-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OmyGjOVTe7lgSPQi0rf81vwtna+cWvlpEbiR4A8kqmZhVplfV8nkJQfRP8Us+1kt DbeZHi6b4SOhrZN+yMy65g== 0000950103-96-000971.txt : 19960708 0000950103-96-000971.hdr.sgml : 19960708 ACCESSION NUMBER: 0000950103-96-000971 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 21 FILED AS OF DATE: 19960705 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FEDERAL EXPRESS CORP CENTRAL INDEX KEY: 0000230211 STANDARD INDUSTRIAL CLASSIFICATION: AIR COURIER SERVICES [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: 333-07691 FILM NUMBER: 96591469 BUSINESS ADDRESS: STREET 1: 2005 CORPORATE AVE CITY: MEMPHIS STATE: TN ZIP: 38132 BUSINESS PHONE: 9013693600 MAIL ADDRESS: STREET 1: 2005 CORPORATE AVE CITY: MEMPHIS STATE: TN ZIP: 38132 S-3 1 As filed with the Securities and Exchange Commission on July 5, 1996 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 of (I.R.S. Employer incorporation or organization) Identification No.) 2005 Corporate Avenue Memphis, Tennessee 38132 (901) 369-3600 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) KENNETH R. MASTERSON, ESQ. Executive 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 (the "Securities Act"), 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 Title of Each Class Amount Offering Aggregate Amount of of Securities Being Price Offering Registration Being Registered Registered Per Unit Price(1) Fee - ------------------- ---------- -------- --------- ------------- Equipment Trust Certificates Pass Through Certificates Debt Securities Preferred Stock(2) Common Stock, par value $.10 per share(3) $1,000,000,000 100% $1,000,000,000 $307,773.79 ============================================================================== (1) Estimated solely for purposes of determining the registration fee. (2) Such indeterminate number of shares of Preferred Stock as may, from time to time, be issued at indeterminate prices. (3) Such indeterminate number of shares of Common Stock as may, from time to time, be issued at indeterminate prices. Pursuant to Rule 429 under the Securities Act, the Prospectuses filed as part of this Registration Statement relate to the securities registered hereby and to the remaining unsold $100,000,000 amount of Debt Securities and $7,456,000 amount of Equipment Trust Certificates and Pass Through Certificates previously registered by Federal Express Corporation under its Registration Statements on Form S-3, File Nos. 33-47176 and 33-56569, respectively. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] __________ If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] __________ If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. ============================================================================== EXPLANATORY NOTE This Registration Statement contains four forms of prospectus: each, as supplemented, to be used in connection with offerings of (1) equipment trust certificates; (2) pass through certificates; (3) debt securities; or (4) common stock and preferred stock, respectively. No 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 JULY 5, 1996 PROSPECTUS - ---------- [COMPANY LOGO] EQUIPMENT TRUST CERTIFICATES _____________________ Up to $1,000,000,000 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. 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 such Lease 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 will be issued in registered form only and, unless otherwise specified in the applicable Prospectus Supplement, in accordance with a book-entry system. 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 July , 1996. 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 accessed electronically by means of the Commission's home page on the Internet at http://www.sec.gov. and 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, 1995 filed August 4, 1995. 2. The Corporation's Quarterly Reports on Form 10-Q for the fiscal quarters ended August 31, 1995, November 30, 1995 and February 29, 1996, respectively, filed October 13, 1995, January 12, 1996 and April 12, 1996, respectively. 3. The Corporation's Current Reports on Form 8-K dated August 14, 1995, August 16, 1995, September 14, 1995, October 17, 1995, October 25, 1995, October 26, 1995, January 12, 1996, March 14, 1996, April 30, 1996, June 5, 1996 and June 7, 1996, respectively, filed August 15, 1995, August 18, 1995, September 19, 1995, October 18, 1995, October 27, 1995, October 30, 1995, January 16, 1996, March 26, 1996, June 5, 1996, June 10, 1996 and June 21, 1996, respectively. 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, including any beneficial owner, to whom this Prospectus is delivered, upon 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 L. Holland, Managing Director -- Investor Relations, Federal Express Corporation, by mail at Box 727, Memphis, Tennessee 38194-1854 or by telephone at (901) 395-3478. 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) Nine Months Ended Year Ended May 31 February 28 February 29 ---------------------------- ---------------------- 1991 1992 1993 1994 1995 1995 1996 ---- ---- ---- ---- ---- ---- ---- Ratio of Earnings to Fixed Charges(a) 1.0x (b) 1.4x 1.7x 2.0x 2.0x 1.8x - ----------- (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, the Owner Trustee or any prior owner, as the case may be. Each Aircraft has been or will be sold to First Security Bank, National Association, or another bank or 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 State Street Bank and Trust Company, or another bank or trust company, 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 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. Book-Entry Procedures Unless otherwise specified in the applicable Prospectus Supplement, the Certificates will be subject to the provisions described below. The Certificates will be fully registered and issued in the form of one or more temporary or permanent global security or securities without coupons, in minimum denominations of $1,000 or any integral multiple of $1,000. Each global certificate will be deposited with, or on behalf of, DTC, and registered in its name or in the name of Cede, its nominee. No Certificateholder will be entitled to receive a Certificate in certificated form, except as set forth below. DTC has advised the Corporation that DTC is a limited purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered pursuant to Section 17A of the Exchange Act. DTC was created to hold securities for its participants ("DTC Participants") and to facilitate the clearance and settlement of securities transactions between DTC Participants through electronic book-entries, thereby eliminating the need for physical movement of certificates. DTC Participants include securities brokers and dealers, banks, trust companies and clearing corporations. Access to DTC's book-entry system is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly. Certificateholders that are not DTC Participants but desire to purchase, sell or otherwise transfer ownership of, or other interests, in Certificates may do so only through DTC Participants. In addition, Certificateholders will receive all distributions of principal and interest from the Indenture Trustee through the DTC Participants. Under the rules, regulations and procedures creating and affecting DTC and its operation, DTC is required to make book-entry transfers of Certificates among DTC Participants on whose behalf it acts and to receive and transmit distributions of principal of, and interest on, the Certificates. Under the book-entry system, Certificateholders may experience some delay in receipt of payments, since such payments will be forwarded by the Indenture Trustee to Cede, as nominee for DTC, and DTC in turn will forward the payments to the appropriate DTC Participants. Distributions by DTC Participants to Certificateholders will be the responsibility of such DTC Participants and will be made in accordance with customary industry practices. Accordingly, although Certificateholders will not have possession of the Certificates, the rules of DTC provide a mechanism by which participants will receive payments and will be able to transfer their interests. Although the DTC Participants are expected to convey the rights represented by their interests in any global security to the related Certificateholders, because DTC can only act on behalf of DTC Participants, the ability of Certificateholders to pledge Certificates to persons or entities that are not DTC Participants or to otherwise act with respect to such Certificates, may be limited due to the lack of physical certificates for such Certificates. None of the Corporation, the Indenture Trustee or any other agent of the Corporation or the Indenture Trustee will have any responsibility or liability for any aspect of the records relating to, or payments made on account of, beneficial ownership interests in the Certificates or for supervising or reviewing any records relating to such beneficial ownership interests. Since the only "Certificateholder" will be Cede, as nominee of DTC, Certificateholders will not be recognized by the Indenture Trustee as Certificateholders, as such term is used in the Indenture, and Certificateholders will be permitted to exercise the rights of Certificateholders only indirectly through DTC and DTC Participants. DTC has advised the Corporation that it will take any action permitted to be taken by a Certificateholder under the Indenture and any Prospectus Supplement only at the direction of one or more DTC Participants to whose accounts with DTC the related Certificates are credited. Additionally, DTC has advised the Corporation that it will take such actions with respect to any percentage of the beneficial interest of Certificateholders only at the direction of and on behalf of DTC Participants whose holders include undivided interests that satisfy any such percentage. DTC may take conflicting actions with respect to other undivided interests to the extent that such actions are taken on behalf of DTC Participants whose holders include such undivided interests. Same-Day Settlement and Payment. All payments made by the Corporation to the Indenture Trustee under each Lease will be in immediately available funds and will be passed through to DTC in immediately available funds. The Certificates will trade in DTC's Same-Day Funds Settlement System until maturity, and secondary market trading activity in the Certificates will be required by DTC to settle in immediately available funds. No assurance can be given as to the effect, if any, of settlement in immediately available funds on trading activity in the Certificates. Certificated Form. The Certificates will be issued in fully registered, certificated form to Certificateholders, or their nominees, rather than to DTC or its nominee, only if DTC advises the Indenture Trustee in writing that it is no longer willing or able to discharge properly its responsibilities as depository with respect to the Certificates and the Corporation is unable to locate a qualified successor or if the Corporation, at its option, elects to terminate the book-entry system through DTC. In such event, the Indenture Trustee will notify all Certificateholders through DTC Participants of the availability of such certificated Certificates. Upon surrender by DTC of the definitive global certificate representing the series of Certificates and receipt of instructions for reregistration, the Indenture Trustee will reissue the Certificates in certificated form to Certificateholders or their nominees. Principal and Interest Payments Interest 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. If the Certificates are issued in certificated form as discussed above, 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 Boston, Massachusetts 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) Such Certificates may be surrendered for registration of transfer or exchange for Certificates of the same Series, maturity and interest rate at facilities established for such purpose by the Indenture Trustee in Boston, Massachusetts. 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 any 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 (the "Transportation Code"), in the name of the Owner Trustee, and to record and maintain the recordation of the Indenture and the Lease relating to each such Aircraft under the Transportation Code. Such recordation will give the Indenture Trustee a security interest in each such Aircraft perfected under the Transportation Code, which perfected security interest will, with certain limited exceptions, be recognized in those jurisdictions that have ratified 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. While such assurances are intended to provide that the Corporation's or the Owner Trustee's title to the Aircraft and the Indenture Trustee's lien thereon will be recognized in such jurisdiction and that the Indenture Trustee may exercise the rights granted to it in the Indentures, there is no guarantee that, even if such jurisdiction is a party to the Convention, as a practical matter, the Indenture Trustee would be able to realize upon its security interest in the case of an Indenture Event of Default. Each Aircraft may also be operated by the Corporation or placed under sublease or interchange arrangements with carriers domiciled outside of the United States. The ability of the Indenture Trustee in the case of an Indenture Event of Default, to realize upon its security interest in the Aircraft could be adversely affected as a legal or practical matter if the Aircraft were located outside the United States. Payments and 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 Transportation Code and a corporation organized and existing under the laws of the United States or a political subdivision thereof, and such corporation expressly assumes all the obligations of 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 the outstanding Certificates issued under an Indenture to which an Indenture Default relates may on behalf of all Holders waive certain past Indenture Defaults thereunder and their 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. 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 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 each 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 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 to act and the Indenture Trustee may not be held liable for any such action taken in good faith. (Indenture, Section 7.10 and Article XI) Section 1110 of the Bankruptcy Code provides that the right of lessors, conditional vendors and holders of security interests with respect to aircraft capable of carrying ten or more individuals or 6,000 pounds or more of cargo used by air carriers operating under certificates issued by the Secretary of Transportation under Chapter 447 of the Transportation Code to take possession of such aircraft in compliance with the provisions of the lease, conditional sale contract or security agreement, as the case may be, is not affected by: (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 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 a security interest to take possession of an aircraft in the event of a default may not be exercised for 60 days following the date of commencement of the reorganization proceedings (unless specifically permitted by the bankruptcy court) and may not be exercised at all if, within such 60-day period, the trustee in reorganization or the debtor-in-possession agrees to perform the debtor's obligations that become due on or after such date and cures all existing defaults (other than defaults resulting solely from the financial condition, bankruptcy, insolvency or reorganization of the debtor). The Prospectus Supplement for each offering will discuss the availability of the benefits of Section 1110 of the Bankruptcy Code with respect to the related Aircraft. If 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 rent 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, State Street Bank and Trust Company will be the Indenture Trustee under each Indenture. State Street Bank and Trust Company acts as trustee under other indentures with respect to other indebtedness of the Corporation, and the Corporation from time to time borrows from, and maintains deposit accounts with, State Street Bank and Trust Company 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 its exercise, as a prudent person would exercise or use under the circumstances in the conduct of its own affairs. Generally, the Indenture Trustee will not be liable for any error of judgment made in good faith, unless the Indenture Trustee was negligent in ascertaining the pertinent facts, or for any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than 50% in aggregate principal amount of the outstanding Certificates issued under 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 Transportation Code or, under certain circumstances, under the applicable requirements of the aeronautical authority of another country of registry. If, however, the Aircraft loses its airworthiness certification and such loss is curable and 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 right, title and interest in the related Owner Trust will not constitute a taxable event to the Holders of the related Certificates. However, 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 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 July 3, 1996, Mr. Hearn owned zero shares of the Corporation's common stock and had been granted options to purchase 20,800 shares of the Corporation's common stock. Of the options granted, 3,750 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, 1995 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 giving said reports. With respect to the unaudited interim financial information for the quarters ended August 31, 1995, November 30, 1995 and February 29, 1996, included in the Corporation's Quarterly Reports on Form 10-Q for such periods, which are incorporated by reference in this Prospectus, Arthur Andersen LLP has applied limited procedures in accordance with professional standards for a review of such information. However, their separate reports thereon state that they did not audit and they do not express an opinion on that interim financial information. Accordingly, the degree of reliance on their reports on that information should be restricted in light of the limited nature of the review procedures applied. In addition, the accountants are not subject to the liability provisions of Section 11 of the Securities Act for their reports on the unaudited interim financial information because those reports are not "reports" or a "part" of the Registration Statement, of which this Prospectus is a part, prepared or certified by the accountants within the meaning of Sections 7 and 11 of the Securities Act. ====================================== ====================================== No dealer, salesperson or other individual has been authorized to give any information or to make any representation not contained in this $1,000,000,000 Prospectus in connection with the offering covered by this Prospectus. If given or made, such information or representation must not be relied [COMPANY LOGO] upon as having been authorized by the Corporation or the Underwriters. This Prospectus does not constitute an offer to sell, or the solicitation $1,000,000,000 of an offer to buy, the Certificates in any jurisdiction where, or to any person to whom, it is unlawful to make such offer or solicitation. Neither the delivery of this Prospectus Equipment Trust Certificates nor any sale made hereunder shall, under any circumstances, create an implication that there has not been any change in the facts set forth in -------------------- this Prospectus or in the affairs of P R O S P E C T U S the Corporation since the date hereof. -------------------- TABLE OF CONTENTS Page ---- Available Information.............. 3 Incorporation of Certain Documents by Reference........... 3 Federal Express Corporation........ 4 Ratio of Earnings to Fixed Charges. 4 Use of Proceeds.................... 4 Outline of Leveraged Lease Transactions.............. 4 Description of the Certificates.... 5 ERISA Considerations............... 15 Plan of Distribution............... 15 Legal Matters...................... 16 Experts............................ 16 July ___, 1996 ====================================== ====================================== SUBJECT TO COMPLETION PRELIMINARY PROSPECTUS DATED JULY 5, 1996 PROSPECTUS - ---------- [COMPANY LOGO] PASS THROUGH TRUSTS PASS THROUGH CERTIFICATES _______________________________ Up to $1,000,000,000 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 dated as of June 1, 1996 (the "Pass Through Agreement") between Federal Express Corporation (the "Corporation") and State Street Bank and Trust Company, and the supplements thereto relating to such Pass Through Trust (a "Series Supplement") between the Corporation and the trustee named in such Series Supplements, not in its individual capacity but solely as the Pass Through Trustee with respect to 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 one 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 issued with respect to each of one or more Aircraft such that all of the 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. (Continued on following page) _______________________________ 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 July __, 1996. (continued from previous page) 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, if specified in the applicable Prospectus Supplement, by other security (which may include a letter of credit). Funds in such collateral account, together with any 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 will be issued in registered form only and, unless otherwise specified in the applicable Prospectus Supplement, will be issued in accordance with a book-entry system. The Pass Through Certificates represent interests in the related Pass Through Trust only and all payments and distributions will 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. ____________________________ 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 accessed electronically by means of the Commission's home page on the Internet at http://www.sec.gov. and 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 The 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, 1995 filed August 4, 1995. 2. The Corporation's Quarterly Reports on Form 10-Q for the fiscal quarters ended August 31, 1995, November 30, 1995 and February 29, 1996, respectively, filed October 13, 1995, January 12, 1996 and April 12, 1996, respectively. 3. The Corporation's Current Reports on Form 8-K dated August 14, 1995, August 16, 1995, September 14, 1995, October 17, 1995, October 25, 1995, October 26, 1995, January 12, 1996, March 14, 1996, April 30, 1996, June 5, 1996 and June 7, 1996, respectively, filed August 15, 1995, August 18, 1995, September 19, 1995, October 18, 1995, October 27, 1995, October 30, 1995, January 16, 1996, March 26, 1996, June 5, 1996, June 10, 1996 and June 21, 1996, respectively. 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, including any beneficial owner, to whom this Prospectus is delivered, upon 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 L. Holland, Managing Director -- Investor Relations, Federal Express Corporation, by mail at Box 727, Memphis, Tennessee 38194-1854 or by telephone at (901) 395-3478. 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) Nine Months Ended Year Ended May 31 February 28 February 29 ---------------------------- ----------------------- 1991 1992 1993 1994 1995 1995 1996 ---- ---- ---- ---- ---- ---- ---- Ratio of Earnings to Fixed Charges (a) 1.0x (b) 1.4x 1.7x 2.0x 2.0x 1.8x - ------------------- (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 the trustee named in such Series Supplement, 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 June 1, 1996 (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 whether such Aircraft was or will be delivered new by the manufacturer to the Corporation or the Owner Trustee, as the case may be, or whether such Aircraft is already in use in the Corporation's fleet. 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 First Security Bank, National Association, 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 the other security, if any, 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 by 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 or will be applied to finance the aggregate principal amount of the debt to be issued by the Corporation in connection with the acquisition of such Aircraft by the Corporation so that such Aircraft becomes an Owned Aircraft. 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 the trustee named in such trust indenture and security agreement, 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 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 - A diagram is included here which 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.] 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. 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 Pass Through Certificates will be issued in fully registered form only and, unless otherwise specified in the applicable Series Supplement, be registered in the name of Cede & Co. ("Cede") as the nominee of The Depository Trust Company ("DTC"). If the Pass Through Certificates are so registered, no Certificateholder will be entitled to receive a certificated Pass Through Certificate representing such person's interest in the related Pass Through Trust unless such certificates are issued as described below. Unless certificated Pass Through Certificates are issued, all references to actions by Certificateholders shall refer to actions taken by DTC upon instructions from DTC Participants (as defined below), and all references herein to distributions, notices, reports and statements to Certificateholders shall refer, as the case may be, to distributions, notices, reports and statements to DTC or Cede, as the registered holder of the Pass Through Certificates, or to DTC Participants for distribution to Certificateholders in accordance with DTC procedures. See "Description of the Pass Through Certificates -- Book-Entry Procedures." (Pass Through Agreement, Section 2.12) 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 Pass Through Trustee for such series of Pass Through Certificates; (3) 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; (4) the specific form of such Pass Through Certificates; (5) 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; (6) a description of the related Aircraft, including whether the Aircraft is a Leased Aircraft or an Owned Aircraft; (7) 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; (8) if such Pass Through Certificates relate to Leased Aircraft, a 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, 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, related Owner Trustee or Owner Participant to cure failures of the Corporation to pay rent under the related Lease; (9) 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 (10)any other special terms pertaining to such Pass Through Certificates. (Pass Through Agreement, Article II) 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. Book-Entry Procedures Unless otherwise specified in the applicable Prospectus Supplement, the Pass Through Certificates will be subject to the provisions described below. Upon issuance, each Series of Pass Through Certificates will be represented by one or more fully registered global certificates. Each global certificate will be deposited with, or on behalf of, DTC, and registered in its name or in the name of Cede, its nominee. No Certificateholder will be entitled to receive a certificated Pass Through Certificate, except as set forth below. DTC has advised the Corporation that DTC is a limited purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. DTC was created to hold securities for its participants ("DTC Participants") and to facilitate the clearance and settlement of securities transactions between DTC Participants through electronic book-entries, thereby eliminating the need for physical movement of certificates. DTC Participants include securities brokers and dealers, banks, trust companies and clearing corporations. Access to DTC's book-entry system is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly. Certificateholders that are not DTC Participants but desire to purchase, sell or otherwise transfer ownership of, or other interests, in Pass Through Certificates may do so only through DTC Participants. In addition, Certificateholders will receive all distributions of principal and interest from the Pass Through Trustee through the DTC Participants. Under the rules, regulations and procedures creating and affecting DTC and its operation, DTC is required to make book-entry transfers of Pass Through Certificates among DTC Participants on whose behalf it acts and to receive and transmit distributions of principal of, and interest on, the Pass Through Certificates. Under the book-entry system, Certificateholders may experience some delay in receipt of payments, since such payments will be forwarded by the Pass Through Trustee to Cede, as nominee for DTC, and DTC in turn will forward the payments to the appropriate DTC Participants. Distributions by DTC Participants to Certificateholders will be the responsibility of such DTC Participants and will be made in accordance with customary industry practices. Accordingly, although Certificateholders will not have possession of the Pass Through Certificates, the rules of DTC provide a mechanism by which participants will receive payments and will be able to transfer their interests. Although the DTC Participants are expected to convey the rights represented by their interests in any global security to the related Certificateholders, because DTC can only act on behalf of DTC Participants, the ability of Certificateholders to pledge Pass Through Certificates to persons or entities that are not DTC Participants or to otherwise act with respect to such Pass Through Certificates, may be limited due to the lack of physical certificates for such Pass Through Certificates. None of the Corporation, the Pass Through Trustee or any other agent of the Corporation or the Pass Through Trustee will have any responsibility or liability for any aspect of the records relating to, or payments made on account of, beneficial ownership interests in the Pass Through Certificates or for supervising or reviewing any records relating to such beneficial ownership interests. Since the only "Certificateholder" will be Cede, as nominee of DTC, Certificateholders will not be recognized by the Pass Through Trustee as Certificateholders, as such term is used in the Pass Through Agreement, and Certificateholders will be permitted to exercise the rights of Certificateholders only indirectly through DTC and DTC Participants. DTC has advised the Corporation that it will take any action permitted to be taken by a Certificateholder under the Pass Through Agreement and any Prospectus Supplement only at the direction of one or more DTC Participants to whose accounts with DTC the related Pass Through Certificates are credited. Additionally, DTC has advised the Corporation that it will take such actions with respect to any percentage of the beneficial interest of Certificateholders held in each Pass Through Trust only at the direction of and on behalf of DTC Participants whose holders include undivided interests that satisfy any such percentage. DTC may take conflicting actions with respect to other undivided interests to the extent that such actions are taken on behalf of DTC Participants whose holders include such undivided interests. Same-Day Settlement and Payment. All payments made by the Corporation to the Indenture Trustee under each Lease will be in immediately available funds and will be passed through to DTC in immediately available funds. The Pass Through Certificates will trade in DTC's Same-Day Funds Settlement System until maturity, and secondary market trading activity in the Pass Through Certificates will be required by DTC to settle in immediately available funds. No assurance can be given as to the effect, if any, of settlement in immediately available funds on trading activity in the Pass Through Certificates. Certificated Form. The Pass Through Certificates will be issued in fully registered, certificated form to Certificateholders, or their nominees, rather than to DTC or its nominee, only if DTC advises the Pass Through Trustee in writing that it is no longer willing or able to discharge properly its responsibilities as depository with respect to the Pass Through Certificates and the Corporation is unable to locate a qualified successor or if the Corporation, at its option, elects to terminate the book-entry system through DTC. In such event, the Pass Through Trustee will notify all Certificateholders through DTC Participants of the availability of such certificated Pass Through Certificates. Upon surrender by DTC of the definitive global certificate representing the series of Pass Through Certificates and receipt of instructions for reregistration, the Pass Through Trustee will reissue the Pass Through Certificates in certificated form to Certificateholders or their nominees. (Pass Through Agreement, Section 2.12) Certificates in certificated form will be freely transferable and exchangeable at the office of the Pass Through Trustee upon compliance with the requirements set forth in the Pass Through Agreement and the applicable Series Supplements. No service charge will be imposed for any registration of transfer or exchange, but payment of a sum sufficient to cover any tax or other governmental charge may be required. 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 any other security pledged under the related Indenture or otherwise provided to the Indenture Trustee 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. (Pass Through Agreement, Section 5.02) If a Scheduled Payment is not received by the Pass Through Trustee on or before a Regular Distribution Date but is received within seven Business Days 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, Article I; Sections 5.01 and 5.02) If a Scheduled Payment is received more than seven Business Days after the applicable Regular Distribution Date, it will be treated as a Special Payment and will be distributed as described below. 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 (a) direct obligations of the United States of America or obligations fully guaranteed by the United States of America; (b) commercial paper rated A-1/P-1 by Standard & Poor's Ratings Group and Moody's Investors Service, Inc., respectively or, if such ratings are unavailable, rated by any nationally recognized rating organization in the United States equal to the highest rating assigned by such rating organization; (c) overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers; and (d) overnight repurchase agreements with respect to the securities described in clause (a) above entered into with an office of a bank or trust company which is located in the United States of America of any bank or trust company which is organized under the laws of the United States or any state thereof and has capital, surplus and undivided profits aggregating at least $500 million. (Pass Through Agreement, Article I and Section 5.04) If at any time, the Pass Through Certificates of any Pass Through Trust are issued in the form of certificated Pass Through Certificates and not to Cede, as nominee for DTC, distributions by the Pass Through Trustee from a Certificate Account or a Special Payments Account of any Pass Through Trust on any Distribution Date will be paid to each Certificateholder of record of such Pass Through Trust on the applicable record date at its address appearing on the register maintained for such Pass Through Trust. (Pass Through Agreement, Section 5.02) The final distribution for each Pass Through Trust, however, will be made only upon presentation and surrender of the Pass Through Certificates for such Pass Through Trust at the office or agency of the Pass Through Trustee specified in the notice given by the Pass Through Trustee of such final distribution. The Pass Through Trustee will mail such notice of the final distribution to the Certificateholders of such Pass Through Trust, specifying the date set for such 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. (Pass Through Agreement, Section 5.03) So long as the Pass Through Certificates of any related Pass Through Trust are registered in the name of Cede, as nominee for DTC, on the record date prior to each Distribution Date, the Pass Through Trustee will request from DTC a securities position listing setting forth the names of all DTC Participants reflected on DTC's books as holding interests in the Pass Through Certificates of such related Pass Through Trust on such record date. On each Distribution Date, the Pass Through Trustee will mail to each such DTC Participant the statement described above, and will make available additional copies as requested by such DTC Participant, to be available for forwarding to Certificateholders. 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. Such report and such other items will be prepared on the basis of information supplied to the Pass Through Trustee by the DTC Participants, and shall be delivered by the Pass Through Trustee to such DTC Participants to be available for forwarding by such DTC Participants to Certificateholders in the manner described above. (Pass Through Agreement, Section 5.03) At such time, if any, as the Pass Through Certificates of a related Pass Through Trust are issued in certificated form, the related Pass Through Trustee will prepare and deliver the information described above to each Certificateholder of record of such Trust as the name and period of record ownership of such Certificateholder appears on the records on the registrar for such Pass Through Trust. Voting of Equipment Certificates 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 one or more Pass Through Trusts holding Equipment Certificates issued under such Indenture, in the absence of instructions from the Certificateholders of any such Pass Through Trust, the Pass Through Trustee for 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 one or more Pass Through Trusts holding Equipment Certificates issued under such Indenture, it may be faced with a conflict in deciding from which Pass Through Trust to sell Equipment Certificates to available buyers. If the Pass Through Trustee sells any such Equipment Certificates with respect to which an Indenture Event of Default exists for less than the outstanding principal amount 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 the Corporation or, in the case of Leased Aircraft Certificates, the Owner Trustee or any related Owner Participant, as the case may be. Furthermore, neither the Pass Through Trustee nor the Certificateholders of such Pass Through Trust could take any action with respect to any remaining Equipment Certificates held in such Pass Through Trust so long as no Indenture Event of Default existed with respect 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 or purchase the outstanding Leased Aircraft Certificates issued under such Indenture as described in the related Prospectus Supplement, the price paid by such Owner Trustee or the Owner Participant 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 that 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. (Pass Through Agreement, Article I and Section 2.02) 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 The Pass Through Trustee for each of the Pass Through Trusts will be named in the Prospectus Supplement. The Pass Through Trustee and any of its affiliates may hold Pass Through Certificates in their own names. (Pass Through Agreement, Section 8.05) Unless otherwise specified in the related Prospectus Supplement, State Street Bank and Trust Company will be the Indenture Trustee under the Indentures under which the Equipment Certificates have been or will be issued. State Street Bank and Trust Company acts as trustee under other indentures with respect to other indebtedness by the Corporation, and the Corporation from time to time borrows from, and maintains deposit accounts with, State Street Bank and Trust Company 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. (Pass Through Agreement, Section 10.01) In the case of the resignation or removal of the Pass Through Trustee, the Corporation or the Certificateholders holding more than 50% in aggregate amount of the related Pass Through Certificates may appoint a successor Pass Through Trustee. The resignation or removal of the Pass Through Trustee for any Pass Through Trust and the appointment of the successor trustee for such Pass Through Trust does not become effective until acceptance of the appointment by the successor trustee. (Pass Through Agreement, Article X) Pursuant to 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 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 any other security pledged under the related Indenture or otherwise available to the Indenture Trustee. 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. In certain circumstances described in the applicable Prospectus Supplement, the Corporation will have the right to purchase an Owner Trustee's right, title and interest in and to the related Aircraft and to assume the related Leased Aircraft Certificates on a full recourse basis, which would reflect a financing contemplated by an Owned Aircraft Indenture. 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 any other security pledged under the related Indenture or otherwise available to the Indenture Trustee 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 security interests with respect to aircraft capable of carrying ten (10) or more individuals or 6,000 pounds or more of cargo used by air carriers operating under certificates issued by the Secretary of Transportation under Chapter 447 of the Transportation Code to take possession of such aircraft in compliance with the provisions of the lease, conditional sale contract or security agreement, as the case may be, is not affected by: (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 a security interest to take possession of an aircraft in the event of a default may not be exercised for 60 days following the date of commencement of the reorganization proceedings (unless specifically permitted by the bankruptcy court) and may not be exercised at all if, within such 60-day period, the trustee in reorganization or the debtor-in-possession agrees to perform the debtor's obligations that become due on or after such date and cures all existing defaults (other than defaults resulting solely from the financial condition, bankruptcy, insolvency or reorganization of the debtor). The Prospectus Supplement for each offering will discuss the availability of the benefits of Section 1110 of the Bankruptcy Code with respect to the related Aircraft. If the 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 the related Collateral Account and, if the Prospectus Supplement so provides, 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 Corporation's ("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 (the "Transportation Code"), 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 Transportation Code. 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 Transportation Code, 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. While such assurances are intended to provide that the Corporation's (in the case of an Owned Aircraft) or the Owner Trustee's (in the case of a Leased Aircraft) title to the Aircraft and the Indenture Trustee's lien thereon will be recognized in such jurisdiction and that the Indenture Trustee may exercise the rights granted to it in the Indentures, there is no guarantee that, even if such jurisdiction is a party to the Convention, as a practical matter, the Indenture Trustee would be able to realize upon its security interest in the case of an Indenture Event of Default. Also, each Aircraft may be operated by the Corporation, or placed under lease, sublease or interchange arrangements with carriers domiciled outside of the United States. The ability of the Indenture Trustee in the case of an Indenture Event of Default, to realize upon its security interest in the Aircraft could be adversely affected as a legal or practical matter if the Aircraft were located outside the United States. Merger, Consolidation and Transfer of Assets 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 Transporation Code and a corporation organized and existing under the laws of the United States or a political subdivision thereof, and such corporation expressly assumes all the obligations of 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 of Default under the related Lease or, in the case of an Owned Aircraft, an Indenture Event of Default under the related Owner 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 the Indenture or 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, if the Prospectus Supplement so provides, 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 pursuant to the related Collateral Agreement or Indenture in U.S. government obligations or such other obligations as 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. 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 or otherwise realize from any Additional Collateral 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 either (i) 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 or (ii) the Corporation will assume the Leased Aircraft Certificates on a full recourse basis. With respect to any Delayed Lease Aircraft, the applicable Prospectus Supplement also will set forth (i) 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 and (ii) any option the Corporation may have to convert the leveraged lease financing for a Delayed Lease Aircraft into the type of financing available for Owned Aircraft. 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 Transportation Code 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 will be distributed to the Indenture Trustee if the amount of such proceeds exceeds certain specified amounts. 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. The income and proceeds received by the Indenture Trustee therefrom or from certain payments received by the Indenture Trustee to be applied pursuant to such Leased Aircraft Indenture, 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 or 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 Transportation Code 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 will be distributed to the Indenture Trustee if the amount of such proceeds exceeds certain specified amounts. 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 thereof at the "issue price" who hold such Pass Through Certificates as a capital asset, and should be read in conjunction with any additional discussion of federal income tax consequences included in the 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 Certificateholders 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 for an amount that differs from a Certificateholder's aggregate adjusted basis in the Equipment Certificate, the Certificateholder will be considered to have sold his pro rata share of that Equipment Certificate, and will recognize any gain or loss equal to the difference between the Certificateholder's adjusted basis and the amount realized from such prepayment (except to the extent attributable to accrued interest, which would be taxable as interest income if not previously included in income). Any such gain or loss will be long-term capital gain or loss if the Equipment Certificate is considered to have been held for more than one year. Net capital gains of individuals are, under certain circumstances, taxed at lower rates than items of ordinary income. 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 MASSACHUSETTS TAXES The summary set forth below is based upon applicable tax statutes, regulations and rules promulgated thereunder, government agency rulings and court decisions published to date, each of which is subject to change. The Pass Through Trustee is a Massachusetts trust company with its principal corporate trust office in Boston, Massachusetts. Bingham, Dana & Gould, counsel to the Pass Through Trustee, has advised the Corporation that, in its opinion, under currently applicable Massachusetts laws and assuming that the Pass Through Trustee will not hold any legal or equitable title to, or lease, any real or tangible personal property located in the Commonwealth of Massachusetts and that each Pass Through Trust will not be taxable as a corporation but rather will be classified as a grantor trust under subpart E, Part I of Subchapter J of the Code: (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), governmental fee or similar charge imposed by the Commonwealth of Massachusetts or any political subdivision thereof as a result of the transactions contemplated by the Pass Through Agreement; and (ii) Certificateholders who are not residents of, or otherwise subject to tax in or by, the Commonwealth of Massachusetts will not be subject to any tax (including, without limitation, net or gross income, tangible or intangible property, net worth, capital, franchise or doing business tax), governmental fee or similar charge imposed by the Commonwealth of Massachusetts or any political subdivision thereof as a result of purchasing, holding (including receiving payments with respect to) or selling a Pass Through Certificate. Neither the Pass Through Trusts nor the Certificateholders will be indemnified for any state or local taxes imposed on them, and the imposition of any such taxes on a Pass Through Trust could result in a reduction in the amounts available for distribution to the Certificateholders of such Pass Through Trust. In general, should a Certificateholder or any Pass Through Trust be subject to any state or local tax which would not be imposed if such Pass Through Trust were administered in a different jurisdiction in the United Sates or if the Pass Through Trustee were located in a different jurisdiction in the United States, the Pass Through Trustee will either relocate the administration of such Pass Through Trust to such other jurisdiction or resign and, in the event of the Pass Through Trustee's resignation, a new Pass Through Trustee in such other jurisdiction will be appointed. ERISA CONSIDERATIONS Unless otherwise indicated in the 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 counsel for the Pass Through Trustee, as to matters relating to the authorization, execution and delivery of the Pass Through Agreement and of each Series of Pass Through Certificates by the Pass Through Trustee, and of George W. Hearn, Vice President - Law of the Corporation, as to the Corporation's authorization, execution and delivery of the Pass Through Agreement. At July 3, 1996, Mr. Hearn owned zero shares of the Corporation's common stock and had been granted options to purchase 20,800 shares of the Corporation's common stock. Of the options granted, 3,750 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, 1995 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 giving said reports. With respect to the unaudited interim financial information for the quarters ended August 31, 1995, November 30, 1995 and February 29, 1996, included in the Corporation's Quarterly Reports on Form 10-Q for such periods, which are incorporated by reference in this Prospectus, Arthur Andersen LLP has applied limited procedures in accordance with professional standards for a review of such information. However, their separate reports thereon state that they did not audit and they do not express an opinion on that interim financial information. Accordingly, the degree of reliance on their reports on that information should be restricted in light of the limited nature of the review procedures applied. In addition, the accountants are not subject to the liability provisions of Section 11 of the Securities Act for their reports on the unaudited interim financial information because those reports are not "reports" or a "part" of the Registration Statement, of which this Prospectus is a part, prepared or certified by the accountants within the meaning of Sections 7 and 11 of the Securities Act. ======================================== ==================================== No dealer, salesperson or other individual has been authorized to give any information or to make any representation not contained in this $1,000,000,000 Prospectus in connection with the offering covered by this Prospectus. If given or made, such information or representation must not be relied [COMPANY LOGO] upon as having been authorized by the Corporation or the Underwriters. This Prospectus does not constitute an offer to sell, or the solicitation $1,000,000,000 of an offer to buy, the Pass Through Certificates in any jurisdiction where, or to any person to whom, it is unlawful to make such offer or solicitation. Neither the delivery Pass Through Certificates of this Prospectus nor any sale made hereunder shall, under any circumstances, create an implication that there has not been any change in the facts set forth in -------------------- this Prospectus or in the affairs of P R O S P E C T U S the Corporation since the date hereof. -------------------- TABLE OF CONTENTS Prospectus Page ---- Available Information.............. 3 Reports to Pass Through 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 Certificates.................... 21 Federal Income Tax Consequences.... 30 July ___, 1996 Certain Massachusetts Taxes........ 31 ERISA Considerations............... 32 Plan of Distribution............... 32 Legal Matters...................... 33 Experts............................ 33 ======================================== ==================================== SUBJECT TO COMPLETION PRELIMINARY PROSPECTUS DATED JULY 5, 1996 PROSPECTUS [COMPANY LOGO] DEBT SECURITIES _____________________________ Up to $1,000,000,000 aggregate principal amount of Federal Express Corporation (the "Corporation") unsecured debt securities (the "Debt Securities") (or the equivalent thereof in foreign currency) may be offered for sale from time to time pursuant to this Prospectus and one or more Prospectus Supplements. The Debt Securities may be offered in one or more series in amounts, at prices and on terms to be determined at the time of sale. The Debt Securities will be unsecured obligations of the Corporation and will rank on a parity with all other unsecured and unsubordinated indebtedness of the Corporation. When a particular series or issue of Debt Securities is offered (the "Offered Debt Securities"), a supplement to this Prospectus (the "Prospectus Supplement") will be delivered with this Prospectus setting forth with respect to the offered securities: (i) the terms of any Offered Debt Securities including the specific designation, aggregate principal amount, denominations, purchase price, currency, maturity, rate (which may be fixed or variable) and time of payment of interest (if any), redemption terms and the other terms in connection with the offering and sale of the Offered Debt Securities; and (ii) any initial public offering price, the net proceeds to the Corporation and the other specific terms of the Offered Debt Securities. Interest will be payable on the Debt Securities of each series on the dates and at the rates per annum set forth for such Debt Securities in the applicable Prospectus Supplement. Principal will be payable on the Debt Securities of each series in scheduled amounts and on specified dates as set forth in the applicable Prospectus Supplement. The Debt Securities will be issued in registered form only and, unless otherwise specified in the applicable Prospectus Supplement, in accordance with a book-entry system. The Debt Securities may be sold on a negotiated or competitive bid basis to or through underwriters or dealers or directly to other purchasers or through agents. See "Plan of Distribution." The Prospectus Supplement relating to each offering will set forth the names of any underwriters, dealers or agents involved in the sale of the Debt Securities 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, dealers or agents. Prior to their issuance there will have been no market for the Debt Securities 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 Debt Securities on a national securities exchange. This Prospectus may not be used to consummate sales of any Debt Securities unless accompanied by the Prospectus Supplement applicable to the Debt Securities 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 July __, 1996. 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 accessed electronically by means of the Commission's home page on the Internet at http://www.sec.gov. and 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, 1995 filed August 4, 1995. 2. The Corporation's Quarterly Reports on Form 10-Q for the fiscal quarters ended August 31, 1995, November 30, 1995 and February 29, 1996, respectively, filed October 13, 1995, January 12, 1996 and April 12, 1996, respectively. 3. The Corporation's Current Reports on Form 8-K dated August 14, 1995, August 16, 1995, September 14, 1995, October 17, 1995, October 25, 1995, October 26, 1995, January 12, 1996, March 14, 1996, April 30, 1996, June 5, 1996 and June 7, 1996, respectively, filed August 15, 1995, August 18, 1995, September 19, 1995, October 18, 1995, October 27, 1995, October 30, 1995, January 16, 1996, March 26, 1996, June 5, 1996, June 10, 1996 and June 21, 1996, respectively. 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, including any beneficial owner, to whom this Prospectus is delivered, upon 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 L. Holland, Managing Director -- Investor Relations, Federal Express Corporation, by mail at Box 727, Memphis, Tennessee 38194-1854 or by telephone at (901) 395-3478. 