIATION, Trustee By: Greg A. Hawley ------------------------ Greg A. Hawley Vice President EXHIBIT 1 ARTICLES OF ASSOCIATION OF FIRST SECURITY BANK NATIONAL ASSOCIATION (As Amended) FIRST. The title of this Association, which shall carry on the business of banking under the laws of the United States, shall be "First Security Bank, National Association." SECOND. The place where the main banking house or office of this Association shall be located shall be Ogden, County of Weber, State of Utah. Its general business and its operations of discount and deposit shall also be carried on in said city, and the branch or branches established or maintained by it in accordance with the provisions of Section 36 of Title 12, United States Code. The Board of Directors shall the power to change the location of the main office of this Association (i) to any other authorized branch location within the limits of Ogden, Utah, without the approval of the shareholders of this Association and upon notice to the Comptroller of the Currency or, (ii) to any other place within Ogden, Utah, or within thirty (30) miles of Ogden, Utah, with the approval of the shareholders and the Comptroller of the Currency. The Board of Directors shall have the power to change the location of any branch or branches of this Association to any other location, without the approval of the shareholders of this Association but subject to the approval of the Comptroller of the Currency. THIRD. The Board of Directors of the consolidated association shall consist of not less than five (5) nor more than twenty-five (25) of its shareholders. FOURTH. There shall be an annual meeting of the shareholders the purpose of which shall be the election of Directors and the transaction of whatever other business may be brought before said meeting. It shall be held at the main office of the Bank or other convenient place as the Board of Directors may designate, on the third Monday of March of each year, but if no election is held on that day, it may be held on any subsequent day according to such lawful rules as may be prescribed by the Board of Directors. Nominations for election to the Board of Directors may be made by the Board of Directors or by any stockholder of any outstanding class of capital stock of the Bank entitled to vote for election of directors. Nominations, other than those made by or on behalf of the existing management of the Bank, shall be made in writing and shall be delivered or mailed to the President of the Bank and to the Comptroller of the Currency, Washington, D.C., not less than 14 days nor more than 50 days prior to any meeting of stockholders called for the election of directors, provided, however, that if less than 21 days notice of the meeting is given to shareholders, such nomination shall be mailed or delivered to the President of the Bank and to the Comptroller of the Currency not later than the close of business on the seventh day following the day on which the notice of meeting was mailed. Such notification shall contain the following information to the extent known to the notifying shareholder: (a) the name and address of each proposed nominee; (b) the principal occupation of each proposed nominee; (c) the total number of shares of capital stock of the Bank that will be voted for each proposed nominee; (d) the name and residence address of the notifying shareholder; and (e) the number of shares of capital stock of the Bank owned by the notifying shareholder. Nominations not made in accordance herewith may, in his discretion, be disregarded by the Chairman of the meeting, and upon his instructions, the voting inspectors may disregard all votes cast for each such nominee. FIFTH. The authorized amount of capital stock of this Association shall be One Hundred Million Dollars ($100,000,000.00), divided into 4,000,000 shares of common stock of the par value of Twenty-five Dollars ($25.00) each; provided, however, that said capital stock may be increased or decreased from time to time, in accordance with the provision of the laws of the United States. The shareholders of this Association shall not have any pre-emptive rights to acquire unissued shares of this Association. SIXTH. (1) The Board of Directors shall appoint one of its members President of this Association. It may also appoint a Chairman of the Board, and one or more Vice Chairmen. The Board of Directors shall have the power to appoint one or more Vice Presidents, at least one of whom shall also be a member of the Board of Directors, and who shall be authorized, in the absence of the President, to perform all acts and duties pertaining to the office of the President; to appoint a Cashier and such other officers and employees as may be required to transact the business of this Association; to fix the salaries to be paid to such officers or employees and appoint others to take their place. (2) The Board of Directors shall have the power to define the duties of officers and employees of this Association and to require adequate bonds from them for the faithful performance of their duties; to make all By-Laws that may be lawful for the general regulation of the business of this Association and the management of its affairs, and generally to do and perform all acts