-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, jG+LYfji6007JUXqsBQttJ6w6QpzvSG5M1/EG2hMAJ6rpBKugJmF8tXbNHJqh9e1 GpBQpCvPTYIy/F+0l+Mggg== 0000950103-94-003680.txt : 19941125 0000950103-94-003680.hdr.sgml : 19941125 ACCESSION NUMBER: 0000950103-94-003680 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 13 FILED AS OF DATE: 19941122 SROS: NONE 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: 1933 Act SEC FILE NUMBER: 033-56569 FILM NUMBER: 94561585 BUSINESS ADDRESS: STREET 1: 2005 CORPORATE AVENUE CITY: MEMPHIS STATE: TN ZIP: 38132 BUSINESS PHONE: (901)-395-3382 MAIL ADDRESS: STREET 1: 2005 CORPORATE AVENUE CITY: MEMPHIS STATE: TN ZIP: 38132 S-3 1 As filed with the Securities and Exchange Commission on November 22, 1994 Registration No. 33- ============================================================================= 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 other jurisdiction (I.R.S. Employer of 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) KENNETH R. MASTERSON, ESQ. Senior Vice President, General Counsel and Secretary Federal Express Corporation 1980 Nonconnah Boulevard Memphis, Tennessee 38132 (901) 395-3388 (Name, address, including zip code, and telephone number, including area code, of agent for service) _______________________ Copies to: SARAH JONES BESHAR, ESQ. Davis Polk & Wardwell 450 Lexington Avenue New York, New York 10017 (212) 450-4000 _______________________ Approximate date of commencement of proposed sale to 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, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] CALCULATION OF REGISTRATION FEE ============================================================================== Proposed Proposed Maximum Maximum Aggregate Title of Each Amount Offering Offering Amount of Class of Securities Being Price Price Registration Being Registered Registered Per Unit Per Unit Fee - ------------------- ---------- --------- --------- ------------ Equipment Trust Certificates; Pass Through Certificates $430,432,000 100% $430,432,000 $148,425 ============================================================================== (1) Estimated solely for purposes of determining the registration fee. _______________________ Pursuant to Rule 429 under the Securities Act of 1933, as amended, the Prospectuses filed as part of this Registration Statement relate to the securities registered hereby and to the remaining unsold $11,680,000 and $22,888,000 amounts of Equipment Trust Certificates and Pass Through Certificates previously registered by Federal Express Corporation under its Registration Statements on Form S-3, File Nos. 33-50013 and 33-51623, respectively. 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 of 1933 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 two forms of prospectus; one, as supplemented, to be used in connection with offerings of equipment trust certificates and the other, as supplemented, to be used in connection with offerings of pass through certificates. Neither prospectus will be used to consummate sales of securities unless accompanied by a prospectus supplement applicable to the securities offered thereby. SUBJECT TO COMPLETION PRELIMINARY PROSPECTUS DATED NOVEMBER 22, 1994 PROSPECTUS [NEW LOGO] EQUIPMENT TRUST CERTIFICATES _____________________ Up to $465,000,000 aggregate principal amount of Equipment Trust Certificates (the "Certificates") may be offered for sale from time to time pursuant to this Prospectus and one or more Prospectus Supplements. The Certificates may be offered in one or more Series in amounts, at prices and on terms to be determined at the time of sale. The Certificates of each Series will be issued as nonrecourse obligations by an Owner Trustee, acting not in its individual capacity but solely as the Owner Trustee of a separate Owner Trust, and authenticated by the Indenture Trustee, acting not in its individual capacity but solely as the Indenture Trustee under an Indenture among the Owner Trustee, the Indenture Trustee and Federal Express Corporation (the "Corporation"), to finance or refinance a portion of the payment by such Owner Trustee of the purchase price for a specified aircraft (an "Aircraft"), which has been or will be leased to the Corporation in connection with a leveraged lease transaction. The Prospectus Supplement relating to each offering will describe certain terms of the Certificates offered thereby, the Indentures and Leases and the leveraged lease transactions and Aircraft relating to such Certificates. For each Aircraft, the related Owner Trustee will issue Certificates of the related Series, each of which may have a different principal amount, maturity date and interest rate, which will be set forth on the cover of the related Prospectus Supplement. Each offering pursuant to this Prospectus and a related Prospectus Supplement may consist of one or more Series of Certificates. The Certificates of each Series will be secured by a security interest in the related Aircraft and by the Lease relating thereto, including the right to receive rent payable by the Corporation under such Lease. Although the Certificates will not be obligations of, nor guaranteed by, the Corporation, the amounts payable by the Corporation under the Lease of each Aircraft will be sufficient to pay in full when due all principal of and interest on the Certificates related to such Aircraft. Interest will be payable on the Certificates of each Series on the dates and at the rates per annum set forth for such Certificates in the applicable Prospectus Supplement. Principal will be payable on the Certificates of each Series in scheduled amounts and on specified dates as set forth in the applicable Prospectus Supplement. The Certificates may be sold to or through underwriters or directly to other purchasers or through agents. The Prospectus Supplement relating to each offering will set forth the names of any underwriters, dealers or agents involved in the sale of the Certificates in connection with which this Prospectus is being delivered, the amounts, if any, to be purchased by underwriters and the compensation, if any, of such underwriters or agents. Prior to their issuance there will have been no market for the Certificates of any Series and there can be no assurance that one will develop. Unless otherwise indicated in the applicable Prospectus Supplement, the Corporation does not intend to apply for the listing of any Series of Certificates on a national securities exchange. This Prospectus may not be used to consummate sales of any Certificates unless accompanied by the Prospectus Supplement applicable to the Certificates being sold. ______________________ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ______________________ The date of this Prospectus is November , 1994. INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. AVAILABLE INFORMATION Federal Express Corporation (the "Corporation") is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports and other information with the Securities and Exchange Commission (the "Commission"). Reports, proxy and information statements and other information filed by the Corporation with the Commission can be inspected, and copies may be obtained at prescribed rates, at the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as at the following Regional Offices of the Commission: Chicago Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and New York Regional Office, 7 World Trade Center, New York, New York 10048. Such material can also be inspected and copied at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. This Prospectus constitutes a part of a registration statement on Form S-3 (together with all amendments and exhibits, herein referred to as the "Registration Statement") filed by the Corporation under the Securities Act of 1933, as amended (the "Securities Act"). This Prospectus does not contain all of the information included in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Commission. Reference is made to such Registration Statement and to the exhibits relating thereto for further information with respect to the Corporation and the securities offered hereby. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed with the Commission in accordance with the provisions of the Exchange Act are incorporated herein by reference and made a part hereof: 1. The Corporation's Annual Report on Form 10-K for the fiscal year ended May 31, 1994 and its Quarterly Report on Form 10-Q for the fiscal quarter ended August 31, 1994, filed August 5, 1994 and October 13, 1994, respectively; and 2. The Corporation's Current Report on Form 8-K dated September 14, 1994 and filed September 23, 1994. All documents filed by the Corporation pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and before the termination of the offering made by this Prospectus shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein, or contained in this Prospectus, shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Corporation will furnish without charge to each person to whom this Prospectus is delivered, on written or oral request of such person, a copy of any or all documents incorporated by reference in this Prospectus, without exhibits to such documents (unless such exhibits are specifically incorporated by reference into such documents). Requests for such copies should be directed to: Thomas R. Martin, Managing Director --Public Relations, Federal Express Corporation, by mail at Box 727, Memphis, Tennessee 38194-1850 or by telephone at (901) 395-3490. FEDERAL EXPRESS CORPORATION The Corporation 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. Corporate headquarters are located at 2005 Corporate Avenue, Memphis, Tennessee 38132, telephone (901) 369-3600. RATIO OF EARNINGS TO FIXED CHARGES (Unaudited) Three Months Year Ended May 31, Ended August 31, --------------------------- --------------------- 1990 1991 1992 1993 1994 1993 1994 Ratio of Earnings to Fixed Charges(a) 1.4x 1.0x (b) 1.4x 1.7x 1.5x 1.9x ______________________ (a) 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. (b) Earnings were inadequate to cover fixed charges by $173.4 million for the year ended May 31, 1992. USE OF PROCEEDS The proceeds from the sale of the equipment trust certificates (the "Certificates") of each series (a "Series") offered pursuant to this Prospectus and a related Prospectus Supplement will be used to finance or refinance the debt portion and, in certain cases, to refinance some of the equity portion of a separate leveraged lease transaction entered into by the Corporation, as lessee, with respect to an aircraft (an "Aircraft") specified in such Prospectus Supplement. For each Aircraft, unless otherwise specified in the applicable Prospectus Supplement, the debt portion financed or refinanced will not exceed 80% of the purchase price for such Aircraft. The discounts and commissions relating to the offering of the Certificates of each Series will be paid by the Owner Participant (as defined below). The other expenses relating to the issuance and offering of such Certificates (other than certain expenses to be paid directly by the Corporation) will be paid by the Owner Participant as such other expenses become due or, if previously paid by the Corporation, will be reimbursed to the Corporation by the Owner Participant. OUTLINE OF LEVERAGED LEASE TRANSACTIONS Each Prospectus Supplement will specify the type and model of Aircraft relating to the Certificates offered thereby, the engines with which such Aircraft is equipped and when such Aircraft was delivered new by the manufacturer to the Corporation or the Owner Trustee, as the case may be. Each Aircraft has been or will be sold to Wilmington Trust Company, not in its individual capacity but solely as owner trustee (the "Owner Trustee") of a trust (an "Owner Trust" created pursuant to a "Trust Agreement") for the benefit of the owner participant named in the related Trust Agreement (the "Owner Participant"). Simultaneously with such sale, the Owner Trustee has leased or will lease the Aircraft to the Corporation pursuant to a lease (a "Lease") between the Owner Trustee, as lessor, and the Corporation, as lessee. Each of the leveraged lease transactions was or will be effected pursuant to a separate participation agreement (a "Participation Agreement") among the Owner Participant, the Owner Trustee, the Indenture Trustee (as defined below), the Corporation and, in the case of a refinancing, each holder of a loan certificate issued under the Indenture as originally executed. For each Aircraft, the related Certificates will be issued as a separate Series by the Owner Trustee, as nonrecourse obligations, and authenticated by NationsBank of Georgia, National Association ("NationsBank of Georgia"), as indenture trustee (the "Indenture Trustee") pursuant to a separate trust indenture and security agreement between the Owner Trustee, the Indenture Trustee and the Corporation (an "Indenture"). Each Owner Participant will have provided or will provide, from sources other than the related Certificates, unless otherwise specified in the applicable Prospectus Supplement, at least 20% of the purchase price for the related Aircraft. DESCRIPTION OF THE CERTIFICATES The discussion that follows is a summary and does not purport to be complete. The summary includes descriptions of the material terms of the Indenture and the Certificates, the forms of which have been filed as exhibits to the Registration Statement of which this Prospectus is a part. For the Certificates offered pursuant to this Prospectus and any Prospectus Supplement, this summary will be qualified in its entirety by the detailed information appearing in such Prospectus Supplement, as well as by the form of the Certificates of each Series offered thereby and the related Indenture, Lease and Participation Agreement which will be filed as exhibits to a post-effective amendment to this Registration Statement, a Current Report on Form 8-K, a Quarterly Report on Form 10-Q or an Annual Report on Form 10-K, as applicable, to be filed with the Commission in connection with the issuance of such Certificates. This summary makes use of terms defined in and is qualified in its entirety by reference to the form of Indenture referred to above. Each Prospectus Supplement will include a glossary of certain terms used in connection with the Certificates offered thereby. Except as otherwise indicated below or as described in the applicable Prospectus Supplement, the following summary will apply to the Certificates, the Indenture, the Lease and the Participation Agreement relating to each Aircraft. Additional provisions with respect to the Indentures, the Certificates, the Leases and the Participation Agreements relating to any particular offering of Certificates will be described in the applicable Prospectus Supplement. To the extent that any provision in any Prospectus Supplement is inconsistent with any provision of this summary, the provision of such Prospectus Supplement will control. General The Certificates of each Series will be issued as nonrecourse obligations by the Owner Trustee, acting for a separate Owner Trust for the benefit of an Owner Participant, and will be authenticated under the related Indenture by the Indenture Trustee for the benefit of the registered holders of the Certificates of such Series (the "Holders"). All of the Certificates issued under the same Indenture will relate to a specific Aircraft which will be leased by the Owner Trustee to the Corporation pursuant to a separate Lease between the Owner Trustee and the Corporation. The Aircraft subject to each Lease and the Certificates issued under the related Indenture will be specified in the applicable Prospectus Supplement. The Corporation will be obligated to make rental payments under each Lease that will be sufficient to pay the principal of and accrued interest on the related Certificates when and as due and payable. The Corporation's obligations to pay rent and to cause other payments to be made under each Lease will be general obligations of the Corporation. The Certificates will not, however, be obligations of, or guaranteed by, the Corporation. The Certificates will not be obligations of the Owner Trustee, in its individual capacity, or the Owner Participant; and neither the Owner Trustee, in its individual capacity, nor the Owner Participant will be liable for payment of any principal of, or premium, if any, or interest on the Certificates. Principal and Interest Payments Interest will be payable on the Certificates of each Series on the dates and at the rates per annum set forth for such Certificates in the applicable Prospectus Supplement. Interest will be calculated on the basis of a 360-day year consisting of twelve 30-day months. Principal will be payable on the Certificates of each Series in scheduled amounts and on specified dates as set forth in the applicable Prospectus Supplement. Unless otherwise set forth in the applicable Prospectus Supplement, the record date for each interest and principal payment date will be the fifteenth day prior to such payment date. Principal of, premium, if any, and interest on the Certificates of each Series will be payable at the corporate trust office of the Indenture Trustee in Atlanta, Georgia or at such other office or agency, including the office or agency of a paying agent that may be appointed by the Indenture Trustee (a "Paying Agent"), maintained for the payment of the Certificates of a Series. All amounts payable by the Indenture Trustee under the terms of the Indenture may, however, at the option of the Indenture Trustee or Paying Agent, be paid by check mailed to the person entitled thereto at the address shown in the register maintained by the Indenture Trustee or other registrar, if any. (Indenture, Sections 2.04, 3.02 and 3.04) Unless otherwise specified in the applicable Prospectus Supplement, the Certificates will be issued in fully registered, certificated form without coupons and in minimum denominations of $1,000 or any integral multiple of $1,000. Certificates may be surrendered for registration of transfer or exchange for Certificates of the same Series, maturity and interest rate at a facility or facilities established for such purpose by the Indenture Trustee in New York, New York. No service charge will be levied on any Holder for any transfer or exchange of Certificates, but payment may be required from such Holder of any tax or other governmental charges that may be imposed in connection therewith. (Indenture, Sections 2.04, 2.06 and 3.02) Prepayment The applicable Prospectus Supplement will describe the circumstances, whether voluntary or involuntary, under which the related Certificates may or must be prepaid prior to the stated maturity date thereof, in whole or in part, the premium, if any, applicable upon certain prepayments and other terms applying to the prepayment of such Certificates. Security The Certificates of each Series will be secured by: (i) an assignment by the Owner Trustee to the Indenture Trustee of the Owner Trustee's rights (except for certain limited rights described below) under the related Lease, including the right to receive rent and other payments thereunder; (ii) a security interest in the related Aircraft, subject to the rights of the Corporation under such Lease and to certain other liens and encumbrances; and (iii) an assignment to the Indenture Trustee of the Owner Trustee's rights relating to such Aircraft and the related engines under the agreements for the purchase thereof between the Corporation and the respective manufacturers of such Aircraft and of such 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: (i) indemnification by the Corporation for certain matters; (ii) proceeds of public liability insurance payable to the Owner Trustee in its individual capacity and to the Owner Participant under insurance maintained by the Corporation under such Lease; and (iii) 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 certain limitations as described in the applicable Prospectus Supplement. (Indenture, Granting Clause and Section 8.01) There will be no cross-collateralization provisions in the Indentures and consequently the Certificates issued in respect of one of the Aircraft will not be secured by any other Aircraft or the Leases related thereto. 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 occurring under any other Indenture. The proceeds from the sale of the Certificates of any Series will, if such proceeds are received by the Indenture Trustee 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, be deposited with and held by the Indenture Trustee in the investments described in the following sentence, at the direction and risk of the Corporation, as security for such Certificates pending the delivery of the Aircraft or the consummation of the refunding. Funds, if any, held from time to time by the Indenture Trustee with respect to any Aircraft as a result of (i) the occurrence of an Indenture Event of Default, which may cause the Indenture Trustee to hold funds otherwise distributable to the Owner Trustee, (ii) an Event of Loss with respect to such Aircraft or (iii) otherwise, will be invested in obligations either of, or fully guaranteed by, the United States of America; certificates of deposit, bankers' acceptances or time deposits made with or by certain banks, trust companies or national banking associations; or commercial paper issued by a U.S. corporation whose commercial paper is rated at least A-1/P-1 by Standard & Poor's Corporation and Moody's Investors Service, Inc., respectively, or if neither such organization rates such commercial paper, the highest rating by another nationally recognized rating organization. Any income realized as a result of such investments, net of the Indenture Trustee's reasonable fees and expenses incurred in making such investment, will be held and applied by the Indenture Trustee in the same manner as the principal amount of such investment is to be applied and any losses, after taking into account such earnings and such reasonable fees and expenses, will be charged against the principal amount invested, in which case the Corporation will be responsible for any losses. (Indenture, Section 5.08) Registration of the Aircraft The Corporation will be required, except under certain circumstances, to register and keep each Aircraft registered under Title 49 of the United States Code (which, among other things, recodified the Federal Aviation Act of 1958, as amended to the time of such recodification) (the "Aviation Act"), in the name of the Owner Trustee, and to record and maintain the recordation of the Indenture and the Lease relating to each such Aircraft under the Aviation Act. Such recordation will give the Indenture Trustee a security interest in each such Aircraft perfected under the Aviation Act, which perfected security interest will, with certain limited exceptions, be recognized in those jurisdictions that have ratified to the Convention on the International Recognition of Rights in Aircraft (the "Convention"). The Corporation will be able, in certain circumstances, to re-register any Aircraft in certain countries other than the United States. Unless otherwise specified in the applicable Prospectus Supplement, prior to any such change in the jurisdiction of registry, the Indenture Trustee and the related Owner Participant must receive certain 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 United States Bankruptcy Code (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. Generally, each Aircraft may also be operated by the Corporation or under sublease or interchange arrangements in countries that are not parties to the Convention. Because no assurances can be given as to the perfection of the Indenture Trustee's security interest in a legal proceeding outside the United States, the ability of the Indenture Trustee in the case of an Indenture Event of Default, to realize upon such security interest could be adversely affected as a legal or practical matter if the Aircraft were registered or located outside the United States. Payments and Limitation of Liability All payments of principal of, premium, if any, 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 therefrom, including rent payable by the Corporation under the related Lease. See "The Leases -- Terms and Rentals" below. The Corporation's obligations to pay rent and to cause other payments to be made under each Lease will be general obligations of the Corporation. The Certificates will not be direct obligations of, and will not be guaranteed by, the Corporation. Neither the Owner Trustee nor the Indenture Trustee (in their individual capacities) will be liable to any Holder or, in the case of the Owner Trustee, in its individual capacity, to the Corporation 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 With respect to each Series of Certificates, the Corporation will be prohibited from consolidating with or merging into any other corporation under circumstances in which the Corporation 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: (i) the successor or transferee corporation is a U.S. Citizen, an "air carrier" within the meaning of and operating under the Aviation Act 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 the Corporation contained in the related Indenture, the Participation Agreement, the Lease, the Purchase Agreement and the Purchase Agreement Assignment; (ii) immediately after giving effect to such consolidation, merger or transfer, the successor or transferee is in compliance with all of the terms and conditions of such documents; and (iii) such 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 Holders protection in the event of a highly leveraged transaction involving the Corporation. Events of Default, Notice and Waiver The Indenture Events of Default under each Indenture for the Certificates to be offered pursuant to this Prospectus and any Prospectus Supplement will be set forth in such Prospectus Supplement. 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 occurring under any other Indenture. Each Indenture will provide that the Indenture Trustee must, within 90 days after the occurrence of any event actually known to a responsible officer of the Indenture Trustee that is an Indenture Default thereunder, give notice thereof to the Holders of outstanding Certificates issued thereunder. Under no circumstances, however, may the Indenture Trustee give such notice until the expiration of a period of 60 days from the occurrence of such Indenture Default. The Indenture Trustee will be protected in withholding such notice, except in the case of a default in the payment of the principal of, premium, if any, or interest on any Certificate issued thereunder, if it in good faith determines that the withholding of such notice is in the interests of the Holders of such Certificates. (Indenture, Section 7.12) The Holders of not less than 50% in aggregate principal amount of outstanding Certificates issued under an Indenture to which an Indenture Default relates may on behalf of all Holders waive certain past Indenture Default thereunder and its consequences. Consent from each Holder of an outstanding Certificate issued under an Indenture, however, is required with respect to a waiver of an Indenture Default in the payment of the principal of, premium, if any, or interest on any Certificate then outstanding under such Indenture or in respect of any covenant or provision of such Indenture or any other related Operative Agreement that, pursuant to the provisions of such Indenture, cannot be modified or amended without the consent of each Holder affected thereby. (Indenture, Section 7.11) Under each Indenture the Owner Trustee or the related Owner Participant will have the right under certain circumstances, as specified in the applicable 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 such cure right, the Indenture Event of Default will be deemed to be cured. Remedies Each Indenture will provide that if an Indenture Event of Default has occurred and is continuing thereunder, the Indenture Trustee may exercise certain rights or remedies available to it under applicable law, including, if a Lease Event of Default under the related Lease has occurred, one or more of the remedies with respect to the Aircraft pledged under such Indenture afforded to the Owner Trustee by the related Lease for Lease Events of Default thereunder. The exercise by the Indenture Trustee of such rights or remedies in connection with a Lease Event of Default will be subject, however, to the right, if any, of the Owner Trustee or the related Owner Participant, as the case may be, to cure certain defaults or to prepay the Certificates. The applicable Prospectus Supplement will describe any limitation on the exercise of remedies by the Indenture Trustee. Such remedies may be exercised by the Indenture Trustee to the exclusion of the Owner Trustee and the Owner Participant. Any Aircraft sold in the exercise of such remedies will be free and clear of any rights of those parties, including the rights of the Corporation under the applicable Lease, provided that no exercise of any remedies by the Indenture Trustee may affect the rights of the Corporation under a Lease unless a Lease Event of Default under such Lease has occurred and is continuing. (Indenture, Section 7.02(a)) 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, among other things, 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, among other things, 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. In addition, 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. If an Indenture Event of Default occurs under an Indenture as a result of certain specified events of bankruptcy, insolvency or reorganization of the Owner Trustee, the related Owner Participant or the Corporation, then the unpaid principal of all outstanding Certificates of each Series issued under such Indenture, together with interest accrued but unpaid thereon and all other amounts due thereunder and under such 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 of eash Series issued under such Indenture, may declare the principal of all such Certificates immediately due and payable, together with interest accrued but unpaid thereon and all other amounts due thereunder and under such Indenture, by written notice or notices to the Owner Trustee and the Corporation. The Holders of not less than 50% in aggregate principal amount of the outstanding Certificates of such Series may rescind any such declaration by the Indenture Trustee or by such 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: (a) all overdue installments of interest on all such Certificates (together, to the extent permitted by law, with interest on such overdue installments of interest); (b) the principal on any Certificates that has become due otherwise than by such declaration; (c) all amounts paid or advanced by the Indenture Trustee under such Indenture; and (d) certain other expenses or all Indenture Events of Default under such Indenture (other than the non-payment of principal that has become due solely because of such declaration) have been cured or waived. (Indenture, Sections 7.02(b) and (c)) In the event of the bankruptcy of the Owner Participant, it is possible that, notwithstanding the fact that the applicable Aircraft will be owned by the Owner Trustee in trust, such Aircraft and the related Lease and Certificates might become part of such bankruptcy proceeding. In such event, payments under such Lease or Certificates might be interrupted and the ability of the Indenture Trustee to exercise its remedies under such Indenture might be restricted, although the Indenture Trustee would retain its status as a secured creditor in respect of such Lease and Aircraft. The right of any Holder of a Certificate to institute an action for any remedy under the Indenture pursuant to which such Certificate was issued (including the right to enforce payment of the principal of, premium, if any, and interest on such 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 such 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 the outstanding Certificates of each Series 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 the Holders of such Series before proceeding so 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 equipment security interests with respect to aircraft used by air carriers operating under certificates issued by the Secretary of Transportation under Section 41102(a) or 41103 of the Aviation Act (formerly Section 401 and 418, respectively, of the Federal Aviation Act of 1958, as amended to the time of recodification by the Aviation Act) to take possession of such aircraft in compliance with the provisions of the lease, conditional sale contract or equipment security agreement, as the case may be, is not affected by: (a) the automatic stay provision of the Bankruptcy Code, which provision enjoins the taking of any action against a debtor by a creditor; (b) 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; (c) the confirmation of a plan by the bankruptcy court; and (d) 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 an equipment 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 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 the Indenture Trustee prior to any payments to Holders of the Certificates with respect to which such 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 of such Series. (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 thereby: (a) reductions in the principal amount of, or premium, if any, or interest payment payable on such Certificate or changes in the date on which any such principal, premium, if any, or interest payment is due and payable or otherwise affect the terms of payment of such Certificate; (b) reductions in, and modifications or amendments to, any indemnities payable by the related Owner Participant in favor of such Holder; (c) reductions in the amount of any rental payment payable by the Corporation below the amount required to pay all principal of, premium, if any, and interest on all such Certificates as and when due and payable; (d) creations of any security interest with respect to the property subject to the Lien of such Indenture ranking prior to or on a parity with the security interest created by such Indenture or deprivation to the Holder of any such Certificate of the benefit of the Lien of such Indenture upon the property subject thereto; or (e) reductions in the percentage of the aggregate principal amount of such Certificates necessary to modify or amend any provision of such Indenture or to waive compliance therewith. (Indenture, Article XIII) Certain provisions of the Indentures, the Leases, the Participation Agreements and the Trust Agreements may be modified by the Owner Trustee, the Lessee and the Indenture Trustee without the consent of the Holders of the outstanding Certificates related thereto. (Indenture, Section 13.01) The Indenture Trustee Unless otherwise indicated in the applicable Prospectus Supplement, NationsBank of Georgia, will be the Indenture Trustee under each Indenture. An affiliate of NationsBank of Georgia acts as trustee under other indentures with respect to other indebtedness of the Corporation. The Corporation from time to time borrows from, and maintains deposit accounts with, NationsBank of Georgia and its affiliates. In accordance with the Trust Indenture Act of 1939, as amended, each Indenture will be deemed to provide that in the case of any Indenture Event of Default thereunder, the Indenture Trustee shall exercise such of the rights and powers vested in it by such Indenture and use the same degree of care and skill in their 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 such 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 Certificates issued thereunder 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 issued thereunder and, subject to certain 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 for at least six months may, on behalf of such Holder 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 the Corporation and such 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 the Corporation 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) Pursuant to such resignation and successor trustee provisions, 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 the Corporation 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 the Corporation under each Lease will be payable on the dates specified in the applicable 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 certain cases the scheduled rental payments under the Leases may be adjusted, under no circumstances will such payments that the Corporation 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 applicable Prospectus Supplement. Net Lease. The Corporation's obligations under each Lease in respect of the related Aircraft will be those of a lessee under a "net lease." Accordingly, the Corporation 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 thereof to be maintained in good standing at all times under the Aviation Act 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 the Corporation, using its reasonable best efforts, undertakes such cure promptly, diligently and continuously, then the Corporation will not be in default with respect to such obligation. Generally, the Corporation will be obligated to replace or cause to be replaced all parts that may from time to time be incorporated or installed in or attached to any Aircraft (including in or on any engine) and that may become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use. The Corporation will have the right to make other alterations, modifications and additions to an Aircraft so long as such alterations, 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 alteration, modification or addition, assuming that such Aircraft was then in the condition and airworthiness required by the related Lease. Also, in certain circumstances, the Corporation will be permitted to remove parts (without replacement) from an Aircraft or any engine (and therefore from the Lien of the applicable Indenture) if the Corporation 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 Aircraft or any such engine, although the value of such Aircraft or any such engine may be reduced by such removal. The applicable Prospectus Supplement will contain a description of certain limitations, if any, applicable to the provisions described above. Insurance. Unless otherwise indicated in the applicable Prospectus Supplement, the Corporation will be obligated to carry insurance with insurers of recognized responsibility with respect to each Aircraft, at its own cost and expense, in such amounts, against such risks, with such deductibles or retentions (i) in the case of hull insurance, as the Corporation customarily maintains with respect to other aircraft in the Corporation's fleet of the same type and model and operating on the same routes as the respective Aircraft and (ii) in the case of liability insurance, as is usually carried by similar corporations engaged in the same or similar business and similarly situated as the Corporation, owning or operating aircraft similar to the Aircraft. The Corporation will be permitted to maintain coverage below certain stipulated values and may be permitted to self-insure (including by way of deductibles and retentions) in certain circumstances, subject to certain limits. Therefore, there is no assurance that any insurance will be carried in the future, or, if it is carried, as to the amount of such insurance. The Corporation 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. Unless otherwise specified in the applicable Prospectus Supplement, liability insurance proceeds will be distributed to the respective parties as their interests may appear and hull insurance proceeds in excess of certain specified amounts will be distributed to the Indenture Trustee. The applicable Prospectus Supplement will contain a description of certain limitations, if any, applicable to the provisions described in this paragraph. Lease Events of Default; Remedies. The applicable 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 The Corporation will be required to indemnify each Owner Participant, the Owner Trustee, the Indenture Trustee and certain parties affiliated with the foregoing (but not including Holders) for certain liabilities, losses, fees and expenses and for certain other matters arising out of the transactions described herein or relating to the applicable Aircraft or the use thereof. In addition, under certain circumstances the Corporation 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 certain restrictions and unless otherwise provided in the related Prospectus Supplement, each Owner Participant may convey all of its interest in the related Owner Trust. Although the matter is not entirely free from doubt, Davis Polk & Wardwell has advised the Corporation that an Owner Participant's conveyance of its interest in the related Owner Trust will not constitute a taxable event to the Holders of the related Certificates. Moreover, if so provided in the applicable Prospectus Supplement, in certain limited instances the Corporation may assume an Owner Trust's obligations under the related Certificates on a full recourse basis. In this event, Holders will recognize gain or loss on the related Certificates for federal income tax purposes. ERISA CONSIDERATIONS Unless otherwise indicated in the applicable Prospectus Supplement, Certificates may not be purchased by, or with the assets of, any 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. Certain governmental plans and non- electing church plans, however, are not subject to Title I of ERISA or Section 4975 of the 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. In connection with the sale of Certificates, underwriters or agents may receive compensation from the Corporation 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 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 Certificates may be deemed to be underwriters, and any discounts or commissions received by them from the Corporation and any profit on the resale of 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 the Corporation will be described, in the applicable Prospectus Supplement. Offers to purchase 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 thereto. Under agreements which may be entered into by the Corporation, underwriters and agents who participate in the distribution of Certificates may be entitled to indemnification by the Corporation against certain liabilities, including liabilities under the Securities Act. Unless otherwise indicated in the applicable Prospectus Supplement, the Corporation 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 such Certificates, as permitted by applicable laws and regulations. No underwriter would be obligated, however, to make a market in such 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 Certificates of any Series. Certain of the underwriters or agents and their associates may be customers of, engage in transactions with, and perform services for, the Corporation in the ordinary course of business. LEGAL MATTERS Unless otherwise indicated in the applicable Prospectus Supplement, the legality of the Certificates offered hereby will be passed upon for the Corporation by Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017, and by counsel for any agents, dealers or underwriters ("Underwriters' Counsel"). Unless otherwise indicated in the applicable Prospectus Supplement, both Davis Polk & Wardwell and Underwriters' Counsel may rely on the opinion of Potter Anderson & Corroon, 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 George W. Hearn, Vice President - Law of the Corporation, as to the Corporation's authorization, execution and delivery of the Indentures. At November 22, 1994, Mr. Hearn owned zero shares of the Corporation's common stock and had been granted options to purchase 14,675 shares of the Corporation's common stock. Of the options granted, 4,362 were vested at such date. EXPERTS The consolidated financial statements and schedules of the Corporation included or incorporated by reference in the Corporation's Annual Report on Form 10-K for the year ended May 31, 1994 and incorporated by reference herein, have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with respect thereto, and are incorporated by reference herein in reliance upon the authority of said firm as experts in accounting and auditing in giving said reports. With respect to the unaudited interim financial information for the quarter ended August 31, 1994, included in the Corporation's Quarterly Report on Form 10-Q for such period, which is 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 report thereon states that they did not audit and they do not express an opinion on that interim financial information. Accordingly, the degree of reliance on their report 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 report on the unaudited interim financial information because that report is not a "report" or "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. ======================================= ===================================== No dealer, salesperson or other individual has been authorized to give any information or to make any representation not contained in this Prospectus in connection with the offering covered by this Prospectus. If given or made, such information or representation must not be relied upon as having $465,000,000 been authorized by the Corporation or the Underwriters. This Prospectus does not constitute an offer to sell, or the solicitation of an offer to buy, the Certificates in any [NEW LOGO] 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 $465,000,000 hereunder shall, under any circumstances, create an implication that there has not Equipment Trust Certificates been any change in the facts set forth in this Prospectus or in the affairs of the Corporation since the date hereof. ____________________ P R O S P E C T U S TABLE OF CONTENTS ____________________ Page ---- Available Information.............. 2 Incorporation of Certain Documents by Reference..................... 2 Federal Express Corporation........ 3 Ratio of Earnings to Fixed Charges. 3 Use of Proceeds.................... 3 November , 1994 Outline of Leveraged Lease Transactions..................... 3 Description of the Certificates.... 4 ERISA Considerations............... 13 Plan of Distribution............... 13 Legal Matters...................... 14 Experts............................ 14 ======================================= ===================================== SUBJECT TO COMPLETION PRELIMINARY PROSPECTUS DATED NOVEMBER 22, 1994 PROSPECTUS [NEW LOGO] PASS THROUGH TRUSTS PASS THROUGH CERTIFICATES _______________________________ Up to $465,000,000 aggregate amount of Pass Through Certificates (the "Pass Through Certificates") may be offered for sale from time to time pursuant to this Prospectus and one or more Prospectus Supplements. The Pass Through Certificates may be offered in one or more Series in amounts, at prices and on terms to be determined at the time of sale. For each Series of Pass Through Certificates offered pursuant to this Prospectus and a Prospectus Supplement, a separate Pass Through Trust will be formed pursuant to the Pass Through Trust Agreement (the "Pass Through Agreement") and a supplement thereto (a "Series Supplement") between Federal Express Corporation (the "Corporation") and NationsBank of South Carolina, National Association, not in its individual capacity but solely as the Pass Through Trustee under such Pass Through Trust. Each Pass Through Certificate in a Series will evidence a fractional undivided interest in the related Pass Through Trust and will have no rights, benefits or interest in respect of any other Pass Through Trust or the Trust Property (as defined below) held in any other such Pass Through Trust. The Trust Property of each Pass Through Trust will consist of (a) equipment purchase certificates issued with recourse to the Corporation (the "Owned Aircraft Certificates") or (b) equipment trust certificates issued as nonrecourse obligations by certain Owner Trustees, each acting not in its individual capacity but solely as the Owner Trustee of a separate Owner Trust, in connection with separate leveraged lease transactions (the "Leased Aircraft Certificates" and, together with the Owned Aircraft Certificates, the "Equipment Certificates"). The Owned Aircraft Certificates will be issued to finance or refinance all or a portion of the purchase price of each of one or more aircraft that have been or will be purchased and owned by the Corporation (the "Owned Aircraft"). The Leased Aircraft Certificates will be issued to finance or refinance a portion of the payment by each such Owner Trustee of the purchase price for a specified aircraft which has been or will be leased to the Corporation (the "Leased Aircraft" and, together with the Owned Aircraft, the "Aircraft"). The Prospectus Supplement relating to each offering will describe certain terms of the Pass Through Certificates offered thereby, the respective Pass Through Trusts, the Equipment Certificates to be purchased by such Pass Through Trusts, the leveraged lease transactions, if any, relating thereto and the Aircraft relating to such Equipment Certificates. For each Aircraft, the related Owner Trustee or the Corporation, as the case may be, may issue on or more Equipment Certificates, each of which may have a different interest rate and final maturity date. For each Series of Pass Through Certificates, the Pass Through Trustee will purchase one or more Equipment Certificates held in the related Pass Through Trust will have identical interest rates, in each case equal to the rate applicable to the Pass Through Certificates issued by such Pass Through Trust, and such that the latest maturity date for such Equipment Certificates will occur on or before the final distribution date for such Pass Through Certificates. The Owned Aircraft Certificates issued with respect to each Owned Aircraft will be secured by a security interest in such Owned Aircraft and will be direct obligations of the Corporation. The Leased Aircraft Certificates issued with respect to each Leased Aircraft, except during the Pre-Funding Period, if any, will be secured by a security interest in such Leased Aircraft and by the Lease relating thereto, including the right to receive rent payable by the Corporation under such Lease. Although none of the Leased Aircraft Certificates held in the respective Pass Through Trusts will be obligations of, or guaranteed by, the Corporation, the amounts payable by the Corporation under the Lease of each Leased Aircraft will be sufficient to pay in full when due all principal of and interest on the Leased Aircraft Certificates relating to such Leased Aircraft, except as described under "Description of the Equipment Certificates -- General" relating to any Pre-Funding Period with respect to such Leased Aircraft. During any Pre-Funding Period, the related Leased Aircraft Certificates will be secured by a collateral account funded by the net proceeds of the sale of such Leased Aircraft Certificates to the Pass Through Trustee and by other security (which may include a letter of credit) to be described in the applicable Prospectus Supplement. Funds in such collateral account, together with such other security will be available to pay any principal due and interest accrued on such Leased Aircraft Certificates during such Pre-Funding Period, as well as to fund any mandatory prepayment of such Leased Aircraft Certificates during such Pre-Funding Period. Interest paid on the Equipment Certificates held in each Pass Through Trust will be passed through to the registered holders of the Pass Through Certificates for such Pass Through Trust (for each Pass Through Trust, the "Certificateholders") on the dates and at the rate per annum set forth in the Prospectus Supplement relating to such Pass Through Certificates until the final distribution date for such Pass Through Trust. Principal paid on the Equipment Certificates held in each Pass Through Trust will be passed through to the Certificateholders in scheduled amounts on the dates set forth in the Prospectus Supplement relating to such Pass Through Certificates until the final distribution date for such Pass Through Trust. The Pass Through Certificates represent interests in the related Pass Through Trust only and all payments and distributions shall be made only from the property of such Pass Through Trust. The Pass Through Certificates do not represent an interest in or obligation of the Corporation. The Pass Through Certificates may be sold to or through underwriters or directly to other purchasers or through agents. The Prospectus Supplement relating to each offering will set forth the names of any underwriters, dealers or agents involved in the sale of the Pass Through Certificates in connection with which this Prospectus is being delivered, the amounts, if any, to be purchased by underwriters and the compensation, if any, of such underwriters or agents. Prior to their issuance, there will have been no market for the Pass Through Certificates of any Series and there can be no assurance that one will develop. Unless otherwise indicated in the applicable Prospectus Supplement, the Corporation does not intend to apply for the listing of any Series of Pass Through Certificates on a national securities exchange. See "Plan of Distribution." This Prospectus may not be used to consummate sales of any Pass Through Certificates unless accompanied by the Prospectus Supplement applicable to the Pass Through Certificates being sold. ________________________________ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ________________________________ The date of this Prospectus is November , 1994. INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. AVAILABLE INFORMATION Federal Express Corporation (the "Corporation") is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports and other information with the Securities and Exchange Commission (the "Commission"). Reports, proxy and information statements and other information filed by the Corporation with the Commission can be inspected, and copies may be obtained at prescribed rates, at the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as at the following Regional Offices of the Commission: Chicago Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and New York Regional Office, 7 World Trade Center, New York, New York 10048. Such material can also be inspected and copied at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. This Prospectus constitutes a part of a registration statement on Form S-3 (together with all amendments and exhibits, herein referred to as the "Registration Statement") filed by the Corporation under the Securities Act of 1933, as amended (the "Securities Act"). This Prospectus does not contain all of the information included in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Commission. Reference is made to such Registration Statement and to the exhibits relating thereto for further information with respect to the Corporation and the securities offered hereby. REPORTS TO PASS THROUGH CERTIFICATEHOLDERS NationsBank of South Carolina, National Association ("NationsBank of South Carolina"), in its capacity as Pass Through Trustee under each Pass Through Trust, will provide the Certificateholders of each Pass Through Trust with certain periodic statements concerning the distributions made from such Pass Through Trust. See "Description of the Pass Through Certificates -- Statements to Certificateholders." INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed with the Commission in accordance with the provisions of the Exchange Act are incorporated herein by reference and made a part hereof. 