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) Nine Months Ended Year Ended May 31 February 28 February 29 ---------------------------- ---------------------- 1991 1992 1993 1994 1995 1995 1996 ---- ---- ---- ---- ---- ---- ---- Ratio of Earnings to Fixed Charges (a) 1.0x (b) 1.4x 1.7x 2.0x 2.0x 1.8x - --------------- (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. As a result of an offering of Debt Securities, the Corporation may be more highly leveraged than currently reflected in this table. USE OF PROCEEDS Unless otherwise set forth in a Prospectus Supplement, the net proceeds from the sale of the Debt Securities will be added to the general funds of the Corporation and used for general corporate purposes. DESCRIPTION OF DEBT SECURITIES 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 (defined herein) and the Debt Securities, the form of which has been filed as an exhibit to the Registration Statement of which this Prospectus is a part. For the Debt Securities 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 Debt Securities of each series offered thereby and the Indenture. This summary makes use of terms defined in and is qualified in its entirety by reference to the Indenture. Except as otherwise indicated below or as described in the applicable Prospectus Supplement, the following summary will apply to the Debt Securities and the Indenture. Additional provisions with respect to the Indenture and the Debt Securities relating to any particular offering of Debt Securities 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 Debt Securities are to be issued under an Indenture, dated as of July 1, 1996 (the "Indenture"), between the Corporation and The First National Bank of Chicago as trustee (the "Trustee"). The Indenture does not limit the aggregate amount of Debt Securities which may be issued thereunder and provides that Debt Securities may be issued thereunder in one or more series. The Debt Securities will be unsecured obligations of the Corporation and will rank on a parity with all other unsecured and unsubordinated indebtedness of the Corporation. The Indenture does not contain any debt covenants or provisions which would afford the holders of the Debt Securities protection in the event of a highly leveraged transaction. Other indebtedness of the Corporation ranking pari passu with the Debt Securities have covenants that would afford those holders privileges in the event of a change in control of the Corporation. Reference is made to the Prospectus Supplement relating to the particular series of Debt Securities for the following terms of such Debt Securities: (1) the title of such Debt Securities and the series in which such Debt Securities will be included; (2) the authorized denominations and aggregate principal amount of such Debt Securities; (3) whether the Debt Securities are to be issuable in global or certificated form; (4) the date or dates on which such Debt Securities will mature; (5) the rate or rates (which may be fixed or variable) per annum at which such Debt Securities will bear interest, if any, and if such rate is variable, the manner of calculation thereof and the date from which interest will accrue; (6) the place or places where the principal of (and premium, if any) and interest, if any, on such Debt Securities shall be payable; (7) the dates on which such interest will be payable and the corresponding record dates; (8) any mandatory or optional sinking fund or purchase fund or analogous provisions; (9) the terms and conditions upon which such Debt Securities may be redeemed, if any, and any redemption price; (10)if other than the principal amount thereof, the portion of the principal amount of such Debt Securities which shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 502 of the Indenture; (11)provisions, if any, for the defeasance of such Debt Securities; (12)the currency in which payments of principal of (and premium, if any) and interest, if any, on such Debt Securities will be; payable; (13)whether Additional Amounts are payable with respect to any Debt Securities; (14)any additional Events of Default or covenants applicable to such series; and (15)any other terms of such series (which terms shall not be inconsistent with the Indenture). (Indenture, Section 301) If a Prospectus Supplement specifies that a series of Debt Securities is denominated in a currency or currency unit other than United States dollars, such Prospectus Supplement shall also specify the denomination in which such Debt Securities will be issued and the currency in which the principal, premium, if any, and interest, if any, on such Debt Securities will be payable, which may be United States dollars based upon the exchange rate for such other currency unit existing on or about the time a payment is due. (Indenture, Section 301) Unless otherwise indicated in the Prospectus Supplement relating thereto, all outstanding Debt Securities will be exchangeable and transfers thereof will be registrable, and principal of, premium, if any, and interest, if any, on all Debt Securities will be payable, at the corporate trust office of the Trustee at One First National Plaza, Chicago, Illinois; provided that payment of interest may, at the option of the Corporation, be made by check mailed to the address of the person entitled thereto as it appears in the Security Register or by transfer to an account maintained by the payee with a bank located in the United States. (Indenture, Sections 301, 307 and 1002) Unless otherwise indicated in the Prospectus Supplement relating thereto, all Debt Securities will be issued only in fully registered form without coupons in denominations of $1,000 and any integral multiples thereof. No service charge will be made for any registration of transfer or exchange of any Debt Securities, but the Corporation may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. (Indenture, Section 305) The Indenture provides that the Debt Securities may be issuable in permanent global form. (Indenture, Section 203) See "Permanent Global Securities." The Corporation's right and the rights of its creditors, including the Holders of any Debt Securities, to participate in the assets of any subsidiary upon its liquidation or recapitalization would be subject to the prior claims of such subsidiary's creditors, except to the extent that the Corporation may itself be a creditor with recognized claims against such subsidiary. The Indenture does not limit the amount of secured or unsecured indebtedness which may be incurred by the Corporation or its subsidiaries. Some of the Debt Securities may be issued as discounted Debt Securities (bearing no interest or interest at a rate which at the time of issuance is below market rates) to be sold at a substantial discount below their stated principal amount. Certain federal income tax consequences and special considerations applicable to any such securities will be described in the applicable Prospectus Supplement. Book-Entry Procedures Unless otherwise specified in the applicable Prospectus Supplement, the Debt Securities will be subject to the provisions described below. Upon issuance, each Series of Debt Securities will be represented by one or more fully registered global certificates. Each global note will be deposited with, or on behalf of, the Depository Trust Company (the "DTC"), and registered in its name or in the name of CEDE & Co. ("Cede"), its nominee. No Holder will be entitled to receive a note in certificated form, except as set forth below. DTC has advised the Corporation that DTC is a limited purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. DTC was created to hold securities for its participants ("DTC Participants") and to facilitate the clearance and settlement of securities transactions between DTC Participants through electronic book-entries, thereby eliminating the need for physical movement of certificates. DTC Participants include securities brokers and dealers, banks, trust companies and clearing corporations. Access to DTC's book-entry system is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly. Holders that are not DTC Participants but desire to purchase, sell or otherwise transfer ownership of, or other interests, in Debt Securities may do so only through DTC Participants. In addition, Holders will receive all distributions of principal and interest from the Trustee through the DTC Participants. Under the rules, regulations and procedures creating and affecting DTC and its operation, DTC is required to make book-entry transfers of Debt Securities among DTC Participants on whose behalf it acts and to receive and transmit distributions of principal of, and interest on, the Debt Securities. Under the book-entry system, Holders may experience some delay in receipt of payments, since such payments will be forwarded by the Trustee to Cede, as nominee for DTC, and DTC in turn will forward the payments to the appropriate DTC Participants. Distributions by DTC Participants to Holders will be the responsibility of such DTC Participants and will be made in accordance with customary industry practices. Accordingly, although Holders will not have possession of the Debt Securities, the rules of DTC provide a mechanism by which participants will receive payments and will be able to transfer their interests. Although the DTC Participants are expected to convey the rights represented by their interests in any global security to the related Holders, because DTC can only act on behalf of DTC Participants, the ability of Holders to pledge Debt Securities to persons or entities that are not DTC Participants or to otherwise act with respect to such Debt Securities, may be limited due to the lack of physical certificates for such Debt Securities. None of the Corporation, the Trustee or any other agent of the Corporation or the Trustee will have any responsibility or liability for any aspect of the records relating to, or payments made on account of, beneficial ownership interests in the Debt Securities or for supervising or reviewing any records relating to such beneficial ownership interests. Since the only "Holder" will be Cede, as nominee of DTC, Holders will not be recognized by the Trustee as Holders, as such term is used in the Indenture, and Holders will be permitted to exercise the rights of Holders only indirectly through DTC and DTC Participants. DTC has advised the Corporation that it will take any action permitted to be taken by a Holder under the Indenture and any Prospectus Supplement only at the direction of one or more DTC Participants to whose accounts with DTC the related Debt Securities are credited. Same-Day Settlement and Payment. All payments made by the Corporation to the Trustee under each Lease will be in immediately available funds and will be passed through to DTC in immediately available funds. The Debt Securities will trade in DTC's Same-Day Funds Settlement System until maturity, and secondary market trading activity in the Debt Securities will be required by DTC to settle in immediately available funds. No assurance can be given as to the effect, if any, of settlement in immediately available funds on trading activity in the Debt Securities. Certificated Form. The Debt Securities will be issued in fully registered, certificated form to Holders, or their nominees, rather than to DTC or its nominee, only if DTC advises the Trustee in writing that it is no longer willing, able or eligible to discharge properly its responsibilities as depository with respect to the Debt Securities and the Corporation is unable to locate a qualified successor or if the Corporation, at its option, elects to terminate the book-entry system through DTC. In such event, the Trustee will notify all Holders through DTC Participants of the availability of such certificated Debt Securities. Upon surrender by DTC of the definitive global note representing the series of Debt Securities and receipt of instructions for reregistration, the Trustee will reissue the Debt Securities in certificated form to Holders or their nominees. (Indenture, Section 305) Debt Securities in certificated form will be freely transferable and exchangeable at the office of the Trustee upon compliance with the requirements set forth in the Indenture. No service charge will be imposed for any registration of transfer or exchange, but payment of a sum sufficient to cover any tax or other governmental charge may be required. (Indenture, Section 305) Merger and Consolidation The Indenture does not prevent any consolidation or merger of the Corporation with or into any other Person, or successive consolidations or mergers in which the Corporation or its successor or successors may be a party, or any conveyance, transfer or lease of the property of the Corporation as an entirety or substantially as an entirety, to any Person, unless: (i) in case the Corporation shall consolidate with or merge into another Corporation or convey, transfer or lease its properties and assets as, or substantially as, an entirety to any Person, the Corporation formed by such consolidation or into which the Corporation is merged or the Person which acquires by conveyance, transfer, or lease the properties and assets of the Corporation, as, or substantially as, an entirety shall be a Corporation organized and existing under the laws of the United States of America, any state thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of (and premium, if any), interest on and any Additional Amounts with respect to all the Securities and the performance of every covenant of this Indenture on the part of the Corporation to be performed or observed; (ii) immediately after giving effect to such transaction, no Event of Default, or event which after notice or lapse of time, or both, would become an Event of Default, shall have occurred and be continuing; and (iii)the Corporation shall have delivered to the Trustee an Officers' Certificate or an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and such supplemental indenture comply with the Indenture and that all conditions precedent therein provided for relating to such transaction have been complied with. (Indenture, Section 801) Upon compliance with such provisions by a successor corporation or Person, the Corporation (except in the case of a lease) would be relieved of its obligations and covenants under the Indenture and the Debt Securities. (Indenture, Section 802) Modification, Amendment and Waiver Modifications and amendments of the Indenture may be made by the Corporation and the Trustee with the consent of the Holders of a majority in principal amount of each series of Debt Securities to be affected if less than all series are to be affected by such modification; provided, however, that no such modification or amendment may, without the consent of the Holder of each debt security affected thereby: (a) change the Stated Maturity of the principal of, or any installment of interest on, any such debt security; (b) reduce the principal amount of, rate of interest on, or premium payable upon the redemption of, any such debt security; (c) change any place of payment where, or the currency in which, any debt security or the interest or any premium thereon is payable; (d) impair the right to institute suit for the enforcement of any payment on or with respect to any such debt security on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date); or (e) reduce the percentage in principal amount of outstanding Debt Securities the consent of whose Holders is required for modification or amendment of the Indenture, for waiver of compliance with certain provisions of the Indenture or for waiver of certain defaults. (Indenture Section 902) The Holders of a majority in principal amount of the outstanding Debt Securities of any series may on behalf of the Holders of all Debt Securities of such series waive any past default under the Indenture and its consequences, except a default in the payment of the principal, premium, if any, or interest on any Debt Securities or in respect of a covenant or provision which under the Indenture cannot be modified or amended without the consent of the Holder of each outstanding debt security affected. (Indenture, Section 513) Events of Default The following are "Events of Default" under the Indenture with respect to each series of Debt Securities: (a) default for more than 30 days in the payment of any interest on any debt security of such series; (b) default in the payment of principal of, or premium, if any, on, any debt security of such series at its Maturity; (c) default in the performance, or breach, of any other covenant of the Corporation in the Indenture for more than 60 days after written notice as provided in the Indenture; (d) default in the deposit of any sinking fund payment when and as due by the terms of a Debt Security of such series; and (e) certain events in bankruptcy, insolvency or reorganization in respect of the Corporation. (Indenture, Section 501) If an Event of Default with respect to all Debt Securities of any series occurs and is continuing, then and in every such case the Trustee or the Holders of not less than 50% in aggregate principal amount of the outstanding Debt Securities of such series may, by a notice in writing to the Corporation (and to the Trustee if given by Holders), declare to be due and payable immediately the principal amount of all Debt Securities of such series. However, at any time after such a declaration of acceleration with respect to the Debt Securities of such series has been made, but before the Stated Maturity thereof, the Holders of a majority in principal amount of the outstanding Debt Securities of such series may, subject to certain conditions, rescind and annul such acceleration if all Events of Default with respect to the Debt Securities of such series, other than the nonpayment of accelerated principal, have been cured or waived as provided in the Indenture. (Indenture, Section 502) For information as to waiver of defaults, see "Modification and Waiver." Subject to the duties of the Trustee, if an Event of Default with respect to the Debt Securities of any series occurs and is continuing, the Indenture provides that the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the Holders of the Debt Securities of such series, unless such Holders offer to the Trustee reasonable indemnity. (Indenture, Sections 601 and 603) Subject to such provision for indemnity, certain conditions and certain other rights of the Trustee, the Holders of a majority in principal amount of the outstanding Debt Securities of such series will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee with respect to the Debt Securities of such series. (Indenture, Section 512) No Holder of any debt security of any series will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder unless such Holder has previously given to the Trustee written notice of a continuing Event of Default, and unless the Holders of at least 50% in principal amount of the outstanding Debt Securities of such series has made written request, and offered reasonable indemnity, to the Trustee to institute such proceeding as trustee, and the Trustee not has received from the Holders of a majority in principal amount of the outstanding Debt Securities of such series a direction inconsistent with such request and the Trustee has failed to institute such proceeding within 60 days. (Indenture, Section 507) However, the Holder of any debt security of such series will have an absolute right to receive payment of the principal of (and premium, if any, on) and interest on such debt security on or after the respective Stated Maturities expressed in such debt security (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment. (Indenture, Section 508) The Indenture requires the Corporation to furnish to the Trustee annually a statement as to the absence of certain defaults under the Indenture. (Indenture, Section 1005) The Indenture provides that the Trustee may withhold notice to the Holders of Debt Securities of any default (except as to payment of principal or interest with respect to such Debt Securities) if it considers such withholding to be in the interest of the Holders of such Debt Securities. (Indenture, Section 602) Defeasance and Covenant Defeasance The Indenture provides, if such provision is made applicable to the Debt Securities of any series, that the Corporation may elect either (A) to defease and be discharged from any and all obligations with respect to such Debt Securities (except for the obligations to register the transfer or exchange of such Debt Securities, to replace temporary or mutilated, destroyed, lost or stolen Debt Securities, to maintain an office or agency in respect of the Debt Securities and to hold moneys for payment in trust) ("defeasance") or (B)(i) to be released from its obligations with respect to such Debt Securities under Sections 801 (consolidation, merger and sale of assets) and 1005 (certificates of compliance) and (ii) that Section 501(3) (as to Sections 801 and 1005), 501(5), 501(6) and 501(7) (if Section 501(7) is specified in the Prospectus Supplement), as described in the last three clauses of the first sentence under "Events of Default" above, shall not be deemed to be events of default under the Indenture with respect to such series ("covenant defeasance"), upon the deposit with the Trustee (or other qualifying trustee), in trust for such purpose, of money, or Government Obligations which through the payment of principal and interest in accordance with their terms will provide money, in an amount sufficient to pay the principal of (and premium, if any) and interest on such Debt Securities, and any mandatory sinking fund or analogous payments thereon, on the scheduled due dates therefor. In the case of defeasance, the holders of such Debt Securities are entitled to receive payments in respect of such Debt Securities solely from such trust. Such a trust may only be established if, among other things, the Corporation has delivered to the Trustee an Opinion of Counsel (as specified in the Indenture) to the effect that the holders of such Debt Securities will not recognize income, gain or loss for federal income tax purposes as a result of such defeasance or covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same time as would have been the case if such defeasance or covenant defeasance had not occurred. Such Opinion of Counsel, in the case of defeasance under clause (A) above, must refer to and be based upon a ruling of the Internal Revenue Service or a change in applicable federal income tax law occurring after the date of the Indenture. (Indenture, Article Thirteen) Concerning the Trustee The Trustee acts as trustee under other indentures with respect to other indebtedness of the Corporation which ranks pari passu with the Debt Securities. The Corporation leases facilities financed with the proceeds of such indebtedness and the Corporation's obligations under such leases secure payment of such indebtedness. The Corporation also from time to time borrows from, and maintains deposit accounts with, the Trustee. PLAN OF DISTRIBUTION The Debt Securities may be sold in any of the following ways: (1) through underwriters or dealers; (2) through agents; or (3) directly to one or more purchasers (through a specific bidding or auction process or otherwise). The distribution of the Debt Securities 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 Debt Securities, underwriters or agents may receive compensation from the Corporation or from purchasers of Debt Securities for whom they may act as agents in the form of discounts, concessions or commissions. Underwriters may sell Debt Securities to or through dealers, and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters or commissions from the purchasers for whom they may act as agents. If a dealer is utilized to sell the Debt Securities, the Corporation will sell such Debt Securities to the dealer as principal. The dealer may then resell such Debt Securities to the public at varying prices to be determined by such dealer at any time of resale. Underwriters, dealers and agents that participate in the distribution of Debt Securities may be deemed to be underwriters, and any discounts or commissions received by them from the Corporation and any profit on the resale of Debt Securities by them may be deemed to be underwriting discounts and commissions, under the Securities Act. Any such underwriter, dealer or agent will be identified, and any such compensation received from the Corporation will be described, in the applicable Prospectus Supplement. Offers to purchase Debt Securities 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, including the terms of any bidding or auction process. If so indicated in the Prospectus Supplement, the Corporation will authorize underwriters, dealers or agents to solicit offers by certain specified institutions to purchase Debt Securities from the Corporation at the public offering price set forth in the Prospectus Supplement pursuant to delayed delivery contracts providing for payment and delivery on a specified date in the future. Such contracts will be subject only to those conditions set forth in the Prospectus Supplement and the Prospectus Supplement will set forth the commission payable for the solicitation of such contracts. Under agreements which may be entered into by the Corporation, underwriters, dealers and agents who participate in the distribution of Debt Securities may be entitled to indemnification by the Corporation against certain liabilities, including liabilities under the Securities Act or to contribution with respect to payments which the agents, underwriters or dealers may be required to make in respect thereof. Unless otherwise indicated in the applicable Prospectus Supplement, the Corporation does not intend to apply for the listing of any Series of Debt Securities on a national securities exchange. If the Debt Securities of any Series are sold to or through underwriters, the underwriters may make a market in such Debt Securities, as permitted by applicable laws and regulations. No underwriter would be obligated, however, to make a market in such Debt Securities, and any such market-making could be discontinued at any time at the sole discretion of the underwriters. Accordingly, no assurance can be given as to the liquidity of, or trading markets for, the Debt Securities of any Series. Certain of the underwriters, dealers 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 Prospectus Supplement relating to the Offered Securities, the legality of the Debt Securities will be passed upon for the Corporation by George W. Hearn, Vice President - Law of the Corporation, and by counsel for any underwriters, dealers and agent. At July 3, 1996, Mr. Hearn owned zero shares of the Corporation's common stock and had been granted options to purchase 20,800 shares of the Corporation's common stock. Of the options granted, 3,750 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, 1995 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 giving said reports. With respect to the unaudited interim financial information for the quarters ended August 31, 1995, November 30, 1995 and February 29, 1996, included in the Corporation's Quarterly Reports on Form 10-Q for such periods, which are incorporated by reference in this Prospectus, Arthur Andersen LLP has applied limited procedures in accordance with professional standards for a review of such information. However, their separate reports thereon state that they did not audit and they do not express an opinion on that interim financial information. Accordingly, the degree of reliance on their reports on that information should be restricted in light of the limited nature of the review procedures applied. In addition, the accountants are not subject to the liability provisions of Section 11 of the Securities Act for their reports on the unaudited interim financial information because those reports are not "reports" or a "part" of the Registration Statement, of which this Prospectus is a part, prepared or certified by the accountants within the meaning of Sections 7 and 11 of the Securities Act. ======================================== ==================================== No dealer, salesperson or other individual has been authorized to give any information or to make any representation not contained in this $1,000,000,000 Prospectus in connection with the offering covered by this Prospectus. If given or made, such information or representation must not be relied [COMPANY LOGO] upon as having been authorized by the Corporation or the Underwriters. This Prospectus does not constitute an offer to sell, or the solicitation $1,000,000,000 of an offer to buy, the Securities in any jurisdiction where, or to any person to whom, it is unlawful to make such offer or solicitation. Neither the delivery of this Prospectus Debt Securities nor any sale made hereunder shall, under any circumstances, create an implication that there has not been any change in the facts set forth in -------------------- this Prospectus or in the affairs of P R O S P E C T U S the Corporation since the date hereof. -------------------- TABLE OF CONTENTS Prospectus Page ---- Available Information.............. 3 Incorporation of Certain Documents by Reference........... 3 Federal Express Corporation........ 4 Ratio of Earnings to Fixed Charges. 4 Use of Proceeds.................... 4 Description of Debt Securities..... 4 Plan of Distribution............... 10 Legal Matters...................... 11 Experts............................ 11 July ___, 1996 ======================================== ==================================== SUBJECT TO COMPLETION PRELIMINARY PROSPECTUS DATED JULY 5, 1996 PROSPECTUS - ---------- [COMPANY LOGO] COMMON STOCK PREFERRED STOCK _______________________________ Pursuant to this Prospectus and one or more Prospectus Supplements, Federal Express Corporation (the "Corporation") may offer and sell from time to time up to $1,000,000,000 aggregate amount, together or separately, of (i) shares of preferred stock of the Corporation (the "Preferred Stock") or (ii) shares of Common Stock, par value $.10 per share of the Corporation (the "Common Stock") on terms to be determined at the time of sale. The Preferred Stock and Common Stock are sometimes collectively called the "Securities" herein. When a particular issue of Securities is offered (the "Offered Securities"), a supplement to this Prospectus (the "Prospectus Supplement") will be delivered with this Prospectus setting forth with respect to the Offered Securities: (i) the terms of any Preferred Stock offered (the "Offered Preferred Stock") including the specific designations and stated value, dividend rights and any liquidation, redemption, conversion, voting and other rights not described in this Prospectus; (ii) the description of any Common Stock offered (the "Offered Common Stock"); and (iii) any initial public offering price, the net proceeds to the Corporation and the other specific terms of the Offered Securities. The Securities will be sold directly by the Corporation, through agents designated from time to time or through underwriters or dealers. If any agents of the Corporation or any underwriters are involved in the sale of the Securities, the names of such agents or underwriters and any applicable commissions or discounts will be set forth in the Prospectus Supplement. ____________________________ 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 July __, 1996. 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 accessed electronically by means of the Commission's home page on the Internet at http://www.sec.gov. and 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, 1995 filed August 4, 1995. 2. The Corporation's Quarterly Reports on Form 10-Q for the fiscal quarters ended August 31, 1995, November 30, 1995 and February 29, 1996, respectively, filed October 13, 1995, January 12, 1996 and April 12, 1996, respectively. 3. The Corporation's Current Reports on Form 8-K dated August 14, 1995, August 16, 1995, September 14, 1995, October 17, 1995, October 25, 1995, October 26, 1995, January 12, 1996, March 14, 1996, April 30, 1996, June 5, 1996 and June 7, 1996, respectively, filed August 15, 1995, August 18, 1995, September 19, 1995, October 18, 1995, October 27, 1995, October 30, 1995, January 16, 1996, March 26, 1996, June 5, 1996, June 10, 1996 and June 21, 1996, respectively. 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, including any beneficial owner, to whom this Prospectus is delivered, upon 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 L. Holland, Managing Director -- Investor Relations, Federal Express Corporation, by mail at Box 727, Memphis, Tennessee 38194-1854 or by telephone at (901) 395-3478. 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. The U.S. domestic express market is highly competitive and sensitive to both price and service. Competitors in this market include passenger airlines offering package express services, regional express delivery concerns, airfreight forwarders and other express package concerns, principally United Parcel Service and Airborne Express. The international express package and freight markets are also highly competitive. Ability to compete effectively internationally depends principally upon price, frequency and capacity of scheduled service, extent of geographic coverage and reliability. Many of the Corporation's competitors in the international market are government owned, controlled, or subsidized carriers which may have greater resources, lower costs, less profit sensitivity and more favorable operating conditions than the Corporation. The Corporation's principal competitors in the international market are foreign national air carriers, United States passenger airlines and all-cargo airlines and other express package companies including United Parcel Service and DHL. The Corporation operates in a heavily regulated environment. The Department of Transportation exercises regulatory authority over the economic aspects of air transportation while the Federal Aviation Administration regulates safety aspects. The Environmental Protection Agency is authorized to establish standards governing aircraft noise and engine emissions, and the Corporation's communication facilities are subject to the Federal Communication Commission Act. In addition to U. S. regulation, the Corporation's international operations are also governed by bilateral treaties between the United States and the countries served. For a complete discussion of the Corporation's competitive and regulatory environments as well as its services, operations and properties, see Item 1 of the Corporation's Annual Report on Form 10-K for the fiscal year ended May 31, 1995. RATIO OF EARNINGS TO FIXED CHARGES (Unaudited) Nine Months Ended Year Ended May 31 February 28 February 29 ---------------------------- ---------------------- 1991 1992 1993 1994 1995 1995 1996 ---- ---- ---- ---- ---- ---- ---- Ratio of Earnings to Fixed Charges (a) 1.0x (b) 1.4x 1.7x 2.0x 2.0x 1.8x - --------------- * The Corporation had zero shares of Preferred Stock outstanding for the periods covered in this table; therefore, no Preferred Stock dividends were paid during these periods. (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 Unless otherwise set forth in a Prospectus Supplement, the net proceeds from the sale of the Securities will be added to the general funds of the Corporation and used for general corporate purposes. DESCRIPTION OF PREFERRED STOCK Under its Restated Certificate of Incorporation (the "Certificate of Incorporation"), the Corporation is authorized to adopt resolutions providing for the issuance, in one or more series, of up to 4,000,000 shares of its Preferred Stock, no par value, with such powers, preferences and relative rights and qualifications, limitations or restrictions thereof as shall be adopted by the Board of Directors and permitted by Delaware law and the Corporation's Certificate of Incorporation. On July 5, 1996, there were zero shares of Preferred Stock outstanding. The description below sets forth certain general terms and provisions of the Preferred Stock covered by this Prospectus. The specific terms of the Offered Preferred Stock will be described in the Prospectus Supplement relating to such Offered Preferred Stock. The following summaries of certain provisions of the Preferred Stock do not purport to be complete and are subject to, and are qualified in their entirety by reference to, the Certificate of Incorporation and the resolution of the Board of Directors authorizing a particular series of Preferred Stock (the "Series Resolution"). If so indicated in the Prospectus Supplement, the terms of the Offered Preferred Stock may differ from the terms set forth below, except those terms required by the Certificate of Incorporation. General Under the Certificate of Incorporation, each series of Preferred Stock of the Corporation ranks prior to the Common Stock of the Corporation with respect to both dividends and distribution of assets on liquidation, dissolution or winding up. The Preferred Stock will, when issued, be fully paid and non-assessable and the holders thereof will have no preemptive rights. Reference is made to the Prospectus Supplement relating to the Offered Preferred Stock for specific terms including: (i) The designation of the series of Preferred Stock, which may be by distinguishing number, letter or title; (ii) The number of shares of such Preferred Stock offered, the liquidation preference per share and the offering price of such Preferred Stock; (iii) The dividend rate or rates of such shares, the date at which dividends, if declared, will be payable, and whether or not such dividends are to be cumulative and, if cumulative, the date or dates from which dividends shall be cumulative; (iv) The amounts payable on shares of such Preferred Stock in the event of voluntary or involuntary liquidation, dissolution or winding up; (v) The redemption rights and price or prices, if any, for the shares of such Preferred Stock; (vi) The terms and amount of any sinking fund or analogous fund providing for the purchase or redemption of the shares of such Preferred Stock, if any; (vii) The voting rights, if any, granted to the holders of the shares of such Preferred Stock in addition to those required by Delaware law or the Certificate of Incorporation; (viii)Whether the shares of Preferred Stock shall be convertible into shares of the Corporation's Common Stock or any other class of the Corporation's capital stock, and if convertible, the conversion price or prices, any adjustment thereof and any other terms and conditions upon which such conversion shall be made; (ix) Any other rights, preferences, restrictions, limitations or conditions relative to the shares of Preferred Stock as may be permitted by Delaware law or the Certificate of Incorporation; (x) Any listing of such Preferred Stock on any securities exchange; and (xi) A discussion of federal income tax considerations applicable to such Preferred Stock. Subject to the Certificate of Incorporation and to any limitations contained in any outstanding Preferred Stock, the Corporation may issue additional series of Preferred Stock, at any time or from time to time, with such powers, preferences, rights and qualifications, limitations or restrictions thereof, as the Board of Directors shall determine, all without further action of the stockholders, including holders of then outstanding Preferred Stock of the Corporation, if any. Restrictions So long as any Preferred Stock is outstanding, the Corporation cannot (1) declare or pay a dividend upon, or make a distribution upon, the Corporation's Common Stock (other than a dividend or distribution payable in shares of such Common Stock) ; (2) purchase or redeem shares of Common Stock without consent of a certain number of holders of the outstanding Preferred Stock established by the Board of Directors when authorizing the issuance of such outstanding Preferred Stock; or (3) pay any money into, or make any money available for, a sinking fund for the purchase or redemption of any Common Stock, unless in each instance all dividends on all outstanding shares of Preferred Stock for all past dividend periods shall have been paid, all dividends for the current dividend period shall have been declared or paid and sufficient funds for the payment thereof set apart and any arrears in the mandatory redemption of the Preferred Stock shall have been made good. Voting Rights Holders of the Preferred Stock will have no right to vote for the election of directors of the Corporation or on any other matter unless a vote of such class is required by Delaware law, the Certificate of Incorporation or the Series Resolution. DESCRIPTION OF COMMON STOCK Under the Certificate of Incorporation, the Corporation is authorized to issue up to 200,000,000 shares of its Common Stock $.10 par value per share. On July 2, 1996, there were outstanding (a) 56,893,591 shares of Common Stock and (b) employee stock options to purchase an aggregate of 3,697,564 shares of Common Stock (of which options to purchase an aggregate of 1,241,263 shares of Common Stock were currently exercisable). The following description is a summary of certain provisions of the Common Stock and does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the Corporation's bylaws and Certificate of Incorporation. The Prospectus Supplement relating to an offering of the Offered Common Stock will describe terms relevant thereto, including the number of shares offered, the initial offering price, market price and dividend information. General Each holder of Common Stock is entitled to one vote for each share held on all matters voted upon by the stockholders of the Corporation, including the election of directors. The Common Stock does not have cumulative voting rights. The election of each class of the Board of Directors is decided by the holders of a plurality of the shares entitled to vote in person or by proxy at a meeting for the election of directors. See "Description of Preferred Stock-Voting Rights" for a discussion of the voting rights of any Preferred Stock that may be issued in the future. In the event of any liquidation, dissolution or winding up of the Corporation, after the payment or provision for payment of the debts and other liabilities of the Corporation and the preferential amounts to which holders of the Corporation's Preferred Stock are entitled (if any shares of Preferred Stock are then outstanding), the holders of Common Stock are entitled to share equally in the remaining assets of the Corporation. The outstanding shares of Common Stock are, and any shares of Common Stock offered hereby upon issuance and payment therefor will be, fully paid and non-assessable. The Common Stock has no preemptive or conversion rights and there are no redemption or sinking fund provisions applicable thereto. The Common Stock of the Corporation is listed on the New York Stock Exchange (symbol "FDX") . Dividends The Corporation's current policy is to not pay dividends on its Common Stock, but to reinvest earnings in its business. However, if the Corporation changes its current policy and decides to pay dividends on its Common Stock, holders of Common Stock are entitled to receive dividends when, as and if declared by the Board of Directors out of funds legally available therefor subject to the rights of the holders of any outstanding shares of Preferred Stock. The holders of the Common Stock will share equally, share for share, in such dividends. Anti-takeover Provisions Classification of Board of Directors. The Board of Directors of the Corporation is divided into three classes, having staggered terms of office of three years each. The effect of a classified board of directors may be to make it more difficult to acquire control of the Corporation. Change in Control. The Corporation's Certificate of Incorporation includes provisions designed to prevent the use of certain tactics in connection with a potential takeover of the Corporation. Article Five of the Certificate of Incorporation requires the affirmative vote of 80% of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors to approve certain business combinations (including certain mergers, consolidations, security issuances, reclassifications, recapitalizations, liquidations, dissolutions, sales, leases, exchanges, mortgages, pledges, transfers of a substantial portion of assets) involving the Corporation or any subsidiary and the beneficial owner of more than 10% of the voting power of the outstanding shares of capital stock (a "Related Person") , unless either (i) such business combination is approved by a majority of the directors who are not affiliated with the Related Person and who were directors before the Related Person became a Related Person or (ii) the stockholders receive a "fair price" for their holdings and other procedural requirements are met. The Certificate of Incorporation also requires all stockholder action be taken at a duly called meeting of such stockholders and prohibits taking action by written consent of stockholders. Supermajority Voting. The classified board, fair price and stockholder consent provisions, as well as certain other provisions of the Certificate of Incorporation, may be altered, amended or repealed only by the affirmative vote of 80% or more of the outstanding capital stock of the Corporation entitled to vote on such action. Transfer Agent and Registrar The transfer agent and registrar for the Common Stock is First Chicago Trust Company of New York, Shareholder Services, P.O. Box 2500, Jersey City, NJ 07303-2500. PLAN OF DISTRIBUTION The Securities may be sold in any of the following ways: (1) through underwriters or dealers; (2) through agents; or (3) directly to one or more purchasers (through a specific bidding or auction process or otherwise). The distribution of the Securities 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 Securities, underwriters or agents may receive compensation from the Corporation or from purchasers of Securities for whom they may act as agents in the form of discounts, concessions or commissions. Underwriters may sell Securities to or through dealers, and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters or commissions from the purchasers for whom they may act as agents. If a dealer is utilized to sell the Securities, the Corporation will sell such Securities to the dealer as principal. The dealer may then resell such Securities to the public at varying prices to be determined by such dealer at any time of resale. Underwriters, dealers and agents that participate in the distribution of Securities may be deemed to be underwriters, and any discounts or commissions received by them from the Corporation and any profit on the resale of Securities by them may be deemed to be underwriting discounts and commissions, under the Securities Act. Any such underwriter, dealer or agent will be identified, and any such compensation received from the Corporation will be described, in the applicable Prospectus Supplement. Offers to purchase Securities 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, including the terms of any bidding or auction process. If so indicated in the Prospectus Supplement, the Corporation will authorize underwriters, dealers or agents to solicit offers by certain specified institutions to purchase Securities from the Corporation at the public offering price set forth in the Prospectus Supplement pursuant to delayed delivery contracts providing for payment and delivery on a specified date in the future. Such contracts will be subject only to those conditions set forth in the Prospectus Supplement and the Prospectus Supplement will set forth the commission payable for the solicitation of such contracts. Under agreements which may be entered into by the Corporation, underwriters, dealers and agents who participate in the distribution of Securities may be entitled to indemnification by the Corporation against certain liabilities, including liabilities under the Securities Act or to contribution with respect to payments which the agents, underwriters or dealers may be required to make in respect thereof. Unless otherwise indicated in the applicable Prospectus Supplement, the Corporation does not intend to apply for the listing of any Series of Preferred Stock on a national securities exchange. If the Preferred Stock is sold to or through underwriters, the underwriters may make a market in such stock, as permitted by applicable laws and regulations. No underwriter would be obligated, however, to make a market in such stock, 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 Preferred Stock. Certain of the underwriters, dealers 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 Prospectus Supplement relating to the Offered Securities, the legality of the Securities will be passed upon for the Corporation by George W. Hearn, Vice President - Law of the Corporation, and by counsel for any underwriters, dealers and agent. At July 3, 1996, Mr. Hearn owned zero shares of the Corporation's common stock and had been granted options to purchase 20,800 shares of the Corporation's common stock. Of the options granted, 3,750 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, 1995 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 giving said reports. With respect to the unaudited interim financial information for the quarters ended August 31, 1995, November 30, 1995 and February 29, 1996, included in the Corporation's Quarterly Reports on Form 10-Q for such periods, which are incorporated by reference in this Prospectus, Arthur Andersen LLP has applied limited procedures in accordance with professional standards for a review of such information. However, their separate reports thereon state that they did not audit and they do not express an opinion on that interim financial information. Accordingly, the degree of reliance on their reports on that information should be restricted in light of the limited nature of the review procedures applied. In addition, the accountants are not subject to the liability provisions of Section 11 of the Securities Act for their reports on the unaudited interim financial information because those reports are not "reports" or a "part" of the Registration Statement, of which this Prospectus is a part, prepared or certified by the accountants within the meaning of Sections 7 and 11 of the Securities Act. ======================================== ==================================== No dealer, salesperson or other individual has been authorized to give any information or to make any representation not contained in this $1,000,000,000 Prospectus in connection with the offering covered by this Prospectus. If given or made, such information or representation must not be relied [COMPANY LOGO] upon as having been authorized by the Corporation or the Underwriters. This Prospectus does not constitute an offer to sell, or the solicitation $1,000,000,000 of an offer to buy, the Securities in any jurisdiction where, or to any person to whom, it is unlawful to make such offer or solicitation. Neither the delivery of this Prospectus Preferred Stock nor any sale made hereunder shall, Common Stock under any circumstances, create an implication that there has not been any change in the facts set forth in -------------------- this Prospectus or in the affairs of P R O S P E C T U S the Corporation since the date hereof. -------------------- TABLE OF CONTENTS Prospectus Page ---- Available Information.............. 3 Incorporation of Certain Documents by Reference........... 3 Federal Express Corporation........ 4 Ratio of Earnings to Fixed Charges.......................... 4 Use of Proceeds.................... 5 Description of Preferred Stock..... 5 Description of Common Stock........ 6 Plan of Distribution............... 8 Legal Matters...................... 9 Experts............................ 9 July ___, 1996 ======================================== ==================================== 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.......................................... $ 307,774 Printing and Engraving........................................ 25,000 Fees of Transfer Agent and Registrar.......................... 10,000 Attorneys' Fees and Expenses.................................. 600,000 Trustees' Fees................................................ 20,000 Accounting Fees and Expenses.................................. 20,000 Blue Sky Fees and Expenses.................................... 5,000 Rating Agency Fees............................................ 125,000 New York Stock Exchange Listing Fee........................... 25,000 Miscellaneous................................................. 5,000 ---------- Total $1,142,774 ========== 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), 1(b), 1(c), 1(d) and 1(e) 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, as amended. 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 1(c) Form of Underwriting Agreement relating to Debt Securities 1(d) Form of Underwriting Agreement relating to Preferred Stock 1(e) Form of Underwriting Agreement relating to Common Stock 4(a)(1) Pass Through Trust Agreement, dated as of June 1, 1996 between Federal Express Corporation and the Pass Through Trustee for an offering of Pass Through Certificates 4(a)(2) Form of Pass Through Certificate (included in Exhibit 4(a)(1)) 4(b)(1) Form of Trust Indenture and Security Agreement among the Owner Trustee, the Indenture Trustee and Federal Express Corporation, as Lessee, for an offering of Equipment Trust Certificates (Filed as Exhibit 4(b)(1) to Registrant's Registration Statement on Form S-3, Commission File No. 33-52142, and incorporated herein by reference.) (*) 4(b)(2) Form of Equipment Trust Certificate (included in Exhibit 4(b)(1)) 4(c)(1) Form of 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(c)(2) Form of Trust Indenture and Security Agreement (Leased Aircraft Indenture - Prefunding) between the Owner Trustee and the Indenture Trustee, relating to Equipment Certificates (Leased Aircraft Certificates) in connection with an offering of Pass Through Certificates (*) 4(d) 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 (Filed as Exhibit 4(d)(1) to Registrant's Registration Statement on Form S-3, Commission File No. 33-56569, and incorporated herein by reference.) (*) 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, as Lessee, the Owner Participant, the Owner Trustee, the Indenture Trustee and the Pass Through Trustee, relating to Equipment Certificates in connection with an offering of Pass Through Certificates (Leased Aircraft Certificates - Prefunding) (*) 4(e)(3) 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 (Filed as Exhibit 4(e)(2) to Registrant's Registration Statement on Form S-3, Commission File No. 33-56569, and incorporated herein by reference.) (*) 4(f)(1) 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(f)(2) Form of Trust Agreement between the Owner Participant and the Owner Trustee relating to Equipment Certificates (Leased Aircraft Certificates - Prefunding) in connection with an offering of Pass Through Certificates (*) 4(g)(1) 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(g)(2) Form of Lease Agreement between the Owner Trustee, as the Lessor, and Federal Express Corporation, as Lessee, relating to Equipment Certificates (Leased Aircraft Certificates- Prefunding) in connection with an offering of Pass Through Certificates (*) 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.) 4(i) Form of Indenture dated as of July 1, 1996 between the Registrant and The First National Bank of Chicago, as Trustee 4(j) Form of Debt Security (included in Exhibit 4(i)) 4(k) The description of the securities contained in the Registrant's Registration Statement on Form 8-A filed with the Commission on December 15, 1978 under Section 12 of the Exchange Act, as amended, including any amendment or report filed for the purpose of updating such description. 4(l) Certain provisions of Registrant's Articles of Incorporation relating to the Common Stock and defining the rights of security holders (Filed as Exhibit 3.1 to Registrant's 1993 Annual Report on Form 10-K, Commission File No. 1-7806, 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 Bingham, Dana & Gould, counsel for the Pass Through Trustee 5(c) Opinion of Ray, Quinney & Nebeker, counsel for the Owner Trustee 5(d)(1) Opinion of George W. Hearn, Vice President - Law of Federal Express Corporation, relating to Equipment Trust Certificates and Pass Through Certificates 5(d)(2) Opinion of George W. Hearn, Vice President - Law of Federal Express Corporation, relating to Debt Securities, Common Stock and Preferred Stock 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 Bingham, Dana & Gould, special counsel for the Pass Through Trustee (included under the caption "Certain Massachusetts 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 FY96 Third Quarterly Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 15(a) Letters of Arthur Andersen LLP, independent public accountants (Filed as Exhibits 15.1 to Registrant's FY96 First, Second and Third Quarterly Reports on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 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 Bingham, Dana & Gould, counsel for the Pass Through Trustee (included in Exhibit 5(b)) 23(c) Consent of Ray, Quinney & Nebeker, counsel for the Owner Trustee (included in Exhibit 5(c)) 23(d) Consent of George W. Hearn (included in Exhibits 5(d)(1) and 5(d)(2)) 23(e) 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 State Street Bank and Trust Company, as Indenture Trustee and as Pass Through Trustee 25(b) Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The First National Bank of Chicago, as 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. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) under the Securities Act of 1933 if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; provided, however, the paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the Registration Statement is on Form S-3, Form S-8 or Form F-3 and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the Registrant pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) That, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions referred to in Item 15 of this Registration Statement, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. (d) To file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of section 310 of the Trust Indenture Act of 1939 in accordance with the rules and regulations prescribed by the Commission under section 305(b)(c) of the Trust Indenture Act of 1939. 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 3rd day of July 1996 FEDERAL EXPRESS CORPORATION (Registrant) By: /s/ JAMES S. HUDSON --------------------------- James S. Hudson 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/ Alan B. Graf, Jr* Executive Vice President and - -------------------------------- Chief Financial Officer Alan B. Graf, Jr. (Principal Financial Officer) /s/ James S. Hudson Vice President and Controller July 3, 1996 - -------------------------------- (Principal Accounting Officer) James S. Hudson /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 Director - -------------------------------- Judith L. Estrin /s/ PHILIP GREER* Director - -------------------------------- Philip Greer /s/ J. R. HYDE, III* Director - -------------------------------- J. R. Hyde, III Director - -------------------------------- Charles T. Manatt /s/ GEORGE J. MITCHELL* Director - -------------------------------- George J. Mitchell /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/ JAMES S. HUDSON July 3, 1996 -------------------------- James S. Hudson 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 1(c) Form of Underwriting Agreement relating to Debt Securities 1(d) Form of Underwriting Agreement relating to Preferred Stock 1(e) Form of Underwriting Agreement relating to Common Stock 4(a)(1) Pass Through Trust Agreement, dated as of June 1, 1996 between Federal Express Corporation and the Pass Through Trustee for an offering of Pass Through Certificates 4(a)(2) Form of Pass Through Certificate (included in Exhibit 4(a)(1)) 4(b)(1) Form of Trust Indenture and Security Agreement among the Owner Trustee, the Indenture Trustee and Federal Express Corporation, as Lessee, for an offering of Equipment Trust Certificates (Filed as Exhibit 4(b)(1) to Registrant's Registration Statement on Form S-3, Commission File No. 33-52142, and incorporated herein by reference.) (*) 4(b)(2) Form of Equipment Trust Certificate (included in Exhibit 4(b)(1)) 4(c)(1) Form of 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(c)(2) Form of Trust Indenture and Security Agreement (Leased Aircraft Indenture - Prefunding) between the Owner Trustee and the Indenture Trustee, relating to Equipment Certificates (Leased Aircraft Certificates) in connection with an offering of Pass Through Certificates (*) 4(d) 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 (Filed as Exhibit 4(d)(1) to Registrant's Registration Statement on Form S-3, Commission File No. 33-56569, and incorporated herein by reference.) (*) 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, as Lessee, the Owner Participant, the Owner Trustee, the Indenture Trustee and the Pass Through Trustee, relating to Equipment Certificates in connection with an offering of Pass Through Certificates (Leased Aircraft Certificates - Prefunding) (*) 4(e)(3) 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 (Filed as Exhibit 4(e)(2) to Registrant's Registration Statement on Form S-3, Commission File No. 33-56569, and incorporated herein by reference.) (*) 4(f)(1) 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(f)(2) Form of Trust Agreement between the Owner Participant and the Owner Trustee relating to Equipment Certificates (Leased Aircraft Certificates - Prefunding) in connection with an offering of Pass Through Certificates (*) 4(g)(1) 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(g)(2) Form of Lease Agreement between the Owner Trustee, as the Lessor, and Federal Express Corporation, as Lessee, relating to Equipment Certificates (Leased Aircraft Certificates- Prefunding) in connection with an offering of Pass Through Certificates (*) 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.) 