that may be lawful for a Board of Directors to do and perform. (3) Each person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, administrative or investigative (other than an action by or in the right of the Association) by reason of the fact that he is or was a director, officer, employee or agent of the Association or is or was serving at the request of the Association as a director, officer, employee, fiduciary or agent of another corporation, partnership, joint venture, trust, estate or other enterprise or was acting in furtherance of the Association's business shall be indemnified against expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Association; provided, however, no indemnification shall be given to a person adjudged guilty of, or liable for, willful misconduct, gross neglect of duty, or criminal acts or where there is a final order assessing civil money penalties or requiring affirmative action by such person in the form of payments to the Association. The termination of any action, suit or proceeding by judgment, order, settlement, or its equivalent, shall not of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Association. (4) Each person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Association (such action or suit being known as a "derivative proceeding") to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Association or is or was serving at the request of the Association as a director, officer, employee, fiduciary or agent of another corporation, partnership, joint venture, trust, estate or other enterprise shall be indemnified against expenses (including attorney's fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Association; provided, however, that no indemnification shall be given where there is a final order assessing civil money penalties or requiring affirmative action by such person in the form of payments to the Association; and provided further that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the Association, unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper. (5) To the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in (3) or (4) of this Article or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorney's fees) actually and reasonably incurred by him in connection therewith. (6) Any indemnification under (3) or (4) of this Article (unless ordered by a court) shall be made by the Association only as authorized in the specific case upon a reasonable determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in (3) or (4) of this Article. Such determination shall be made (a) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (b) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in written opinion, or (c) by the stockholders. (7) Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the Association in advance of the final disposition of such action, suit or proceeding as authorized in the manner provided in (6) of this Article (i) if the Board of Directors determines, in writing, that (1) the director, officer, employee or agent has a substantial likelihood or prevailing on the merits; (2) in the event the director, officer, employee or agent does not prevail, he or she will have the financial capability or reimburse the Association; and (3) payment of expenses by the Association will not adversely affect its safety and soundness; and (ii) upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount unless it shall ultimately be determined that he is entitled to be indemnified by the Association as authorized in this Article. (8) The indemnification provided by this Article shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any By-Law, agreement, vote of shareholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors, successors in interest, and administrators of such a person. SEVENTH. This Association shall have succession from the date of its organization certificate until such time as it be dissolved by the act of its shareholders in accordance with the provisions of the banking laws of the United States, or until its franchise becomes forfeited by reason of violation of law, or until terminated by either a general or a special act of Congress, or until its affairs be placed in the hands of a receiver and finally wound up by him. EIGHTH. The Board of Directors of this Association, or any three or more shareholders owning, in the aggregate, not less than ten per centum of the stock of this Association, may call a special meeting of shareholders at any time: Provided, however, that unless otherwise provided by law, not less than ten days prior to the date fixed for any such meeting, a notice of the time, place and purpose of the meeting shall be given by first-class mail, postage prepaid, to all shareholders of record of this Association. These Articles of Association may be amended at any regular or special meeting of the Shareholders by the affirmative vote of the shareholders owning at least a majority of the stock of this Association, subject to the provisions of the banking laws of the United States. The notice of any shareholders' meeting, at which an amendment to the Articles of Association of this Association is to be considered shall be given as hereinabove set forth. EXHIBIT 2 CERTIFICATE