1 The Corporation's Annual Report on Form 10-K for the fiscal year ended May 31, 1994 and its Quarterly Report on Form 10-Q for the fiscal quarter ended August 31, 1994, filed August 5, 1994 and October 13, 1994, respectively; and 2. The Corporation's Current Report on Form 8-K dated September 14, 1994 and filed September 23, 1994. All documents filed by the Corporation pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and before the termination of the offering made by this Prospectus shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein, or contained in this Prospectus, shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Corporation will furnish without charge to each person to whom this Prospectus is delivered, on written or oral request of such person, a copy of any or all documents incorporated by reference in this Prospectus, without exhibits to such documents (unless such exhibits are specifically incorporated by reference into such documents). Requests for such copies should be directed to: Thomas R. Martin, Managing Director -- Public Relations, Federal Express Corporation, by mail at Box 727, Memphis, Tennessee 38194-1850 or by telephone at (901) 395-3490. FEDERAL EXPRESS CORPORATION The Corporation 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. Corporate headquarters are located at 2005 Corporate Avenue, Memphis, Tennessee 38132, telephone (901) 369-3600. RATIO OF EARNINGS TO FIXED CHARGES (Unaudited) Three Months Year Ended May 31, Ended August 31, --------------------------- --------------------- 1990 1991 1992 1993 1994 1993 1994 ---- ---- ---- ---- ---- ---- ---- Ratio of Earnings to Fixed Charges(a) 1.4x 1.0x (b) 1.4x 1.7x 1.5x 1.9x ______________________ (a) 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. (b) Earnings were inadequate to cover fixed charges by $173.4 million for the year ended May 31, 1992. OUTLINE OF PASS THROUGH TRUST STRUCTURE For each Series of Pass Through Certificates (as such terms are defined below) offered pursuant to this Prospectus and a related Prospectus Supplement, a separate pass through trust (a "Pass Through Trust") will be formed pursuant to a supplemental agreement (a "Series Supplement") between the Corporation and NationsBank of South Carolina, not in its individual capacity but solely as pass through trustee (the "Pass Through Trustee"), in accordance with the Pass Through Trust Agreement, dated as of February 1, 1993, (the "Pass Through Agreement") between the Corporation and the Pass Through Trustee, for the benefit of the registered holders (the "Certificateholders") of the series (a "Series") of certificates (the "Pass Through Certificates") evidencing fractional undivided interests in such Pass Through Trust. The property held in each Pass Through Trust (the "Trust Property") will consist of (a) equipment purchase certificates issued in connection with the purchase by the Corporation of one or more aircraft (the "Owned Aircraft Certificates") or (b) equipment trust certificates issued in connection with one or more leveraged lease transactions (the "Leased Aircraft Certificates" and, together with the Owned Aircraft Certificates, the "Equipment Certificates"), as specified in the applicable Prospectus Supplement. As more fully described below under "Use of Proceeds," in connection with each purchase or leveraged lease transaction, one or more Equipment Certificates may be issued, each of which may have different interest rates and final maturity dates. Concurrently with the execution and delivery of each Series Supplement, the Pass Through Trustee, on behalf of the related Pass Through Trust, will enter into one or more participation agreements (each, a "Participation Agreement") pursuant to which it will, among other things, purchase one or more Owned Aircraft Certificates or Leased Aircraft Certificates, such that the Equipment Certificates that constitute the property of such Pass Through Trust will have identical interest rates, in each case equal to the rate applicable to the Pass Through Certificates issued by such Pass Through Trust, and such that the latest maturity date for such Equipment Certificates will occur on or before the final distribution date applicable to such Pass Through Certificates. 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, premium, if any, and interest, received by it as holder of the Equipment Certificates to the Certificateholders of the Pass Through Trust in which such Equipment Certificates are held. See "Description of the Pass Through Certificates" and "Description of the Equipment Certificates." USE OF PROCEEDS Each Series of Pass Through Certificates offered pursuant to this Prospectus and a related Prospectus Supplement will be issued to facilitate (a) the financing of the aggregate principal amount of debt to be issued, or the refinancing of the aggregate principal amount of the debt previously issued, by the Corporation with respect to each of the aircraft that have been or will be purchased and owned by the Corporation (the "Owned Aircraft"), as specified in the applicable Prospectus Supplement, or (b) the financing or refinancing of the debt portion and, in certain cases, refinancing some of the equity portion of one or more separate leveraged lease transactions entered into or to be entered into by the Corporation, as lessee, with respect to each of the aircraft that have been or will be leased by the Corporation (the "Leased Aircraft" and, together with the Owned Aircraft, the "Aircraft"), as specified in the applicable Prospectus Supplement. Each Prospectus Supplement will specify the type and model of each Aircraft relating to the Pass Through Certificates offered thereby, the engines with which such Aircraft is equipped and when such Aircraft was or will be delivered new by the manufacturer to the Corporation or the Owner Trustee, as the case may be. The proceeds from the sale of such Pass Through Certificates will be used by the Pass Through Trustee on behalf of the related Pass Through Trust (a) to purchase Owned Aircraft Certificates or (b) to purchase Leased Aircraft Certificates. The Owned Aircraft Certificates will be issued with recourse to the Corporation to finance or refinance all or a portion of the purchase price (as specified in the applicable Prospectus Supplement) for one or more Owned Aircraft which have been or will be purchased and owned by the Corporation. The Leased Aircraft Certificates will be issued as nonrecourse obligations by Wilmington Trust Company, not in its individual capacity but solely as the owner trustee (the "Owner Trustee") of separate owner trusts (each, an "Owner Trust" created pursuant to a separate "Trust Agreement") for the benefit of the owner participant named therein (each, an "Owner Participant"), in connection with one or more leveraged lease transactions, in each case to finance or refinance not more than, unless otherwise specified in such Prospectus Supplement, 80% of the purchase price paid or to be paid by the Owner Trustee for a Leased Aircraft which has been or will be leased by the related Owner Trustee to the Corporation. To the extent that any proceeds from the sale of the Pass Through Certificates for any Pass Through Trust have not been applied by the Pass Through Trustee by the date specified in the applicable Prospectus Supplement to the purchase of the Equipment Certificates that were contemplated to be held in such Pass Through Trust, such proceeds will be distributed on the date specified in such Prospectus Supplement to the related Certificateholders on a pro rata basis, together with interest accrued thereon, but without premium. See "Description of the Pass Through Certificates -- Special Payment Upon Unavailability of Trust Property." If, for any Leased Aircraft, under the circumstances discussed below in "Description of Equipment Certificates -- Delayed Lease Commencement" the proceeds from the sale of the related Leased Aircraft Certificates to the applicable Pass Through Trusts are not applied by the Owner Trustee to pay the purchase price for such Leased Aircraft on the date of the purchase of such Leased Aircraft Certificates by such Pass Through Trusts, such proceeds, after deducting certain expenses of the Pass Through Certificate offering, will be deposited by the Owner Trustee into a Collateral Account (as defined below). Such Collateral Account, together with any other security pledged under the related Indenture (see "Description of the Equipment Certificates -- Security" below), will secure such Leased Aircraft Certificates during the related Pre-Funding Period (as defined below) and will be available to make scheduled payments of principal, if any, and interest accrued on such Leased Aircraft Certificates during the Pre-Funding Period. If the Lease related to such Leased Aircraft does not commence on the cut-off date specified in the applicable Prospectus Supplement or an event of loss occurs with respect to such Leased Aircraft during the Pre-Funding Period, funds in such Collateral Account, together with such other security will be available to prepay such Leased Aircraft Certificates as described in such Prospectus Supplement. See "Description of the Equipment Certificates -- Delayed Lease Commencement" and "--Mandatory Prepayment During the Pre-Funding Period." For each Leased Aircraft, the related Leased Aircraft Certificates have been or will be issued by the Owner Trustee and authenticated by NationsBank of Georgia, National Association ("NationsBank of Georgia"), as indenture trustee (the "Indenture Trustee") under a separate trust indenture and security agreement (each, a "Leased Aircraft Indenture") between the Owner Trustee and the Indenture Trustee. Each Owner Participant will have provided or will provide, from sources other than the related Leased Aircraft Certificates, at least, unless otherwise specified in the applicable Prospectus Supplement, 20% of the purchase price for the related Leased Aircraft. No Owner Participant, however, will be personally liable for any amount payable under the related Leased Aircraft Indenture or the Leased Aircraft Certificates issued thereunder. For each Owned Aircraft, the related Owned Aircraft Certificates have been or will be issued under a separate trust indenture and security agreement (each, an "Owned Aircraft Indenture," and together with any Leased Aircraft Indentures, the "Indentures") between the Indenture Trustee and the Corporation. The Owned Aircraft Certificates will be direct obligations of the Corporation. DIAGRAM OF PAYMENTS The following diagram illustrates certain aspects of the payment flows in the Pass Through Trust structure (1) for a possible transaction for Leased Aircraft among the Corporation, the Owner Trustee, the related Owner Participant, the Indenture Trustee, the Pass Through Trustee and the Certificateholders, assuming each Leased Aircraft is leased by the Corporation upon issuance of the Pass Through Certificates, and (2) for a possible transaction for Owned Aircraft among the Corporation, the Indenture Trustee, the Pass Through Trustee and the Certificateholders. For each Aircraft included in a particular Pass Through Certificate offering, one or more Equipment Certificates will be issued, each of which may have a different interest rate and final maturity date and will be held in a separate Pass Through Trust. Each Pass Through Trust may hold Equipment Certificates relating to more than one Aircraft. The number of Aircraft included in each offering and the interest rates and final maturity dates of the Equipment Certificates held by each Pass Through Trust will be described in the applicable Prospectus Supplement. In a Leased Aircraft transaction, the Corporation will lease each Leased Aircraft from the Owner Trustee under a separate Lease. The Corporation will make scheduled rental payments for each Leased Aircraft under the related Lease. As a result of the assignment under the related Leased Aircraft Indenture of certain rights of the Owner Trustee under such Lease, the Corporation will make these payments directly to the Indenture Trustee. From these rental payments the Indenture Trustee will pay to the Pass Through Trustee for each Pass Through Trust the interest or interest and principal due from the Owner Trustee on the Leased Aircraft Certificates issued under the related Leased Aircraft Indenture and held in such Pass Through Trust. After such payments have been made, the Indenture Trustee will pay the 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 related Certificateholders payments received on the Leased Aircraft Certificates held in such Pass Through Trust. See "Description of the Pass Through Certificates -- Payments and Distributions" and "Description of the Equipment Certificates -- Delayed Lease Commencement" for a discussion of payments during any Pre-Funding Period. In an Owned Aircraft transaction, the Corporation will make scheduled payments on the Owned Aircraft Certificates relating to each Owned Aircraft to the Indenture Trustee. From these payments the Indenture Trustee will pay to the Pass Through Trustee for each Pass Through Trust the interest or interest and principal due on the Owned Aircraft Certificates issued under the related Owned Aircraft Indenture and held in such Pass Through Trust. The Pass Through Trustee for each Pass Through Trust will distribute to the related Certificateholders payments received on the Owned Aircraft Certificates held in such Pass Through Trust. [GRAPHIC -- SEE APPENDIX A] DESCRIPTION OF THE PASS THROUGH CERTIFICATES In connection with each offering of Pass Through Certificates, one or more separate Pass Through Trusts will be formed, and one or more corresponding Series of Pass Through Certificates will be issued, pursuant to the Pass Through Agreement and one or more separate Series Supplements to be entered into between the Corporation and the Pass Through Trustee. The following summary relates to the Pass Through Agreement and each of the Series Supplements, the Pass Through Trusts to be formed thereby and the Pass Through Certificates to be issued by each Pass Through Trust, except as otherwise described in the applicable Prospectus Supplement. The discussion that follows is a summary and does not purport to be complete. The summary includes descriptions of the material terms of the Pass Through Agreement which has been filed as an exhibit to the Registration Statement of which this Prospectus is a part. The Series Supplement relating to each Series of Pass Through Certificates and the forms of the related Indentures and Participation Agreements and, if the Pass Through Certificates relate to Leased Aircraft, the related Leases, Trust Agreements and Collateral Agreements, if any, will be filed as exhibits to a post-effective amendment to this Registration Statement, a Current Report on Form 8-K, a Quarterly Report on Form 10-Q or an Annual Report on Form 10-K, as applicable, to be filed with the Commission in connection with the issuance of each such Series of Pass Through Certificates. This summary makes use of terms defined in and is qualified in its entirety by reference to the Pass Through Agreement. Each Prospectus Supplement will include a glossary of certain defined terms used in connection with the Pass Through Certificates offered thereby and the related Equipment Certificates. General Unless otherwise provided in the applicable Series Supplement, the Pass Through Certificates will be issued in fully registered, certificated form only. 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. The property of each Pass Through Trust will include the Equipment Certificates held in such Pass Through Trust, all monies at any time paid thereon, all monies due and to become due thereunder and funds from time to time deposited with the Pass Through Trustee in accounts relating to such Pass Through Trust. 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 applicable Prospectus Supplement, in minimum denominations of $1,000 or any integral multiple of $1,000. (Pass Through Agreement, Article II) The applicable Prospectus Supplement will describe the specific Series of Pass Through Certificates offered thereby, including: (1) the specific designation and title of such Pass Through Certificates; (2) the Regular Distribution Dates (as herein defined) and Special Distribution Dates (as herein defined) applicable to such Pass Through Certificates and the applicable Cut-Off Date (as herein defined), if any; (3) the specific form of such Pass Through Certificates; (4) 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 such Certificates may or must be repaid in whole or in part, by the Corporation or, with respect to Leased Aircraft Certificates, the related Owner Trustee; (5) a description of the related Aircraft, including whether the Aircraft is a Leased Aircraft or an Owned Aircraft; (6) a description of the related Participation Agreement and Indenture, 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 such remedies with respect to such Equipment Certificates; (7) if such Pass Through Certificates relate to Leased Aircraft, a description of the related Lease, Trust Agreement and Collateral Agreement, if any, including (a) the names of the related Owner Trustee, (b) 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 such remedies with respect to such Leased Aircraft Certificates, and (c) the rights, if any, of the related Owner Trustee or Owner Participant to cure failures of the Corporation to pay rent under the related Lease; (8) the extent, if any, to which the provisions of the operative documents applicable to such Equipment Certificates may be amended by the parties thereto 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; and (9) any other special terms pertaining to such Pass Through Certificates. 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 set forth for such Pass Through Trust on the cover page of the applicable Prospectus Supplement. 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 the Corporation, the Pass Through Trustee, any related Owner Participant, the Owner Trustee in its individual capacity or any affiliate of any of the foregoing. 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 applicable Series Supplement. (Pass Through Agreement, Section 3.06) The Pass Through Agreement does not, and the Indentures will not, contain any debt covenants or provisions that would afford Certificateholders protection in the event of a highly leveraged transaction involving the Corporation. 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. Payments and Distributions The Corporation 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, the Corporation will make scheduled rental payments for each Leased Aircraft under the related Lease. After any Pre-Funding Period for a Leased Aircraft, 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. Until the Corporation has entered into a Lease in connection with a Leased Aircraft, the Corporation will not be obligated to make any scheduled rental payments and during any Pre-Funding Period for such Leased Aircraft the related Leased Aircraft Certificates will not be secured by such Leased Aircraft or the related Lease, including any rental payments under such Lease. During the Pre- Funding Period, if any, for such Leased Aircraft, however, the related Collateral Account, together with the other security pledged under the related Indenture, will be available to provide funds necessary to make the corresponding scheduled payments of principal, if any, and interest accrued on the related Leased Aircraft Certificates during such Pre-Funding Period, and to pay the portion, if any, of principal and interest due on the first payment date after the Pre-Funding Period to the extent exceeding the amount of rent payable by the Corporation on such payment date. See "Description of the Equipment Certificates -- Delayed Lease Commencement." Following any Pre-Funding Period, after the Indenture Trustee has made such 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 the remaining balance, if any, to the Owner Trustee for the benefit of the related Owner Participant. The Pass Through Trustee for each such 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 applicable Prospectus Supplement (such scheduled payments of principal of, and interest on, the Equipment Certificates are referred to herein as "Scheduled Payments," and the dates specified for distributions of Scheduled Payments to the Pass Through Trustee in the applicable Prospectus Supplement are referred to herein as "Regular Distribution Dates"). 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. If a Scheduled Payment is not received by the Pass Through Trustee on or before a Regular Distribution Date but is received within five Business Days thereafter, it will be distributed on the date received to the Certificateholders. Each such distribution of a Scheduled Payment 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 Regular Distribution Date, subject to certain exceptions. Each such Certificateholder will be entitled to receive a pro rata share of any such distribution. (Pass Through Agreement, Sections 5.01 and 5.02) If a Scheduled Payment is received more than five Business Days after the applicable Regular Distribution Date, it will be treated as a Special Payment and will be distributed as described below. 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 the Pool Factor (as such terms are defined below) 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, premium, if any, 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 (i) for the prepayment of such Equipment Certificates in connection with certain events specified in the applicable Prospectus Supplement (including payments upon unavailability of Trust Property and prepayments during any Pre-Funding Period as described below), (ii) upon the prepayment by the related Owner Trustee of such Equipment Certificates following a default in respect of such Equipment Certificates, and (iii) on account of the sale of such Equipment Certificates by the Pass Through Trustee (such payments are referred to herein as "Special Payments"), will be distributed on the dates determined as set forth in the applicable Prospectus Supplement (each, a "Special Distribution Date" and, together with the Regular Distribution Dates, the "Distribution Dates"). See "Description of the Equipment Certificates -- Mandatory Prepayment During the Pre-Funding Period" for a discussion of the funding of such 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 anticipated Special Distribution Date therefor in accordance with the Pass Through Agreement. 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 otherwise specified in the applicable 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 Agreement requires that the Pass Through Trustee establish and maintain, for each Pass Through Trust and for the benefit of the related Certificateholders, one or more non-interest bearing accounts (a "Certificate Account") for the deposit of Scheduled Payments on the Equipment Certificates held in such Pass Through Trust and one or more accounts which will, except in connection with Permitted Investments as defined below, be non-interest bearing (a "Special Payments Account") for the deposit of Special Payments on such Equipment Certificates. 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 Payments so received by it in the related Special Payments Account pending distribution thereof. (Pass Through Agreement, Section 5.01) Special Payments that are 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 such investment will be distributed with such Special Payment. "Permitted Investments" are non-callable and non-redeemable direct obligations of the United States of America maturing on or prior to the day required for the distribution of any such funds on the applicable Special Distribution Date. (Pass Through Agreement, Article I and Section 5.04) 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 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 (as defined below) 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 applicable 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 applicable Prospectus Supplement or below in "Events of Default and Certain Rights Upon an Event of Default," the Pool Factor and the Pool Balance (as defined below) 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. Unless otherwise described in the applicable Prospectus Supplement, the "Pool Balance" for each Pass Through Trust indicates, 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 the Corporation and deposited in a deposit trust account in connection with a delayed purchase of the Equipment Certificates. The Pool Balance for each Pass Through Trust as of any Distribution Date will be computed after giving effect to the payment of principal, if any, on the Equipment Certificates held in such Pass Through Trust and the distribution thereof being made on that date. (Pass Through Agreement, Article I) Unless otherwise described in the applicable Prospectus Supplement, the "Pool Factor" for each Pass Through Trust as of any Distribution Date is the quotient (rounded to the seventh decimal place) computed by dividing (i) the Pool Balance, by (ii) the aggregate original principal amount of the Equipment Certificates held in such Pass Through Trust. The Pool Factor for each Pass Through Trust as of any Distribution Date shall be computed after giving effect to the payment of principal, if any, on the Equipment Certificates held in such Pass Through Trust and the distribution thereof being made 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 such distribution being made on such Distribution Date, setting forth the following information (per $1,000 in aggregate amount of Pass Through Certificates for such Pass Through Trust, as to (i) and (ii) below): (i) the amount of such distribution allocable to principal and allocable to premium, if any; (ii) the amount of such distribution allocable to interest; and (iii)the Pool Balance and the Pool Factor for such Pass Through Trust. 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 clauses (i) and (ii) 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. (Pass Through Agreement, Section 5.03) Voting of Equipment Certificates 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 sets forth the circumstances in which the Pass Through Trustee shall 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 shall seek instructions from the Certificateholders of such Pass Through Trust. Prior to an Event of Default (as defined below) 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 7.01) Events of Default and Certain Rights Upon an Event of Default The Pass Through Agreement defines an event of default for any Pass Through Trust (an "Event of Default") as the occurrence and continuance of an event of default under one or more of the related Indentures (an "Indenture Event of Default"). The Indenture Events of Default under the Indentures will be described in the applicable Prospectus Supplement and, for the Leased Aircraft, will include events of default under the related Leases ("Lease Events of Default"). 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 such 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. Consequently, events resulting in an Indenture Event of Default under any particular Indenture will not necessarily result in an Indenture Event of Default occurring 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 related 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, premium, if any, and interest on such Equipment Certificates will continue to be distributed to the Certificateholders of such Pass Through Trust as originally scheduled. 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 such Equipment Certificates or Pass Through Certificates that would afford the holders thereof protection in the event of a highly leveraged transaction involving the Corporation. Under each Leased Aircraft Indenture the related Owner Trustee and the Owner Participant will have the right under certain 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 such 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 applicable Prospectus Supplement will contain a more detailed discussion of certain provisions described in this paragraph. The Pass Through Agreement provides that if an Indenture Event of Default under an Indenture relating to Equipment Certificates held in a Pass Through Trust shall have occurred and be 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, shall 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 and any accrued and unpaid interest thereon to be due and payable. The Pass Through Agreement also provides that if an Indenture Event of Default under an Indenture relating to Equipment Certificates held in a Pass Through Trust shall have occurred and be continuing, the Pass Through Trustee may, and upon the direction of the Certificateholders evidencing fractional undivided interests aggregating not less than a majority in interest of such Pass Through Trust shall, 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) The ability of the Certificateholders of any one Pass Through Trust 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. Each Pass Through Trust will hold Equipment Certificates outstanding under such Indenture. 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 an affiliate of such institution acts as Pass Through Trustee of each Pass Through Trust, in the absence of instructions from the Certificateholders of any such Pass Through Trust, the Pass Through Trustee for such Pass Through Trust could for the same reason be faced with a potential conflict of interest upon an Indenture Event of Default. In such event, the initial Pass Through Trustee has indicated that it would resign as Pass Through Trustee of one or all of such 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. As an additional remedy, if an Indenture Event of Default under an Indenture has occurred and is continuing, the Pass Through Agreement provides that 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 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 each Pass Through Trust, 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 thereof, 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, in the case of Leased Aircraft Certificates, the Corporation, 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 thereto. 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 such Pass Through Trust following an Indenture Event of Default under such Indenture 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. 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 its option, if any, to prepay the outstanding Leased Aircraft Certificates issued under such Indenture as described in the related Prospectus Supplement, the price paid by such Owner Trustee 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) 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 such funds on a Special Distribution Date. (Pass Through Agreement, Article I and Section 5.04) The Pass Through Agreement provides that 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 it. Under no circumstances, however, may the Pass Through Trustee give such 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 such notice if it in good faith determines that the withholding of such notice is in the interests of such Certificateholders, except in the case of default in the payment of principal of, premium, if any, or interest 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 shall be disregarded. (Pass Through Agreement, Section 7.11) The Pass Through Agreement provides that for each Pass Through Trust, subject to the duty of the Pass Through Trustee during a default to act with the required standard of care, the Pass Through Trustee is entitled to be indemnified by the Certificateholders of such Pass Through Trust before proceeding to exercise any right or power under such Pass Through Trust at the request of such Certificateholders. (Pass Through Agreement, Section 8.03) In certain 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 waive any past default or Event of Default with respect to such Pass Through Trust and thereby annul any direction given by such Certificateholders to the Pass Through Trustee or the Indenture Trustee with respect thereto, except (i) a default in payment of the principal of, premium, if any, or interest on any of the Equipment Certificates held in such Pass Through Trust and (ii) 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 thereby. Any such 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 thereunder. (Pass Through Agreement, Section 7.10) Each Indenture will provide that, with certain exceptions, the holders of a majority in aggregate unpaid principal amount of the Equipment Certificates issued thereunder may on behalf of all such holders waive any past default or Indenture Event of Default thereunder. If, as described above, the Certificateholders of a Pass Through Trust elect to waive a past default or Event of Default with respect to such Pass Through Trust, the principal amount of the Equipment Certificates issued under the related Indenture and held in such Pass Through Trust will be counted in favor of the waiver of the corresponding past default or Indenture Event of Default under the related Indenture when the Indenture Trustee determines whether such past default or Indenture Event of Default has been waived by the requisite majority in aggregate unpaid principal amount of Equipment Certificates under such Indenture. If, for example, the Equipment Certificates issued under an Indenture held in a Pass Through Trust constitute only 45% in aggregate unpaid principal amount of the Equipment Certificates issued and unpaid under such Indenture, even if all the Certificateholders of such Pass Through Trust were to instruct the Pass Through Trustee not to waive a past default or Event of Default with respect to such Pass Through Trust and, consequently, to vote such Equipment Certificates against the waiver of the corresponding past default or Indenture Event of Default under such Indenture, the Equipment Certificates so voted by the Pass Through Trustee on behalf of such Pass Through Trust would not alone be sufficient under the terms of such Indenture to compel the Indenture Trustee to refrain from giving such waiver. Moreover, there would be no assurance that the Certificateholders of any other Pass Through Trust holding Equipment Certificates issued under such Indenture would at such time vote such Equipment Certificates against such waiver. Therefore, if the Certificateholders of a Pass Through Trust or Trusts waive a past default or Event of Default such that the principal amount of the Equipment Certificates held either individually in such Pass Through Trust or in the aggregate in such Pass Through Trusts constitutes the required majority in aggregate unpaid principal amount under the applicable Indenture, such past default or Indenture Event of Default under such Indenture will be waived whether or not the Certificateholders of any other Pass Through Trust holding Equipment Certificates issued under such Indenture waive such past default or Event of Default with respect to such other Pass Through Trust. Modifications of the Pass Through Agreement The Pass Through Agreement contains provisions permitting the Corporation and the Pass Through Trustee to enter into an agreement supplemental to any Pass Through Trust, without the consent of the Certificateholders of such Pass Through Trust, to: (i) provide for the formation of any Pass Through Trust and the issuance of the related Pass Through Certificates; (ii) evidence the succession of another corporation to the Corporation and the assumption by such corporation of the Corporation's obligations under the Pass Through Agreement and the applicable Series Supplement; (iii) add to the covenants of the Corporation for the protection of the related Certificateholders; (iv) surrender any right or power conferred upon the Corporation in the Pass Through Agreement or any Series Supplement; (v) cure any ambiguity or correct or supplement any defective or inconsistent provision of such Pass Through Agreement or the applicable Series Supplement, or make any other provisions in regard to matters or questions arising thereunder that will not adversely affect the interests of the related Certificateholders; (vi) correct or amplify the description of property that constitutes Trust Property or the conveyance of such property to the Pass Through Trustee; (vii) evidence and provide for a successor Pass Through Trustee for some or all of the Pass Through Trusts; (viii) modify, eliminate or add to the provisions of the Pass Through Agreement or any Series Supplement to the extent necessary to continue to qualify such Pass Through Agreement or such Series Supplement under the Trust Indenture Act or any similar Federal statute enacted thereafter; (ix) make any other amendments or modifications which shall only apply to any Pass Through Trust established thereafter; and (x) add, eliminate or change any provision under the Pass Through Agreement that will not adversely affect the interests of the Certificateholders provided that in each case such modification does not cause the Pass Through Trust to become taxable as an "association" within the meaning of Treasury Regulation Section 301.7701-4. (Pass Through Agreement, Section 11.01) The Pass Through Agreement also provides that the Corporation 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, or modifying the rights of such Certificateholders. No such supplemental agreement may, however, without the consent of each Certificateholder so affected: (a) 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; (b) reduce, modify or amend any indemnities in favor of any Certificateholder (unless consented to by each such holder adversely affected thereby); (c) create or permit the creation of any lien on the Trust Property or deprive any holder of any such Equipment 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; (d) 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 (e) cause the Pass Through Trust to become taxable as an "association" within the meaning of Treasury Regulation Section 301.7701-4. (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 certain 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, in its own discretion consent to such amendment, modification or waiver, and may so notify the Indenture Trustee. (Pass Through Agreement, Section 11.08) Termination of Pass Through Trusts The obligations of the Corporation and the Pass Through Trustee with respect to a Pass Through Trust will terminate upon the distribution to the Certificateholders of such 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 such Pass Through Trust. The Pass Through Trustee will notify each Certificateholder of record of such Pass Through Trust by mail of, among other things, the termination of such Pass Through Trust, the amount of the proposed final payment and the proposed date for the distribution of such final payment for such Pass Through Trust. The final distribution for each Certificateholder of such Pass Through Trust will be made only upon surrender of such Certificateholder's Pass Through Certificates at the office or agency of the Pass Through Trustee specified in such termination notice. (Pass Through Agreement, Section 12.01) Delayed Purchase If, on the date of issuance of any Pass Through Certificates, all of the proceeds from the sale of such Pass Through Certificates are not used to purchase the Equipment Certificates contemplated to be held in the related Pass Through Trust, such Equipment Certificates may be purchased by the Pass Through Trustee at any time on or prior to the date specified in the applicable Prospectus Supplement. In such event, the Pass Through Trustee will transfer the proceeds from the sale of such Pass Through Certificates not used to purchase Equipment Certificates on such date of issuance to the Corporation which will deposit such amount into a deposit trust account pending the purchase of the Equipment Certificates not so purchased. Such proceeds will be invested in specified investments at the direction and risk of, and for the benefit of, the Corporation until applied to such purchase. Earnings on specified investments in such deposit trust account will be paid to the Corporation periodically, and the Corporation will be responsible for any losses. Subject to a Special Payment upon unavailability of the Trust Property as described below, in return for its interest in the funds transferred to the deposit trust account, if the Equipment Certificates that were not so purchased become available for purchase on or prior to the date specified in the applicable Prospectus Supplement, then the Corporation will cause an amount equal to the purchase price of such Equipment Certificates to be transferred from the deposit trust account to the Pass Through Trustee on the date for such delayed purchase. On the initial Regular Distribution Date, the Corporation will pay to the Pass Through Trustee an amount equal to the interest that would have accrued on any Equipment Certificates purchased after the date of the issuance of such Pass Through Certificates from the date of the issuance of such Pass Through Certificates to, but excluding, the date of the purchase of such Equipment Certificates by the Pass Through Trustee. (Pass Through Agreement, Section 2.02) 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 applicable Prospectus Supplement to purchase the Equipment Certificates that were contemplated to be held in such Pass Through Trust, the Corporation 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 applicable Prospectus Supplement, together with interest thereon at a rate equal to the rate applicable to such Pass Through Certificates, but without premium. The Corporation will also pay to the Pass Through Trustee on such date an amount equal to such interest. The Corporation will be responsible for any losses in the deposit trust account. (Pass Through Agreement, Section 2.02) The Pass Through Trustee; the Indenture Trustee NationsBank of South Carolina will be the Pass Through Trustee for each of the Pass Through Trusts. The Pass Through Trustee and any of its affiliates may hold Pass Through Certificates in their own names. (Pass Through Agreement, Section 8.05) Unless otherwise specified in the related Prospectus Supplement, NationsBank of Georgia, an affiliate of NationsBank of South Carolina, will be the Indenture Trustee under the Indentures under which the Equipment Certificates have been or will be issued. An affiliate of NationsBank of Georgia acts as trustee under other indentures with respect to other indebtedness by the Corporation. The Corporation from time to time borrows from, and maintains deposit accounts with, NationsBank of Georgia 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, the Corporation may remove such Pass Through Trustee, or any Certificateholder of such Pass Through Trust holding Pass Through Certificates for at least six months may, on behalf of such Certificateholder and all others similarly situated, petition any court of competent jurisdiction for the removal of such Pass Through Trustee and the appointment of a successor trustee. In addition, the Pass Through Trustee of any Pass Through Trust may be removed without cause by the Certificateholders holding more than 50% in aggregate amount of the related Pass Through Certificates. In the case of the resignation or removal of the Pass Through Trustee, 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 such resignation and successor trustee provisions, 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 such a resignation or removal. The Pass Through Agreement provides that the Corporation 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 the Corporation 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 gross negligence or by reason of a breach of any of its representations or warranties set forth in the Pass Through Agreement or the applicable Series Supplement or any related documents. In certain circumstances, the Pass Through Trustee will be entitled to be reimbursed from the applicable Pass Through Trust for any tax (other than income or similar taxes) incurred in its trust capacity in connection with the administration of any Pass Through Trust. (Pass Through Agreement, Articles VIII and IX) DESCRIPTION OF THE EQUIPMENT CERTIFICATES The discussion that follows is a summary that does not purport to be complete and is qualified in its entirety by the detailed information appearing in the applicable Prospectus Supplement. The following summary includes descriptions of the material terms of the Equipment Certificates and the Indentures. Except as otherwise indicated below or as described in the applicable Prospectus Supplement, the following summary will apply to the Equipment Certificates, the Indenture and the Participation Agreement relating to each Aircraft and, for Leased Aircraft, the Lease and the Collateral Agreement, if any, relating thereto. Where no distinction is made between the Leased Aircraft Certificates and the Owned Aircraft Certificates or between their respective Indentures, the summary applies to any Equipment Certificate and any Indenture. Additional provisions with respect to the Equipment Certificates, the Indentures and the Participation Agreements and, for Leased Aircraft, the Leases and the Collateral Agreements, if any, relating to any particular offering of Pass Through Certificates will be described in the applicable Prospectus Supplement. To the extent that any provision in any Prospectus Supplement is inconsistent with any provision of this summary, the provision of such Prospectus Supplement will control. General For each Owned Aircraft, the related Owned Aircraft Certificates will be issued as direct obligations by the Corporation 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 Owned Aircraft relating to each Owned Aircraft Indenture and the related Owned Aircraft Certificates will be specified in the applicable Prospectus Supplement. The Corporation will be directly obligated under each Owned Aircraft Indenture to make payments of principal of, premium, if any, and interest on the related Owned Aircraft Certificates. 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 the Corporation pursuant to a separate Lease between such Owner Trustee and the Corporation. See "Delayed Lease Commencement" 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. The Leased Aircraft subject to each Lease and the Leased Aircraft Certificates issued under the related Leased Aircraft Indenture will be specified in the applicable Prospectus Supplement. Upon the commencement of the Lease for any Leased Aircraft, the Corporation 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, with respect to a Delayed Lease Aircraft (as defined below), on the first scheduled payment date after the related Pre-Funding Period, any difference between the rental payment due on such date by the Corporation 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 the other security pledged under the related Indenture. See "Delayed Lease Commencement" below. The Leased Aircraft Certificates will not, however, be obligations of, or guaranteed by, the Corporation. The Corporation's obligations to pay rent and to cause other payments to be made under each Lease will be general obligations of the Corporation. For any Owned Aircraft, if specified in the applicable Prospectus Supplement, the Corporation may arrange for an Owner Trustee, acting for an Owner Trust for the benefit of an Owner Participant, to purchase such Owned Aircraft from the Corporation and lease such Aircraft back to the Corporation 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 such Prospectus Supplement. In such event, such Owner Trustee will assume, on a nonrecourse basis, the obligations of the Corporation 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, the Corporation, although the Corporation 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 such Owner Trustee to the Indenture Trustee of such Owner Trustee's rights under such Lease and the agreements relating to the purchase of such Aircraft. See "Security," "Payments and Limitation of Liability" below and "Federal Income Tax Consequences." The terms and conditions under which any such sale and leaseback transaction may be consummated will be described in the applicable Prospectus Supplement. Until the Corporation has entered into a Lease in connection with a Leased Aircraft, the Corporation will not be obligated to make any scheduled rental payments and during any Pre-Funding Period for such Leased Aircraft the related Leased Aircraft Certificates will not be secured by such Leased Aircraft or the related Lease, including any rental payments under such Lease. During any Pre-Funding Period for such Leased Aircraft, however, the related Collateral Account, together with the other security pledged under the related Indenture will be available to provide funds necessary to make the corresponding scheduled payments of principal, if any, and interest accrued on the related Leased Aircraft Certificates during such Pre-Funding Period, including the portion, if any, of principal and interest due on the first payment date after the Pre-Funding Period to the extent exceeding the amount of rent payable by the Corporation pursuant to the related Lease. See "Delayed Lease Commencement" below. 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 set forth in the applicable 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 set forth in the applicable Prospectus Supplement. Principal received by the Pass Through Trustee on such Equipment Certificates will be passed through to the Certificateholders of such Pass Through Trust on a pro rata basis as set forth in the Prospectus Supplement. Prepayment The applicable Prospectus Supplement will describe the circumstances, whether voluntary or involuntary, under which the related Equipment Certificates may or must be prepaid prior to the stated maturity date thereof, in whole or in part, the premium, if any, applicable upon certain prepayments and other terms applying to the prepayment of such Equipment Certificates. See "Mandatory Prepayment During the Pre-Funding Period" below for a discussion of certain events which would require prepayment of Leased Aircraft Certificates related to a Leased Aircraft 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: (i) an assignment by the related Owner Trustee to the Indenture Trustee of such Owner Trustee's rights (except for certain limited rights described below) under the applicable Lease, including the right to receive rent and other payments thereunder; (ii) a security interest granted to the Indenture Trustee in the related Leased Aircraft, subject to the rights of the Corporation under such Lease and to certain other liens and encumbrances; and (iii) an assignment to such Indenture Trustee of such Owner Trustee's rights relating to such Leased Aircraft and the related engines under the agreements for the purchase thereof between the Corporation and the respective manufacturers of such Leased Aircraft and of such engines. See "Registration of the Aircraft" below. The assignment by such Owner Trustee to the Indenture Trustee of its rights under each Lease will exclude rights of such Owner Trustee and the related Owner Participant relating to: (i) indemnification by the Corporation for certain matters; (ii) proceeds of public liability insurance payable to such Owner Trustee in its individual capacity and to such Owner Participant under insurance maintained by the Corporation under such Lease; and (iii) proceeds of any insurance policies separately maintained by such Owner Trustee in its individual capacity or by such 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 certain limitations as described in the applicable Prospectus Supplement. The Owned Aircraft Certificates issued under each Owned Aircraft Indenture will be secured by (i) a security interest granted to the Indenture Trustee in all of the Corporation's right, title and interest in and to the related Owned Aircraft and (ii) an assignment to such Indenture Trustee of certain of the Corporation's rights relating to such Owned Aircraft and the related engines under the agreements for the purchase thereof between the Corporation and the respective manufacturers of such Owned Aircraft and of such engines. See "Registration of the Aircraft" below. There will be no cross-collateralization provisions in the Indentures and consequently the Equipment Certificates issued in respect of one of the Aircraft will not be secured by any other Aircraft or, in the case of Leased Aircraft Certificates, the Leases related thereto. 