4(i) Form of Indenture dated as of July 1, 1996 between the Registrant and The First National Bank of Chicago, as Trustee 4(j) Form of Debt Security (included in Exhibit 4(i)) 4(k) The description of the securities contained in the Registrant's Registration Statement on Form 8-A filed with the Commission on December 15, 1978 under Section 12 of the Exchange Act, as amended, including any amendment or report filed for the purpose of updating such description. 4(l) Certain provisions of Registrant's Articles of Incorporation relating to the Common Stock and defining the rights of security holders (Filed as Exhibit 3.1 to Registrant's 1993 Annual Report on Form 10-K, Commission File No. 1-7806, 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 Bingham, Dana & Gould, counsel for the Pass Through Trustee 5(c) Opinion of Ray, Quinney & Nebeker, counsel for the Owner Trustee 5(d)(1) Opinion of George W. Hearn, Vice President - Law of Federal Express Corporation, relating to Equipment Trust Certificates and Pass Through Certificates 5(d)(2) Opinion of George W. Hearn, Vice President - Law of Federal Express Corporation, relating to Debt Securities, Common Stock and Preferred Stock 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 Bingham, Dana & Gould, special counsel for the Pass Through Trustee (included under the caption "Certain Massachusetts 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 FY96 Third Quarterly Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 15(a) Letters of Arthur Andersen LLP, independent public accountants (Filed as Exhibits 15.1 to Registrant's FY96 First, Second and Third Quarterly Reports on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 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 Bingham, Dana & Gould, counsel for the Pass Through Trustee (included in Exhibit 5(b)) 23(c) Consent of Ray, Quinney & Nebeker, counsel for the Owner Trustee (included in Exhibit 5(c)) 23(d) Consent of George W. Hearn (included in Exhibits 5(d)(1) and 5(d)(2)) 23(e) 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 State Street Bank and Trust Company, as Indenture Trustee and as Pass Through Trustee 25(b) Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The First National Bank of Chicago, as 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. EX-1.B 2 Exhibit 1(b) Underwriting Agreement Dated as of ______________, 199__ between FEDERAL EXPRESS CORPORATION and [UNDERWRITERS] Pass Through Certificates TABLE OF CONTENTS Page ---- SECTION 1. Representations & Warranties of the Company................ 3 SECTION 2. Purchase and Sale.......................................... 7 SECTION 3. Covenants of the Company................................... 8 SECTION 4. Payment of Expenses........................................ 10 SECTION 5. Conditions of Underwriters' Obligations.................... 11 SECTION 6. Indemnification............................................ 14 SECTION 7. Contribution............................................... 16 SECTION 8. Representations, Warranties and Agreements to Survive Delivery...................................... 16 SECTION 9. Termination of Agreement................................... 17 SECTION 10. Default by One of the Underwriters......................... 17 SECTION 11. Notices.................................................... 18 SECTION 12. Parties.................................................... 18 SECTION 13. Governing Law.............................................. 19 Exhibit A Pricing Information Exhibit B Opinion of Davis Polk & Wardwell Exhibit C-1 Opinion of Davis Polk & Wardwell pursuant to Participation Agreement - Refinancing Exhibit C-2 Opinion of Davis Polk & Wardwell pursuant to Participation Agreement - Prefunding Exhibit D Opinion of the Company Schedule I Underwriters' Commitments Schedule II Terms and Conditions FEDERAL EXPRESS CORPORATION 199__ Pass Through Certificates, Series __ UNDERWRITING AGREEMENT ____________, 199__ [UNDERWRITERS] [ADDRESS] Ladies and Gentlemen: Federal Express Corporation, a Delaware corporation (the "Company"), proposes that State Street Bank and Trust Company, acting not in its individual capacity but solely as pass through trustee (the "Trustee") under the Pass Through Trust Agreement dated as of June 1, 1996 (the "Basic Agreement"), as supplemented for each series of pass through certificates (the "Pass Through Certificates") to be purchased hereunder (each, a "Series") by a Series Supplement (each, a "Series Supplement"), in each case between the Company and the Trustee (for each Series, the Basic Agreement, as supplemented by the related Series Supplement, being referred to herein as the "Pass Through Agreement"), issue and sell to the underwriters named in Schedule I hereto its Pass Through Certificates in the aggregate amounts and with the applicable interest rates and final distribution dates set forth on Exhibit A hereto (the "Offered Certificates") on the terms and conditions stated herein and in Schedule II. Each Series of Pass Through Certificates will represent interests in a separate trust (each, a "Pass Through Trust") established pursuant to the related Pass Through Agreement to fund the purchase of equipment certificates (the "Equipment Certificates") which are to be issued by the Company or as nonrecourse obligations by certain owner trustees, each acting not in its individual capacity but solely as owner trustee (each, an "Owner Trustee"), in connection with separate leveraged lease transactions relating to _____ aircraft (each, an "Aircraft" and, collectively, the "Aircraft"). The proceeds from the sale of the Equipment Certificates will be used to (i) finance a portion of the purchase price to be paid by the Company or by the Owner Trustee on behalf of the related Owner Trust, and (ii) refinance the aggregate outstanding principal amount of the Original Loan Certificates of the Company or the related Owner Trust issued in connection with transactions relating to ___ Aircraft bearing U.S. Registration Marks N____FE and [N____FE], respectively. Each series of Equipment Certificates will be issued under a separate Trust Indenture and Security Agreement between State Street Bank and Trust Company, acting not in its individual capacity, but solely as Indenture Trustee (the "Indenture Trustee"), and the related Owner Trustee (each, an "Indenture" and, collectively, the "Indentures"). As used herein, unless the context otherwise requires, the term "Underwriters" shall mean the firm or firms named as Underwriter or Underwriters in Schedule I and the term "you" shall mean the Underwriter or Underwriters, if no underwriting syndicate is purchasing the Offered Certificates, or the representative or representatives of the Underwriters, if an underwriting syndicate is purchasing the Offered Certificates, as indicated in Schedule I. The Company has filed with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-3 (No. 33-________) for the registration of certain equipment trust certificates, pass through certificates and other securities, including the Offered Certificates, under the Securities Act of 1933, as amended (the "1933 Act"), and the offering thereof from time to time in accordance with Rule 415 of the rules and regulations of the Commission under the 1933 Act (the "1933 Act Regulations"). Such registration statement has been declared effective by the Commission and the Basic Agreement has been qualified under the Trust Indenture Act of 1939, as amended (the "1939 Act"). The Company has, pursuant to Rule 424 under the 1933 Act, filed with, or transmitted for filing to, or shall within the required period of time hereafter file with or transmit for filing to, the Commission a prospectus supplement (the "Prospectus Supplement") specifically relating to the Offered Certificates, together with a revised and restated prospectus relating to pass through certificates covered by the above-referenced registration statement. The term "Registration Statement" refers to such registration statement in the form in which it became effective, including the exhibits thereto and the documents incorporated by reference therein, as amended to the date hereof. The term "Basic Prospectus" means the above-referenced revised and restated prospectus relating to pass through certificates. The term "Prospectus" means the Basic Prospectus supplemented by the Prospectus Supplement. The term "Preliminary Prospectus" means a preliminary prospectus supplement specifically relating to the Offered Certificates together with the Basic Prospectus. As used herein, the terms "Basic Prospectus," "Prospectus" and "Preliminary Prospectus" shall include in each case the documents, if any, incorporated by reference therein. The terms "supplement" and "amendment" or "amend" as used herein shall include all documents deemed to be incorporated by reference in the Prospectus that have been filed subsequent to the date of the Basic Prospectus by the Company with the Commission pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"). If the Company has filed an abbreviated registration statement to register additional shares of Equipment Trust Certificates or Pass Through Certificates pursuant to Rule 462(b) under the 1933 Act, then any reference herein to the term "Registration Statement" shall include such Rule 462(b) registration statement. Capitalized terms used but not otherwise defined in this Agreement shall have the meanings specified in or pursuant to the Pass Through Agreement or the Indenture relating to each related series of Equipment Certificates. SECTION 1. Representations and Warranties of the Company. (a) The Company represents and warrants to you and to each Underwriter named in Schedule I, as of the date hereof, as follows: (i) Due Incorporation and Qualification. The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware, is a "citizen of the United States" within the meaning of Title 49 of the United States Code, as amended (the "Transportation Code"), holding an air operating certificate issued by the Secretary of Transportation pursuant to Chapter 447 of the Transportation Code for aircraft capable of carrying 10 or more individuals or 6,000 or more pounds of cargo, has the corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus; and is duly qualified to do business and is in good standing in each jurisdiction in which such qualification is required, except where the failure to so qualify would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise. (ii) Subsidiaries. Each subsidiary of the Company which is a significant subsidiary as defined in Rule 405 of Regulation C of the 1933 Act Regulations (each a "Significant Subsidiary") has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, except where the failure to so qualify would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise; and all of the issued and outstanding capital stock of each Significant Subsidiary has been duly authorized and validly issued, is fully paid and non-assessable and, except for directors' qualifying shares (except as otherwise stated in the Registration Statement), is owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity. (iii) Registration Statement and Prospectus. At the time the Registration Statement became effective, the Registration Statement complied, and as of the date hereof does comply, in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations and the 1939 Act and the rules and regulations of the Commission promulgated thereunder. The Registration Statement, at the time it became effective, did not, and at each time thereafter at which any amendment to the Registration Statement becomes effective, will not, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Prospectus, as of the date hereof, does not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that the representations and warranties in this subsection shall not apply to statements in or omissions from the Registration Statement or Prospectus made in reliance upon and in conformity with information furnished to the Company in writing by an Underwriter expressly for use in the Registration Statement or Prospectus or to those parts of the Registration Statement which constitute Statements of Eligibility and Qualification of Trustees (Form T-1) under the 1939 Act. No stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been initiated or threatened by the Commission. (iv) Incorporated Documents. The documents incorporated by reference in the Prospectus, at the time they were or hereafter are filed with the Commission, complied and will comply in all material respects with the requirements of the 1934 Act and the rules and regulations promulgated thereunder (the "1934 Act Regulations") , and, when read together and with the other information in the Prospectus, did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were or are made, not misleading. (v) Accountants. The accountants who certified the financial statements included or incorporated by reference in the Prospectus are independent public accountants as required by the 1933 Act and the 1933 Act Regulations. (vi) Financial Statements. The financial statements of the Company included or incorporated by reference in the Prospectus and the Registration Statement present fairly the financial position of the Company as of the dates thereof and the results of operations, changes in common stockholders' investment and cash flows of the Company, for the respective periods covered thereby, all in conformity with generally accepted accounting principles applied on a consistent basis throughout the entire period involved; and the financial schedules included or incorporated by reference in the Registration Statement meet the requirements of the 1933 Act Regulations or the 1934 Act Regulations, as applicable. (vii) Material Changes or Material Transactions. Except as stated in the Prospectus, subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus, the Company has not incurred any liabilities or obligations, direct or contingent, or entered into any transactions which are material to the Company, and there has not been any material adverse change in the capital stock or short-term debt, or any material increase in long-term debt of the Company, or any material adverse change, or any development involving a prospective material adverse change, in the condition (financial or other), business, prospects, net worth or results of operations of the Company. (viii) No Defaults; Regulatory Approvals. Neither the Company nor any of its subsidiaries is in violation of its charter or in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which it is a party or by which it or any of them or their properties may be bound. The execution and delivery of this Agreement, each Pass Through Agreement and the other Operative Agreements to which the Company is or is to be a party and the consummation of the transactions contemplated herein and therein have been duly authorized by all necessary corporate action and executed by the Company and will not conflict with or constitute a breach of, or default under, or result in the creation or imposition of any lien (other than as permitted under the Leases), charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which the Company or any such subsidiary is a party or by which it or any of them may be bound or to which any of the property or assets of the Company or any such subsidiary is subject, which conflict, breach or default would have, individually or in the aggregate with any other such instances, a material adverse effect on the condition (financial or other), business, prospects, net worth or results of operations of the Company and its subsidiaries considered as one entity, nor will such action result in any violation of the provisions of the charter or by-laws of the Company or any law, administrative regulation or administrative or court order or decree currently in effect or in effect at the time of execution and delivery of this Agreement, each Pass Through Agreement and the other Operative Agreements and applicable to the Company or any of its subsidiaries. No consent, approval, authorization, order or decree of any court or governmental agency or body is required for the consummation by the Company of the transactions contemplated by this Agreement, any Pass Through Agreement or any other Operative Agreement to which the Company is or is to be a party, except such as may be required under the 1933 Act, the 1939 Act, the 1933 Act Regulations or state securities or Blue Sky laws, the Transportation Code, and the Uniform Commercial Code as in effect in Delaware and Tennessee. (ix) Legal Proceedings; Contracts. Except for matters described in the Prospectus (as to which the Company can express no opinion at this time concerning the Company's liability (if any) or the effect of any adverse determination upon the business, condition (financial or otherwise) or operations of the Company), there is no pending, or to the best knowledge of any financial officer of the Company, threatened action or proceeding before any court or administrative agency which individually (or in the aggregate in the case of any group of related lawsuits) is expected to have a material adverse effect on the financial condition of the Company or the ability of the Company to perform its obligations under the Pass Through Agreements and the other Operative Agreements to which the Company is a party. (x) Compliance with Laws. The Company's business and operations comply in all material respects with all laws and regulations applicable thereto and there are no known, proposed or threatened changes in any laws or regulations which would have a material adverse effect on the Company or the manner in which it conducts its business. The Company possesses all valid and effective certificates, licenses and permits required to conduct its business as now conducted, except for instances which individually or in the aggregate do not, or will not, have a material adverse effect on the condition (financial or other), business, prospects or results of operations of the Company. (xi) Enforceability of Operative Agreements. Each of the Pass Through Agreements and the other Operative Agreements to which the Company is or is to be a party have been duly authorized by the Company, will each be substantially in the form heretofore supplied to you and, when duly executed and delivered by the Company and the other parties thereto, will each constitute a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms. The Basic Agreement as executed is substantially in the form filed as an exhibit to the Registration Statement and has been duly qualified under the 1939 Act. (xii) Validity of the Offered Certificates. When executed, issued, authenticated and delivered pursuant to the provisions of the applicable Pass Through Agreement and sold and paid for as provided in this Agreement, each Series of Offered Certificates will constitute valid and legally binding obligations of the Trustee enforceable in accordance with their terms; and the Certificateholders of such Offered Certificates will be entitled to the benefits provided by such Pass Through Agreement. (xiii) Equipment Certificates. The Equipment Certificates to be issued under each applicable Indenture, when duly executed and delivered by the related Owner Trustee and duly authenticated by the Indenture Trustee in accordance with the terms of such Indenture, will be duly issued under such Indenture and will constitute the valid and binding obligations of such Owner Trustee, and the Holders thereof will be entitled to the benefits of such Indenture. The representations and warranties made by the Company as to the enforceability of the Pass Through Agreements, the Indentures, the Offered Certificates, the Equipment Certificates and the other Operative Agreements set forth in subparagraphs (xi), (xii) and (xiii) above are limited by bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting enforcement of creditors' rights or by general equity principles, and the enforceability of any Pass Through Agreement, Lease and Indenture is also limited by applicable laws which may affect the remedies provided therein but which do not affect the validity of such Pass Through Agreement, Lease or Indenture or make such remedies inadequate for the practical realization of the benefits intended to be provided thereby. (b) Additional Certifications. Any certificate signed by any officer of the Company and delivered to you or your counsel in connection with an offering of the Offered Certificates shall be deemed a representation and warranty by the Company to each Underwriter participating in such offering as to the matters covered thereby on the date of such certificate unless subsequently amended or supplemented subsequent thereto. SECTION 2. Purchase and Sale. (a) Subject to the terms and conditions set forth herein and in Schedule II, if any, the Company agrees to cause the Trustee to sell to each Underwriter, and each Underwriter agrees, severally and not jointly, to purchase from the Trustee, at the purchase price specified in Exhibit A hereto, the respective amounts of each Series of Offered Certificates set forth opposite the name of such Underwriter in Schedule I. It is understood that you propose to offer the Offered Certificates for sale to the public as set forth in the Prospectus. (b) Payment of the purchase price for any Offered Certificates to be purchased by the Underwriters shall be made at either the Company's offices in Memphis, Tennessee or the office of Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017, or at such other place as shall be agreed upon by you and the Company, at 9:00 A.M., New York City time, on the fourth business day (unless postponed in accordance with the provisions of Section 10) following the date hereof or at such other date, time or location specified in Schedule II, or as otherwise shall be agreed upon by you and the Company (such time and date being referred to as a "Closing Time"). Delivery of the Offered Certificates shall be made for your account as specified in Schedule II against payment by you of the purchase price thereof to, or upon the order of, the Trustee (or such other person as the Company may direct) by wire transfer of immediately available funds. Unless otherwise indicated on Schedule II, such Offered Certificates shall be registered in the name of Cede & Co., as nominee for The Depository Trust Company, and in such denominations, as you may request in writing at least two business days prior to the Closing Time. Such Offered Certificates, which may be in temporary form, will be made available for examination and packaging by you in New York, New York, on or before the first business day prior to the Closing Time or at such other time and place specified in Schedule II. (c) As compensation to you for your commitments and obligations hereunder in respect of the Offered Certificates, including your undertakings to distribute Offered Certificates, the Company will pay (or cause to be paid) to you an amount equal to that percentage of the aggregate amount of each series of Offered Certificates purchased by you as set forth in Exhibit A as the underwriting discounts and commissions. Such payment shall be made simultaneously with the payment by you to the Trustee of the purchase price of the Offered Certificates as specified in Section 2(b) hereof. Payment of such compensation shall be made by wire transfer of immediately available funds. SECTION 3. Covenants of the Company. The Company covenants with each of you, and with each Underwriter participating in the offering as follows: (a) Prospectus Supplement. The Company has prepared a Preliminary Prospectus, and immediately following the execution of this Agreement, the Company will prepare a Prospectus Supplement in connection with the offering of the Offered Certificates. The Company will promptly transmit copies of the Prospectus Supplement to the Commission for filing pursuant to Rule 424 of the 1933 Act Regulations. (b) Notice of Certain Events. The Company will notify you promptly (i) of the effectiveness of any amendment to the Registration Statement, (ii) of the transmittal to the Commission for filing of any supplement to the Prospectus or any document to be filed pursuant to the 1934 Act which will be incorporated by reference in the Prospectus, (iii) of the receipt of any comments from the Commission with respect to the Registration Statement, the Prospectus or the Prospectus Supplement relating in any way to the offer and sale of the Offered Certificates, (iv) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information, and (v) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose. (c) Notice of Certain Proposed Filings. The Company will give you notice of its intention to file or prepare any amendment to the Registration Statement or any amendment or supplement to the Prospectus, whether by the filing of documents pursuant to the 1934 Act, the 1933 Act or otherwise, and will furnish you with copies of any such amendment or supplement or other documents proposed to be filed or prepared a reasonable time in advance of such proposed filing or preparation, as the case may be. (d) Copies of the Registration Statement and the Prospectus. The Company will deliver to you as many signed and conformed copies of the Registration Statement (as originally filed) and of each amendment thereto (including exhibits filed therewith or incorporated by reference therein and documents incorporated by reference in the Prospectus) as you may reasonably request. The Company will furnish to you as many copies of the Prospectus (as amended or supplemented) as you shall reasonably request so long as you are required to deliver a Prospectus in connection with sales or solicitations of offers to purchase the Offered Certificates. (e) Revisions of Prospectus -- Material Changes. If at any time when the Prospectus is required by the 1933 Act to be delivered in connection with sales of the Offered Certificates any event shall occur or condition exist as a result of which it is necessary, in the reasonable opinion of counsel for the Company, to further amend or supplement the Prospectus in order that the Prospectus will not include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, or if it shall be necessary, in the reasonable opinion of such counsel, at any such time to amend or supplement the Registration Statement or the Prospectus in order to comply with the requirements of the 1933 Act or the 1933 Act Regulations the Company will promptly prepare and file with the Commission such amendment or supplement, whether by filing documents pursuant to the 1934 Act, the 1933 Act or otherwise, as may be necessary to correct such untrue statement or omission or to make the Registration Statement and Prospectus comply with such requirements. (f) Earnings Statements. The Company will make generally available to its security holders as soon as practicable after the close of the period covered thereby, an earnings statement (in form complying with the provisions of Rule 158 under the 1933 Act) covering each twelve-month period beginning, in each case, not later than the first day of the Company's fiscal quarter next following the "effective date" (as defined in such Rule 158) of the Registration Statement with respect to each sale of Offered Certificates. (g) Blue Sky Qualifications. The Company will endeavor, in cooperation with you, to qualify the Offered Certificates for offering and sale under the applicable securities laws of such states and other jurisdictions of the United States as the Underwriters may designate, and will maintain such qualifications in effect for so long as may be required for the distribution of the Offered Certificates; provided, however, that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or to subject itself to taxation as doing business in any jurisdiction in which it is not otherwise required to be so qualified. The Company will file such statements and reports as may be required by the laws of each jurisdiction in which the Offered Certificates have been qualified as provided above. (h) 1934 Act Filings. The Company, during the period when the Prospectus is required to be delivered under the 1933 Act, will file promptly all documents required to be filed with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act. (i) Stand-Off Agreement. The Company will not, between the date of this Agreement and the Closing Time, offer or sell, or enter into any agreement to sell, any equipment notes, pass through certificates, equipment trust certificates or equipment purchase certificates secured by aircraft owned or leased by the Company (or rights relating thereto) unless the Company has provided the Underwriters at least two business days' notice thereof. SECTION 4. Payment of Expenses. The Company will pay (or cause to be paid) all expenses incident to the performance of its obligations under this Agreement, including: (i) the preparation and filing of the Registration Statement and all amendments thereto, the Preliminary Prospectus, if any, and the Prospectus and any amendments or supplements thereto; (ii) the filing of this Agreement; (iii) the preparation, issuance and delivery of the Offered Certificates; (iv) the reasonable fees and disbursements of the Company's accountants and counsel, of the Trustee, the Owner Trustees and the Indenture Trustees and their respective counsel, and of any registrar, paying agent and authenticating agent; (v) the qualification of the Offered Certificates under securities laws in accordance with the provisions of Section 3(g), including filing fees and the reasonable fees and disbursements of counsel to the Underwriters in connection therewith and in connection with the preparation of any Blue Sky Survey and any Legal Investment Survey; (vi) the printing and delivery to the Underwriters in quantities as hereinabove stated of copies of the Registration Statement and any amendments thereto, and of the Prospectus and any amendments or supplements thereto, and the delivery by the Underwriters of the Prospectus and any amendments or supplements thereto in connection with solicitations or confirmations of sales of the Offered Certificates; (vii) the preparation and delivery to the Underwriters of copies of the Pass Through Agreements and the other Operative Agreements, including all expenses incident to the performance of the Company's obligations under the Pass Through Agreements, Participation Agreements, Indentures, Leases and each of the other agreements and instruments referred to in the Indentures and Participation Agreements; and (viii)any fees charged by rating agencies for the rating of the Offered Certificates. If this Agreement is terminated by you in accordance with the provisions of Section 5 or clause (i) of Section 9 hereof, the Company shall reimburse upon demand the Underwriters for all of their out-of-pocket expenses, including the reasonable fees and disbursements of counsel for the Underwriters that shall have been incurred by you in connection with the proposed purchase and sale of the Offered Certificates. SECTION 5. Conditions of Underwriters' Obligations. The several obligations of the Underwriters to purchase the Offered Certificates pursuant to this Agreement will be subject at all times to the accuracy of the representations and warranties on the part of the Company herein, to the accuracy of the statements of the Company's officers made in any certificate furnished pursuant to the provisions hereof, to the performance and observance by the Company of all covenants and agreements contained herein, or in Schedule II hereto, on its part to be performed and observed and to the following additional conditions precedent: (a) Stop Order; Ratings Change; etc. At the Closing Time, (i) no stop order suspending the effectiveness of the Registration Statement shall have been issued under the 1933 Act or proceedings therefor initiated or threatened by the Commission, (ii) the rating assigned as of the date of this Agreement by any "nationally recognized statistical rating organization," as such term is defined for purposes of Rule 436(g) under the 1933 Act Regulations, to any debt securities of the Company (including for purposes of this Section 5(a)(ii) any rating indicated by the Company as of the date of this Agreement as the rating orally confirmed to the Company by any such rating organization as the rating to be assigned to the Offered Certificates) shall not have been lowered since the execution of this Agreement nor shall any such rating organization have publicly announced that it has placed any debt securities of the Company on what is commonly termed a "watch list" for possible downgrading, and (iii) there shall not have come to your attention any facts that would cause you to believe that the Prospectus, including the Prospectus Supplement, at the time it was required to be delivered to a purchaser of the Offered Certificates, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances existing at such time, not misleading. (b) Legal Opinions. At the Closing Time, you shall have received the following documents: (1) Opinion of Special Counsel to the Company. The opinion of Davis Polk & Wardwell, special counsel to the Company, dated as of such date, in form and substance satisfactory to you, to the effect set forth in Exhibit B and the opinions of such counsel required to be delivered pursuant to each Participation Agreement, dated as of such date, in form and substance satisfactory to you, to the effect set forth in Exhibits C-1 and C-2. (2) Opinion of Company Counsel. The opinion of the Executive Vice President, General Counsel and Secretary of the Company or any Vice President in the Legal and Regulatory Division of the Company, dated as of such date, in form and substance reasonably satisfactory to you, to the effect as set forth in Exhibit D. (3) Opinion of Counsel to the Underwriters. The opinion of __________________________________, counsel to the Underwriters, with respect to such matters as you may reasonably request. (c) Officer Certificate. At the Closing Time, there shall not have been, since the respective dates as of which information is given in the Registration Statement and the Prospectus, any material adverse change in the condition (financial or otherwise) of the Company, or in the earnings or business affairs of the Company; and you shall have received a certificate of any Vice President of the Company, dated as of the Closing Time, to the effect (i) that there has been no such material adverse change, (ii) that the other representations and warranties of the Company contained in Section 1 are true and correct with the same force and effect as though expressly made at and as of the date of such certificate, except to the extent that such representations and warranties expressly relate to an earlier date or later date (in which case such representations and warranties are true and correct on and as of such earlier date or will be true and correct on and as of such later date, as the case may be), (iii) that the Company has made or caused to be made any required filing of the Prospectus pursuant to Rule 424(b) in the manner and within the time period required by Rule 424(b), and (iv) that the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the date of such certificate. The officer signing and delivering this certificate may rely upon the best of his or her knowledge as to proceedings threatened. (d) Comfort Letter. At the time of the execution of this Agreement and at the Closing Time, you shall have received a letter from Arthur Andersen LLP or their successors as the Company's independent accountants (the "Independent Accountants"), dated as of the date hereof and of the Closing Time, as the case may be, in form and substance satisfactory to you to the effect that: (i) they are independent public accountants within the meaning of the 1933 Act and the 1933 Act Regulations; (ii) in their opinion the Company's financial statements and schedules included or incorporated by reference in the Registration Statement and Prospectus and covered by their reports included or incorporated therein comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the 1933 Act Regulations or the 1934 Act and the 1934 Act Regulations, as the case may be; (iii) they have conducted reviews of the unaudited interim consolidated financial information of the Company included in the Company's Quarterly Reports on Form 10-Q incorporated in the Registration Statement and Prospectus in compliance with the standards for such reviews promulgated by the American Institute of Certified Public Accountants; (iv) on the basis of a reading of the financial statements and schedules of the Company included or incorporated in the Prospectus and the Registration Statement, and the latest available unaudited interim financial statements of the Company, inquiries of officials of the Company responsible for financial and accounting matters, and other specified procedures and inquiries, nothing has come to their attention that caused them to believe that: (A) the unaudited financial statements of the Company included or incorporated in the Prospectus and the Registration Statement do not comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the 1933 Act Regulations or the 1934 Act and the 1934 Act Regulations thereunder, as the case may be, or that such unaudited financial statements are not presented fairly in conformity with generally accepted accounting principles; (B) with respect to the period subsequent to the date of the most recent financial statements incorporated in the Registration Statement and the Prospectus, as of a specified date not more than five business days prior to the date of delivery of such letter, there has been any change in the common or preferred stock or long-term debt of the Company or, as of such date, there has been any decrease in assets or common stockholders' investment, in each case as compared with amounts shown in the most recent consolidated balance sheet of the Company included or incorporated in the Registration Statement and the Prospectus, except in each case for changes or decreases which the Prospectus discloses have occurred or may occur or which are described in such letter; or (C) for the period from the date of the most recent financial statements incorporated in the Registration Statement and the Prospectus to such specified date, there was any decrease in operating revenues, operating income, income before taxes or net income of the Company in each case as compared with the comparable period of the preceding year, except in each case for decreases which the Prospectus discloses have occurred or may occur or which are described in such letter; and (v) in addition to their audit referred to in their reports included or incorporated by reference in the Registration Statement and the Prospectus and the reviews, inquiries and procedures referred to in clauses (iii) and (iv) above, such letter shall state that Arthur Andersen LLP has performed other specified procedures, with respect to certain numerical data and information included or incorporated in the Registration Statement and the Prospectus, as are requested by an Underwriter and specified in such letter and have found such data and information to be in agreement with the accounting records of or analyses prepared by the Company. (e) Satisfaction of Conditions Precedent in Participation Agreements. At the Closing Time, all conditions precedent specified in each Participation Agreement with respect to the refunding or funding of the related Equipment Certificates, as the case may be, shall have been satisfied; the representations and warranties of the Company, the Owner Trustee, the Pass Through Trustee and the Indenture Trustee contained in each of the Participation Agreements shall be accurate as of the Closing Time (except to the extent that they relate solely to an earlier date in which case they shall be accurate as of such earlier date) and you shall have received certificates of the Company and appropriate officers of the respective Owner Trustees, Pass Through Trustees and Indenture Trustees, dated as of the Closing Time, to such effect; and you shall have received a copy of each opinion required to be delivered under each of the Participation Agreements dated as of the Closing Time, and addressed to you, and of such other documents furnished in connection with the fulfillment of such conditions as you may reasonably request. (f) Other Documents. At the Closing Time, counsel for the Underwriters shall have been furnished with such documents and opinions as such counsel may reasonably require for the purpose of enabling such counsel to pass upon the issuance and sale of Offered Certificates as herein contemplated and related proceedings, or in order to evidence the accuracy and completeness of any of the representations and warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Company in connection with the issuance and sale of Offered Certificates as herein contemplated shall be satisfactory in form and substance to you. SECTION 6. Indemnification. (a) The Company agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of Section 15 of the 1933 Act as follows: (i) against any and all loss, liability, claim, damage and expense whatsoever, arising out of any untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), or the omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of or based upon any untrue statement of a material fact contained in the Prospectus (or any amendment or supplement thereto) or the omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (ii) against any and all loss, liability, claim, damage and expense whatsoever to the extent of the aggregate amount paid in settlement of any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever arising out of or based upon any such untrue statement or omission, if such settlement is effected with the written consent of the Company; and (iii) against any and all expense whatsoever, reasonably incurred in investigating, preparing or defending against any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever arising out of or based upon any such untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above; provided, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by any Underwriter expressly for use in the Registration Statement (or any amendment thereto) or the Prospectus (or any amendment or supplement thereto), or made in reliance upon the Statements of Eligibility and Qualification of Trustees (Form T-1) under the 1939 Act filed as exhibits to the Registration Statement; and provided, further, that the foregoing indemnity agreement, with respect to any Preliminary Prospectus shall not inure to the benefit of any Underwriter from whom the person asserting any such losses, claims, damages or liabilities purchased Offered Certificates, or any person controlling such Underwriter, if a copy of the Prospectus (as then amended or supplemented if the Company shall have furnished any amendments or supplements thereto) was not sent or given by or on behalf of such Underwriter to such person, if required by law so to have been delivered, at or prior to the written confirmation of the sale of the Offered Certificates to such person, and if the Prospectus (as so amended or supplemented) would have cured the defect giving rise to such losses, claims, damages or liabilities. (b) Each Underwriter severally agrees to indemnify and hold harmless the Company, its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of this Section, as incurred, but only with respect to untrue statements or omissions made in the Registration Statement (or any amendment thereto) or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by such Underwriters through you expressly for use in the Registration Statement (or any amendment thereto) or the Prospectus (or any amendment or supplement thereto). (c) Each indemnified party shall give prompt notice to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability which it may have otherwise than on account of this indemnity agreement. An indemnifying party may participate at its own expense in the defense of such action. In no event shall the indemnifying parties be liable for the fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. SECTION 7. Contribution. In order to provide for just and equitable contribution in circumstances in which the indemnity agreement provided for in Section 6 is for any reason held to be unenforceable by the indemnified parties although applicable in accordance with its terms, the Company and the Underwriters of each offering of Offered Certificates shall contribute to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by said indemnity agreement incurred by the Company and one or more of the Underwriters in respect of such offering, as incurred, in such proportions that the Underwriters are responsible for that portion represented by the percentage that the underwriting discount appearing on the cover page of the Prospectus in respect of such offering bears to the initial public offering price appearing thereon and the Company is responsible for the balance; provided, however, that no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section, each person, if any, who controls an Underwriter within the meaning of Section 15 of the 1933 Act shall have the same rights to contribution as such Underwriter, and each director of the Company, each officer of the Company who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act shall have the same rights to contribution as the Company. SECTION 8. Representations, Warranties and Agreements to Survive Delivery. All representations, warranties and agreements contained in this Agreement, or contained in certificates of officers of the Company submitted pursuant hereto, shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of any Underwriter or controlling person, or by or on behalf of the Company, and shall survive each delivery of and payment for any of the Offered Certificates. SECTION 9. Termination of Agreement. You may terminate this Agreement, immediately upon notice to the Company, at any time prior to the Closing Time (i) if there has been, since the date hereof or since the respective dates as of which information is given in the Registration Statement, any material adverse change in the condition, financial or otherwise, or in the earnings or business affairs of the Company, or (ii) if there shall have occurred any material adverse change in the financial markets in the United States or any outbreak or escalation of hostilities or other national or international calamity or crisis, the effect of which shall be such as to make it, in your judgment, impracticable to market the Offered Certificates or enforce contracts for the sale of the Offered Certificates, or (iii) if trading in any securities of the Company shall have been suspended by the Commission or a national securities exchange, or if trading generally on either the American Stock Exchange or the New York Stock Exchange shall have been suspended, or minimum or maximum prices for trading shall have been fixed, or maximum ranges for prices for securities shall have been required, by either of said exchanges or by order of the Commission or any other governmental authority, or if a banking moratorium shall have been declared by either federal or New York authorities. In the event of any termination of this Agreement, the covenant set forth in Section 3(f) hereof, the provisions of Section 4 hereof, the indemnity and contribution agreements set forth in Sections 6 and 7 hereof, and the provisions of Sections 8 and 13 hereof shall remain in effect. SECTION 10. Default by One of the Underwriters. If any Underwriter shall fail at the Closing Time to purchase the Offered Certificates which it is obligated to purchase hereunder (the "Defaulted Certificates"), and the aggregate amount of Defaulted Certificates is not more than one-tenth of the aggregate amount of the Offered Certificates to be purchased on such date, the other Underwriters shall be obligated severally in the proportions that the amount of the Offered Certificates set forth opposite their respective names in Schedule I hereto bears to the aggregate amount of Offered Certificates set forth opposite the names of all such non-defaulting underwriters to purchase the Defaulted Certificates; provided that in no event shall the amount of Defaulted Certificates that any Underwriter has agreed to purchase pursuant to this Agreement be increased by an amount in excess of one-ninth of such amount of Offered Certificates without the written consent of such Underwriter. If the aggregate amount of Defaulted Certificates is more than one-tenth of the aggregate amount of the Offered Certificates to be purchased on the Closing Date, and arrangements satisfactory to the Underwriters and the Company for the purchase of such Defaulted Certificates are not made within 36 hours after such default, this Agreement shall terminate without liability on the part of any non-defaulting Underwriters or the Company. No action taken pursuant to this Section shall relieve a defaulting Underwriter from liability in respect of its default under this Agreement. In the event of any such default which does not result in a termination of this Agreement, either the non-defaulting Underwriters or the Company shall have the right to postpone the Closing Time for a period not exceeding seven days in order to effect any required changes in the Registration Statement or Prospectus or in any other documents or arrangements. SECTION 11. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed, delivered by Federal Express service or transmitted by any facsimile communication. Notices to the Underwriters shall be directed to _______________________________________, with copies thereof directed to _________________________________________ _________________________________________________. Notices to the Company shall be directed to it at 2007 Corporate Avenue, Memphis, Tennessee 38132 (if by Federal Express service) or P.O. Box 727, Memphis, Tennessee 38194 (if by mail), Attention: Vice President and Treasurer, with copies thereof directed to the Legal Department of the Company at 1980 Nonconnah Drive, Memphis, Tennessee 38132 (if by Federal Express Service) or P.O. Box 727, Memphis, Tennessee 38194 (if by mail), Attention: Managing Director - Securities and Corporate Law. SECTION 12. Parties This Agreement shall inure to the benefit of and be binding upon you and the Company and any Underwriter who becomes a party hereto and their respective successors. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the parties hereto and their respective successors and the controlling persons and officers and directors referred to in Sections 6 and 7 and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the parties hereto their respective successors and said controlling persons and officers and directors and their heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Offered Certificates from any Underwriter shall be deemed to be a successor by reason merely of such purchase. Section 13. Governing Law. This Agreement and the rights and obligations of the parties created hereby and thereby shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed in such state. Any suit, action or proceeding brought by the Company against an Underwriter in connection with or arising under this Agreement shall be brought solely in the state or federal court of appropriate jurisdiction located in the Borough of Manhattan, The City of New York. If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument along with all counterparts will become a binding agreement between you and the Company in accordance with its terms. Very truly yours, FEDERAL EXPRESS CORPORATION By: _________________________________ Name: Title: CONFIRMED AND ACCEPTED, as of the date first above written: [UNDERWRITERS] By: By: ___________________________________ Name: Title: Acting on behalf of themselves and the other named Underwriters Exhibit A FEDERAL EXPRESS CORPORATION 199__ Pass Through Certificates, Series __ 1996 _ Pass Underwriting Through Final Discounts Certificates Purchase Interest Distribution Aggregate and Designation Price Rate Date Amounts Commissions - ------------ -------- -------- ------------ --------- ------------ Series __ $ % $ % TOTAL Exhibit B Opinion of Davis Polk & Wardwell, Special Counsel for the Company The opinion of Davis Polk & Wardwell, special counsel for the Company, to be delivered pursuant to Section 5(b)(1) of the Underwriting Agreement shall be to the effect that: 1. The Underwriting Agreement has been duly authorized, executed and delivered by the Company. 2. The Registration Statement has become effective under the 1933 Act and the Basic Agreement has been duly qualified under the 1939 Act. 3. Although we are not aware of any judicial authority, none of the Pass Through Trusts is required to be registered under the Investment Company Act of 1940, as amended. 4. 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, and each person having a beneficial interest in a Pass Through Certificate 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. With respect to all other matters addressed in the Basic Prospectus under the caption "Federal Income Tax Consequences," we are also of the opinions ascribed to us therein. We have considered the matters required to be included in the Registration Statement and the Prospectus and the information contained therein. In our opinion (i) the statements in the Basic Prospectus under the captions "Description of the Pass Through Certificates" and "Description of the Equipment Certificates" and in the Prospectus Supplement under the captions "Description of the Pass Through Certificates" and "Description of the Equipment Trust Certificates," insofar as such statements constitute a summary of the Pass Through Agreement, the Leases, the Participation Agreements and the Indentures, fairly present the information called for by the 1933 Act and the 1933 Act Regulations with respect thereto and fairly summarize the material provisions thereof and (ii) the statements in the Basic Prospectus in the fourth paragraph under the caption "Description of the Equipment Certificates - Security" and in the Prospectus Supplement in the ninth paragraph under the caption "Description of the Equipment Certificates - Remedies," insofar as such statements constitute a description of Section 1110 of the Bankruptcy Code as such Section would be applicable to the Equipment Certificates, fairly summarize the material provisions of such Section as such Section would be applicable to the Equipment Certificates. The Offered Certificates conform in all material respects to the summary descriptions thereof contained in the Prospectus. We have not ourselves checked the accuracy or completeness of, or otherwise verified, the information furnished with respect to other matters in the Registration Statement or the Prospectus. We have generally reviewed and discussed with certain officers and employees of the Company, its independent public accountants and your representatives and counsel the information furnished, whether or not subject to our check and verification. On the basis of such consideration, review and discussion, but without independent check or verification, except as stated, (i) we are of the opinion that the Registration Statement and the Prospectus (except for the financial statements and other financial information set forth or incorporated by reference therein, as to which we are not called upon to express any opinion) comply as to form in all material respects with the 1933 Act and the applicable 1933 Act Regulations and (ii) we have no reason to believe that the Registration Statement and the prospectus included therein (except for the financial statements and other financial information set forth or incorporated by reference therein and the Statement of Eligibility and Qualification (Form T-1) under the 1939 Act of State Street Bank and Trust Company, as to all of which we are not called upon to express a belief) at the time the Registration Statement became effective contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that, as of the Closing Time, either the Registration Statement or the Prospectus (except for the financial statements and other financial information set forth or incorporated by reference therein, as to which we are not called upon to express a belief), contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in light of the circumstances in which they were made, not misleading. The foregoing opinions are subject to the following qualifications: (a) We are members of the Bar of the State of New York and the foregoing opinions are limited to the laws of the State of New York, the federal laws of the United States of America and the General Corporation Law of the State of Delaware. (b) We express no opinion as to the scope, effect or other matters arising under the Transportation Code, or the rules and regulations thereunder or as to matters involving filing and recording with the Federal Aviation Administration. (c) This opinion is issued solely to you in connection with the above matter and may not be relied upon by you for any other purpose or relied upon by or furnished to any other person without our prior written consent. Exhibit C-1 [Letterhead of Davis Polk & Wardwell] _____________, 199__ To each of the Parties named on the Schedule hereto Ladies and Gentlemen: We have acted as special counsel for Federal Express Corporation, a Delaware corporation ("Federal Express"), in connection with the transaction contemplated by the Participation Agreement (Federal Express Corporation Trust No. [N_______FE], dated as of [_________________, 199__] , as amended and restated as of ___________________, 199__ (the "Participation Agreement") among Federal Express, as Lessee, [________________________] as Owner Participant, the entities listed on Schedule I to the Original Participation Agreement as Original Loan Participants, ________________________________, as Owner Trustee, State Street Bank and Trust Company, as Indenture Trustee and State Street Bank and Trust Company, as Pass Through Trustee. Unless otherwise defined herein, capitalized terms used herein shall have the meanings assigned thereto in the Participation Agreement. This opinion is being delivered pursuant to Section 4.01(l)(viii) of the Participation Agreement. Capitalized terms not otherwise defined herein have the meanings assigned thereto in the Participation Agreement. Pursuant to the Original Participation Agreement, the Owner Participant and the Original Loan Participants participated in the payment of the Purchase Price of [Aircraft] which was purchased by the Owner Trustee pursuant to [the Bills of Sale] [FAA Bill of Sale and the Warranty Bill of Sale], subjected to the Lien of the Original Indenture and leased to Federal Express under the Original Lease. The Participation Agreement provides, among other things, for the refinancing of the Original Loan Certificates using the proceeds from the public offering of Pass Through Certificates. _______ Series of Pass Through Certificates will be issued by separate Pass Through Trusts, each formed to acquire, among other securities, the Certificates bearing a particular interest rate and having a particular Maturity that will be issued under the Indenture. In connection with the opinions expressed below, we have examined executed counterparts of the Operative Agreements, the Pass Through Certificates, the Pass Through Agreement and each Series Supplement (the "Transaction Agreements"). We have also examined originals, or copies certified to our satisfaction, of such other agreements, documents, certificates and statements of governmental officials and corporate officers as we have deemed necessary or advisable as a basis for such opinions. In such examination, we have assumed the genuineness of all signatures and the authenticity of all documents submitted to us as originals and the conformity with the originals of all documents submitted to us as copies. As to any facts material to our opinions expressed below, we have, with your consent, relied on the representations and warranties made in or pursuant to the Participation Agreement and the other documents referred to therein, the accuracy of which we have not independently verified. In addition, we have, when relevant facts were not independently established by us, relied, to the extent we deemed such reliance proper, upon certificates of public officials and certificates, telegrams and other written or oral statements of officers of the parties referred to herein. Based on the foregoing, it is our opinion that: 1. With respect to that portion, if any, of the Aircraft and the other property included in the Lessor's Estate as may not be covered by the recording system established by the FAA pursuant to Section 44107 of the Transportation Code, no filing or recording of any document or other action was or is necessary in order to establish the Owner Trustee's title thereto and interest therein as against Federal Express and any third parties. 