TREASURY DEPARTMENT ) Office of ) ss: Comptroller of the Currency ) I, Thomas G. DeShazo, Deputy Comptroller of the Currency, do hereby certify that: Pursuant to Revised Statutes 324, et seq., as amended, 12 U.S.C. 1, et seq., the Comptroller of the Currency charters and exercises regulatory and supervisory authority over all national banking associations; On December 9, 1881, The First National Bank of Ogden, Ogden, Utah was chartered as a National Banking Association under the laws of the United States and under Charter No. 2597; The document hereto attached is a true and complete copy of the Comptroller Certificate issued to The First National Bank of Ogden, Ogden, Utah, the original of which certificate was issued by this Office on December 9, 1881; On October 2, 1922, in connection with a consolidation of The First Bank of Ogden, Ogden, Utah, and The Utah National Bank of Ogden, Ogden, Utah, the title was charged to "The First & Utah National Bank of Ogden"; on January 18, 1923, The First & Utah National Bank of Ogden changed its title to "First Utah National Bank of Ogden"; on January 19, 1926, the title was changed to "First National Bank of Ogden"; and on February 24, 1934, the title was changed to "First Security Bank of Utah, National Association"; and First Security Bank of Utah, National Association, Ogden, Utah, continues to hold a valid certificate to do business as a National Banking Association. IN TESTIMONY WHEREOF, I have hereunto subscribed my name and caused the seal of Office of the Comptroller of the Currency to be affixed to these presents at the Treasury Department, in the City of Washington and District of Columbia, this fourth day of April, A.D. 1972. Thomas G. DeShazo --------------------------- Deputy Comptroller of the Currency TREASURY DEPARTMENT Comptroller of the Currency, Washington, December 9th, 1881 WHEREAS, by satisfactory evidence presented to the undersigned it has been made to appear that "The First National Bank of Ogden" in Ogden City in the County of Weber, and Territory of Utah has complied with all the provisions of the Revised Statutes of the United States, required to be complied with before an association shall be authorized to commence the business of Banking. Now, therefore, I, John Jay Knox, Comptroller of the Currency, do hereby certify that "The First National Bank of Ogden" in Ogden City in the County of Weber, and Territory of Utah is authorized to commence the business of Banking, as provided in Section Fifty-one hundred and sixty-nine of the Revised Statutes of the United States. In testimony whereof, witness my hand and seal of office this 9th day of December, 1881. John Jay Knox -------------------------------- Comptroller of the Currency EXHIBIT 3 FEDERAL RESERVE BOARD WASHINGTON, D.C. I, S.R. Carpenter, Assistant Secretary of the Federal Reserve Board, do hereby certify that it appears from the records of the Federal Reserve Board that: (1) Pursuant to authority vested in the Federal Reserve Board by an Act of Congress approved December 23, 1913, known as the Federal Reserve Act, as amended, the Federal Reserve Board has heretofore granted to the First National Bank of Ogden, Ogden, Utah, the right to act when not in contravention of State or local law, as trustee, executor, administrator, registrar of stocks and bonds, guardian of estates, assignee, receiver, committee of estates of lunatics, or in any other fiduciary capacity in which State banks, trust companies or other corporations which come into competition with national banks are permitted to act under the laws of the State of Utah; (2) On February 24, 1934, the First National Bank of Ogden, Ogden, Utah, changed its title to First Security Bank of Utah, National Association, under the provisions of an Act of Congress approved May 1, 1886, whereby all of the rights, liabilities and powers of such national bank under its old name devolved upon and inured to the bank under its new name; and (3) Pursuant to the permission heretofore granted by the Federal Reserve Board to the First National Bank of Ogden, Ogden, Utah, as aforesaid, and by virtue of the change in the title of such bank, the First Security Bank of Utah, National Association has authority to act, when not in contravention of State or local law, as trustee, executor, administrator, registrar of stocks and bonds, guardian of estates of lunatics, or in any other fiduciary capacity in which State banks, trust companies or other corporations which come into competition with national banks are permitted to act under the laws of the State of Utah, subject to regulations prescribed by the Federal Reserve Board. IN WITNESS WHEREOF, I have hereunto subscribed my name and caused the seal of the Federal Reserve Board to be affixed at the City of Washington, in the District of Columbia, on the 1st day of March, 1934. S.R. Carpenter ----------------------------- Assistant Secretary, Federal Reserve Board. FEDERAL RESERVE BOARD WASHINGTON ADDRESS OFFICIAL CORRESPONDENCE TO THE FEDERAL RESERVE BOARD March 1, 1934. First Security Bank of Utah, National Association, Ogden, Utah. Dear Sirs: Reference is made to the change in the name of the First National Bank of Ogden, Ogden, Utah, pursuant to the provisions of the Act of May 