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 occurring under any other Indenture. Section 1110 of the United States Bankruptcy Code (the "Bankruptcy Code") provides that the right of lessors, conditional vendors and holders of equipment security interests with respect to aircraft used by air carriers operating under certificates issued by the Secretary of Transportation under Section 41102(a) or 41103 of the Aviation Act (formerly Sections 401 and 418, respectively, of the Federal Aviation Act of 1958, as amended to the time of recodification by the Aviation Act) to take possession of such aircraft in compliance with the provisions of the lease, conditional sale contract or equipment security agreement, as the case may be, is not affected by: (a) the automatic stay provision of the Bankruptcy Code, which provision enjoins the taking of any action against a debtor by a creditor; (b) 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; (c) the confirmation of a plan by the bankruptcy court; and (d) 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 an equipment 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 applicable 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 (i) the related Collateral Account and (ii) certain additional security which may include, unless otherwise specified in the applicable Prospectus Supplement, a letter of credit 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 the Corporations ("Additional Collateral"). See "Delayed Lease Commencement" below. Registration of the Aircraft The Corporation will be required, except under certain circumstances, to register and keep each Aircraft registered under Title 49 of the United States Code (which, among other things, recodified the Federal Aviation Act of 1958, as amended to the time of such recodification) (the "Aviation Act"), in the name of the Corporation, in the case of an Owned Aircraft, or in the name of the Owner Trustee, after commencement of a Lease in the case of a Leased Aircraft, and to record and maintain the recordation of the Indenture and the Lease, if any, relating to each such Aircraft under the Aviation Act. Such recordation of the Indenture and the Lease, if any, relating to each Aircraft will give the Indenture Trustee a security interest in each such Aircraft perfected under the Aviation Act which perfected security interest will, with certain limited exceptions, be recognized in those jurisdictions that have ratified to the Convention on the International Recognition of Rights in Aircraft (the "Convention"). The Corporation will be able, in certain circumstances, to re-register any Aircraft in certain countries other than the United States. Unless otherwise specified in the applicable Prospectus Supplement, prior to any such change in the jurisdiction of registry, the Indenture Trustee and, for Leased Aircraft, the related Owner Participant must receive certain 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. Generally, each Aircraft may also be operated by the Corporation or under lease, sublease or interchange arrangements in countries that are not parties to the Convention. Because no assurances can be given as to the protection of the Indenture Trustee's security interest in a legal proceeding outside the United States or any Convention country, the ability of the Indenture Trustee in the case of an Indenture Event of Default, to realize upon such security interest could be adversely affected as a legal or practical matter if the Aircraft were registered in a non-Convention country or located therein. Merger, Consolidation and Transfer of Assets With respect to each Aircraft, the Corporation will be prohibited from consolidating with or merging into any other corporation under circumstances in which the Corporation 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: (i) the successor or transferee corporation is a U.S. Citizen, an "air carrier" within the meaning of and operating under the Aviation Act 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 the Corporation contained in the related Indenture, the Participation Agreement, the Lease, the Purchase Agreement and the Purchase Agreement Assignment; (ii) immediately after giving effect to such consolidation, merger or transfer, the successor or transferee is in compliance with all of the terms and conditions of such documents; and (iii) such consolidation, merger or transfer does not (or would not, if prior to commencement of the related Lease) give rise to a Lease Event Default under the related Lease or, in the case of an Owned Aircraft, an Indenture Event of Default under the related Owned Aircraft Indenture. Delayed Lease Commencement If the applicable Prospectus Supplement provides that a Pre-Funding Period will apply to a Leased Aircraft, then until commencement of a Lease with respect to such Leased Aircraft and the Indenture Trustee's release of funds from the related Collateral Account, which is expected to occur at the same time as the commencement of such Lease, such Leased Aircraft is referred to as a "Delayed Lease Aircraft" and the period prior to the Indenture Trustee's release of such funds is referred to as the "Pre-Funding Period." In the case of Leased Aircraft Certificates relating to a Delayed Lease Aircraft, the proceeds from sale of such Leased Aircraft Certificates to the applicable Pass Through Trusts, after deducting certain expenses of the offering of the related Pass Through Certificates, will be deposited by the Owner Trustee, on the date of such sale, in a collateral account (a "Collateral Account") established pursuant to a collateral agreement between the Owner Trustee and the Indenture Trustee (a "Collateral Agreement"). Such Collateral Account will secure payment of the related Leased Aircraft Certificates. In addition, the Corporation will be required to provide to the Indenture Trustee Additional Collateral for such Leased Aircraft Certificates during the related Pre-Funding Period. See "Security" above. Funds in the Collateral Account will be invested at the risk of the Owner Trustee in U.S. government obligations pursuant to the related Collateral Agreement and further described in the applicable Prospectus Supplement. Earnings on such investments will be retained in the Collateral Account pending distribution as contemplated below. Unless otherwise specified in an applicable Prospectus Supplement, the Leased Aircraft Certificates relating to a Delayed Lease Aircraft will be issued in an amount such that the net proceeds thereof, together with expected earnings on the investments in the Collateral Account, will be sufficient (i) to make scheduled payments of principal, if any, and interest accrued on such Leased Aircraft Certificates during the related scheduled Pre-Funding Period specified in such Prospectus Supplement and (ii) to finance a portion of the purchase price of such Delayed Lease Aircraft, as specified in such Prospectus Supplement. Accordingly, the principal amount of such Leased Aircraft Certificates at issuance will exceed the amount that will be applied to the purchase price of the Delayed Lease Aircraft. Subject to any mandatory prepayment contemplated below, under the Collateral Agreement relating to a Delayed Lease Aircraft, on each date during the scheduled Pre-Funding Period for the scheduled payments of principal, if any, and interest on the related Leased Aircraft Certificates, the Indenture Trustee shall withdraw from the Collateral Account the amount necessary to make the scheduled payment then due. If the Indenture Trustee shall not have released the funds in the Collateral Account on the date scheduled for the commencement of the Lease relating to such Delayed Lease Aircraft, then on each scheduled payment date during the Pre-Funding Period that occurs after such scheduled commencement date, the Indenture Trustee shall withdraw from the Collateral Account the excess of the amount therein over the amount specified to be retained in such Collateral Account to be applied to the purchase price of the Delayed Lease Aircraft. If the amount withdrawn is less than the scheduled payment then due, the Indenture Trustee shall draw the deficiency from any available Additional Collateral and will apply such amount to satisfy the corresponding payment obligation. On the first scheduled payment date after any Pre-Funding Period with respect to a Delayed Lease Aircraft, the Indenture Trustee will withdraw from the Collateral Account the difference between the scheduled payment then due and the rental payment due on such payment from the Corporation. Mandatory Prepayment During the Pre-Funding Period To the extent that the Lease related to a Delayed Lease Aircraft has not commenced on or prior to the cut-off date specified in the applicable Prospectus Supplement as the last date of the related permitted Pre-Funding Period, a "Deemed Event of Loss" will occur and the Collateral Account and, to the extent necessary any Additional Collateral will be drawn upon and the related Leased Aircraft Certificates will be prepaid at a prepayment price equal to the aggregate principal amount of such Leased Aircraft Certificates, together with accrued but unpaid interest thereon to the date designated for such prepayment specified in such Prospectus Supplement. Such Prospectus Supplement will specify the date after such Deemed Event of Loss on which such prepayment is to be made. With respect to any Delayed Lease Aircraft, the applicable Prospectus Supplement also will set forth any mandatory prepayment of the related Leased Aircraft Certificates, and the prepayment price therefor, upon the occurrence of any event of loss with respect to such Delayed Lease Aircraft during such Pre-Funding Period. Owned Aircraft Indenture Covenants Maintenance. The Corporation 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 thereof to be maintained in good standing at all times under the Aviation Act or, under certain circumstances, under the applicable requirements of the aeronautical authority of another country of registry. If, however, the Owned Aircraft loses its airworthiness certification and such loss is curable, and the Corporation, using its reasonable best efforts, undertakes such cure promptly, diligently and continuously, then the Corporation will not be in default with respect to such obligation. Generally, the Corporation will be obligated to replace or cause to be replaced all parts that may from time to time be incorporated or installed in or attached to any Owned Aircraft (including in or on any engine) and that may become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use. The Corporation will have the right to make other alterations, modifications and additions to an Owned Aircraft so long as such alterations, 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 such alteration, modification or addition, assuming that such Owned Aircraft was then in the condition and airworthiness required by the related Indenture. Also, in certain circumstances, the Corporation 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 the Corporation 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 applicable Prospectus Supplement will contain a description of certain limitations, if any, applicable to provisions described in this paragraph. Insurance. Unless otherwise indicated in the applicable Prospectus Supplement, the Corporation will be obligated to carry insurance with insurers of recognized responsibility with respect to each Owned Aircraft, at its own cost and expense, in such amounts, against such risks, with such deductibles or retentions (i) in the case of hull insurance, as the Corporation customarily maintains with respect to other aircraft in the Corporation's fleet of the same type and model and operating on the same routes as the respective Owned Aircraft and (ii) in the case of liability insurance, as is usually carried by similar corporations engaged in the same or similar business and similarly situated as the Corporation, owning or operating aircraft similar to the Aircraft. The Corporation will be permitted to maintain coverage below certain stipulated values and may be permitted to self-insure (including by way of deductibles and retentions) in certain circumstances, subject to certain limits. Therefore, there is no assurance that any insurance will be carried in the future, or, if it is carried, as to the amount of such insurance. The Corporation 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. Unless otherwise specified in the applicable Prospectus Supplement, liability insurance proceeds will be distributed to the respective parties as their interests may appear and hull insurance proceeds in excess of certain specified amounts will be distributed to the Indenture Trustee. The applicable Prospectus Supplement will contain a description of certain limitations, if any, applicable to provisions described in this paragraph. Payments and Limitation of Liability All payments of principal of, premium, if any, and interest on any Leased Aircraft Certificates will be made only from the assets subject to the Lien of the related Leased Aircraft Indenture or the income and proceeds received by the Indenture Trustee therefrom, including, 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 and, on and after the commencement of the related Lease and, in the case of a Delayed Lease Aircraft, after the related Pre-Funding Period, rent payable by the Corporation under the related Lease. The Leased Aircraft Certificates will not be direct obligations of, or guaranteed by the Corporation. The Corporation's obligations to pay rent and to cause other payments to be made under each Lease will be general obligations of the Corporation. 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 the Corporation 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. The Corporation's obligations under each Owned Aircraft Indenture and under the related Owned Aircraft Certificates will be general obligations of the Corporation. Indenture Events of Default and Remedies For any Pass Through Trust, the applicable 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. There will be no cross-default provisions in the Indentures and 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 the Corporation 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. The scheduled rental payments by the Corporation under each Lease will be payable on the dates specified in the applicable Prospectus Supplement. The respective payments will be assigned under the related Leased Aircraft 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 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 the Corporation 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 and after the related Pre-Funding Period, the Corporation 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 the Corporation 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. 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 applicable Prospectus Supplement. Net Lease. The Corporation's obligations under each Lease in respect of the related Leased Aircraft will be those of a lessee under a "net lease." Accordingly, the Corporation 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 thereof to be maintained in good standing at all times under the Aviation Act or, under certain circumstances, under the applicable requirements of the aeronautical authority of another country of registry. If, however, the Leased Aircraft loses its airworthiness certification and such loss is curable, and the Corporation, using its reasonable best efforts, undertakes such cure promptly, diligently and continuously, then the Corporation will not be in default with respect to such obligation. Generally, the Corporation will be obligated to replace or cause to be replaced all parts that may from time to time be incorporated or installed in or attached to any Leased Aircraft (including in or on any engine) and that may become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use. The Corporation will have the right to make other alterations, modifications and additions to a Leased Aircraft so long as such alterations, 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 such alteration, modification or addition, assuming that such Leased Aircraft was then in the condition and airworthiness required by the related Lease. Also, in certain circumstances, the Corporation 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 the Corporation 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 applicable Prospectus Supplement will contain a description of certain limitations, if any, applicable to provisions described above. Insurance. Unless otherwise indicated in the applicable Prospectus Supplement, the Corporation will be obligated to carry insurance with insurers of recognized responsibility with respect to each Leased Aircraft, at its own cost and expense, in such amounts, against such risks, with such deductibles or retentions (i) in the case of hull insurance, as the Corporation customarily maintains with respect to other aircraft in the Corporation's fleet of the same type and model and operating on the same routes as the respective Leased Aircraft and (ii) in the case of liability insurance, as is usually carried by similar corporations engaged in the same or similar business and similarly situated as the Corporation, owning or operating aircraft similar to the Aircraft. The Corporation will be permitted to maintain coverage below certain stipulated values and may be permitted to self-insure (including by way of deductibles and retentions) in certain circumstances, subject to certain limits. Therefore, there is no assurance that any insurance will be carried in the future, or, if it is carried, as to the amount of such insurance. The Corporation 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. Unless otherwise specified in the applicable Prospectus Supplement, liability insurance proceeds will be distributed to the respective parties as their interests may appear and hull insurance proceeds in excess of certain specified amounts will be distributed to the Indenture Trustee. The applicable Prospectus Supplement will contain a description of certain limitations, if any, applicable to provisions described in this paragraph. Lease Events of Default; Remedies. The applicable 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. The Participation Agreements The Corporation 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 of the Equipment Certificates or the Certificateholders), for certain liabilities, losses, fees and expenses and for certain other matters arising out of the transactions described herein or relating to the applicable Aircraft or the use thereof. In addition, under certain circumstances the Corporation 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 certain restrictions, each Owner Participant may convey all of its right, title and interest relating to any Leased Aircraft. Moreover, if so provided in the applicable Prospectus Supplement, in certain limited instances the Corporation may assume an Owner Trust's obligations under the related Leased Aircraft Certificates on a full recourse basis. FEDERAL INCOME TAX CONSEQUENCES In the opinion of Davis Polk & Wardwell, tax counsel to the Corporation, 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 at the "issue price" thereof 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 applicable Prospectus Supplement. This opinion is based on laws, regulations, rulings and decisions in effect as of the date hereof. Changes to existing law, which could have retroactive effect, may alter the consequences described below. This opinion does not purport to 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 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 Certificate Owners of such Pass Through Trust. General The Pass Through Trusts will not be classified as associations taxable as corporations, but, rather, will be classified as grantor trusts under subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986, as amended (the "Code"), and each Certificateholder will be treated as the owner of a pro rata undivided interest in each of the Equipment Certificates and any other property held in the related Pass Through Trust. 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 and any other property 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 will be treated as purchasing an interest in each Equipment Certificate and any other property 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 and other property in proportion to their fair market values at the time of purchase of the Pass Through Certificate. Unless otherwise indicated in a Prospectus Supplement, the Corporation 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, a Certificateholder will be considered to have sold his pro rata share of that Equipment Certificate, and will recognize gain or loss equal to the difference between its aggregate adjusted basis in the Equipment Certificate and the amount realized on the sale (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. With respect to the Leased Aircraft Certificates, although the matter is not entirely free from doubt, 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 Leased Aircraft Certificates. However, if the Corporation were to assume an Owner Trust's obligations under the related Leased Aircraft Certificates upon a purchase of the related Aircraft by the Corporation, or an Owner Trust were to assume the Company's obligations under Owned Aircraft Certificates upon a conversion of an Owned Aircraft to a Leased Aircraft, 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. For this purpose the amount realized, as determined under current Treasury regulations on original issue discount, will be equal to the fair market value of the Certificateholder's pro rata share of the respective Equipment Certificates at such time. Sales or Exchanges of Pass Through Certificates A Certificateholder that sells or exchanges a Pass Through Certificate will be considered to have sold his pro rata portion of the property held by the Pass Through Trust, and will recognize gain or loss on the basis discussed in the preceding paragraph. 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 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. CERTAIN SOUTH CAROLINA TAXES The Pass Through Trustee is a national banking association with its corporate trust office in South Carolina. Powell, Goldstein, Frazer & Murphy, special South Carolina tax counsel for the Pass Through Trustee, has advised the Corporation that, in its opinion, under currently applicable law, assuming that each Pass Through Trust will not be classified as an association taxable as a corporation for federal income tax purposes, but rather, will be classified as a grantor trust under subpart E, Part I of Subchapter J of the Code, and assuming that each Pass Through Trust does not otherwise engage in business in South Carolina, (i) 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), fee or other governmental charge under the laws of the State of South Carolina or any political subdivision thereof and (ii) Certificateholders that are not residents of or otherwise subject to tax in South Carolina will not be subject to any tax (including, without limitation, net or gross income, tangible or intangible property, net worth, capital, franchise or doing business tax), fee or other governmental charge under the laws of the State of South Carolina or any political subdivision thereof as a result of purchasing, owning (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. ERISA CONSIDERATIONS Unless otherwise indicated in the applicable Prospectus Supplement, Pass Through Certificates may not be purchased by, or with the assets of, any 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. Certain governmental plans and non-electing church plans, however, are not subject to Title I of ERISA or Section 4975 of the 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 the Corporation 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 the Corporation 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 the Corporation will be described, in the applicable Prospectus Supplement. 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 thereto. Under agreements which may be entered into by the Corporation, underwriters and agents who participate in the distribution of Pass Through Certificates may be entitled to indemnification by the Corporation against certain liabilities, including liabilities under the Securities Act. Unless otherwise indicated in the applicable Prospectus Supplement, the Corporation 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. Certain of the underwriters or agents and their associates may be customers of, engage in transactions with, and perform services for, the Corporation in the ordinary course of business. LEGAL MATTERS Unless otherwise indicated in the applicable Prospectus Supplement, the legality of the Pass Through Certificates offered hereby will be passed upon for the Corporation by Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017, and by counsel for any agents, dealers or underwriters ("Underwriters' Counsel"). Unless otherwise indicated in the applicable Prospectus Supplement, both Davis Polk & Wardwell and Underwriters' Counsel may rely on the opinion of Powell, Goldstein, Frazer & Murphy, counsel for NationsBank of South Carolina, individually and as 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 George W. Hearn, Vice President - Law of the Corporation, as to the Corporation's authorization, execution and delivery of the Pass Through Agreement. At November 22, 1994, Mr. Hearn owned zero shares of the Corporation's common stock and had been granted options to purchase 14,675 shares of the Corporation's common stock. Of the options granted, 4,362 were vested at such date. EXPERTS The consolidated financial statements and schedules of the Corporation included or incorporated by reference in the Corporation's Annual Report on Form 10-K for the year ended May 31, 1994 and incorporated by reference herein, have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with respect thereto, and are incorporated by reference herein in reliance upon the authority of said firm as experts in accounting and auditing in giving said reports. With respect to the unaudited interim financial information for the quarter ended August 31, 1994, included in the Corporation's Quarterly Report on Form 10-Q for such period, which is 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 report thereon states that they did not audit and they do not express an opinion on that interim financial information. Accordingly, the degree of reliance on their report 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 that report is not a "report" or "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. ======================================= ===================================== No dealer, salesperson or other individual has been authorized to give any information or to make any representation not contained in this Prospectus in connection with the offering covered by this Prospectus. If given or made, such by thisProspectus. If given must not be relied upon as having been authorized by the Corporation or the or made, such information or representation Underwriters. This Prospectus does not constitute an offer to sell, or the solicitatio 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 $465,000,000 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 [NEW LOGO] facts set forth in this Prospectus or in the affairs of the Corporation since the date hereof. $465,000,000 Pass Through Certificates TABLE OF CONTENTS Prospectus Page ---- ________________ Available Information.................3 Reports to Pass Through P R O S P E C T U S Certificateholders..................3 ________________ Incorporation of Certain Documents by Reference...........................3 Federal Express Corporation...........4 Ratio of Earnings to Fixed Charges....4 Outline of Pass Through Trust Structure..........................4 Use of Proceeds.......................5 Diagram of Payments...................6 Description of the Pass Through Certificates........................8 Description of the Equipment November , 1994 Certificates.......................20 Federal Income Tax Consequences......29 Certain South Carolina Taxes.........30 ERISA Considerations.................31 Plan of Distribution.................31 Legal Matters........................32 Experts..............................32 ======================================= ===================================== Appendix A Two diagrams are included following the third paragraph of "Diagram of Payments". The diagram headed "Leased Aircraft" contains boxes representing the parties identified in the second paragraph of "Diagram of Payments," which are connected by arrows demonstrating the cash flows described in the paragraph. The diagram headed "Owned Aircraft" contains boxes representing the parties identified in the third paragraph of "Diagram of Payments," which are connected by arrows demonstrating the cash flows described in the paragraph. 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................................................$148,425 Printing and Engraving.............................................. 37,500 Attorneys' Fees and Expenses........................................ 600,000 Trustees' Fees...................................................... 12,000 Accounting Fees and Expenses........................................ 25,000 Blue Sky Fees and Expenses.......................................... 15,000 Rating Agency Fees.................................................. 125,000 Miscellaneous....................................................... 5,000 Total $967,925 ======== 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 Registrant has also entered into an indemnification agreement with each of its directors based on the sections of the DGCL that recognize the validity of additional indemnity rights granted by agreement. The indemnification agreement alters or clarifies the statutory indemnity with respect to the Registrant's directors in the following respects: (i) indemnity is explicitly provided for settlements, fines and judgments in derivative actions to the maximum extent permitted by Delaware law, (ii) prompt payment of expenses is provided in advance of indemnification, provided the director undertakes to repay such amount if it is finally determined the director is not entitled to be indemnified and (iii) indemnification for all matters involving a director as a party by reason of the person being a director unless the person violates the law or the person's conduct is finally adjudged to have been knowingly fraudulent, deliberately dishonest or willful misconduct. Therefore, a director who has entered into the indemnification agreement will be entitled to indemnification automatically according to its terms without prior independent review of such director's conduct and approval of the indemnification payment by either disinterested directors, independent counsel or the stockholders. Certain of the provisions of the indemnification agreement have not been tested in court and remain subject to public policy considerations with respect to their enforceability. The Registrant has been advised that indemnification of a judgment or amounts paid in settlement in a derivative suit may be contrary to public policy in the State of Delaware. Because substantial uncertainty exists as to the validity of such payments, the Registrant will not make an indemnification payment for fines, judgments or amounts paid in settlement in a derivative suit without first obtaining an opinion of independent counsel that such payment is permitted under Delaware law. (d) The Underwriting Agreements filed as Exhibits 1(a) and 1(b) to this Registration Statement provide, under certain circumstances, for indemnification for the Registrant and certain other persons against certain liabilities. (e) 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. Item 16. Exhibits -------- Exhibit Number Description of 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. 33-52142, and incorporated herein by reference, except that reference in such Exhibit to such File Number shall be left blank.) 4(a)(1) Pass Through Trust Agreement, dated as of February 1, 1993, between Federal Express Corporation and the Pass Through Trustee for an offering of Pass Through Certificates (Filed as Exhibit 4.19 to Registrant's 1993 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 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) Form of Trust Indenture and Security Agreement (Leased Aircraft Indenture) between the Owner Trustee and the Indenture Trustee, relating to Equipment Certificates (Leased Aircraft Certificates) in connection with an offering of Pass Through Certificates (Filed as Exhibit 4(c) to Registrant's Registration Statement on Form S-3, Commission File No. 33-52142, and incorporated herein by reference.)* 4(d)(1) Form of Trust Indenture, Mortgage and Security Agreement (Owned Aircraft Indenture) between Federal Express Corporation and the Indenture Trustee, relating to Equipment Certificates (Owned Aircraft Certificates) in connection with an offering of Pass Through Certificates* 4(e)(1) Form of Participation Agreement among Federal Express Corporation, as Lessee, the Owner Participant, the Owner Trustee, the Original Loan Participants, if any, the Indenture Trustee and, when in connection with an offering of Pass Through Certificates, the Pass Through Trustee, relating to Equipment Trust Certificates or, when in connection with an offering of Pass Through Certificates, Equipment Certificates (Leased Aircraft Certificates) (Filed as Exhibit 4(e)(1) to Registrant's Registration Statement on Form S-3, Commission File No. 33-52142, and incorporated herein by reference.)* 4(e)(2) Form of Participation Agreement among Federal Express Corporation, the Pass Through Trustee and the Indenture Trustee for Equipment Certificates (Owned Aircraft Certificates) in connection with an offering of Pass Through Certificates* 4(f) Form of Trust Agreement between the Owner Participant and the Owner Trustee relating to Equipment Certificates (Leased Aircraft Certificates) in connection with an offering of Equipment Trust Certificates or Pass Through Certificates (Filed as Exhibit 4(f) to Registrant's Registration Statement on Form S-3, Commission File No. 33-52142, and incorporated herein by reference.)* 4(g) Form of Lease Agreement between the Owner Trustee, as the Lessor, and Federal Express Corporation, as Lessee, relating to Equipment Certificates (Leased Aircraft Certificates) in connection with an offering of Equipment Trust Certificates or Pass Through Certificates (Filed as Exhibit 4(g) to Registrant's Registration Statement on Form S-3, Commission File No. 33-52142, and incorporated herein by reference.)* 4(h) Form of Collateral Agreement between the Owner Trustee and the Indenture Trustee (Filed as Exhibit 4.g to Registrant's Registration Statement No. 33-51623, and incorporated herein by reference.) 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 Powell, Goldstein, Frazer & Murphy, counsel for the Pass Through Trustee 5(c) Opinion of Potter Anderson & Corroon, counsel for the Owner Trustee 5(d) Opinion of George W. Hearn, Vice President - Law of Federal Express Corporation, relating to Equipment Trust Certificates and Pass Through Certificates 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) 8(b) Tax Opinion of Powell, Goldstein, Frazer & Murphy, special counsel for the Pass Through Trustee (included under the caption "Certain South Carolina Taxes" in the Prospectus relating to Pass Through Certificates) (included in Exhibit 5(b)) 12 Computation of Ratio of Earnings to Fixed Charges (Filed as Exhibit 12.1 to Registrant's 1995 First Quarterly Report on Form 10-Q, Commission File No. 1-7806, 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 Powell, Goldstein, Frazer & Murphy, counsel for the Pass Through Trustee (included in Exhibit 5(b)) 23(c) Consent of Potter Anderson & Corroon, counsel for the Owner Trustee (included in Exhibit 5(c)) 23(d) Consent of George W. Hearn (included in Exhibit 5(d)) 23(f) Consent of Arthur Andersen LLP, independent public accountants 24 Powers of Attorney 25(a) Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of NationsBank of Georgia, National Association, as Indenture Trustee 25(b) Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of NationsBank of South Carolina, National Association, as Pass Through Trustee - ------------------- * Separate Indentures, Participation Agreements, Trust Agreements and Lease Agreements will be entered into with respect to each Leased Aircraft in connection with any particular offering of Equipment Trust Certificates or Pass Through Certificates. Separate Indentures and Participation Agreements will be entered into with respect to each Owned Aircraft in connection with an offering of Pass Through Certificates. The Prospectus Supplement for each offering of Equipment Trust Certificates or Pass Through Certificates will set forth any material details in which such Indentures, Participation Agreements, Trust Agreements or Lease Agreements, as the case may be, differ from the corresponding Exhibit for the form of such documents. 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; (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. 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 22nd day of November 1994. FEDERAL EXPRESS CORPORATION (Registrant) By: /s/ GRAHAM R. SMITH _______________________________ Graham R. Smith Vice President and Controller (Principal Accounting Officer) Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated. Signature Capacity Date ---------- -------- ---- /s/ Frederick W. Smith* Chairman of the Board, _________________________ President and Chief Frederick W. Smith Executive Officer (Principal Executive Officer) and Director /s/ William J. Razzouk* Executive Vice President, _________________________ Worldwide Customer William J. Razzouk Operations /s/ Alan B. Graf, Jr.* Senior Vice President and _________________________ Chief Financial Officer Alan B. Graf, Jr. (Principal Financial Officer) /s/ Graham R. Smith _________________________ (Acting Principal Graham R. Smith Accounting Officer) November 22, 1994 /s/ Robert H. Allen* Director _________________________ Robert H. Allen /s/ Howard H. Baker, Jr.* Director _________________________ Howard H. Baker, Jr. /s/ Anthony J. A. Bryan* Director _________________________ Anthony J. A. Bryan /s/ Robert L. Cox* Director _________________________ Robert L. Cox /s/ RALPH D. DENUNZIO* Director _________________________ Ralph D. DeNunzio /s/ JUDITH L. ESTRIN* Director _________________________ Judith L. Estrin /s/ PHILIP GREER* Director _________________________ Philip Greer /s/ J. R. HYDE, III* Director _________________________ J. R. Hyde, III /s/ CHARLES T. MANATT* Director _________________________ Charles T. Manatt /s/ JACKSON W. SMART, JR.* Director _________________________ Jackson W. Smart, Jr. /s/ JOSHUA I. SMITH* Director _________________________ Joshua I. Smith /s/ PETER S. WILLMOTT* Director _________________________ Peter S. Willmott *By: /s/ GRAHAM R. SMITH November 22, 1994 _____________________ Graham R. Smith Attorney-in-Fact 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. 33-52142, and incorporated herein by reference, except that reference in such Exhibit to such File Number shall be left blank.) 4(a)(1) Pass Through Trust Agreement, dated as of February 1, 1993, between Federal Express Corporation and the Pass Through Trustee for an offering of Pass Through Certificates (Filed as Exhibit 4.19 to Registrant's 1993 Annual Report on Form 10-K, Commission File No. 1-7806, and incorporated herein by reference.) 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) Form of Trust Indenture and Security Agreement (Leased Aircraft Indenture) between the Owner Trustee and the Indenture Trustee, relating to Equipment Certificates (Leased Aircraft Certificates) in connection with an offering of Pass Through Certificates (Filed as Exhibit 4(c) to Registrant's Registration Statement on Form S-3, Commission File No. 33-52142, and incorporated herein by reference.)* 4(d)(1) Form of Trust Indenture, Mortgage and Security Agreement (Owned Aircraft Indenture) between Federal Express Corporation and the Indenture Trustee, relating to Equipment Certificates (Owned Aircraft Certificates) in connection with an offering of Pass Through Certificates* 4(e)(1) Form of Participation Agreement among Federal Express Corporation, as Lessee, the Owner Participant, the Owner Trustee, the Original Loan Participants, if any, the Indenture Trustee and, when in connection with an offering of Pass Through Certificates, the Pass Through Trustee, relating to Equipment Trust Certificates or, when in connection with an offering of Pass Through Certificates, Equipment Certificates (Leased Aircraft Certificates) (Filed as Exhibit 4(e)(1) to Registrant's Registration Statement on Form S-3, Commission File No. 33-52142, and incorporated herein by reference.)* 4(e)(2) Form of Participation Agreement among Federal Express Corporation, the Pass Through Trustee and the Indenture Trustee for Equipment Certificates (Owned Aircraft Certificates) in connection with an offering of Pass Through Certificates* 4(f) Form of Trust Agreement between the Owner Participant and the Owner Trustee relating to Equipment Certificates (Leased Aircraft Certificates) in connection with an offering of Equipment Trust Certificates or Pass Through Certificates (Filed as Exhibit 4(f) to Registrant's Registration Statement on Form S-3, Commission File No. 33-52142, and incorporated herein by reference.)* 4(g) Form of Lease Agreement between the Owner Trustee, as the Lessor, and Federal Express Corporation, as Lessee, relating to Equipment Certificates (Leased Aircraft Certificates) in connection with an offering of Equipment Trust Certificates or Pass Through Certificates (Filed as Exhibit 4(g) to Registrant's Registration Statement on Form S-3, Commission File No. 33-52142, and incorporated herein by reference.)* 4(h) Form of Collateral Agreement between the Owner Trustee and the Indenture Trustee (Filed as Exhibit 4.g to Registrant's Registration Statement No. 33-51623, and incorporated herein by refer ence.) 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 Powell, Goldstein, Frazer & Murphy, counsel for the Pass Through Trustee 5(c) Opinion of Potter Anderson & Corroon, counsel for the Owner Trustee 5(d) Opinion of George W. Hearn, Vice President - Law of Federal Express Corporation, relating to Equipment Trust Certificates and Pass Through Certificates 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) 8(b) Tax Opinion of Powell, Goldstein, Frazer & Murphy, special counsel for the Pass Through Trustee (included under the caption "Certain South Carolina Taxes" in the Prospectus relating to Pass Through Certificates) (included in Exhibit 5(b)) 12 Computation of Ratio of Earnings to Fixed Charges (Filed as Exhibit 12.1 to Registrant's 1995 First Quarterly Report on Form 10-Q, Commission File No. 1-7806, 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 Powell, Goldstein, Frazer & Murphy, counsel for the Pass Through Trustee (included in Exhibit 5(b)) 23(c) Consent of Potter Anderson & Corroon, counsel for the Owner Trustee (included in Exhibit 5(c)) 23(d) Consent of George W. Hearn (included in Exhibit 5(d)) 23(f) Consent of Arthur Andersen LLP, independent public accountants 24 Powers of Attorney 25(a) Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of NationsBank of Georgia, National Association, as Indenture Trustee 25(b) Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of NationsBank of South Carolina, National Association, as Pass Through Trustee - ------------------- * Separate Indentures, Participation Agreements, Trust Agreements and Lease Agreements will be entered into with respect to each Leased Aircraft in connection with any particular offering of Equipment Trust Certificates or Pass Through Certificates. Separate Indentures and Participation Agreements will be entered into with respect to each Owned Aircraft in connection with an offering of Pass Through Certificates. The Prospectus Supplement for each offering of Equipment Trust Certificates or Pass Through Certificates will set forth any material details in which such Indentures, Participation Agreements, Trust Agreements or Lease Agreements, as the case may be, differ from the corresponding Exhibit for the form of such documents. APPENDIX A A diagram is included following the third paragraph of "Diagram of Payments." The diagram contains boxes representing the parties identified in the first paragraph of "Diagram of Payments," which are connected by arrows demonstrating the cash flows described in each of the second and third paragraphs. EX-4.D1 2 Exhibit 4(d)(1) TRUST INDENTURE, MORTGAGE AND SECURITY AGREEMENT Dated as of __________ , 199_ between FEDERAL EXPRESS CORPORATION and __________________, Indenture Trustee COVERING ONE [MANUFACTURER/MODEL] AIRCRAFT SERIAL NO. _____, REGISTRATION NO. ______ TABLE OF CONTENTS RECITALS............................................................. GRANTING CLAUSES..................................................... HABENDUM............................................................. ARTICLE 1 DEFINITIONS SECTION 1.01. Definitions.................................... ARTICLE 2 THE EQUIPMENT PURCHASE CERTIFICATES SECTION 2.01. Issuance of an Equipment Purchase Certificate.................................. SECTION 2.02. Terms of the Equipment Purchase Certificates................................. SECTION 2.03. Execution and Authentication................... SECTION 2.04. Method of Payment.............................. SECTION 2.05. Application of Payments........................ SECTION 2.06. Termination of Interest in Indenture Estate............................. SECTION 2.07. Transfer and Exchange of Certificates; Participation.................. SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Certificates.......................... SECTION 2.09. Costs and Expenses of Issuance of New Equipment Purchase Certificates................................. SECTION 2.10. No Liability of Indenture Trustee.............. SECTION 2.11. ERISA Plan Prohibition......................... ARTICLE 3 Intentionally Left Blank..................... ARTICLE 4 COVENANTS AND REPRESENTATIONS OF THE COMPANY SECTION 4.01. Liens.......................................... SECTION 4.02. Registration, Maintenance and Operation; Possession and Lease; Insignia.............................. SECTION 4.03. Replacement and Pooling of Parts............... SECTION 4.04. Alterations, Modifications and Additions................................ SECTION 4.05. Loss, Destruction, Registration................ SECTION 4.06. Insurance...................................... SECTION 4.07. Inspection..................................... SECTION 4.08. Filings........................................ SECTION 4.09. Annual Opinion................................. SECTION 4.10. Corporate Existence............................ SECTION 4.11. Merger, Consolidation.......................... SECTION 4.12. Financial Information.......................... SECTION 4.13. Representations and Warranties of the Company............................... SECTION 4.14. Survival of Representations and Warranties............................... ARTICLE 5 RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE INDENTURE ESTATE SECTION 5.01. Distribution of Principal and Interest................................. SECTION 5.02. Intentionally Left Blank....................... SECTION 5.03. Payments during Continuance of Event of Default............................. SECTION 5.04. Funds held by Indenture Trustee; Investments.................................. ARTICLE 6 EVENTS OF DEFAULT, REMEDIES OF THE INDENTURE UPON AN EVENT OF DEFAULT SECTION 6.01. Event of Default............................... SECTION 6.02. Remedies with Respect to Indenture Estate....................................... ARTICLE 7 DUTIES OF THE INDENTURE TRUSTEE SECTION 7.01. Action Upon Event of Default................... SECTION 7.02. No Duties Except as Specified.................. SECTION 7.03. No Action Except Under Indenture or Instructions.............................. SECTION 7.04. Action Upon Instructions Generally............. SECTION 7.05. Indemnification................................ SECTION 7.06. Withholding Taxes.............................. ARTICLE 8 THE INDENTURE TRUSTEE SECTION 8.01. Acceptance of Trusts and Duties................ SECTION 8.02. Absence of Certain Duties...................... SECTION 8.03. Representations, Warranties and Agreements of Indenture Trustee.............. SECTION 8.04. Reliance; Agents; Advice of Experts............ SECTION 8.05. Compensation and Expenses of Indenture Trustee............................ SECTION 8.06. Monies Held by Indenture Trustee............... SECTION 8.07. Capacity in Which Active....................... ARTICLE 9 SUCCESSOR INDENTURE TRUSTEE SECTION 9.01. Resignation or Removal; Appointment of Successor................................. SECTION 9.02. Appointment of Separate Trustees............... ARTICLE 10 SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE AND OTHER DOCUMENTS SECTION 10.01. Supplemental Indentures........................ SECTION 10.02. Indenture Trustee Protected.................... SECTION 10.03. Requirement of Substance, Not Form............. SECTION 10.04. Documents Mailed to Holders.................... ARTICLE 11 LEVERAGED LEASE FINANCING SECTION 11.01. Conversion to Leveraged Lease Financing.................................... SECTION 11.02. Indenture Amendment............................ SECTION 11.03. The Lease...................................... SECTION 11.04. Conditions Precedent........................... ARTICLE 12 MISCELLANEOUS SECTION 12.01. Termination of Indenture....................... SECTION 12.02. No Legal Title in Indenture Estate............. SECTION 12.03. Sale of Collateral by Indenture Trustee...................................... SECTION 12.04. Indenture for Benefit of Parties and Holders Only............................. SECTION 12.05. Notices........................................ SECTION 12.06. Severability................................... SECTION 12.07. Binding Effect................................. SECTION 12.08. Heading; Reference............................. SECTION 12.09. Counterparts................................... SECTION 12.10. Governing Laws................................. SECTION 12.11. No Oral Modifications.......................... SECTION 12.12. Normal Commercial Relations.................... SECTION 12.13. Section 1110 Compliance........................ Schedule I -- Definitions Schedule II -- Permitted Country List Exhibit A -- Form of Indenture Supplement Exhibit B -- Form of Equipment Purchase Certificate Exhibit C -- Form of Participation Agreement Exhibit D -- Form of Lease Agreement Exhibit E -- Form of Indenture Amendment Exhibit F -- Form of Lease Participation Agreement TRUST INDENTURE, MORTGAGE AND SECURITY AGREEMENT TRUST INDENTURE, MORTGAGE AND SECURITY AGREEMENT entered into as of _________, 199_ between FEDERAL EXPRESS CORPORATION, a Delaware corporation (together with its successors and assigns the "Company") and ______________, a national banking corporation, as Indenture Trustee hereunder (together with its successors hereunder, the "Indenture Trustee"); W I T N E S S E T H : WHEREAS, unless otherwise defined herein or the context otherwise requires, capitalized terms herein are used as provided in Article 1 hereof; [WHEREAS, pursuant to the Purchase Agreement, the Manufacturer has agreed to sell to the Company and the Company has agreed to purchase from the Manufacturer the Aircraft; WHEREAS, the Company wishes to finance a portion the purchase price of the Aircraft through the issuance of Equipment Purchase Certificates;](*) WHEREAS, the Company desires by this Indenture, among other things, (i) to provide for the issuance to the Holders by the Company of certain Equipment Purchase Certificates [in connection with the refunding of Equipment Purchase Certificates](**) and (ii) to provide for the assignment, mortgage, grant of a first priority security interest in and pledge by the Company to the Indenture Trustee, of certain of the Company's right, title and interest in and to the Aircraft as security for the Obligations; (*) Bracketed information followed by an asterisk ([ ](*)) will be included only in the case of initial funding. (**) Bracketed information followed by two asterisks ([ ](*)) will be included only in the case of initial funding. WHEREAS, all things have been done to make the Equipment Purchase Certificates, when executed by the Company, authenticated and delivered under this Indenture and issued, the legal, valid and binding obligations of the Company; and WHEREAS, all things necessary to make this Indenture the legal, valid and binding obligation of the Company, for the uses and purposes set forth in this Indenture, in accordance with its terms, have been done and performed and have happened. [NOW, THEREFORE, the parties agree that the Original Indenture be and the same is hereby amended as follows:](**) -- GRANTING CLAUSES -- NOW, THEREFORE, THIS TRUST INDENTURE, MORTGAGE AND SECURITY AGREEMENT WITNESSETH, that: to secure the Obligations, and in consideration of the premises and of the covenants herein contained, and of the acceptance of the Equipment Purchase Certificates by the Holders, and of the sum of $1 paid to the Company by the Indenture Trustee at or before the delivery hereof, the receipt whereof is hereby acknowledged, the Company has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee and its successors and assigns, for the security and benefit of the Holders, as aforesaid, a first priority security interest in and first mortgage lien upon, all right, title and interest of the Company in, to and under the following described property, rights and privileges (which collectively, including all property hereafter specifically subjected to the Lien of this Indenture by an Indenture Supplement or any other mortgage supplemental hereto, shall constitute the "Indenture Estate"), to wit: a. all estate, right, title and interest of the Company in the Aircraft (including the Airframe and the Engines and all warranties of any manufacturer in respect thereof) and all replacements thereof and substitutions therefor to which the Company shall from time to time acquire title, all as more particularly described in the Indenture Supplement executed and delivered with respect to the Aircraft or any such replacements or substitutions therefor, as provided in this Indenture, all Parts related to the foregoing, and all records, logs and other documents at any time maintained with respect to the foregoing property; b. all estate, right, title and interest of the Company in, to and under the Estate Documents; c. all tolls, rents, issues, profits, revenues and other income of the property subjected or required to be subjected to the Lien of this Indenture including all payments or proceeds payable to the Company with respect to the Aircraft as the result of the sale, lease or other disposition thereof, and all estate, right, title and interest of every nature whatsoever of the Company in and to the same and every part thereof; d. all insurance and requisition proceeds and all other payments of any kind with respect to the Aircraft or any part thereof, including but not limited to the insurance required under Section 4.06 hereof; e. all monies and securities deposited or required to be deposited with the Indenture Trustee pursuant to any term of this Indenture or required to be held by the Indenture Trustee hereunder; and f. all proceeds of the foregoing. All property referred to in the Granting Clauses, whenever acquired by the Company, shall secure all Obligations at any time outstanding. Any and all properties referred to in the Granting Clauses which are hereafter acquired by the Company shall, without further conveyance, assignment or act by the Company or the Indenture Trustee thereby become and be subject to the security interest hereby granted as fully and completely as though specifically described herein. TO HAVE AND TO HOLD all and singular the aforesaid property unto the Indenture Trustee, its successors and assigns, in trust for the benefit and security of the Holders, and for the uses and purposes and subject to the terms and provisions set forth in this Indenture. It is expressly agreed that anything herein contained to the contrary notwithstanding, the Company shall remain liable under the Operative Agreements to perform all of the obligations assumed by it thereunder, all in accordance with and pursuant to the terms and provisions thereof, and the Indenture Trustee and the Holders shall have no obligation or liability under any thereof by reason of or arising out of the assignment hereunder, nor shall the Holders be required or obligated in any manner to perform or fulfill any obligations of the Company under or pursuant to any of the Operative Agreements, except as therein or herein expressly provided, to make any payment, or to make any inquiry as to the nature or sufficiency of any payment received by it, or present or file any claim, or take any action to collect or enforce the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. The Company does hereby constitute the Indenture Trustee the true and lawful attorney of the Company, irrevocably, with full power (in the name of the Company or otherwise) to ask, require, demand, receive, compound and give acquittance for any and all monies and claims for monies (in each case including insurance and requisition proceeds) due and to become due under or arising out of the Operative Agreements and all other property which now or hereafter constitutes part of the Indenture Estate, to endorse any checks or other instruments or orders in connection therewith and to file any claims or to take any action or to institute any proceedings which the Indenture Trustee may deem to be necessary or advisable in the premises. The Company agrees that promptly on receipt thereof, it will transfer to the Indenture Trustee any and all monies from time to time received by it constituting part of the Indenture Estate, for distribution by the Indenture Trustee pursuant to this Indenture. The Company does hereby warrant and represent that (except as permitted herein) it has not assigned or pledged any of its right, title, and interest hereby assigned to anyone other than the Indenture Trustee. The Company does hereby ratify and confirm the Operative Agreements and does hereby agree that (except as permitted herein) it will not take or omit to take any action, the taking or omission of which would result in an alteration or impairment of any of the Operative Agreements or of any of the rights created by any thereof or the assignment hereunder. IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows: ARTICLE 1 DEFINITIONS SECTION 1.01. Definitions. Unless the context otherwise requires, all capitalized used herein and not otherwise defined shall have the meanings set forth in Schedule I hereto. ARTICLE 2 THE EQUIPMENT PURCHASE CERTIFICATES SECTION 2.01. Issuance of an Equipment Purchase Certificate. There shall be issued by the Company to each of the Holders [in connection with their respective participation in the payment of the purchase price of the Aircraft](*), an Equipment Purchase Certificate or Equipment Purchase Certificates [dated the Delivery