2. The Lease creates a valid leasehold interest in the Aircraft, the entitlement thereof to the benefits of recordation under the Transportation Code being subject to the due and timely filing and, where appropriate, recording of (A) the Lease (with the Indenture attached as an exhibit), (B) the Indenture and (C) the Trust Agreement. 3. The execution, delivery and performance of the Participation Agreement, the Trust Agreement, the Indenture and the Lease by the Owner Trustee in its individual or trust capacity, as the case may be, and the issuance, execution, delivery and performance of the Certificates by the Owner Trustee in its trust capacity do not violate, and fully comply with, any laws and governmental rules and regulations of the State of New York that may be applicable to the Owner Trustee in its individual or trust capacity, as the case may be. The opinion set forth in this paragraph 3 is rendered without regard to the effect, if any, on such issuance (in the case of the Certificates), execution, delivery or performance of the taking of any other action, the conduct of any other business or the exercise of any other powers by _______, in its individual or in a trust capacity, in the State of New York not related to the transactions contemplated by the Transaction Agreements. We have assumed that _______ has made the filings necessary to comply with Section 131.3 of the Banking Law of the State of New York. However, we express no opinion as to whether _______ is required to comply with said Section 131.3. 4. (a) Each of the Transaction Agreements to which Federal Express is a party has been duly authorized, executed and delivered by Federal Express. (b) The execution, delivery and performance by Federal Express of each of the Transaction Agreements to which Federal Express is a party do not violate, or did not on the date of execution thereof, and fully comply, or did fully comply on the date of execution thereof, with any laws and governmental rules and regulations of the State of New York that may be applicable to Federal Express. The opinion set forth in this paragraph 4(b) is rendered without regard to the taking of any other action or the conduct of any other business by Federal Express in the State of New York other than the transactions contemplated by the Transaction Agreements. 5. Assuming (i) the due authorization, execution and delivery of the Transaction Agreements by each of the parties to each such document (other than Federal Express), (ii) each such party has full power and legal right to enter into and perform its respective obligations under the Transaction Agreements, (iii) that the execution, delivery and performance by each of the Transaction Agreements by each of the parties thereto will not violate the respective parties' constituent documents, (iv) the due authorization, execution, issuance and delivery by the Owner Trustee, and the due authentication by the Indenture Trustee, of the Certificates to be issued under the Indenture in accordance with the terms of the Indenture, (v) that the Original Loan Certificates are delivered by the Original Loan Participants to the Indenture Trustee for cancellation and are canceled, (vi) the due authorization, execution, issuance, delivery and authentication by the Pass Through Trustee of the Pass Through Certificates to be issued under the Pass Through Agreement and the Series Supplement relating to such Pass Through Certificates, in each case in accordance with the terms of the Pass Through Agreement and such Series Supplement, and (vii) that the form of each Transaction Agreement is in compliance with all applicable laws and governmental rules and regulations (other than the laws of the United States and the laws of the State of New York), then: (A) to the extent governed by New York law, each Transaction Agreement in form constitutes a legal, valid and binding agreement of each party thereto enforceable against each such party in accordance with its terms; (B) the Original Indenture created, and the Indenture creates, for the benefit of the Holders the security interest in the Trust Indenture Estate that they purport to create; (C) the Certificates, when issued to and acquired by the Pass Through Trustee, will be legal, valid and binding obligations of the Owner Trustee enforceable against the Owner Trustee in accordance with their terms and the terms of the Indenture and will be entitled to the benefits of the Indenture, including the benefit of the security interest created thereby; (D) the Pass Through Certificates, when issued to and acquired by the Underwriters in accordance with the Underwriting Agreement, will be legal, valid and binding obligations of the Pass Through Trustee enforceable against the Pass Through Trustee in accordance with their terms and will be entitled to the benefits of the Pass Through Agreement and the Series Supplement relating thereto; and (E) the beneficial interest of the Owner Participant under the Trust Agreement in and to the properties which are part of the Trust Indenture Estate is subject, to the extent provided in the Indenture, to the Lien of the Indenture in favor of the Holders. The opinions set forth in this paragraph 5 are subject to the due filing and, where appropriate, recording with the FAA of the documents referred to in paragraph 2 above. 6. All the properties which are part of the Trust Indenture Estate (including all right, title and interest of the Owner Trustee pledged and mortgaged by it pursuant to the Indenture in and to the Aircraft and the Lease) have been pledged and mortgaged with the Indenture Trustee as part of the Trust Indenture Estate (subject to the due filing and, where appropriate, recording of those documents referred to in paragraph 2 above and the financing statements referred to in Section 4.01(f) of the Participation Agreement), and the beneficial interest of the Owner Participant under the Trust Agreement in and to such properties are subject, to the extent provided in the Indenture, to the Lien of the Indenture in favor of the Holders of the Certificates issued and to be issued under the Indenture. 7. The Indenture creates, as security for all of the Certificates duly issued and to be issued under the Indenture, the first priority security interest in the Aircraft it purports to create, the perfection and rank thereof being subject to the registration with the FAA of the Aircraft in the name of the Owner Trustee and the due filing and, where appropriate, recording in accordance with the Transportation Code of the documents referred to in paragraph 2 above. We express no opinion with respect to the status of any security interest in any portion of the Aircraft which does not constitute an "aircraft" or "aircraft engine", as defined in paragraphs (6) and (7) of Section 40102(a) of the Transportation Code. 8. Federal Express' participation in the transactions contemplated by the Transaction Agreements does not and will not constitute a violation of Section 7 of the Securities Exchange Act of 1934. 9. Except for the fillings and recordings referred to in paragraph 2 above, neither the execution and delivery by Federal Express of the Participation Agreement or any other Transaction Agreement to which it is a party, nor the consummation of any of the transactions by Federal Express contemplated thereby, requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action in respect of, the Department of Transportation, the FAA, the Securities and Exchange Commission or any other Federal or New York State governmental authority. 10. It is not necessary, in connection with the creation of the beneficial interest of the Owner Participant of the Trust Indenture Estate under the circumstances contemplated by the Participation Agreement to register such beneficial interest under the Securities Act of 1933, as amended, or to qualify the Trust Agreement under the Trust Indenture Act of 1939, as amended. 11. The provisions of Section 1110 of the United States Bankruptcy Code will apply to the Aircraft for the benefit of the Lessor, as lessor under and by reason of the Lease. The Lease, including the rights under Section 1110 of the United States Bankruptcy Code, has been assigned to the Indenture Trustee pursuant to the Indenture as part of the collateral for the Certificates and, as assignee, the Indenture Trustee has the benefit of Section 1110. The foregoing opinions are subject to the following qualifications: (a) We have relied, with your consent, without independent investigation and verification and subject to the assumptions and qualifications contained therein, upon the opinions of Daugherty, Fowler & Peregrin and _______________, Vice President ____________ of Federal Express to be delivered to you and dated the date hereof, for purposes of the matters covered thereby. (b) We are qualified to practice law in the State of New York, and we do not purport to be experts on, or to express any opinion herein concerning, any laws other than the laws of the State of New York, the laws of the United States and the General Corporation Law of the State of Delaware. We express no opinion as to any matters involving aviation law. (c) The opinion contained in paragraph 5 above as to enforceability is subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and (ii) general principles of equity which may affect the remedies provided in the agreements referred to in said opinions, which laws and principles, however, do not in our opinion make the remedies provided in said agreements inadequate for the practical realization of the benefits of the security intended to be provided thereby. (d) This opinion is rendered solely to you at Federal Express' request in connection with the above matter. This opinion may not be relied upon by you for any other purpose or relied upon by or furnished to any other Person without our prior written consent. (e) We rendered an opinion dated [________________, 199__] (the "Delivery Opinion"), a copy of which is attached hereto, in connection with the financing and acquisition of the Aircraft on such date. We hereby consent and agree that the addressees hereto who were not addressees to the Delivery Opinion may rely on the Delivery Opinion as fully and with the same force and effect as if such addressees were originally named therein on the date of the Delivery Opinion. Very truly yours, SCHEDULE -------- Owner Trustee - ------------- Indenture Trustee - ----------------- State Street Bank and Trust Company Owner Participant - ----------------- Original Loan Participants - -------------------------- The Entities listed on Schedule I to the Participation Agreement as Original Loan Participants Lessee - ------ Federal Express Corporation Pass Through Trustee - -------------------- State Street Bank and Trust Company Underwriters - ------------ Exhibit C-2 [Letterhead of Davis Polk & Wardwell] ________, 199__ To each of the parties named on the Schedule hereto Ladies and Gentlemen: We have acted as special counsel for Federal Express Corporation, a Delaware corporation ("Federal Express"), in connection with the transaction contemplated by the Participation Agreement (Federal Express Corporation Trust No. N_____FE), dated as of _____________, 199__ (the "Participation Agreement") among Federal Express, as Lessee, ______________________, as Owner Participant, ___________________________________, as Owner Trustee, State Street Bank and Trust Company, as Indenture Trustee and State Street Bank and Trust Company, as Pass Through Trustee. This opinion is being delivered pursuant to Section 4.01(k)(v) of the Participation Agreement. Capitalized terms not otherwise defined herein have the meanings assigned thereto in the Participation Agreement. The Participation Agreement provides, among other things, for the financing on the Delivery Date of a portion of the Owner Trustee's payment of the Purchase Price of [Aircraft] using the proceeds from the public offering of the Pass Through Certificates. On the Certificate Closing Date, _____ Series of Pass Through Certificates will be issued by separate Pass Through Trusts, each formed to acquire, among other securities, the Certificates bearing a particular interest rate and having a particular Maturity that will be issued under the Indenture. In connection with the opinions expressed below, we have examined executed counterparts of the Operative Agreements to be delivered on the Certificate Closing Date the Pass Through Certificates, the Pass Through Agreement, each Series Supplement (the "Certificate Closing Date Documents") and the forms of the Operative Agreements to be delivered on the Delivery Date. We have also examined originals, or copies certified to our satisfaction, of such other agreements, documents, certificates and statements of governmental officials and corporate officers as we have deemed necessary or advisable as a basis for such opinions. In such examination, we have assumed the genuineness of all signatures and the authenticity of all documents submitted to us as originals and the conformity with the originals of all documents submitted to us as copies. As to any facts material to our opinions expressed below, we have, with your consent, relied on the representations and warranties made in or pursuant to the Participation Agreement and the other documents referred to therein, the accuracy of which we have not independently verified. In addition, we have, when relevant facts were not independently established by us, relied, to the extent we deemed such reliance proper, upon certificates of public officials and certificates, telegrams and other written or oral statements of officers of the parties referred to herein. Based on the foregoing, it is our opinion that: 1. The execution, delivery and performance by the Owner Trustee in its individual or trust capacity, as the case may be, of the Certificate Closing Date Documents (other than the Certificates) to which it is a party, and the issuance, execution, delivery and performance of the Certificates by the Owner Trustee in its trust capacity do not violate, and fully comply with, any laws and governmental rules and regulations of the State of New York that may be applicable to the Owner Trustee in its individual or trust capacity, as the case may be. The opinion set forth in this paragraph 1 is rendered without regard to the effect, if any, on such issuance (in the case of the Certificates), execution, delivery or performance of the taking of any other action, the conduct of any other business or the exercise of any other powers by _______, in its individual or in a trust capacity, in the State of New York not related to the transactions contemplated by the Certificate Closing Date Documents. We have assumed that _______ has made the filings necessary to comply with Section 131.3 of the Banking Law of the State of New York. However, we express no opinion as to whether _______ is required to comply with said Section 131.3. 2. (a) Each of the Certificate Closing Date Documents to which Federal Express is a party has been duly authorized, executed and delivered by Federal Express. Each of the Operative Agreements to which Federal Express is to be a party and which are to be delivered on the Delivery Date has been authorized by Federal Express. (b) The execution, delivery and performance by Federal Express of each of the Certificate Closing Date Documents to which Federal Express is a party do not, or did not on the date of execution thereof, violate, and fully comply, or did fully comply on the date of execution thereof, with, any laws and governmental rules and regulations of the State of New York that may be applicable to Federal Express. The opinion set forth in this paragraph 2(b) is rendered without regard to the taking of any other action or the conduct of any other business by Federal Express in the State of New York not related to the transactions contemplated by the Certificate Closing Date Documents. 3. Assuming (i) the due authorization, execution and delivery of the Certificate Closing Date Documents by each of the parties to each such document (other than Federal Express), (ii) each such party has full power and legal right to enter into and perform its respective obligations under the Certificate Closing Date Documents, (iii) that the execution, delivery, performance by each of the Certificate Closing Date Documents by each of the parties thereto will not violate the respective parties' constituent documents, (iv) the due authorization, execution, issue and delivery by the Owner Trustee, and the due authentication by the Indenture Trustee, of the Certificates to be issued under the Indenture in accordance with the terms of the Indenture, (v) the due authorization, execution, issuance, delivery and authentication by the Pass Through Trustee of the Pass Through Certificates to be issued under the Pass Through Agreement and the Series Supplement relating to such Pass Through Certificates, in each case in accordance with the terms of the Pass Through Agreement and such Series Supplement, and (vi) that the form of each such Certificate Closing Date Documents is in compliance with all applicable laws and governmental rules and regulations (other than the laws of the United States and the laws of the State of New York), then: (A) to the extent governed by New York law, each such Certificate Closing Date Documents in form constitutes a legal, valid and binding agreement of each party thereto enforceable against each such party in accordance with its terms; (B) the Indenture creates, for the benefit of the Holders the security interest in the Trust Indenture Estate that they purport to create; (C) the Certificates, when issued to and acquired by the Pass Through Trustee, will be legal, valid and binding obligations of the Owner Trustee enforceable against the Owner Trustee in accordance with their terms and the terms of the Indenture and will be entitled to the benefits of the Indenture, including the benefit of the security interest created thereby except that no opinion is given with respect to perfection of such security interest on the date hereof; (D) the Pass Through Certificates, when issued to and acquired by the Underwriters in accordance with the Underwriting Agreement, will be legal, valid and binding obligations of the Pass Through Trustee enforceable against the Pass Through Trustee in accordance with their terms and will be entitled to the benefits of the Pass Through Agreement and the Series Supplement relating thereto; and (E) the beneficial interest of the Owner Participant under the Trust Agreement in and to the properties which are part of the Trust Indenture Estate is subject, to the extent provided in the Indenture, to the Lien of the Indenture in favor of the Holders. 4. Federal Express' participation in the transactions contemplated by the Operative Agreements does not and will not constitute a violation of Section 7 of the Securities Exchange Act of 1934. 5. It is not necessary, in connection with the creation of the beneficial interest of the Owner Participant of the Trust Indenture Estate under the circumstances contemplated by the Participation Agreement to register such beneficial interest under the Securities Act of 1933, as amended, or to qualify the Trust Agreement under the Trust Indenture Act of 1939, as amended. The foregoing opinions are subject to the following qualifications: (a) We have relied, with your consent, without independent investigation and verification and subject to the assumptions and qualifications contained therein, on the opinion dated the date hereof of ________________, Vice President _______ of Federal Express. (b) We are qualified to practice law in the State of New York, and we do not purport to be experts on, or to express any opinion herein concerning, any laws other than the laws of the State of New York, the laws of the United States and the General Corporation Law of the State of Delaware. (c) The opinion contained in paragraph 3 above as to enforceability is subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and (ii) general principles of equity which may affect the remedies provided in the agreements referred to in said opinions, which laws and principles, however, do not in our opinion make the remedies provided in said agreements inadequate for the practical realization of the benefits of the security intended to be provided thereby. (d) This opinion is rendered solely to you at Federal Express' request in connection with the above matter. This opinion may not be relied upon by you for any other purpose or relied upon by or furnished to any other Person without our prior written consent. Very truly yours, SCHEDULE -------- Owner Trustee - ------------- Indenture Trustee - ----------------- State Street Bank and Trust Company Owner Participant - ----------------- Lessee - ------ Federal Express Corporation Pass Through Trustee - -------------------- State Street Bank and Trust Company Underwriters - ------------ Exhibit D Form of Opinion of Company Counsel ____________, 199__ [UNDERWRITERS] Re: Federal Express Corporation 199_ Pass Through Certificates, Series __ (the "Offered Certificates") Ladies and Gentlemen: This opinion is directed to the Underwriters pursuant to Section 5(b)(2) of the Underwriting Agreement dated ________________, 199__ (the "Underwriting Agreement"), among the Company and you, with respect to the offer and sale of the Offered Certificates. All terms defined or used in the Underwriting Agreement have the same meaning when used herein, unless otherwise noted. I am Vice President ________ of the Company and have acted as such in connection with the Offered Certificates and the Underwriting Agreement. I or attorneys under my supervision have made such examination and investigation as we have deemed necessary in order to give the following opinion. Based on the foregoing, it is my opinion that: (i) The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has full corporate power and authority under such laws to own its properties and to conduct its business as described in the Prospectus; the Company is a "citizen of the United States" within the meaning of Section 40102(a)(15) of Title 49 of the United States Code, as amended, holding an air operating certificate issued by the Secretary of Transportation pursuant to Chapter 447 of Title 49 of the United States Code, as amended, for aircraft capable of carrying 10 or more individuals or 6,000 or more pounds of cargo; the Company is duly qualified to do business and is in good standing in each jurisdiction in which it owns or leases real property or in which the conduct of its business requires such qualification, except for such instances which in the aggregate will not have a material adverse effect on the Company; (ii) Each subsidiary of the Company which is a significant subsidiary as defined in Rule 405 of Regulation C of the 1933 Act Regulations (each a "Significant Subsidiary") has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has corporate power and authority to own, lease and operate its properties and conduct its business as described in the Registration Statement, and, to the best of my knowledge, is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, except where the failure to so qualify would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise; all of the issued and outstanding capital stock of each Significant Subsidiary has been duly authorized and validly issued and is fully paid and non-assessable, and all of such capital stock, except for directors' qualifying shares, is owned by the Company, directly or through subsidiaries, free and clear of any mortgage, pledge, lien, encumbrance, claim or equity; (iii) Except for matters described in the Prospectus (as to which I can express no opinion at this time concerning the Company's liability (if any) or the effect of any adverse determination upon the business, condition (financial or otherwise) or operations of the Company), there is no pending, or to my knowledge, threatened action or proceeding before any court or administrative agency which individually (or in the aggregate in the case of any group of related lawsuits) is expected to have a material adverse effect on the financial condition of the Company or the ability of the Company to perform its obligations under the Pass Through Agreements and the other Operative Agreements to which the Company is a party; (iv) The Pass Through Agreements and the other Operative Agreements to which the Company is a party have been duly and validly authorized, executed and delivered by the Company; (v) The Equipment Certificates are in due and proper form and have been duly and validly authorized by all necessary corporate action; (vi) The Company possesses all permits, approvals, franchises and other rights from federal aviation, aeronautical, communications, transportation and shipping authorities which are requisite for the conduct of its business as described in the Prospectus or for the actions contemplated by the Underwriting Agreement and the offering contemplated by the Prospectus; and the actions contemplated by the Underwriting Agreement, the Pass Through Agreements, the Participation Agreements and the other Operative Agreements, and the offering contemplated by the Prospectus, are not in violation of any federal statute or regulation relating to aviation, aeronautics, communications, transportation or shipping; (vii) The Basic Agreement is qualified under the 1939 Act; I have reviewed or caused to be reviewed by attorneys under my supervision the Registration Statement, the Prospectus and each amendment and supplement thereto (including the documents incorporated by reference) and have no reason to believe that, as of their respective effective or issue dates, or as of the Closing Time, either the Registration Statement or the Prospectus or any such amendment or supplement (or any such documents incorporated by reference) contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (viii)I do not know of any statute or regulation or legal or governmental proceeding required to be described in the Prospectus which is not described as required, nor of any contract or document of a character required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement which is not described and filed as required; and the descriptions in the Registration Statement and the Prospectus of the contracts and other documents therein described are accurate and fairly present the information required to be shown; (ix) The execution and delivery by the Company of the Underwriting Agreement, the Pass Through Agreements and the Operative Agreements to which the Company is a party, the consummation by the Company of the transactions herein and therein contemplated and compliance with the terms of the Underwriting Agreement, the Pass Through Agreements and such Operative Agreements do not and will not conflict with or result in a breach of any of the terms of the Certificate of Incorporation or By-laws of the Company, and will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan, credit or note agreement, lease or other agreement or instrument material to the Company to which the Company is a party or by which it or any or its properties are bound, or any existing applicable law, rule, regulation, judgment, order or decree of any government, governmental instrumentality or court, having jurisdiction over the Company or any of its properties; (x) No authorization, approval, consent or license of any regulatory body or authority (other than under the 1933 Act, the 1939 Act and the securities or Blue Sky laws of the various states) is required for the valid authorization, issuance, sale and delivery of the Offered Certificates as herein contemplated or the valid authorization, execution, delivery and performance by the Company of the Underwriting Agreement, the Pass Through Agreements and the other Operative Agreements to which the Company is a party or the consummation by the Company of the transactions contemplated herein or therein, or, if so required, all such authorizations, approvals, consents and licenses, specifying the sale, have been obtained and are in full force and effect; (xi) The Registration Statement has become effective under the 1933 Act and, to the best of my knowledge, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the 1933 Act; the Registration Statement and the Prospectus, and each amendment or supplement thereto (except for the financial statements and schedules included therein, as to which I express no opinion), comply as to form in all material respects to the requirements of the 1933 Act and the 1933 Act Regulations and, as to documents incorporated therein, to the requirements of the 1934 Act and the 1934 Act Regulations in effect at the time such documents were filed with the Commission; and (xii) The Underwriting Agreement has been duly and validly authorized, executed and delivered by the Company and constitutes a valid and binding agreement of the Company, enforceable in accordance with its terms, except as enforcement thereof is limited by bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting enforcement of creditors' rights or by general equity principles and subject to any principles of public policy limiting the right to enforce the indemnification and contribution provisions contained in Sections 6 and 7 of the Underwriting Agreement. In rendering the foregoing opinion, we have assumed that (i) all signatures on all documents examined by us are genuine and that where any such signature (other than a signature purporting to have been made on behalf of the Company) purports to have been made in a corporate, governmental, fiduciary or other capacity, the person who affixed such signature had the due authority to do so, (ii) certain factual matters contained in certificates of public officials are accurate, true and correct, and (iii) photostatic copies of such documents, records and certificates conform to the originals. This opinion is intended solely for the benefit of the Underwriters and is not to be relied on by, and no copies of it are to be delivered to, any other person without my prior written consent, except that Underwriters' counsel may rely upon this opinion as to all matters of Tennessee law or Delaware corporate law in rendering its opinion of even date herewith. I am not assuming any professional responsibility to any other person by rendering this opinion. It is understood that this opinion speaks as of the date given, notwithstanding any delivery as contemplated above on any other date. Very truly yours, Schedule I to Underwriting Agreement Dated: ________, 199__ FEDERAL EXPRESS CORPORATION 199__ Pass Through Certificates, Series __ Aggregate Amount Aggregate Amount Total Aggregate of Series ___ Pass of Series ___ Pass Amount to be Underwriters Through Certificates Through Certificates Purchased - ------------ -------------------- -------------------- --------------- $ $ $ Schedule II to Underwriting Agreement Dated: ________, 199__ FEDERAL EXPRESS CORPORATION 199__ Pass Through Certificates, Series __ To: Federal Express Corporation 2005 Corporate Avenue Memphis, Tennessee 38132 Re: Underwriting Agreement dated ______________, 199__ Title of Offered Certificates:199__ Pass Through Certificates, Series __ Current ratings: Interest rate: Series __ ____% Interest payable: each ___________ and __________ commencing on _________, 199__ Public offering price: 100%, plus accrued interest from ___________, 199__ Closing date, time and location: ___________, 199__, 9:00 A.M., New York City time Davis Polk & Wardwell 450 Lexington Avenue New York, NY 10017 Location for checking Offered Certificates: New York, New York Listing requirement: None Other terms and conditions: The Offered Certificates will be issued in fully registered, book-entry only form through the facilities of The Depository Trust Company, and each Series of the Offered Certificates shall be represented by a separate global certificate. Exceptions, if any, to Section 3(i) of the Underwriting Agreement: None [UNDERWRITERS] By: By: ___________________________ Name: Title: Acting on behalf of themselves and the other named Underwriters Accepted: FEDERAL EXPRESS CORPORATION By: _______________________________ Name: Title: EX-1.C 3 Exhibit 1(c) Underwriting Agreement Dated as of ______________, 199__ between FEDERAL EXPRESS CORPORATION and [UNDERWRITERS] DEBT SECURITIES TABLE OF CONTENTS Page ---- SECTION 1. Representations & Warranties of the Company............2 SECTION 2. Purchase and Sale..................................... 6 SECTION 3. Covenants of the Compan................................8 SECTION 4. Payment of Expenses...................................10 SECTION 5. Conditions of Underwriters' Obligations...............11 SECTION 6. Indemnification.......................................14 SECTION 7. Contribution..........................................15 SECTION 8. Representations, Warranties and Agreements to Survive Delivery .................................16 SECTION 9. Termination of Agreement..............................16 SECTION 10. Default by One Underwriter............................16 SECTION 11. Notices...............................................17 SECTION 12. Parties...............................................17 SECTION 13. Governing Law.........................................18 Exhibit A Pricing Information Exhibit B Opinion of the Company Schedule I Underwriters' Commitments Schedule II Terms and Conditions FEDERAL EXPRESS CORPORATION Debt Securities UNDERWRITING AGREEMENT ____________, 199__ [UNDERWRITERS] [ADDRESS] Ladies and Gentlemen: Federal Express Corporation, a Delaware corporation (the "Company"), proposes to issue and sell to the underwriters named in Schedule I hereto up to $1 billion aggregate principal amount of its debt securities (the "Debt Securities") in one or more offerings on the terms and conditions stated herein and in Schedule II hereto (the "Offered Securities"). The Debt Securities will be issued under an indenture dated as of June 1, 1996 (the "Indenture") between the Company and The First National Bank of Chicago, acting not in its individual capacity, but solely as trustee (the "Trustee"). Each issue of Debt Securities may vary as to aggregate principal amount, maturity date, currency, interest rate or formula and timing of payments thereof, any redemption or sinking fund requirements and any other variable terms as the Indenture contemplates and as may be set forth in the Debt Securities issued from time to time. As used herein, unless the context otherwise requires, the term "Underwriters" shall mean the firm or firms named as Underwriter or Underwriters in Schedule I and the term "you" shall mean the Underwriter or Underwriters, if no underwriting syndicate is purchasing the Offered Securities, or the representative or representatives of the Underwriters, if an underwriting syndicate is purchasing the Offered Securities, as indicated in Schedule I. The Company has filed with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-3 (No. 33-________) for the registration of certain debt securities and other securities, including the Offered Securities, under the Securities Act of 1933, as amended (the "1933 Act"), and the offering thereof from time to time in accordance with Rule 415 of the rules and regulations of the Commission under the 1933 Act (the "1933 Act Regulations"). Such registration statement has been declared effective by the Commission and the Indenture has been qualified under the Trust Indenture Act of 1939, as amended (the "1939 Act"). The Company has, pursuant to Rule 424 under the 1933 Act, filed with, or transmitted for filing to, or shall within the required period of time hereafter file with or transmit for filing to, the Commission a prospectus supplement (the "Prospectus Supplement") specifically relating to the Offered Securities, together with a revised and restated prospectus relating to debt securities covered by the above-referenced registration statement. The term "Registration Statement" refers to such registration statement in the form in which it became effective, including the exhibits thereto and the documents incorporated by reference therein, as amended to the date hereof. The term "Basic Prospectus" means the above-referenced revised and restated prospectus relating to debt securities. The term "Prospectus" means the Basic Prospectus supplemented by the Prospectus Supplement. The term "Preliminary Prospectus" means a preliminary prospectus supplement specifically relating to the Offered Securities together with the Basic Prospectus. As used herein, the terms "Basic Prospectus," "Prospectus" and "Preliminary Prospectus" shall include in each case the documents, if any, incorporated by reference therein. The terms "supplement" and "amendment" or "amend" as used herein shall include all documents deemed to be incorporated by reference in the Prospectus that have been filed subsequent to the date of the Basic Prospectus by the Company with the Commission pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"). If the Company has filed an abbreviated registration statement to register additional shares of Debt Securities pursuant to Rule 462(b) under the 1933 Act, then any reference herein to the term "Registration Statement" shall include such Rule 462(b) registration statement. Capitalized terms used but not otherwise defined in this Agreement shall have the meanings specified in or pursuant to the Indenture. SECTION 1. Representations and Warranties of the Company. (a) The Company represents and warrants to you and to each Underwriter named in Schedule I, as of the date hereof, as follows: (i) Due Incorporation and Qualification. The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware, has the corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus; and is duly qualified to do business and is in good standing in each jurisdiction in which such qualification is required, except where the failure to so qualify would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise. (ii) Subsidiaries. Each subsidiary of the Company which is a significant subsidiary as defined in Rule 405 of Regulation C of the 1933 Act Regulations (each a "Significant Subsidiary") has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, except where the failure to so qualify would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise; and all of the issued and outstanding capital stock of each Significant Subsidiary has been duly authorized and validly issued, is fully paid and non-assessable and, except for directors' qualifying shares (except as otherwise stated in the Registration Statement), is owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity. (iii) Registration Statement and Prospectus. At the time the Registration Statement became effective, the Registration Statement complied, and as of the date hereof does comply, in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations and the 1939 Act and the rules and regulations of the Commission promulgated thereunder. The Registration Statement, at the time it became effective, did not, and at each time thereafter at which any amendment to the Registration Statement becomes effective, will not, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Prospectus, as of the date hereof, does not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that the representations and warranties in this subsection shall not apply to statements in or omissions from the Registration Statement or Prospectus made in reliance upon and in conformity with information furnished to the Company in writing by an Underwriter expressly for use in the Registration Statement or Prospectus or to those parts of the Registration Statement which constitute Statements of Eligibility and Qualification of Trustees (Form T-1) under the 1939 Act. No stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been initiated or threatened by the Commission. (iv) Incorporated Documents. The documents incorporated by reference in the Prospectus, at the time they were or hereafter are filed with the Commission, complied and will comply in all material respects with the requirements of the 1934 Act and the rules and regulations promulgated thereunder (the "1934 Act Regulations"), and, when read together and with the other information in the Prospectus, did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were or are made, not misleading. (v) Accountants. The accountants who certified the financial statements included or incorporated by reference in the Prospectus are independent public accountants as required by the 1933 Act and the 1933 Act Regulations. (vi) Financial Statements. The financial statements of the Company included or incorporated by reference in the Prospectus and the Registration Statement present fairly the financial position of the Company as of the dates thereof and the results of operations, changes in common stockholders' investment and cash flows of the Company, for the respective periods covered thereby, all in conformity with generally accepted accounting principles applied on a consistent basis throughout the entire period involved; and the financial schedules included or incorporated by reference in the Registration Statement meet the requirements of the 1933 Act Regulations or the 1934 Act Regulations, as applicable. (vii) Material Changes or Material Transactions. Except as stated in the Prospectus, subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus, the Company has not incurred any liabilities or obligations, direct or contingent, or entered into any transactions which are material to the Company, and there has not been any material adverse change in the capital stock or short-term debt, or any material increase in long-term debt of the Company, or any material adverse change, or any development involving a prospective material adverse change, in the condition (financial or other), business, prospects, net worth or results of operations of the Company. (viii) No Defaults; Regulatory Approvals. Neither the Company nor any of its subsidiaries is in violation of its charter or in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which it is a party or by which it or any of them or their properties may be bound. The execution and delivery of this Agreement and the Indenture and the consummation of the transactions contemplated herein and therein have been duly authorized by all necessary corporate action and executed by the Company and will not conflict with or constitute a breach of, or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which the Company or any such subsidiary is a party or by which it or any of them may be bound or to which any of the property or assets of the Company or any such subsidiary is subject, which conflict, breach or default would have, individually or in the aggregate with any other such instances, a material adverse effect on the condition (financial or other), business, prospects, net worth or results of operations of the Company and its subsidiaries considered as one entity, nor will such action result in any violation of the provisions of the charter or by-laws of the Company or any law, administrative regulation or administrative or court order or decree currently in effect or in effect at the time of execution and delivery of this Agreement and the Indenture and applicable to the Company or any of its subsidiaries. No consent, approval, authorization, order or decree of any court or governmental agency or body is required for the consummation by the Company of the transactions contemplated by this Agreement or the Indenture, except such as may be required under the 1933 Act, the 1939 Act, the 1933 Act Regulations or state securities or Blue Sky laws, and the Uniform Commercial Code as in effect in Delaware and Tennessee. (ix) Legal Proceedings; Contracts. Except for matters described in the Prospectus (as to which the Company can express no opinion at this time concerning the Company's liability (if any) or the effect of any adverse determination upon the business, condition (financial or otherwise) or operations of the Company), there is no pending, or to the best knowledge of any financial officer of the Company, threatened action or proceeding before any court or administrative agency which individually (or in the aggregate in the case of any group of related lawsuits) is expected to have a material adverse effect on the financial condition of the Company or the ability of the Company to perform its obligations under the Indenture. (x) Compliance with Laws. The Company's business and operations comply in all material respects with all laws and regulations applicable thereto and there are no known, proposed or threatened changes in any laws or regulations which would have a material adverse effect on the Company or the manner in which it conducts its business. The Company possesses all valid and effective certificates, licenses and permits required to conduct its business as now conducted, except for instances which individually or in the aggregate do not, or will not, have a material adverse effect on the condition (financial or other), business, prospects or results of operations of the Company. (xi) Enforceability. The Indenture has been duly authorized by the Company, will be substantially in the form heretofore supplied to you and, when duly executed and delivered by the Company and the other parties thereto, will constitute a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms. (xii) Validity of the Offered Securities. When executed, issued, authenticated and delivered pursuant to the provisions of the Indenture and sold and paid for as provided in this Agreement, each thereof Offered Securities will constitute valid and legally binding obligations of the Company enforceable in accordance with their terms; and the Holders of such Offered Securities will be entitled to the benefits provided by such Indenture. The representations and warranties made by the Company as to the enforceability of the Indenture and the Offered Securities, set forth in subparagraphs (xi) and (xii) above are limited by bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting enforcement of creditors' rights or by general equity principles, and the enforceability of the Indenture is also limited by applicable laws which may affect the remedies provided therein but which do not affect the validity of such Indenture or make such remedies inadequate for the practical realization of the benefits intended to be provided thereby. (b) Additional Certifications. Any certificate signed by any officer of the Company and delivered to you or your counsel in connection with an offering of the Offered Securities shall be deemed a representation and warranty by the Company to each Underwriter participating in such offering as to the matters covered thereby on the date of such certificate unless subsequently amended or supplemented subsequent thereto. SECTION 2. Purchase and Sale. (a) Subject to the terms and conditions set forth herein and in Schedule II, if any, the Company agrees to sell to each Underwriter, and each Underwriter agrees, severally and not jointly, to purchase from the Company, at the purchase price specified in Exhibit A hereto, the amount of Offered Securities set forth opposite the name of such Underwriter in Schedule I. It is understood that you propose to offer the Offered Securities for sale to the public as set forth in the Prospectus. (b) Subject to the terms and conditions herein set forth, the Company may grant, if so provided in Schedule II hereto, an option to the Underwriters, severally and not jointly, to purchase additional Debt Securities to cover over-allotments, if any (the "Option Securities"). If Schedule II so provides, the Underwriters may purchase up to the amount of Option Securities set forth therein at the same price per share as is applicable to the Offered Securities. As used herein, the term "Offered Securities" shall include Option Securities. Such option, if granted, will expire 30 days after the date of this Agreement, and may be exercised in whole or in part from time to time only for the purpose of covering over-allotments which may be made in connection with the offering and distribution of the Offered Securities upon notice by you to the Company setting forth the number of Option Securities as to which the several Underwriters are then exercising the option and the time and date of payment and delivery for such Option Securities. Any such time and date of delivery shall be determined by you, but shall not be later than four business days and not be earlier that two business days after the exercise of said option, nor in any event prior to Closing Time, unless otherwise agreed upon by you and the Company. If the option is exercised as to all or any portion of the Option Securities, each Underwriter, acting severally and not jointly, will purchase that proportion of the total number of Option Securities then being purchased which the number of Offered Securities each such Underwriter has agreed to purchase as set forth in Schedule II bears to the total number of Offered Securities, subject to such adjustments as you shall make to eliminate any sales or purchases of fractional Debt Securities. (c) Payment of the purchase price for any Offered Securities to be purchased by the Underwriters shall be made to the Company at either the Company's offices in Memphis, Tennessee or the office of Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017, or at such other place as shall be agreed upon by you and the Company, at 9:00 A.M., New York City time, on the third business day (unless postponed in accordance with the provisions of Section 10) following the date hereof or at such other date, time or location specified in Schedule II, or as otherwise shall be agreed upon by you and the Company (such time and date being referred to as a "Closing Time"). Delivery of the Offered Securities shall be made for your account as specified in Schedule II against payment by you of the purchase price thereof to the Company (or such other person as the Company may direct) by wire transfer of immediately available funds. Unless otherwise indicated on Schedule II, such Offered Securities shall be registered in the name of Cede & Co., as nominee for The Depository Trust Company, and in such denominations, as you may request in writing at least two business days prior to the Closing Time. Such Offered Securities will be made available for examination and packaging by you in New York, New York, on or before the first business day prior to the Closing Time or at such other time and place specified in Schedule II. (d) As compensation to you for your commitments and obligations hereunder in respect of the Offered Securities, including your undertakings to distribute Offered Securities, the Company will pay to you an amount equal to that percentage of the aggregate principal amount of Offered Securities purchased by you as set forth in Exhibit A as the underwriting discounts and commissions. Such payment shall be made simultaneously with the payment by you of the purchase price of the Offered Securities as specified in Section 2(b) hereof. Payment of such compensation shall be made by wire transfer of immediately available funds. SECTION 3. Covenants of the Company. The Company covenants with each of you, and with each Underwriter participating in the offering as follows: (a) Prospectus Supplement. The Company has prepared a Preliminary Prospectus, and immediately following the execution of this Agreement, the Company will prepare a Prospectus Supplement in connection with the offering of the Offered Securities. The Company will promptly transmit copies of the Prospectus Supplement to the Commission for filing pursuant to Rule 424 of the 1933 Act Regulations. (b) Notice of Certain Events. The Company will notify you promptly (i) of the effectiveness of any amendment to the Registration Statement, (ii) of the transmittal to the Commission for filing of any supplement to the Prospectus or any document to be filed pursuant to the 1934 Act which will be incorporated by reference in the Prospectus, (iii) of the receipt of any comments from the Commission with respect to the Registration Statement, the Prospectus or the Prospectus Supplement relating in any way to the offer and sale of the Offered Securities, (iv) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information, and (v) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose. (c) Notice of Certain Proposed Filings. The Company will give you notice of its intention to file or prepare any amendment to the Registration Statement or any amendment or supplement to the Prospectus, whether by the filing of documents pursuant to the 1934 Act, the 1933 Act or otherwise, and will furnish you with copies of any such amendment or supplement or other documents proposed to be filed or prepared a reasonable time in advance of such proposed filing or preparation, as the case may be. (d) Copies of the Registration Statement and the Prospectus. The Company will deliver to you as many signed and conformed copies of the Registration Statement (as originally filed) and of each amendment thereto (including exhibits filed therewith or incorporated by reference therein and documents incorporated by reference in the Prospectus) as you may reasonably request. The Company will furnish to you as many copies of the Prospectus (as amended or supplemented) as you shall reasonably request so long as you are required to deliver a Prospectus in connection with sales or solicitations of offers to purchase the Offered Securities. (e) Revisions of Prospectus -- Material Changes. If at any time when the Prospectus is required by the 1933 Act to be delivered in connection with sales of the Offered Securities any event shall occur or condition exist as a result of which it is necessary, in the reasonable opinion of counsel for the Company, to further amend or supplement the Prospectus in order that the Prospectus will not include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, or if it shall be necessary, in the reasonable opinion of such counsel, at any such time to amend or supplement the Registration Statement or the Prospectus in order to comply with the requirements of the 1933 Act or the 1933 Act Regulations the Company will promptly prepare and file with the Commission such amendment or supplement, whether by filing documents pursuant to the 1934 Act, the 1933 Act or otherwise, as may be necessary to correct such untrue statement or omission or to make the Registration Statement and Prospectus comply with such requirements. (f) Earnings Statements. The Company will make generally available to its security holders as soon as practicable after the close of the period covered thereby, an earnings statement (in form complying with the provisions of Rule 158 under the 1933 Act) covering each twelve-month period beginning, in each case, not later than the first day of the Company's fiscal quarter next following the "effective date" (as defined in such Rule 158) of the Registration Statement with respect to each sale of Offered Securities. (g) Blue Sky Qualifications. The Company will endeavor, in cooperation with you, to qualify the Offered Securities for offering and sale under the applicable securities laws of such states and other jurisdictions of the United States as the Underwriters may designate, and will maintain such qualifications in effect for so long as may be required for the distribution of the Offered Securities; provided, however, that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or to subject itself to taxation as doing business in any jurisdiction in which it is not otherwise required to be so qualified. The Company will file such statements and reports as may be required by the laws of each jurisdiction in which the Offered Securities have been qualified as provided above. (h) 1934 Act Filings. The Company, during the period when the Prospectus is required to be delivered under the 1933 Act, will file promptly all documents required to be filed with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act. (i) Stand-Off Agreement. The Company will not, between the date of this Agreement and the Closing Time, without your consent, offer or sell, or enter into any agreement to sell, any debt securities of the Company pursuant to a public offering of securities registered under the 1933 Act (other than the Offered Securities which are to be sold pursuant hereto and commercial paper in the ordinary course of business). SECTION 4. Payment of Expenses. The Company will pay all expenses incident to the performance of its obligations under this Agreement, including: (i) the preparation and filing of the Registration Statement and all amendments thereto, the Preliminary Prospectus, if any, and the Prospectus and any amendments or supplements thereto; (ii) the filing of this Agreement; (iii) the preparation, issuance and delivery of the Offered Securities; (iv) the reasonable fees and disbursements of the Company's accountants and counsel, of the Trustee and its counsel, and of any registrar, paying agent and authenticating agent; (v) the qualification of the Offered Securities under securities laws in accordance with the provisions of Section 3(g), including filing fees and the reasonable fees and disbursements of counsel to the Underwriters in connection therewith and in connection with the preparation of any Blue Sky Survey and any Legal Investment Survey; (vi) the printing and delivery to the Underwriters in quantities as hereinabove stated of copies of the Registration Statement and any amendments thereto, and of the Prospectus and any amendments or supplements thereto, and the delivery by the Underwriters of the Prospectus and any amendments or supplements thereto in connection with solicitations or confirmations of sales of the Offered Securities; (vii) the preparation and delivery to the Underwriters of copies of the Indenture; and (viii) any fees charged by rating agencies for the rating of the Offered Securities. If this Agreement is terminated by you in accordance with the provisions of Section 5 or clause (i) of Section 9 hereof, the Company shall reimburse upon demand the Underwriters for all of their out-of-pocket expenses, including the reasonable fees and disbursements of counsel for the Underwriters that shall have been incurred by you in connection with the proposed purchase and sale of the Offered Securities. SECTION 5. Conditions of Underwriters' Obligations. The several obligations of the Underwriters to purchase the Offered Securities pursuant to this Agreement will be subject at all times to the accuracy of the representations and warranties on the part of the Company herein, to the accuracy of the statements of the Company's officers made in any certificate furnished pursuant to the provisions hereof, to the performance and observance by the Company of all covenants and agreements contained herein, or in Schedule II hereto, on its part to be performed and observed and to the following additional conditions precedent: (a) Stop Order; Ratings Change; etc. At the Closing Time, (i) no stop order suspending