1, 1886, to First Security Bank of Utah, National Association, and there is inclosed a certificate issued by the Federal Reserve Board showing the trust powers heretofore granted to the bank under its former name and that it is authorized to exercise such powers under its new name. Very truly yours, S.R. Carpenter S.R. Carpenter, Assistant Secretary. Enclosure [COMPANY LOGO] - ------------------------------------------------------------------------------- Comptroller of the Currency Administrator of National Banks - ------------------------------------------------------------------------------- Licensing Unit (Applications) 50 Fremont Street, Suite 3900 San Francisco, CA 94105 (415) 545-5900, FAX (415) 545-5925 June 20, 1996 Board of Directors First Security Bank of Utah, N.A. c/o First Security Corporation Attn: Brad D. Hardy, EVP Post Office Box 30006 Salt Lake City, Utah 84130 Re: Merger - First Security Bank of Idaho, N.A., Boise, Idaho into First Security Bank of Utah, N.A., Ogden, Utah, under the title of First Security Bank, N.A., Odgen, Utah. Control No: 96-WE-02-010 Dear Members of the Board: This letter is the official certification of the Comptroller of the Currency to merge First Security Bank of Idaho, National Association, Boise, Idaho into First Security Bank of Utah, National Association, Ogden, Utah, effective as of June 21, 1996. The resulting bank title is First Security Bank, National Association and charter number is 2597. This is also the official authorization given to First Security Bank, National Association to operate the branches of the target institution and to operate the main office of the target institution as a branch. Branches of a national bank target are not listed since they are automatically carried over to the resulting bank and retain their current OCC branch numbers. Please be advised that the Charter Certificate for the merged bank, First Security Bank of Idaho, National Association, must be returned to the Western District Office for cancellation. Very truly yours, Robert G. Tornborg Robert G. Tornborg Acting Director of Bank Supervision - Compliance and Analysis EXHIBIT 4 BY-LAWS OF THE FIRST SECURITY BANK, NATIONAL ASSOCIATION Organized under the National Banking laws of the United States. MEETINGS SECTION 1. Unless otherwise provided by the articles of association a notice of each shareholder's meeting, setting forth clearly the time, place and purpose of the meeting, shall be given, by mail, to each shareholder of record of this bank at least 10 days prior to the date of such meeting. Any failure to mail such notice or any irregularity therein, shall not affect the validity of such meeting or of any of the proceedings thereat. SECTION 2. A record shall be made of the shareholders represented in person and by proxy, after which the shareholders shall proceed to the transaction of any business that may properly come before the meeting. A record of the shareholder's meeting, giving the names of the shareholders present and the number of shares of stock held by each, the names of the shareholders represented by proxy and the number of shares held by each, and the names of the proxies, shall be entered in the records of the meeting in the minute book of the bank. This record shall show the names of the shareholders and the number of shares voted for each resolution or voted for each candidate for director. Proxies shall be secured for the annual meeting alone, shall be dated, and shall be filed with the records of the meeting. No officer, director, employee, or attorney for the bank may act as proxy. The chairman or Secretary of the meeting shall notify the directors-elect of their election and of the time at which they are required to meet at the banking house for the purpose of organizing the new board. At the appointed time, which as closely as possible shall follow their election, the directors-elect shall convene and organize. The president or cashier shall then forward to the office of the Comptroller of the Currency a letter stating that a meeting of the shareholders was held in accordance with these by-laws, stating the number of shares represented in person and the number of shares represented by proxy, together with a list of the directors elected and the report of the appointment and signatures of officers. OFFICERS SECTION 3. Each officer and employee of this bank shall be responsible for all such moneys, funds, valuables, and property of every kind as may be entrusted to his care or otherwise come into his possession, and shall faithfully and honestly discharge his duties and apply and account for all such moneys, funds, valuables and other property that may come into his hands as such officer or employee and pay over and deliver the same to the order of the Board of Directors or to such person or persons as may be authorized to demand and receive same. Association By-Laws SECTION 4. If the Board of Directors shall not require separate bonds, it shall require a blanket bond in an amount deemed by it to be sufficient. SECTION 5. The following is an impression of the seal adopted by the Board of Directors of this bank: (Here in the original resolution was imprinted the Association's seal). SECTION 6. The various branches of this