Date of the Aircraft, designated as having been issued in connection with the purchase of the Aircraft, and](*) [the Refunding Date](**) registered in the name of such Holder in a principal amount not in excess of the amount specified in Section 2.02 hereof. SECTION 2.02. Terms of the Equipment Purchase Certificates. (a) The Equipment Purchase Certificates and the Indenture Trustee's certificate of authentication shall be substantially in the form set forth in Exhibit B hereto. The Equipment Purchase Certificates shall be issued in registered form only and in denominations of $1,000 and any integral multiple thereof and shall be issued in the Maturities and principal amounts, and bear interest at the rates per annum, specified in the form of Equipment Purchase Certificate set forth in Exhibit B hereto. Any of the Equipment Purchase Certificates may be issued with appropriate insertions, omissions, substitutions and variations, and may have imprinted or otherwise reproduced thereon such legend or legends, not inconsistent with the provisions of this Indenture, as may be required to comply with any law or with any rules or regulations pursuant thereto, or with the rules of any securities market in which the Equipment Purchase Certificates are admitted to trading, or to conform to general usage. Each Equipment Purchase Certificate shall bear interest from the date of original issuance thereof or from the most recent date to which interest has been paid and duly provided for, as the case may be, which shall be payable on the dates specified on the face of the form of Equipment Purchase Certificate set forth in Exhibit B hereto until the principal thereof is paid. Interest shall be calculated on the basis of a 360-day year of twelve 30-day months. Notwithstanding the preceding paragraph, each Equipment Purchase Certificate shall bear interest at the Past Due Rate on any principal, interest and any other amount payable hereunder or under such Certificate, which shall not be paid in full when due (whether at stated maturity, by acceleration, by mandatory prepayment or otherwise), for the period from and including the due date thereof to but excluding the date the same is paid in full, payable from time to time on demand of the Indenture Trustee. The principal of, and Make-Whole Premium, if any, and interest on, the Equipment Purchase Certificates shall be payable at the Corporate Trust Office of the Indenture Trustee or at any office or agency maintained for such purpose pursuant to Section 2.04 hereof. The Holder at the close of business on any Record Date with respect to any Payment Date shall be entitled to receive the interest if any payable on such Payment Date notwithstanding any transfer or exchange of such Equipment Purchase Certificate subsequent to the Record Date and prior to such Payment Date, except if and to the extent the Company shall default in the payment of the interest due on such Payment Date, in which case such defaulted interest shall be paid to the Holder at the close of business on a subsequent Record Date (which shall be not less than five (5) or more than fifteen (15) Business Days prior to the date of payment of such defaulted interest) established by notice given by mail by or on behalf of the Owner Trustee to the Holders not less than fifteen (15) days preceding such subsequent Record Date. (b) Event of Loss. The Equipment Purchase Certificates shall be prepaid in whole but not in part by the Company in connection with an Event of Loss with respect to the Aircraft as and when provided in Section 4.05(b) hereof at a price, in addition to any other amounts payable to the Holders under this Indenture, equal to the aggregate unpaid principal amount thereof together with accrued but unpaid interest thereon to but not including the date of payment, but without Make-Whole Premium. The Company shall give at least 30 days' prior notice of any prepayment of the Equipment Purchase Certificates pursuant to this subsection (b) to the Indenture Trustee, which notice shall specify the date fixed for prepayment and the principal amount of the Equipment Purchase Certificates to be prepaid and the amount of accrued interest thereon to be so payable. (c) Prepayment Generally. The Equipment Purchase Certificates may by prepaid in whole or in part at the option of the Company upon 30 days' prior written notice, together with Make-Whole Premium, if any. The Equipment Purchase Certificates shall be prepaid in whole but not in part upon any sale of the Aircraft by the Company other than a sale of the Aircraft to an owner trust as contemplated by Article 11 hereof. SECTION 2.03. Execution and Authentication. The Equipment Purchase Certificates shall be executed on behalf of the Company by an authorized officer of the Company. No Equipment Purchase Certificate shall be secured or entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Equipment Purchase Certificate a certificate of authentication in the form provided for in Exhibit B hereto executed by the Indenture Trustee by the manual signature of one of its authorized officers, and such certificate of authentication upon any Equipment Purchase Certificate shall be conclusive evidence, and the only evidence, that such Equipment Purchase Certificate has been duly authenticated and delivered under this Indenture. SECTION 2.04. Method of Payment. The Company covenants and agrees that it will duly and punctually pay or cause to be paid in immediately available funds the principal of, any Make-Whole Premium and interest and all other amounts due on each of the Equipment Purchase Certificates hereunder at the Corporate Trust Office of the Indenture Trustee (or at such other account in New York, New York as the Indenture Trustee may designate for the purpose) no later than 1:00 p.m. (New York City time) on the date when due and, upon receipt of such amounts, the Indenture Trustee agrees to pay such amounts to the appropriate Holders no later than 3:00 p.m. (New York City time) on such day. In the event the Indenture Trustee shall fail to make any such payment as provided in the immediately preceding sentence after its receipt of funds at the place and prior to the time specified above, the Indenture Trustee, in its individual capacity and not as trustee, agrees to compensate the Holders for loss of use of such funds at the Past Due Rate; provided, however, notwithstanding the foregoing the Indenture Trustee, in its individual capacity, shall not be liable for such compensation to the extent any failure to make any such payment is a result of any action, inaction, event or other occurrence outside the Indenture Trustee's control. The principal of and any Make-Whole Premium and interest on each Equipment Purchase Certificate and all other amounts due hereunder or under the Equipment Purchase Certificates shall be payable at the Corporate Trust Office of the Indenture Trustee or at any office or agency maintained for such purpose pursuant to this Section 2.04; provided, however, that interest may be payable at the option of the Indenture Trustee by mailing checks for such interest payable to or on the written order of the Holders entitled thereto as they shall appear on the Register; provided further, however, that notwithstanding the foregoing, any amounts payable with respect to the Equipment Purchase Certificates as to which the Pass Through Trustee is the Holder shall be sent by wire transfer of immediately available funds to an account or accounts in the United States previously specified by the Pass Through Trustee to the Indenture Trustee. Prior to the due presentment for registration of transfer of any Equipment Purchase Certificate, the Company and the Indenture Trustee shall deem and treat the person in whose name any Equipment Purchase Certificate is registered on the Register as the absolute owner and Holder of such Equipment Purchase Certificate for the purpose of receiving payment of all amounts payable with respect to such Equipment Purchase Certificate and for all other purposes, and neither the Company nor the Indenture Trustee shall be affected by any notice to the contrary. So long as the Equipment Purchase Certificates remain outstanding, the Indenture Trustee will maintain the following: (a) an office or agency where the Equipment Purchase Certificates may be presented for payment and (b) a facility or agency in New York, New York where the Equipment Purchase Certificates may be presented for registration of transfer under this Indenture. SECTION 2.05. Application of Payments. All payments of principal, any Make-Whole Premium or interest shall be applied, subject to Section 5.03 hereof, first, to the payment of accrued interest (including interest on overdue principal and interest) on such Equipment Purchase Certificate to the date of such payment, second, to the payment of the principal amount of such Equipment Purchase Certificate then due under such Equipment Purchase Certificate, third, to the payment of any Make-Whole Premium due on such Equipment Purchase Certificate and fourth, to the payment of the principal amount of such Equipment Purchase Certificate remaining unpaid. SECTION 2.06. Termination of Interest in Indenture Estate. A Holder of an Equipment Purchase Certificate shall have no further interest in, or other right with respect to, the Indenture Estate when and if the principal of and any Make-Whole Premium and interest on all Equipment Purchase Certificates held by such Holder and all other sums payable to such Holder under this Indenture and under such Equipment Purchase Certificates shall have been paid in full, and upon such payment in full such Holder shall surrender such Equipment Purchase Certificates to the Indenture Trustee for cancellation. SECTION 2.07. Transfer and Exchange of Certificates; Participation. The Indenture Trustee shall keep at its Corporate Trust Office and at each other office or agency to be maintained for the purpose as provided in Section 2.04 hereof a register (the "Register") of Equipment Purchase Certificates issued from time to time and the Holders thereof. A Holder of an Equipment Purchase Certificate intending to transfer such Equipment Purchase Certificate to a new payee, including a sale pursuant to the Transfer Agreement, or to exchange such Equipment Purchase Certificate for new Equipment Purchase Certificates of authorized denominations, shall endorse such outstanding Equipment Purchase Certificate and surrender such outstanding Equipment Purchase Certificate at the Corporate Trust Office or other office maintained for the purpose, or execute a written instrument of transfer, duly executed by such Holder for the issuance of a new Equipment Purchase Certificate or Equipment Purchase Certificates, specifying the name and address of the new payee or payees. Promptly upon receipt of such documents, subject to satisfaction of Section 2.09 hereof, the Company shall execute and the Indenture Trustee will authenticate and deliver a new Equipment Purchase Certificate or Equipment Purchase Certificates, in the same aggregate original face amount with the same Maturity and the same interest rate and dated the same date as the Equipment Purchase Certificate surrendered, and in such authorized denomination or denominations registered in the name of such payee or payees as such Holder may specify by written request. The Indenture Trustee shall make a notation on each new Equipment Purchase Certificate of the amount of all payments of principal previously made on the surrendered Equipment Purchase Certificate with respect to which such new Equipment Purchase Certificate is issued and the date to which interest on such surrendered Equipment Purchase Certificate has been paid. From time to time, the Indenture Trustee will provide the Company with such information as it may request as to the registered Holders of Equipment Purchase Certificates. SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Certificates. If any Equipment Purchase Certificate shall become mutilated, destroyed, lost or stolen, upon the written request of the Holder thereof (a copy of which request shall be sent by the Holder to the Indenture Trustee), and subject to satisfaction of Section 2.09 hereof, the Company shall execute and the Indenture Trustee shall authenticate and deliver as a replacement a new Equipment Purchase Certificate, payable in the same original principal amount and dated the same date as the Equipment Purchase Certificate so mutilated, destroyed, lost or stolen. If the Equipment Purchase Certificate being replaced has become mutilated, such Equipment Purchase Certificate shall be surrendered to the Indenture Trustee and a photocopy shall be furnished to the Company by the Indenture Trustee. If the Equipment Purchase Certificate being replaced has been destroyed, lost or stolen, the Holder shall furnish to the Company and the Indenture Trustee such security or indemnity as may be required by them to save the Company and the Indenture Trustee harmless and evidence satisfactory to the Company and Indenture Trustee of the destruction, loss or theft of such Equipment Purchase Certificate and of the ownership of such Equipment Purchase Certificate; provided, however, that if the Holder of such Equipment Purchase Certificate is one of the Banks or the Pass Through Trustee (or an Affiliate thereof) the written undertaking of such Holder delivered to the Company and the Indenture Trustee shall be sufficient security and indemnity under this Section 2.08. The Indenture Trustee will promptly cancel and destroy all Equipment Purchase Certificates surrendered for transfer, exchange or replacement pursuant to Section 2.07 hereof and this Section. SECTION 2.09. Costs and Expenses of Issuance of New Equipment Purchase Certificates. Upon the issuance of a new Equipment Purchase Certificate pursuant to Section 2.07 or 2.08 hereof, the Company and/or the Indenture Trustee may require from the party requesting such new Equipment Purchase Certificate payment of a sum to reimburse the Company and the Indenture Trustee for, or to provide funds for the payment of, any tax or other governmental charge in connection with the issuance of such new Equipment Purchase Certificate. No service charge shall be levied for any such transaction. SECTION 2.10. No Liability of Indenture Trustee. All payments to be made by the Indenture Trustee under this Indenture shall be made only to the extent the Indenture Trustee shall have received sufficient funds from the Company to enable the Indenture Trustee to make payments in accordance with the terms hereof. Each Holder, by its acceptance of an Equipment Purchase Certificate, agrees that the Indenture Trustee is not and shall not be personally liable to the Holder for any amount payable under such Equipment Purchase Certificate or this Indenture or, except as expressly provided in this Indenture, for any liability under this Indenture. SECTION 2.11. ERISA Plan Prohibition. No employee benefit plan subject to Title I of ERISA, or individual retirement account or employee benefit plan subject to Section 4975 of the Code, or any trust established under any such plan or account (hereinafter collectively referred to as an "ERISA Plan"), may acquire or hold any of the Equipment Purchase Certificates. The purchase by any Person of any Equipment Purchase Certificate constitutes a representation by such Person to the Company and the Indenture Trustee that such Person is not an ERISA Plan and that such Person is not acquiring, and has not acquired, such Equipment Purchase Certificate with assets of an ERISA Plan. ARTICLE 3 Intentionally Left Blank. ARTICLE 4 COVENANTS AND REPRESENTATIONS OF THE COMPANY SECTION 4.01. Liens. The Company will not directly or indirectly create, incur, assume or suffer to exist, and will promptly, at its own cost and expense, take such action as may be necessary to discharge, any Lien on or with respect to any of the Indenture Estate or title thereto or any interest therein except: (a) the Lien of this Indenture and the rights of the parties to the other Operative Agreements; (b) the rights of any assignee, lessee or transferee under a lease or an assignment expressly permitted by the terms of this Indenture; (c) Liens arising as a result of claims against or affecting the Indenture Trustee, the Holders or any Affiliate thereof not arising solely from participation in the transactions contemplated by the Operative Agreements or any act or omission of the Indenture Trustee, the Holders or any Affiliate thereof not required or expressly permitted by the Operative Agreements; (d) Liens for taxes imposed against the Company either not yet due or being contested in good faith by appropriate proceedings so long as such Liens or proceedings do not involve any material danger of the sale, forfeiture or loss of any of the Indenture Estate or any interest therein; (e) materialmen's, mechanic's, workmen's, repairmen's, employees' or other like Liens arising against the Company in the ordinary course of the Company's business for amounts the payment of which is either not yet overdue or is being contested in good faith by appropriate proceedings so long as such Liens or proceedings do not involve any material danger of the sale, forfeiture or loss of any of the Indenture Estate or any interest therein; (f) Liens arising from judgment or awards against the Company with respect to which at the time an appeal or proceeding for review is being prosecuted in good faith and with respect to which there shall have been secured a stay of execution pending such appeal or proceeding for review and then only for the period of such stay; and (g) the right of any Person (other than the Company) to claim a portion of the insurance proceeds received or receivable as a result of an Event of Loss with respect to the Airframe, which right arises out of such Person's having a direct interest in an engine (other than an Engine) installed on the Airframe as a lessor, conditional vendor, owner or otherwise. SECTION 4.02. Registration, Maintenance and Operation; Possession and Lease; Insignia. (a) Registration, Maintenance and Operation. The Company at its own cost and expense, shall: (i) [on the Delivery Date](*) cause the Aircraft [to be duly registered in its name, pursuant to the Act and,](*) to remain, subject to paragraph (b) below, at all times duly registered in its name pursuant to the Act and at all times act in accordance with the rules and regulations of the Aeronautics Authority; (ii) maintain, inspect, service, repair and overhaul the Aircraft (or cause the same to be done) so as to keep the Aircraft (and any engine which is not an Engine but is installed on the Aircraft) in good operating condition, ordinary wear and tear excepted, and in any event (x) in accordance with the applicable regulations of the applicable Aeronautics Authority or regulatory agency or body of any other jurisdiction in which the Aircraft may then be registered in accordance with Section 4.02(b) hereof and the Company's maintenance program approved by the applicable Aeronautics Authority and (y) so as to keep the Aircraft in such condition as may be necessary to enable its airworthiness certification to be maintained in good standing at all times under the Act or any applicable rule or regulation of the applicable regulatory agency or body of any other jurisdiction in which the Aircraft may then be registered, and, provided, however, the Company shall not be in default of its obligation in this Section 4.02(a)(ii) to maintain the Aircraft's airworthiness certification in good standing if the Aircraft loses its airworthiness certification, such loss is curable and the Company undertakes such cure promptly, diligently, and continuously, using its reasonable best efforts; (iii) maintain, or cause to be maintained, all records, logs and other materials in respect of the Aircraft required by the Aeronautics Authority, or the applicable regulatory agency or body of any other jurisdiction in which the Aircraft may then be registered, to be maintained; (iv) not maintain, service, repair, overhaul, use or operate the Aircraft or any Engine in violation of any airworthiness certificate or registration relating thereto, or in violation of any law or any license, rule, regulation or order of or by any government or governmental authority having jurisdiction over the Company or the Aircraft or any Engine or any service bulletin relating to the Aircraft or any Engine or for any purpose for which the Aircraft or any Engine is not designed; provided, however, that the Company or any lessee may in good faith contest the validity or application of any such law, license, rule, regulation or order in any manner that does not adversely affect the Indenture Trustee or any Holder; and if any such law, license, rule, regulation or order requires alteration of the Aircraft or any Engine, the Company will conform therewith at its own cost and expense and will maintain the Aircraft or any Engine in compliance with such law, license, rule, regulation or order; (v) not operate or locate the Airframe or any Engine, or suffer the Airframe or any Engine to be operated or located (x) in any area excluded from coverage by any insurance policy in effect with respect to the Airframe or any Engine required by the terms of Section 4.06 hereof or (y) in any area that is a war zone or recognized or, in the Company's reasonable judgment, threatened area of hostilities, unless the Company has obtained, prior to the operation or location of the Airframe or any Engine in such area, indemnification from the Government, or other insurance, against the risks and in the amounts required by, and in compliance with, Section 4.06 hereof covering such area (except in the case of a requisition for use by the Government, to the extent that the Company certifies that such insurance is unobtainable after diligent effort or is obtainable only at unreasonably high rates or on unduly burdensome terms and conditions) (and naming the Indenture Trustee as loss payee in respect of indemnification or insurance payable in respect of casualties to the Aircraft) or unless the Aircraft is only temporarily located in such area as a result of an isolated occurrence attributable to a hijacking, medical emergency, equipment malfunction, weather conditions, navigational error or other similar unforeseen circumstances and the Company is using its good faith efforts promptly to remove the Aircraft from such area. (b) Reregistration. The Company may at its sole expense reregister the Aircraft under the laws of a country listed in Schedule II hereto with which the United States then maintains normal and full (other than in the case of Taiwan) diplomatic relations, subject to the following conditions. The Indenture Trustee shall have received: (i) assurances satisfactory to it: (A) to the effect that the insurance provisions of this Indenture have been and will be complied with upon such change of registry; (B) as to the continuation of the Lien of this Indenture as a first priority, duly perfected lien on the Aircraft; and (C) that such new country of registry (x) would provide substantially equivalent protection for the rights of lenders in similar transactions as provided under United States law (except that, in the absence of restrictions under the laws of such country on rights and remedies of lessors and secured parties similar to those imposed by Sections 362 and 363 of the Bankruptcy Code, rights and remedies similar to those available under Section 1110 of the Bankruptcy Code shall not be required), and (y) imposes aircraft maintenance standards not materially less stringent than those of the Aeronautics Authority; and (ii) a favorable opinion of counsel (reasonably satisfactory in form and substance to the Indenture Trustee) in the new jurisdiction of registry to the effect: (A) that the terms (including, without limitation, the governing law, service-of-process and jurisdictional-submission provisions thereof) of the Indenture are legal, valid, binding and enforceable in such jurisdiction; (B) that it is not necessary for the Indenture Trustee to register or qualify to do business in such jurisdiction in connection with the registration in the new jurisdiction and the exercise of any rights or remedies with respect to the Aircraft; (C) that the courts of such jurisdiction would provide substantially equivalent protection to the Indenture Trustee as provided under United States law (with the exception described in paragraph (b)(i)(C) of this Section 4.02); (D) that there is no tort liability of the mortgagee of an aircraft not in possession thereof under the laws of such jurisdiction, other than tort liability which might have been imposed on such mortgagee under the laws of the United States or any state thereof (it being understood that, in the event such latter opinion cannot be given in a form satisfactory to the Indenture Trustee, such opinion shall be waived, if insurance reasonably satisfactory to the Indenture Trustee is provided, at the Company's expense to cover such risk); and (E) (unless the Company shall have agreed to provide insurance reasonably satisfactory to the Indenture Trustee covering the risk of requisition of use of the Aircraft by the government of registry of the Aircraft) that the laws of such jurisdiction require fair compensation by the government of such jurisdiction payable in currency freely convertible into United States Dollars for the loss of use of the Aircraft in the event of such requisition. (c) Possession and Leases. The Company will not, without the prior written consent of the Indenture Trustee, lease or otherwise in any manner deliver, transfer or relinquish possession of the Aircraft, the Airframe or any Engine or install any Engine, or permit any Engine to be installed, on any airframe other than the Airframe; provided, that, so long as (i) no Event of Default shall have occurred and be continuing, and (ii) the Company shall comply with the provisions of Section 4.06 hereof, the Company may without the prior written consent of the Indenture Trustee: (i) so long as the lessee is generally meeting its material obligations as they come due and is not subject to a proceeding or final order under applicable bankruptcy, insolvency or reorganization laws on the date the lease is entered into, (A) lease the Aircraft or any Engine to a U.S. Air Carrier, (B) lease the Aircraft to an Air Carrier which is principally based in and domiciled in one of the countries listed on Schedule II hereto, (C) lease the Aircraft to any Air Carrier principally based in and domiciled in a country which, at the inception of such lease, is a signatory to the Convention on the International Recognition of Rights in Aircraft, or (D) lease the Aircraft to any other Air Carrier not described in this Section which shall be reasonably acceptable to the Indenture Trustee; provided, that, with respect to clauses (B) and (C) above, at the time of any such lease the United States maintains normal and full (other than in the case of Taiwan) diplomatic relations with the country in which such Air Carrier is principally based and domiciled. In the case of any lease (x) such lessee shall operate and maintain the Aircraft in compliance with this Indenture, (y) such lease shall provide that such lessee will not transfer possession of, or any other rights to, the leased Airframe or Aircraft to any other person without the prior written consent of the Indenture Trustee (except as permitted by subparagraphs (ii) and (iii) below). Prior to any lease to an Air Carrier permitted under clauses (B) and (C) of this Section 4.02(c)(i): (I) the maintenance standards of the aeronautical authority of the country of domicile or principal operation of the lessee taken as a whole shall be not materially less stringent than those of the FAA and the lease will provide that the maintenance performed during such lease will meet in all material respects such maintenance standards; (II) the Company will provide opinions of counsel reasonably satisfactory to the Indenture Trustee with respect to the validity and enforceability of the Indenture in such country; that the laws of such country require fair compensation by the government of such country payable in a currency freely convertible into US Dollars for the loss of the use of the Aircraft in the event of a requisition of use by such government; (III) import and export certificates, if required, shall be procured at the Company's own cost and expense by the Company; (IV) duties and tariffs, if applicable, shall be paid for by the Company; and (V) the Company shall effect or cause to be effected at the Company's own cost and expense all recordings and filings that are required to perfect the Lien of this Indenture; (ii) subject the Airframe or permit the Airframe to be subjected to normal interchange agreements or subject the Engines or permit any Engine to be subjected to normal interchange or pooling agreements or arrangements, in each case customary in the airline industry, entered into by the Company in the ordinary course of its business with any Air Carrier; provided that no transfer of the registration of the Airframe or any Engine shall be effected and that throughout the period that the Airframe or any Engine is subjected to such interchange or pooling agreement or arrangement the terms of this Indenture shall be observed; and provided, further, that no such agreement or arrangement contemplates or requires the transfer of title to the Airframe or any Engine, and if the Company's title to any Engine shall be divested under any such agreement or arrangement, such divestiture shall be deemed to be an Event of Loss with respect to such Engine and the Company shall comply with Section 4.05(d) hereof in respect of such Engine; (iii) deliver or permit the delivery of possession of the Airframe or any Engine to their respective manufacturers or certified maintenance providers for testing, services, repair, maintenance or overhaul work or for alterations or modifications in or additions to the Airframe or Engine to the extent required or permitted by the terms of Section 4.04 hereof; (iv) transfer or permit the transfer of possession of the Airframe or any Engine pursuant to a contract or agreement with the Government or pursuant to the Civil Reserve Air Fleet Program ("CRAF Program") administered pursuant to Executive Order No. 12056, as amended, or any similar or substitute programs, so long as the Company or any lessee shall promptly notify the Indenture Trustee upon such transfer of possession and provide the Indenture Trustee with the name and address of the Contracting Officer or representative of the Military Aircraft Command of the United States Air Force to whom notices must be given in respect of the Aircraft; (v) install or permit the installation of an Engine on an airframe which is owned by the Company or any lessee free and clear of all Liens, except (A) Liens of the type permitted under Section 4.01 hereof; (B) Liens which apply only to the engines (other than an Engine), appliances, parts, instruments, appurtenances, accessories, furnishings and other equipment (other than Parts) installed on such airframe and which do not apply to substantially all of such airframe; and (C) the rights of an Air Carrier under normal interchange or pooling agreements which are customary in the airline industry and do not contemplate or require the transfer of title to such airframe or the engines installed on it; (vi) install or permit the installation of an Engine on an airframe leased to the Company or any lessee or purchased by the Company subject to a conditional sale or other security agreement, provided that (A) such lease, conditional sale or other security agreement does not cover the Engine so installed and the Indenture Trustee shall have received from the lessor, conditional vendor or secured party of such airframe, an agreement (which may be the lease or conditional sale or other security agreement covering such airframe), whereby such lessor, conditional vendor or secured party expressly agrees that neither it nor its successors or assigns will acquire or claim any right, title or interest in any Engine by reason of such Engine being installed on such airframe at any time, and (B) such airframe is and remains free and clear of all Liens except the rights of the parties to the lease or conditional sale or other security agreement covering such airframe and Liens of the type permitted by subparagraph (v) of this Section 4.02(c); (vii) install or permit the installation of an Engine on an airframe owned by the Company, leased to the Company or purchased by the Company subject to a conditional sale or other security agreement under circumstances where neither subparagraph (v) nor subparagraph (vi) of this Section 4.02(c) is applicable, provided that such installation shall be deemed an Event of Loss with respect to such Engine and the Company shall comply with Section 4.05(d) hereof in respect of such Engine, the Indenture Trustee not intending to waive any right or interest it may have to or in such Engine under applicable law until compliance by the Company with such Section 4.05(d); and (viii) enter into a wet lease under which the Company has effective control of the Aircraft in the ordinary course of the Company's business which shall not be considered a transfer of possession hereunder, provided that the Company's obligations under this Indenture shall continue in full force and effect notwithstanding any such wet lease. (d) Rights of Transferee. Notwithstanding the provisions of Section 4.02(c) hereof, the rights of any transferee who takes possession of the Aircraft, the Airframe or any Engine by reason of a transfer permitted by Section 4.02(c) hereof shall be subject and subordinate to, and any lease or wet lease permitted by Section 4.02(c) hereof shall be made expressly subject and subordinate to, all the terms of this Indenture, including, without limitation, the Indenture Trustee's right to repossession pursuant to Article 6 hereof, and to avoid such lease upon such repossession, and the Company shall remain primarily liable for the performance of all the terms of this Indenture to the same extent as if such lease or transfer had not occurred. Any such lease shall include appropriate provisions for the maintenance and insurance of the Aircraft, the Airframe or any Engine in accordance with the provisions of this Indenture and shall provide assurances reasonably satisfactory to the Indenture Trustee that the lessee may not further lease any of such equipment. The Company shall notify the Indenture Trustee within 60 days after any lease and will promptly upon request from the Indenture Trustee furnish to the Indenture Trustee a copy of any lease which has a term in excess of six (6) months and deliver to the Indenture Trustee all other documents required hereunder relating to such lease or transfer of possession. (e) Insignia. The Company agrees to affix to and maintain in the cockpit of the Airframe, in a clearly visible location, and on each Engine, a clearly visible metal nameplate bearing the inscription "Mortgaged To: ____________, as Indenture Trustee". SECTION 4.03. Replacement and Pooling of Parts. (a) Replacement of Parts. The Company, at its own cost and expense, will replace or cause to be replaced as promptly as practicable all Parts which may from time to time be incorporated or installed in or attached to the Airframe or any Engine and which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use for any reason, except as otherwise provided in Section 4.04 hereof. In addition, the Company may, at its own cost and expense, remove or cause to be removed in the ordinary course of maintenance, service, repair, overhaul or testing, any Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use, provided that the Company, except as otherwise provided in Section 4.04 hereof, will, at its own cost and expense, replace such Parts as promptly as practicable. All replacement Parts shall be free and clear of Liens (except for pooling arrangements to the extent permitted by Section 4.03(b) hereof and Liens of the type permitted under Sections 4.01(d) and (e) hereof) and shall be in as good operating condition as, and shall have a value and utility at least equal to, the Parts replaced, assuming such replaced Parts were in the condition and repair required to be maintained by the provisions of this Indenture. Immediately upon any replacement Part becoming incorporated or installed in or attached to the Airframe or any Engine, and without further act (subject only to a pooling arrangement to the extent permitted by Section 4.03(b) hereof) such replacement Part shall become subject to the Lien of this Indenture and shall be deemed part of the Airframe or any Engine, for all purposes to the same extent as the Parts originally incorporated or installed in or attached to the Airframe or such Engine. (b) Pooling of Parts. Any Part removed from the Airframe or any Engine as permitted in Section 4.03(a) hereof may be subjected by the Company to any normal pooling arrangement customary in the airline industry and entered into with other Air Carriers in the ordinary course of the Company's business, provided that the Part replacing such removed Part shall be incorporated or installed in or attached to the Airframe or such Engine, as promptly as practicable after the removal of such removed Part. In addition, any replacement Part when incorporated or installed in or attached to the Airframe or any Engine in accordance with Section 4.03(a) hereof may be owned by another Air Carrier subject to such normal pooling arrangement, provided that the Company, at its own cost and expense and as promptly as possible, either: (A) causes title to such replacement Part to vest in the Company free and clear of all Liens (other than Liens permitted under Sections 4.01(a), (b), (c) and (e) hereof) and become subject to the Lien of this Indenture; or (B) replaces such replacement Part by incorporating or installing in or attaching to the Airframe or such Engine a further replacement Part owned by the Company free and clear of all Liens (other than Liens permitted under Section 4.01(a), (b), (c) and (e) hereof) and causes such replacement Part to become subject to the Lien of this Indenture. All replacement Parts shall meet the standards set forth in Section 4.03(a) hereof. SECTION 4.04. Alterations, Modifications and Additions. The Company, at its own cost and expense, shall make or cause to be made such alterations and modifications in and additions to the Aircraft as may be required from time to time to meet the applicable requirements of the Aeronautics Authority or any other governmental authority with jurisdiction over the Aircraft and/or the Company's operations and aircraft; provided, however, that the Company may in good faith contest the validity or application of any such requirements in any reasonable manner that does not adversely affect the first and prior perfected Lien and security interest of the Indenture or the interests of the Indenture Trustee or the Holders in the Indenture Estate. In addition, the Company, at its own cost and expense, may from time to time make such alterations and modifications in and additions to the Airframe or any Engine as the Company may deem desirable in the proper conduct of its business, including, without limitation, removal of Obsolete Parts, provided that no such alteration, modification, addition or removal shall materially diminish the value or utility of the Airframe or any Engine or impair its condition or airworthiness below its value, utility, condition and airworthiness immediately prior to such alteration, modification, addition or removal, assuming that the Airframe or such Engine was then in the condition and airworthiness required to be maintained by the terms of this Indenture, except that the value (but not the utility, condition or airworthiness) of the Airframe or any Engine may be reduced by the value of any such obsolete Parts which shall have been removed. Each Part incorporated or installed in or attached or added to the Airframe or any Engine as the result of any alteration, modification, removal or addition made pursuant to this Section 4.04 shall without further act become subject to the Lien of this Agreement. Notwithstanding the foregoing, the Company may remove any such Part if: (i) such Part is in addition to, and not in replacement of or substitution for, any Part originally incorporated or installed in or attached or added to the Airframe or such Engine on the Delivery Date or any Part in replacement of, or substitution for, any such Part; (ii) such Part is not required to be incorporated or installed in or attached or added to the Airframe or such Engine pursuant to the terms of Section 4.02 hereof or the first sentence of this Section 4.04; and (iii) such Part can be removed from the Airframe or such Engine without (A) causing material damage to the Aircraft or diminishing or impairing the utility, condition or airworthiness required to be maintained by the terms of this Indenture or (B) diminishing the value or utility which the Airframe or such Engine would have had at such time had such alteration, modification, removal or addition not occurred assuming the Aircraft was then in the condition required to be maintained by the terms of this Indenture. Upon the removal by the Company of any such Part as provided in the preceding sentence such Part shall no longer be subject to the Lien of this Indenture or deemed a Part. SECTION 4.05. Loss, Destruction, Registration. (a) Company's Election Rights. The Company shall notify the Indenture Trustee as soon as practicable but in no event more than 10 Business Days following the occurrence of an event which constitutes or might constitute an Event of Loss with respect to the Airframe or with respect to the Airframe and the Engines or engines then installed on the Airframe. By written notice to the Indenture Trustee given within 60 days of the occurrence of any Event of Loss, the Company shall elect the alternative set forth in Section 4.05(b) hereof or the alternative set forth in Section 4.05(c) hereof. The Company's failure to make such election within said 60-day period shall be deemed to be an election of the alternative set forth in Section 4.05(b) hereof. (b) Prepayment of Equipment Purchase Certificates. The Company shall, if it has so elected or is deemed to have so elected under 4.05(a) hereof, pay to the Indenture Trustee, by wire transfer of immediately available funds on a date designated by the Company upon 30 days' irrevocable notice but in no event later than 180 days following the occurrence of the Event of Loss (the earlier of such dates in clause (A) or the date provided in clause (B) being referred to herein as the "Loss Payment Date"), the outstanding principal amount of the Equipment Purchase Certificates and all accrued and unpaid interest thereon together with all other amounts due and owing under this Indenture or the Loan Agreement, including without limitation, but without any Make-Whole Premium, in respect of such prepayment. Upon receipt by the Indenture Trustee of such amounts, the Indenture Trustee shall apply such amounts as provided in Section 5.01 hereof and thereupon the Lien of this Indenture shall terminate. (c) Replacement of Airframe and Engines. So long as no Event of Default shall have occurred and be continuing, and subject to Section 4.05(a) hereof, if the Company has elected to replace the Airframe and Engines pursuant to this Section 4.05(c), the Company shall, within one hundred eighty (180) days after the occurrence of such Event of Loss, as replacement for the Airframe and Engines with respect to which an Event of loss has occurred, substitute for the Aircraft subject to the Event of Loss, by causing to be subjected to the Lien of this Indenture, a [Manufacturer-Model] airframe and a number of engines equal to the number of Engines with respect to which the Event of Loss has occurred of the same or an improved make and model (or Replacement Engines), owned by the Company free and clear of all Liens not excepted in Sections 4.01(a), (b), (c) and (e) hereof, duly certified as an airworthy aircraft by the Aeronautics Authority and having a value and utility at least equal to, and being in as good operating condition as, the Airframe and Engines with respect to which such Event of Loss occurred, assuming that the Airframe and Engines were then in the condition and airworthiness required to be maintained by the terms of this Indenture immediately prior to the occurrence of such Event of Loss. In such case, and as a condition to such substitution, the Company, at its own cost and expense, will also promptly: (i) furnish the Indenture Trustee with a certificate of a nationally recognized aircraft appraiser reasonably satisfactory to the Indenture Trustee certifying that such replacement airframe and engines have a value and utility at least equal to, and are in as good operating condition as, the Airframe and Engines replaced, assuming such Airframe and Engines were in the condition and repair required by the terms of this Indenture immediately prior to the occurrence of such Event of Loss; (ii) furnish the Indenture Trustee with such evidence as the Indenture Trustee may reasonably request of compliance with the insurance provisions of Section 4.06 hereof with respect to such replacement airframe and engines; (iii) cause an Indenture Supplement with respect to such replacement airframe and engines to be duly executed by the Company and the Indenture Trustee and recorded pursuant to the Act, or the applicable laws, rules and regulations of any other jurisdiction in which the Aircraft may then be registered as permitted by Section 4.02(b) hereof, in order that the Lien of this Indenture shall constitute a first and prior perfected Lien and security interest on and in respect of such replacement airframe and engines; (iv) take such other action as the Indenture Trustee may reasonable request in order that such replacement airframe and engines shall be due and properly subjected to the Lien of this Indenture to the same extent as the replaced Airframe and Engines. Each replacement airframe shall be deemed an "Airframe," each such replacement engine shall be deemed an "Engine" and each such replacement airframe and engine shall be deemed part of the same Aircraft as was the Airframe or Engine replaced. (d) Event of Loss with Respect to an Engine. Upon the occurrence of an Event of Loss with respect to an Engine under circumstances in which there has not occurred an Event of Loss with respect to the Airframe, the Company shall give the Indenture Trustee prompt written notice thereof and shall, as soon as practicable but in any event within one hundred twenty (120) days after the occurrence of such Event of Loss, substitute (by subjection to the Lien of this Indenture) for the Engine with respect to which such Event of Loss occurred, a Replacement Engine, free and clear of all Liens not excepted in Sections 4.01(a), (b), (c) and (e) hereof and having a value and utility at least equal to, and being in as good operating condition as, the Engine with respect to which such Event of Loss occurred, assuming such Engine was of the value and utility and in the condition and repair required by the terms of this Indenture immediately prior to the occurrence of such Event of Loss. The standards set forth in this Section with respect to Replacement Engines shall apply upon any replacement or substitution of an Engine with a Replacement Engine pursuant to any other provision of this Indenture. Prior to or at the time of any substitution of an Engine pursuant to this Section 4.05(d), the Company, at its own cost and expense will: (i) furnish the Indenture Trustee with such evidence of compliance with the insurance provisions of Section 4.06 hereof with respect to such Replacement Engine as the Indenture Trustee may reasonably request; (ii) furnish the Indenture Trustee with a certificate of an aircraft advisor (who must be a nationally recognized aircraft authority) certifying that such Replacement Engine has a value and utility at least equal to, and is in as good operating condition as, the Engine replaced, assuming such Engine was in the condition and repair required by the terms of this Indenture immediately prior to the occurrence of such Event of Loss; (iii) cause an Indenture Supplement with respect to such Replacement Engine to be duly executed by the Company and the Indenture Trustee and recorded pursuant to the Act, or the applicable laws, rule and regulations of any other jurisdiction in which the Aircraft may be registered as permitted by Section 4.02(b) hereof in order that the Lien of this Indenture shall constitute a first and prior and perfected Lien and security interest on and in respect of such Replacement Engine; (iv) take such other action, as the Indenture Trustee may reasonably request in order that such Replacement Engine be duly and properly subjected to the Lien of this Indenture to the same extent as the replaced Engine. (e) Requisition of an Airframe and the Installed Engines for Use by Government. In the event of the requisition for use by the Government or any other government of registry of the Aircraft, or any agency or instrumentality thereof of the Airframe and the Engines or engines then installed on the Airframe, which requisition does not constitute an Event of Loss, the Company shall promptly notify the Indenture Trustee of such requisition and all of the Company's obligations under this Indenture with respect to such Airframe and Engines or engines shall continue to the same extent as if such requisition had not occurred. All payments received by the Company, any lessee or the Indenture Trustee from the Government or other government of registry of the Aircraft or any agency or instrumentality thereof for such use of the Airframe and Engines or engines shall be paid to or returned by the Indenture Trustee for application in accordance with this Indenture. (f) Requisition for Use by Government of an Engine not Installed on the Airframe. In the event of the requisition for use by the Government or any other government of registry of the Aircraft or any agency or instrumentality thereof of any Engine not then installed on the Airframe, the Company shall replace such Engine by complying with the terms of Section 4.05(d) hereof to the same extent as if an Event of Loss had occurred with respect to such Engine, and any payments received by the Company, any lessee or the Indenture Trustee from the Government or other government of registry or any instrumentality thereof with respect to such requisition shall, be paid over to or retained by the Company, provided that the Company shall have fully performed its obligations under Section 4.05(d) hereof. (g) Other Payments. Any payments (other than insurance proceeds, the application of which is provided in Section 4.06 hereof) received at any time by the Company or the Indenture Trustee from any governmental authority or any other Person in connection with an Event of Loss with respect to the Airframe or the Airframe and the Engines or engines then installed on the Airframe will be applied towards the Company's obligations under Section 4.05(b) hereof or if the Company has made the election under Section 4.05(c) hereof or if the Event of Loss relates to an Engine not then installed on the Airframe, such payments shall be paid over to the Company, provided that the Company shall have fully performed its obligations pursuant to Section 4.05(c) or (d) hereof, as the case may be. SECTION 4.06. Insurance. (a) Public Liability and Property Damage Liability Insurance. (i) The Company, at its own cost and expense, will maintain or cause to be maintained with respect to the Aircraft, comprehensive aircraft liability insurance including, without limitation, passenger legal liability and property damage liability insurance and cargo legal liability in such amounts, against such risks (including, without limitation, contractual liability and war risk and allied perils liability), with such retentions as the Company customarily maintains with respect to similar aircraft and engines which comprise the fleet of the Company (subject to the limitations set forth in Section 4.06(f) hereof), and with such insurers (which shall be insurers of recognized responsibility), and such insurance against such other risks as is usually carried by similar corporations engaged in the same or similar business and similarly situated as the Company and owning or operating aircraft and engines similar to the Aircraft and Engines. (ii) Notwithstanding Section 4.06(a)(i) hereof, in the event of the requisition for use by the Government of the Airframe or the Airframe and the Engines or engines then installed on the Airframe, the Company shall maintain throughout the period of such requisition such insurance as would otherwise be required under this Section 4.06 (except to the extent that the Company certifies that such insurance is unobtainable after diligent effort or is obtainable only at unreasonably high rates or on unduly burdensome terms and conditions); provided that the Indenture Trustee shall accept, in lieu of such insurance coverage, indemnification or insurance from the Government which is substantially the same as otherwise required under this Section 4.06. (iii) Any policy of insurance carried and maintained in accordance with this Section 4.06(a), and any policy taken out in substitution or replacement for any such policy subject to the terms, conditions and limitations thereof, shall: (A) name or be amended to name the Indenture Trustee as an additional insured; (B) provide that, in respect of the interest of the Additional Insured in such policies, the insurance shall not be invalidated by any action or inaction of the Company or the Additional Insured as defined under the policy of insurance required under this Section 4.06 and shall insure such Additional Insured regardless of any breach or violation of any warranty, declaration or condition contained in such policies by the Company or as defined under the policy of insurance required under this Section 4.06; (C) provide that if such insurance is cancelled for any reason, or any substantial change is made in the policies which adversely affect the coverage required herein, or if such insurance is allowed to lapse for nonpayment of premium, such cancellation, change or lapse shall not be effective as to the Additional Insured for thirty (30) days (except in the case of war risk coverage in which event the applicable period shall be seven (7) days or such other period as may be customary) after receipt by such Additional Insured of written notice from such insurers of such cancellation, change or lapse; (D) provide that the Additional Insured shall have any obligation or liability for premiums or other payments, if any, in connection with such insurance; (E) provide that the insurers shall waive any rights of subrogation against the Additional Insured, to the extent that the Company has waived its rights under this Indenture; provided that the exercise by insurers of rights of subrogation derived from rights retained by the Company shall not, in any way, delay payment of any claim that would otherwise be payable by such insurers but for existence of rights of subrogation derived from rights retained by the Company; (F) provide that such insurer shall waive the right of such insurer to any set-off or counterclaim or any other deduction, whether by attachment or otherwise, in respect of any liability of the Additional Insured; (G) provide that all of the provisions of such policy shall operate in the same manner as if there were a separate policy covering the Additional Insured; provided that such policies shall not operate to increase any insurer's limit of liability; and (H) be primary, without right of contribution from any other insurance which is carried by the Additional Insured with respect to its interest in the Aircraft. (b) Insurance Against Loss or Damage to Aircraft and Engines. The Company, at its own cost and expense, shall maintain or cause to