the effectiveness of the Registration Statement shall have been issued under the 1933 Act or proceedings therefor initiated or threatened by the Commission, (ii) the rating assigned as of the date of this Agreement by any "nationally recognized statistical rating organization," as such term is defined for purposes of Rule 436(g) under the 1933 Act Regulations, to any debt securities of the Company (including for purposes of this Section 5(a)(ii) any rating indicated by the Company as of the date of this Agreement as the rating orally confirmed to the Company by any such rating organization as the rating to be assigned to the Offered Securities) shall not have been lowered since the execution of this Agreement nor shall any such rating organization have publicly announced that it has placed any debt securities of the Company on what is commonly termed a "watch list" for possible downgrading, and (iii) there shall not have come to your attention any facts that would cause you to believe that the Prospectus, including the Prospectus Supplement, at the time it was required to be delivered to a purchaser of the Offered Securities, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances existing at such time, not misleading. (b) Legal Opinions. At the Closing Time, you shall have received the following documents: (1) Opinion of Company Counsel. The opinion of the Executive Vice President, General Counsel and Secretary of the Company or any Vice President in the Legal and Regulatory Division of the Company, dated as of such date, in form and substance reasonably satisfactory to you, to the effect as set forth in Exhibit B. (2) Opinion of Counsel to the Underwriters. The opinion of __________________________________, counsel to the Underwriters, with respect to such matters as you may reasonably request. (c) Officer Certificate. At the Closing Time, there shall not have been, since the respective dates as of which information is given in the Registration Statement and the Prospectus, any material adverse change in the condition (financial or otherwise) of the Company, or in the earnings or business affairs of the Company; and you shall have received a certificate of any Vice President of the Company, dated as of the Closing Time, to the effect (i) that there has been no such material adverse change, (ii) that the other representations and warranties of the Company contained in Section 1 are true and correct with the same force and effect as though expressly made at and as of the date of such certificate, except to the extent that such representations and warranties expressly relate to an earlier date or later date (in which case such representations and warranties are true and correct on and as of such earlier date or will be true and correct on and as of such later date, as the case may be), (iii) that the Company has made or caused to be made any required filing of the Prospectus pursuant to Rule 424(b) in the manner and within the time period required by Rule 424(b), and (iv) that the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the date of such certificate. The officer signing and delivering this certificate may rely upon the best of his or her knowledge as to proceedings threatened. (d) Comfort Letter. At the time of the execution of this Agreement and at the Closing Time, you shall have received a letter from Arthur Andersen LLP or their successors as the Company's independent accountants (the "Independent Accountants"), dated as of the date hereof and of the Closing Time, as the case may be, in form and substance satisfactory to you to the effect that: (i) they are independent public accountants within the meaning of the 1933 Act and the 1933 Act Regulations; (ii) in their opinion the Company's financial statements and schedules included or incorporated by reference in the Registration Statement and Prospectus and covered by their reports included or incorporated therein comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the 1933 Act Regulations or the 1934 Act and the 1934 Act Regulations, as the case may be; (iii) they have conducted reviews of the unaudited interim consolidated financial information of the Company included in the Company's Quarterly Reports on Form 10-Q incorporated in the Registration Statement and Prospectus in compliance with the standards for such reviews promulgated by the American Institute of Certified Public Accountants; (iv) on the basis of a reading of the financial statements and schedules of the Company included or incorporated in the Prospectus and the Registration Statement, and the latest available unaudited interim financial statements of the Company, inquiries of officials of the Company responsible for financial and accounting matters, and other specified procedures and inquiries, nothing has come to their attention that caused them to believe that: (A) the unaudited financial statements of the Company included or incorporated in the Prospectus and the Registration Statement do not comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the 1933 Act Regulations or the 1934 Act and the 1934 Act Regulations thereunder, as the case may be, or that such unaudited financial statements are not presented fairly in conformity with generally accepted accounting principles; (B) with respect to the period subsequent to the date of the most recent financial statements incorporated in the Registration Statement and the Prospectus, as of a specified date not more than five business days prior to the date of delivery of such letter, there has been any change in the common or preferred stock or long-term debt of the Company or, as of such date, there has been any decrease in assets or common stockholders' investment, in each case as compared with amounts shown in the most recent consolidated balance sheet of the Company included or incorporated in the Registration Statement and the Prospectus, except in each case for changes or decreases which the Prospectus discloses have occurred or may occur or which are described in such letter; or (C) for the period from the date of the most recent financial statements incorporated in the Registration Statement and the Prospectus to such specified date, there was any decrease in operating revenues, operating income, income before taxes or net income of the Company in each case as compared with the comparable period of the preceding year, except in each case for decreases which the Prospectus discloses have occurred or may occur or which are described in such letter; and (v) in addition to their audit referred to in their reports included or incorporated by reference in the Registration Statement and the Prospectus and the reviews, inquiries and procedures referred to in clauses (iii) and (iv) above, such letter shall state that Arthur Andersen LLP has performed other specified procedures, with respect to certain numerical data and information included or incorporated in the Registration Statement and the Prospectus, as are requested by an Underwriter and specified in such letter and have found such data and information to be in agreement with the accounting records of or analyses prepared by the Company. (e) Other Documents. At the Closing Time, counsel for the Underwriters shall have been furnished with such documents and opinions as such counsel may reasonably require for the purpose of enabling such counsel to pass upon the issuance and sale of Offered Securities as herein contemplated and related proceedings, or in order to evidence the accuracy and completeness of any of the representations and warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Company in connection with the issuance and sale of Offered Securities as herein contemplated shall be satisfactory in form and substance to you. SECTION 6. Indemnification. (a) The Company agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of Section 15 of the 1933 Act as follows: (i) against any and all loss, liability, claim, damage and expense whatsoever, arising out of any untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), or the omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of or based upon any untrue statement of a material fact contained in the Prospectus (or any amendment or supplement thereto) or the omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (ii) against any and all loss, liability, claim, damage and expense whatsoever, to the extent of the aggregate amount paid in settlement of any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever arising out of or based upon any such untrue statement or omission, if such settlement is effected with the written consent of the Company; and (iii) against any and all expense whatsoever, reasonably incurred in investigating, preparing or defending against any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever arising out of or based upon any such untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above; provided, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by any Underwriter expressly for use in the Registration Statement (or any amendment thereto) or the Prospectus (or any amendment or supplement thereto), or made in reliance upon the Statements of Eligibility and Qualification of Trustees (Form T-1) under the 1939 Act filed as exhibits to the Registration Statement; and provided, further, that the foregoing indemnity agreement, with respect to any Preliminary Prospectus shall not inure to the benefit of any Underwriter from whom the person asserting any such losses, claims, damages or liabilities purchased Offered Securities, or any person controlling such Underwriter, if a copy of the Prospectus (as then amended or supplemented if the Company shall have furnished any amendments or supplements thereto) was not sent or given by or on behalf of such Underwriter to such person, if required by law so to have been delivered, at or prior to the written confirmation of the sale of the Offered Securities to such person, and if the Prospectus (as so amended or supplemented) would have cured the defect giving rise to such losses, claims, damages or liabilities. (b) Each Underwriter severally agrees to indemnify and hold harmless the Company, its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of this Section, as incurred, but only with respect to untrue statements or omissions made in the Registration Statement (or any amendment thereto) or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by such Underwriters through you expressly for use in the Registration Statement (or any amendment thereto) or the Prospectus (or any amendment or supplement thereto). (c) Each indemnified party shall give prompt notice to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability which it may have otherwise than on account of this indemnity agreement. An indemnifying party may participate at its own expense in the defense of such action. In no event shall the indemnifying parties be liable for the fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. SECTION 7. Contribution. In order to provide for just and equitable contribution in circumstances in which the indemnity agreement provided for in Section 6 is for any reason held to be unenforceable by the indemnified parties although applicable in accordance with its terms, the Company and the Underwriters of each offering of Offered Securities shall contribute to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by said indemnity agreement incurred by the Company and one or more of the Underwriters in respect of such offering, as incurred, in such proportions that the Underwriters are responsible for that portion represented by the percentage that the underwriting discount appearing on the cover page of the Prospectus in respect of such offering bears to the initial public offering price appearing thereon and the Company is responsible for the balance; provided, however, that no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section, each person, if any, who controls an Underwriter within the meaning of Section 15 of the 1933 Act shall have the same rights to contribution as such Underwriter, and each director of the Company, each officer of the Company who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act shall have the same rights to contribution as the Company. SECTION 8. Representations, Warranties and Agreements to Survive Delivery. All representations, warranties and agreements contained in this Agreement, or contained in certificates of officers of the Company submitted pursuant hereto, shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of any Underwriter or controlling person, or by or on behalf of the Company, and shall survive each delivery of and payment for any of the Offered Securities. SECTION 9. Termination of Agreement. You may terminate this Agreement, immediately upon notice to the Company, at any time prior to the Closing Time if: (i) there has been, since the date hereof or since the respective dates as of which information is given in the Registration Statement, any material adverse change in the condition, financial or otherwise, or in the earnings or business affairs of the Company, (ii) there shall have occurred any material adverse change in the financial markets in the United States or any outbreak or escalation of hostilities or other national or international calamity or crisis, the effect of which shall be such as to make it, in your judgment, impracticable to market the Offered Securities or enforce contracts for the sale of the Offered Securities, or (iii) trading in any securities of the Company shall have been suspended by the Commission or a national securities exchange, or if trading generally on either the American Stock Exchange or the New York Stock Exchange shall have been suspended, or minimum or maximum prices for trading shall have been fixed, or maximum ranges for prices for securities shall have been required, by either of said exchanges or by order of the Commission or any other governmental authority, or if a banking moratorium shall have been declared by either federal or New York authorities. In the event of any termination of this Agreement, the covenant set forth in Section 3(f) hereof, the provisions of Section 4 hereof, the indemnity and contribution agreements set forth in Sections 6 and 7 hereof, and the provisions of Sections 8 and 13 hereof shall remain in effect. SECTION 10. Default by One Underwriter. If any Underwriter shall fail at the Closing Time to purchase the Offered Securities which it is obligated to purchase hereunder (the "Defaulted Securities"), and the aggregate amount of Defaulted Securities is not more than one-tenth of the aggregate amount of the Offered Securities to be purchased on such date, the other Underwriters shall be obligated severally in the proportions that the amount of the Offered Securities set forth opposite their respective names in Schedule I hereto bears to the aggregate amount of Offered Securities set forth opposite the names of all such non-defaulting underwriters to purchase the Defaulted Securities; provided that in no event shall the amount of Defaulted Securities that any Underwriter has agreed to purchase pursuant to this Agreement be increased by an amount in excess of one-ninth of such amount of Offered Securities without the written consent of such Underwriter. If the aggregate amount of Defaulted Securities is more than one-tenth of the aggregate amount of the Offered Securities to be purchased on the Closing Date, and arrangements satisfactory to the Underwriters and the Company for the purchase of such Defaulted Securities are not made within 36 hours after such default, this Agreement shall terminate without liability on the part of any non-defaulting Underwriters or the Company. No action taken pursuant to this Section shall relieve a defaulting Underwriter from liability in respect of its default under this Agreement. In the event of any such default which does not result in a termination of this Agreement, either the non-defaulting Underwriters or the Company shall have the right to postpone the Closing Time for a period not exceeding seven days in order to effect any required changes in the Registration Statement or Prospectus or in any other documents or arrangements. SECTION 11. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed, delivered by Federal Express service or transmitted by any facsimile communication. Notices to the Underwriters shall be directed to _______________________________________, with copies thereof directed to _________________________________________ ________________________________________________. Notices to the Company shall be directed to it at 2007 Corporate Avenue, Memphis, Tennessee 38132 (if by Federal Express service) or P.O. Box 727, Memphis, Tennessee 38194 (if by mail), Attention: Vice President and Treasurer, with copies thereof directed to the Legal Department of the Company at 1980 Nonconnah Drive, Memphis, Tennessee 38132 (if by Federal Express Service) or P.O. Box 727, Memphis, Tennessee 38194 (if by mail), Attention: Managing Director - Securities and Corporate Law. SECTION 12. Parties This Agreement shall inure to the benefit of and be binding upon you and the Company and any Underwriter who becomes a party hereto and their respective successors. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the parties hereto and their respective successors and the controlling persons and officers and directors referred to in Sections 6 and 7 and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the parties hereto their respective successors and said controlling persons and officers and directors and their heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Offered Securities from any Underwriter shall be deemed to be a successor by reason merely of such purchase. Section 13. Governing Law. This Agreement and the rights and obligations of the parties created hereby and thereby shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed in such state. Any suit, action or proceeding brought by the Company against an Underwriter in connection with or arising under this Agreement shall be brought solely in the state or federal court of appropriate jurisdiction located in the Borough of Manhattan, The City of New York. If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument along with all counterparts will become a binding agreement between you and the Company in accordance with its terms. Very truly yours, FEDERAL EXPRESS CORPORATION By: _________________________________ Name: Title: CONFIRMED AND ACCEPTED, as of the date first above written: [UNDERWRITERS] By: By: ___________________________________ Name: Title: Acting on behalf of themselves and the other named Underwriters Exhibit A FEDERAL EXPRESS CORPORATION Debt Securities Underwriting Final Aggregate Discount Purchase Interest Distribution Principal and Designation Price Rate Date Amount Commissions - ----------- -------- -------- ------------ --------- ----------- $ % $ % Exhibit B Form of Opinion of Company Counsel ____________, ______ [UNDERWRITERS] Re: Federal Express Corporation Debt Securities (the "Offered Securities") Ladies and Gentlemen: This opinion is directed to the Underwriters pursuant to Section 5(b)(1) of the Underwriting Agreement dated ________________, ______ (the "Underwriting Agreement"), among the Company and you, with respect to the offer and sale of the Offered Securities. All terms defined or used in the Underwriting Agreement have the same meaning when used herein, unless otherwise noted. I am Vice President ________ of the Company and have acted as such in connection with the Offered Securities and the Underwriting Agreement. I or attorneys under my supervision have made such examination and investigation as we have deemed necessary in order to give the following opinion. Based on the foregoing, it is my opinion that: (i) The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has full corporate power and authority under such laws to own its properties and to conduct its business as described in the Prospectus; the Company is duly qualified to do business and is in good standing in each jurisdiction in which it owns or leases real property or in which the conduct of its business requires such qualification, except for such instances which in the aggregate will not have a material adverse effect on the Company; (ii) Each subsidiary of the Company which is a significant subsidiary as defined in Rule 405 of Regulation C of the 1933 Act Regulations (each a "Significant Subsidiary") has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has corporate power and authority to own, lease and operate its properties and conduct its business as described in the Registration Statement, and, to the best of my knowledge, is duly qualified to do business and is in good standing in each jurisdiction in which such qualification is required, except where the failure to so qualify would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise; all of the issued and outstanding capital stock of each Significant Subsidiary has been duly authorized and validly issued and is fully paid and non-assessable, and all of such capital stock, except for directors' qualifying shares, is owned by the Company, directly or through subsidiaries, free and clear of any mortgage, pledge, lien, encumbrance, claim or equity; (iii) Except for matters described in the Prospectus (as to which I can express no opinion at this time concerning the Company's liability (if any) or the effect of any adverse determination upon the business, condition (financial or otherwise) or operations of the Company), there is no pending, or to my knowledge, threatened action or proceeding before any court or administrative agency which individually (or in the aggregate in the case of any group of related lawsuits) is expected to have a material adverse effect on the financial condition of the Company or the ability of the Company to perform its obligations under the Indenture; (iv) The Indenture has been duly qualified under the 1939 Act and duly and validly authorized, executed and delivered by the Company and (assuming the Indenture has been duly authorized, executed and delivered by the Trustee) constitutes a valid and binding agreement of the Company, enforceable in accordance with its terms; (v) The Offered Securities are in due and proper form and have been duly and validly authorized by all necessary corporate action and, when executed and authenticated as specified in the Indenture and delivered against payment of the consideration therefor determined in accordance with the Underwriting Agreement, will be valid and binding obligations of the Company, enforceable in accordance with their terms, and each holder of the Offered Securities will be entitled to the benefits of the Indenture; (vi) The Company possesses all permits, approvals, franchises and other rights from federal aviation, aeronautical, communications, transportation and shipping authorities which are requisite for the conduct of its business as described in the Prospectus or for the actions contemplated by the Underwriting Agreement and the offering contemplated by the Prospectus; and the actions contemplated by the Underwriting Agreement, the Indenture and the offering contemplated by the Prospectus, are not in violation of any federal statute or regulation relating to aviation, aeronautics, communications, transportation or shipping; (vii) I have reviewed or caused to be reviewed by attorneys under my supervision the Registration Statement, the Prospectus and each amendment and supplement thereto (including the documents incorporated by reference) and have no reason to believe that, as of their respective effective or issue dates, or as of the Closing Time, either the Registration Statement or the Prospectus or any such amendment or supplement (or any such documents incorporated by reference) contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (viii) I do not know of any statute or regulation or legal or governmental proceeding required to be described in the Prospectus which is not described as required, nor of any contract or document of a character required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement which is not described and filed as required; and the descriptions in the Registration Statement and the Prospectus of the contracts and other documents therein described are accurate and fairly present the information required to be shown; (ix) The execution and delivery by the Company of the Underwriting Agreement and the consummation by the Company of the transactions herein and therein contemplated and compliance with the terms of the Underwriting Agreement do not and will not conflict with or result in a breach of any of the terms of the Certificate of Incorporation or By-laws of the Company, and will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan, credit or note agreement, lease or other agreement or instrument material to the Company to which the Company is a party or by which it or any or its properties are bound, or any existing applicable law, rule, regulation, judgment, order or decree of any government, governmental instrumentality or court, having jurisdiction over the Company or any of its properties; (x) No authorization, approval, consent or license of any regulatory body or authority (other than under the 1933 Act, the 1939 Act and the securities or Blue Sky laws of the various states) is required for the valid authorization, issuance, sale and delivery of the Offered Securities as herein contemplated or the valid authorization, execution, delivery and performance by the Company of the Underwriting Agreement and the Indenture or the consummation by the Company of the transactions contemplated herein or therein, or, if so required, all such authorizations, approvals, consents and licenses, specifying the sale, have been obtained and are in full force and effect; (xi) The Registration Statement has become effective under the 1933 Act and, to the best of my knowledge, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the 1933 Act; the Registration Statement and the Prospectus, and each amendment or supplement thereto (except for the financial statements and schedules included therein, as to which I express no opinion), comply as to form in all material respects to the requirements of the 1933 Act and the 1933 Act Regulations and, as to documents incorporated therein, to the requirements of the 1934 Act and the 1934 Act Regulations in effect at the time such documents were filed with the Commission; and (xii) The Underwriting Agreement has been duly and validly authorized, executed and delivered by the Company and constitutes a valid and binding agreement of the Company, enforceable in accordance with its terms. My opinions as to the enforceability of the Indenture, the Offered Securities and Underwriting Agreement set forth in subparagraphs (iv), (v) and (xii) above, are limited by bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting enforcement of creditors' rights or by general equity principles and subject to any principles of public policy limiting the right to enforce the indemnification and contribution provisions contained in Sections 6 and 7 of the Underwriting Agreement. In rendering the foregoing opinion, we have assumed that (i) all signatures on all documents examined by us are genuine and that where any such signature (other than a signature purporting to have been made on behalf of the Company) purports to have been made in a corporate, governmental, fiduciary or other capacity, the person who affixed such signature had the due authority to do so, (ii) certain factual matters contained in certificates of public officials are accurate, true and correct, and (iii) photostat copies of such documents, records and certificates conform to the originals. This opinion is intended solely for the benefit of the Underwriters and is not to be relied on by, and no copies of it are to be delivered to, any other person without my prior written consent, except that Underwriters' counsel may rely upon this opinion as to all matters of Tennessee law or Delaware corporate law in rendering its opinion of even date herewith. I am not assuming any professional responsibility to any other person by rendering this opinion. It is understood that this opinion speaks as of the date given, notwithstanding any delivery as contemplated above on any other date. Very truly yours, Schedule I to Underwriting Agreement Dated: ________, ______ FEDERAL EXPRESS CORPORATION Debt Securities Total Aggregate Principal Amount to be Underwriters Purchased ------------ --------- $ Schedule II to Underwriting Agreement Dated: ________, ______ FEDERAL EXPRESS CORPORATION [Title of Debt Securities] To: Federal Express Corporation 2005 Corporate Avenue Memphis, Tennessee 38132 Re: Underwriting Agreement dated ______________, _______ Title of Offered Securities:__ % Debt Securities due ____________, ______ Current ratings: Interest rate: % Interest payable: ____________ and ____________ commencing ___________, _____ Public offering price: 100%, plus accrued interest from ___________, ______ Closing date, time and location: ____________, ______, 9:00 A.M., New York City time Davis Polk & Wardwell 450 Lexington Avenue New York, NY 10017 Location for checking Offered Securities: New York, New York Listing requirement: None Redemption or repayment provisions: Sinking fund requirements: Number of Option Securities, if any, that may be purchased by the Underwriters: Other terms and conditions: The Offered Securities will be issued in fully registered, book-entry only form through the facilities of The Depository Trust Company, and each issue of the Offered Securities shall be represented by a separate global note. Exceptions, if any, to Section 3(i) of the Underwriting Agreement: None [UNDERWRITERS] By: By: ______________________________ Name: Title: Acting on behalf of themselves and the other named Underwriters Accepted: FEDERAL EXPRESS CORPORATION By: _______________________________ Name: Title: EX-1.D 4 Exhibit 1(d) Underwriting Agreement Dated as of ______________, 199__ between FEDERAL EXPRESS CORPORATION and [UNDERWRITERS] PREFERRED STOCK TABLE OF CONTENTS Page ---- SECTION 1. Representations & Warranties of the Company.............. 2 SECTION 2. Purchase and Sale........................................ 6 SECTION 3. Covenants of the Company................................. 7 SECTION 4. Payment of Expenses...................................... 9 SECTION 5. Conditions of Underwriters' Obligations.................. 10 SECTION 6. Indemnification.......................................... 13 SECTION 7. Contribution............................................. 14 SECTION 8. Representations, Warranties and Agreements to Survive Delivery.................................... 15 SECTION 9. Termination of Agreement................................. 15 SECTION 10. Default by One Underwriter............................... 16 SECTION 11. Notices.................................................. 16 SECTION 12. Parties.................................................. 17 SECTION 13. Governing Law............................................ 17 Exhibit A Pricing Information Exhibit B Opinion of the Company Schedule I Underwriters' Commitments Schedule II Terms and Conditions FEDERAL EXPRESS CORPORATION Preferred Stock UNDERWRITING AGREEMENT ____________, 199__ [UNDERWRITERS] [ADDRESS] Ladies and Gentlemen: Federal Express Corporation, a Delaware corporation (the "Company"), proposes to issue and sell to the underwriters named in Schedule I hereto ____________________ shares of its Preferred Stock (the "Preferred Stock") in one or more offerings on the terms and conditions stated herein and in Schedule II hereto (the "Offered Preferred Stock"). As used herein, unless the context otherwise requires, the term "Underwriters" shall mean the firm or firms named as Underwriter or Underwriters in Schedule I and the term "you" shall mean the Underwriter or Underwriters, if no underwriting syndicate is purchasing the Offered Preferred Stock, or the representative or representatives of the Underwriters, if an underwriting syndicate is purchasing the Offered Preferred Stock, as indicated in Schedule I. The Company has filed with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-3 (No. 33-________) for the registration of certain preferred stock and other securities, including the Offered Preferred Stock, under the Securities Act of 1933, as amended (the "1933 Act"), and the offering thereof from time to time in accordance with Rule 415 of the rules and regulations of the Commission under the 1933 Act (the "1933 Act Regulations"). Such registration statement has been declared effective by the Commission. The Company has, pursuant to Rule 424 under the 1933 Act, filed with, or transmitted for filing to, or shall within the required period of time hereafter file with or transmit for filing to, the Commission a prospectus supplement (the "Prospectus Supplement") specifically relating to the Offered Preferred Stock, together with a revised and restated prospectus relating to preferred stock covered by the above-referenced registration statement. The term "Registration Statement" refers to such registration statement in the form in which it became effective, including the exhibits thereto and the documents incorporated by reference therein, as amended to the date hereof. The term "Basic Prospectus" means the above-referenced revised and restated prospectus relating to Preferred Stock. The term "Prospectus" means the Basic Prospectus supplemented by the Prospectus Supplement. The term "Preliminary Prospectus" means a preliminary prospectus supplement specifically relating to the Offered Preferred Stock together with the Basic Prospectus. As used herein, the terms "Basic Prospectus," "Prospectus" and "Preliminary Prospectus" shall include in each case the documents, if any, incorporated by reference therein. The terms "supplement" and "amendment" or "amend" as used herein shall include all documents deemed to be incorporated by reference in the Prospectus that have been filed subsequent to the date of the Basic Prospectus by the Company with the Commission pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"). If the Company has filed an abbreviated statement to register additional shares of Preferred Stock pursuant to Rule 462(b) under the 1933 Act, then any reference herein to the term "Registration Statement" shall include such Rule 462(b) registration statement. SECTION 1. Representations and Warranties of the Company. (a) The Company represents and warrants to you and to each Underwriter named in Schedule I, as of the date hereof, as follows: (i) Due Incorporation and Qualification. The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware, has the corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus; and is duly qualified to do business and is in good standing in each jurisdiction in which such qualification is required, except where the failure to so qualify would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise. (ii) Subsidiaries. Each subsidiary of the Company which is a significant subsidiary as defined in Rule 405 of Regulation C of the 1933 Act Regulations (each a "Significant Subsidiary") has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, except where the failure to so qualify would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise; and all of the issued and outstanding capital stock of each Significant Subsidiary has been duly authorized and validly issued, is fully paid and non-assessable and, except for directors' qualifying shares (except as otherwise stated in the Registration Statement) , is owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity. (iii) Registration Statement and Prospectus. At the time the Registration Statement became effective, the Registration Statement complied, and as of the date hereof does comply, in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations and the rules and regulations of the Commission promulgated thereunder. The Registration Statement, at the time it became effective, did not, and at each time thereafter at which any amendment to the Registration Statement becomes effective, will not, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Prospectus, as of the date hereof, does not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that the representations and warranties in this subsection shall not apply to statements in or omissions from the Registration Statement or Prospectus made in reliance upon and in conformity with information furnished to the Company in writing by an Underwriter expressly for use in the Registration Statement or Prospectus or to those parts of the Registration Statement which constitute Statements of Eligibility and Qualification of Trustees (Form T-1) under the 1939 Act. No stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been initiated or threatened by the Commission. (iv) Incorporated Documents. The documents incorporated by reference in the Prospectus, at the time they were or hereafter are filed with the Commission, complied and will comply in all material respects with the requirements of the 1934 Act and the rules and regulations promulgated thereunder (the "1934 Act Regulations") , and, when read together and with the other information in the Prospectus, did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were or are made, not misleading. (v) Accountants. The accountants who certified the financial statements included or incorporated by reference in the Prospectus are independent public accountants as required by the 1933 Act and the 1933 Act Regulations. (vi) Financial Statements. The financial statements of the Company included or incorporated by reference in the Prospectus and the Registration Statement present fairly the financial position of the Company as of the dates thereof and the results of operations, changes in common stockholders' investment and cash flows of the Company, for the respective periods covered thereby, all in conformity with generally accepted accounting principles applied on a consistent basis throughout the entire period involved; and the financial schedules included or incorporated by reference in the Registration Statement meet the requirements of the 1933 Act Regulations or the 1934 Act Regulations, as applicable. (vii) Material Changes or Material Transactions. Except as stated in the Prospectus, subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus, the Company has not incurred any liabilities or obligations, direct or contingent, or entered into any transactions which are material to the Company, and there has not been any material adverse change in the capital stock or short-term debt, or any material increase in long- term debt of the Company, or any material adverse change, or any development involving a prospective material adverse change, in the condition (financial or other) , business, prospects, net worth or results of operations of the Company. (viii) No Defaults; Regulatory Approvals. Neither the Company nor any of its subsidiaries is in violation of its charter or in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which it is a party or by which it or any of them or their properties may be bound. The execution and delivery of this Agreement and the consummation of the transactions contemplated herein and in the resolution of the Company's Board of Directors setting forth the terms of the Offered Preferred Stock (the "Series Resolution") have been duly authorized by all necessary corporate action and executed by the Company and will not conflict with or constitute a breach of, or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which the Company or any such subsidiary is a party or by which it or any of them may be bound or to which any of the property or assets of the Company or any such subsidiary is subject, which conflict, breach or default would have, individually or in the aggregate with any other such instances, a material adverse effect on the condition (financial or other) , business, prospects, net worth or results of operations of the Company and its subsidiaries considered as one entity, nor will such action result in any violation of the provisions of the charter or by-laws of the Company or any law, administrative regulation or administrative or court order or decree currently in effect or in effect at the time of execution and delivery of this Agreement and applicable to the Company or any of its subsidiaries. No consent, approval, authorization, order or decree of any court or governmental agency or body is required for the consummation by the Company of the transactions contemplated by this Agreement, except such as may be required under the 1933 Act, the 1933 Act Regulations or state securities or Blue Sky laws and the filing of the Series Resolution in Delaware. (ix) Legal Proceedings; Contracts. Except for matters described in the Prospectus (as to which the Company can express no opinion at this time concerning the Company's liability (if any) or the effect of any adverse determination upon the business, condition (financial or otherwise) or operations of the Company) , there is no pending, or to the best knowledge of any financial officer of the Company, threatened action or proceeding before any court or administrative agency which individually (or in the aggregate in the case of any group of related lawsuits) is expected to have a material adverse effect on the financial condition of the Company. (x) Compliance with Laws. The Company's business and operations comply in all material respects with all laws and regulations applicable thereto and there are no known, proposed or threatened changes in any laws or regulations which would have a material adverse effect on the Company or the manner in which it conducts its business. The Company possesses all valid and effective certificates, licenses and permits required to conduct its business as now conducted, except for instances which individually or in the aggregate do not, or will not, have a material adverse effect on the condition (financial or other) , business, prospects or results of operations of the Company. (xi) Capital Stock. The authorized capital stock of the Company and the provisions of the Series Resolution conform as to legal matters to the descriptions thereof contained in the Prospectus. (xii) Validity of the Offered Preferred Stock. The Offered Preferred Stock has been duly authorized and, when issued and delivered in accordance with the terms of this Agreement, will be validly issued, fully paid and non- assessable, and the issuance of such shares will not be subject to any preemptive or similar rights. (xiii) Registration Rights. There are no contracts or agreements between the Company and any person granting such person the right to require the Company to file a registration statement under the 1933 Act with respect to any equity securities of the Company or to require the Company to include such securities with the Preferred Stock registered pursuant to the Registration Statement. (b) Additional Certifications. Any certificate signed by any officer of the Company and delivered to you or your counsel in connection with an offering of the Offered Preferred Stock shall be deemed a representation and warranty by the Company to each Underwriter participating in such offering as to the matters covered thereby on the date of such certificate unless subsequently amended or supplemented subsequent thereto. SECTION 2. Purchase and Sale. (a) Subject to the terms and conditions set forth herein and in Schedule II, if any, the Company agrees to sell to each Underwriter, and each Underwriter agrees, severally and not jointly, to purchase from the Company, at the purchase price specified in Exhibit A hereto, the respective numbers of shares of Offered Preferred Stock set forth opposite the name of such Underwriter in Schedule I. It is understood that you propose to offer the Offered Preferred Stock for sale to the public as set forth in the Prospectus. (b) Subject to the terms and conditions herein set forth, the Company may grant, if so provided in Schedule II hereto, an option to the Underwriters, severally and not jointly, to purchase additional shares of Preferred Stock to cover over-allotments, if any (the "Option Shares"). If Schedule II so provides, the Underwriters may purchase up to the amount of Option Shares set forth therein at the same price per share as is applicable to the Offered Preferred Stock. As used herein, the term "Offered Preferred Stock" shall include Option Shares. Such option, if granted, will expire 30 days after the date of this Agreement, and may be exercised in whole or in part from time to time only for the purpose of covering over-allotments which may be made in connection with the offering of the Offered Preferred Stock upon notice by you to the Company setting forth the number of Option Shares as to which the several Underwriters are then exercising the option and the time and date of payment and delivery for such Option Shares. Any such time and date of delivery shall be determined by you, but shall not be later than four business days and not be earlier that two business days after the exercise of said option, nor in any event prior to Closing Time, unless otherwise agreed upon by you and the Company. If the option is exercised as to all or any portion of the Option Shares, each Underwriter, acting severally and not jointly, will purchase that proportion of the total number of Option Shares then being purchased which the number of shares of Offered Preferred Stock each such Underwriter has agreed to purchase as set forth in Schedule II bears to the total number of shares of Offered Preferred Stock, subject to such adjustments as you shall make to eliminate any sales or purchases of fractional shares of Preferred Stock. (c) Payment of the purchase price for any Offered Preferred Stock to be purchased by the Underwriters shall be made to the Company at either the Company's offices in Memphis, Tennessee or the office of Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017, or at such other place as shall be agreed upon by you and the Company, at 9:00 A.M., New York City time, on the third business day (unless postponed in accordance with the provisions of Section 10) following the date hereof or at such other date, time or location specified in Schedule II, or as otherwise shall be agreed upon by you and the Company (such time and date being referred to as a "Closing Time"). Certificates for the Offered Preferred Stock shall be in definitive form and registered in such names and in such denominations as you shall request in writing at least two business days prior to the Closing Time. Delivery of the Offered Preferred Stock shall be made to you as specified in Schedule II against payment by you of the purchase price thereof to the Company (or such other person as the Company may direct) by wire transfer of immediately available funds. Such Offered Preferred Stock will be made available for examination and packaging by you in New York, New York, on or before the first business day prior to the Closing Time or at such other time and place specified in Schedule II. (d) As compensation to you for your commitments and obligations hereunder in respect of the Offered Preferred Stock, including your undertakings to distribute Offered Preferred Stock, the Company will pay to you the amount set forth in Exhibit A as the underwriting discounts and commissions. Such payment shall be made simultaneously with the payment by you of the purchase price of the Offered Preferred Stock as specified in Section 2(b) hereof. Payment of such compensation shall be made by wire transfer of immediately available funds. SECTION 3. Covenants of the Company. The Company covenants with each of you, and with each Underwriter participating in the offering as follows: (a) Prospectus Supplement. The Company has prepared a Preliminary Prospectus, and immediately following the execution of this Agreement, the Company will prepare a Prospectus Supplement in connection with the offering of the Offered Preferred Stock. The Company will promptly transmit copies of the Prospectus Supplement to the Commission for filing pursuant to Rule 424 of the 1933 Act Regulations. (b) Notice of Certain Events. The Company will notify you promptly (i) of the effectiveness of any amendment to the Registration Statement, (ii) of the transmittal to the Commission for filing of any supplement to the Prospectus or any document to be filed pursuant to the 1934 Act which will be incorporated by reference in the Prospectus, (iii) of the receipt of any comments from the Commission with respect to the Registration Statement, the Prospectus or the Prospectus Supplement relating in any way to the offer and sale of the Offered Preferred Stock, (iv) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information, and (v) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose. (c) Notice of Certain Proposed Filings. The Company will give you notice of its intention to file or prepare any amendment to the Registration Statement or any amendment or supplement to the Prospectus, whether by the filing of documents pursuant to the 1934 Act, the 1933 Act or otherwise, and will furnish you with copies of any such amendment or supplement or other documents proposed to be filed or prepared a reasonable time in advance of such proposed filing or preparation, as the case may be. (d) Copies of the Registration Statement and the Prospectus. The Company will deliver to you as many signed and conformed copies of the Registration Statement (as originally filed) and of each amendment thereto (including exhibits filed therewith or incorporated by reference therein and documents incorporated by reference in the Prospectus) as you may reasonably request. The Company will furnish to you as many copies of the Prospectus (as amended or supplemented) as you shall reasonably request so long as you are required to deliver a Prospectus in connection with sales or solicitations of offers to purchase the Offered Preferred Stock. (e) Revisions of Prospectus -- Material Changes. If at any time when the Prospectus is required by the 1933 Act to be delivered in connection with sales of the Offered Preferred Stock any event shall occur or condition exist as a result of which it is necessary, in the reasonable opinion of counsel for the Company, to further amend or supplement the Prospectus in order that the Prospectus will not include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, or if it shall be necessary, in the reasonable opinion of such counsel, at any such time to amend or supplement the Registration Statement or the Prospectus in order to comply with the requirements of the 1933 Act or the 1933 Act Regulations the Company will promptly prepare and file with the Commission such amendment or supplement, whether by filing documents pursuant to the 1934 Act, the 1933 Act or otherwise, as may be necessary to correct such untrue statement or omission or to make the Registration Statement and Prospectus comply with such requirements. (f) Earnings Statements. The Company will make generally available to its security holders as soon as practicable after the close of the period covered thereby, an earnings statement (in form complying with the provisions of Rule 158 under the 1933 Act) covering each twelve-month period beginning, in each case, not later than the first day of the Company's fiscal quarter next following the "effective date" (as defined in such Rule 158) of the Registration Statement with respect to each sale of Offered Preferred Stock. (g) Blue Sky Qualifications. The Company will endeavor, in cooperation with you, to qualify the Offered Preferred Stock for offering and sale under the applicable securities laws of such states and other jurisdictions of the United States as the Underwriters may designate, and will maintain such qualifications in effect for so long as may be required for the distribution of the Offered Preferred Stock; provided, however, that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or to subject itself to taxation as doing business in any jurisdiction in which it is not otherwise required to be so qualified. The Company will file such statements and reports as may be required by the laws of each jurisdiction in which the shares of Offered Preferred Stock have been qualified as provided above. (h) 1934 Act Filings. The Company, during the period when the Prospectus is required to be delivered under the 1933 Act, will file promptly all documents required to be filed with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act. SECTION 4. Payment of Expenses. The Company will pay all expenses incident to the performance of its obligations under this Agreement, including: (i) the preparation and filing of the Registration Statement and all amendments thereto, the Preliminary Prospectus, if any, and the Prospectus and any amendments or supplements thereto; (ii) the filing of this Agreement; (iii) the preparation, issuance, printing and delivery of the Offered Preferred Stock; (iv) the reasonable fees and disbursements of the Company's accountants and counsel, and of the transfer agent; (v) the qualification of the Offered Preferred Stock under securities laws in accordance with the provisions of Section 3(g), including filing fees and the reasonable fees and disbursements of counsel to the Underwriters in connection therewith and in connection with the preparation of any Blue Sky Survey and any Legal Investment Survey; and (vi) the printing and delivery to the Underwriters in quantities as hereinabove stated of copies of the Registration Statement and any amendments thereto, and of the Prospectus and any amendments or supplements thereto. If this Agreement is terminated by you in accordance with the provisions of Section 5 or clause (i) of Section 9 hereof, the Company shall reimburse upon demand the Underwriters for all of their out-of-pocket expenses, including the reasonable fees and disbursements of counsel for the Underwriters that shall have been incurred by you in connection with the proposed purchase and sale of the Offered Preferred Stock. SECTION 5. Conditions of Underwriters' Obligations. The several obligations of the Underwriters to purchase the Offered Preferred Stock pursuant to this Agreement will be subject at all times to the accuracy of the representations and warranties on the part of the Company herein, to the accuracy of the statements of the Company's officers made in any certificate furnished pursuant to the provisions hereof, to the performance and observance by the Company of all covenants and agreements contained herein, or in Schedule II hereto, on its part to be performed and observed and to the following additional conditions precedent: (a) Stop Order; Ratings Change; etc. At the Closing Time, (i) no stop order suspending the effectiveness of the Registration Statement shall have been issued under the 1933 Act or proceedings therefor initiated or threatened by the Commission, (ii) the rating assigned as of the date of this Agreement by any "nationally recognized statistical rating organization," as such term is defined for purposes of Rule 436(g) under the 1933 Act Regulations, to any debt securities of the Company shall not have been lowered since the execution of this Agreement nor shall any such rating organization have publicly announced that it has placed any debt securities of the Company on what is commonly termed a "watch list" for possible downgrading, and (iii) there shall not have come to your attention any facts that would cause you to believe that the Prospectus, including the Prospectus Supplement, at the time it was required to be delivered to a purchaser of the Offered Preferred Stock, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances existing at such time, not misleading. (b) Legal Opinions. At the Closing Time, you shall have received the following documents: (1) Opinion of Company Counsel. The opinion of the Executive Vice President, General Counsel and Secretary of the Company or any Vice President in the Legal and Regulatory Division of the Company, dated as of such date, in form and substance reasonably satisfactory to you, to the effect as set forth in Exhibit B. (2) Opinion of Counsel to the Underwriters. The opinion of __________________________________, counsel to the Underwriters, with respect to such matters as you may reasonably request. (c) Officer Certificate. At the Closing Time, there shall not have been, since the respective dates as of which information is given in the Registration Statement and the Prospectus, any material adverse change in the condition (financial or otherwise) of the Company, or in the earnings or business affairs of the Company; and you shall have received a certificate of any Vice President of the Company, dated as of the Closing Time, to the effect (i) that there has been no such material adverse change, (ii) that the other representations and warranties of the Company contained in Section 1 are true and correct with the same force and effect as though expressly made at and as of the date of such certificate, except to the extent that such representations and warranties expressly relate to an earlier date or later date (in which case such representations and warranties are true and correct on and as of such earlier date or will be true and correct on and as of such later date, as the case may be), (iii) that the Company has made or caused to be made any required filing of the Prospectus pursuant to Rule 424(b) in the manner and within the time period required by Rule 424(b), and (iv) that the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the date of such certificate. The officer signing and delivering this certificate may rely upon the best of his or her knowledge as to proceedings threatened. (d) Comfort Letter. At the time of the execution of this Agreement and at the Closing Time, you shall have received a letter from Arthur Andersen LLP or their successors as the Company's independent accountants (the "Independent Accountants"), dated as of the date hereof and of the Closing Time, as the case may be, in form and substance satisfactory to you to the effect that: (i) they are independent public accountants within the meaning of the 1933 Act and the 1933 Act Regulations; (ii) in their opinion the Company's financial statements and schedules included or incorporated by reference in the Registration Statement and Prospectus and covered by their reports included or incorporated therein comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the 1933 Act Regulations or the 1934 Act and the 1934 Act Regulations, as the case may be; (iii) they have conducted reviews of the unaudited interim consolidated financial information of the Company included in the Company's Quarterly Reports on Form 10-Q incorporated in the Registration Statement and Prospectus in compliance with the standards for such reviews promulgated by the American Institute of Certified Public Accountants; (iv) on the basis of a reading of the financial statements and schedules of the Company included or incorporated in the Prospectus and the Registration Statement, and the latest available unaudited interim financial statements of the Company, inquiries of officials of the Company responsible for financial and accounting matters, and other specified procedures and inquiries, nothing has come to their attention that caused them to believe that: (A) the unaudited financial statements of the Company included or incorporated in the Prospectus and the Registration Statement do not comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the 1933 Act Regulations or the 1934 Act and the 1934 Act Regulations thereunder, as the case may be, or that such unaudited financial statements are not presented fairly in conformity with generally accepted accounting principles; (B) with respect to the period subsequent to the date of the most recent financial statements incorporated in the Registration Statement and the Prospectus, as of a specified date not more than five business days prior to the date of delivery of such letter, there has been any change in the common or preferred