bank shall be open for business during such hours as shall be customary in the vicinity, or as shall be fixed, as to any branch, by the clearing house association of which such branch shall be a member. SECTION 7. The regular meeting of the board of directors shall be held on the first Wednesday after the first Tuesday of each month. When any regular meeting of the board of directors falls upon a holiday, the meeting shall be held on such other day as the board may previously designate. Special meetings may be called by the president, any vice-president, the secretary or the cashier, or at the request of three or more directors. MINUTE BOOK SECTION 8. The organization papers of this bank, the returns of the elections, the proceedings of all regular and special meetings of the directors and of the shareholders, the by-laws and any amendments thereto, and reports of the committees of directors shall be recorded in the minute book; and the minutes of each meeting shall be signed by the chairman and attest by the secretary of the meeting. TRANSFERS OF STOCK SECTION 9. The stock of this bank shall be assignable and transferable only on the books of this bank, subject to the restrictions and provisions of the national banking laws; and a transfer book shall be provided in which all assignments and transfers of stock shall be made. SECTION 10. Certificates of stock, signed by the president or vice-president, and the secretary or the cashier or any assistant cashier, may be issued to shareholders, and when stock is transferred the certificates thereof shall be returned to the association, cancelled, preserved, and new certificates issued. Certificates of stock shall state upon the face thereof that the stock is transferable only upon the books of the association, and shall meet the requirements of section 5139, United States Revised Statutes, as amended. EXPENSES SECTION 11. All the current expenses of the bank shall be paid by the cashier, except that the current expenses of each branch shall be paid by the manager thereof; and such officer shall, every six months, or more often if required, make to the board a report thereof. Association By-Laws EXAMINATIONS SECTION 12. There shall be appointed by the board of directors a committee of three members, exclusive of the active officers of the bank, whose duty it shall be to examine, at least once in each period of eighteen months, the affairs of each branch as well as the head office of the association, count its cash, and compare its assets and liabilities with the accounts of the general ledgers, ascertain whether the accounts are correctly kept and that the condition of the bank corresponds therewith, and whether the bank is in a sound and solvent condition, and to recommend to the board such changes in the manner of doing business, etc., as shall seem to be desirable, the result of which examination shall be reported in writing to the board at the next regular meeting thereafter, provided that the appointment of such committee and the examinations by it may be dispensed with if the board shall cause such examination to be made and reported to the board by accountants approved by it. CHANGES IN BY-LAWS SECTION 13. These by-laws may be changed or amended by the vote of a majority of the directors at any regular or special meeting of the board, provided, however, that the directors shall have been given 10 days notice of the intention to change or offer an amended thereto. REPEAL SECTION 14. All by-laws heretofore adopted are repealed. Association By-Laws First Security Bank, NA Call Date: 03/31/2000 State #: 49-0290 FFIEC 031 P.O. Box 30011 Vendor ID: D Cert #: 13718 RC-1 Salt Lake City, UT 84130 Transit #: 12400001 Transmitted to EDS as 0073009 on 04/28/00 at 18:34:02 CST 11 Consolidated Report of Condition for Insured Commercial and State-Chartered Savings Banks for March 31, 2000 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding of the last business day of the quarter. Schedule RC--Balance Sheet C400 Dollar Amounts in thousands - -------------------------------------------------------------------------------------------------------------- ASSETS 1. Cash and balances due from depository institutions (from Schedule RC-A): RCFD ---- a. Noninterest-bearing balances and currency and coin(1) ................... 0081 702,790 1.a b. Interest-bearing balances(2) ............................................ 0071 2,974 1.b 2. Securities a. Held-to-maturity securities(from Schedule RC-B, column A) ............... 1754 0 2.a b. Available-for-sale securities (from Schedule RC-B, column D)............. 1773 3,262,312 2.b 3. Federal funds sold and securities purchased under agreements to resell...... 1350 422,835 3. 4. Loans and lease financing receivables: a. Loans and leases, net of unearned income (from Schedule RCFD ---- RC-C).........................................................2122 12,425,341 4.a b. LESS: Allowance for loan and lease losses .................3123 123,728 4.b c. LESS: Allocated transfer risk reserve .....................3128 0 4.c d. Loans and leases, net of unearned income, allowance, and RCFD ---- reserve (item 4.a minus 4.b and 4.c)..................................... 2125 12,301,613 4.d 5. Trading assets (from Schedule RD-D) ........................................ 