be maintained in effect, with insurers of recognized responsibility, all-risk ground and flight aircraft hull insurance covering the Aircraft and all-risk coverage with respect to any Engines and Parts while temporarily removed from the Aircraft and not replaced by similar Engines or Parts, including in each case war-risk and allied perils, hijacking (air piracy) and governmental confiscation and expropriation insurance (except in the country of registry) with such retentions (subject to the limitations set forth in Section 4.06(f) hereof) and in such form and amounts as the Company customarily maintains with respect to the aircraft in the Company's fleet of the same type and model and operated on the same routes as the Aircraft (except that the Company shall be required to maintain war-risk, hijacking (air piracy) and governmental confiscation and expropriation insurance (except in the country of registry) if the Aircraft is operated on routes where the custom is for major international Air Carriers flying comparable routes to carry such insurance), provided that such insurance shall at all times while the Aircraft is subject to the Lien of this Indenture be for an amount not less than an amount equal to ___% of the aggregate outstanding principal amount of the Equipment Purchase Certificates at the date of determination (the "Threshold Value"). (ii) Any policies carried and maintained in accordance with this Section 4.06(b) and any policies taken out in substitution or replacement for any such policies subject to the terms, conditions and limitations thereof shall: (A) name or be amended to name the Indenture Trustee as an additional insured and as loss payee (the "Loss Payee"); (B) provide with respect to coverage provided under this Section 4.06(b), that (i) in the event of a loss involving proceeds in excess of $5,000,000, the proceeds in respect of such loss up to an amount equal to the Threshold Value shall be payable to the Indenture Trustee, it being understood and agreed that in the case of any payment to the Indenture Trustee otherwise than in respect of an Event of Loss, the Indenture Trustee shall, unless a Payment Default or an Event of Default shall have occurred and be continuing, upon receipt of evidence satisfactory to it that the damage giving rise to such payment shall have been repaired or that such payment shall then be required to pay for repairs then being made, pay the amount of such payment to the Company or its order, and (ii) the entire amount of any loss involving proceeds in the aggregate of $5,000,000 or less or the amount of any proceeds of any loss in excess of the Threshold Value for the Aircraft shall be paid to the Company or its order unless a Payment Default or Event of Default shall have occurred and be continuing and the insurers have been notified thereof by the Indenture Trustee; (C) provide that if such insurance is cancelled for any reason or any substantial change is made in the policies which adversely affects the coverage required herein, or if such insurance is allowed to lapse for nonpayment of premium, such cancellation, change or lapse shall not be effective as to the Additional Insured or the Loss Payee for thirty days (except in the case of war-risk coverage in which event the applicable period shall be seven (7) days or such other period as may be customary) after receipt by the Indenture Trustee, whether as Additional Insured or the Loss Payee, of written notice from such insurer of such cancellation, change or lapse; (D) provide that, in respect of the interest of the Indenture Trustee as Additional Insured or Loss Payee in such policies the insurance shall not be invalidated by any action or inaction of the Company and shall insure the Indenture Trustee as Additional Insured and Loss Payee regardless of any breach or violation of any warranty, declaration or condition in such policies by the Company as defined under the policy of insurance required under this Section 4.06(b); (E) provide that the insurers shall waive any rights of subrogation against the Indenture Trustee as Loss Payee and Additional Insured, to the extent that the Company has waived its rights under this Indenture; provided that the exercise by insurers of rights of subrogation derived from rights retained by the Company shall not, in any way, delay payment of any claim that would otherwise be payable by such insurers but for the existence of right of subrogation derived from rights retained by the Company; (F) provide that such insurer shall waive any right of such insurer to any set-off or counterclaim or any other deduction, whether by attachment or otherwise, in respect of any liability of the Indenture Trustee as Additional Insured or Loss Payee; (G) be primary and without rights of contribution from any other insurance which is carried by the Indenture Trustee with respect to its interest in the Aircraft; and (H) provide that the Indenture Trustee, whether as Additional Insured or Loss Payee, shall have no obligation or liability for premiums or other payments, if any, in connection with such insurance. (c) Application of Insurance Proceeds. (i) All insurance proceeds (other than proceeds from policies carried by the Indenture Trustee, the Agent or any Holder) received under policies described in Section 4.05(b) hereof as the result of the occurrence of an Event of Loss with respect to the Airframe or an Engine will be applied as follows: (A) if such proceeds are received with respect to the Airframe or with respect to the Airframe and the Engines or engines then installed on the Airframe and the Company has elected or is deemed to have elected the alternative set forth in Section 4.05(b) hereof, so much of such proceeds as shall not exceed the amounts required to be paid by the Company pursuant to said Section 4.05(b) hereof shall be applied in reduction of the Company's obligation to pay such amounts if not already paid by the Company, or if already paid by the Company, shall be applied to reimburse the Company for its payment of such amounts, provided that no Payment Default or Event of Default shall have occurred and be continuing and the balance, if any, of such proceeds remaining will be paid to the order of the Company; if and so long as the foregoing proviso is not satisfied, such proceeds shall be held pursuant to Section 5.04 hereof as security for the Company's obligations hereunder; or (B) if such proceeds are received with respect to the Airframe or the Airframe and the Engines or engines then installed on the Airframe and the Company has elected the alternative set forth in Section 4.05(c) hereof, or if such proceeds are received with respect to an Engine not then installed on the Airframe and not replaced by an Engine or engine under the circumstances contemplated by Section 4.05(d) hereof, all such proceeds shall be paid to the Indenture Trustee for disbursement to the order of the Company, after the Company shall have fully performed the terms of Sections 4.05(c) or 4.05(d) hereof, as applicable, with respect to the Event of Loss for which such proceeds are paid, provided that no Default or Event of Default shall have occurred and be continuing; if and so long as the foregoing proviso is not satisfied, such proceeds shall be held pursuant to Section 5.04 hereof as security for the Company's obligations hereunder. (ii) The insurance proceeds of any property damage loss not constituting an Event of Loss with respect to the Airframe or an Engine will be applied in payment (or to reimburse the Company) for repairs or for replacement property in accordance with Sections 4.02 and 4.03 hereof, if not already paid for by the Company, and any balance remaining after compliance with said Sections 4.02 and 4.03 hereof with respect to such loss shall be paid to the order of the Company, provided that no Payment Default or Event of Default shall have occurred and be continuing; if and so long as the foregoing proviso is not satisfied, such proceeds shall be held pursuant to Section 5.04 hereof as security for the Company's obligations hereunder. (iii) If the Indenture Trustee becomes subject to any claim covered by any insurance policy maintained pursuant to this Section 4.06, the Company shall make available any information required by the Indenture Trustee in connection with such claim. (d) Reports. On or before the Delivery Date and thereafter annually on or before the scheduled expiration date for such policy, while the Equipment Purchase Certificates are outstanding, the Company's aviation insurance broker will furnish to the Indenture Trustee a report, signed by the Company's independent aviation insurance broker, stating the types of coverage and limits carried and maintained on the Aircraft and certifying that such insurance complies with the terms and conditions of this Indenture. The Company will cause its aviation insurance broker to advise the Indenture Trustee in writing promptly of any default in the payment of any premium and of any other act or omission on the part of the Company of which it has knowledge and which might cause cancellation of all or any part of any insurance carried by the Company with respect to the Aircraft. The Company will cause such insurance broker to agree to advise the Indenture Trustee in writing if and when it becomes evident to such broker that any insurance policy carried and maintained on the Aircraft pursuant to this Section 4.06 will not be renewed at the expiration date. If the Company shall fail to maintain insurance as required hereby, the Indenture Trustee may, at its option, provide such insurance, and in such event, the Company shall, upon demand, reimburse the Indenture Trustee for the cost of such insurance; provided, however, that no exercise of said option shall affect the provisions of this Indenture, including the provisions that failure by the Company to maintain the prescribed insurance shall constitute an Event of Default, or otherwise constitute a waiver of any other rights the Indenture Trustee may have against the Company. (e) Indenture Trustee's Insurance. The Indenture Trustee may insure the Airframe or any Engine at its own cost and expense, including insuring the Aircraft for amounts in excess of the Threshold Value, provided that any insurance so maintained by the Indenture Trustee shall not result in a reduction of coverage or amounts payable under insurance required or permitted to be maintained by the Company under this Section 4.06 or increase the cost to the Company of maintaining such insurance; provided further, that any insurance policies of the Indenture Trustee insuring the Airframe or any Engine shall provide for a release to the Company of any and all salvage rights in and to the Airframe or any Engine. (f) Self-Insurance. The Company may self-insure policies, the risks required to be insured against by Section 4.06(a) and Section 4.06(b) hereof in such reasonable amounts as are then applicable to other aircraft or engines of the Company of value comparable to the Aircraft, but in no case shall such self-insurance with respect to all aircraft in the Company's fleet in aggregate exceed for any 12-month policy year an amount equal to the lesser of (i) 50% of the highest insured value of any single aircraft in the Company's fleet and (ii) 1.5% of the average aggregate insured value from time to time of the Company's entire aircraft fleet, provided that a standard deductible per occurrence per aircraft not in excess of the amount customarily allowed as a deductible in the industry shall be permitted in addition to the above-mentioned self-insurance. SECTION 4.07. Inspection. At reasonable times, and (so long as no Event of Default shall have occurred and be continuing) upon at least five Business Days' prior written notice to the Company, the Indenture Trustee or its authorized representative, may inspect the Aircraft, (so long as no Event of Default shall have occurred and be continuing) upon at least 10 Business Days' prior written notice, all Aeronautics Authority-required books and records of the Company and any lessee relating to the maintenance of the Aircraft and such Persons shall keep any information obtained thereby confidential and shall not disclose the same to any Person, except (a) to the Indenture Trustee's counsel, independent insurance advisors or other agents, the Holders and any prospective purchaser of the Aircraft in connection with the Indenture Trustee's exercise of remedies following an Event of Default, each of whom agree to hold such information confidential, (b) as may be required by any statute, court or administrative order or decree or governmental ruling, regulation or demand or (c) as may be necessary for purposes of protecting the interests of any such Person or for enforcement of this Indenture by the Indenture Trustee; provided, however, that any and all disclosures permitted by (b) or (c) above shall be made only to the extent necessary to meet the specific requirements or needs of the Persons to whom such disclosures are hereby permitted; any such inspection of the Aircraft shall be a visual, walk-around inspection of the interior and exterior of the Aircraft and shall not include opening any panel, bays or the like without the express consent of the Company. Notwithstanding the previous sentence, the Indenture Trustee or its authorized representative shall (so long as no Event of Default shall have occurred and be continuing) be entitled to inspect the Aircraft only one time among themselves during any consecutive twelve month period. Neither the Indenture Trustee nor any Holder shall have any duty to make any inspection of the Aircraft and none of them shall incur any liability or obligation by reason of not making any such inspection. SECTION 4.08. Filings. So long as the Equipment Purchase Certificates remain unpaid, the Company will take, or cause to be taken, at the Company's cost and expense, such action with respect to the recording, filing, re-recording and re-filing of this Indenture, each Indenture Supplement and any financing statements or other instruments as are necessary, or as requested by the Indenture Trustee and appropriate, to maintain, so long as this Indenture is in effect, the perfection of the purchase money equipment security interest and the Lien created by this Indenture, or will furnish to the Indenture Trustee timely notice of the necessity of such action, together with such instruments, in execution form, and such other information as may be required to enable it to take such action at the Company's cost and expense in a timely manner. SECTION 4.09. Annual Opinion. So long as the Equipment Purchase Certificates remain unpaid, the Company shall furnish to the Indenture Trustee annually after the execution hereof (but not later than March 15 of each year) commencing with the year 199_, an opinion, reasonably satisfactory to the Indenture Trustee, of Special Aviation Counsel or other counsel reasonably satisfactory to the Indenture Trustee, with a copy to the Agent in the case of opinions delivered prior to the Refunding Date, stating: (i) that in the opinion of such counsel, except as otherwise noted in the opinion, such action has been taken with respect to the recording, filing, re-recording and re-filing of this Indenture, Indenture Supplement and any financing statement, continuation statement or other instruments, and all other action has been taken, as is necessary to maintain the perfection of the security interest created by this Indenture and reciting the details of such recording or other action or that in the opinion of such counsel no action is necessary to maintain the perfection of such security interest; (ii) specifying all other action which needs to be taken during the succeeding 14 months in order to maintain the perfection of such security interest; and (iii) stating that the Company is the owner of the legal title to the Aircraft, and the Aircraft is free and clear of all Liens, except the security interest created by this Indenture and such as are permitted by this Indenture. SECTION 4.10. Corporate Existence. So long as the Equipment Purchase Certificates remain unpaid, the Company shall at all times maintain its corporate existence except as permitted by Section 4.11 hereof and all of its rights, privileges and franchises necessary in the normal conduct of its business, except for any corporate right, privilege or franchise (i) that it determines, in its reasonable, good faith business judgment, is no longer necessary or desirable in the conduct of its business and (ii) the loss of which will not materially adversely affect or diminish the rights of the Holders. SECTION 4.11. Merger, Consolidation. So long as the Equipment Purchase Certificates remain unpaid, the Company shall not enter into any merger or consolidation, or convey, transfer or lease all or substantially all of its assets as an entirety to any Person, unless the surviving corporation or Person which acquires by conveyance, transfer or lease all or substantially all of the assets of the Company as an entirety (i) is a domestic corporation organized and existing under the laws of the United States or a political subdivision thereof, (ii) is a Citizen of the United States, (iii) is a certificated Air Carrier, (iv) expressly assumes by an instrument in writing in form and substance satisfactory to the Indenture Trustee all of the Company's obligations hereunder and under the other Operative Agreements, and the Company delivers such instrument to the Indenture Trustee, (v) provides an opinion from counsel to the Company which counsel shall be reasonably satisfactory to the Indenture Trustee and which opinion shall be reasonably satisfactory to the Indenture Trustee that such merger, consolidation, conveyance, transfer or lease and the instrument noted in clause (iv) above comply with this Section 4.11, that such instrument is a legal, valid and binding obligation of, and is enforceable against, such survivor or Person, and that all conditions precedent herein provided for relating to such transaction have been complied with, and (vi) immediately after such merger, consolidation or conveyance, transfer or lease, as the case may be, the surviving company is in compliance with all of the terms and conditions of this Indenture and each other Operative Agreement, provided that no such merger, consolidation or conveyance, transfer or lease shall be permitted if the same gives rise to an Event of Default. Upon any consolidation or merger, or any conveyance, transfer or lease of all or substantially all of the assets of the Company and the satisfaction of the conditions specified in this Section 4.11, the successor corporation formed by such consolidation or into which the Company is merged or the Person to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture and the other Operative Agreements to which the Company is a party with the same effect as if such successor corporation had been named as the Company herein and therein. SECTION 4.12. Financial Information. So long as any of the Equipment Purchase Certificates remain unpaid, the Company agrees to furnish to the Indenture Trustee: (i) as soon as available, but in any event within one hundred twenty (120) days after the end of each fiscal year of the Company, a consolidated balance sheet of the Company as of the end of such fiscal year, and the related consolidated statements of income, retained earnings and cash flows of the Company for the fiscal year then ended as prepared and certified by the Company's independent certified public accountants, including their opinion; (ii) within sixty (60) days after the end of the first, second and third quarterly accounting periods in each fiscal year of the Company, a consolidated balance sheet of the Company prepared by the Company as of the close of the accounting period then ended, together with the related consolidated statements of income, retained earnings and cash flows of the Company for such accounting period certified by the chief accounting officer or a financial vice president of the Company; (iii) promptly upon their general transmission, copies of all regular and periodic reports furnished by the Company to its stockholders; (iv) promptly after filing with the SEC, copies of the Company's annual reports on Form 10-K, quarterly reports on Form 10-Q and, if requested, any registration statement or prospectus filed by the Company with any securities exchange or with the SEC; (v) promptly upon any officer of the Company obtaining knowledge of any condition or event which constitutes an Event of Default, an officer's certificate specifying the nature and period of existence thereof and what action the Company has taken or is taking or proposes to take with respect thereto; and (vi) from time to time, such other financial information as the Indenture Trustee, the Agent or any Holder may reasonably request. Concurrently with the delivery of the financial statements referred to in clause (i) above, the Company shall deliver to the Indenture Trustee a certificate of the Company, signed by any one of the President, the Chief Financial Officer, the General Counsel, the Treasurer or the principal accounting officer of the Company, stating that the signer, or an officer reporting to same, is familiar with the relevant terms of this Indenture and the signer has reviewed, or has caused to be made under such person's supervision a review, of the activities of the Company and that, to the best of his or her knowledge, there does not exist an Event of Default. SECTION 4.13. Representations and Warranties of the Company. The Company represents and warrants that, on the date hereof: (i) the Company is a corporation duly organized and validly existing in good standing under the laws of the State of Delaware with its principal place of business and chief executive office in Memphis, Tennessee, and is duly qualified to do business as a foreign corporation in good standing in all jurisdictions in which it has intrastate routes, or offices or major overhaul facilities or in which other activities of the Company require such qualification; (ii) the Company has full power, authority and legal right to conduct its current business and operations as currently conducted and to own or hold under lease its properties and to enter into and perform its obligations under the Operative Agreements to which it is a party (the "Company Documents"); (iii) the Company is an "air carrier" within the meaning of the Federal Aviation Act of 1958, as amended to the date of recodification (the "Act"), a holder of a certificate under Sections 41102(a) and 41103 of the Act and an "air carrier operating certificate" issued under Chapter 447 of the Act for aircraft capable of carrying ten (10) or more individuals or 6,000 pounds or more of cargo; (iv) the Company possesses all necessary certificates, franchises, licenses, permits, rights and concessions and consents which are material to the operation of the routes flown by it and the conduct of its business and operations as currently conducted; (v) the Company Documents have each been duly authorized, executed and delivered by the Company and constitute, or when executed and delivered by the Company will constitute, the legal, valid and binding obligations of the Company enforceable against it in accordance with the terms thereof except as such enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization or other similar laws of general application to or affecting the enforcement of creditors' rights, or equitable principles; (vi) no authorization, consent or approval of, notice to or filing with any governmental authority is required for the execution, delivery or performance by the Company of the Company Documents or for the use and maintenance of the Aircraft except for those that have been duly made, given or accomplished; and (vii) neither the execution, delivery or performance by the Company of the Company Documents, nor compliance with the terms and provisions hereof or thereof, conflicts or will conflict with or will result in a breach or violation of any of the terms, conditions or provisions of, or will require any consent or approval under, any law, governmental rule or regulation or the charter documents, as amended, or bylaws, as amended, of the Company or any order, writ, injunction or decree of any court or governmental authority against the Company or by which it or any of its properties is bound or any indenture, mortgage or contract or other agreement or instrument to which the Company is a party or by which it or any of its properties is bound, or constitutes or will constitute a default thereunder or will result in the imposition of any Lien (other than the Lien of this Indenture) upon any of its properties. SECTION 4.14. Survival of Representations and Warranties. The representations and warranties of the Company shall survive the Delivery Date hereunder and the expiration or termination of this Indenture. ARTICLE 5 RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE INDENTURE ESTATE SECTION 5.01. Distribution of Principal and Interest. Except as otherwise provided in Section 5.03 hereof, (a) each payment or prepayment of principal of Equipment Purchase Certificates by the Company shall be made for the account of the Holders pro rata in accordance with the respective unpaid principal amounts of the Equipment Purchase Certificates held by them and (b) each payment of interest or Make-Whole Premium on Equipment Purchase Certificates by the Company shall be made for the account of the Holders pro rata in accordance with the amounts of interest or Make-Whole Premium, as the case may be, on the Equipment Purchase Certificates then due and payable to the Holders. SECTION 5.02. Intentionally Left Blank. SECTION 5.03. Payments during Continuance of Event of Default. All payments received and amounts held or realized by the Indenture Trustee after an Event of Default shall have occurred and be continuing (including any amounts realized by the Indenture Trustee from the exercise of any remedies pursuant to Article 6), as well as all payments or amounts then held or thereafter received by the Indenture Trustee as part of the Indenture Estate while such Event of Default shall be continuing, shall be distributed by the Indenture Trustee in the following order of priority: first, so much of such payments or amounts as shall be required to pay the Indenture Trustee all amounts then due it pursuant to Sections 8.05 and 7.05(b) hereof shall be applied to pay the Indenture Trustee such amounts; second, so much of such payments or amounts remaining as shall be required to pay the expenses incurred, or in the judgment of the Indenture Trustee expected to be incurred, in using, operating, storing, leasing, controlling or managing the Indenture Estate, and in all maintenance, repairs, replacements, alterations, additions and improvements and in making all payments which the Indenture Trustee may be required or may elect to make, if any, for taxes, assessments, insurance or other proper charges upon the Indenture Estate or any part thereof (including the employment of engineers and accountants to examine and make reports upon the properties, books and records of the Company), or for the satisfaction of Liens, if any, prior to the Lien of this Indenture; third, so much of such aggregate amount remaining as shall be required to reimburse the Holders for payment made by them to the Indenture Trustee pursuant to Section 7.05 hereof (to the extent not previously reimbursed), to be distributed to the Holders ratably, without priority of one over any other, in the proportion of the amounts of such unreimbursed payment made pursuant to Section 7.05 hereof; fourth, so much of such payments or amounts remaining as shall be required to pay any Make-Whole Premium, if any, and any other amounts owing to the Holders under this Indenture and the other Operative Agreements in respect of the Equipment Purchase Certificates (other than principal of and interest on the Equipment Purchase Certificates) shall be applied ratably to the payment of such amounts; fifth, so much of such payments or amounts remaining as shall be required to pay the unpaid principal of and interest on the Equipment Purchase Certificates, shall be applied to the payment of such amounts; and sixth, the balance, if any, of such payments or amounts remaining thereafter shall be held by the Indenture Trustee as collateral security for the obligations secured hereby until such time as no Event of Default shall be continuing hereunder or the Equipment Purchase Certificates have been accelerated and all amounts due thereon have been paid, at which time such payments or amounts shall be distributed to the Company. SECTION 5.04. Funds Held by Indenture Trustee; Investments. At any time and from time to time, so long as no Event of Default shall have occurred and be continuing, the Indenture Trustee shall, upon the written instructions of the Company, invest and reinvest in Permitted Investments as specified in the written instructions of the Company, any monies on deposit with the Indenture Trustee as part of the Indenture Estate, and sell any Permitted Investments, in either case, at such prices, including accrued interest, as are set forth in the written instructions of the Company, and such Permitted Investments shall be held by the Indenture Trustee until so sold in trust as part of the Indenture Estate; provided, that the Company shall upon demand pay to the Indenture Trustee the amount of any loss realized upon maturity, sale or other disposition of any Permitted Investments and, so long as no Event of Default shall have occurred and be continuing, be entitled to receive from the Indenture Trustee, and the Indenture Trustee shall promptly pay to the Company, any profit, income interest, dividend or gain realized upon maturity, sale or other disposition of any Permitted Investment. The Indenture Trustee shall not be responsible for any losses on any investments or sales of Permitted Investments made pursuant to the procedure specified in this Section 5.04. An account statement delivered by the Indenture Trustee to the Company shall be deemed written confirmation by the Company that the investment transactions identified therein accurately reflect the investment directions given to the Indenture Trustee by the Company, unless the Company notifies the Indenture Trustee in writing to the contrary within ten (10) days of the date of receipt of such statement. ARTICLE 6 EVENTS OF DEFAULT; REMEDIES OF THE INDENTURE TRUSTEE UPON AN EVENT OF DEFAULT SECTION 6.01. Events of Default. The following events shall constitute "Events of Default" and each such Event of Default shall be deemed to exist and continue so long as, but only so long as, it shall not have been remedied: (a) the Company shall fail to make any payment of principal or Make-Whole Premium, as the case may be, or interest on any Equipment Purchase Certificates or any fee payable under Section 2.04 of the Loan Agreement within five (5) Business Days after the date when due; or the Company shall fail to pay any other amount owing hereunder or under the Equipment Purchase Certificates within 30 days after demand therefor by the Indenture Trustee; or (b) (i) the Company shall fail to procure, carry and maintain insurance on the Aircraft at any time in accordance with the provisions of Section 4.06 hereof or such insurance lapses or is cancelled, provided that no such lapse or cancellation shall constitute an Event of Default until the earlier of 30 days (seven days or such shorter time as may be standard in the industry with respect to war risk coverage) after receipt by the Indenture Trustee of written notice of such lapse or cancellation and the date that such lapse or cancellation is effective as to the Indenture Trustee and provided further, that such failure for a period of not more than 30 days shall not constitute an Event of Default as long as the Aircraft is insured as required while on the ground and not operated or (ii) the Aircraft shall be operated at any time when public liability insurance required under Section 4.06(a) hereof shall not be in effect (it being understood that the Company is not required to maintain such insurance under Section 4.06(a) hereof if the indemnification or insurance referred to in the proviso to Section 4.06(a)(ii) hereof is obtained); or (c) the Company shall fail to perform or observe any other covenant, condition or agreement to be performed or observed by it under this Indenture or any other Operative Agreement or any other written agreement of the Company entered into in connection with the transactions contemplated by the Operative Agreements and such failure shall continue unremedied for a period of thirty (30) days from the date on which the Company has knowledge of the failure or the Company shall have received written notice, identified as a "Notice of Indenture Default," from the Indenture Trustee (or from the Holders of not less than 25% of aggregate principal amount of outstanding Equipment Purchase Certificates) of such failure, provided, that in the event such failure is curable and so long as (but for no longer than 150 days after such 30-day period) the Company shall have promptly undertaken such cure after the earlier of such knowledge or notice thereof which undertaking shall be diligently and continuously pursued using the Company's reasonable best efforts, such failure shall not constitute an Event of Default; or (d) an order for relief shall be entered in respect of the Company by a court having jurisdiction in the premises in an involuntary case under the federal bankruptcy laws as now or hereafter in effect; or the Company shall consent to the appointment of a custodian, receiver, trustee or liquidator of itself or of a substantial part of its property; or the Company is not paying, or shall admit in writing its inability to pay, its debts generally as they come due or shall make a general assignment for the benefit of creditors; or the Company shall file, or the Board of Directors of the Company shall authorize the filing of, or grant one or more persons authority (at their discretion) to make a filing for, a voluntary petition in bankruptcy or a voluntary petition or an answer seeking reorganization in a proceeding under any bankruptcy laws (as now or hereafter in effect) or an answer admitting the material allegations of a petition filed against the Company in any such proceeding; or the Company shall file, or the Board of Directors of the Company shall authorize the Company to, or grant one or more persons authority (at their discretion) to, seek relief by voluntary petition, answer or consent, under the provisions of any other or future bankruptcy or other similar law providing for the reorganization or winding-up of corporations, or providing for an agreement, composition, extension or adjustment with its creditors; or (e) an order, judgment or decree shall be entered by any court of competent jurisdiction appointing, without the consent of the Company, a custodian, receiver, trustee, or liquidator of the Company or of any substantial part of its property, or sequestering any substantial part of the property of the Company or granting any other relief in respect of the Company under the federal bankruptcy laws or other insolvency laws, and any such order, judgment or decree of appointment or sequestration shall remain in force undismissed or unvacated for a period of sixty (60) days after the date of its entry; or (f) a petition against the Company in a proceeding under the federal bankruptcy law or other insolvency laws (as now or hereafter in effect) shall be filed and shall not be withdrawn or dismissed within sixty (60) days, or under the provisions of any law providing for reorganization or winding-up of corporations which may apply to the Company, any court of competent jurisdiction shall assume jurisdiction, custody or control of the Company or of any substantial part of its property and such jurisdiction, custody or control shall remain in force unrelinquished or unterminated for a period of sixty (60) days; or (g) any representation or warranty made by the Company in this Indenture or in any other Operative Document shall at any time prove to have been incorrect at the time made in any respect material to the transactions contemplated by this Indenture and, if originally made by the Company in good faith, shall remain material and unremedied for a period of thirty (30) days after the Company shall have received written notice, identified as a "Notice of Indenture Default," of such misstatement from the Indenture Trustee or from the Holders of not less than 25% aggregate principal amount of outstanding Equipment Purchase Certificates. SECTION 6.02. Remedies with Respect to Indenture Estate. (i) Upon the occurrence of any Event of Default referred to in Section 6.01(d), (e) or (f) hereof then and in every such case the entire unpaid principal amount of the Equipment Purchase Certificates together with all accrued interest and any other sums then owing by the Company hereunder shall immediately and without further act become due and payable without presentment, demand, protest or notice, all of which are hereby waived. Upon the occurrence of any other Event of Default and at any time thereafter so long as the same shall be continuing, the Indenture Trustee may on its own accord or at the direction of Holders of not less than 25% in aggregate principal amount of outstanding Equipment Purchase Certificates declare the entire unpaid principal amount of the Equipment Purchase Certificates together with all accrued interest and any other sums (not including any Make-Whole Premium) then owing by the Company hereunder to be forthwith due and payable. Upon the occurrence of any Event of Default and at any time thereafter so long as the same shall be continuing, the Indenture Trustee may, and upon the written instructions of a Majority in Interest of Certificate Holders, the Indenture Trustee shall, do one or more of the following: (a) cause the Company, upon the written demand of the Indenture Trustee, at the Company's expense, to deliver promptly, and the Company shall deliver promptly, all or such part of the Airframe or any Engine (together with all records, logs, manuals, data, and inspection, modification and overhaul records and other documents maintained with respect thereto or pertaining thereto) as the Indenture Trustee may so demand to the Indenture Trustee or its order, or the Indenture Trustee, at its option, may enter upon the premises where all or any part of the Airframe or any Engine (or any such records, logs, manuals, data, or inspection, modification or overhaul records or other documents) are located and take immediate possession (to the exclusion of the Company and all Persons claiming under or through the Company) of and remove the same together with any engine which is not an Engine but which is installed on the Airframe, subject to all of the rights of the owner, lessor, lienor or secured party of such engine, provided, that any such engine shall be held for the account of any such owner, lessor, lienor or secured party or, if owned by the Company, may at the option of the Indenture Trustee, be exchanged with the Company for an Engine in accordance with the provisions of Section 4.05(d) hereof by summary proceedings or otherwise, all without liability accruing to the Indenture Trustee for or by reason of such entry or taking of possession or removal, whether for the restoration of damage to property caused by such taking or otherwise; (b) sell all or any part of the Airframe and any Engine and any other part of the Indenture Estate at public or private sale, whether or not the Indenture Trustee shall at the time have possession thereof, as the Indenture Trustee may determine, or otherwise dispose of, hold, use, operate, lease to others or keep idle all or any part of the Airframe or such Engine or any other part of the Indenture Estate as the Indenture Trustee, in its sole discretion, may determine, all free and clear of any rights or claims of whatsoever kind of the Company; or (c) exercise any or all of the rights and powers and pursue any and all remedies of a secured party under the Uniform Commercial Code of the State of New York (whether or not in effect in the jurisdiction in which enforcement is sought). Upon every taking of possession of any part of the Indenture Estate under this Section 6.02, the Indenture Trustee may, from time to time, at the expense of the Company or the Indenture Estate, make all such expenditures for maintenance, insurance, repairs, replacements, alterations, additions and improvements to and of any of the Indenture Estate, as it may deem proper in each such case, the Indenture Trustee shall have the right to maintain, use, operate, store, lease, control or manage all or any part of the Indenture Estate and to exercise all rights and powers of the Company in relation to any part of the Indenture Estate in connection therewith, as the Indenture Trustee shall deem best, including the right to enter into any and all such agreements with respect to the maintenance, insurance, use, operation, storage, leasing, control, management or disposition of any and all of the Indenture Estate as the Indenture Trustee may determine; and the Indenture Trustee shall be entitled to collect and receive directly all tolls, rents, revenues, issues, income, products and profits of all or any part of the Indenture Estate, without prejudice, however, to the right of the Indenture Trustee under any provision of this Indenture to collect and receive all cash held by, or required to be deposited with, the Indenture Trustee hereunder. Such tolls, rents, revenues, issues, income, products and profits may be applied to pay the expenses of use, operation, storage, leasing, control, management or disposition of all or any part of the Indenture Estate, and of all maintenance, repairs, replacements, alterations additions and improvements, and to make all payments which the Indenture Trustee may be required or may elect to make, if any, for taxes, assessments, insurance or other proper charges upon any or all of the Indenture Estate (including the employment of engineers and accountants to examine, inspect and make reports upon the properties and books and records of the Company), and all other payments which the Indenture Trustee may be required or authorized to make under any provision of this Indenture, as well as just and reasonable compensation for the services of the Indenture Trustee, and of all Persons properly engaged and employed by the Indenture Trustee. In addition, the Company shall be liable for all legal fees and other costs and expenses incurred by reason of the occurrence of any Event of Default or the exercise of the Indenture Trustee's remedies with respect thereto, including all costs and expenses incurred in connection with the retaking or return of the Airframe or any Engine (or any records, logs, manuals, data, or inspection, modification, or overhaul records or other documents maintained with respect thereto or pertaining thereto) in accordance with the terms hereof and under the Uniform Commercial Code of the State of New York, which amounts shall, until paid, be secured by the Lien of this Indenture. If an Event of Default shall have occurred and be continuing and the Equipment Purchase Certificates shall have been accelerated pursuant to this Section 6.02(i), at the request of the Indenture Trustee, the Company shall promptly execute and deliver to the Indenture Trustee such instruments of title and other documents as the Indenture Trustee may deem necessary or advisable to enable the Indenture Trustee or an agent or representative designated by the Indenture Trustee, at such time or times and place or places as the Indenture Trustee may specify, to obtain possession of any or all of the Indenture Estate to which the Indenture Trustee shall at the time be entitled hereunder. If the Company shall for any reason fail to execute and deliver such instruments and documents after such request by the Indenture Trustee, the Indenture Trustee may obtain a judgment conferring on the Indenture Trustee the right to immediate possession and requiring the Company to execute and deliver such instruments and documents to the Indenture Trustee, to the entry of which judgment the Company hereby specifically consents to the fullest extent it may lawfully do so. Nothing in the foregoing shall affect the right of each Holder to receive all payments of principal of, and interest on, the Equipment Purchase Certificate or Certificates held by such Holder and all other amounts owing to such Holder as and when the same may be due. (ii) The Indenture Trustee shall give the Company at least 30 days prior notice of any public sale or of the date on or after which any private sale will be held, which notice the Company hereby agrees is reasonable notice. (iii) At any time after the Indenture Trustee has declared the unpaid principal amount of all Equipment Purchase Certificates then outstanding to be due and payable and prior to the sale of any part of the Indenture Estate pursuant to this Article 6, a Majority in Interest of Certificate Holders, by written notice to the Company and the Indenture Trustee, may rescind and annul such declaration and its consequences if: (i) there has been paid to or deposited with the Indenture Trustee an amount sufficient to pay all overdue installments of interest on the Equipment Purchase Certificates, and the principal of and any Make-Whole Premium on any Equipment Purchase Certificates that have become due otherwise than by such declaration of acceleration, and (ii) all other Events of Default, other than nonpayment of principal or interest on the Equipment Purchase Certificates that have become due solely because of such acceleration, have been cured or waived. (iv) A Majority in Interest of Certificate Holders may on behalf of all Holders waive any past default hereunder and its consequences, except a default: (i) in the payment of the principal of, Make-Whole Premium, if any, or interest on any Equipment Purchase Certificate, or (ii) in respect of a covenant or provision hereof which under Section 10.01(b) hereof cannot be modified or amended without the consent of each Holder affected thereby. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. (v) Each and every right, power and remedy herein specifically given to the Indenture Trustee or otherwise in the Indentures shall be cumulative and shall be in addition to every other right, power and remedy herein specifically given or now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by the Indenture Trustee, 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 Indenture Trustee 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 Company or to be an acquiescence therein. (vi) In case the Indenture Trustee shall have instituted any proceeding to enforce any right, power or remedy under this Indenture by foreclosure, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Indenture Trustee, then and in every such case the Company and the Indenture Trustee shall, subject to any determination in such proceedings, be restored to their former positions and rights hereunder with respect to the Indenture Estate, and all rights, remedies and powers of the Indenture Trustee shall continue, as if no such proceedings had been undertaken (but otherwise without prejudice). ARTICLE 7 DUTIES OF THE INDENTURE TRUSTEE SECTION 7.01. Action Upon Event of Default. If any payments of the principal of, or interest on, the Equipment Purchase Certificates due and payable on any Payment Date, or when otherwise due and payable, shall not have been paid in full on such Payment Date or such other date, the Indenture Trustee shall give telephonic notice within one Business Day (followed by prompt written notice) to the Company and each Holder specifying the amount and nature of such deficiency in payment; provided that any failure to give such notice to the Company under this Section 7.01 shall not relieve the Company of its obligation to make such payment. If a Responsible Officer of the Indenture Trustee shall have actual knowledge of an Event of Default or an event or condition which after notice or lapse of time, or both, would become an Event of Default (other than as provided in the preceding sentence), the Indenture Trustee shall give prompt written notice within 5 Business Days of receiving such knowledge, to the Company and each Holder; provided, however, that the failure of the Indenture Trustee to give any such notice shall not in any way affect the validity of any action taken by the Indenture Trustee or any Holder pursuant to the exercise of any of the remedies provided in Article 6 hereof, except that the foregoing proviso shall not reduce the time provided for any action or otherwise impair any right granted the Company under this Indenture. Subject to the terms of Sections 6.02 and 7.03 hereof, the Indenture Trustee shall take such action, or refrain from taking such action, with respect to such Event of Default as the Indenture Trustee shall be instructed in writing by a Majority in Interest of Certificate Holders. If the Indenture Trustee shall not have received instructions as above provided within twenty (20) Business Days after giving notice of such Event of Default to the Holders, the Indenture Trustee may, subject to instructions later received pursuant to the preceding sentence, take such action, or refrain from taking such action, but shall be under no duty to take or refrain from taking any action, with respect to such Event of Default as it shall determine advisable in the best interests of the Holders, and shall use the same degree of care and skill in connection therewith as a prudent Person would use under the circumstances in the conduct of its own affairs. The Indenture Trustee shall promptly provide each Holder with a copy of any notice it received from the Company to the extent such Holder has not otherwise received such notice from the Company. SECTION 7.02. No Duties Except as Specified. (a) Generally. The Indenture Trustee shall not have any duty or obligation to manage, control, use, sell, dispose of or otherwise deal with the Aircraft or any other part of the Indenture Estate or otherwise to take or refrain from taking any action under or in connection with this Indenture, except as expressly provided by the terms of this Indenture or as expressly provided in written instructions received pursuant to the terms of Section 7.01 or 7.04 hereof. No implied duties or obligations shall be read into this Indenture against the Indenture Trustee. (b) Specific Duties. Notwithstanding the provisions of paragraph (a) of this Section 7.02, the Indenture Trustee agrees that (i) it will, in its individual capacity and at its own cost and expense, promptly take such action as may be necessary to discharge duly any Liens on any part of the Indenture Estate or on any properties of the Company assigned, pledged or mortgaged as part of the Indenture Estate, which result from claims against the Indenture Trustee not related to the Lien and security interest created under this Indenture on the Indenture Estate or to the administration of the Indenture Estate or to any other transaction pursuant to this Indenture or any document included in the Indenture Estate, (ii) so long as this Indenture is in effect, it will, with respect to specific actions to be taken and subject to Section 7.04 hereof, cooperate with the Company in connection with the recording, filing, re-recording and refiling of the Indenture and any supplements to any of them, and any financing statement or other documents as is necessary to maintain the perfection hereof or otherwise to protect the security interests created hereby and (iii) it will furnish the notices and other instruments referred to in the last sentence of Section 8.02 hereof. The Indenture Trustee shall not discriminate as between Holders. SECTION 7.03. No Action Except Under Indenture or Instructions. The Indenture Trustee agrees that it will not manage, control, use, sell, dispose of or otherwise deal with the Aircraft or any other property constituting part of the Indenture Estate except (i) in accordance with the powers granted to, or the authority conferred upon, the Indenture Trustee pursuant to this Indenture or (ii) in accordance with the express terms of this Indenture or with written instructions pursuant to Section 6.02, 7.01 or 7.04 hereof. SECTION 7.04. Action Upon Instructions Generally. Subject to the terms of Sections 6.02, 7.01 and 7.05 hereof and except as otherwise provided herein, upon the written instructions at any time and from time to time of a Majority in Interest of Certificate Holders, the Indenture Trustee shall take such of the following actions as may be specified in such instructions or this Indenture: (i) give such notice or direction or consent or exercise such right, remedy or power under this Indenture or in respect of any part or all of the Indenture Estate as shall be specified in such instructions; and (ii) take such other action as shall be specified in such instructions, it being understood that without the written instructions of a Majority in Interest of Certificate Holders, the Indenture Trustee will not approve any such matter as satisfactory to the Indenture Trustee. The Indenture Trustee will execute and the Company will file or cause to be filed such continuation statements with respect to financing statements relating to the security interest created under this Indenture in the Indenture Estate as may be specified from time to time in written instructions of the Company or a Majority in Interest of Certificate Holders (which instructions may, by their terms, be operative only at a future date and which shall be accompanied by the form of such continuation statement so to be filed). The Indenture Trustee shall forthwith notify all of the Holders of any direction received pursuant to this Section 7.04 by a Majority in Interest of Certificate Holders. SECTION 7.05. Indemnification. (a) With Respect to Actions Hereunder. The Indenture Trustee shall not be required to take any action or refrain from taking any action requested by the Holders under Sections 7.01 (other than the first two sentences of Section 7.01), 7.04 or Article 6 hereof if it shall have reasonable grounds for believing that repayment of any funds expended by it or adequate indemnification against risks incurred in connection therewith is not reasonably assured to it. The Indenture Trustee shall not be required to take any action pursuant to Section 7.01 or 7.04 or Article 6 hereof, nor shall any other provision of this Indenture be deemed to impose a duty on the Indenture Trustee to take any action, if the Indenture Trustee shall have been advised by counsel that such action is contrary to the terms hereof or is otherwise contrary to law. Each Holder may, but shall not be required to, participate in any indemnification of the Indenture Trustee given pursuant to this Section 7.05. Each Holder so participating shall be entitled to reimbursement from the Company for such participation. (b) With Respect to Claims. (i) For the purposes of this Section 7.05(b), "Claims" shall mean any and all costs, liabilities (including strict or absolute liability without fault in tort or otherwise), losses, damages, penalties, actions or suits or claims which may be imposed on, incurred by, suffered by, or asserted against an Indemnified Person, as defined herein, and, except as otherwise expressly provided in this Section 7.05(b), shall include all reasonable out-of-pocket costs, disbursements and expenses (including legal fees and expenses) paid or incurred by an Indemnified Person in connection therewith. (ii) For the purposes of this Section 7.05(b), "Indemnified Person" means the Indenture Estate, the Indenture Trustee both in its individual capacity and as trustee and each of its successors, permitted transferees or assigns permitted under the terms hereof, provided that as a condition of any obligations of the Company to pay any indemnity or perform any action under this