stock or long-term debt of the Company or, as of such date, there has been any decrease in assets or common stockholders' investment, in each case as compared with amounts shown in the most recent consolidated balance sheet of the Company included or incorporated in the Registration Statement and the Prospectus, except in each case for changes or decreases which the Prospectus discloses have occurred or may occur or which are described in such letter; or (C) for the period from the date of the most recent financial statements incorporated in the Registration Statement and the Prospectus to such specified date, there was any decrease in operating revenues, operating income, income before taxes or net income of the Company in each case as compared with the comparable period of the preceding year, except in each case for decreases which the Prospectus discloses have occurred or may occur or which are described in such letter; and (v) in addition to their audit referred to in their reports included or incorporated by reference in the Registration Statement and the Prospectus and the reviews, inquiries and procedures referred to in clauses (iii) and (iv) above, such letter shall state that Arthur Andersen LLP has performed other specified procedures, with respect to certain numerical data and information included or incorporated in the Registration Statement and the Prospectus, as are requested by an Underwriter and specified in such letter and have found such data and information to be in agreement with the accounting records of or analyses prepared by the Company. (e) Other Documents. At the Closing Time, counsel for the Underwriters shall have been furnished with such documents and opinions as such counsel may reasonably require for the purpose of enabling such counsel to pass upon the issuance and sale of Offered Preferred Stock as herein contemplated and related proceedings, or in order to evidence the accuracy and completeness of any of the representations and warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Company in connection with the issuance and sale of Offered Preferred Stock as herein contemplated shall be satisfactory in form and substance to you. SECTION 6. Indemnification. (a) The Company agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of Section 15 of the 1933 Act as follows: (i) against any and all loss, liability, claim, damage and expense whatsoever, arising out of any untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), or the omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of or based upon any untrue statement of a material fact contained in the Prospectus (or any amendment or supplement thereto) or the omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (ii) against any and all loss, liability, claim, damage and expense whatsoever, to the extent of the aggregate amount paid in settlement of any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever arising out of or based upon any such untrue statement or omission, if such settlement is effected with the written consent of the Company; and (iii) against any and all expense whatsoever, reasonably incurred in investigating, preparing or defending against any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever arising out of or based upon any such untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above; provided, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by any Underwriter expressly for use in the Registration Statement (or any amendment thereto) or the Prospectus (or any amendment or supplement thereto), or made in reliance upon the Statements of Eligibility and Qualification of Trustees (Form T-1) under the 1939 Act filed as exhibits to the Registration Statement; and provided, further, that the foregoing indemnity agreement, with respect to any Preliminary Prospectus shall not inure to the benefit of any Underwriter from whom the person asserting any such losses, claims, damages or liabilities purchased Offered Preferred Stock, or any person controlling such Underwriter, if a copy of the Prospectus (as then amended or supplemented if the Company shall have furnished any amendments or supplements thereto) was not sent or given by or on behalf of such Underwriter to such person, if required by law so to have been delivered, at or prior to the written confirmation of the sale of the Offered Preferred Stock to such person, and if the Prospectus (as so amended or supplemented) would have cured the defect giving rise to such losses, claims, damages or liabilities. (b) Each Underwriter severally agrees to indemnify and hold harmless the Company, its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of this Section, as incurred, but only with respect to untrue statements or omissions made in the Registration Statement (or any amendment thereto) or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by such Underwriters through you expressly for use in the Registration Statement (or any amendment thereto) or the Prospectus (or any amendment or supplement thereto). (c) Each indemnified party shall give prompt notice to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability which it may have otherwise than on account of this indemnity agreement. An indemnifying party may participate at its own expense in the defense of such action. In no event shall the indemnifying parties be liable for the fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. SECTION 7. Contribution. In order to provide for just and equitable contribution in circumstances in which the indemnity agreement provided for in Section 6 is for any reason held to be unenforceable by the indemnified parties although applicable in accordance with its terms, the Company and the Underwriters of each offering of Offered Preferred Stock shall contribute to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by said indemnity agreement incurred by the Company and one or more of the Underwriters in respect of such offering, as incurred, in such proportions that the Underwriters are responsible for that portion represented by the percentage that the underwriting discount appearing on the cover page of the Prospectus in respect of such offering bears to the initial public offering price appearing thereon and the Company is responsible for the balance; provided, however, that no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section, each person, if any, who controls an Underwriter within the meaning of Section 15 of the 1933 Act shall have the same rights to contribution as such Underwriter, and each director of the Company, each officer of the Company who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act shall have the same rights to contribution as the Company. SECTION 8. Representations, Warranties and Agreements to Survive Delivery. All representations, warranties and agreements contained in this Agreement, or contained in certificates of officers of the Company submitted pursuant hereto, shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of any Underwriter or controlling person, or by or on behalf of the Company, and shall survive each delivery of and payment for any of the Offered Preferred Stock. SECTION 9. Termination of Agreement. You may terminate this Agreement, immediately upon notice to the Company, at any time prior to the Closing Time if: (i) there has been, since the date hereof or since the respective dates as of which information is given in the Registration Statement, any material adverse change in the condition, financial or otherwise, or in the earnings or business affairs of the Company, (ii) there shall have occurred any material adverse change in the financial markets in the United States or any outbreak or escalation of hostilities or other national or international calamity or crisis, the effect of which shall be such as to make it, in your judgment, impracticable to market the Offered Preferred Stock or enforce contracts for the sale of the Offered Preferred Stock, or (iii) trading in any securities of the Company shall have been suspended by the Commission or a national securities exchange, or if trading generally on either the American Stock Exchange or the New York Stock Exchange shall have been suspended, or minimum or maximum prices for trading shall have been fixed, or maximum ranges for prices for securities shall have been required, by either of said exchanges or by order of the Commission or any other governmental authority, or if a banking moratorium shall have been declared by either federal or New York authorities. In the event of any termination of this Agreement, the covenant set forth in Section 3(f) hereof, the provisions of Section 4 hereof, the indemnity and contribution agreements set forth in Sections 6 and 7 hereof, and the provisions of Sections 8 and 13 hereof shall remain in effect. SECTION 10. Default by One Underwriter. If any Underwriter shall fail at the Closing Time to purchase the Offered Preferred Stock which it is obligated to purchase hereunder (the "Defaulted Securities"), and the aggregate amount of Defaulted Securities is not more than one-tenth of the aggregate amount of the Offered Preferred Stock to be purchased on such date, the other Underwriters shall be obligated severally in the proportions that the amount of the Offered Preferred Stock set forth opposite their respective names in Schedule I hereto bears to the aggregate amount of Offered Preferred Stock set forth opposite the names of all such non-defaulting underwriters to purchase the Defaulted Securities; provided that in no event shall the amount of Defaulted Securities that any Underwriter has agreed to purchase pursuant to this Agreement be increased by an amount in excess of one-ninth of such amount of Offered Preferred Stock without the written consent of such Underwriter. If the aggregate amount of Defaulted Securities is more than one-tenth of the aggregate amount of the Offered Preferred Stock to be purchased on the Closing Date, and arrangements satisfactory to the Underwriters and the Company for the purchase of such Defaulted Securities are not made within 36 hours after such default, this Agreement shall terminate without liability on the part of any non-defaulting Underwriters or the Company. No action taken pursuant to this Section shall relieve a defaulting Underwriter from liability in respect of its default under this Agreement. In the event of any such default which does not result in a termination of this Agreement, either the non-defaulting Underwriters or the Company shall have the right to postpone the Closing Time for a period not exceeding seven days in order to effect any required changes in the Registration Statement or Prospectus or in any other documents or arrangements. SECTION 11. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed, delivered by Federal Express service or transmitted by any facsimile communication. Notices to the Underwriters shall be directed to _______________________________________, with copies thereof directed to _________________________________________ ________________________________________________. Notices to the Company shall be directed to it at 2007 Corporate Avenue, Memphis, Tennessee 38132 (if by Federal Express service) or P.O. Box 727, Memphis, Tennessee 38194 (if by mail), Attention: Vice President and Treasurer, with copies thereof directed to the Legal Department of the Company at 1980 Nonconnah Drive, Memphis, Tennessee 38132 (if by Federal Express Service) or P.O. Box 727, Memphis, Tennessee 38194 (if by mail), Attention: Managing Director - Securities and Corporate Law. SECTION 12. Parties This Agreement shall inure to the benefit of and be binding upon you and the Company and any Underwriter who becomes a party hereto and their respective successors. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the parties hereto and their respective successors and the controlling persons and officers and directors referred to in Sections 6 and 7 and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the parties hereto their respective successors and said controlling persons and officers and directors and their heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Offered Preferred Stock from any Underwriter shall be deemed to be a successor by reason merely of such purchase. SECTION 13. Governing Law. This Agreement and the rights and obligations of the parties created hereby and thereby shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed in such state. Any suit, action or proceeding brought by the Company against an Underwriter in connection with or arising under this Agreement shall be brought solely in the state or federal court of appropriate jurisdiction located in the Borough of Manhattan, The City of New York. If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument along with all counterparts will become a binding agreement between you and the Company in accordance with its terms. Very truly yours, FEDERAL EXPRESS CORPORATION By: _________________________________ Name: Title: CONFIRMED AND ACCEPTED, as of the date first above written: [UNDERWRITERS] By: By: ___________________________________ Name: Title: Acting on behalf of themselves and the other named Underwriters Exhibit A FEDERAL EXPRESS CORPORATION Preferred Stock Underwriting Purchase Number of Shares to Discounts and Designation Price be Purchased Commissions - -------------- ---------- --------------------- --------------- $ $ % Exhibit B Form of Opinion of Company Counsel ____________, ______ [UNDERWRITERS] Re: Federal Express Corporation Preferred Stock (the "Offered Preferred Stock") Ladies and Gentlemen: This opinion is directed to the Underwriters pursuant to Section 5(b)(1) of the Underwriting Agreement dated ________________, ______ (the "Underwriting Agreement"), among the Company and you, with respect to the offer and sale of the Offered Preferred Stock. All terms defined or used in the Underwriting Agreement have the same meaning when used herein, unless otherwise noted. I am Vice President ________ of the Company and have acted as such in connection with the Offered Preferred Stock and the Underwriting Agreement. I or attorneys under my supervision have made such examination and investigation as we have deemed necessary in order to give the following opinion. Based on the foregoing, it is my opinion that: (i) The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has full corporate power and authority under such laws to own its properties and to conduct its business as described in the Prospectus; the Company is duly qualified to do business and is in good standing in each jurisdiction in which it owns or leases real property or in which the conduct of its business requires such qualification, except for such instances which in the aggregate will not have a material adverse effect on the Company; (ii) Each subsidiary of the Company which is a significant subsidiary as defined in Rule 405 of Regulation C of the 1933 Act Regulations (each a "Significant Subsidiary") has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has corporate power and authority to own, lease and operate its properties and conduct its business as described in the Registration Statement, and, to the best of my knowledge, is duly qualified to do business and is in good standing in each jurisdiction in which such qualification is required, except where the failure to so qualify would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise; all of the issued and outstanding capital stock of each Significant Subsidiary has been duly authorized and validly issued and is fully paid and non-assessable, and all of such capital stock, except for directors' qualifying shares, is owned by the Company, directly or through subsidiaries, free and clear of any mortgage, pledge, lien, encumbrance, claim or equity; (iii) Except for matters described in the Prospectus (as to which I can express no opinion at this time concerning the Company's liability (if any) or the effect of any adverse determination upon the business, condition (financial or otherwise) or operations of the Company), there is no pending, or to my knowledge, threatened action or proceeding before any court or administrative agency which individually (or in the aggregate in the case of any group of related lawsuits) is expected to have a material adverse effect on the financial condition of the Company; (iv) The authorized capital stock of the Company conforms as to legal matters to the description thereof contained in the Prospectus. (v) The Offered Preferred Stock has been duly authorized and, when issued and delivered in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable, and the issuance of such shares will not be subject to any preemptive or similar rights. (vi) The Company possesses all permits, approvals, franchises and other rights from federal aviation, aeronautical, communications, transportation and shipping authorities which are requisite for the conduct of its business as described in the Prospectus or for the actions contemplated by the Underwriting Agreement and the offering contemplated by the Prospectus; and the actions contemplated by the Underwriting Agreement and the offering contemplated by the Prospectus, are not in violation of any federal statute or regulation relating to aviation, aeronautics, communications, transportation or shipping; (vii) I have reviewed or caused to be reviewed by attorneys under my supervision the Registration Statement, the Prospectus and each amendment and supplement thereto (including the documents incorporated by reference) and have no reason to believe that, as of their respective effective or issue dates, or as of the Closing Time, either the Registration Statement or the Prospectus or any such amendment or supplement (or any such documents incorporated by reference) contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (viii)I do not know of any statute or regulation or legal or governmental proceeding required to be described in the Prospectus which is not described as required, nor of any contract or document of a character required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement which is not described and filed as required; and the descriptions in the Registration Statement and the Prospectus of the contracts and other documents therein described are accurate and fairly present the information required to be shown; (ix) The execution and delivery by the Company of the Underwriting Agreement and the consummation by the Company of the transactions herein and therein contemplated and compliance with the terms of the Underwriting Agreement do not and will not conflict with or result in a breach of any of the terms of the Certificate of Incorporation or By-laws of the Company, and will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan, credit or note agreement, lease or other agreement or instrument material to the Company to which the Company is a party or by which it or any or its properties are bound, or any existing applicable law, rule, regulation, judgment, order or decree of any government, governmental instrumentality or court, having jurisdiction over the Company or any of its properties; (x) No authorization, approval, consent or license of any regulatory body or authority (other than under the 1933 Act and the securities or Blue Sky laws of the various states) is required for the valid authorization, issuance, sale and delivery of the Offered Preferred Stock as herein contemplated or the valid authorization, execution, delivery and performance by the Company of the Underwriting Agreement or the consummation by the Company of the transactions contemplated herein or therein, or, if so required, all such authorizations, approvals, consents and licenses, specifying the sale, have been obtained and are in full force and effect; (xi) The Registration Statement has become effective under the 1933 Act and, to the best of my knowledge, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the 1933 Act; the Registration Statement and the Prospectus, and each amendment or supplement thereto (except for the financial statements and schedules included therein, as to which I express no opinion), comply as to form in all material respects to the requirements of the 1933 Act and the 1933 Act Regulations and, as to documents incorporated therein, to the requirements of the 1934 Act and the 1934 Act Regulations in effect at the time such documents were filed with the Commission; and (xii) The Underwriting Agreement has been duly and validly authorized, executed and delivered by the Company and constitutes a valid and binding agreement of the Company, enforceable in accordance with its terms, except as limited by bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting enforcement of creditors' rights or by general equity principles and subject to any principles of public policy limiting the right to enforce the indemnification and contribution provisions contained in Sections 6 and 7 of the Underwriting Agreement. In rendering the foregoing opinion, we have assumed that (i) all signatures on all documents examined by us are genuine and that where any such signature (other than a signature purporting to have been made on behalf of the Company) purports to have been made in a corporate, governmental, fiduciary or other capacity, the person who affixed such signature had the due authority to do so, (ii) certain factual matters contained in certificates of public officials are accurate, true and correct, and (iii) photostat copies of such documents, records and certificates conform to the originals. This opinion is intended solely for the benefit of the Underwriters and is not to be relied on by, and no copies of it are to be delivered to, any other person without my prior written consent, except that Underwriters' counsel may rely upon this opinion as to all matters of Tennessee law or Delaware corporate law in rendering its opinion of even date herewith. I am not assuming any professional responsibility to any other person by rendering this opinion. It is understood that this opinion speaks as of the date given, notwithstanding any delivery as contemplated above on any other date. Very truly yours, Schedule I of Underwriting Agreement Dated: ________, ______ FEDERAL EXPRESS CORPORATION Preferred Stock Underwriters Number of Shares to be Purchased - --------------------------- ---------------------------------- $ Schedule II to Underwriting Agreement Dated: ________, ______ FEDERAL EXPRESS CORPORATION [Title of Preferred Stock] To: Federal Express Corporation 2005 Corporate Avenue Memphis, Tennessee 38132 Re: Underwriting Agreement dated ______________, _______ Title of Offered Preferred Stock: Current ratings: Public offering price: Closing date, time and location: ____________, ______, 9:00 A.M., New York City time Davis Polk & Wardwell 450 Lexington Avenue New York, NY 10017 Location for checking Offered Preferred Stock: New York, New York Redemption provisions: Liquidation Preference: Listing requirement: None Number of Option Shares, if any, that may be purchased by the Underwriters: Other terms and conditions: [UNDERWRITERS] By: By: ______________________________ Name: Title: Acting on behalf of themselves and the other named Underwriters Accepted: FEDERAL EXPRESS CORPORATION By: _______________________________ Name: Title: EX-1.E 5 Exhibit 1(e) Underwriting Agreement Dated as of ______________, 199__ between FEDERAL EXPRESS CORPORATION and [UNDERWRITERS] COMMON STOCK, par value $.10 per share TABLE OF CONTENTS Page ---- SECTION 1. Representations & Warranties of the Company............. 2 SECTION 2. Purchase and Sale....................................... 6 SECTION 3. Covenants of the Company................................ 8 SECTION 4. Payment of Expenses..................................... 10 SECTION 5. Conditions of Underwriters' Obligations................. 10 SECTION 6. Indemnification......................................... 14 SECTION 7. Contribution............................................ 15 SECTION 8. Representations, Warranties and Agreements to Survive Delivery................................... 16 SECTION 9. Termination of Agreement................................ 16 SECTION 10. Default by One Underwriter.............................. 16 SECTION 11. Notices................................................. 17 SECTION 12. Parties................................................. 17 SECTION 13. Governing Law........................................... 18 Exhibit A Pricing Information Exhibit B Opinion of the Company Exhibit C Form of Lock-up Letter Schedule I Underwriters' Commitments Schedule II Terms and Conditions FEDERAL EXPRESS CORPORATION Common Stock, par value $.10 per share UNDERWRITING AGREEMENT ____________, 199__ [UNDERWRITERS] [ADDRESS] Ladies and Gentlemen: Federal Express Corporation, a Delaware corporation (the "Company"), proposes to issue and sell to the underwriters named in Schedule I hereto ____________________ shares of its Common Stock, par value $.10 per share (the "Common Stock") in one or more offerings on the terms and conditions stated herein and in Schedule II hereto (the "Offered Common Stock"). As used herein, unless the context otherwise requires, the term "Underwriters" shall mean the firm or firms named as Underwriter or Underwriters in Schedule I and the term "you" shall mean the Underwriter or Underwriters, if no underwriting syndicate is purchasing the Offered Common Stock, or the representative or representatives of the Underwriters, if an underwriting syndicate is purchasing the Offered Common Stock, as indicated in Schedule I. The Company has filed with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-3 (No. 33-________) for the registration of certain common stock and other securities, including the Offered Common Stock, under the Securities Act of 1933, as amended (the "1933 Act"), and the offering thereof from time to time in accordance with Rule 415 of the rules and regulations of the Commission under the 1933 Act (the "1933 Act Regulations"). Such registration statement has been declared effective by the Commission. The Company has, pursuant to Rule 424 under the 1933 Act, filed with, or transmitted for filing to, or shall within the required period of time hereafter file with or transmit for filing to, the Commission a prospectus supplement (the "Prospectus Supplement") specifically relating to the Offered Common Stock, together with a revised and restated prospectus relating to common stock covered by the above-referenced registration statement. The term "Registration Statement" refers to such registration statement in the form in which it became effective, including the exhibits thereto and the documents incorporated by reference therein, as amended to the date hereof. The term "Basic Prospectus" means the above-referenced revised and restated prospectus relating to Common Stock. The term "Prospectus" means the Basic Prospectus supplemented by the Prospectus Supplement. The term "Preliminary Prospectus" means a preliminary prospectus supplement specifically relating to the Offered Common Stock together with the Basic Prospectus. As used herein, the terms "Basic Prospectus," "Prospectus" and "Preliminary Prospectus" shall include in each case the documents, if any, incorporated by reference therein. The terms "supplement" and "amendment" or "amend" as used herein shall include all documents deemed to be incorporated by reference in the Prospectus that have been filed subsequent to the date of the Basic Prospectus by the Company with the Commission pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"). If the Company has filed an abbreviated registration statement to register additional shares of Common Stock pursuant to Rule 462(b) under the 1933 Act, then any reference herein to the term "Registration Statement" shall include such Rule 462(b) registration statement. SECTION 1. Representations and Warranties of the Company. (a) The Company represents and warrants to you and to each Underwriter named in Schedule I, as of the date hereof, as follows: (i) Due Incorporation and Qualification. The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware, has the corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus; and is duly qualified to do business and is in good standing in each jurisdiction in which such qualification is required, except where the failure to so qualify would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise. (ii) Subsidiaries. Each subsidiary of the Company which is a significant subsidiary as defined in Rule 405 of Regulation C of the 1933 Act Regulations (each a "Significant Subsidiary") has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, except where the failure to so qualify would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise; and all of the issued and outstanding capital stock of each Significant Subsidiary has been duly authorized and validly issued, is fully paid and non-assessable and, except for directors' qualifying shares (except as otherwise stated in the Registration Statement), is owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity. (iii) Registration Statement and Prospectus. At the time the Registration Statement became effective, the Registration Statement complied, and as of the date hereof does comply, in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations and the rules and regulations of the Commission promulgated thereunder. The Registration Statement, at the time it became effective, did not, and at each time thereafter at which any amendment to the Registration Statement becomes effective, will not, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Prospectus, as of the date hereof, does not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that the representations and warranties in this subsection shall not apply to statements in or omissions from the Registration Statement or Prospectus made in reliance upon and in conformity with information furnished to the Company in writing by an Underwriter expressly for use in the Registration Statement or Prospectus or to those parts of the Registration Statement which constitute Statements of Eligibility and Qualification of Trustees (Form T-1) under the 1939 Act. No stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been initiated or threatened by the Commission. (iv) Incorporated Documents. The documents incorporated by reference in the Prospectus, at the time they were or hereafter are filed with the Commission, complied and will comply in all material respects with the requirements of the 1934 Act and the rules and regulations promulgated thereunder (the "1934 Act Regulations") , and, when read together and with the other information in the Prospectus, did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were or are made, not misleading. (v) Accountants. The accountants who certified the financial statements included or incorporated by reference in the Prospectus are independent public accountants as required by the 1933 Act and the 1933 Act Regulations. (vi) Financial Statements. The financial statements of the Company included or incorporated by reference in the Prospectus and the Registration Statement present fairly the financial position of the Company as of the dates thereof and the results of operations, changes in common stockholders' investment and cash flows of the Company, for the respective periods covered thereby, all in conformity with generally accepted accounting principles applied on a consistent basis throughout the entire period involved; and the financial schedules included or incorporated by reference in the Registration Statement meet the requirements of the 1933 Act Regulations or the 1934 Act Regulations, as applicable. (vii) Material Changes or Material Transactions. Except as stated in the Prospectus, subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus, the Company has not incurred any liabilities or obligations, direct or contingent, or entered into any transactions which are material to the Company, and there has not been any material adverse change in the capital stock or short-term debt, or any material increase in long- term debt of the Company, or any material adverse change, or any development involving a prospective material adverse change, in the condition (financial or other) , business, prospects, net worth or results of operations of the Company. (viii) No Defaults; Regulatory Approvals. Neither the Company nor any of its subsidiaries is in violation of its charter or in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which it is a party or by which it or any of them or their properties may be bound. The execution and delivery of this Agreement and the consummation of the transactions contemplated herein have been duly authorized by all necessary corporate action and executed by the Company and will not conflict with or constitute a breach of, or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which the Company or any such subsidiary is a party or by which it or any of them may be bound or to which any of the property or assets of the Company or any such subsidiary is subject, which conflict, breach or default would have, individually or in the aggregate with any other such instances, a material adverse effect on the condition (financial or other) , business, prospects, net worth or results of operations of the Company and its subsidiaries considered as one entity, nor will such action result in any violation of the provisions of the charter or by-laws of the Company or any law, administrative regulation or administrative or court order or decree currently in effect or in effect at the time of execution and delivery of this Agreement and applicable to the Company or any of its subsidiaries. No consent, approval, authorization, order or decree of any court or governmental agency or body is required for the consummation by the Company of the transactions contemplated by this Agreement, except such as may be required under the 1933 Act, the 1933 Act Regulations or state securities or Blue Sky laws. (ix) Legal Proceedings; Contracts. Except for matters described in the Prospectus (as to which the Company can express no opinion at this time concerning the Company's liability (if any) or the effect of any adverse determination upon the business, condition (financial or otherwise) or operations of the Company) , there is no pending, or to the best knowledge of any financial officer of the Company, threatened action or proceeding before any court or administrative agency which individually (or in the aggregate in the case of any group of related lawsuits) is expected to have a material adverse effect on the financial condition of the Company. (x) Compliance with Laws. The Company's business and operations comply in all material respects with all laws and regulations applicable thereto and there are no known, proposed or threatened changes in any laws or regulations which would have a material adverse effect on the Company or the manner in which it conducts its business. The Company possesses all valid and effective certificates, licenses and permits required to conduct its business as now conducted, except for instances which individually or in the aggregate do not, or will not, have a material adverse effect on the condition (financial or other) , business, prospects or results of operations of the Company. (xi) Capital Stock. The authorized capital stock of the Company conforms as to legal matters to the description thereof contained in the Prospectus. (xii) Validity of the Offered Common Stock. The Offered Common Stock has been duly authorized and, when issued and delivered in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable, and the issuance of such shares will not be subject to any preemptive or similar rights. (xiii) Registration Rights. There are no contracts or agreements between the Company and any person granting such person the right to require the Company to file a registration statement under the 1933 Act with respect to any equity securities of the Company or to require the Company to include such securities with the Common Stock registered pursuant to the Registration Statement. (b) Additional Certifications. Any certificate signed by any officer of the Company and delivered to you or your counsel in connection with an offering of the Offered Common Stock shall be deemed a representation and warranty by the Company to each Underwriter participating in such offering as to the matters covered thereby on the date of such certificate unless subsequently amended or supplemented subsequent thereto. SECTION 2. Purchase and Sale. (a) Subject to the terms and conditions set forth herein and in Schedule II, if any, the Company agrees to sell to each Underwriter, and each Underwriter agrees, severally and not jointly, to purchase from the Company, at the purchase price specified in Exhibit A hereto, the respective numbers of shares of Offered Common Stock set forth opposite the name of such Underwriter in Schedule I. It is understood that you propose to offer the Offered Common Stock for sale to the public as set forth in the Prospectus. (b) Subject to the terms and conditions herein set forth, the Company may grant, if so provided in Schedule II hereto, an option to the Underwriters, severally and not jointly, to purchase additional shares of Common Stock to cover over-allotments, if any (the "Option Shares"). If Schedule II so provides, the Underwriters may purchase up to the amount of Option Shares set forth therein at the same price per share as is applicable to the Offered Common Stock. As used herein, the term "Offered Common Stock" shall include Option Shares. Such option, if granted, will expire 30 days after the date of this Agreement, and may be exercised in whole or in part from time to time only for the purpose of covering over-allotments which may be made in connection with the offering of the Offered Common Stock upon notice by you to the Company setting forth the number of Option Shares as to which the several Underwriters are then exercising the option and the time and date of payment and delivery for such Option Shares. Any such time and date of delivery shall be determined by you, but shall not be later than four business days and not be earlier that two business days after the exercise of said option, nor in any event prior to Closing Time, unless otherwise agreed upon by you and the Company. If the option is exercised as to all or any portion of the Option Shares, each Underwriter, acting severally and not jointly, will purchase that proportion of the total number of Option Shares then being purchased which the number of shares of Offered Common Stock each such Underwriter has agreed to purchase as set forth in Schedule II bears to the total number of shares of Offered Common Stock, subject to such adjustments as you shall make to eliminate any sales or purchases of fractional shares of Common Stock. (c) Payment of the purchase price for any Offered Common Stock to be purchased by the Underwriters shall be made to the Company at either the Company's offices in Memphis, Tennessee or the office of Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017, or at such other place as shall be agreed upon by you and the Company, at 9:00 A.M., New York City time, on the third business day (unless postponed in accordance with the provisions of Section 10) following the date hereof or at such other date, time or location specified in Schedule II, or as otherwise shall be agreed upon by you and the Company (such time and date being referred to as a "Closing Time"). Certificates for the Offered Common Stock shall be in definitive form and registered in such names and in such denominations as you shall request in writing at least two business days prior to the Closing Time. Delivery of the Offered Common Stock shall be made to you as specified in Schedule II against payment by you of the purchase price thereof to the Company (or such other person as the Company may direct) by wire transfer of immediately available funds. Such Offered Common Stock will be made available for examination and packaging by you in New York, New York, on or before the first business day prior to the Closing Time or at such other time and place specified in Schedule II. (d) As compensation to you for your commitments and obligations hereunder in respect of the Offered Common Stock, including your undertakings to distribute Offered Common Stock, the Company will pay to you the amount set forth in Exhibit A as the underwriting discounts and commissions. Such payment shall be made simultaneously with the payment by you of the purchase price of the Offered Common Stock as specified in Section 2(b) hereof. Payment of such compensation shall be made by wire transfer of immediately available funds. (e) The Company hereby agrees that, without the prior consent of the Underwriters, it will not, during the period ending 30 days after the date of the Prospectus, (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exerciseable or exchangeable for Common Stock, or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction described in clause (i) above or this (ii) is to be settled by delivery of Common Stock or such other securities, in cash or otherwise. The foregoing sentence shall not apply to (A) the Offered Common Stock to be sold hereunder, or (B) the issuance by the Company of shares of Common Stock, (i) upon the exercise of an employee stock option outstanding on the date hereof under any of the Company's stock incentive plans or (ii) in connection with any of the Company's employee benefit plans. SECTION 3. Covenants of the Company. The Company covenants with each of you, and with each Underwriter participating in the offering as follows: (a) Prospectus Supplement. The Company has prepared a Preliminary Prospectus, and immediately following the execution of this Agreement, the Company will prepare a Prospectus Supplement in connection with the offering of the Offered Common Stock. The Company will promptly transmit copies of the Prospectus Supplement to the Commission for filing pursuant to Rule 424 of the 1933 Act Regulations. (b) Notice of Certain Events. The Company will notify you promptly (i) of the effectiveness of any amendment to the Registration Statement, (ii) of the transmittal to the Commission for filing of any supplement to the Prospectus or any document to be filed pursuant to the 1934 Act which will be incorporated by reference in the Prospectus, (iii) of the receipt of any comments from the Commission with respect to the Registration Statement, the Prospectus or the Prospectus Supplement relating in any way to the offer and sale of the Offered Common Stock, (iv) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information, and (v) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose. (c) Notice of Certain Proposed Filings. The Company will give you notice of its intention to file or prepare any amendment to the Registration Statement or any amendment or supplement to the Prospectus, whether by the filing of documents pursuant to the 1934 Act, the 1933 Act or otherwise, and will furnish you with copies of any such amendment or supplement or other documents proposed to be filed or prepared a reasonable time in advance of such proposed filing or preparation, as the case may be. (d) Copies of the Registration Statement and the Prospectus. The Company will deliver to you as many signed and conformed copies of the Registration Statement (as originally filed) and of each amendment thereto (including exhibits filed therewith or incorporated by reference therein and documents incorporated by reference in the Prospectus) as you may reasonably request. The Company will furnish to you as many copies of the Prospectus (as amended or supplemented) as you shall reasonably request so long as you are required to deliver a Prospectus in connection with sales or solicitations of offers to purchase the Offered Common Stock. (e) Revisions of Prospectus -- Material Changes. If at any time when the Prospectus is required by the 1933 Act to be delivered in connection with sales of the Offered Common Stock any event shall occur or condition exist as a result of which it is necessary, in the reasonable opinion of counsel for the Company, to further amend or supplement the Prospectus in order that the Prospectus will not include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, or if it shall be necessary, in the reasonable opinion of such counsel, at any such time to amend or supplement the Registration Statement or the Prospectus in order to comply with the requirements of the 1933 Act or the 1933 Act Regulations the Company will promptly prepare and file with the Commission such amendment or supplement, whether by filing documents pursuant to the 1934 Act, the 1933 Act or otherwise, as may be necessary to correct such untrue statement or omission or to make the Registration Statement and Prospectus comply with such requirements. (f) Earnings Statements. The Company will make generally available to its security holders as soon as practicable after the close of the period covered thereby, an earnings statement (in form complying with the provisions of Rule 158 under the 1933 Act) covering each twelve-month period beginning, in each case, not later than the first day of the Company's fiscal quarter next following the "effective date" (as defined in such Rule 158) of the Registration Statement with respect to each sale of Offered Common Stock. (g) Blue Sky Qualifications. The Company will endeavor, in cooperation with you, to qualify the Offered Common Stock for offering and sale under the applicable securities laws of such states and other jurisdictions of the United States as the Underwriters may designate, and will maintain such qualifications in effect for so long as may be required for the distribution of the Offered Common Stock; provided, however, that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or to subject itself to taxation as doing business in any jurisdiction in which it is not otherwise required to be so qualified. The Company will file such statements and reports as may be required by the laws of each jurisdiction in which the shares of Offered Common Stock have been qualified as provided above. (h) 1934 Act Filings. The Company, during the period when the Prospectus is required to be delivered under the 1933 Act, will file promptly all documents required to be filed with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act. SECTION 4. Payment of Expenses. The Company will pay all expenses incident to the performance of its obligations under this Agreement, including: (i) the preparation and filing of the Registration Statement and all amendments thereto, the Preliminary Prospectus, if any, and the Prospectus and any amendments or supplements thereto; (ii) the filing of this Agreement; (iii) the preparation, issuance, printing and delivery of the Offered Common Stock; (iv) the reasonable fees and disbursements of the Company's accountants and counsel, and of the transfer agent; (v) the qualification of the Offered Common Stock under securities laws in accordance with the provisions of Section 3(g), including filing fees and the reasonable fees and disbursements of counsel to the Underwriters in connection therewith and in connection with the preparation of any Blue Sky Survey and any Legal Investment Survey; (vi) the printing and delivery to the Underwriters in quantities as hereinabove stated of copies of the Registration Statement and any amendments thereto, and of the Prospectus and any amendments or supplements thereto; (vii) costs and expenses related to the issuance and delivery of the Offered Common Stock to the Underwriters; and (viii) fees and expenses incident to listing of the Offered Common Stock on the New York Stock Exchange. If this Agreement is terminated by you in accordance with the provisions of Section 5 or clause (i) of Section 9 hereof, the Company shall reimburse upon demand the Underwriters for all of their out-of-pocket expenses, including the reasonable fees and disbursements of counsel for the Underwriters that shall have been incurred by you in connection with the proposed purchase and sale of the Offered Common Stock. SECTION 5. Conditions of Underwriters' Obligations. The several obligations of the Underwriters to purchase the Offered Common Stock pursuant to this Agreement will be subject at all times to the accuracy of the representations and warranties on the part of the Company herein, to the accuracy of the statements of the Company's officers made in any certificate furnished pursuant to the provisions hereof, to the performance and observance by the Company of all covenants and agreements contained herein, or in Schedule II hereto, on its part to be performed and observed and to the following additional conditions precedent: (a) Stop Order; Ratings Change; etc. At the Closing Time, (i) no stop order suspending the effectiveness of the Registration Statement shall have been issued under the 1933 Act or proceedings therefor initiated or threatened by the Commission, (ii) the rating assigned as of the date of this Agreement by any "nationally recognized statistical rating organization," as such term is defined for purposes of Rule 436(g) under the 1933 Act Regulations, to any debt securities of the Company shall not have been lowered since the execution of this Agreement nor shall any such rating organization have publicly announced that it has placed any debt securities of the Company on what is commonly termed a "watch list" for possible downgrading, and (iii) there shall not have come to your attention any facts that would cause you to believe that the Prospectus, including the Prospectus Supplement, at the time it was required to be delivered to a purchaser of the Offered Common Stock, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances existing at such time, not misleading. (b) Legal Opinions. At the Closing Time, you shall have received the following documents: (1) Opinion of Company Counsel. The opinion of the Executive Vice President, General Counsel and Secretary of the Company or any Vice President in the Legal and Regulatory Division of the Company, dated as of such date, in form and substance reasonably satisfactory to you, to the effect as set forth in Exhibit B. (2) Opinion of Counsel to the Underwriters. The opinion of __________________________________, counsel to the Underwriters, with respect to such matters as you may reasonably request. (c) Officer Certificate. At the Closing Time, there shall not have been, since the respective dates as of which information is given in the Registration Statement and the Prospectus, any material adverse change in the condition (financial or otherwise) of the Company, or in the earnings or business affairs of the Company; and you shall have received a certificate of any Vice President of the Company, dated as of the Closing Time, to the effect (i) that there has been no such material adverse change, (ii) that the other representations and warranties of the Company contained in Section 1 are true and correct with the same force and effect as though expressly made at and as of the date of such certificate, except to the extent that such representations and warranties expressly relate to an earlier date or later date (in which case such representations and warranties are true and correct on and as of such earlier date or will be true and correct on and as of such later date, as the case may be), (iii) that the Company has made or caused to be made any required filing of the Prospectus pursuant to Rule 424(b) in the manner and within the time period required by Rule 424(b), and (iv) that the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the date of such certificate. The officer signing and delivering this certificate may rely upon the best of his or her knowledge as to proceedings threatened. (d) Comfort Letter. At the time of the execution of this Agreement and at the Closing Time, you shall have received a letter from Arthur Andersen LLP or their successors as the Company's independent accountants (the "Independent Accountants"), dated as of the date hereof and of the Closing Time, as the case may be, in form and substance satisfactory to you to the effect that: (i) they are independent public accountants within the meaning of the 1933 Act and the 1933 Act Regulations; (ii) in their opinion the Company's financial statements and schedules included or incorporated by reference in the Registration Statement and Prospectus and covered by their reports included or incorporated therein comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the 1933 Act Regulations or the 1934 Act and the 1934 Act Regulations, as the case may be; (iii) they have conducted reviews of the unaudited interim consolidated financial information of the Company included in the Company's Quarterly Reports on Form 10-Q incorporated in the Registration Statement and Prospectus in compliance with the standards for such reviews promulgated by the American Institute of Certified Public Accountants; (iv) on the basis of a reading of the financial statements and schedules of the Company included or incorporated in the Prospectus and the Registration Statement, and the latest available unaudited interim financial statements of the Company, inquiries of officials of the Company responsible for financial and accounting matters, and other specified procedures and inquiries, nothing has come to their attention that caused them to believe that: (A) the unaudited financial statements of the Company included or incorporated in the Prospectus and the Registration Statement do not comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the 1933 Act Regulations or the 1934 Act and the 1934 Act Regulations thereunder, as the case may be, or that such unaudited financial statements are not presented fairly in conformity with generally accepted accounting principles; (B) with respect to the period subsequent to the date of the most recent financial statements incorporated in the Registration Statement and the Prospectus, as of a specified date not more than five business days prior to the date of delivery of such letter, there has been any change in the common or preferred stock or long-term debt of the Company or, as of such date, there has been any decrease in assets or common stockholders' investment, in each case as compared with amounts shown in the most recent consolidated balance sheet of the Company included or incorporated in the Registration Statement and the Prospectus, except in each case for changes or decreases which the Prospectus discloses have occurred or may occur or which are described in such letter; or (C) for the period from the date of the most recent financial statements incorporated in the Registration Statement and the Prospectus to such specified date, there was any decrease in operating revenues, operating income, income before taxes or net income of the Company in each case as compared with the comparable period of the preceding year, except in each case for decreases which the Prospectus discloses have occurred or may occur or which are described in such letter; and (v) in addition to their audit referred to in their reports included or incorporated by reference in the Registration Statement and the Prospectus and the reviews, inquiries and procedures referred to in clauses (iii) and (iv) above, such letter shall state that Arthur Andersen LLP has performed other specified procedures, with respect to certain numerical data and information included or incorporated in the Registration Statement and the Prospectus, as are requested by an Underwriter and specified in such letter and have found such data and information to be in agreement with the accounting records of or analyses prepared by the Company. (e) Other Documents. At the Closing Time, counsel for the Underwriters shall have been furnished with such documents and opinions as such counsel may reasonably require for the purpose of enabling such counsel to pass upon the issuance and sale of Offered Common Stock as herein contemplated and related proceedings, or in order to evidence the accuracy and completeness of any of the representations and warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Company in connection with the issuance and sale of Offered Common Stock as herein contemplated shall be satisfactory in form and substance to you. (f) "Lock-up". The "lock-up" agreements, each substantially in the form of Exhibit C hereto, between you and certain stockholders, officers and directors of the Company relating to sales and certain other dispositions of shares of Common Stock or certain other securities, delivered to you on or before the date hereof, shall be in full force and effect on the Closing Date. SECTION 6. Indemnification. (a) The Company agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of Section 15 of the 1933 Act as follows: (i) against any and all loss, liability, claim, damage and expense whatsoever, arising out of any untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), or the omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of or based upon any untrue statement of a material fact contained in the Prospectus (or any amendment or supplement thereto) or the omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (ii) against any and all loss, liability, claim, damage and expense whatsoever, to the extent of the aggregate amount paid in settlement of any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever arising out of or based upon any such untrue statement or omission, if such settlement is effected with the written consent of the Company; and (iii) against any and all expense whatsoever, reasonably incurred in investigating, preparing or defending against any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever arising out of or based upon any such untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above; provided, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by any Underwriter expressly for use in the Registration Statement (or any amendment thereto) or the Prospectus (or any amendment or supplement thereto), or made in reliance upon the Statements of Eligibility and Qualification of Trustees (Form T-1) under the 1939 Act filed as exhibits to the Registration Statement; and provided, further, that the foregoing indemnity agreement, with respect to any Preliminary Prospectus shall not inure to the benefit of any Underwriter from whom the person asserting any such losses, claims, damages or liabilities purchased Offered Common Stock, or any person controlling such Underwriter, if a copy of the Prospectus (as then amended or supplemented if the Company shall have furnished any amendments or supplements thereto) was not sent or given by or on behalf of such Underwriter to such person, if required by law so to have been delivered, at or prior to the written confirmation of the sale of the Offered Common Stock to such person, and if the Prospectus (as so amended or supplemented) would have cured the defect giving rise to such losses, claims, damages or liabilities. (b) Each Underwriter severally agrees to indemnify and hold harmless the Company, its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of this Section, as incurred, but only with respect to untrue statements or omissions made in the Registration Statement (or any amendment thereto) or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by such Underwriters through you expressly for use in the Registration Statement (or any amendment thereto) or the Prospectus (or any amendment or supplement thereto). (c) Each indemnified party shall give prompt notice to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability which it may have otherwise than on account of this indemnity agreement. An indemnifying party may participate at its own expense in the defense of such action. In no event shall the indemnifying parties be liable for the fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. SECTION 7. Contribution. In order to provide for just and equitable contribution in circumstances in which the indemnity agreement provided for in Section 6 is for any reason held to be unenforceable by the indemnified parties although applicable in accordance with its terms, the Company and the Underwriters of each offering of Offered Common Stock shall contribute to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by said indemnity agreement incurred by the Company and one or more of the Underwriters in respect of such offering, as incurred, in such proportions that the Underwriters are responsible for that portion represented by the percentage that the underwriting discount appearing on the cover page of the Prospectus in respect of such offering bears to the initial public offering price appearing thereon and the Company is responsible for the balance; provided, however, that no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section, each person, if any, who controls an Underwriter within the meaning of Section 15 of the 1933 Act shall have the same rights to contribution as such Underwriter, and each director of the Company, each officer of the Company who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act shall have the same rights to contribution as the Company. SECTION 8. Representations, Warranties and Agreements to Survive Delivery. All representations, warranties and agreements contained in this Agreement, or contained in certificates of officers of the Company submitted pursuant hereto, shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of any Underwriter or controlling person, or by or on behalf of the Company, and shall survive each delivery of and payment for any of the Offered Common Stock. SECTION 9. Termination of Agreement. You may terminate this Agreement, immediately upon notice to the Company, at any time prior to the Closing Time if: (i) there has been, since the date hereof or since the respective dates as of which information is given in the Registration Statement, any material adverse change in the condition, financial or otherwise, or in the earnings or business affairs of the Company, (ii) there shall have occurred any material adverse change in the financial markets in the United States or any outbreak or escalation of hostilities or other national or international calamity or crisis, the effect of which shall be such as to make it, in your judgment, impracticable to market the Offered Common Stock or enforce contracts for the sale of the Offered Common Stock, or (iii) trading in any securities of the Company shall have been suspended by the Commission or a national securities exchange, or if trading generally on either the American Stock Exchange or the New York Stock Exchange shall have been suspended, or minimum or maximum prices for trading shall have been fixed, or maximum ranges for prices for securities shall have been required, by either of said exchanges or by order of the Commission or any other governmental authority, or if a banking moratorium shall have been declared by either federal or New York authorities. In the event of any termination of this Agreement, the covenant set forth in Section 3(f) hereof, the provisions of Section 4 hereof, the indemnity and contribution agreements set forth in Sections 6 and 7 hereof, and the provisions of Sections 8 and 13 hereof shall remain in effect. SECTION 10. Default by One Underwriter. If any Underwriter shall fail at the Closing Time to purchase the Offered Common Stock which it is obligated to purchase hereunder (the "Defaulted Securities"), and the aggregate amount of Defaulted Securities is not more than one-tenth of the aggregate amount of the Offered Common Stock to be purchased on such date, the other Underwriters shall be obligated severally in the proportions that the amount of the Offered Common Stock set forth opposite their respective names in Schedule I hereto bears to the aggregate amount of Offered Common Stock set forth opposite the names of all such non-defaulting underwriters to purchase the Defaulted Securities; provided that in no event shall the amount of Defaulted Securities that any Underwriter has agreed to purchase pursuant to this Agreement be increased by an amount in excess of one-ninth of such amount of Offered Common Stock without the written consent of such Underwriter. If the aggregate amount of Defaulted Securities is more than one-tenth of the aggregate amount of the Offered Common Stock to be purchased on the Closing Date, and arrangements satisfactory to the Underwriters and the Company for the purchase of such Defaulted Securities are not made within 36 hours after such default, this Agreement shall terminate without liability on the part of any non-defaulting Underwriters or the Company. No action taken pursuant to this Section shall relieve a defaulting Underwriter from liability in respect of its default under this Agreement. In the event of any such default which does not result in a termination of this Agreement, either the non-defaulting Underwriters or the Company shall have the right to postpone the Closing Time for a period not exceeding seven days in order to effect any required changes in the Registration Statement or Prospectus or in any other documents or arrangements. SECTION 11. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed, delivered by Federal Express service or transmitted by any facsimile communication. Notices to the Underwriters shall be directed to _______________________________________, with copies thereof directed to ___________________________________________ ________________________________________________. Notices to the Company shall be directed to it at 2007 Corporate Avenue, Memphis, Tennessee 38132 (if by Federal Express service) or P.O. Box 727, Memphis, Tennessee 38194 (if by mail), Attention: Vice President and Treasurer, with copies thereof directed to the Legal Department of the Company at 1980 Nonconnah Drive, Memphis, Tennessee 38132 (if by Federal Express Service) or P.O. Box 727, Memphis, Tennessee 38194 (if by mail), Attention: Managing Director - Securities and Corporate Law. SECTION 12. Parties This Agreement shall inure to the benefit of and be binding upon you and the Company and any Underwriter who becomes a party hereto and their respective successors. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the parties hereto and their respective successors and the controlling persons and officers and directors referred to in Sections 6 and 7 and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the parties hereto their respective successors and said controlling persons and officers and directors and their heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Offered Common Stock from any Underwriter shall be deemed to be a successor by reason merely of such purchase. Section 13. Governing Law. This Agreement and the rights and obligations of the parties created hereby and thereby shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed in such state. Any suit, action or proceeding brought by the Company against an Underwriter in connection with or arising under this Agreement shall be brought solely in the state or federal court of appropriate jurisdiction located in the Borough of Manhattan, The City of New York. If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument along with all counterparts will become a binding agreement between you and the Company in accordance with its terms. Very truly yours, FEDERAL EXPRESS CORPORATION By: _________________________________ Name: Title: CONFIRMED AND ACCEPTED, as of the date first above written: [UNDERWRITERS] By: By: ___________________________________ Name: Title: Acting on behalf of themselves and the other named Underwriters Exhibit A FEDERAL EXPRESS CORPORATION Common Stock, par value $.10 per share Number of Underwriting Shares Discounts Purchase to be and Designation Price Purchased Commissions - ----------- ----- --------- ----------- $ $ % Exhibit B Form of Opinion of Company Counsel ____________, ______ [UNDERWRITERS] Re: Federal Express Corporation Common Stock (the "Offered Common Stock") Ladies and Gentlemen: This opinion is directed to the Underwriters pursuant to Section 5(b)(1) of the Underwriting Agreement dated ________________, ______ (the "Underwriting Agreement"), among the Company and you, with respect to the offer and sale of the Offered Common Stock. All terms defined or used in the Underwriting Agreement have the same meaning when used herein, unless otherwise noted. I am Vice President ________ of the Company and have acted as such in connection with the Offered Common Stock and the Underwriting Agreement. I or attorneys under my supervision have made such examination and investigation as we have deemed necessary in order to give the following opinion. Based on the foregoing, it is my opinion that: (i) The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has full corporate power and authority under such laws to own its properties and to conduct its business as described in the Prospectus; the Company is duly qualified to do business and is in good standing in each jurisdiction in which it owns or leases real property or in which the conduct of its business requires such qualification, except for such instances which in the aggregate will not have a material adverse effect on the Company; (ii) Each subsidiary of the Company which is a significant subsidiary as defined in Rule 405 of Regulation C of the 1933 Act Regulations (each a "Significant Subsidiary") has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has corporate power and authority to own, lease and operate its properties and conduct its business as described in the Registration Statement, and, to the best of my knowledge, is duly qualified to do business and is in good standing in each jurisdiction in which such qualification is required, except where the failure to so qualify would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise; all of the issued and outstanding capital stock of each Significant Subsidiary has been duly authorized and validly issued and is fully paid and non-assessable, and all of such capital stock, except for directors' qualifying shares, is owned by the Company, directly or through subsidiaries, free and clear of any mortgage, pledge, lien, encumbrance, claim or equity; (iii) Except for matters described in the Prospectus (as to which I can express no opinion at this time concerning the Company's liability (if any) or the effect of any adverse determination upon the business, condition (financial or otherwise) or operations of the Company), there is no pending, or to my knowledge, threatened action or proceeding before any court or administrative agency which individually (or in the aggregate in the case of any group of related lawsuits) is expected to have a material adverse effect on the financial condition of the Company; (iv) The authorized capital stock of the Company conforms as to legal matters to the description thereof contained in the Prospectus. (v) The Offered Common Stock has been duly authorized and, when issued and delivered in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable, and the issuance of such shares will not be subject to any preemptive or similar rights. (vi) The Company possesses all permits, approvals, franchises and other rights from federal aviation, aeronautical, communications, transportation and shipping authorities which are requisite for the conduct of its business as described in the Prospectus or for the actions contemplated by the Underwriting Agreement and the offering contemplated by the Prospectus; and the actions contemplated by the Underwriting Agreement and the offering contemplated by the Prospectus, are not in violation of any federal statute or regulation relating to aviation, aeronautics, communications, transportation or shipping; (vii) I have reviewed or caused to be reviewed by attorneys under my supervision the Registration Statement, the Prospectus and each amendment and supplement thereto (including the documents incorporated by reference) and have no reason to believe that, as of their respective effective or issue dates, or as of the Closing Time, either the Registration Statement or the Prospectus or any such amendment or supplement (or any such documents incorporated by reference) contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (viii)I do not know of any statute or regulation or legal or governmental proceeding required to be described in the Prospectus which is not described as required, nor of any contract or document of a character required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement which is not described and filed as required; and the descriptions in the Registration Statement and the Prospectus of the contracts and other documents therein described are accurate and fairly present the information required to be shown; (ix) The execution and delivery by the Company of the Underwriting Agreement and the consummation by the Company of the transactions herein and therein contemplated and compliance with the terms of the Underwriting Agreement do not and will not conflict with or result in a breach of any of the terms of the Certificate of Incorporation or By-laws of the Company, and will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan, credit or note agreement, lease or other agreement or instrument material to the Company to which the Company is a party or by which it or any or its properties are bound, or any existing applicable law, rule, regulation, judgment, order or decree of any government, governmental instrumentality or court, having jurisdiction over the Company or any of its properties; (x) No authorization, approval, consent or license of any regulatory body or authority (other than under the 1933 Act and the securities or Blue Sky laws of the various states) is required for the valid authorization, issuance, sale and delivery of the Offered Common Stock as herein contemplated or the valid authorization, execution, delivery and performance by the Company of the Underwriting Agreement or the consummation by the Company of the transactions contemplated herein or therein, or, if so required, all such authorizations, approvals, consents and licenses, specifying the sale, have been obtained and are in full force and effect; (xi) The Registration Statement has become effective under the 1933 Act and, to the best of my knowledge, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the 1933 Act; the Registration Statement and the Prospectus, and each amendment or supplement thereto (except for the financial statements and schedules included therein, as to which I express no opinion), comply as to form in all material respects to the requirements of the 1933 Act and the 1933 Act Regulations and, as to documents incorporated therein, to the requirements of the 1934 Act and the 1934 Act Regulations in effect at the time such documents were filed with the Commission; and (xii) The Underwriting Agreement has been duly and validly authorized, executed and delivered by the Company and constitutes a valid and binding agreement of the Company, enforceable in accordance with its terms, except as limited by bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting enforcement of creditors' rights or by general equity principles and subject to any principles of public policy limiting the right to enforce the indemnification and contribution provisions contained in Sections 6 and 7 of the Underwriting Agreement. In rendering the foregoing opinion, we have assumed that (i) all signatures on all documents examined by us are genuine and that where any such signature (other than a signature purporting to have been made on behalf of the Company) purports to have been made in a corporate, governmental, fiduciary or other capacity, the person who affixed such signature had the due authority to do so, (ii) certain factual matters contained in certificates of public officials are accurate, true and correct, and (iii) photostat copies of such documents, records and certificates conform to the originals. This opinion is intended solely for the benefit of the Underwriters and is not to be relied on by, and no copies of it are to be delivered to, any other person without my prior written consent, except that Underwriters' counsel may rely upon this opinion as to all matters of Tennessee law or Delaware corporate law in rendering its opinion of even date herewith. I am not assuming any professional responsibility to any other person by rendering this opinion. It is understood that this opinion speaks as of the date given, notwithstanding any delivery as contemplated above on any other date. Very truly yours, Exhibit C [Form of Lock-up Letter] _____________, 199__ [UNDERWRITERS] [ADDRESS] Ladies and Gentlemen: The undersigned understands that the Underwriters propose to enter into an underwriting agreement (the "Underwriting Agreement") with Federal Express Corporation, a Delaware corporation (the "Company"), providing for the public offering (the "Public Offering") by the several Underwriters, (the "Underwriters"), of ______ shares (the "Shares") of the Common Stock par value $.10 per share of the company (the "Common Stock"). To induce the Underwriters that may participate in the Public Offering to continue their efforts in connection with the Public Offering, the undersigned hereby agrees that, without the prior consent of the Underwriters, it will not, during the period commencing on the date hereof and ending 30 days after the date of the Prospectus relating to the Public Offering (the "Prospectus"), (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock (whether such shares or any such securities are now owned by the undersigned or are hereafter acquired), or (2) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction described in clause (1) above or in this (2) is to be settled by delivery of Common Stock or such other securities, in cash or otherwise. The foregoing sentence shall not apply to: (i) the sale of any Shares to the Underwriters pursuant to the Underwriting Agreement, (ii) gifts, (iii) stock grants in connection with the Company's benefit plans or (iv) the exercise of a stock option under any of the Company's stock incentive plans. In addition, the undersigned agrees that, without the prior consent of the Underwriters, it will not, during the period commencing on the date hereof and ending 30 days after the date of the Prospectus, make any demand for or exercise any right with respect to, the registration of any shares of Common Stock or any security convertible into or exercisable or exchangeable for Common Stock. Whether or not the Public Offering actually occurs depends on a number of factors, including market conditions. Any Public Offering will only be made pursuant to an Underwriting Agreement, the terms of which are subject to negotiation between the Company and the Underwriters. Very truly yours, __________________________________ (Name) __________________________________ (Address) Schedule I to Underwriting Agreement Dated: ________, ______ FEDERAL EXPRESS CORPORATION Common Stock, par value $.10 per share Underwriters Number of Shares to be Purchased - --------------------------- ---------------------------------- $ Schedule II to Underwriting Agreement Dated: ________, ______ FEDERAL EXPRESS CORPORATION Common Stock, par value $.10 per share To: Federal Express Corporation 2005 Corporate Avenue Memphis, Tennessee 38132 Re: Underwriting Agreement dated ______________, _______ Title of Offered Common Stock: Current ratings: Public offering price: Closing date, time and location: ____________, ______, 9:00 A.M., New York City time Davis Polk & Wardwell 450 Lexington Avenue New York, NY 10017 Location for checking Offered Common Stock: New York, New York Listing requirement: None Redemption provisions: Liquidation preference: Number of Option Shares, if any, that may be purchased by the Underwriters: Other terms and conditions: [UNDERWRITERS] By: By: ______________________________ Name: Title: Acting on behalf of themselves and the other named Underwriters Accepted: FEDERAL EXPRESS CORPORATION By: _______________________________ Name: Title: EX-4.A.1 6 Exhibit 4(a)(1) PASS THROUGH TRUST AGREEMENT Dated as of June 1, 1996 between STATE STREET BANK AND TRUST COMPANY, as Pass Through Trustee, and FEDERAL EXPRESS CORPORATION CROSS REFERENCE SHEET Between Provisions of the Trust Indenture Act of 1939, as amended, and the Pass Through Trust Agreement: Section of Section of the Act the Agreement - ------------------ ------------- 310(a)(1) and (2)..................................................10.02 310(a)(3)..........................................................10.05 310(a)(4).......................................................Art. VII 310(a)(5)..........................................................10.02 310(b)(i)-(iii).............................................10.01, 10.03 310(b)(remainder)......................................................* 310(c)......................................................Inapplicable 311(a).................................................................* 311(b).............................................................10.06 311(c)......................................................Inapplicable 312(a)..................... ..................................2.12, 4.01 312(b).................................................................* 312(c)..............................................................4.02 313(a)..............................................................4.04 313(b)(1)..............................................................* 313(b)(2)..............................................................* 313(c)..............................................................4.04 313(d).................................................................* 314(a)..............................................................4.03 314(b)......................................................Inapplicable 314(c)(1) and (2)..................................................13.07 314(c)(3)...................................................Inapplicable 314(d)(1)..............................................................* 314(d)(2)..............................................................* 314(d)(3)..............................................................* 314(e).............................................................13.07 314(f)......................................................Inapplicable 315(a), (c) and (d)....................................................* 315(b)..............................................................7.11 315(e).................................................................* 316(a)(1).....................................................7.09, 7.10 316(a)(2)..........................................................11.01 316(a)(last sentence)...............................................6.04 316(b)..............................................................7.08 316(c)...........................................................6.01(b) 317(a)........................................................7.03, 7.05 317(b)..............................................................3.04 318(a).............................................................13.08 _____________ *Intentionally deleted. TABLE OF CONTENTS PARTIES.................................................................... 1 RECITALS................................................................... 1 ARTICLE I DEFINITIONS ARTICLE II ISSUANCE OF PASS THROUGH CERTIFICATES; ACQUISITION OF EQUIPMENT CERTIFICATES SECTION 2.01 Amount Unlimited; Issuable in Series; Series Supplements. ..................................... 11 SECTION 2.02. Acquisition of Equipment Certificates. ........... 13 SECTION 2.03. Initial Certificateholders as Grantors............ 15 SECTION 2.04. Limitation of Powers. ............................ 16 SECTION 2.05. Execution of Pass Through Certificates. .......... 16 SECTION 2.06. Certificate of Authentication. ................... 16 SECTION 2.07. Form and Denomination of Pass Through Certificates...................................... 17 SECTION 2.08. Registration, Transfer and Exchange............... 17 SECTION 2.09. Mutilated, Defaced, Destroyed, Lost and Stolen Pass Through Certificates......................... 18 SECTION 2.10. Cancellation of Pass Through Certificates; Destruction Thereof. ............................. 19 SECTION 2.11. Temporary Pass Through Certificates. ............. 20 SECTION 2.12. Pass Through Certificates Issuable in the Form of a Registered Global Certificate. ................. 20 ARTICLE III CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS SECTION 3.01. Covenants of the Company. ........................ 22 SECTION 3.02. Offices for Payments; Registrar................... 23 SECTION 3.03. Representations and Warranties of the Pass Through Trustee. ......................................... 24 SECTION 3.04. Paying Agents..................................... 25 SECTION 3.05. No Representations or Warranties as to Documents.. 26 SECTION 3.06. Payments from Trust Property Only. ............... 26 SECTION 3.07. Limitation of the Company's Liability. ........... 26 ARTICLE IV CERTIFICATEHOLDER LISTS AND REPORTS BY THE COMPANY AND THE PASS THROUGH TRUSTEE SECTION 4.01. Certificateholder Lists; Ownership of Pass Through Certificates...................................... 27 SECTION 4.02. Disclosure of Certificateholder Lists. ........... 27 SECTION 4.03. Reports by the Company. .......................... 27 SECTION 4.04. Reports by the Pass Through Trustee. ............. 28 ARTICLE V RECEIPT AND DISTRIBUTION OF INCOME AND PROCEEDS FROM THE TRUST PROPERTY SECTION 5.01. Certificate Account and Special Payments Account.. 28 SECTION 5.02. Distributions from Certificate Account and Special Payments Account. ................................ 29 SECTION 5.03. Statements to Certificateholders. ................ 31 SECTION 5.04. Investment of Special Payment Moneys. ............ 31 SECTION 5.05. Withholding Taxes. ............................... 31 ARTICLE VI CONCERNING THE CERTIFICATEHOLDERS SECTION 6.01. Evidence of Action Taken by Certificateholders. .. 32 SECTION 6.02. Proof of Execution of Instruments and of Holding of Certificates. ................................. 33 SECTION 6.03. Certificateholders to Be Treated as Owners. ...... 33 SECTION 6.04. Pass Through Certificates Owned by the Company and Related Owner Trustees Deemed Not Outstanding. ... 33 SECTION 6.05. Right of Revocation of Action Taken. ............. 34 SECTION 6.06. ERISA. ........................................... 35 ARTICLE VII REMEDIES OF PASS THROUGH TRUSTEE AND CERTIFICATEHOLDERS SECTION 7.01. Events of Default. ............................... 35 SECTION 7.02. Incidents of Sale of Equipment Certificates. ..... 36 SECTION 7.03. Pass Through Trustee May Prove Debt. ............. 37 SECTION 7.04. Remedies Cumulative. ............................. 38 SECTION 7.05. Suits for Enforcement. ........................... 38 SECTION 7.06. Discontinuance of Proceedings. ................... 38 SECTION 7.07. Limitations on Suits by Certificateholders. ...... 39 SECTION 7.08. Unconditional Right of Certificateholders to Receive Principal, Interest and Premium, and to Institute Certain Suits. ................................... 39 SECTION 7.09. Control by Certificateholders. ................... 40 SECTION 7.10. Waiver of Past Events of Default. ................ 40 SECTION 7.11. Notice of Pass Through Defaults. ................ 41 ARTICLE VIII CONCERNING THE PASS THROUGH TRUSTEE SECTION 8.01. Acceptance by Pass Through Trustee. .............. 41 SECTION 8.02. Pass Through Trustee's Liens. .................... 42 SECTION 8.03. Certain Rights of the Pass Through Trustee. ..... 42 SECTION 8.04. Pass Through Trustee Not Responsible for Recitals. 43 SECTION 8.05. Pass Through Trustee and Agents May Hold Pass Through Certificates; Collections. ............... 43 SECTION 8.06. Moneys Held by Pass Through Trustee. ............. 44 SECTION 8.07. Right of Pass Through Trustee to Rely on Officer's Certificate....................................... 44 SECTION 8.08. Compensation. .................................... 44 ARTICLE IX INDEMNIFICATION OF PASS THROUGH TRUSTEE BY THE COMPANY ARTICLE X SUCCESSOR TRUSTEES SECTION 10.01. Resignation and Removal of Pass Through Trustee; Appointment of Successor. ........................ 46 SECTION 10.02. Persons Eligible for Appointment as Pass Through Trustee. ......................................... 47 SECTION 10.03. Acceptance of Appointment by Successor Trustee. .. 48 SECTION 10.04. Merger, Conversion, Consolidation or Succession to Business of Pass Through Trustee. ................ 49 SECTION 10.05. Appointment of Separate Pass Through Trustees. ... 50 SECTION 10.06 Preferential Claim. .............................. 52 ARTICLE XI SUPPLEMENTS AND AMENDMENTS TO THIS PASS THROUGH AGREEMENT AND OTHER DOCUMENTS SECTION 11.01. Supplemental Agreements Without Consent of Certificateholders. .............................. 53 SECTION 11.02. Supplemental Agreements With Consent of Certificate-holders............................... 54 SECTION 11.03 Effect of Supplemental Agreements. ............... 56 SECTION 11.04. Documents to Be Given to Trustee. ................ 56 SECTION 11.05. Notation on Pass Through Certificates in Respect of Supplemental Agreements. ...................... 56 SECTION 11.06. Trust Indenture Act. ............................. 56 SECTION 11.07. Revocation and Effect of Consents. ............... 57 SECTION 11.08. Amendments, Waivers, etc., of Related Indenture Documents......................................... 57 ARTICLE XII TERMINATION OF PASS THROUGH TRUSTS; UNCLAIMED MONEYS SECTION 12.01. Termination of Pass Through Trusts. .............. 57 SECTION 12.02. Application by Pass Through Trustee of Funds Deposited for Payment of Pass Through Certificates...................................... 58 SECTION 12.03. Repayment of Moneys Held by Paying Agent. ........ 58 SECTION 12.04. Transfer of Moneys Held by Pass Through Trustee and Paying Agent Unclaimed for Two Years and Eleven Months. ................................... 58 ARTICLE XIII MISCELLANEOUS SECTION 13.01. Capacity in Which Acting.......................... 59 SECTION 13.02. No Legal Title to Trust Property in Certificateholders................................ 59 SECTION 13.03. Certificates Nonassessable and Fully Paid. ....... 59 SECTION 13.04. Pass Through Agreement for the Benefit of the Company, the Pass Through Trustee and the Certificateholders. .............................. 60 SECTION 13.05. Limitation on Rights of Certificateholders. ...... 60 SECTION 13.06. Notices. ......................................... 60 SECTION 13.07. Officer's Certificates and Opinions of Counsel; Statements to Be Contained Therein. .............. 61 SECTION 13.08. Conflict of Any Provision of Pass Through Agreement with the Trust Indenture Act. .......... 62 SECTION 13.09. Severability. .................................... 62 SECTION 13.10. No Oral Modifications or Continuing Waivers. ..... 62 SECTION 13.11. Successors and Assigns. .......................... 63 SECTION 13.12. Headings. ........................................ 63 SECTION 13.13. Normal Commercial Relations. ..................... 63 SECTION 13.14. Governing Law; Counterpart Form. ................. 63 SECTION 13.15. Distributions Due on Days Other than Business Days 63 EXHIBIT A Form of Pass Through Certificate EXHIBIT B Form of Series Supplement PASS THROUGH TRUST AGREEMENT PASS THROUGH TRUST AGREEMENT dated as of June 1, 1996, between FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Company"), and State Street Bank and Trust Company, a Massachusetts trust company, as Pass Through Trustee (together with any successor hereunder or under any Pass Through Trust as herein provided, the "Pass Through Trustee"). RECITALS WHEREAS, capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, from time to time the Company will enter into a Series Supplement with the Pass Through Trustee named therein in accordance with this Pass Through Agreement pursuant to which the Pass Through Trustee will declare the creation of a separate Pass Through Trust for the benefit of the Certificateholders of the Series of Pass Through Certificates to be issued pursuant to such Pass Through Trust, and the initial Certificateholders of such Series, as the grantors of such Pass Through Trust, by their respective acceptances of such Pass Through Certificates, will join in the creation of such Pass Through Trust; WHEREAS, the Pass Through Certificates of each Series will evidence fractional undivided interests in the Pass Through Trust pursuant to which they will be issued, and will have no rights, benefits or interest in respect of any other separate Pass Through Trust or the Trust Property held in any such other Pass Through Trust; WHEREAS, for each Pass Through Trust, the Pass Through Trustee will purchase one or more issues of Equipment Certificates of the same interest rate as, and final maturity dates not later than the final scheduled Regular Distribution Date of, the Series of Pass Through Certificates to be issued in respect of such Pass Through Trust and will hold such Equipment Certificates in trust as Trust Property for the benefit of the Certificateholders of such Series; WHEREAS, to facilitate the sale of Equipment Certificates to, and the purchase of Equipment Certificates by, the Pass Through Trustee on behalf of each such Pass Through Trust, the Company has duly authorized the execution and delivery of this Pass Through Agreement and each Series Supplement as the "issuer," as such term is defined in and solely for purposes of the Securities Act, of the Pass Through Certificates to be issued in respect of each Pass Through Trust and as the "obligor," as such term is defined in and solely for purposes of the Trust Indenture Act, with respect to all such Pass Through Certificates and is undertaking to perform certain administrative duties hereunder and to pay the fees and expenses of the Pass Through Trustee; WHEREAS, this Pass Through Agreement, as amended or supplemented from time to time, is subject to the provisions of the Trust Indenture Act and shall, to the extent applicable, be governed by such provisions; IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows: ARTICLE I DEFINITIONS The following terms (except as otherwise expressly provided or unless the context otherwise clearly requires) for all purposes of this Pass Through Agreement have the respective meanings specified in this Section, as amended or supplemented by the provisions of the Series Supplement for a particular Series. All other terms used in this Pass Through Agreement that are defined in the Trust Indenture Act or the definitions of which in the Securities Act are referred to in the Trust Indenture Act (except as herein otherwise expressly provided or unless the context otherwise clearly requires), have the meanings assigned to such terms in the Trust Indenture Act and in the Securities Act. All accounting terms used and not expressly defined herein have the meanings given to them in accordance with generally accepted accounting principles, and the term "generally accepted accounting principles" means the accounting principles that are generally accepted at the date or time of any computation or otherwise at the date hereof. The words "herein," "hereof" and "hereunder" and other words of similar import refer to this Pass Through Agreement as a whole and not to any particular Article, Section or other subdivision. References to designated "Articles," "Sections," "subsections" and other subdivisions of this Pass Through Agreement are to the designated Articles, Sections, subsections and other subdivisions of this Pass Through Agreement. The terms defined in this Article include the plural as well as the singular. "Affiliate," has for any Person, the meaning specified in Rule 0-2 under the Trust Indenture Act. "Business Day" means, for any Series, any day other than Saturday, Sunday or other day on which banking institutions in the States of Massachusetts, New York or Tennessee, or any other state in which the Pass Through Trustee or any Related Indenture Trustee or Related Owner Trustee for the Pass Through Trust for such Series maintains an office for the receipt or disbursement of funds for the transactions contemplated herein or in any Indenture Documents for the Equipment Certificates that constitute Trust Property of such Pass Through Trust, are authorized or required by law to close. "Certificate Account" means, for any Pass Through Trust, the account or accounts created and maintained for such Pass Through Trust pursuant to Section 5.01(a) hereof and the related Series Supplement. "Certificateholder" means, for any Series, the Person who is the registered holder of any Pass Through Certificate as evidenced on the Register for such Series. "Code" means the Internal Revenue Code of 1986, as amended. "Commission" means the Securities and Exchange Commission of the United States, or if at any time after the execution and delivery of this Pass Through Agreement such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. "Company" means Federal Express Corporation, a Delaware corporation, and its permitted successors and assigns hereunder. "Corporate Trust Office" means the corporate trust office of the Pass Through Trustee in the city in which the Pass Through Trustee's corporate trust business shall be administered and which the Pass Through Trustee shall have specified by notice in writing to the Company and the Certificateholders of each Series. "Cut-off Date for Pass Through Trust" means, for any Pass Through Trust, the date specified as such in the related Series Supplement, provided that in no event shall such Cut-off Date for Pass Through Trust be later than 90 days after the creation of such Pass Through Trust. "Delivery Date" means, for any Pass Through Trust, the date specified in the related Series Supplement for the purchase of the related Equipment Certificates, which date may be delayed for any such Equipment Certificates as provided in Section 2.02 hereof. "Delayed Delivery Notice" means, for any Pass Through Trust, a certificate signed by a Responsible Officer of the Company (i) requesting that the Pass Through Trustee temporarily delay purchase of any related Equipment Certificates to a date later than the applicable Issuance Date, (ii) stating the amount of the purchase price of each such Equipment Certificate and the aggregate purchase price of all such Equipment Certificates, (iii) stating the reasons for such delay and (iv) with respect to any Participation Agreement for such delayed Equipment Certificates, either (1) setting or resetting the Delivery Date (which shall be on or prior to the applicable Cut-off Date for Pass Through Trust), or (2) indicating that such Delivery Date will be set by subsequent written notice not less than one Business Day prior to such new Delivery Date (which shall be on or prior to the applicable Cut-off Date for Pass Through Trust). "Delayed ECs" means, for any Pass Through Trust, any Equipment Certificates that are the subject of a Delayed Delivery Notice. "Deposit Trust" means a separate trust created pursuant to a Deposit Trust Agreement. "Deposit Trust Account" means, for any Deposit Trust, the deposit account established and maintained for such Deposit Trust pursuant to the related Deposit Trust Agreement. "Deposit Trust Agreement" means an agreement in form and substance reasonably satisfactory to the Company and the Pass Through Trustee for the purposes described in Section 2.02 hereof, between the Company, as depositor, the Pass Through Trustee and the Deposit Trustee. "Deposit Trust Funds" means, for any Delayed ECs, an amount equal to the purchase price of such Delayed ECs. "Deposit Trustee" means, for any Deposit Trust, the Person, acceptable to the Pass Through Trustee, defined as such in the related Deposit Trust Agreement. "Depositary" means, for any Series, the depository of the Registered Global Certificate, if any, representing the Pass Through Certificates of such Series and any successor to such depository appointed by the Company pursuant hereto. Such depository initially shall be The Depository Trust Company, a New York corporation, or any successor thereto registered under the Exchange Act or other applicable statute or regulation. "Distribution Date" means, for any Series, any Regular Distribution Date or Special Distribution Date or both for such Series. "Dollars" and "$" mean lawful currency of the United States of America. "Equipment Certificate" means, for any Pass Through Trust, any of the Equipment Trust Certificates or Equipment Purchase Certificates, issued pursuant to an Indenture and described in, or on a schedule attached to, the Series Supplement for such Pass Through Trust. "Equipment Purchase Certificate" means, for any Pass Through Trust, any "Equipment Purchase Certificate," as such term is defined in the related Indenture, issued by the Company pursuant to an Indenture and described in, or on a schedule attached to, the Series Supplement for such Pass Through Trust, which is to be held by the Pass Through Trustee as part of the Trust Property of such Pass Through Trust. "Equipment Trust Certificate" means, for any Pass Through Trust, any "Equipment Trust Certificate," as such term is defined in the related Indenture, issued by an Owner Trustee pursuant to such Indenture and described in, or on a schedule attached to, the Series Supplement for such Pass Through Trust, which is to be held by the Pass Through Trustee as part of the Trust Property of such Pass Through Trust. "Event of Default" has the meaning specified in Section 7.01 hereof. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Fractional Undivided Interest" means, for any Pass Through Certificate, the fractional undivided interest in the related Pass Through Trust that is evidenced thereby. "Government Obligations" means direct obligations of the United States of America which are not callable, redeemable or payable prior to maturity, in whole or in part, directly or indirectly, by any Person. "Indenture" means (i) for any Equipment Trust Certificate, the trust indenture and security agreement among the Indenture Trustee, the Owner Trustee and, if applicable, the Company pursuant to which such Equipment Trust Certificate is issued and (ii) for any Equipment Purchase Certificate, the trust indenture and security agreement between the Indenture Trustee and the Company pursuant to which such Equipment Purchase Certificate is issued, in each case as such agreement may be modified, supplemented or amended from time to time in accordance with the related Indenture Documents. "Indenture Default" means, for any Indenture, any event or condition defined as a "Default" under such Indenture. "Indenture Documents" means (i) for any Equipment Trust Certificate, the related Indenture, the related Trust Agreement and the related Lease, in each case as defined in such Indenture, and the related Participation Agreement and (ii) for any Equipment Purchase Certificate, the related Indenture, the related Indenture Addendum, as defined in such Indenture, and the related Participation Agreement. "Indenture Event of Default" means, for any Indenture, any event or condition defined as an "Indenture Event of Default" in such Indenture. "Indenture Trustee" means, for any Equipment Certificate, the Person defined as such in the related Indenture. "Initial Regular Distribution Date" means, for any Pass Through Trust, the first Regular Distribution Date on which a Scheduled Payment is to be made following the Issuance Date for such Pass Through Trust. "Issuance Date" means, for any Pass Through Trust, the date of the issuance of the related Pass Through Certificates. "Lease" means, for any Equipment Trust Certificate, the agreement between the Company, as lessee, and an Owner Trustee, as lessor, that is defined as the "Lease" in the related Indenture. "Letter of Representations" means, for any Series, a letter from the Company and the Pass Through Trustee to, and accepted by, the Depository in form and substance satisfactory to the Company and the Pass Through Trustee for the purposes of the related Series Supplement, as such letter may be modified or supplemented, or any successor letter thereto. "Lien" means any mortgage, pledge, lien, charge, disposition of title, encumbrance, lease or security interest. "Majority in Interest of Certificateholders" means, for any Series at any time, Pass Through Certificates of such Series then Outstanding (or the proxy therefor) representing in the aggregate not less than a majority of the aggregate Fractional Undivided Interests of the Pass Through Certificates then Outstanding under the related Pass Through Trust. "Officer's Certificate" means a certificate signed by a Responsible Officer of the Company, any Indenture Trustee or any Owner Trustee, as the case may be, delivered to the Pass Through Trustee. Each such certificate shall include the statements provided for in Section 13.07 hereof. "Opinion of Counsel" means a written opinion of legal counsel, who in the case of counsel (a) for the Company may be (i) an attorney employed by the Company who is generally empowered to deliver such written opinions, or (ii) other counsel designated by the Company and reasonably satisfactory to the Pass Through Trustee and (b) for any Owner Trustee or Indenture Trustee, an attorney selected by such Person and reasonably satisfactory to the Pass Through Trustee. "Outstanding" means, when used with respect to Pass Through Certificates of any Series, as of the date of determination and subject to the provisions of Section 6.04 hereof, all Pass Through Certificates theretofore authenticated and delivered for such Series, with the exception of the following: (i) Pass Through Certificates theretofore cancelled by the Pass Through Trustee or delivered to the Pass Through Trustee for cancellation pursuant to Section 2.10 hereof; (ii) All Pass Through Certificates of such Series if money in the amount required to make the final distribution thereon in accordance with Section 12.01 hereof has been theretofore deposited with the Pass Through Trustee in trust for the Certificateholders of such Series pending such final distribution; and (iii) Pass Through Certificates in exchange for or in lieu of which other Pass Through Certificates have been authenticated and delivered pursuant to Article II hereof. "Overdue Scheduled Payment" means, for any Pass Through Trust, any Scheduled Payment that is not received within seven Business Days after the Regular Distribution Date applicable to such Scheduled Payment. "Owner Participant" means, for any Equipment Trust Certificate, the Person defined as such in the related Indenture. "Owner Trustee" means, for any Equipment Trust Certificate, the Person defined as such in the related Indenture. "Participation Agreement" means (i) for any Equipment Trust Certificate, the agreement among the Company, the Owner Participant, the Owner Trustee, the Indenture Trustee, the Pass Through Trustee and, if applicable, each Original Loan Participant (as defined in such Participation Agreement), that is defined as the "Participation Agreement" in the related Indenture and pursuant to which the Pass Through Trustee agrees to purchase such Equipment Trust Certificate upon the issuance thereof by such Owner Trustee and (ii) for any Equipment Purchase Certificate, the agreement among the Company, the Indenture Trustee and the Pass Through Trustee that is defined as the "Transfer Agreement" in the related Indenture and pursuant to which the Pass Through Trustee agrees to purchase such Equipment Purchase Certificate from the Banks (as defined in such Participation Agreement). "Pass Through Agreement," "this Pass Through Agreement" and other like words mean this Pass Through Trust Agreement as the same may be modified, supplemented or amended from time to time in accordance with the provisions hereof, but does not include, unless otherwise specified, any Series Supplement. "Pass Through Certificate" means, for any Series, any of the certificates executed, authenticated and delivered for such Series by the Pass Through Trustee, in accordance with this Pass Through Agreement and pursuant to the related Series Supplement. "Pass Through Default" means, for any Pass Through Trust, an Event of Default or an event or condition that, with the giving of notice or the lapse of time or both, would become an Event of Default. "Pass Through Trust" means a separate trust created in accordance with this Pass Through Agreement by a Series Supplement incorporating the provisions hereof, as such provisions may be amended or supplemented thereby, the estate of which consists of the related Trust Property. "Pass Through Trustee" means the institution executing this Pass Through Agreement as Pass Through Trustee, or its successor in interest, and any successor or other trustee appointed as provided herein; provided that if the same institution is not acting as the Pass Through Trustee in respect of all Series, the phrase "the Pass Through Trustee" shall, unless the context otherwise requires, mean, as to any Series, the institution named in the applicable Series Supplement as Pass Through Trustee in respect of such Series, or its successor in interest and any successor or other trustee appointed as provided herein. "Paying Agent" has the meaning set forth in Section 3.04 hereof. "Permitted Investments" means (a) direct obligations of the United States of America or obligations fully guaranteed by the United States of America; (b) commercial paper rated A-1/P-1 by Standard & Poor's Ratings Group and Moody's Investors Service, Inc., respectively or, if such ratings are unavailable, rated by any nationally recognized rating organization in the United States equal to the highest rating assigned by such rating organization; (c) overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers; and (d) overnight repurchase agreements with respect to the securities described in clause (a) above entered into with an office of a bank or trust company which is located in the United States of America of any bank or trust company which is organized under the laws of the United States or any state thereof and has capital, surplus and undivided profits aggregating at least $500 million. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, nonincorporated organization or government or any agency or political subdivision thereof. "Pool Balance" means, for any Pass Through Trust, as of any date of determination the aggregate unpaid principal amount of the Equipment Certificates that constitute Trust Property of such Pass Through Trust on such date plus the amount of the principal payments on such Equipment Certificates held by the Pass Through Trustee and not yet distributed plus the amount of any moneys transferred to the Company and deposited in the related Deposit Trust Account (other than earnings thereon and without giving effect to any losses on investments thereof). The Pool Balance as of any Regular Distribution Date or Special Distribution Date shall be computed after giving effect to the payment of principal, if any, on such Equipment Certificates and the distribution thereof being made on that date. "Pool Factor" means, for any Pass Through Trust, as of any date of determination the quotient (rounded to the seventh decimal place) computed by dividing (i) the Pool Balance by (ii) the aggregate original amount of the Pass Through Certificates of the related Series. The Pool Factor as of any Regular Distribution Date or Special Distribution Date shall be computed after giving effect to the payment of principal, if any, on such Equipment Certificates and the distribution thereof being made on that date. "Record Date," for any Series, means, (i) for any Regular Distribution Date, the date specified in the related Series Supplement as the Record Date for such Regular Distribution Date and (ii) for any Special Distribution Date, the 15th day preceding such Special Distribution Date, in any event, whether or not such date is a Business Day. "Register" has the meaning set forth in Section 3.02 hereof. "Registered Global Certificate" means, for any Series, each Pass Through Certificate, if any, issued to the Depository in accordance with Article II hereof and bearing the legend prescribed in Section 2.12(a) hereof. "Registrar" has the meaning set forth in Section 3.02 hereof. "Regular Distribution Date" means, for any Pass Through Trust, any date specified in the related Series Supplement for the distribution of any Scheduled Payment from such Pass Through Trust to the related Certificateholders. "Related Indenture Trustee" means, for any Pass Through Trust, any Indenture Trustee under an Indenture relating to any Equipment Certificate that constitutes Trust Property thereof, and "Related Indenture Trustees" means all such Indenture Trustees for all such Equipment Certificates constituting Trust Property thereof. "Related Owner Participant" means, for any Pass Through Trust, any Owner Participant under a Trust Agreement relating to any Equipment Trust Certificate that constitutes Trust Property, and "Related Owner Participants" means all such Owner Participants for all such Equipment Trust Certificates constituting Trust Property thereof. "Related Owner Trustee" means, for any Pass Through Trust, any Owner Trustee under a Trust Agreement relating to any Equipment Trust Certificate that constitutes Trust Property, and "Related Owner Trustees" means all such Owner Trustees for all such Equipment Trust Certificates constituting Trust Property thereof. "Responsible Officer" means the president or any vice president; or, in the case of the Pass Through Trustee, an officer in its Corporate Trust Office. "Scheduled Payment" means, for any Pass Through Trust, any scheduled payment of principal of (whether by installment or redemption or otherwise) and interest on any Equipment Certificate that constitutes Trust Property thereof to be made in the amounts and on the date set forth for such payment in such Equipment Certificate, but does not include any Overdue Scheduled Payment. "Securities Act" means the Securities Act of 1933, as amended. "Series" means a separate series of Pass Through Certificates issued pursuant to this Pass Through Agreement and a Series Supplement. "Series Supplement" means an agreement executed and delivered by the Company and the Pass Through Trustee in accordance with this Pass Through Agreement, incorporating the provisions hereof, as amended or supplemented thereby, and creating a separate Pass Through Trust for the benefit of the Certificateholders of the Series of Pass Through Certificates to be issued under such Pass Through Trust. "Special Distribution Date" means, for any Pass Through Trust, any date specified in the related Series Supplement for the distribution of any Special Payment from such Pass Through Trust to the related Certificateholders. "Special Payment" means, for any Pass Through Trust, any payment (including any Overdue Scheduled Payment) other than a Scheduled Payment on any Equipment Certificate that constitutes Trust Property thereof, any proceeds from the sale of such Equipment Certificate pursuant to Article VII hereof or any payment by the Company pursuant to the last two paragraphs of Section 2.02(b) hereof. "Special Payments Account" means, for any Pass Through Trust, the account or accounts created and maintained for such Pass Through Trust pursuant to Section 5.01(b) hereof and the related Series Supplement. "Specified Investments" has, for any Deposit Trust, the meaning set forth for such term in the related Deposit Trust Agreement. "Trust Agreement" means, for any Equipment Trust Certificate, the agreement between an Owner Trustee and an Owner Participant that is defined as the "Trust Agreement" in the related Indenture. "Trust Indenture Act" means (except as otherwise provided in Section 11.06) the Trust Indenture Act of 1939, as amended, as in force at the date as of which this Pass Through Agreement was first qualified under such Act. "Trust Property" means, for any Pass Through Trust, all money, instruments, including the related Equipment Certificates, and other property held as the property of such Pass Through Trust, including all distributions thereon and proceeds thereof. ARTICLE II ISSUANCE OF PASS THROUGH CERTIFICATES; ACQUISITION OF EQUIPMENT CERTIFICATES SECTION 2.01. Amount Unlimited; Issuable in Series; Series Supplements. (a) The aggregate amount of Pass Through Certificates that may be authenticated and delivered in accordance with this Pass Through Agreement is unlimited. The Pass Through Certificates may be issued from time to time in one or more Series, each Series relating to a separate Pass Through Trust, and shall be designated generally as the "Pass Through Certificates," with further designations added or incorporated in the title for the Pass Through Certificates of any Series as specified in the related Series Supplement. Each Pass Through Certificate shall bear upon its face the designation so selected for the Series to which it belongs. All Pass Through Certificates of the same Series shall be substantially identical except as to denomination and as may otherwise be provided in the related Series Supplement. The Pass Through Certificates of each Series will evidence fractional undivided interests in the separate Pass Through Trust formed by the related Series Supplement, and will have no rights, benefits or interest in respect of any other separate Pass Through Trust or the Trust Property held in such other Pass Through Trust. All Pass Through Certificates of the same Series shall be in all respects equally and ratably entitled to the benefits of the related Pass Through Trust without preference, priority, or distinction on account of the actual time or times of authentication and delivery, all in accordance with the terms and provisions of this Pass Through Agreement and the related Series Supplement. (b) The following matters shall be established for the Pass Through Certificates of each Series in a Series Supplement executed and delivered by the Company and the Pass Through Trustee: (1) the formation of the Pass Through Trust in which the Pass Through Certificates of such Series evidence fractional undivided interests and its designation (which designation shall distinguish such Pass Through Trust from each other Pass Through Trust); (2) the specific title of the Pass Through Certificates of such Series (which title shall distinguish the Pass Through Certificates of the Series from each other Series); (3) subject to Section 2.02(a) hereof, any limit upon the aggregate amount of the Pass Through Certificates of such Series that may be authenticated and delivered under this Pass Through Agreement; (4) the related Cut-off Date for Pass Through Trust; (5) the related Regular Distribution Dates; (6) the related Special Distribution Dates; (7) if other than as provided in Section 3.02 hereof, the Registrar or the Paying Agent for such Series, including any Co-Registrar or additional Paying Agent; (8) if other than as provided in Section 2.07 hereof, the denominations in which the Pass Through Certificates of such Series are issuable; (9) the specific form of the Pass Through Certificates of such Series and whether or not the Pass Through Certificates of such Series are to be issued as one or more Registered Global Certificates and if the Pass Through Certificates are to be issued as one or more Registered Global Certificates, the Depository for the Registered Global Certificates and the Letter of Representations; (10) a description of the Equipment Certificates to be acquired by and held in the related Pass Through Trust and of the related Indenture Documents; (11) provisions with respect to the terms for which the definitions set forth in Article I hereof permit or require further specification in the related Series Supplement; (12) whether the Pass Through Certificates are eligible for purchase by ERISA Plans (as defined in Section 6.06 hereof) and, if applicable, any restrictions on purchases of Pass Through Certificates by ERISA Plans; (13) the acceptance of appointment by the institution named to act as Pass Through Trustee with respect to such Series if different from the institution