3545 0 5. 6. Premises and fixed assets (including capitalized leases) ................... 2145 239,972 6. 7. Other real estate owned (from Schedule RC-M) ............................... 2150 5,427 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) ............................................. 2130 0 8. 9. Customers' liability to this bank on acceptances outstanding ............... 2155 1,405 9. 10. Intangible assets (from Schedule RC-M) ..................................... 2143 280,495 10. 11. Other assets (from Schedule RC-F) .......................................... 2160 753,354 11. 12. Total assets (sum of items 1 through 11) ................................... 2170 17,993,177 12. - --------- (1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held for trading.
First Security Bank, NA Call Date: 03/31/2000 State #: 49-0290 FFIEC 031 P.O. Box 30011 Vendor ID: D Cert #: 13718 RC-1 Salt Lake City, UT 84130 Transit #: 12400001 Transmitted to EDS as 0073009 on 04/28/00 at 18:34:02 CST 12 Schedule RC-Continued Dollar Amounts in thousands - -------------------------------------------------------------------------------------------------------------- LIABILITIES 13. Deposits: a. In domestic offices (sum of totals of columns A and C RCON ---- from Schedule RC-E, part 1)................................RCON 2200 9,097,731 13.a ---- (1) Noninterest-bearing(1).................... ............6631 1,671,561 13.a1 (2) Interest-bearing.......................................6636 7,426,170 13.a2 b. In foreign offices, Edge and Agreement subsidiaries, and RCFN ---- IBFs (from Schedule RC-E, part II).........................RCFN 2200 591,445 13.b ---- (1) Noninterest bearing....................................6631 0 13.b1 (2) Interest-bearing.......................................6636 591,445 RCFD 13.b2 ---- 14. Federal funds purchased and securities sold under agreements to repurchase.................................................................. 2800 2,179,100 14 RCFD ---- 15. a. Demand notes issued to the U.S. Treasury.................................... 2840 16,247 15.a RCFD ---- b. Trading Liabilities(from Schedule RC-D)..................................... 3548 0 15.b 16. Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases): a. With a remaining maturity of one year or less............................... 2332 2,363,392 16.a b. With a remaining maturity of more than one year through three years........ A547 302,815 16.b c. With a remaining maturity of more than three years.......................... A548 1,115,477 16.c 17. Not applicable 18. Bank's liability on acceptances executed and outstanding ...................... 2920 1,405 18 19. Subordinated notes and debentures(2)........................................... 3200 245,000 19 20. Other liabilities (from Schedule RC-G) ........................................ 2930 608,478 20 21. Total liabilities (sum of items 13 through 20) ................................ 2948 16,521,090 21 22. Not applicable EQUITY CAPITAL 23. Perpetual preferred stock and related surplus ................................. 3838 0 23 24. Common stock .................................................................. 3230 64,307 24 25. Surplus (exclude all surplus related to preferred stock) ...................... 3839 392,199 25 26. a. Undivided profits and capital reserves ..................................... 3632 1,098,329 26.a b. Net unrealized holding gains (losses) on available-for-sale securities ................................................................. 8434 (82,748) 26.b c. Accumulated net gains (losses) on cash flow hedges ......................... 4336 0 26.c 27. Cumulative foreign currency translation adjustments ........................... 3284 0 27 28. Total equity capital (sum of items 23 through 27) ............................. 3210 1,472,087 28 29. Total liabilities and equity capital (sum of items 21, and 28)................. 3300 17,993,177 29 Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the statement below that best describes the most comprehensive level of auditing work performed for the bank by independent RCFD Number ---- ------ external auditors as of any date during 1999 ................................... 5724 2 M.1 ------ 1 = Independent audit of the bank conducted in accordance 4. = Directors' examination of the bank performed by other with generally accepted auditing standards by a certified external auditors (may be required by state chartering public accounting firm which submits a report on the bank authority) 2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external conducted in accordance with generally accepted auditing auditors standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external submits a report on the consolidated holding company auditors (but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work) 3 = Directors' examination of the bank conducted in 8 = No external audit work accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority) (1) Includes total demand deposits and noninterest-bearing time and savings deposits. (2) Includes limited-life preferred stock and related surplus.
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