Section 7.05(b) with respect to any Persons who are not signatories hereto, such Persons shall expressly agree in writing to be bound by all the terms of this Section 7.05(b). (iii) Subject to the exclusions stated in Section 7.05(b)(iv) hereof the Company agrees to indemnify, defend and hold harmless each Indemnified Person on an After-Tax Basis against Claims resulting from or arising out of: (A) the operation, possession, use, maintenance, overhaul, testing, registration, re-registration, modification, alteration or lease of the Aircraft, Airframe or Engine, or any engine used in connection with the Airframe, or any part thereof by the Company, any lessee or any other Person whatsoever, whether or not such operation, possession, use, maintenance, overhaul, testing, registration, re-registration, non-use, modification, alteration or lease is in compliance with the terms of this Indenture; (B) the manufacture, design, purchase, acceptance, rejection, delivery, or condition of the Aircraft or any Engine, including, without limitation, latent and other defects, whether or not discoverable, and claims relating to patent, trademark or copyright infringement; and (C) any breach of or failure to perform or observe, or any other non-compliance with, any covenant or agreement to be performed, or other obligation of the Company under any of the Operative Agreements, or the falsity of any representation or warranty of the Company in any of the Operative Agreements. (iv) The following are excluded from the Company's agreement to indemnify under this Section 7.05(b): (A) Claims which are taxes whether or not covered pursuant to the indemnity set forth in Section 8.05 hereof; (B) Claims which are covered pursuant to Section 8.05 hereof; (C) With respect to any particular Indemnified Person, Claims attributable to the gross negligence or willful misconduct of, or to the breach of any contractual obligation by, or the falsity or inaccuracy of any representation or warranty of, such Indemnified Person; and (D) Claims attributable to acts or events occurring any period subsequent to termination of this Indenture. (v) In the case of any Claim indemnified by the Company hereunder which is covered by a policy of insurance maintained by the Company pursuant to Section 4.06 hereof or otherwise, it shall be a condition of such indemnity with respect to any particular Indemnified Person that such Indemnified Person shall use reasonable efforts to cooperate with the insurers in the exercise of their rights to investigate, defend or compromise such Claim as may reasonably be required to retain the benefits of such insurance with respect to such Claim. (vi) An Indemnified Person shall promptly notify the Company of any Claim as to which indemnification is sought. Subject to the rights of insurers under policies of insurance maintained by the Company, the Company shall have the right to investigate, and the right in its sole discretion to defend or compromise any Claim for which indemnification is sought under this Section 7.05(b), and the Indemnified Person shall cooperate with all reasonable requests of the Company in connection therewith. Where the Company or the insurers under a policy of insurance maintained by the Company undertake the defense of an Indemnified Person with respect to a Claim, no additional legal fees or expenses of such Indemnified Person in connection with the defense of such Claim shall be indemnified hereunder unless the fees or expenses were incurred at the written request of the Company or such insurers. Subject to the requirement of any policy of insurance applicable to a Claim, an Indemnified Person may participate at its own expense in any judicial proceeding controlled by the Company or its insurers pursuant to the preceding provisions, provided that such party's participation does not, in the opinion of the independent counsel appointed by the Company or its insurers to conduct such proceedings, interfere with such control; and such participation shall not constitute a waiver of the indemnification provided in this Section 7.05(b). (vii) To the extent that a Claim indemnified by the Company under this Section 7.05(b) is in fact paid by the Company and/or an insurer under a policy of insurance maintained by the Company, the Company and/or such insurer as the case may be shall be subrogated to the extent of such payment to the rights and remedies of the Indemnified Person on whose behalf such Claim was paid with respect to the transaction or event giving rise to such Claim. Should an Indemnified Person receive any refund, in whole or in part, with respect to any Claim paid by the Company hereunder, it shall, so long as no Event of Default or Payment Default shall have occurred and be continuing, promptly pay over the amount refunded, together with any interest received with respect to such amount for the period between the indemnification payment and the receipt of such refund, to the Company, but in no event more than the amount theretofore received by such Indemnified Person from the Company and its insurers in respect of such Claim. (viii) The general indemnification provisions of this Section 7.05(b) are not intended to waive or supersede any specific provisions of, or any rights or remedies of the Company under, this Indenture or any other Operative Agreement to the extent such provisions apply to any Claim. The Company does not guarantee and nothing in the general indemnification provisions of this Section 7.05(b) shall be construed as a guarantee by the Company with respect to the value of the Aircraft or any part thereof. (c) Survival of Indemnity. The indemnity contained in this Section 7.05 shall survive the Delivery Date and the expiration or termination of this Indenture but only with respect to Claims arising out of events occurring prior to such expiration or termination. SECTION 7.06. Withholding Taxes. The Indenture Trustee, as agent for the Company, shall exclude and withhold from each payment of principal, Make-Whole Premium, if any, and interest and other amounts due hereunder or under the Equipment Purchase Certificates any and all withholding taxes applicable thereto as required by law. The Indenture Trustee agrees to act as such withholding agent and, in connection therewith, whenever any present or future taxes or similar charges are required to be withheld with respect to any amounts payable in respect of the Equipment Purchase Certificates, it will withhold such amounts and timely pay the same to the appropriate authority in the name of and on behalf of the Holders, 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 Holder, appropriate documentation showing the payment thereof, together with such additional documentary evidence as such Holder may reasonably request from time to time. The Indenture Trustee agrees to file any other information reports as it may be required to file under United States law. ARTICLE 8 THE INDENTURE TRUSTEE SECTION 8.01. Acceptance of Trusts and Duties. The Indenture Trustee accepts the trusts and duties hereby created and applicable to it and agrees to perform the same but only upon the terms of this Indenture, and agrees to receive and disburse all monies constituting part of the Indenture Estate in accordance with the terms hereof. The Indenture Trustee shall not be answerable or accountable under any circumstances, except for ordinary negligence in the receipt or disbursement of money, for its obligations specified in Section 7.02(b) hereof and the last sentence of Section 8.02 hereof and except for its own willful misconduct or gross negligence (except as otherwise provided with respect to liabilities that may result from the inaccuracy of any of its representations or warranties in its individual capacity or as Indenture Trustee, set forth in this Indenture). Unless otherwise expressly provided in this Indenture, the Indenture Trustee shall have no obligation to advance its individual funds for any purpose and shall have no obligation to distribute to the Holders, the Company or any third party any amounts to be paid to the Indenture Trustee until such amounts are collected by the Indenture Trustee. SECTION 8.02. Absence of Certain Duties. Except in accordance with written instructions to the Indenture Trustee furnished pursuant to Sections 6.02, 7.01 and 7.04 and except as provided in, and without limiting the generality of, Section 7.02 hereof, the Indenture Trustee shall have no duty (i) to see to any registration of the Aircraft or any recording or filing of this Indenture or any other document, or to see to the maintenance of any such registration, recording or filing, (ii) to see to any insurance on the Aircraft or to effect or maintain any such insurance, whether or not the Company shall be in default with respect to effecting or maintaining such insurance, (iii) to see to the payment or discharge of any tax, assessment or other governmental charge or any Lien or encumbrance of any kind owing with respect to, assessed or levied against, any part of the Indenture Estate except as expressly provided in Section 7.02(b)(i) hereof, (iv) to confirm, verify or inquire into the failure to receive any financial statements of the Company, or (v) to inspect the Aircraft at any time or ascertain or inquire as to the performance or observance of any of the Company's covenants under this Indenture with respect to the Aircraft. Notwithstanding the foregoing, the Indenture Trustee will furnish to each Holder promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates, financial statements and other instruments furnished to the Indenture Trustee, to the extent that the same shall not have been otherwise furnished to such Holder pursuant to this Indenture or to the extent the Indenture Trustee does not reasonably believe that the same shall have been furnished by the Company directly to such Holder. SECTION 8.03. Representations, Warranties and Agreements of Indenture Trustee. The Indenture Trustee, in its individual capacity, represents, warrants and agrees that: (a) Organization; Authority; Legal and Binding Obligations. The Indenture Trustee in its individual capacity is a national banking association duly organized, validly existing and in good standing under the laws of the United States, is a "citizen of the United States" within the meaning of Section 40102(a)(15) of Title 49 of the United States Code formerly Section 101(16) of the Act and will resign as Indenture Trustee promptly after it obtains actual knowledge that it has ceased to be such a citizen, has the full corporate power and authority and legal right under the laws of the State of ____________ and the laws of the United States pertaining to its banking, trust and fiduciary powers to execute, deliver and perform this Indenture, that this Indenture has been duly authorized, executed and delivered by it and assuming due authorization, execution and delivery by the other party hereto, constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization or other laws of general application to or affecting the enforcement of creditors' rights generally, and that the execution, delivery and performance by the Indenture Trustee of this Indenture is not in violation of its articles of association or by-laws or of any indenture, mortgage, contract or other agreement to which the Indenture Trustee is a party or by which it is bound or of any order or judgment applicable to the Indenture Trustee or any applicable law of the United States or the laws of the State of __________ governing the trust powers of the Indenture Trustee and by which it or its assets or property are bound. NOTWITHSTANDING THE FOREGOING, THE INDENTURE TRUSTEE DOES NOT MAKE NOR SHALL BE DEEMED TO HAVE MADE AND HEREBY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, COMPLIANCE WITH SPECIFICATIONS, WORKMANSHIP, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OR FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENTS OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT, AIRFRAME OR ANY ENGINE WHATSOEVER. (b) Securities Representations. The Indenture Trustee, in its individual capacity, represents that neither the Indenture Trustee nor anyone authorized by it to act on its behalf has directly or indirectly offered (i) any interest in the Indenture Estate for sale to, or solicited any offer to acquire any of the same from, anyone other than the Banks or (ii) any Equipment Purchase Certificate or any similar security for sale to, or solicited any offer to acquire any of the same from, anyone. (c) Lien; Indemnity. The Indenture Trustee shall not directly or indirectly create, incur, assume or suffer to exist any Liens described in Section 7.02(b)(i) hereof with respect to the Aircraft, any interest therein, or any other portion of the Indenture Estate, and that it will promptly cause any such Lien to be discharged at its own expense. The Indenture Trustee in its individual capacity shall indemnify, protect, save and keep harmless the Company and each Holder from and against any reduction in the amount payable out of the Indenture Estate to such Holder, or any other loss, cost or expense (including legal fees and expenses) incurred by such Holder or the Company as a result of the imposition or enforcement of such Lien. SECTION 8.04. Reliance; Agents; Advice of Experts. The Indenture Trustee shall incur no liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper reasonably believed by it to be genuine and reasonably believed by it to be signed by the proper party or parties. The Indenture Trustee may accept a copy of a resolution of the Board of Directors of the Company or any Holder or any committee of said Board, certified by the Secretary or an Assistant Secretary of said party as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted by said Board or committee and that the same is in full force and effect. As to any fact or matter relating to the Company the manner of ascertainment of which is not specifically described in this Indenture, the Indenture Trustee may for all purposes of this Indenture rely on a certificate, signed by the President or by a Vice President signing with the Treasurer or any Assistant Treasurer or the Secretary or an Assistant Secretary of the Company as to such fact or matter, and such certificate shall constitute full protection to the Indenture Trustee for any action taken or omitted to be taken by it in good faith in reliance on such certificate. The Indenture Trustee shall furnish to the Company upon request such information and copies of such documents as the Indenture Trustee may have and as are necessary for the Company to perform its duties under Article 2 hereof. In the administration of the trust under this Indenture the Indenture Trustee may execute any trust or power of this Indenture and perform its powers and duties directly or through agents or attorneys and may, at the expense of the Company, consult with counsel, accountants and other skilled Persons to be selected and retained by it, and the Indenture Trustee shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the advice or opinion of any such counsel, accountants or other skilled Person (so long as the Indenture Trustee shall have exercised reasonable care and judgment in selecting such Persons). SECTION 8.05. Compensation and Expenses of Indenture Trustee. The Company agrees, to the extent the Indenture Trustee was not reimbursed under Section 7.05 hereof, to pay upon written demand the reasonable and customary fees and reasonable out-of-pocket costs and expenses (including legal fees and expenses) of the Indenture Trustee in the performance of its responsibilities hereunder (including in connection with the execution and delivery of the Transfer Agreement) and agrees to indemnify the Indenture Trustee against any taxes imposed upon it relating thereto (other than taxes, fees or charges based on or measured by any fees or compensation received by the Indenture Trustee for services rendered in connection with the transactions contemplated hereby). The Indenture Trustee agrees that it shall have no right against the Holders or the Indenture Estate for any fee as compensation for its services hereunder. The provisions of this Section 8.05 with respect to costs and expenses shall survive the termination of this Indenture. SECTION 8.06. Moneys Held by Indenture Trustee. Subject to Section 5.04 hereof, all moneys received by the Indenture Trustee shall, until used or applied as herein provided, 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 hereof, neither the Indenture Trustee nor any agent of the Indenture Trustee shall be under any liability for interest on any moneys received by it hereunder. SECTION 8.07. Capacity in Which Acting. The Indenture Trustee acts hereunder not in its individual capacity but solely as trustee except as otherwise expressly provided herein and in the other Operative Agreements. ARTICLE 9 SUCCESSOR INDENTURE TRUSTEE SECTION 9.01. Resignation or Removal; Appointment of Successor. (a) Resignation and Removal. The Indenture Trustee or any successor to it must resign if at any time it ceases to be a Citizen of the United States and may resign at any time without cause by giving at least 30 days prior written notice to the Company, and each Holder, such resignation to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In addition, a Majority in Interest of Certificate Holders may at any time remove the Indenture Trustee without cause by an instrument in writing delivered to the Indenture Trustee and the Company and the Company shall promptly notify each Holder of such action in writing, such removal to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In addition, the Company may, without the consent of any Holder unless an Event of Default shall have occurred and be continuing, remove the Indenture Trustee (i) if the Indenture Trustee fails to comply with Section 9.01(c) hereof, (ii) if the Indenture Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver or liquidator of the Indenture Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Indenture Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation. In the case of the resignation or removal of the Indenture Trustee, the Company shall promptly appoint a successor Indenture Trustee; provided that, a Majority in Interest of Certificate Holders may appoint after such resignation or removal, a successor Indenture Trustee which may be other than the successor Indenture Trustee appointed by the Company and such successor Indenture Trustee appointed by the Company shall be superseded by the successor Indenture Trustee appointed by a Majority in Interest of Certificate Holders. If a successor Indenture Trustee shall not have been appointed within 30 days after such notice of resignation or removal, the Indenture Trustee, the Company or any Holder may apply to any ,court of competent jurisdiction to appoint a successor Indenture Trustee to act until such time, if any, as a successor shall have been appointed as above provided. The successor Indenture Trustee so appointed by such court shall immediately and without further act be superseded by any successor Indenture Trustee appointed from the date of the appointment by such court. (b) Acceptance of Appointment. Any successor Indenture Trustee, however appointed, shall execute and deliver to the Company and to the predecessor Indenture Trustee an instrument accepting such appointment, and, without further act, such successor Indenture Trustee shall become vested with all the estates, properties, rights, powers and duties of the predecessor Indenture Trustee under this Indenture in the trusts applicable to it with like effect as if originally named Indenture Trustee; but, nevertheless, upon the written request of such successor Indenture Trustee, such predecessor Indenture Trustee shall execute and deliver an instrument transferring to such successor Indenture Trustee all the estates, properties, rights and powers of such predecessor Indenture Trustee, and such predecessor Indenture Trustee shall duly assign, transfer, deliver and pay over to such successor Indenture Trustee all moneys or other property then held by such predecessor Indenture Trustee under this Indenture. (c) Qualification of Successor. Any successor Indenture Trustee, however appointed, shall be a Citizen of the United States and shall be a bank or trust company having its principal place of business in the United States of America and having a combined capital and surplus of at least $100,000,000 if there be such an institution willing, able and legally qualified to perform the duties of Indenture Trustee under this Indenture upon reasonable or customary terms. (d) Merger. Any corporation into which the Indenture 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 Indenture Trustee shall be a party, or any corporation to which substantially all the business of the Indenture Trustee may be transferred, shall, subject to the terms of Section 9.01(c) hereof, be the Indenture Trustee under this Indenture without further act. (e) Notice Period. The notice period specified in Section 9.01(a) hereof shall be reduced as necessary so that any resignation of the Indenture Trustee or any successor Indenture Trustee shall be effective prior to the date such Indenture Trustee no longer qualifies, or is expected no longer to qualify, as a Citizen of the United States. SECTION 9.02. Appointment of Separate Trustees. (a) At any time or times, for the purpose of meeting any legal requirements of any jurisdiction in which any part of the Indenture Estate may at the time be located or in which any action of the Indenture Trustee may be required to be performed or taken, the Indenture Trustee, by an instrument in writing signed by it, may appoint one or more individuals or corporations to act as a separate trustee or separate trustees or co-trustee, acting jointly with the Indenture Trustee, of all or any part of the Indenture Estate to the full extent that local law makes it necessary for such separate trustee or separate trustees or co-trustee acting jointly with the Indenture Trustee to act. (b) The Indenture Trustee and, at the request of the Indenture 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 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 or they shall be vested with such title to the Indenture Estate or any part of it and with such rights and duties, as shall be specified in the instrument of appointment, jointly with the Indenture Trustee (except insofar as local law makes it necessary for any such separate trustee or separate trustees to act alone) subject to all the terms of this Indenture. Any separate trustee or separate trustees or co-trustee may, at any time by an instrument in writing, constitute the Indenture Trustee its 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 or his behalf and in its 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 the Indenture Estate and all rights and duties of such separate trustee or co-trustee shall, so far as permitted by law, vest in and be exercised by the Indenture Trustee, without the appointment of a successor to such separate trustee or co-trustee. (c) Every separate trustee and co-trustee hereunder shall, to the extent permitted by law, be appointed and act, and the Indenture Trustee shall act, subject to the following provisions and conditions: (i) all powers, duties, obligations and rights conferred upon the Indenture Trustee in respect of the receipt, custody, payment of moneys or the investment of moneys, shall be exercised solely by the Indenture Trustee; (ii) to the extent specified in the instrument of appointment, all other rights, powers, duties and obligations conferred or imposed upon the Indenture Trustee shall be conferred or imposed upon and exercised or performed by the Indenture Trustee and such separate trustee or co-trustee jointly, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed the Indenture 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 Indenture Estate in any such jurisdiction) shall be exercised and performed by such additional trustee or separate trustee; (iii) no power hereby given to, or exercisable as provided herein 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 Indenture Trustee; and (iv) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder. Any separate trustee or co-trustee may be removed by the Indenture Trustee at any time without cause. (d) All provisions of this Indenture which are for the benefit of the Indenture Trustee shall extend to and apply to each separate trustee or co-trustee appointed pursuant to this Section 9.02. ARTICLE 10 SUPPLEMENTS AND AMENDMENTS TO THIS INDENTURE AND OTHER DOCUMENTS SECTION 10.01. Supplemental Indentures. (a) Supplemental Indentures Without Consent of Holders. The Company and the Indenture Trustee, at any time and from time to time, without notice to or the consent of the Holders, may enter into one or more indentures supplemental hereto for any of the following purposes: (i) to provide for the Indenture Amendment more fully described in Section 11.02 hereof; (ii) to correct or amplify the description of any property at any time subject to the Lien of this Indenture or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subject to the Lien of this Indenture or to subject to the Lien of this Indenture any Airframe or Engine or any airframe or engine substituted for any Airframe or Engine in accordance with the terms hereof; provided, however, that indenture supplements entered into for the purpose of subjecting to the Lien of this Indenture any Airframe or Engine or airframe or engine substituted for any Airframe or Engine in accordance with the terms hereof need only be executed by the Company; or (iii) to add to the covenants of the Company, for the benefit of the Holders, or to surrender any right or power herein conferred upon the Company; or (iv) to comply with any applicable requirements of the Trust Indenture Act of 1939, as from time to time amended or any other requirements of applicable law; or (v) to cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising hereunder so long as any such action does not adversely affect the interests of the Holders. (b) Supplemental Indentures With Consent of Majority. With the written consent of a Majority in Interest of Certificate Holders, the Company may, and the Indenture Trustee, subject to Section 10.02 hereof, shall, at any time and from time to time, enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights and obligations of the Holders and of the Company under this Indenture; provided, however, without the consent of each Holder affected thereby, no such supplemental indenture shall: (i) except as permitted under the Transfer Agreement, change the final maturity of the principal of any Equipment Purchase Certificate, or change the dates or amounts of payment of any installment of the principal of or any Make-Whole Premium or interest on any Equipment Purchase Certificate, or reduce the principal amount thereof or any Make-Whole Premium or interest thereon, or change to a location outside the United States the place of payment where, or the coin or currency in which, any Equipment Purchase Certificate or any Make-Whole Premium or interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment of principal or any Make-Whole Premium or interest becomes due and payable; or (ii) create any Lien with respect to the Indenture Estate ranking prior to, or on a parity with, the security interest created by this Indenture, except Liens permitted under Section 4.01 hereof, or deprive any Holder of the benefit of the Lien on the Indenture Estate created by this Indenture; or (iii) reduce the percentage in principal amount of the Equipment Purchase Certificates, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture, or of certain defaults hereunder and their consequences) provided for in this Indenture or change the definition of the "Majority in Interest of Certificate Holders"; or (iv) modify any provisions of this Section 10.01(b), except to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Equipment Purchase Certificate affected thereby. SECTION 10.02. Indenture Trustee Protected. If in the reasonable opinion of the Indenture Trustee any document required to be executed pursuant to the terms of Section 10.01 hereof adversely affects any right, duty, immunity or indemnity in favor of the Indenture Trustee under this Indenture, the Loan Agreement, or the Transfer Agreement, the Indenture Trustee may in its discretion decline to execute such document. SECTION 10.03. Requirement of Substance, Not Form. It shall not be necessary for any consent of the Holders under Section 10.01(b) hereof to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. SECTION 10.04. Documents Mailed to Holders. Promptly after the execution by the Indenture Trustee of any document entered into pursuant to this Article 10, the Indenture Trustee shall mail, by first-class mail, postage prepaid, a conformed copy thereof to each Holder at its address last known to the Indenture Trustee, but the failure of the Indenture Trustee to mail such conformed copies shall not impair or affect the validity of such document. ARTICLE 11 LEVERAGED LEASE FINANCING SECTION 11.01. Conversion to Leveraged Lease Financing. (a) The Lease. Subject to the provisions of this Article 11, the Company may arrange for a trustee (the "Owner Trustee"), acting on behalf of one or more investors with a net worth of at least $50,000,000 (the "Owner Participants"), to purchase the Aircraft from the Company and lease the Aircraft back to the Company pursuant to a "net" lease (the "Lease") which shall provide for the unconditional obligation of the Company to make payments of rent in amounts and at all times sufficient to pay the principal amount of, Make-Whole Premium (if any) and interest on the Equipment Purchase Certificates when due or to prepay such amounts as permitted hereunder and in any event sufficient to pay or prepay, as permitted, the aggregate indebtedness incurred by the Equipment Purchase Certificates issued hereunder on or prior to the maturity thereof and otherwise shall provide for terms and conditions in all material respects no less favorable to the Lessor and the Holders than those set forth in the form of Lease attached hereto as Exhibit D. In connection therewith, the outstanding indebtedness evidenced by the Equipment Purchase Certificates issued hereunder may be assumed by such Owner Trustee on a non-recourse basis, such assumption to be evidenced by an amendment to this Indenture (the "Indenture Amendment") described in Section 11.02 hereof. Upon such assumption by the Owner Trustee, all of the Company's obligations under the Equipment Purchase Certificates shall be deemed to be obligations of the Owner Trustee, as if the Equipment Purchase Certificates had been executed by the Owner Trustee and authenticated and delivered by the Indenture Trustee pursuant to the Indenture. (b) Liens. In connection with the leveraged lease transaction the Company shall enter into an agreement with the Owner Participant and the Owner Trustee pursuant to which the Owner Participant and the Owner Trustee in its individual capacity shall, among other things, agree for the benefit of the Company, the Indenture Trustee and the Holders that they shall not directly or indirectly create, incur, assume or suffer to exist, any Lessor's Liens attributable to it (substantially as defined in the form of Lease attached hereto as Exhibit D) on the Aircraft or the Indenture Estate (as defined in the Indenture Amendment) or any interest therein and that they will promptly at their own expense cause any such Lien to be duly discharged and removed. (c) Payment of Accrued Interest. In the event the Company shall enter into the leveraged lease transactions contemplated by this Article 11 on a date (the "Lease Closing Date") which is not a Payment Date, the Company shall provide for payment of the interest accrued on the Equipment Purchase Certificates since the Payment Date next preceding the Lease Closing Date by (i) depositing an amount equal to such accrued interest with the Indenture Trustee, (ii) including such accrued interest in the first basic rent payment to be made under the Lease, or (iii) paying such accrued interest directly to the Indenture Trustee on the Payment Date next following the Lease Closing Date. SECTION 11.02. Indenture Amendment. Concurrently with the execution of the Lease by the parties thereto, the Indenture Trustee upon the request of the Company shall enter into an amendment to this Indenture (the "Indenture Amendment") on terms in all material respects no less favorable than those set forth in the form of Exhibit E hereto except for additions and changes agreed to by the Company and the Owner Trustee (A) which are agreed to by the Indenture Trustee in accordance with the terms of Article 10 hereof, (B) with respect to which the Indenture Trustee shall have received from independent counsel selected by the Indenture Trustee an opinion to the effect that such additions and changes do not in any material respect adversely affect the interests of the Holders as reflected in the form of Indenture Amendment set forth in Exhibit E hereto, and (C) with respect to which the Indenture Trustee shall have received letters from Moody's and S&P (or if either such corporation shall no longer perform the functions of a securities rating agency, any other nationally recognized rating agency designated by the Company) to the effect that such additions and changes will not result in a downgrading of the credit rating assigned to the Pass Through Certificates. Notwithstanding the above, this Section 11.02 shall not be construed to permit additions or changes to the Indenture Amendment which pursuant to Section 10.01(b) hereof would require the consent of each Holder affected. In connection with any leveraged lease financing, the Company shall have the right to re-optimize the schedule of payments of principal of the Equipment Purchase Certificates set forth in each Equipment Purchase Certificate; provided, however, that no such re-optimization shall be permitted which would result in (i) the Equipment Purchase Certificates having a maturity beyond the stated maturity date of the Equipment Purchase Certificates from the date of original issue, after giving effect to said re-optimization, (ii) a change in the principal amount of any Equipment Purchase Certificates outstanding, and in addition, in connection with any such re-optimization the amount of principal payable on any Payment Date under each new Equipment Purchase Certificate issued to each Holder shall bear the same ratio to the aggregate principal payable on such Payment Date under all Equipment Purchase Certificates as the principal amount of the Equipment Purchase Certificates held by such Holder immediately prior to the date of re-optimization bears to the aggregate principal amount of the Equipment Purchase Certificates held by all the Holders immediately prior to any such re-optimization date, (iii) a change in the Debt Rate and (iv) a change in the average life of any Equipment Purchase Certificate of plus or minus one year. SECTION 11.03. The Lease. The Lease shall be substantially in the form of Exhibit D hereto, except for additions and changes agreed to by the Company and the Owner Trustee (A) which could be implemented as amendments to the Lease without the consent of the Indenture Trustee under the terms of Article 10 of the form of Indenture Amendment annexed hereto as Exhibit E or as to which all the conditions for giving the consent of the Indenture Trustee under the terms of such Article 10 are met, or (B) with respect to which the Indenture Trustee shall have received an opinion from independent counsel selected by the Indenture Trustee to the effect that such additions and changes do not in any material respect adversely affect the interests of the Holders as reflected in the form of Lease set forth in Exhibit D hereto, or (C) with respect to which the Indenture Trustee shall have received letters from Moody's and S&P (or if either such corporation shall no longer perform the functions of a securities rating agency, any other nationally recognized rating agency designated by the Company) to the effect that such additions and changes will not result in a downgrading of the credit rating assigned to the Pass Through Certificates. SECTION 11.04. Conditions Precedent. The obligation of the Indenture Trustee to enter into the Indenture Amendment shall be subject to the execution and delivery by the parties thereto of a Participation Agreement substantially in the form of Exhibit F, and the satisfaction in the reasonable opinion of the Indenture Trustee, of the conditions precedent therein contained. ARTICLE 12 MISCELLANEOUS SECTION 12.01. Termination of Indenture. This Indenture and the trust created hereby shall terminate and this Indenture shall be of no further force or effect upon the payment in full of the principal amount of, any Make-Whole Premium and interest on all Equipment Purchase Certificates outstanding hereunder and all other sums payable to the Indenture Trustee and the Holders hereunder and under such Equipment Purchase Certificates and the other Operative Agreements. SECTION 12.02. No Legal Title in Indenture Estate. No Holder shall have legal title to any part of the Indenture Estate. No transfer, by operation of law or otherwise, of any Equipment Purchase Certificate or other right, title and interest of any Holder in and to the Indenture Estate or under this Indenture shall operate to terminate this Indenture or entitle any successor or transferee of such Holder to an accounting or to the transfer to it of legal title to any part of the Indenture Estate. SECTION 12.03. Sale of Collateral by Indenture Trustee. Any sale or other conveyance of the Aircraft by the Indenture Trustee made pursuant to the terms of this Indenture shall bind the Holders and shall be effective to transfer or convey all right, title and interest of the Indenture Trustee, the Company, and such Holders in and to the Aircraft. No purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency or regularity of such sale or conveyance or as to the application of any sale or other proceeds by the Indenture Trustee. SECTION 12.04. Indenture for Benefit of Parties and Holders Only. Nothing in this Indenture shall be construed to give to any person other than the Company, the Indenture Trustee and the Holders and former Holders any legal or equitable right, remedy or claim under or in respect of this Indenture or any Equipment Purchase Certificate. Upon termination of this Indenture pursuant to Section 12.01 hereof, the Indenture Trustee in connection with satisfaction of the Indenture shall return to the Company all property (and related documents and instruments) constituting or evidencing the Indenture Estate. SECTION 12.05. Notices. (a) Unless otherwise expressly specified or permitted by the terms of this Indenture, all notices, requests, demands, authorizations, directions, consents, waivers or documents provided or permitted by the Indenture to be made, given, furnished or filed shall be in writing, mailed by certified mail, postage prepaid, return receipt requested or delivered by hand or by Federal Express or other delivery service of established reputation or by confirmed telex or facsimile addressed as follows: (i) if to the Indenture Trustee, sent to it at its office at ______________________________, Attention: Corporate Trust Department (Facsimile: (___) ________); (ii) if to the Company, sent to it at its office at 2007 Corporate Avenue, Memphis, Tennessee, 38132, Attention: Vice President and Treasurer (Facsimile: (901) 395-3910); and (iii) if to any Holder, at the address set forth for such Holder in the Register; or to such other address as any such party shall advise the others of in writing for such purpose. Any notice given pursuant to this Section shall be deemed given, and such requirement shall be deemed satisfied, when such notice is received, if such notice is mailed by certified mail, postage prepaid or is delivered by hand or Federal Express or other delivery service of established reputation, or is sent by confirmed telex, telecopy or facsimile (if, in the case of a facsimile, transmitted on a Business Day and during normal business hours of the recipient, and otherwise on the next Business Day following transmission), addressed as provided above. (b) Any party may change the address to which notices to such party will be sent by giving notice of such change to the other parties to this Indenture. SECTION 12.06. Severability. Any provision of this Indenture 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 of this Indenture, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 12.07. Binding Effect. All covenants and agreements contained in this Indenture shall be binding upon the Indenture Trustee and its successors and assigns, the Company and its successors and assigns, and each Holder. Any request, notice, direction, consent, waiver or other instrument or action by any Holder shall bind the successors and assigns of such Holder. SECTION 12.08. Headings; Reference. The headings of the various articles and sections and in the Table of Contents are for convenience of reference only and shall not define or limit any of the terms or provisions of this Indenture. SECTION 12.09. Counterparts. This Indenture may be executed 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 12.10. Governing Laws. THIS INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 12.11. No Oral Modifications. The terms and provisions of this Indenture may not be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought and subject to Article 10 hereof. SECTION 12.12. Normal Commercial Relations. Notwithstanding anything contained in this Indenture to the contrary, the Company, the Indenture Trustee or any affiliate of either may enter into commercial banking or other financial transactions and conduct banking or other commercial relationships fully to the same extent as if this Indenture were not in effect, including, without limitation, the making of loans or other extensions of credit for any purpose whatsoever. SECTION 12.13. Section 1110 Compliance. Notwithstanding any provision herein or elsewhere contained to the contrary, it is understood and agreed among the parties hereto that the transactions contemplated by this Agreement and the other Operative Agreements are expressly intended to be, shall be and should be construed so as to be, entitled to the full benefits of Section 1110 of the Bankruptcy Code and any successor provision thereof. IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed by their respective authorized officers, as of the day and year first above written. FEDERAL EXPRESS CORPORATION, Company By__________________________ Name: Charles Buchas Title: Vice President and Treasurer ____________________________, Indenture Trustee By__________________________ Name: Title: Schedule I DEFINITIONS GENERAL PROVISIONS The following terms shall have the following meanings for all purposes of the Operative Agreements referred to below, unless otherwise defined in an Operative Agreement or the context thereof shall otherwise require. In the case of any conflict between the provisions of this Schedule and the provisions of any Operative Agreement, the provisions of such Operative Agreement shall control the construction of such Operative Agreement. Unless the context otherwise requires, (i) references to agreements shall be deemed to mean and include such agreements as amended and supplemented from time to time, and (ii) references to parties to agreements shall be deemed to include the successors and permitted assigns of such parties. DEFINED TERMS: Act; Federal Aviation Act. Title 49 of the United States Code (which, among other things, recodified the Federal Aviation Act of 1958, as amended to the time of such recodification), as amended and in effect, on the date of the Lease or as subsequently amended, or any successor or substituted legislation at the time in effect and applicable, and the regulations promulgated pursuant thereto. Additional Insureds. The Indenture Trustee and in the case of insurance obtained by any lessee of the Aircraft, the Company in its capacity as lessor under any lease of the Aircraft. Aeronautics Authority. As appropriate, the Federal Aviation Administration and/or the Administrator of the Federal Aviation Administration, any successor to the former United States Civil Aeronautics Board, or any Person, governmental department, bureau, commission or agency succeeding to the functions of any of the foregoing. Affiliate. With respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person. For the purposes of this definition, "control" (including "controlled by" and "under common control with") shall mean the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person whether through the ownership or voting securities or by contract or otherwise. After-Tax Basis. A basis such that any payment received or deemed to have been received by a Person shall be supplemented by a further payment to such Person so that the sum of the two payments, after deduction of all Taxes resulting from the receipt or accrual of such payments, shall be equal to the payment received or deemed to have been received. Agent. ___________________ and its successors and permitted assigns, as Agent for the banks named in the Loan Agreement. Air Carrier. Any U.S. Air Carrier and any "foreign air carrier" (as defined in the Act) as to which there is in force a permit granted under Section 41302 of the Act (formerly Section 402 of the Federal Aviation Act of 1958, as amended to the time of recodification by the Act). Aircraft. The Airframe [to be sold by the Manufacturer to the Company pursuant to the Purchase Agreement](*) (or any permitted substitute Airframe) together with the two Engines (or any Replacement Engine) whether or not any of such initial or Replacement Engines may from time to time be installed on such Airframe or may be installed on any other airframe or on any other aircraft, including any aircraft substituted pursuant to Section 4.05(c) of the Indenture. Airframe. The [Manufacturer/Model] aircraft (excluding the Engines or engines from time to time installed thereon) having the United States FAA Registration Number and manufacturer's serial number specified in the Indenture Supplement, including (i) all Parts and (ii) any replacement airframe which may be substituted pursuant to Section 4.05(c) of the Indenture. Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended, and any successor thereto. Bankruptcy Default. An event specified in Section 6.01(d), (e) and (f) of the Indenture which with the giving of notice or lapse of time or both would constitute an Event of Default. [Bills of Sale. Collectively, the FAA Bill of Sale for the Aircraft and an additional full warranty bill of sale covering the Aircraft (and specifically referring to each Engine) executed by the Manufacturer in favor of the Company and dated the Delivery Date.](*) Business Day. (a) any day on which commercial banks are not authorized or required to close in New York City. Citizen of the United States. A citizen of the United States as defined in Section 40102(a)(15) of the Act (formerly Section 101(16) of the Federal Aviation Act of 1958, as amended to the time of recodification by the Act), or any analogous part of any successor or substituted legislation or regulation at the time in effect. Code. Except as otherwise provided, references to the Code shall mean the Internal Revenue Code of 1986, as amended from time to time. Company. Federal Express Corporation, a Delaware corporation and its successors and permitted assigns. Consent and Agreement. The Consent and Agreement means the Consent and Agreement dated as of ____________, executed by the Manufacturer, as the same may be amended, modified or supplemented from time to time. Corporate Trust Office. The corporate trust office of the Indenture Trustee located at _________________ or such other office at which the Indenture Trustee's corporate trust business shall be administered that the Indenture Trustee shall have specified by notice in writing to the Company and the Holders. Debt Rate. __% per annum. Default. Any event or condition, which, with the lapse of time or the giving of notice, or both, would constitute an Event of Default. Delayed Delivery Notices. A certificate signed by a Responsible Officer of the Company (i) requesting that the Pass Through Trustee temporarily delay purchase of the Equipment Purchase Certificates to a date later than the Pass Through Closing Date, (ii) stating the amount of the purchase price of each such Equipment Purchase Certificate and the aggregate purchase price of all such Equipment Purchase Certificates and (iii) either (1) setting or resetting the [Delivery](*) [Refunding](**) Date, or (2) indicating that such [Delivery](*) [Refunding](**) Date will be set by subsequent written notice not less than three Business Days prior to such new [Delivery](*) [Refunding](**) Date. [Delivery Date. The date on which the Aircraft is to be delivered and sold by the Manufacturer to the Company which date is also the date of the initial Indenture Supplement.](*) Engine. Each of the [Model] engines listed by its manufacturer's serial number in the initial Indenture Supplement, whether or not from time to time installed on the Airframe or installed on any other airframe or on any other aircraft, and any Replacement Engine which may from time to time be substituted for an Engine pursuant to Sections 4.02(c)(vii), 4.05(c) or 4.05(d) of the Indenture, together with all Parts to any such Engine. Except as otherwise provided, at such time as a Replacement Engine shall be so substituted and the Engine for which the substitution is made shall be released from the lien of the Indenture, such replaced Engine shall cease to be an "Engine" under the Indenture. The term "Engines" means, as of any date of determination, all Engines subject to the Lien of the Indenture. Engine Agreement. The General Terms Agreement dated _______________, between the Company and the Engine Manufacturer (as heretofore amended, modified and supplemented). Engine Consent and Agreement. The Engine Consent and Agreement dated ____________, executed by the Engine Manufacturer. Engine Manufacturer. _____________________, a ______________ corporation. Equipment Purchase Certificates. The Equipment Purchase Certificates issued by the Company pursuant to the Indenture and any certificate issued in exchange therefor or replacement thereof pursuant to the Indenture. ERISA. The Employee Retirement Income Security Act of 1974, as amended. Estate Documents. The Purchase Agreement, the Consent and Agreement, the Engine Agreement and the Engine Consent and Agreement, in each case to the extent that the same relate to the Aircraft. Event of Default. Each of the events specified in Section 6.01 of the Indenture. Event of Loss. Any of the following events with respect to the Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A) for a period in excess of 180 days due to theft or disappearance, or (B) for a period in excess of 60 days due to the destruction, damage beyond economic repair or rendition of such property permanently unfit for normal use by the Company for any reason whatsoever; (ii) any damage to such property which results in an insurance settlement with respect to such property on the basis of a total loss, or constructive or compromised total loss; (iii) condemnation, confiscation or seizure of, or requisition of title to such property, by the Government, any foreign government or purported government or agency or instrumentality thereof, (iv) requisition of use of such property by the Government, a foreign government or instrumentality or agency thereof, or any purported government or instrumentality or agency thereof, for a period in excess of 180 days; and (v) as a result of any law, rule, regulation, order or other action by the Aeronautics Authority or other governmental body having jurisdiction, the use of the Aircraft or Airframe in the normal course of air transportation of cargo shall have been prohibited by virtue of a condition affecting all aircraft of the same type for a period of eighteen (18) consecutive months, unless the Company, prior to the expiration of such eighteen month period, shall be diligently carrying forward all steps which are necessary or desirable to permit the normal use of the Aircraft or Airframe or, in any event, if such use shall have been prohibited for a period of two (2) consecutive years, unless the Company, prior to the expiration of such two (2) year period shall have conformed at least one [Manufacturer/Model] aircraft (but not necessarily the Aircraft or the Airframe) to the requirements of any such law, rule, regulation, order, or other action and shall have commenced regular commercial use and shall be diligently carrying forward, on a non-discriminatory basis, all steps necessary or desirable to permit the normal use of the Aircraft by the Company. The date of such Event of Loss shall be the date of (i) loss of such property or its use for a period in excess of 180 days due to theft or disappearance, or loss for a period in excess of 60 days due to damage beyond economic repair or loss of use of the Airframe because of requisition for use for a period in excess of 180 days (or shorter period due to insurance settlement) (ii) an insurance settlement on the basis of total loss with respect to such property, (iii) condemnation, confiscation, seizure or requisition of title, or (iv) prohibition from usage for the periods described in clause (v) above. An Event of Loss with respect to the Aircraft shall be deemed to have occurred if any Event of Loss occurs with respect to the Airframe. Fair Market Value. An amount determined on the basis of, and equal in amount to, the value which would be obtained in an arm's-length transaction between an informed and willing purchaser under no compulsion to buy and an informed and willing seller unaffiliated with such purchaser and under no compulsion to sell. In such determination it shall be assumed that the Aircraft is in the condition required under the Indenture. Federal Aviation Administration and FAA. The United States Federal Aviation Administration and any successor agency or agencies thereto. Government. The United States of America or an agency or instrumentality thereof. Holder. On any date of determination, the Person in whose name such Equipment Purchase Certificate is registered. In no event shall the term Holder include a holder of a Pass Through Certificate. Indemnified Person. Has the meaning set forth in Section 7.05(b)(ii) of the Indenture. Indenture. The Trust Indenture, Mortgage and Security Agreement, dated as of ___________, 199_, between the Company and the Indenture Trustee as amended, supplemented or modified by any amendment or supplement thereto from time to time entered into. Indenture Amendment. Has the meaning set forth in Section 11.02 of the Indenture. Indenture Estate. Has the meaning set forth in the Granting Clause of the Indenture. Indenture Supplement. A supplement to the Indenture, substantially in the form of Exhibit A to the Indenture. Indenture Trustee. ______, a national banking association, not in its individual capacity, but solely in its capacity as Indenture Trustee under the Indenture and its successors and permitted assigns as trustee thereunder. Independent Investment Banker. An independent investment banking institution of national standing appointed by the Company that is independent in fact, does not have any direct financial interest, or any material indirect financial interest, in the Company or any Affiliate of the Company, and is not connected with the Company or any Affiliate of the Company as an officer, employee, promoter, underwriter, trustee, partner, director or Person performing similar functions; provided, that if the Indenture Trustee shall not have received written notice of such an appointment at least 10 days prior to the Prepayment Date or if an Event of Default shall have occurred and be continuing, "Independent Investment Banker" shall mean such an institution appointed by the Indenture Trustee. Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or security interest. [Loan Agreement. The Loan Agreement dated as of _________, 199_ between the Company, the banks named therein and _______, as agent for such banks (as amended, modified, supplemented and in effect from time to time).](**) Majority in Interest of Certificate Holders. As of a particular date of determination, the Holders of more than 50% in aggregate unpaid principal amount of all Equipment Purchase Certificates outstanding as of such date excluding for purposes of this definition any Equipment Purchase Certificates held by the Company or any Affiliate thereof. Make-Whole Premium. With respect to each Equipment Purchase Certificate to be prepaid pursuant to Section 2.02(c) of the Indenture, an amount determined as of the day before the applicable prepayment date which an Independent Investment Banker determines to be equal to the excess, if any, of (i) the present values of all remaining scheduled payments of principal or portion thereof and interest thereon (excluding interest accrued from the immediately preceding Payment Date to such prepayment date) to the Maturity of such Equipment Purchase Certificate in accordance with generally accepted financial practices assuming a 360-day year consisting of twelve 30-day months at a discount rate equal to Treasury Yield, all as determined by the Independent Investment Banker over (ii) the unpaid principal amount of such Equipment Purchase Certificate. Manufacturer. _________________, a ______________ corporation. Maturity. With respect to any Equipment Purchase Certificate, the date on which the final principal amount of such Equipment Purchase Certificate is payable. Moody's. Moody's Investors Service, Inc. Obligations. Principal of and interest on the Equipment Purchase Certificates and all other amounts owing by the Company thereunder and under the Indenture in respect of the Equipment Purchase Certificates and under the other Operative Agreements and the performance and observance by the Company of all of the agreements, covenants and provisions contained in the Indenture in respect of the Equipment Purchase Certificates and in the other Operative Agreements. Obsolete Parts. Parts which the Company deems obsolete or no longer suitable or appropriate for use on the Airframe or any Engine. Operative Agreements. The Indenture, the Indenture Supplement, the Equipment Purchase Certificates, [the Bills of Sale,](*) the Pass Through Agreement, the Series Supplements, the Estate Documents and the Participation Agreement. [Original Equipment Purchase Certificates. The equipment purchase certificates issued on the Delivery Date. [Original Indenture. The Indenture, Mortgage and Security Agreement dated as of ________, 199_, between the Company and the Indenture Trustee which, together with the Indenture and Security Agreement Supplement No. 1 dated _________, attached thereto was recorded as one instrument by the FAA on ________ and assigned Conveyance Number ___.](**) Participation Agreement. The Participation Agreement to be entered into by the Company relating to the purchase of the Equipment Purchase Certificates by the Pass Through Trustee, substantially as set forth in Exhibit C to the Indenture. Parts. All appliances, parts, components, instruments, appurtenances, accessories, furnishings and other equipment of whatever nature (other than complete Engines or engines) which may from time to time be incorporated or installed in or attached to the Airframe or any Engine or prior to replacement thereof in accordance with the Indenture, which may be removed therefrom. Pass Through Agreement. The Pass Through Trust Agreement to be entered into by the Company and the Pass Through Trustee, as such Pass Through Agreement may be modified, supplemented or amended from time to time in accordance with the provisions thereof. Pass Through Certificates. Any of the Pass Through Certificates, as issued by the related Pass Through Trust; and "Pass Through Certificates" means all of the Pass Through Certificates issued by each of the Pass Through Trusts. Pass Through Closing Date. The Business Day on which the sale of the Pass Through Certificates to the Underwriters pursuant to the Underwriting Agreement takes place. Pass Through Trust. The Federal Express Pass Through Trust formed pursuant to the related Series Supplement in accordance with the Pass Through Agreement. Pass Through Trustee. __________________, a national banking association, in its capacity as Pass Through Trustee under the Pass Through Agreement and each Pass Through Trust, and its successors and assigns as Pass Through Trustee thereunder. Payment Date. Each six-month anniversary of the Refunding Date. Payment Default. Any event specified in Section 6.01(a) of the Indenture which with the giving of notice or lapse of time or both would constitute an Event of Default. Permitted Investments. Investment in (i) direct obligations of the United States of America; (ii) obligations fully guaranteed by the United States; (iii) certificates of deposit issued by, or bankers' acceptances of, or time deposits or a deposit account with, any bank, trust company or national banking association incorporated or doing business under the laws of the United States of America or one of its States (which may include the Indenture Trustee, in its individual capacity, and any of its Affiliates), having a combined capital and surplus of at least $500,000,000 and having a rating of "B" or better from the Thomson Bank Watch; or (iv) commercial paper rated at least A-1/P-1 by S&P and Moody's, respectively (or if neither such organization shall rate such commercial paper at any time, by any nationally recognized rating organization in the United States of America equal to the highest rating assigned by such rating organization). Person. Any individual, sole proprietorship, partnership, joint venture, joint stock company, trust, unincorporated organization, association, corporation, institution, entity or government (federal, state, local, foreign or any agency, instrumentality, division or body thereof). Post-Default Rate. A rate of interest per annum equal to ____% per annum plus the Debt Rate. [Purchase Agreement. The Purchase Agreement dated _________, between the Manufacturer and the Company (as heretofore amended, modified and supplemented), providing inter alia, for the manufacture and sale by the Manufacturer to the Company of certain [Manufacturer/Model] aircraft, as such Purchase Agreement may hereafter be amended, modified or supplemented, but solely as such Purchase Agreement relates to the Aircraft.](*) Record Date. With respect to Payment Dates under the Indenture (except a date for payment of defaulted interest), ________ for ________ Payment Dates and _________ for ____________ Payment Dates, whether or not such date is a Business Day. Refunding Date. A Business Day on which the refunding of the Original Equipment Purchase Certificates occurs, the expected date thereof having been specified by the Company in a written notice given to the Indenture Trustee and the Pass Through Trustee. Register. Has the meaning specified in Section 2.07 of the Indenture. Replacement Engine. A [Manufacturer/Model] engine (or an engine of the same or another manufacturer of the same or of equal or greater value, and utility), which shall have been substituted for an Engine pursuant to Sections 4.02(c)(vii), 4.05(c) or 4.05(d) of the Indenture and leased pursuant to the Lease, together with all Parts relating to such engine. Responsible Officer. With respect to the Indenture Trustee, any officer in its Corporate Trust Administration Department designated by such person to perform obligations under the Operative Agreements, and with respect to any other Person, any corporate officer or other employee of a Person who, in the normal performance of his or her operational responsibilities, with respect to the subject matter of any covenant, agreement or obligation of such party pursuant to any Operative Agreement, would have responsibility for and knowledge of such matter and the requirements of any Operative Agreement with respect thereto. S&P. Standard & Poor's Corporation. SEC. The Securities and Exchange Commission of the United States and any successor agencies or authorities. Series Supplement. Each Series Supplement to be executed and delivered by the Company and the Pass Through Trustee, as such Series Supplement may be modified, supplemented or amended from time to time in accordance with the provisions thereof and "Series Supplements" means both of such Series Supplements. Special Aviation Counsel. Daugherty, Fowler & Peregrin. Supplemented Indenture. Has the meaning set forth in Section 2.02(b)(i) of the Indenture. Threshold Value. Has the meaning set forth in Section 4.06(b) of the Indenture. Treasury Yield. (i) In the case of an Equipment Purchase Certificate having a Maturity within one year after the prepayment date, the average yield to maturity on a government bond equivalent basis of the applicable United States Treasury Bill due the week of Maturity of such Equipment Purchase Certificate and (ii) in the case of an Equipment Purchase Certificate having a Maturity one year or more after the Prepayment Date, the average yield of the most actively traded United States Treasury Note (as reported by Cantor Fitzgerald Securities Corp. on page 5 of Telerate Systems, Inc., a financial news service, or if such report is not available, a source deemed comparable by the Independent Investment Banker selected to determine the Make-Whole Premium and reasonably acceptable to the Company) corresponding in maturity to such Equipment Purchase Certificate (or if there is no corresponding maturity, an interpolation of maturities by the Independent Investment Banker), in each case determined by the Independent Investment Banker selected to determine the Make-Whole Premium based on the average of the yields to stated maturity determined from the bid prices as of 10:00 a.m. and 2:00 p.m., New York time, on the second Business Day preceding the prepayment date. Underwriters, for any Underwriting Agreement, the several Underwriters named therein. Underwriting Agreement. An agreement among the Company and the several Underwriters relating to the purchase by such Underwriters of the Pass Through Certificates. United States or US. The United States of America. U.S. Air Carrier. Any United States air carrier as to which there is in force a certificate issued pursuant to Section 41102(a) or Section 41103 of the Federal Aviation Act (formerly Sections 401 and 418, respectively, of the Federal Aviation Act of 1958, as amended to the time of recodification by the Act), and as to which there is in force an air carrier operating certificate issued pursuant to Chapter 447 of the Federal Aviation Act and Part 121 of the regulations under such Act, or which may operate as an air carrier by certification or otherwise under any successor or substitute provision thereof or in absence thereof. Schedule II PERMITTED COUNTRY LIST Argentina Italy Australia Jamaica Austria Japan Bahamas Luxembourg Barbados Malaysia Belgium Malta Brazil Mexico British Virgin Islands Netherlands Canada New Zealand Cayman Islands Norway Denmark Portugal Egypt Republic of China (Taiwan) Finland Singapore France South Korea Germany Spain Greece Sweden Grenada Switzerland Hong Kong Thailand Iceland Trinidad & Tabago Indonesia United Kingdom Ireland EXHIBIT A TO INDENTURE FORM OF INDENTURE SUPPLEMENT THIS INDENTURE SUPPLEMENT, dated ________ __, 1992 between FEDERAL EXPRESS CORPORATION (the "Company"), a Delaware corporation, and ________________, a national banking corporation, not in its individual capacity but solely as trustee ( the "Indenture Trustee") under Trust Indenture, Indenture and Security Agreement dated as of __________ __, 199_ (the "Indenture") between the Company and the Indenture Trustee. All capitalized terms used herein and not defined herein shall have the respective meanings set forth in the Indenture. W I T N E S S E T H : WHEREAS,(***) the Indenture provides for the execution and delivery of a Supplement substantially in the form of this Supplement, which Supplement shall particularly describe the Aircraft included in the Indenture Estate, and shall specifically mortgage such Aircraft to the Indenture Trustee; and WHEREAS,(****) the Indenture Supplement dated ______________, ____ (the Indenture being attached to and made a part of such Supplement and filed therewith) have been duly recorded pursuant to the Federal Aviation Act of 1958, as amended on __________________, ____, as one document and have been assigned Conveyance No. ________; *** This recital is to be included only in the first Supplement. **** This recital is not to be included in the first Supplement. WHEREAS, the Indenture relates to the Aircraft and the Engines described in the following paragraph and a counterpart of the Indenture is attached to and made a part of this Supplement, and this Supplement, together with such attachment, is being filed for recordation on or promptly after the date of this Supplement with the Federal Aviation Administration as one document. NOW, THEREFORE, to secure (i) the prompt payment of the principal of and Make-Whole Premium, if any, and interest on, and all other amounts due with respect to, all the Equipment Purchase Certificates from time to time outstanding under the Indenture and (ii) the performance and observance by the Company of all the agreements, covenants and provisions in this Indenture contained for the benefit of the Holders of the Equipment Purchase Certificates, and for the uses and purposes and subject to the terms and conditions of the Indenture, and in consideration of the premises and of the covenants contained in the Indenture and in the Equipment Purchase Certificates and of the purchase of the Equipment Purchase Certificates by the Holders, and of the sum of $1.00 paid to the Company by the Indenture Trustee at or before the delivery of this Supplement, the receipt of which is hereby acknowledged, the Company has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged, granted a security interest in and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge, grant a purchase money equipment security interest in and confirm to the Indenture Trustee, its successors and assigns in the trust created by the Indenture for the security and benefit of the Holders from time to time of the Equipment Purchase Certificates, the following described Equipment (the "Delivered Equipment"): (i) one (1) Manufacturer/Model Registration Number ______; Manufacturer's Serial No. _____; (ii) Manufacturer/Model engines bearing, respectively, Manufacturer's Serial Nos. ______, ______, and ______ (each of which engines has 750 or more rated takeoff horsepower or the equivalent of such horsepower); and whether or not such engines shall be installed in or attached to such airframe or any other airframe. Together with all substitutions, replacements and renewals, by whomsoever manufactured, of the property above described, and all property which shall hereafter become physically attached to or incorporated in the property above described, by whomsoever manufactured, whether the same are now owned by the Company or shall hereafter be acquired by it and all Parts in respect thereof. TO HAVE AND TO HOLD the aforesaid property to the Indenture Trustee, its successors and assigns, for the benefit and security of the Holders from time to time of the Equipment Purchase Certificates and for the uses and purposes and subject to the terms and conditions set forth in the Indenture. AND, FURTHER, the Company, hereby acknowledges that the Delivered Equipment referred to in the aforesaid Indenture attached to and made a part of this Supplement has been delivered to the Company and is included in the property of the Company, subject to the pledge or mortgage under the Indenture. This Supplement shall be construed as supplemental to the Indenture and shall form a part thereof, and the Indenture is hereby incorporated by reference in this Supplement and is hereby ratified, approved and confirmed. This Supplement may be executed by the Company and the Indenture Trustee in separate counterparts, each of which when so executed and delivered is an original, but all such counterparts shall together constitute but one and the same Supplement. IN WITNESS WHEREOF, the Company and the Indenture Trustee have each caused this Supplement to be duly executed by their respective, duly authorized officers as of the day and year first above written. COMPANY: FEDERAL EXPRESS CORPORATION, By___________________________ Title: Vice President and Treasurer INDENTURE TRUSTEE: ___________________________, not in its individual capacity, but solely as Indenture Trustee, By___________________________ Title: EXHIBIT B TO INDENTURE FORM OF EQUIPMENT PURCHASE CERTIFICATE THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR OFFERED FOR SALE UNLESS REGISTERED UNDER SAID ACT OR LAWS OR UNLESS AN EXEMPTION IS AVAILABLE UNDER SAID ACT OR LAWS. FEDERAL EXPRESS CORPORATION EQUIPMENT PURCHASE CERTIFICATE DUE ____ FEDERAL EXPRESS CORPORATION [SERIES NAME] ISSUED IN CONNECTION WITH ONE MANUFACTURER/MODEL AIRCRAFT WITH MANUFACTURER'S SERIAL NO. ______, AND INITIALLY BEARING UNITED STATES FEDERAL AVIATION ADMINISTRATION REGISTRATION NO. ______ AND INCLUDING MANUFACTURER/MODEL ENGINES No. ______ __, 199_ $ FEDERAL EXPRESS CORPORATION hereby promises to pay to __________________________________, or its registered assigns, the principal sum of ___________ in __ installments as set forth in Annex A hereto, each such installment to be in an amount equal to the amount set forth in Annex A hereto, together with interest on each Payment Date on the amount of said principal sum remaining unpaid from time to time from and including the date of this Equipment Purchase Certificate until paid at the rates per annum provided in the Trust Indenture, Mortgage and Security Agreement, dated as of _________ _, 199_ between the Company and _______________________, not in its individual capacity except as otherwise expressly provided therein, but solely as Indenture Trustee (the "Indenture"), all as more fully provided therein. Capitalized terms used herein and not otherwise defined have the meanings specified in Schedule I to the Indenture. All principal, interest and other amounts payable on, under or in respect of this Equipment Purchase Certificate shall be payable in U.S. dollars in immediately available funds at the Corporate Trust Office of the Indenture Trustee or at any office or agency maintained for such purpose pursuant to the Indenture and otherwise in accordance with the terms of the Indenture; provided, however that interest may be payable at the option of the Indenture Trustee by mailing checks for such interest payable to or on the written order of the Holders entitled thereto as they shall appear on the Register; provided further, however, that notwithstanding the foregoing to the contrary, interest payable with respect to the Equipment Purchase Certificates as to which the Pass Through Trustee is the Holder shall be sent by wire transfer of immediately available funds to an account or accounts in the United States previously specified by the Pass Through Trustee to the Indenture Trustee. Each Holder, by its acceptance of an Equipment Purchase Certificate, agrees that the Indenture Trustee is not and shall not be personally liable to the Holder for any amount payable under such Equipment Purchase Certificate or the Indenture or except as expressly provided in the Indenture, for any liability under the Indenture. This Equipment Purchase Certificate is one of the Equipment Purchase Certificates referred to in the Indenture which has been or is to be issued by the Company pursuant to the terms of the Indenture. The Indenture Estate is held by the Indenture Trustee as security for the Equipment Purchase Certificates. Reference is hereby made to the Indenture for a statement of the rights and obligations of the Holder of, and the nature and extent of the security for, this Equipment Purchase Certificate and of the rights and obligations of the Holders of, and the nature and extent of the security for, the other Equipment Purchase Certificates under the Indenture, as well as for a statement of the terms and conditions of the trusts created by the Indenture, to all of which terms and conditions in the Indenture each Holder of this Equipment Purchase Certificate agrees by its acceptance of this Equipment Purchase Certificate. The obligations of the Company with respect to this Equipment Purchase Certificate may, at the Company's option, be assumed by an Owner Trustee on a non-recourse basis in connection with a sale-leaseback transaction relating to the Aircraft as provided in Article 11 of the Indenture, and the Holder hereof, by its acceptance of this Equipment Purchase Certificate, consents to such assumption. As provided in the Indenture and subject to certain limitations set forth in the Indenture, the Equipment Purchase Certificates are exchangeable for a like aggregate principal amount of Equipment Purchase Certificates of a different denomination, as requested by the Holder surrendering the same. This Equipment Purchase Certificate is a registered Equipment Purchase Certificate and is transferable, as provided in the Indenture, only upon surrender of this Equipment Purchase Certificate for registration of transfer duly endorsed by, or accompanied by a written statement of transfer duly executed by, the registered Holder hereof or his attorney duly authorized in writing. Prior to due presentment for registration of transfer of this Equipment Purchase Certificate, the Company and the Indenture Trustee shall deem and treat the person in whose name this Equipment Purchase Certificate is registered as the owner of this Equipment Purchase Certificate for all purposes whether or not this Equipment Purchase Certificate shall be overdue, and neither the Company nor the Indenture Trustee shall be affected by notice to the contrary. This Equipment Purchase Certificate is not subject to prepayment except as specifically provided in the Indenture. Until the certificate of authentication below shall have been duly executed by or on behalf of the Indenture Trustee by manual signature, this Equipment Purchase Certificate shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. This Equipment Purchase Certificate may become or be declared due and payable prior to its Maturity as provided in the Indenture. No employee benefit plan subject to Title I of ERISA or individual retirement account or employee benefit plan subject to Section 4975 of the Code, or any trust established under any such plan or account (hereinafter collectively referred to as an "ERISA Plan"), may acquire or hold any of the Equipment Purchase Certificates. The acquiring by any Person of any Equipment Purchase Certificates shall be deemed to constitute a representation by such Person to the Company and the Indenture Trustee that such person is not an ERISA Plan and that such Person is not acquiring, and has not acquired, such Equipment Purchase Certificate with assets of an ERISA Plan. THIS EQUIPMENT PURCHASE CERTIFICATE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. IN WITNESS WHEREOF, the Company has caused this Equipment Purchase Certificate to be executed by its duly authorized officer as of the date hereof. FEDERAL EXPRESS CORPORATION By____________________________ Title: [FORM OF INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This is the Equipment Purchase Certificate referred to in the within mentioned Indenture. __________________________, not in its individual capacity, but solely as Indenture Trustee By_________________________ Title: Authorized Officer ANNEX A TO EQUIPMENT PURCHASE CERTIFICATE SCHEDULE OF PRINCIPAL PAYMENTS EXHIBIT C TO INDENTURE FORM OF PARTICIPATION AGREEMENT See Exhibit 4(e)(2) to this Registration Statement. EXHIBIT D TO INDENTURE FORM OF LEASE AGREEMENT See Exhibit 4(g) to this Registration Statement EXHIBIT E TO INDENTURE FORM OF INDENTURE AMENDMENT See Exhibit 4(c) to this Registration Statement EXHIBIT F TO INDENTURE FORM OF LEASE PARTICIPATION AGREEMENT See Exhibit 4(e)(1) to this Registration Statement EX-4.E2 3 Exhibit 4(e)(2) PARTICIPATION AGREEMENT Dated as of ___________, 199_ among FEDERAL EXPRESS CORPORATION, _____________________________, as Pass Through Trustee and _____________________________, as Indenture Trustee _________________________________________ Relating to One [Manufacturer/Model] Aircraft TABLE OF CONTENTS Page SECTION 1. Certain Definitions . . . . . . . . . 2 SECTION 2. Purchase of Equipment Purchase Certificates . . . . . . . . . . . . 2 SECTION 3. Conditions Precedent . . . . . . . . . 4 SECTION 4. Representations, Warranties and Agreements of the Company . . . . . . 9 SECTION 5. Representations and Warranties of the Pass Through Trustee . . . . . . 12 SECTION 6. Representations of the Indenture Trustee . . . . . . . . . . . . . . . 13 SECTION 7. Notices . . . . . . . . . . . . . . . 14 SECTION 8. Expenses . . . . . . . . . . . . . . 14 SECTION 9. Survival of Representations and Warranties . . . . . . . . . . . . . 14 SECTION 10. Counterparts . . . . . . . . . . . . 15 SECTION 11. Entire Agreement; Amendments and Waivers . . . . . . . . . . . . . . . 15 SECTION 12. Headings and Table of Contents . . . 15 SECTION 13. Governing Law . . . . . . . . . . . . 15 SECTION 14. Capacity in Which Acting . . . . . . 15 SCHEDULE I Definitions SCHEDULE II Schedule of Equipment Purchase Certificates EXHIBIT A Form of Opinion of ____________________, Special Counsel for the Company EXHIBIT B Form of Opinion of Counsel for the Company EXHIBIT C Form of Opinion of Daugherty, Fowler & Peregrin EXHIBIT D Form of Opinion of _____________________, Special Counsel for the Indenture Trustee EXHIBIT E Form of Opinion of _____________________, Special Counsel for the Pass Through Trustee PARTICIPATION AGREEMENT This PARTICIPATION AGREEMENT (this "Agreement") dated as of __________, 199_ among FEDERAL EXPRESS CORPORATION, a Delaware corporation, _____________________________, ____________________, a national banking association, not in its individual capacity except as otherwise expressly provided herein, but solely as Pass Through Trustee under the Pass Through Agreement and ______________________, ____________________, not in its individual capacity, except as otherwise expressly provided herein, but solely as Indenture Trustee, under the Indenture. W I T N E S S E T H: [WHEREAS, the Company (such term and other capitalized terms used herein being defined as hereinafter provided) has entered into a Purchase Agreement with the Manufacturer regarding inter alia, the purchase of the Aircraft by the Company from the Manufacturer; and WHEREAS, the Company desires to finance a portion of the purchase price of the Aircraft through the issuance of Equipment Purchase Certificates and to such end shall execute and deliver the Indenture;](*) [WHEREAS, the Company (such term and other capitalized terms used herein being defined as hereinafter provided) purchased the Aircraft from the Manufacturer and, in connection with such purchase, (i) entered into the Loan Agreement, pursuant to which the Company borrowed funds which it applied to the Purchase Price for the Aircraft, and (ii) entered into the Original Indenture with the Indenture Trustee, under which, among other things, the Company issued the Original Equipment Purchase Certificates to evidence such borrowing and granted a security interest in the Aircraft to the Indenture Trustee for the equal and ratable benefit of the holders from time to time of such the Original Equipment Purchase Certificates; and (*) Bracketed information followed by an asterisk ([ ](*)) will be included only in the case of initial funding. (**) Bracketed information followed by two asterisks ([ ](**)) will be included only in the case of refunding. WHEREAS, the Company wishes to cause a refinancing of such Equipment Purchase Certificates, and the Pass Through Trustee wishes to acquire Equipment Purchase Certificates issued under the Indenture, as amended and restated, all upon the terms and conditions hereinafter set forth;](**) NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: SECTION 1. Certain Definitions. Unless the context requires otherwise, all capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in Schedule I hereto. SECTION 2. Purchase of Equipment Purchase Certificates. (a) On or before the [Delivery](*) [Refunding](**) Date, the Pass Through Trustee and the Company, in accordance with the Pass Through Agreement, shall enter into the Series Supplements, and, subject to the terms and conditions set forth therein, on the [Delivery](*) [Refunding](**) 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 pursuant to the Underwriting Agreement with respect to the Pass Through Certificates and (ii) the Pass Through Trustee shall deliver the Pass Through Certificates to the Underwriters upon receipt by the Pass Through Trustee of such proceeds. (b) Subject to the satisfaction or waiver of the conditions set forth herein, at 11:00 a.m. New York City time on the [Delivery](*) [Refunding](**)Date, the Pass Through Trustee for each Pass Through Trust shall purchase Equipment Purchase Certificates of the Maturity, aggregate principal amount, and bearing the interest rate that relates to such Pass Through Trust set forth on Schedule II hereto and the Indenture Trustee shall deliver such Equipment Purchase Certificates to the Pass Through Trustee. [Simultaneously with the payment of the Purchase Amount by the Pass Through Trustee for each Pass Through Trust, the Company will pay to the order of the Agent on behalf of the holders thereof an amount equal to the accrued and unpaid interest on the original Equipment Purchase Certificates to the Refunding Date, whether or not then due, and all other amounts (other than principal) payable to the Indenture Trustee, the Agent and such holders under the Original Equipment Purchase Certificates, the Indenture or the Loan Agreement (as each such amount pertains to the Original Equipment Purchase Certificates) on the Refunding Date.](**) As a condition precedent to any such purchase, the Underwriters shall have indemnified the Indenture Trustee [and]* the Pass Through Trustee[, the Agent and the holders of the Original Equipment Purchase Certificates](**) from and against any loss, liability, claim or expense arising out of or relating to the underwriting of the Pass Through Certificates, it being expressly understood and agreed that no such Person shall be deemed to have made any representation or warranty whatsoever in connection therewith. The Pass Through Trustee, from the proceeds of sale of the related Pass Through Certificates, shall execute a wire transfer or intra-bank transfer of immediately available funds in favor of the Indenture Trustee on behalf of the Company in the amount of the [then outstanding](**) principal amount of the applicable Equipment Purchase Certificates and which amounts shall be [paid by the Indenture Trustee to the Company](*) [applied by the Indenture Trustee in prepayment of the principal amount of the original Equipment Purchase Certificates](**). [Upon receipt of the amounts set forth in this Section 2(b) hereof, the holders of the Original Equipment Purchase Certificates shall deliver the same to the Indenture Trustee for cancellation and such delivery will constitute an acknowledgement by each such holder that it has no further interest in or right with respect to the Indenture Estate.](**) (c) If, on or prior to the Pass Through Closing Date, the Company delivers to the Pass Through Trustee and the Indenture Trustee a Delayed Delivery Notice relating to the Equipment Purchase Certificates, the [Delivery](*) [Refunding](**) Date shall be postponed to the date specified in such Delayed Delivery Notice. On such later [Delivery](*) [Refunding](**) Date, the purchase by the Pass Through Trustee shall occur as provided in this Section 2 and the Company shall, on the Initial Regular Distribution Date (as such term is defined in the Series Supplements) for each Pass Through Trust, pay in immediately available funds to the Pass Through Trustee for such Pass Through Trust an amount equal to the interest that would have accrued on the Equipment Purchase Certificates purchased by such Pass Through Trust after the Pass Through Closing Date if such Equipment Purchase Certificates had been purchased on such Pass Through Closing Date, from such Pass Through Closing Date to, but not including, the [Delivery](*) [Refunding](**) Date on which such Equipment Purchase Certificates were so purchased. (d) The Purchase Amount, and all amounts payable by the Company pursuant to Section 2[(b) or](**) (c) above, shall be paid by wire transfer of immediately available funds to the account(s) and in such amounts as [the Company,](*) [the Agent](**) or the Pass Through Trustee shall specify by notice given not less than one Business Day prior to the [Delivery](*) [Refunding](**) Date. (e) The closing of the transactions described in this Agreement shall take place at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017. (f) In order to facilitate the purchase by the Pass Through Trustee under each Pass Through Trust of the Equipment Purchase Certificates contemplated hereby, the Company (i) is entering into the Underwriting Agreement, (ii) [is entering] [has entered] into the Pass Through Agreement as the "issuer" (as defined in and solely for purposes of the Securities Act of 1933, as amended) and will enter into the Series Supplements with respect to the Pass Through Certificates and (iii) is undertaking to perform certain administrative and ministerial duties under the Pass Through Agreement. SECTION 3. Conditions Precedent. The obligation of the Pass Through Trustee under each Pass Through Trust to purchase the Equipment Purchase Certificates on the [Delivery](*) [Refunding](**) Date is subject to the fulfillment, prior to or on the [Delivery](*) [Refunding](**) Date, of the following conditions precedent: (a) Each party (other than the delivering party) shall have received the following documents in form and substance satisfactory to it: (i) a copy of the certificate of incorporation and bylaws of the Company certified by the Secretary or Assistant Secretary of the Company (or other like instruments satisfactory to such party), and of resolutions of the Board of Directors of the Company duly authorizing the execution and delivery by the Company of this Agreement and the other Operative Agreements, together with an incumbency certificate of the Company as to the Person or Persons authorized to execute and deliver said documents on behalf of the Company and the signatures of such Person or Persons; (ii) a copy of the articles of association and bylaws of the Pass Through Trustee, certified by the Secretary or an Assistant Secretary of the Pass Through Trustee, which by-laws include a provision duly authorizing the execution and delivery by the Pass Through Trustee or this Agreement and the other Operative Agreements to which it is a party required to be executed and delivered in connection herewith, together with an incumbency certificate of the Pass Through Trustee as to the Person or Persons authorized to execute and deliver said documents on behalf of the Pass Through Trustee and the signatures of such Person or Persons; (iii) a copy of the articles of association and bylaws of the Indenture Trustee, certified by the Secretary or Assistant Secretary of the Indenture Trustee, which by-laws include a provision duly authorizing the execution and delivery by the Indenture Trustee of this Agreement and any other documents required to be executed and delivered in connection herewith, together with an incumbency certificate of the Indenture Trustee as to the Person or Persons authorized to execute and deliver said documents on behalf of the Indenture Trustee and the signatures of such Person or Persons; (iv) a certificate signed by an authorized officer of the Company, dated the [Delivery](*) [Refunding](**) Date, certifying that: (A) the Aircraft has been duly certified by the Federal Aviation Administration as to type and airworthiness in accordance with the terms of the Indenture; (B) the FAA Bill of Sale, the Indenture and each Indenture Supplement have been duly [filed for recording](*) [recorded](**) with the FAA pursuant to the Federal Aviation Act; (C) the Aircraft has been registered with the FAA in the name of the Company and the Company has authority to operate such Aircraft; (D) the Company has good and marketable title to the Aircraft, free and clear of all Liens other than Liens permitted under Article IV of the Indenture; (E) the representations and warranties of the Company contained herein and the representations and warranties of the Company in the Indenture, are correct as though made on and as of the [Delivery](*) [Refunding](**) Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties were correct on and as of such earlier date); (F) no event has occurred and is continuing which constitutes an Event of Default under the Indenture or would constitute an Event of Default under the Indenture but for the requirement that notice be given or time elapsed or both; and (G) no event has occurred and is continuing which constitutes, or would with the passage of time constitute, an Event of Loss with respect to the Airframe or any Engine; (v) a certificate signed by an authorized officer of the Pass Through Trustee, dated the [Delivery](*) [Refunding](**) Date, certifying that the representations and warranties of the Pass Through Trustee contained herein are correct as though made on and as of the [Delivery](*) [Refunding](**) Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties were correct on and as of such earlier date); and (vi) a certificate signed by an authorized officer of the Indenture Trustee, dated the [Delivery](*) [Refunding](**) Date, certifying that the representations and warranties of the Indenture Trustee contained herein and in the Indenture are correct as though made on and as of the [Delivery](*) [Refunding](**) Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties were correct on and as of such earlier date. (b) The Pass Through Trustee shall have received concurrently with making its payment of the Purchase Amount, the Equipment Purchase Certificates duly registered in its name. (c) The Pass Through Trustee shall have received the audited consolidated balance sheet of the Company for the fiscal year ended May 31, 199_ [and the unaudited consolidated balance sheet of the Company as of _________, 199_], and the related consolidated statements of income and cash flows for the fiscal year[ and interim reporting period] ended on such date[s], accompanied [(except in the case of such interim reporting period)] by a report thereon containing opinions without qualification, except as therein noted, by Arthur Andersen & Co., independent public accountants; said financial statements have been prepared in accordance with generally accepted accounting principles consistently applied and present fairly the financial position of the Company as of such dates and the results of its operations and cash flows for such periods. (d) No action or proceeding shall have been instituted nor shall governmental action be threatened before any court or governmental agency, nor shall any order, judgment or decree have been issued or proposed to be issued by any court or governmental agency at the time of the [Delivery](*) [Refunding](**) Date to set aside, restrain, enjoin or prevent the consummation of this Agreement or the other Operative Agreements or the transactions contemplated hereby or thereby. (e) A Uniform Commercial Code ("UCC") financing statement or statements covering the security interest created by or pursuant to the Granting Clause of the Indenture shall have been executed and delivered by the Company, as debtor, and by the Indenture Trustee, as secured party, and such financing statement or statements shall have been duly filed in all places, and all other actions shall have been taken, which in the opinion of special counsel for the Pass Through Trustee or for the Underwriters are necessary or desirable to perfect said security interest and no termination statement shall have been filed with respect thereto. (f) No change shall have occurred after the date of the execution and delivery of this Agreement and prior to the [Delivery](*) [Refunding](**) Date in any applicable law which would make it a violation of any applicable law for the parties hereto to enter into any transaction contemplated by the Operative Agreements. (g) The Pass Through Trustee shall have received an independent insurance broker's report, together with certificates of insurance from such broker, evidencing the due compliance with the terms of Section 4.06 of the Indenture relating to insurance with respect to the Aircraft. (h) Each party shall have received an opinion addressed to it from _____________________, special counsel for the Company, substantially in the form of Exhibit A hereto. (i) Each party shall have received an opinion addressed to it from the Vice President - Law of the Company, substantially in the form of Exhibit B hereto. (j) Each party shall have received an opinion addressed to it from Special Aviation Counsel, substantially in the form of Exhibit C hereto. (k) Each party shall have received opinions addressed to it from __________________________________, special counsel for the Indenture Trustee and the Pass Through Trustee substantially in the form of Exhibits D and E hereto. (l) The Company and the Underwriters shall have entered into the Underwriting Agreement and the Company and the Pass Through Trustee shall have entered into the Pass Through Agreement and the Series Supplements, and the Pass Through Certificates shall have been issued pursuant to the Underwriting Agreement and the Pass Through Agreement and there shall have been transferred to the Pass Through Trustee in immediately available funds an amount equal to the Purchase Amount. [(m) The Company shall have paid to the Agent the amounts referred to in the second sentence of Section 2(a) hereof.](**) [(m)](*)[(n)](**) Each party shall have received such other documents and evidence with respect to each other party to the transactions contemplated hereby as it may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement, the taking of all necessary corporate action in connection herewith and therewith and compliance with the conditions herein set forth. Promptly upon the recording of the Supplemented Indenture, the Company shall cause Special Aviation Counsel to deliver to the Indenture Trustee and the Pass Through Trustee an opinion as to the due recording of such document and the lack of filing of any intervening documents with respect to the Aircraft. SECTION 4. Representations, Warranties and Agreements of the Company. The Company represents, warrants and agrees that: (a) It is a corporation duly organized, validly existing and in good standing under the laws of the state of Delaware; it is an "air carrier" within the meaning of the Federal Aviation Act of 1958, as amended to the date of recodification (the "Act"), a holder of a certificate under Sections 41102(a) and 41103 of the Act and an "air carrier operating certificate" issued under Chapter 447 of the Act for aircraft capable of carrying ten (10) or more individuals or 6,000 pounds or more of cargo, and has the corporate power and authority to conduct its current business and operations as currently conducted, to own or hold under lease its properties and to enter into this Agreement and perform its obligations under each of the Operative Agreements to which it is a party; it is a Citizen of the United States within the meaning of Section 40102(a)(15) of Title 49 of the United States Code (formerly Section 101(16) of the Act); it is duly qualified to do business as a foreign corporation in good standing in each state of the United States and in all jurisdictions in which it has intrastate routes or offices or major overhaul facilities or in which other activities of the Company require such qualification or in which failure to so qualify would have a material and adverse effect on its financial condition, business or operations or on its ability to perform its obligations under any of the Operative Agreements to which it is a party; and its chief executive office (as such term is used in Sections 9-103 and 9-401 of the Uniform Commercial Code as in effect in the State of New York) is located at 2005 Corporate Avenue, Memphis, Tennessee 38132. (b) The Company possesses all necessary certificates, franchises, licenses, permits, rights and concessions and consents which are material to the operation of the routes flown by it and the conduct of its business and operations as currently conducted. (c) The execution, delivery and performance of each of the Operative Agreements to which it is a party have been duly authorized by all necessary corporate action on the part of the Company, and do not or did not at the time of execution and delivery require any stockholder approval or consent of, or notice to, any trustee or holders of any indebtedness or obligations of the Company. (d) The execution, delivery or performance by the Company of the Operative Agreements to which it is a party and the consummation or performance by the Company of the transactions contemplated thereby do not and did not at the time of execution and delivery thereof conflict with or result in any violation of, or constitute a default under any term of the certificate of incorporation or by-laws of the Company or any agreement, mortgage, indenture, lease or other instrument, or any applicable law, by which the Company or its properties or assets are bound. (e) Neither the execution, delivery nor performance by the Company of any of the Operative Agreements to which it is a party nor the consummation of any of the transactions contemplated thereby requires, or required at the time of execution and delivery, the consent or approval of, the giving of notice to, or the registration with, or taking of any other action in respect of, the FAA or the Department of Transportation, or any other Federal, state or foreign governmental authority or agency, including any judicial body, other than (i) the registration of the Pass Through Certificates under the Securities Act of 1933, as amended, 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, which registrations have been duly accomplished, (ii) the qualification of the Pass Through Agreement under the Trust Indenture Act of 1939, as amended, which qualification has been duly obtained pursuant to an order of the Securities and Exchange Commission and (iii) the registration and filings referred to in Section 4(j) hereof. (f) The Operative Agreements to which it is a party have been duly authorized, executed and delivered by the Company, and each constitutes (assuming due authorization, execution and delivery by each other party thereto) the legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms; provided that enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and (ii) general principles of equity. (g) The Company is not in default under any material provision of any mortgage, deed of trust, indenture or other instrument or agreement to which it is a party or by which it or any of its properties or assets may be bound, or in violation of any applicable law, which default or violation would have a material adverse effect on the financial condition, business or operations of the Company or its ability to perform any of its obligations under the Operative Agreements to which it is a party. (h) There are no pending or, to the knowledge of the Company, threatened actions or proceedings by or before any court or administrative agency or arbitrator that would either individually or in the aggregate materially and adversely affect the financial condition, business or operations of the Company or the ability of the Company to perform its obligations under any of the Operative Agreements to which it is a party. (i) The audited consolidated balance sheet of the Company for the fiscal year ended May 31, 199_ [and the unaudited consolidated balance sheet of the Company as of _________, 199_], and the related consolidated statements of income, changes in common stockholders' investment and cash flows for the fiscal year[ and interim reporting period] ended on such date[s], accompanied [(except in the case of such interim reporting period)] by a report thereon containing opinions without qualification, except as therein noted, by Arthur Andersen & Co., independent public accountants; said financial statements have been prepared in accordance with generally accepted accounting principles consistently applied and present fairly the financial position of the Company as of such dates and the results of its operations and cash flows for such periods. (j) Except for the registration of the Aircraft in the name of the Company, the filing and recordation of the Indenture (including all amendments thereto) and each Indenture Supplement, and the filing of the FAA Bill of Sale covering the Aircraft pursuant to the Federal Aviation Act and the filing of Uniform Commercial Code financing statements, no action, including any filing or recording of any document, is or was necessary or advisable in order to establish and perfect the Indenture Trustee's security interest in the Indenture Estate pertaining to the Indenture, as against the Company and any third parties. (k) Except for the issue and sale of the Pass Through Certificates contemplated hereby, neither the Company nor anyone acting on its behalf has directly or indirectly offered any Equipment Purchase Certificates or any interest in or to the Aircraft for sale to, or solicited any offer to acquire the same from, anyone other than the Banks, the Pass Through Trustee and not more than __ other financial institutions[; provided, however, that the Company does not make a representation concerning the actions of the Agent or anyone acting on the Agent's behalf](*). (l) On the [Delivery](*) [Refunding](**) Date, there shall be in effect with respect to the Aircraft, a current and valid airworthiness certificate issued by the FAA pursuant to the Federal Aviation Act and the Aircraft shall be in such condition as may be necessary to enable the airworthiness certificate to be maintained in good standing. SECTION 5. Representations and Warranties of the Pass Through Trustee. The Pass Through Trustee, in its individual capacity (except with respect to the enforceability of the Operative Documents as set forth in paragraph (e) below which representation it makes solely in its capacity as Pass Through Trustee), represents and warrants that: (a) It is a national banking association duly organized, validly existing and in good standing under the laws of the United States; and it has the full corporate power, authority and legal right under the laws of the State of ______________ and the United States pertaining to its banking, trust and fiduciary powers to execute, deliver and carry out the terms of the Operative Agreements to which it is a party. (b) The execution, delivery and performance of the Operative Agreements to which it is a party have been duly authorized by all necessary action on the part of the Pass Through Trustee and do not require any stockholder approval or approval or consent of, or notice to, any trustee or holders of any indebtedness or obligations of the Pass Through Trustee. (c) Neither the execution, delivery or performance by the Pass Through Trustee of the Operative Agreements to which it is a party nor the consummation or performance by the Pass Through Trustee of the transactions contemplated thereby will conflict with or result in any violation of, or constitute a default under, any term of the articles of association or by-laws of the Pass Through Trustee or any agreement, mortgage, indenture, lease or other instrument to which it is a party, or any applicable law relating to the banking, trust or fiduciary powers by which the Pass Through Trustee or its properties or assets are bound. (d) Neither the execution, delivery or performance by the Pass Through Trustee of the Operative Agreements to which it is a party nor the consummation of any of the transactions contemplated thereby requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action in respect of, any ______________ or United States governmental authority or agency regulating the Pass Through Trustee's banking, trust or fiduciary powers, other than the registrations, qualifications and filings referred to in Section 4(d) hereof. (e) The Operative Agreements to which it is a party have been duly authorized, executed and delivered by the Pass Through Trustee and each constitutes (assuming due authorization, execution and delivery by each other party thereto) the legal, valid and binding obligation of the Pass Through Trustee, enforceable against it in accordance with its terms; provided that enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and (ii) general principles of equity. (f) The Pass Through Trustee is not in default under any mortgage, deed of trust, indenture or other instrument or agreement to which it is a party, or by which it or any of its properties or assets may be bound, or in violation of any applicable law, which default or violation would have a material adverse effect on the financial condition, business or operations of the Pass Through Trustee or its ability to perform any of its obligations under the Operative Agreements to which it is a party. (g) There are no pending or, to the knowledge of the Pass Through Trustee, threatened actions or proceedings by or before any court or administrative agency or arbitrator that would either individually or in the aggregate materially and adversely affect its financial condition, business or operations or its ability to perform its obligations under the Operative Agreements to which it is a party. SECTION 6. Representations of the Indenture Trustee. The Indenture Trustee, in its individual capacity, represents and warrants that its representations and warranties contained in the Indenture are correct as though made on and as of the [Delivery](*) [Refunding](**) Date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties were correct on and as of such earlier date). SECTION 7. Notices. Unless otherwise specifically provided herein, all notices required or permitted by the terms of this Agreement shall be in writing, and any such notice shall be deemed given when such notice is received, if such notice is mailed by certified mail, postage prepaid or is delivered by hand or Federal Express service or is sent by confirmed telecopy or facsimile (if, in the case of a facsimile transmitted on a Business Day and during normal business hours of the recipient, and otherwise on the next Business Day following transmission) addressed to the respective addresses or facsimile numbers of the Company, the Pass Through Trustee or the Indenture Trustee set forth below the signatures of such parties at the end of this Agreement. SECTION 8. Expenses. (a) All of the out-of-pocket costs, fees and expenses incurred by the Pass Through Trustee (to the extent set forth below), the Indenture Trustee, [the Agent and the holders of Original Equipment Purchase Certificates,](**) in connection with the preparation, execution and delivery of this Agreement and the transactions contemplated hereby shall be paid promptly by the Company including, without limitation (i) the reasonable fees, expenses and disbursements of counsel to the Pass Through Trustee, the Indenture Trustee, [the Agent and the holders of Original Equipment Purchase Certificates,](**) and (ii) all other reasonable expenses in connection with such transactions including, without limitation, 100% of any underwriter's commissions payable in connection with the offer and sale of that portion of the Pass Through Certificates allocable to the Equipment Purchase Certificates being purchased hereby, printing expenses and all fees, taxes and other charges payable in connection with the recording or filing of instruments described in this Agreement. (b) All of the out-of-pocket costs, fees and expenses incurred by the Indenture Trustee[, the Agent and the holders of Original Equipment Purchase Certificates](**) in connection with the enforcement by any of them of their respective rights under this Agreement shall be paid promptly by the Company including, without limitation, the reasonable fees, expenses and disbursements of counsel to the Indenture Trustee[, the Agent and the holders of Original Equipment Purchase Certificates](**). SECTION 9. Survival of Representations and Warranties. Except as otherwise provided for herein, the representations, warranties and agreements of the Company, the Pass Through Trustee and the Indenture Trustee shall survive the expiration or other termination of this Agreement and the other agreements referred to herein. SECTION 10. Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, and all such counterparts shall together constitute one and the same instrument. SECTION 11. Entire Agreement; Amendments and Waivers. This Agreement expresses the entire understanding of the parties relating to the subject matter hereof; all prior understandings, written or oral, with respect to such subject matter are merged herein and superseded hereby; except that the foregoing is not intended to nor shall it be construed to modify or otherwise affect the provisions of any Operative Agreement. Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented waived or modified orally, but only by an instrument in writing signed by each of the parties hereto. No failure to exercise, nor any delay in exercising, on the part of any party hereto, any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise thereof or the exercise of any other right or remedy. The rights and remedies herein provided are cumulative and not exclusive of any rights or remedies provided by law. SECTION 12. Headings and Table of Contents. The headings of the various sections and table of contents of this Agreement are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof. SECTION 13. Governing Law. This Agreement shall in all respects be governed by, and construed in accordance with, the laws of the State of New York, including all matters of construction, validity and performance, without regard to principles of conflicts of law. This Agreement is being delivered in the State of New York. SECTION 14. Capacity in Which Acting. Each of the Indenture Trustee and the Pass Through Trustee acts hereunder not in its individual capacity but solely as trustee except as otherwise expressly provided herein and in the other Operative Agreements. Neither the Indenture Trustee nor the Pass Through Trustee is personally liable for any amounts payable under the Indenture or any Equipment Purchase Certificate and has no liability under any Equipment Purchase Certificate or the Indenture, except as expressly provided herein or in the Indenture. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. FEDERAL EXPRESS CORPORATION By:_________________________ Name: Attention: Address: 2007 Corporate Avenue Memphis, TN 38132 _____________________________, _____________________________ not in its individual capacity, except as otherwise expressly provided, but solely as Pass Through Trustee By:_________________________ Name: Attention: Address: ______________________, ______________________ not in its individual capacity, except as otherwise expressly provided, but solely as Indenture Trustee By:_________________________ Name: Attention: Address: EX-5.A1 4 Exhibit 5(a)(1) November 22, 1994 Federal Express Corporation 2005 Corporate Avenue Memphis, Tennessee 38132 Dear Sirs: 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 $465,000,000 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 Wilmington Trust Company, as Owner Trustee (the "Owner Trustee"), NationsBank of Georgia, National Association, as Indenture Trustee (the "Indenture Trustee"), and the Corporation, as Lessee, 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, as originally executed and as supplemented by a related Indenture Supplement, 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 the Trust Agreements and, in the case of a refinancing transaction, the Original Indentures and the related Indenture Supplements by each of the parties thereto (other than the Corporation), (ii) that the Trust Agreements, 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 relating to the Certificates that constitutes part of the Registration Statement. Very truly yours, EX-5.A2 5 Exhibit 5(a)(2) November 22, 1994 Federal Express Corporation 2005 Corporate Avenue Memphis, Tennessee 38132 Dear Sirs: 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 $465,000,000 aggregate 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 the Pass Through Trust Agreement to be entered into between the Corporation and NationsBank of South Carolina, National Association, as Pass Through Trustee (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) 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 relating to the Pass Through Certificates that constitutes part of the Registration Statement. Very truly yours, EX-5.B 6 Exhibit 5(b) November 22, 1994 Federal Express Corporation 2005 Corporate Avenue Memphis, Tennessee 38132 Attention: Chief Financial Officer Re: Federal Express Corporation -- Pass Through Certificates -- Shelf Registration Dear Sirs: We have acted as special counsel to NationsBank of South Carolina, a national banking association, in its individual capacity and as pass through trustee (the "Pass Through Trustee"), under the Pass Through Trust Agreement, dated as of February 1, 1993, (the "Agreement") entered into between Federal Express Corporation (the "Corporation") and the Pass Through Trustee. Pursuant to the Agreement and one or more supplemental agreements thereto to be entered into between the Corporation and the Pass Through Trustee, the Pass Through Trustee will execute, authenticate and deliver, upon the Corporation's request, pass through certificates in one or more series in an aggregate principal amount of up to $465,000,000 (the "Pass Through Certificates"), to be registered with the Securities and Exchange Commission ("SEC") under the Securities Act of 1933, as amended (the "1933 Act"), under the Corporation's Registration Statement on Form S-3 filed on the date hereof with the SEC (the "Registration Statement"). As such counsel, we have examined the Agreement and the Pass Through Certificates which you have furnished to us and which will be filed as exhibits to the Registration Statement. We have also examined and relied upon originals, or copies certified or otherwise identified to our satisfaction, of such documents, corporate records and other instruments as we have deemed necessary or appropriate for the purposes of this opinion. With respect to the discussion in the Prospectus forming part of the Registration Statement entitled "Certain South Carolina Taxes," the assumptions set forth therein are specifically incorporated herein. In addition, we have assumed that each Pass Through Trust will not be classified as a Partnership as defined in Section 7701 of the Internal Revenue Code of 1986, as amended, and the Pass Through Trust does not otherwise engage in business in South Carolina. The opinions set forth herein are limited to the laws of the State of Georgia, the federal laws of the United States of America governing the banking and trust powers of the Pass Through Trustee, and, with respect to the opinion set forth in paragraph 4 below, the laws of the State of South Carolina. With respect to the validity and binding nature of the Agreement and the Pass Through Certificates, which we note are governed by the laws of the State of New York, we have relied, with your permission, entirely upon the opinion of even date herewith of Davis Polk & Wardwell, and the opinions set forth herein are subject to each of the assumptions, exceptions, qualifications and limitations contained in such opinion letter. In addition, the opinions set forth below are based on the assumption that the Corporation has duly authorized, executed and delivered the Agreement and, at the time of such authorization, execution and delivery, had the full power, authority and legal right to have done so. Based on the foregoing, we are of the opinion that: 1. The Pass Through Trustee is a national banking association validly existing under the laws of the United States of America holding a valid certificate to do business as a national banking association, with trust powers. 2. The execution, authentication, issuance and delivery by the Pass Through Trustee of the Pass Through Certificates and the Agreement have been duly authorized by the Pass Through Trustee, in its individual (to the extent provided therein) and trust capacities. 3. With respect to the Pass Through Certificates of each series, 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 Corporation and the Pass Through Trustee in accordance with the terms and conditions of the Agreement (assuming that (x) the terms and conditions of the Agreement are in compliance with then applicable law at the time of such authorization, execution and delivery and (y) the Pass Through Trustee continues in existence as a national banking association holding a valid certificate to do business, with trust powers, at the time of such authorization, execution and delivery), and (b) the Pass Through Certificates of such series 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 Corporation and the purchasers or underwriters named therein, as the case may be, relating thereto, the Agreement (assuming that (x) the terms of the Pass Through Certificates of such series are in compliance with then applicable law at the time of such authorization, execution and delivery and (y) the Pass Through Trustee continues in existence as a national banking association holding a valid certificate to do business, with trust powers, at the time of such authorization, execution and delivery), (i) the Agreement will constitute a valid and binding obligation of the Pass Through Trustee in accordance with its terms, except as the provisions thereof may be limited by bankruptcy, reorganization, insolvency, arrangement, fraudulent conveyance, moratorium, or other similar laws generally affecting creditors' rights or debtors' relief from time to time in effect, and (ii) each of the Pass Through Certificates of such series will be validly issued and will be entitled to the benefits of the Agreement pursuant to which it was issued. The opinions expressed above as to the enforceability of the documents referred to above further are subject in each case to applicable laws and usual equitable principles that may render certain remedial provisions in the documents referred to above invalid or unenforceable. 4. The discussion in the Prospectus forming part of the Registration Statement entitled "Certain South Carolina Taxes," insofar as it relates to statements of law or legal conclusions, is correct in all material respects. We consent to the filing of this opinion as Exhibit 5 to the Registration Statement and to the reference to us under the captions "Validity of the Pass Through Certificates" and "Certain South Carolina Taxes" in the Prospectus forming part of the Registration Statement. Very truly yours, /s/ POWELL, GOLDSTEIN, FRAZER & MURPHY ---------------------------------- POWELL, GOLDSTEIN, FRAZER & MURPHY EX-5.C 7 Exhibit 5(c) November 22, 1994 Federal Express Corporation 2007 Corporate Avenue Memphis, Tennessee 38132-2140 Attention: Chief Financial Officer Re: Federal Express Corporation -- 1994 Public Offering Equipment Trust Certificates Ladies and Gentleman: We have acted as counsel to Wilmington Trust Company, a Delaware banking corporation, in its individual capacity ("WTC") and not in its individual capacity but solely as owner trustee ("Owner Trustee") under one or more Trust Agreements ("Trust Agreements"), 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 or about 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 $465,000,000 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 Agreements, each between WTC and the owner participant named therein (the "Owner Participant"), and one or more Trust Indenture, Mortgage and Security Agreements (individually an "Indenture", collectively the "Indentures") among the Owner Trustee, NationsBank of Georgia, National Association ("NationsBank") as indenture trustee, and Federal Express. We have examined a form of Trust Agreement and a form of Indenture which you have furnished to us and which have been filed as exhibits to the Registration Statement. We have also examined and relied upon originals, or copies certified or otherwise identified to our satisfaction, of such documents, corporate records and other instruments as we have deemed necessary or appropriate for the purposes of this opinion. The opinions set forth herein are limited to the federal laws of the United States of America governing the banking and trust powers of WTC, the laws of the State of Delaware and, solely with respect to the validity and binding nature of the Indentures and the Certificates, the laws of the State of New York. 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 of even date herewith of Davis Polk & Wardwell, and the opinions set forth herein are subject to each of the assumptions, exceptions, qualifications and limitations contained in such opinion letter. We have assumed that the Trust Agreements and the Indentures will not differ in any material respect from the forms of Trust Agreement and Indenture filed as exhibits to the Registration Statement and that no relevant provision of Delaware, 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. In addition, the opinions set forth below are based on the assumption that the Owner Participant will have duly authorized, executed and delivered each of the Trust Agreements and, at the time of such authorization, execution and delivery, will have had the full power, authority and legal right to have done so. Based on the foregoing, we are of the opinion that: 1. WTC has been duly incorporated and is validly existing as a Delaware banking corporation in good standing under the laws of the State of Delaware. 2. Upon the execution and delivery by WTC of each of the Trust Agreements and assuming that at the time of such execution and delivery WTC continues in existence as a Delaware banking corporation in good standing and has maintained its current full corporate power and authority to enter into and perform the Trust Agreements, each of the Trust Agreements will constitute a legal, valid and binding obligation of WTC. 3. Upon the execution and delivery by WTC of each of the Trust Agreements and assuming that at the time of such execution and delivery WTC continues in existence as a Delaware bank in good standing and has maintained its current full corporate power and authority to enter into and perform the Trust Agreements and Indentures, the execution and delivery by the Owner Trustee of each of the Indentures will have been duly authorized by the Owner Trustee. 4. Assuming (i) the due authorization, execution and delivery of each of the Indentures by each of the parties to each such document (other than WTC or the Owner Trustee, as the case may be), (ii) that each such party (other than WTC or the Owner Trustee, as the case may be) had, 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 (other than WTC or the Owner Trustee, as the case may be) continues to have such power, authority and legal right, (iv) that the execution, delivery and performance of each such Indenture by each such party (other than WTC or the Owner Trustee, as the case may be) did not and does 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, and (vi) that WTC or the Owner Trustee, as the case may be, has maintained its current full corporate power and authority to enter into and perform the Trust Agreements and 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 WTC or the Owner Trustee, as the case may be, the Indentures will constitute valid and binding agreements of WTC or the Owner Trustee, as the case may be, and (b) upon the due execution by the Owner Trustee and the due authentication by NationsBank 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 the Prospectus 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, EX-5.D 8 Exhibit 5(d) November 22, 1994 Federal Express Corporation 2005 Corporate Avenue Memphis, Tennessee 38132 Ladies and Gentlemen: I am Vice President - Law 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 two prospectus contained therein (collectively, the "Prospectus") 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 $465,000,000 pursuant to one or more Trust Indenture and Security Agreements (the "Indentures") to be entered into among the Company, NationsBank of Georgia, National Association, as Indenture Trustee, and Wilmington Trust Company, a Delaware banking corporation, as Owner Trustee, and (ii) Pass Through Certificates, to be issued in one or more series in an aggregate amount of up to $465,000,000 pursuant to a Pass Through Agreement (the "Pass Through Agreement") to be entered into between the Company and NationsBank of South Carolina, National Association, as Pass Through 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 Pass Through Agreement and the form of 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. 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/ George W. Hearn -------------------- George W. Hearn Vice President - Law GWH/PYT/ebw 1390.MEM2 EX-15 9 Exhibit 15 [LETTERHEAD] Arthur Andersen Suite 1700 165 Madison Avenue Memphis, TN 38103-2777 (901) 525-4451 November 17, 1994 Federal Express Corporation Box 727 Memphis, TN 38194 Dear Ladies and Gentlemen: We are aware that Federal Express Corporation will be incorporating by reference in this Form S-3 Registration Statement its Form 10-Q for the quarter ended August 31, 1994, which includes our report dated September 14, 1994, covering the unaudited interim financial information contained therein. Pursuant to Regulation C of the Securities Act of 1933, that report is not considered 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.F 10 Exhibit 23(f) CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this Form S-3 registration statement of our reports dated June 29, 1994, included (or incorporated by reference) in Federal Express Corporation's Form 10-K for the year ended May 31, 1994, and to all references to our Firm included in this registration statement. /s/ ARTHUR ANDERSEN LLP ------------------------ ARTHUR ANDERSEN LLP Memphis, Tennessee November 17, 1994. EX-24 11 Exhibit 24 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Corporation"), does hereby constitute and appoint Frederick W. Smith, William J. Razzouk, Alan B. Graf, Jr. and Graham R. Smith, and each of them, with full power of substitution and resubstitution, as his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, a Registration Statement on Form S-3 to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, with respect to a shelf registration for equipment trust certificates and pass through certificates in an amount up to $465 million and any and all amendments to such Registration Statement whether filed prior or subsequent to the time such Registration Statement becomes effective; and hereby ratifies and confirms all that such 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 of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 27th day of October 1994. /s/ ROBERT H. ALLEN ------------------- Robert H. Allen STATE OF TEXAS COUNTY OF HARRIS I, Earlene Barbeau , a Notary Public in and for the aforesaid State and County, do hereby certify that Robert H. Allen, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the foregoing instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/ EARLENE L. BARBEAU ---------------------- NOTARY PUBLIC My Commission Expires: March 8, 1997 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Corporation"), does hereby constitute and appoint Frederick W. Smith, William J. Razzouk, Alan B. Graf, Jr. and Graham R. Smith, and each of them, with full power of substitution and resubstitution, as her true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, a Registration Statement on Form S-3 to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, with respect to a shelf registration for equipment trust certificates and pass through certificates in an amount up to $465 million and any and all amendments to such Registration Statement whether filed prior or subsequent to the time such Registration Statement becomes effective; and hereby ratifies and confirms all that such 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 of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 27th day of October 1994. /s/ JUDITH L. ESTRIN -------------------- Judith L. Estrin STATE OF CALIFORNIA COUNTY OF SANTA CLARA I, Janine Dietiker , a Notary Public in and for the aforesaid State and County, do hereby certify that Judith L. Estrin, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that she signed and delivered the foregoing instrument as her free and voluntary act, for the uses and purposes therein set forth. /s/ JANINE DIETIKER ------------------- NOTARY PUBLIC My Commission Expires: February 7, 1997 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Corporation"), does hereby constitute and appoint Frederick W. Smith, William J. Razzouk, Alan B. Graf, Jr. and Graham R. Smith, and each of them, with full power of substitution and resubstitution, as his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, a Registration Statement on Form S-3 to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, with respect to a shelf registration for equipment trust certificates and pass through certificates in an amount up to $465 million and any and all amendments to such Registration Statement whether filed prior or subsequent to the time such Registration Statement becomes effective; and hereby ratifies and confirms all that such 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 of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 28th day of October 1994. /s/ HOWARD H. BAKER, JR. ------------------------ Howard H. Baker, Jr. STATE OF TENNESSEE COUNTY OF SCOTT I, Billie J. Hamilton , a Notary Public in and for the aforesaid State and County, do hereby certify that Howard H. Baker, Jr. personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the foregoing instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/ BILLIE J. HAMILTON ---------------------- NOTARY PUBLIC My Commission Expires: 6/24/98 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Corporation"), does hereby constitute and appoint Frederick W. Smith, William J. Razzouk, Alan B. Graf, Jr. and Graham R. Smith, and each of them, with full power of substitution and resubstitution, as his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, a Registration Statement on Form S-3 to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, with respect to a shelf registration for equipment trust certificates and pass through certificates in an amount up to $465 million and any and all amendments to such Registration Statement whether filed prior or subsequent to the time such Registration Statement becomes effective; and hereby ratifies and confirms all that such 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 of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 31st day of October 1994. /s/ ANTHONY J.A. BRYAN ---------------------- Anthony J.A. Bryan STATE OF FLORIDA COUNTY OF PALM BEACH I, Patricia Gmyrek , a Notary Public in and for the aforesaid State and County, do hereby certify that Anthony J.A. Bryan, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the foregoing instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/ PATRICIA A. GMYREK ---------------------- NOTARY PUBLIC My Commission Expires: March 30, 1997 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Corporation"), does hereby constitute and appoint Frederick W. Smith, William J. Razzouk, Alan B. Graf, Jr. and Graham R. Smith, and each of them, with full power of substitution and resubstitution, as his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, a Registration Statement on Form S-3 to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, with respect to a shelf registration for equipment trust certificates and pass through certificates in an amount up to $465 million and any and all amendments to such Registration Statement whether filed prior or subsequent to the time such Registration Statement becomes effective; and hereby ratifies and confirms all that such 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 of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 7th day of November 1994. /s/ ROBERT L. COX ----------------- Robert L. Cox STATE OF TENNESSEE COUNTY OF SHELBY I, Lillian W. Powers , a Notary Public in and for the aforesaid State and County, do hereby certify that Robert L. Cox, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the foregoing instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/ LILLIAN W. POWERS --------------------- NOTARY PUBLIC My Commission Expires: 4/29/97 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Corporation"), does hereby constitute and appoint Frederick W. Smith, William J. Razzouk, Alan B. Graf, Jr. and Graham R. Smith, and each of them, with full power of substitution and resubstitution, as his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, a Registration Statement on Form S-3 to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, with respect to a shelf registration for equipment trust certificates and pass through certificates in an amount up to $465 million and any and all amendments to such Registration Statement whether filed prior or subsequent to the time such Registration Statement becomes effective; and hereby ratifies and confirms all that such 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 of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 2nd day of November 1994. /s/ RALPH D. DENUNZIO --------------------- Ralph D. DeNunzio STATE OF NEW YORK COUNTY OF NEW YORK I, Pauline Kalahele , a Notary Public in and for the aforesaid State and County, do hereby certify that Ralph D. DeNunzio personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the foregoing instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/ PAULINE E. KALAHELE ----------------------- NOTARY PUBLIC My Commission Expires: 2/28/96 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Corporation"), does hereby constitute and appoint Frederick W. Smith, William J. Razzouk, Alan B. Graf, Jr. and Graham R. Smith, and each of them, with full power of substitution and resubstitution, as his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, a Registration Statement on Form S-3 to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, with respect to a shelf registration for equipment trust certificates and pass through certificates in an amount up to $465 million and any and all amendments to such Registration Statement whether filed prior or subsequent to the time such Registration Statement becomes effective; and hereby ratifies and confirms all that such 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 of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 28th day of October 1994. /s/ PHILIP GREER ---------------- Philip Greer STATE OF NEW YORK COUNTY OF NEW YORK I, Kathleen M. Rode , a Notary Public in and for the aforesaid State and County, do hereby certify that Philip Greer, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the foregoing instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/ KATHLEEN M. RODE -------------------- NOTARY PUBLIC My Commission Expires: 5/31/96 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Corporation"), does hereby constitute and appoint Frederick W. Smith, William J. Razzouk, Alan B. Graf, Jr. and Graham R. Smith, and each of them, with full power of substitution and resubstitution, as his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, a Registration Statement on Form S-3 to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, with respect to a shelf registration for equipment trust certificates and pass through certificates in an amount up to $465 million and any and all amendments to such Registration Statement whether filed prior or subsequent to the time such Registration Statement becomes effective; and hereby ratifies and confirms all that such 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 of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 27th day of October 1994. /s/ J. R. HYDE, III ------------------- J. R. Hyde, III STATE OF TENNESSEE COUNTY OF SHELBY I, Nancy C. Phillips , a Notary Public in and for the aforesaid State and County, do hereby certify that J. R. Hyde, III, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the foregoing instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/ NANCY C. PHILLIPS --------------------- NOTARY PUBLIC My Commission Expires: 10/24/95 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Corporation"), does hereby constitute and appoint Frederick W. Smith, William J. Razzouk, Alan B. Graf, Jr. and Graham R. Smith, and each of them, with full power of substitution and resubstitution, as his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, a Registration Statement on Form S-3 to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, with respect to a shelf registration for equipment trust certificates and pass through certificates in an amount up to $465 million and any and all amendments to such Registration Statement whether filed prior or subsequent to the time such Registration Statement becomes effective; and hereby ratifies and confirms all that such 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 of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 7th day of November 1994. /s/ CHARLES T. MANATT --------------------- Charles T. Manatt STATE OF WASHINGTON, D.C. COUNTY OF I, Janet Lee Shaw , a Notary Public in and for the aforesaid State and County, do hereby certify that Charles T. Manatt, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the foregoing instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/ JANET LEE SHAW ------------------ NOTARY PUBLIC My Commission Expires: 07/14/99 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Corporation"), does hereby constitute and appoint Frederick W. Smith, William J. Razzouk, Alan B. Graf, Jr. and Graham R. Smith, and each of them, with full power of substitution and resubstitution, as his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, a Registration Statement on Form S-3 to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, with respect to a shelf registration for equipment trust certificates and pass through certificates in an amount up to $465 million and any and all amendments to such Registration Statement whether filed prior or subsequent to the time such Registration Statement becomes effective; and hereby ratifies and confirms all that such 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 of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 27th day of October 1994. /s/ JACKSON W. SMART, JR. -------------------------- Jackson W. Smart, Jr. STATE OF ILLINOIS COUNTY OF COOK I, Esperanza Acosta , a Notary Public in and for the aforesaid State and County, do hereby certify that Jackson W. Smart, Jr. personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the foregoing instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/ ESPERANZA ACOSTA -------------------- NOTARY PUBLIC My Commission Expires: 2/8/97 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Corporation"), does hereby constitute and appoint Frederick W. Smith, William J. Razzouk, Alan B. Graf, Jr. and Graham R. Smith, and each of them, with full power of substitution and resubstitution, as his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, a Registration Statement on Form S-3 to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, with respect to a shelf registration for equipment trust certificates and pass through certificates in an amount up to $465 million and any and all amendments to such Registration Statement whether filed prior or subsequent to the time such Registration Statement becomes effective; and hereby ratifies and confirms all that such 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 of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 28th day of October 1994. /s/ JOSHUA I. SMITH ------------------- Joshua I. Smith STATE OF MARYLAND COUNTY OF PRINCE GEORGE'S I, Robyn P. Armstrong , a Notary Public in and for the aforesaid State and County, do hereby certify that Joshua I. Smith, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the foregoing instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/ ROBYN PROCTOR ARMSTRONG --------------------------- NOTARY PUBLIC My Commission Expires: February 16, 1998 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, a Director of FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Corporation"), does hereby constitute and appoint Frederick W. Smith, William J. Razzouk, Alan B. Graf, Jr. and Graham R. Smith, and each of them, with full power of substitution and resubstitution, as his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such Director, a Registration Statement on Form S-3 to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, with respect to a shelf registration for equipment trust certificates and pass through certificates in an amount up to $465 million and any and all amendments to such Registration Statement whether filed prior or subsequent to the time such Registration Statement becomes effective; and hereby ratifies and confirms all that such 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 of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 3rd day of November 1994. /s/ PETER S. WILLMOTT --------------------- Peter S. Willmott STATE OF TENNESSEE COUNTY OF SHELBY I, Joyce J. Jones , a Notary Public in and for the aforesaid State and County, do hereby certify that Peter S. Willmott personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the foregoing instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/ JOYCE J. JONES ------------------ NOTARY PUBLIC My Commission Expires: August 12, 1998 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, the principal executive officer and a director of FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Corporation"), does hereby constitute and appoint William J. Razzouk, Alan B. Graf, Jr. and Graham R. Smith, and each of them, with full power of substitution and resubstitution, as his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such officer and director, a Registration Statement on Form S-3 to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, with respect to a shelf registration for equipment trust certificates and pass through certificates in an amount up to $465 million and any and all amendments to such Registration Statement whether filed prior or subsequent to the time such Registration Statement becomes effective; and hereby ratifies and confirms all that such 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 of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 28th day of October 1994. /s/ FREDERICK W. SMITH ---------------------- Frederick W. Smith STATE OF TENNESSEE COUNTY OF SHELBY I, Joyce J. Jones , a Notary Public in and for the aforesaid State and County, do hereby certify that Frederick W. Smith, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the foregoing instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/ JOYCE J. JONES ------------------ NOTARY PUBLIC My Commission Expires: August 12, 1998 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, the Executive Vice President, Worldwide Customer Operations, of FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Corporation"), does hereby constitute and appoint Frederick W. Smith, Alan B. Graf, Jr. and Graham R. Smith, and each of them, with full power of substitution and resubstitution, as his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such officer, a Registration Statement on Form S-3 to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, with respect to a shelf registration for equipment trust certificates and pass through certificates in an amount up to $465 million and any and all amendments to such Registration Statement whether filed prior or subsequent to the time such Registration Statement becomes effective; and hereby ratifies and confirms all that such 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 of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 28th day of October 1994. /s/ WILLIAM J. RAZZOUK ---------------------- William J. Razzouk STATE OF TENNESSEE COUNTY OF SHELBY I, Sharon A. Smith , a Notary Public in and for the aforesaid State and County, do hereby certify that William J. Razzouk, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the foregoing instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/ SHARON A. SMITH ------------------- NOTARY PUBLIC My Commission Expires: May 16, 1997 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, the Chief Financial Officer of FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Corporation"), does hereby constitute and appoint Frederick W. Smith, William J. Razzouk, and Graham R. Smith, and each of them, with full power of substitution and resubstitution, as his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as such officer, a Registration Statement on Form S-3 to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, with respect to a shelf registration for equipment trust certificates and pass through certificates in an amount up to $465 million and any and all amendments to such Registration Statement whether filed prior or subsequent to the time such Registration Statement becomes effective; and hereby ratifies and confirms all that such 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 of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 27th day of October 1994. /s/ ALAN B. GRAF, JR. --------------------- Alan B. Graf, Jr. STATE OF TENNESSEE COUNTY OF SHELBY I, Sharon A. Smith , a Notary Public in and for the aforesaid State and County, do hereby certify that Alan B. Graf, Jr., personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the foregoing instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/ SHARON A. SMITH ------------------- NOTARY PUBLIC My Commission Expires: March 16, 1994 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, the principal accounting officer and controller of FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Corporation"), does hereby constitute and appoint Frederick W. Smith, William J. Razzouk and Alan B. Graf, Jr., and each of them, with full power of substitution and resubstitution, as his true and lawful attorneys-in-fact and agents, with full power and authority to execute in the name and on behalf of the undersigned as the Controller, a Registration Statement on Form S-3 to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, with respect to a shelf registration for equipment trust certificates and pass through certificates in an amount up to $465 million and any and all amendments to such Registration Statement whether filed prior or subsequent to the time such Registration Statement becomes effective; and hereby ratifies and confirms all that such 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 of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 26th day of October 1994. /s/ GRAHAM R. SMITH ------------------- Graham R. Smith STATE OF TENNESSEE COUNTY OF SHELBY I, Delores Wolfmeyer , a Notary Public in and for the aforesaid State and County, do hereby certify that Graham R. Smith, personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person, and acknowledged that he signed and delivered the foregoing instrument as his free and voluntary act, for the uses and purposes therein set forth. /s/ DELORES WOLFMEYER --------------------- NOTARY PUBLIC My Commission Expires: December 9, 1996 EX-25.A 12 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) _______________ NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION (Exact name of trustee as specified in its charter) 58-0193243 (I.R.S. employer identification no.) 600 Peachtree Street, N.E. Suite 900 Atlanta, Georgia 30308 (Address of principal executive offices) (Zip Code) _____________________________ John T. Henderson NationsBank of Georgia, National Association Area Administration 6000 Feldwood Road College Park, Georgia 30349 (404) 774-6074 (Name, Address and telephone number of agent for service) _______________ with a copy to: NationsBank of Georgia, National Association Corporate Trust 600 Peachtree Street, Suite 900 Atlanta, GA 30308 ________________________ Federal Express Corporation (Exact name of obligor as specified in its charter) Delaware 71-0427007 (State or other jurisdiction (IRS employer of incorporation or organization) identification no.) 2005 Corporate Avenue Memphis, Tennessee 38132 (901) 369-3600 (Name, address, including zip code, and telephone number, including area code, of principal executive office) __________________________________________ Equipment Trust Certificates; Pass Through Certificates (Title of the indenture securities) _________________________________________________________________ 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. The Comptroller of the Currency, Washington, D.C. Federal Reserve Bank of Atlanta 104 Marietta Street, N.W. Atlanta, Georgia Federal Deposit Insurance Corporation Washington, D.C. (b) Whether it is authorized to exercise corporate trust powers. Yes. 2. Affiliations with obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. 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 as now in effect. (See Exhibit 1 to Form T-1, Exhibit 25 to Registration No. 33-50233, which is incorporated herein by reference.) (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, as amended to date. (See Exhibit 4 to Form T-1, Exhibit 25 to Registration No. 33-50233, which is incorporated herein by reference.) (6) The consent of the trustee required by Section 321(b) of the Trust Indenture Act of 1939. (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. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939 the trustee, NationsBank of Georgia, National Association, a corporation organized and existing under the laws of the United States of America, has duly caused this statement of eligibility and qualification to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Atlanta and the State of Georgia, on the 14th day of November, 1994. NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION By: /s/ L. Collins Proctor . ---------------------- L. Collins Proctor Trust Officer EXHIBIT 6 TO FORM T-1 CONSENT OF TRUSTEE Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of 1939 in connection with the proposed issuance of Federal Express Corporation Equipment Trust Certificates Pass Through Certificates, NationsBank of Georgia, National Association hereby consents that reports of examinations by Federal, State, Territorial or District Authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION By: /s/ L. Collins Proctor . ---------------------- L. Collins Proctor Trust Officer SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939 the trustee, NationsBank of Georgia, National Association, a corporation organized and existing under the laws of the United States of America, has duly caused this statement of eligibility and qualification to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Atlanta and the State of Georgia, on the 14th day of November, 1994. NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION By: /s/ L. Collins Proctor ---------------------- L. Collins Proctor Trust Officer EXHIBIT 6 TO FORM T-1 CONSENT OF TRUSTEE Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of 1939 in connection with the proposed issuance of Federal Express Corporation Equipment Trust Certificates Pass Through Certificates, NationsBank of Georgia, National Association hereby consents that reports of examinations by Federal, State, Territorial or District Authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION By: /s/ L. Collins Proctor ---------------------- L. Collins Proctor Trust Officer EXHIBIT 2 TO FORM T-1 Comptroller of the Currency Administrator of National Banks Washington, D.C. 20219 CERTIFICATE I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify that: 1. The Comptroller of the Currency, pursuant to Revised Statutes 324, et seq., as amended, 12 U.S.C. 1, et seq., as amended, has possession, custody and control of all records pertaining to the chartering, regulation and supervision of all National Banking Associations. 2. "NationsBank of Georgia, National Association", Atlanta, Georgia, (Charter No. 13068), a National Banking Association formed under the laws of the United States and is authorized thereunder to transact the business of banking on the date of this Certificate. IN TESTIMONY WHEREOF, I have hereunto subscribed my name and caused my seal of office to be affixed to these presents at the Treasury Department, in the City of Washington and District of Columbia, this 27th day of October, 1994. Eugene A. Ludwig ---------------------- /s/ Eugene A. Ludwig Comptroller of the Currency EXHIBIT 3 TO FORM T-1 Comptroller of the Currency Administrator of National Banks Washington, D.C. 20219 Certification of Fiduciary Powers I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify the records in this Office evidence "NationsBank of Georgia, National Association", Atlanta, Georgia, (Charter No. 13068), was granted, under the hand and seal of the Comptroller, the right to act in all fiduciary capacities authorized under the provisions of The Act of Congress approved September 28, 1962, 76 Stat. 668, 12 U.S.C. 92a. I further certify the authority so granted remains in full force and effect. IN TESTIMONY WHEREOF, I have hereunto subscribed my name and caused my 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 27th day of October, 1994. /s/ Eugene A. Ludwig ---------------------- Eugene A. Ludwig Comptroller of the Currency EXHIBIT 7 TO FORM T-1 Comptroller of the Currency Administrator of National Banks REPORT OF CONDITION Consolidating domestic and foreign subsidiaries of NationsBank of Georgia, N.A. of Atlanta, in the state of Georgia, at the close of business on September 30, 1994 published in response to call made by Comptroller of the Currency, under Title 12, United States Code, Section 161. Charter Number 13281, Comptroller of the Currency, Atlanta District. Statement of Resources and Liabilities Dollar Amounts in Thousands ASSETS Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin 1,284,932. Securities: Held-to-maturity securities 2,262,168. Available-for-sale securities 1,979,730. Federal funds sold and securities purchased under agreements to resell in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: Federal funds sold 681,581. Securities purchased under agreements to resell 1,000. Loans and lease financing receivables: Loans and leases, net of unearned income 10,368,698. LESS: Allowance for loan and lease losses 144,800. Loans and leases, net of unearned income, allowance, and reserve 10,223,898. Assets held in trading accounts 17,832. Premises and fixed assets (including capitalized leases) 188,054. Other real estate owned 11,810. Customers' liability to this bank on acceptances outstanding 166,352. Intangible assets 41,997. Other assets 175,432. Total assets 17,034,786. LIABILITIES Deposits: In domestic offices 8,434,032. Noninterest-bearing 2,722,621. Interest-bearing 5,711,411. Federal funds purchased and securities sold under agreements to repurchase in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: Federal funds purchased 5,922,740. Securities sold under agreements to repurchase 294,226. Demand notes issued to the U.S. Treasury 148,359. Trading Liabilities 6,857. Other borrowed money: With original maturity of one year or less 268,337. With original maturity of more than one year 524. Bank's liability on acceptances executed and outstanding 166,352. Other liabilities 771,599. Total liabilities 16,013,026. EQUITY CAPITAL Common stock 97,747. Surplus 232,803. Undivided profits and capital reserves 714,854. Less: Net unrealized loss on marketable equity securities (23,644) Total equity capital 1,021,760. Total liabilities, limited-life preferred stock, and equity capital 17,034,786. We, the undersigned directors, attest to the correctness of this statement of resources and liabilities. We declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the instructions and is true and correct. Hugh M. Chapman L.L. Directors Gellerstedt, III Harold A. Dawson EX-25.B 13 Exhibit 25(b) 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) _____ _______________ NATIONSBANK OF SOUTH CAROLINA, NATIONAL ASSOCIATION (Exact name of trustee as specified in its charter) 57-0516069 (I.R.S. employer identification no.) 1301 Gervais Street Columbia, South Carolina 29201 (Address of principal executive offices) (Zip Code) _______________ John T. Henderson NationsBank of Georgia, National Association Area Administration 6000 Feldwood Road College Park, Georgia 30349 (404) 774-6074 with a copy to: NationsBank of South Carolina, National Association Corporate Trust Administration 1301 Gervais Street Fourth Floor Columbia, South Carolina 29201 (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 (IRS employer of incorporation or organization) identification no.) 2005 Corporate Avenue Memphis, Tennessee 38132 (Address of principal executive offices) (Zip Code) _______________ Equipment Trust Certificates; Pass Through Certificates (Title of the indenture securities) ______________________________________________________________________________ (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. The Comptroller of the Currency, Washington, D.C. Federal Reserve Bank of Richmond 701 East Byrd Street, P.O. Box 27622 Richmond, Virginia Federal Deposit Insurance Corporation Washington, D.C. (b) Whether it is authorized to exercise corporate trust powers. Yes 2. Affiliations with obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. 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 as now in effect. (See Exhibit 1 to form T-1 filed as exhibit 25(b) to Registration Statement in Form S-3, Commission File No. 33-50175) (2) A copy of the certificate of authority of the trustee to commence business. (See Exhibit 1 to form T-1 filed as exhibit 25(b) to Registration Statement in Form S-3, Commission File No. 33-50175) (3) A copy of the authorization of the trustee to exercise corporate trust powers. (See Exhibit 1 to form T-1 filed as exhibit 25(b) to Registration Statement in Form S-3, Commission File No. 33-50175) (6) The consent of the trustee required by Section 321(b) of the Trust Indenture Act of 1939. (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. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939 the trustee, NationsBank of South Carolina, National Association, a corporation organized and existing under the laws of the United States of America, has duly caused this statement of eligibility and qualification to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Atlanta and the State of Georgia, on the 14th day of November , 1994. NATIONSBANK OF SOUTH CAROLINA, NATIONAL ASSOCIATION By: _________________________ L. Collins Proctor Trust Officer SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939 the trustee, NationsBank of South Carolina, National Association, a corporation organized and existing under the laws of the United States of America, has duly caused this statement of eligibility and qualification to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Atlanta and the State of Georgia, on the 14th day of November, 1994. NATIONSBANK OF SOUTH CAROLINA, NATIONAL ASSOCIATION By: /s/ L. Collins Proctor __________________________ 14th day of November, 1994 Trust Officer EXHIBIT 6 TO FORM T 1 CONSENT OF TRUSTEE Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of 1939 in connection with the proposed issuance of Federal Express Corporation Equipment Trust Certificates Pass Through Certificates, NationsBank of South Carolina, National Association hereby consents that reports of examinations by Federal, State, Territorial or District Authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. NATIONSBANK OF SOUTH CAROLINA, NATIONAL ASSOCIATION By: /s/ L. Collins Proctor _________________________ L. Collins Proctor Trust Officer EXHIBIT 6 TO FORM T1 CONSENT OF TRUSTEE Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of 1939 in connection with the proposed issuance of Federal Express Corporation Equipment Trust Certificates Pass Through Certificates, NationsBank of South Carolina, National Association hereby consents that reports of examinations by Federal, State, Territorial or District Authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. NATIONSBANK OF SOUTH CAROLINA, NATIONAL ASSOCIATION By: /s/ L. Collins Proctor __________________________ L. Collins Proctor Trust Officer EXHIBIT 7 TO FORM T-1 Comptroller of the Currency Administrator of National Banks REPORT OF CONDITION Consolidating domestic and foreign subsidiaries of the NATIONSBANK OF SOUTH CAROLINA OF COLUMBIA, in the state of SOUTH CAROLINA, at the close of business on September 30, 1994 published in response to call made by Comptroller of the Currency, under Title 12, United States Code, Section 161. Charter Number 14425, Comptroller of the Currency District. Statement of Resources and Liabilities Dollar Amounts in Thousands ASSETS Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin 370,147 Interest-bearing balances 0 Securities: Held-to-maturity securities 730,052 Available-for-sale securities 841,738 Federal funds sold 103,065 Securities purchased under agreements to resell 755 Loans and lease financing receivables: Loans and leases, net of unearned income 6,477,477 LESS: Allowance for loan and lease losses 133,167 Loans and leases, net of unearned income, allowance, and reserve 6,344,310 Assets held in trading accounts 50 Premises and fixed assets (including capitalized leases) 123,082 Other real estate owned 27,257 Investments in unconsolidated subsidiaries and associated Companies 7,290 Customers' liability to this bank on acceptances outstanding 406 Intangible assets 43,919 Other assets 128,263 Total assets 8,720,334 LIABILITIES Deposits: In domestic offices 4,815,006 Noninterest-bearing 1,124,155 Interest-bearing 3,690,851 Federal funds purchased 3,117,585 Demand notes issued to the U.S. Treasury 25,466 Other borrowed money: With original maturity of one year or less 2,559 With original maturity of more than one year 73 Mortgage Indebtedness and Obligors under capitalized leases 0 Bank's liability on acceptances executed and outstanding 406 Subordinated notes and debentures 10,000 Other liabilities 75,758 Total liabilities 8,046,853 EQUITY CAPITAL Common stock 67,000 Surplus 519,398 Undivided profits and capital reserves 96,862 Net unrealized holdings gains (losses) on available for sale securities (9,779) Total equity capital 673,481 Total liabilities, limited-life preferred stock, and equity capital 8,720,334 We, the undersigned directors, attest to the correctness of this statement of resources and liabilities. We declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the instructions and is true and correct. William L. Bethea, Jr. William E. Simms Edwin S. Pearlstine, Jr. Directors I, Joe L. Price, Sr. Vice President of the above-named bank, do hereby declare that this Report of Condition is true and correct to the best of my knowledge and belief. Joe L. Price, Sr. Vice President October 21, 1994 -----END PRIVACY-ENHANCED MESSAGE-----