executing this Pass Through Agreement or its successor; and (14) any other terms of the Pass Through Certificates of such Series (which terms shall not be inconsistent with the provisions of the Trust Indenture Act as in effect at the time of the execution and delivery of such Series Supplement or adversely affect the interest of the Certificateholders of any Series outstanding at the time), including any terms that may be required or advisable under United States laws or regulations or advisable in connection with the marketing of the Series. (c) At any time and from time to time after the execution and delivery of this Pass Through Agreement, the Company and the Pass Through Trustee may execute and deliver one or more Series Supplements, each forming a separate Pass Through Trust and establishing the terms of the Pass Through Certificates of the related Series, and pursuant to which the Pass Through Certificates of such Series shall be executed, authenticated and delivered by the Pass Through Trustee to the Person specified by the Company upon request of the Company and upon satisfaction of any conditions precedent set forth in the related Series Supplement on the Issuance Date for such Series. SECTION 2.02. Acquisition of Equipment Certificates. (a) Pass Through Certificates of a Series executed, authenticated and delivered by the Pass Through Trustee upon request of the Company in accordance with Section 2.01(c) hereof shall equal the aggregate principal amount of the Equipment Certificates to be purchased by the Pass Through Trustee pursuant to the related Participation Agreements, and evidence the entire ownership of the related Pass Through Trust. The Pass Through Trustee shall issue and sell such Pass Through Certificates, in authorized denominations and in such Fractional Undivided Interests, so as to result in the receipt of consideration in an amount equal to the aggregate principal amount of such Equipment Certificates and, concurrently therewith, the Pass Through Trustee shall purchase, pursuant to the terms and conditions of the Participation Agreements, the Equipment Certificates (except Delayed ECs, if any) at a purchase price equal to the amount of such consideration so received. Except as provided in Sections 2.08 and 2.09 hereof, the Pass Through Trustee shall not execute, authenticate or deliver Pass Through Certificates of such Series in excess of the aggregate amount determined in accordance with this subsection (a). The provisions of this subsection (a) are subject to the provisions of subsection (b) below. (b) If, on or prior to an Issuance Date, the Company delivers to the Pass Through Trustee a Delayed Delivery Notice relating to one or more Delayed ECs, then (i) the Pass Through Trustee shall postpone the purchase of the specified Delayed ECs, (ii) the Company, the Pass Through Trustee and the Deposit Trustee shall form a Deposit Trust, (iii) the Pass Through Trustee shall transfer to the Company the Deposit Trust Funds relating to such Delayed ECs and (iv) the Company shall deposit such Deposit Trust Funds into the Deposit Trust Account for such Deposit Trust. The Deposit Trust Funds so deposited shall be invested pursuant to the related Deposit Trust Agreement by the Deposit Trustee at the direction and risk of, and for the benefit of, the Company in Specified Investments. The Company agrees that withdrawals shall be made from any Deposit Trust Account only as provided in the related Deposit Trust Agreement. Upon notice from the Company on one or more occasions that any Delayed ECs are available for purchase and upon the satisfaction of the closing conditions specified in the applicable Participation Agreements and the related Series Supplement on or prior to the related Cut-off Date for Pass Through Trust, the Company shall cause the related Deposit Trust Funds to be withdrawn from the related Deposit Trust Account and paid to the Pass Through Trustee, free and clear of any Lien under the Deposit Trust Agreement, and the Pass Through Trustee shall purchase the applicable Delayed ECs with such Deposit Trust Funds. The purchase price for such Delayed ECs shall equal the principal amount of such Delayed ECs. On the Initial Regular Distribution Date for any Pass Through Trust for which Delayed ECs are purchased pursuant to this subsection, the Company shall pay, in immediately available funds, to the Pass Through Trustee an amount equal to the interest that would have accrued on any Delayed ECs purchased after the related Issuance Date as if such Delayed ECs had been purchased on such Issuance Date, from such Issuance Date to, but not including, the date of the purchase of such Delayed ECs for such Pass Through Trust. If the Company notifies the Pass Through Trustee prior to any Cut-off Date for Pass Through Trust that any related Delayed ECs will not be issued on or prior to such Cut-off Date for Pass Through Trust for any reason, on the next Special Distribution Date for such Pass Through Trust occurring more than 20 days following the date of such notice (i) the Company shall (A) pay to the Pass Through Trustee for deposit in the related Special Payments Account, in immediately available funds, an amount equal to the interest that would have accrued on the Delayed ECs designated in such notice at a rate equal to the interest rate applicable to the related Series from the related Issuance Date to, but not including, such Special Distribution Date and (B) cause an amount equal to the amount of Deposit Trust Funds that would have been used to purchase such Delayed ECs to be withdrawn from the related Deposit Trust Account and paid to the Pass Through Trustee, free and clear of any Lien under the Deposit Trust Agreement, and (ii) the Pass Through Trustee shall deposit in the related Special Payments Account, upon receipt from the Deposit Trustee pursuant to the related Deposit Trust Agreement, the amount received pursuant to clause (i)(B) above, and the amount paid by the Company pursuant to clause (i)(A) above, and such amounts shall be distributed as a Special Payment in accordance with the provisions hereof. If, on the Cut-off Date for Pass Through Trust for any Pass Through Trust, an amount equal to less than all of the Deposit Trust Funds (other than Deposit Trust Funds referred to in the immediately preceding paragraph) has been used to purchase related Delayed ECs, on the next Special Distribution Date for such Pass Through Trust occurring more than 20 days following such Cut-off Date for Pass Through Trust (i) the Company shall (A) pay to the Pass Through Trustee for deposit in the related Special Payments Account, in immediately available funds, an amount equal to the interest that would have accrued on such Delayed ECs contemplated to be purchased with such unused Deposit Trust Funds (other than any Deposit Trust Funds referred to in the immediately preceding paragraph) but not so purchased at a rate equal to the interest rate applicable to the related Series from the related Issuance Date to, but not including, such Special Distribution Date and (B) cause such unused Deposit Trust Funds to be withdrawn from the related Deposit Trust Account and paid to the Pass Through Trustee, free and clear of any Lien under the Deposit Trust Agreement, and (ii) the Pass Through Trustee shall deposit in such Special Payments Account, upon receipt from the Deposit Trustee pursuant to the related Deposit Trust Agreement, such unused Deposit Trust Funds received pursuant to clause (i)(B) above, and the amount paid by the Company pursuant to clause (i)(A) above, and such amounts shall be distributed as a Special Payment in accordance with the provisions hereof. SECTION 2.03. Initial Certificateholders as Grantors. By its acceptance of any Pass Through Certificate of any Series issued to it under the related Pass Through Trust, each initial Certificateholder of such Series as grantor of such Pass Through Trust shall join in the creation and declaration of such Pass Through Trust. SECTION 2.04. Limitation of Powers. Each Pass Through Trust shall be constituted solely for the purpose of making the investment in the Equipment Certificates provided for in the related Series Supplement and, except as set forth herein or in such Series Supplement, the Pass Through Trustee shall not be authorized or empowered to acquire any other investments or engage in any other activities and, in particular, the Pass Through Trustee shall not be authorized or empowered to do anything that would cause such Pass Through Trust to fail to qualify as a "grantor trust" for federal income tax purposes (including as subject to this restriction, acquiring any Aircraft (as defined in the respective related Indentures) by bidding such Equipment Certificates or otherwise, or taking any action with respect to any such Aircraft once acquired). SECTION 2.05. Execution of Pass Through Certificates. The Pass Through Certificates of each Series shall be signed on behalf of the Pass Through Trustee by an authorized officer of the Pass Through Trustee. Such signatures may be the manual or facsimile signatures of such officer and minor errors or defects in any reproduction of any such signature shall not affect the validity or enforceability of any Pass Through Certificate which has been duly authenticated and delivered by the Pass Through Trustee. If any officer of the Pass Through Trustee who signs any of the Pass Through Certificates subsequently ceases to be such officer before the Pass Through Certificate so signed is authenticated and delivered or disposed of by the Pass Through Trustee, such Pass Through Certificate nevertheless may be authenticated and delivered or disposed of as though the person who signed such Pass Through Certificate had not ceased to be such officer of the Pass Through Trustee; and any Pass Through Certificate may be signed on behalf of the Pass Through Trustee by such person or persons as, at the actual date of the execution of such Pass Through Certificate, are the proper officers of the Pass Through Trustee, although at the date of the execution and delivery of the related Series Supplement any such person was not such officer. SECTION 2.06. Certificate of Authentication. The Pass Through Trustee shall duly authenticate and deliver Pass Through Certificates for each Series in authorized denominations equaling the aggregate principal amount of the Equipment Certificates to be purchased for the related Pass Through Trust by the Pass Through Trustee pursuant to the related Participation Agreements, and evidencing the entire ownership of the related Pass Through Trust. Only such Pass Through Certificates of such Series as shall bear thereon a certificate of authentication substantially in the form set forth in Exhibit A, executed by the Pass Through Trustee by manual or facsimile signature of one of its authorized officers, shall be entitled to the benefits of the related Pass Through Trust or be valid or obligatory for any purpose. Such certificate by the Pass Through Trustee upon any Pass Through Certificate for such Series executed by the Pass Through Trustee shall be conclusive evidence that the Pass Through Certificate so authenticated has been duly authenticated and delivered hereunder and that the Certificateholder, as evidenced on the Register for such Series, is entitled to the benefits of the related Pass Through Trust. SECTION 2.07. Form and Denomination of Pass Through Certificates. The Pass Through Certificates of each Series shall be substantially in the form set forth in Exhibit A hereto. The Pass Through Certificates shall be issuable as registered securities without coupons and shall be numbered, lettered, or otherwise distinguished in such manner or in accordance with such plans as set forth in the related Series Supplement. The Pass Through Certificates of each Series shall be issued in minimum denominations of $1,000 and integral multiples thereof and shall be dated the date of their authentication. The Pass Through Certificates of any Series may be issued with appropriate insertions, omissions, substitutions and variations, and may have imprinted or otherwise reproduced thereon such legend, not inconsistent with the provisions of this Pass Through Agreement or the related Series Supplement, as may be required to comply with any law or with any rules or regulations pursuant thereto, or with the rules of the Depository or any securities market in which such Pass Through Certificates are admitted to trading, or to conform to general usage. SECTION 2.08. Registration, Transfer and Exchange. The Pass Through Trustee will keep at each office or agency to be maintained for any Series for the purpose as provided in Section 3.02 hereof a Register in which, subject to such reasonable regulations as it may prescribe, it will register, and will register the transfer of, Pass Through Certificates of the related Series as provided in this Article II. Such Register shall be in written form in the English language. Upon due presentation for registration of transfer of any Pass Through Certificate of the related Series at any such office or agency, the Pass Through Trustee shall execute, authenticate and deliver in the name of the transferee or transferees a new Pass Through Certificate of such Series in authorized denominations and for a like aggregate Fractional Undivided Interest. Subject to the provisions of Section 2.12 hereof, any Pass Through Certificate or Pass Through Certificates may be exchanged for a Pass Through Certificate or Pass Through Certificates of the same Series in other authorized denominations and for a like aggregate Fractional Undivided Interest. Pass Through Certificates to be exchanged shall be surrendered at any office or agency to be maintained by the Pass Through Trustee for the related Series for the purpose as provided in Section 3.02 hereof, and the Pass Through Trustee shall execute, authenticate and deliver in exchange therefor the Pass Through Certificate or Pass Through Certificates which the Certificateholder making the exchange shall be entitled to receive, bearing numbers not contemporaneously or previously outstanding. All Pass Through Certificates presented for registration of transfer, exchange, redemption or payment shall (if so required by the Pass Through Trustee) be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Pass Through Trustee duly executed by, the Certificateholder or such Person's attorney duly authorized in writing. The Pass Through Trustee may require payment from the Certificateholder of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any exchange or registration of transfer of Pass Through Certificates. No service charge to the Certificateholder shall be made for any such transaction. All Pass Through Certificates issued upon any transfer or exchange of Pass Through Certificates shall evidence ownership in the same Pass Through Trust and be entitled to the same benefits under this Pass Through Agreement and the applicable Series Supplement, as the Pass Through Certificates surrendered upon such transfer or exchange. Resales or other transfers of Pass Through Certificates represented by a Registered Global Certificate will be conducted in accordance with the provisions of this Pass Through Agreement, including without limitation Section 6.06 hereof, and the rules and procedures of the Depository applicable to U.S. corporate pass through certificates and without notice to, or action by, the Pass Through Trustee. Neither the Company nor the Pass Through Trustee will have any responsibility or liability for any aspect of the records relating to, or payments made on account of, beneficial ownership interests of a Registered Global Certificate or for maintaining, supervising or reviewing any records relating to such beneficial interests. SECTION 2.09. Mutilated, Defaced, Destroyed, Lost and Stolen Pass Through Certificates. If any Pass Through Certificate becomes mutilated, defaced or is apparently destroyed, lost or stolen, the Pass Through Trustee in its discretion may execute, authenticate and deliver a new Pass Through Certificate of like Fractional Undivided Interest in the related Pass Through Trust, bearing a number not contemporaneously or previously outstanding, in exchange and substitution for the mutilated or defaced Pass Through Certificate, or in lieu of and in substitution for the Pass Through Certificate so apparently destroyed, lost or stolen. In every case the applicant for a substitute Pass Through Certificate shall furnish to the Pass Through Trustee and any agent of the Pass Through Trustee such security or indemnity as may be required by them to indemnify and defend and to save each of them harmless from any such substitution and, in every case of destruction, loss or theft, evidence to their satisfaction of the apparent destruction, loss or theft of such Pass Through Certificate and of the ownership thereof. Upon the issuance of any substitute Pass Through Certificate, the Pass Through Trustee may require payment from the Certificateholder of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses (including the reasonable fees and expenses of the Pass Through Trustee) connected therewith. If any Pass Through Certificate of a Pass Through Trust for which a notice of termination has been or is about to be given pursuant to Section 12.01 hereof becomes mutilated or defaced or is apparently destroyed, lost or stolen, the Pass Through Trustee may, instead of issuing a substitute Pass Through Certificate, pay or authorize the payment of the same (without surrender thereof except in the case of a mutilated or defaced Pass Through Certificate), if the applicant for such payment furnishes to the Pass Through Trustee and any agent of the Pass Through Trustee such security or indemnity as any of them may require to save each of them harmless from all risks, however remote, resulting from such payment and, in every case of apparent destruction, loss or theft, the applicant shall also furnish to the Pass Through Trustee and any agent of the Pass Through Trustee evidence to their satisfaction of the apparent destruction, loss or theft of such Pass Through Certificate and of the ownership thereof. Every substitute Pass Through Certificate issued pursuant to the provisions of this Section 2.09 by virtue of the fact that any Pass Through Certificate is apparently destroyed, lost or stolen will constitute conclusive evidence of the Fractional Undivided Interest in the applicable Pass Through Trust evidenced by the Pass Through Certificate that it replaces, whether or not the apparently destroyed, lost or stolen Pass Through Certificate may be enforceable at any time by anyone and will be entitled to all the benefits of (but will be subject to all the limitations of rights set forth in) the applicable Pass Through Trust equally and proportionately with any and all other Pass Through Certificates duly authenticated and delivered therefor. All Pass Through Certificates will be held and owned upon the express condition that, to the extent permitted by law, the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, defaced, or apparently destroyed, lost or stolen Pass Through Certificates and will preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender. SECTION 2.10. Cancellation of Pass Through Certificates; Destruction Thereof. All Pass Through Certificates surrendered for payment, redemption, registration of transfer or exchange, if surrendered to any agent of the Pass Through Trustee, shall be delivered to the Pass Through Trustee for cancellation or, if surrendered to the Pass Through Trustee, shall be cancelled by it; and no Pass Through Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Pass Through Agreement or the applicable Series Supplement. The Pass Through Trustee shall destroy cancelled Pass Through Certificates held by it. SECTION 2.11. Temporary Pass Through Certificates. Pending the preparation of definitive Pass Through Certificates of any Series, the Pass Through Trustee may execute, authenticate and deliver temporary Pass Through Certificates for such Series (produced in a form satisfactory to the executing officer of the Pass Through Trustee, as evidenced by such officer's execution thereof). Such temporary Pass Through Certificates shall be issuable as registered Pass Through Certificates without coupons, of any authorized denomination, and substantially in the form of the definitive Pass Through Certificates of such Series but with such omissions, insertions and variations as may be appropriate for temporary Pass Through Certificates, all as may be determined by the executing officer of the Pass Through Trustee, as evidenced by such officer's execution thereof. Temporary Pass Through Certificates may contain such reference to any provisions of this Pass Through Agreement or the applicable Series Supplement as may be appropriate. Every such temporary Pass Through Certificate shall be executed and authenticated by the Pass Through Trustee upon the same conditions and in substantially the same manner, and with like effect, as the definitive Pass Through Certificates of such Series. Without unreasonable delay the Company shall furnish definitive Pass Through Certificates for such Series and thereupon temporary Pass Through Certificates shall be surrendered in exchange therefor without charge at any office or agency to be maintained by the Pass Through Trustee for the purpose pursuant to Section 3.02 hereof, and the Pass Through Trustee shall execute, authenticate and deliver in exchange for such temporary Pass Through Certificates such definitive Pass Through Certificates evidencing a like aggregate Fractional Undivided Interest in the applicable Pass Through Trust in authorized denominations. Until so exchanged, temporary Pass Through Certificates shall be entitled to the same benefits under the applicable Pass Through Trust and this Pass Through Agreement as definitive Pass Through Certificates of the applicable Series. SECTION 2.12. Pass Through Certificates Issuable in the Form of a Registered Global Certificate. For any Series, at the sole option of the Company as set forth in the related Series Supplement, this Section 2.12 shall apply to such Series or may be amended with respect to any Series. To the extent that the provisions of this Section 2.12 conflict with any other provisions of this Pass Through Agreement, the provisions of this Section 2.12 shall control. (a) If the Company shall establish pursuant to Section 2.01(b)(9) hereof that the Pass Through Certificates of a particular Series are to be issued in whole in the form of a Registered Global Certificate, then the Pass Through Trustee shall, in accordance with this Article II, execute, authenticate and deliver, one or more Registered Global Certificates which (i) shall represent, and shall be denominated in an amount equal to, the aggregate Fractional Undivided Interests of all of the Pass Through Certificates in the related Pass Through Trust, (ii) shall be registered in the name of the Depository or its nominee, (iii) shall be delivered by the Pass Through Trustee to the Depository or pursuant to the Depository's instruction, and (iv) shall bear a legend substantially to the following effect: "Unless this Registered Global Certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Pass Through Trustee or its agent for registration of transfer, exchange or payment, and any Registered Global Certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein." No Person acquiring a beneficial interest in a Pass Through Certificate will be entitled to receive a definitive Pass Through Certificate representing such Person's interest in the Pass Through Trust, except as provided in subsection (d) below. (b) Notwithstanding any other provision of this Section 2.12 or of Section 2.08 hereof, the Registered Global Certificate for any Series may be transferred, in whole but not in part and in the manner provided in Section 2.08 hereof, by the Depository to a nominee of such Depository or by a nominee of such Depository to such Depository or another nominee of such Depository or by such Depository or any such nominee to a successor Depository selected or approved by the Company upon notice to the Pass Through Trustee or to a nominee of such successor Depository. (c) The Depository shall be an organization registered as a clearing agency under the Exchange Act and any other applicable statute or regulation. (d) If at any time the Depository notifies the Company that it is unwilling or unable to continue as Depository for such Series or if at any time the Depository for such Series shall no longer be eligible under subsection (c) above, and a successor Depository is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such condition, as the case may be, this Section 2.12 shall no longer be applicable to the Pass Through Certificates of such Series and the Pass Through Trustee will execute, authenticate and deliver Pass Through Certificates of such Series in definitive registered form without coupons, in authorized denominations, and in an aggregate Fractional Undivided Interest in the related Pass Through Trust equal to the Fractional Undivided Interest in the related Pass Through Trust of the Registered Global Certificate then outstanding in exchange for such Registered Global Certificate. The Company may at any time and in its sole discretion determine that the Pass Through Certificates of any Series shall no longer be represented by a Registered Global Certificate and that the provisions of this Section 2.12 shall no longer apply to such Pass Through Certificates. In such event the Pass Through Trustee, upon receipt of an Officer's Certificate evidencing such determination by the Company, will notify the Depository of the availability of such Pass Through Certificates in definitive form and will execute, authenticate and deliver, Pass Through Certificates of such Series in definitive registered form without coupons, in authorized denominations and in an aggregate Fractional Undivided Interest in the related Pass Through Trust equal to the Fractional Undivided Interest in the related Pass Through Trust of the Registered Global Certificate then outstanding in exchange for such Registered Global Certificate. Upon the exchange of the Registered Global Certificate for such Pass Through Certificates in definitive registered form, such Registered Global Certificate shall be cancelled by the Pass Through Trustee. Such Pass Through Certificates in definitive registered form issued in exchange for the Registered Global Certificate pursuant to this subsection (d) shall be registered in such names and in such authorized denominations as the Depository shall instruct the Pass Through Trustee. The Pass Through Trustee shall deliver such Pass Through Certificates to the Persons in whose names such Pass Through Certificates are so registered. Upon the issuance of Pass Through Certificates in definitive registered form without coupons, the Pass Through Trustee shall recognize the Person in whose name such definitive Pass Through Certificates are registered in the Register from time to time as Certificateholders hereunder. (e) As long as the Pass Through Certificates of a Series are represented by a Registered Global Certificate, all distributions for such Series shall be made to the holder of such Registered Global Certificate as the Certificateholder of such Series, or to such Persons as such holder may designate, by wire transfer of immediately available funds on the date such distributions are due, and the Company shall or shall cause the Pass Through Trustee to provide to the Depository any notices referred to in the related Letter of Representations in accordance with such Letter of Representations. ARTICLE III CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS SECTION 3.01. Covenants of the Company. (a) The Company will preserve and maintain all of its rights, privileges and franchises necessary in the normal conduct of its business; provided that the Company shall not be required to preserve any right, privilege or franchise if the Company shall reasonably determine that the loss thereof will not materially adversely affect the Company's ability to perform its obligations hereunder or under any Series Supplement. (b) The Company shall not (i) consolidate with or merge into any other corporation under circumstances in which the Company is not the surviving corporation or (ii) convey, transfer or lease all or substantially all of its assets as an entirety to any Person, unless the corporation formed by such consolidation or into which the Company is merged or the Person which acquired by conveyance, transfer or lease substantially all of the assets of the Company as an entirety shall be a corporation organized and existing under the laws of the United States of America or any State or the District of Columbia, and shall execute and deliver to the Pass Through Trustee an agreement reasonably satisfactory in form and substance to the Pass Through Trustee containing an effective assumption by such successor corporation of the due and punctual performance and observance of each covenant and condition to be performed or observed by the Company hereunder and under each Series Supplement. (c) Upon any consolidation or merger, or any conveyance, transfer or lease of substantially all the assets of the Company as an entirety in accordance with this Section 3.01, the successor corporation formed by such consolidation or the Person into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company hereunder and under each Series Supplement with the same effect as if such successor corporation or such Person, as the case may be, had been named as the Company herein and therein. No such conveyance, transfer or lease of substantially all of the assets of the Company as an entirety shall have the effect of releasing the Company or any successor corporation which shall theretofore have become such in the manner prescribed in this Section 3.01 from its liability hereunder or under any Series Supplement. (d) The Pass Through Trustee shall receive an Opinion of Counsel of the Company as conclusive evidence that any consolidation, merger, sale, lease or conveyance, and any assumption complies with the provisions of this Section 3.01 and the Pass Through Trustee shall be entitled to rely upon the same for all purposes hereof. SECTION 3.02. Offices for Payments; Registrar. So long as any Pass Through Certificates of a Series remain outstanding, the Pass Through Trustee will maintain the following for such Series: (a) an office or agency where such Pass Through Certificates may be presented for payment and (b) a facility or agency in New York, New York where such Pass Through Certificates may be presented or surrendered for registration of transfer and for exchange and for redemption as provided in this Pass Through Agreement (the "Registrar"). Written notice of the location of each such other office or agency and of any change of location thereof shall be given by the Pass Through Trustee to the Company, any Owner Trustees, the Indenture Trustees and the Certificateholders of such Series. In the event that no such office or agency shall be maintained or no such notice of location or of change of location shall be given, presentations and demands may be made and notices may be served at the Corporate Trust Office of the Pass Through Trustee. The Registrar shall keep a Register with respect to the Pass Through Certificates of each Series and their transfer and exchange. The Pass Through Trustee may appoint one or more co-registrars ("Co-Registrars") for any Series and may terminate any such appointment at any time upon written notice. The term "Registrar" includes any Co-Registrar. Any Registrar shall be a bank or trust company organized and doing business under the laws of the United States or any state, with a combined capital and surplus of at least $100,000,000, or a direct or indirect subsidiary of such an entity, or a member of a bank holding company group, having a combined capital and surplus of at least $100,000,000 and such subsidiary or member itself having a capital and surplus of at least $10,000,000. The Pass Through Trustee shall initially act as Registrar and shall initially serve as an office where Pass Through Certificates can be presented for payment. SECTION 3.03. Representations and Warranties of the Pass Through Trustee. (a) The Pass Through Trustee, in its individual capacity (except with respect to clause (iv) below), represents, warrants and agrees that: (i) it is a validly existing national banking association or a bank or trust company organized or chartered under the laws of a State of the United States of America and duly organized under the laws of the United States of America or such State, as the case may be, holding a valid certificate to do business as a national banking association or a bank or trust company under the State of the United States of America where it is organized or chartered, as the case may be, with banking and trust powers and has the corporate power and authority to enter into and perform its obligations under this Pass Through Agreement; (ii) this Pass Through Agreement has been duly authorized by all necessary corporate action on its part, and neither the execution and delivery hereof nor its performance of any of the terms and provisions hereof will violate any federal law or the law of the State of the United States of America where it is located or regulation relating to its banking or trust powers or any judgment or order applicable to or binding on the Pass Through Trustee and will not contravene or result in any breach of, or constitute any default under its charter or by-laws or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it or its properties may be bound or affected; (iii) the execution, delivery and performance by the Pass Through Trustee of this Pass Through Agreement will not require the authorization, consent, or approval of, the giving of notice to, the filing or registration with, or the taking of any other action in respect of, any governmental authority or agency of the United States of America or the State of the United States of America where it is located regulating the banking and corporate trust activities of the Pass Through Trustee other than (i) the registration of the Pass Through Certificates under the Securities Act and under the securities laws of any state in which the Pass Through Certificates may be offered for sale if the laws of such state require such action and (ii) the qualification of the Pass Through Agreement under the Trust Indenture Act pursuant to an order of the Securities and Exchange Commission; (iv) this Pass Through Agreement has been duly executed and delivered by it and, assuming that this Pass Through Agreement is the legal, valid and binding obligation of the Company, is the legal, valid and binding obligation of the Pass Through Trustee, enforceable against the Pass Through Trustee in accordance with its terms except as may be limited by bankruptcy, insolvency, moratorium, reorganization, receivership, fraudulent conveyance or similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights and remedies generally from time to time in effect, regardless of whether such enforceability is considered in a proceeding in equity or at law; and (v) each Series Supplement executed by such Pass Through Trustee will be, upon the date of execution and delivery of such Series Supplement, executed and delivered by one of its officers duly authorized to execute and deliver such Series Supplement on its behalf. (b) The representations and warranties set forth in subsection (a) above shall be deemed to be made by the applicable Pass Through Trustee on each Issuance Date, except as otherwise provided in the applicable Series Supplement. SECTION 3.04. Paying Agents. Whenever the Pass Through Trustee in its sole discretion shall appoint a paying agent (the "Paying Agent") for any Pass Through Trust, it will cause the Paying Agent to execute and deliver an instrument in which the Paying Agent shall agree with the Pass Through Trustee, subject to the provisions of this Section 3.04, (a) that it will hold all sums received by it as such agent for distribution to the Certificateholders of the related Series (whether such sums have been paid to it by the Pass Through Trustee or the Related Owner Trustee or Indenture Trustee) in trust for the benefit of the Certificateholders of the related Series or of the Pass Through Trustee, and (b) that it will notify the Pass Through Trustee if the principal of or interest or premium on the Equipment Certificates that constitute Trust Property of such Pass Through Trust is not paid when the same is due and payable. Anything in this Section 3.04 to the contrary notwithstanding, the agreements to hold sums in trust as provided in this Section 3.04 are subject to the provisions of Sections 12.03 and 12.04 hereof. SECTION 3.05. No Representations or Warranties as to Documents. The Pass Through Trustee neither makes nor shall be deemed to have made any representation or warranty as to the validity, legality or enforceability of any Series Supplement, any related Pass Through Certificates or any related Indenture Documents or as to the correctness of any statement contained in any thereof, except for the representations and warranties of the Pass Through Trustee made in its individual capacity under this Pass Through Agreement, in any Series Supplement or in any related Participation Agreement. SECTION 3.06. Payments from Trust Property Only. For any Pass Through Trust, all payments or distributions to be made to Certificateholders of any Series under the related Series Supplement by the Pass Through Trustee under such Pass Through Trust shall be made only from the income and the proceeds from the related Trust Property and only to the extent that the Pass Through Trustee shall have sufficient income or proceeds from such Trust Property to enable the Pass Through Trustee to make distributions of the amounts due in respect of the Pass Through Certificates thereunder. Each Certificateholder of such Series by its acceptance of a related Pass Through Certificate agrees that it will look solely to the income and proceeds from the related Trust Property to the extent available for distribution to it as provided herein and in the related Series Supplement and that the Pass Through Trustee is not personally liable to such Certificateholder for any amounts payable under such Pass Through Trust except as expressly provided herein. SECTION 3.07. Limitation of the Company's Liability. The Company is a party to this Pass Through Agreement solely for purposes of meeting the requirements of the Trust Indenture Act, and therefore shall not be liable hereunder, except as otherwise expressly provided herein, or under the terms of any Series Supplement or any Pass Through Certificates, except as otherwise expressly provided therein. ARTICLE IV CERTIFICATEHOLDER LISTS AND REPORTS BY THE COMPANY AND THE PASS THROUGH TRUSTEE SECTION 4.01. Certificateholder Lists; Ownership of Pass Through Certificates. (a) For each Series, the Pass Through Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of the Certificateholders of such Series. If the Pass Through Trustee is not the Registrar for such Series, the Company shall cause the Registrar to furnish to the Pass Through Trustee semi-annually not more than 15 days after each Record Date, as of such Record Date, or at such other times as the Pass Through Trustee may request in writing, a list, in such form and as of such date as the Pass Through Trustee may reasonably require, containing all the information in the possession or control of the Registrar as to the names and addresses of the Certificateholders of such Series and the amounts of the Pass Through Certificates held by such Certificateholders. (b) For each Series, ownership of the Pass Through Certificates shall be proved by the Register for such Series kept by the Registrar. SECTION 4.02. Disclosure of Certificateholder Lists. Each and every Certificateholder, by receiving and holding such Pass Through Certificate, agrees with the Company and the Pass Through Trustee that neither the Company, the Pass Through Trustee, the Pass Through Trustee in its individual capacity nor any agent of any of the foregoing shall be held accountable by reason of the disclosure of any such information as to the names and addresses of any Certificateholders in accordance with the provisions of Section 312 of the Trust Indenture Act, regardless of the source from which such information was derived, and that the Pass Through Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 312(b) of the Trust Indenture Act. SECTION 4.03. Reports by the Company. The Company covenants: (a) to file with the Pass Through Trustee, within 30 days after the Company is required to file the same with the Commission, copies of the reports and documents, which the Company is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act; (b) to file with the Pass Through Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents, and reports with respect to compliance by the Company with the conditions and covenants provided for in this Pass Through Agreement as may be required from time to time by such rules and regulations; (c) to transmit to the Certificateholders of each Series in the manner and to the extent required by Section 313(c) of the Trust Indenture Act, within 30 days after the filing thereof with the Pass Through Trustee, such summaries of any information, documents and reports required to be filed by the Company pursuant to subsections (a) and (b) of this Section 4.03 as may be required by rules and regulations prescribed from time to time by the Commission; and (d) furnish to the Pass Through Trustee, on or before each March 15, a brief certificate from the principal executive officer, principal financial officer or principal accounting officer of the Company as to his or her knowledge of the Company's compliance with all conditions and covenants under this Pass Through Agreement and each Series Supplement. For purposes of this subsection (d), such compliance shall be determined without regard to any period of grace or requirement of notice provided under this Pass Through Agreement or any Series Supplement. SECTION 4.04. Reports by the Pass Through Trustee. For each Series, on or before each May 15, the Pass Through Trustee in respect of such Series shall transmit, in the manner and to the extent required by Section 313(c) of the Trust Indenture Act, any report required by Section 313(b) of the Trust Indenture Act to be transmitted by the Pass Through Trustee to the related Certificateholders. ARTICLE V RECEIPT AND DISTRIBUTION OF INCOME AND PROCEEDS FROM THE TRUST PROPERTY SECTION 5.01. Certificate Account and Special Payments Account. (a) The Pass Through Trustee shall establish and maintain for each Pass Through Trust, on behalf of the related Certificateholders of each Series, a Certificate Account as one or more non-interest bearing accounts. In each case, the Pass Through Trustee shall hold such Certificate Account in trust for the benefit of such Certificateholders, respectively, and shall make or permit withdrawals therefrom only as provided in this Pass Through Agreement or the related Series Supplement. Upon receipt of any Scheduled Payment, the Pass Through Trustee shall immediately deposit such Scheduled Payment in the applicable Certificate Account. (b) The Pass Through Trustee shall establish and maintain, as and when required, for each Pass Through Trust, on behalf of the related Certificateholders of each Series, a Special Payments Account as one or more accounts, which shall be non-interest bearing except as provided in Section 5.04 hereof. In each case, the Pass Through Trustee shall hold such Special Payments Account in trust for the benefit of such Certificateholders, respectively, and shall make or permit withdrawals therefrom only as provided in this Pass Through Agreement or the related Series Supplement. Upon receipt of any Special Payment, the Pass Through Trustee shall immediately deposit such Special Payment in the applicable Special Payments Account. (c) The Pass Through Trustee shall present any Equipment Certificate to the applicable Related Indenture Trustee on the date of its stated final maturity, or on such earlier date as such Equipment Certificate is to be redeemed or purchased in whole pursuant to the relevant Indenture. SECTION 5.02. Distributions from Certificate Account and Special Payments Account. (a) For each Pass Through Trust, on each related Regular Distribution Date, or as soon thereafter as the Pass Through Trustee has confirmed receipt of any Scheduled Payment due on the related Equipment Certificates on such Regular Distribution Date, the Pass Through Trustee shall distribute out of the applicable Certificate Account the entire amount deposited therein pursuant to Section 5.01(a) hereof by paying to each Certificateholder of the related Series of record at the close of business on the Record Date for such Regular Distribution Date (except as provided in Section 12.01 hereof concerning the final distribution), at the address for such Certificateholder appearing in the related Register, such Certificateholder's pro rata share (based on the aggregate Fractional Undivided Interest in the related Pass Through Trust held by such Certificateholder) of the aggregate amount in the applicable Certificate Account. (b) For each Pass Through Trust, on each related Special Distribution Date, or as soon thereafter as the Pass Through Trustee has confirmed receipt of any Special Payment due on the related Equipment Certificates or realized upon the sale of any such Equipment Certificates, the Pass Through Trustee shall distribute out of the applicable Special Payments Account the entire amount of such Special Payment deposited therein pursuant to Section 5.01(b) hereof by paying to each Certificateholder of the related Series of record at the close of business on the Record Date for such Special Distribution Date (except as provided in Section 12.01 hereof concerning the final distribution), at the address for such Certificateholder appearing in the related Register, such Certificateholder's pro rata share (based on the aggregate Fractional Undivided Interest in the related Pass Through Trust held by such Certificateholder) of the aggregate amount in the applicable Special Payments Account on account of such Special Payment. (c) For each Pass Through Trust, the Pass Through Trustee shall at the expense of the Company notify each Certificateholder of the related Series by mail at its address as it appears in the related Register of each related Special Payment for such Series. If the related Equipment Certificates are to be redeemed or purchased in whole prior to their respective maturities, or if a Special Payment is to be made pursuant to either of the last two paragraphs of Section 2.02(b) hereof, such notice shall be mailed not less than 20 days prior to the date any such Special Payment is scheduled to be distributed. For any other Special Payment, such notice shall be mailed as soon as practicable after the Pass Through Trustee has received funds for such Special Payment. Such notices of Special Payments shall set forth: (i) the Special Distribution Date and the Record Date therefor (except as otherwise provided in Section 12.01 hereof); (ii) the amount of the Special Payment for each $1,000 face amount Pass Through Certificate and the amount thereof constituting principal, premium, if any, and interest on the related Equipment Certificates; (iii) the reason for the Special Payment; and (iv) if the Special Distribution Date is the same date as a Regular Distribution Date for such Series, the total amount to be received on such date for each $1,000 face amount Pass Through Certificate. If the amount of premium, if any, payable upon the redemption or purchase in whole of an Equipment Certificate has not been calculated at the time that the Pass Through Trustee mails the notice of the related Special Payment, it shall be sufficient if the notice sets forth the other amounts to be distributed and states that any premium received will also be distributed. If, for any Pass Through Trust, any cancelable redemption of the related Equipment Certificates is cancelled, the Pass Through Trustee, as soon as possible after learning thereof, shall notify by mail each Certificateholder of the related Series at its address as it appears on the related Register. (d) For each Pass Through Trust, any Scheduled Payment or Special Payment to be distributed pursuant to this Article V shall be payable at the Corporate Trust Office of the Pass Through Trustee or at any office or agency maintained for such purpose for the related Series pursuant to Section 3.02 hereof, provided that any Scheduled Payment or Special Payment may be payable at the option of the Pass Through Trustee or its Paying Agent for the related Series by mailing checks for such Scheduled Payment or Special Payment payable to or upon the written order of the related Certificateholders entitled thereto as they appear on the related Register. SECTION 5.03. Statements to Certificateholders. (a) On each Regular Distribution Date and Special Distribution Date, the Pass Through Trustee shall mail to Certificateholders of the related Series a statement, giving effect to such distribution to be made on such Regular Distribution Date or Special Distribution Date, as the case may be, setting forth the following information (as to (i) and (ii) below, for each $1,000 face amount Pass Through Certificate): (i) the amount of such distribution allocable to principal and the amount allocable to premium, if any, on the related Equipment Certificates; (ii) the amount of such distribution allocable to interest on the related Equipment Certificates; and (iii) the Pool Balance and the Pool Factor of the related Pass Through Trust. (b) For each Series, within a reasonable period of time after the end of each calendar year but not later than the latest date permitted by law, the Pass Through Trustee shall furnish to each Person who at any time during such calendar year was a Certificateholder of such Series a statement containing the sum of the amounts determined pursuant to clauses (a)(i) and (a)(ii) of this Section 5.03 for the related Pass Through Trust for such calendar year or, in the event such Person was a Certificateholder of such Series during a portion of such calendar year, for the applicable portion of such year. SECTION 5.04. Investment of Special Payment Moneys. Any money received by the Pass Through Trustee pursuant to Section 5.01(b) hereof representing a Special Payment that is not to be promptly distributed shall, to the extent practicable, be invested by the Pass Through Trustee in Permitted Investments selected by the Company pending distribution of such Special Payment pursuant to Section 5.02 hereof. Any investment made pursuant to this Section 5.04 shall be in such Permitted Investments having maturities not later than the date that such moneys are required to be used to make the payment required under Section 5.02 hereof on the applicable Special Distribution Date and the Pass Through Trustee shall hold any such Permitted Investments until maturity. The proceeds upon maturity of any Permitted Investment shall not be reinvested pending distribution. The Pass Through Trustee shall have no liability with respect to any investment made pursuant to this Section 5.04, other than by reason of the willful misconduct or negligence of the Pass Through Trustee. All income and earnings from such investments shall be distributed on such Special Distribution Date as part of such Special Payment. SECTION 5.05. Withholding Taxes. The Pass Through Trustee shall withhold any taxes required to be withheld on payments to any Certificateholder of any Series, except to the extent that such Certificateholder has furnished evidence reasonably satisfactory to the Pass Through Trustee of any exemption from withholding claimed by such Certificateholder, and under no circumstances shall the failure of any such Certificateholder to receive any amounts so withheld constitute an Event of Default. The Pass Through Trustee agrees to act as such withholding agent and, in connection therewith, whenever any taxes or similar charges are required to be withheld with respect to any amounts payable in respect of the Pass Through Certificates of such Series, to withhold such amounts and timely pay the same to the appropriate authority in the name of and on behalf of the Certificateholders of such Series, that it will file any necessary withholding tax returns or statements when due, and that, as promptly as possible after the payment thereof, it will deliver to each such Certificateholder appropriate documentation showing the payment thereof, together with such additional documentary evidence as any such Certificateholder of such Series may reasonably request from time to time. The Pass Through Trustee agrees to file any other information reports as it may be required to file under law. Notwithstanding any provision to the contrary herein, if the Company is required to pay any withholding tax or any interest or penalty thereon, or to indemnify an Owner Participant or Owner Trustee pursuant to Section 8.01(c) of any related Participation Agreement with respect to the Pass Through Trustee's failure to withhold with respect to any Certificateholder, the Pass Through Trustee shall be entitled to retain any payments otherwise distributable to such Certificateholder that was subject to such withholding until such amounts shall have been recovered in full by the Pass Through Trustee. ARTICLE VI CONCERNING THE CERTIFICATEHOLDERS SECTION 6.01. Evidence of Action Taken by Certificateholders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Pass Through Agreement to be given or taken by Certificateholders of any Series may be embodied in and evidenced by one or more substantially similar instruments signed by such Certificateholders in person or by an agent duly appointed in writing, and, except as otherwise expressly provided herein, such action shall become effective when such instrument or instruments are delivered to the Pass Through Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Pass Through Agreement and (subject to Sections 8.02 and 8.03 hereof) conclusive in favor of the Pass Through Trustee, if made in the manner provided in this Article VI. (b) For the purpose of determining the Certificateholders of any Series entitled to vote or consent to any direction, waiver or other action of such Certificateholders under Section 7.10 or 7.11 hereof, the Company may set a record date for such vote or consent by specifying such record date in an Officer's Certificate delivered to the Pass Through Trustee. Notwithstanding Section 316(c) of the Trust Indenture Act, such record date shall be a date not more than 15 days prior to the first solicitation of such vote or consent. SECTION 6.02. Proof of Execution of Instruments and of Holding of Certificates. Subject to Sections 8.02 and 8.03 hereof, the execution of any instrument by a Certificateholder or his or her agent or proxy may be proved in accordance with such reasonable rules and regulations as may be prescribed by the Pass Through Trustee. The holding of Pass Through Certificates shall be proved by the Register or by a certificate of the Registrar. SECTION 6.03. Certificateholders to Be Treated as Owners. Prior to due presentment for registration of transfer of any Pass Through Certificate, each related Indenture Trustee, the Pass Through Trustee, any agent of any such related Indenture Trustee or the Pass Through Trustee, the Paying Agent, if any, the Registrar and the Company may deem and treat the Person in whose name such Pass Through Certificate shall be registered upon the Register as the absolute owner of such Pass Through Certificate (whether or not such Pass Through Certificate shall be overdue and notwithstanding any notation of ownership or other writing thereon) for the purpose of receiving payment on account of the principal payable with respect to and, subject to the provisions of this Pass Through Agreement, interest payable with respect to such Pass Through Certificate and for all other purposes; and neither any such related Indenture Trustee nor the Pass Through Trustee (nor any agent of any such related Indenture Trustee or the Pass Through Trustee) nor the Paying Agent, if any, nor the Registrar nor the Company shall be affected by any notice to the contrary. All such payments so made to any such Person, or upon such Person's order, shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Pass Through Certificate. SECTION 6.04. Pass Through Certificates Owned by the Company and Related Owner Trustees Deemed Not Outstanding. In determining whether the Certificateholders of the requisite aggregate Fractional Undivided Interest of Pass Through Certificates of any Series have concurred in any direction, consent or waiver under this Pass Through Agreement, Pass Through Certificates of such Series that are owned by the Company, any Related Owner Trustee or Related Owner Participant or any obligor on such Pass Through Certificates or by any Affiliate of the Company, any such Related Owner Trustee or Related Owner Participant or any obligor on such Pass Through Certificates shall be disregarded and deemed not to be Outstanding for the purpose of any such determination; provided that for the purpose of determining whether the Pass Through Trustee shall be protected in relying on any such direction, consent or waiver, only if a Responsible Officer of the Pass Through Trustee has actual knowledge that certain Pass Through Certificates are so owned shall such Pass Through Certificates be so disregarded; and provided further that if all Pass Through Certificates of such Series that would be deemed Outstanding in the absence of the foregoing provision are owned by the Company, any Related Owner Trustee or Related Owner Participant or any obligor on such Pass Through Certificates or by any Affiliate of the Company, any such Related Owner Trustee or Related Owner Participant or any obligor on such Pass Through Certificates, then such Pass Through Certificates shall be deemed Outstanding for the purpose of any such determination. Pass Through Certificates so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Pass Through Trustee the pledgee's right so to act with respect to such Pass Through Certificates and that the pledgee is not the Company, any Related Owner Trustee or Related Owner Participant or any obligor upon the Pass Through Certificates or any Affiliate of the Company, any Related Owner Trustee or Related Owner Participant or any obligor on such Pass Through Certificates. In case of a dispute as to such right, the advice of counsel shall be full protection in respect of any decision made by the Pass Through Trustee in accordance with such advice. For any Series, upon request of the Pass Through Trustee, the Company, the Related Owner Trustees and the Related Owner Participants promptly shall furnish to the Pass Through Trustee an Officer's Certificate listing and identifying all Pass Through Certificates of such Series, if any, known by the Company or any such Related Owner Trustee or Related Owner Participant to be owned or held by or for the account of any of the above-described persons; and the Pass Through Trustee shall be entitled to accept such Officer's Certificate as conclusive evidence of the facts set forth therein and of the fact that all Pass Through Certificates of such Series not listed therein are Outstanding for the purpose of any such determination. For the purpose of determining whether Pass Through Certificates of a Series are Outstanding as described in this Section 6.04, an "obligor" on such Pass Through Certificates shall include any obligor or any Affiliate of any such obligor on any Equipment Certificates that constitute Trust Property of the related Pass Through Trust. SECTION 6.05. Right of Revocation of Action Taken. For any Series, at any time prior to (but not after) the evidencing to the Pass Through Trustee, as provided in Section 6.01 hereof, of any action taken by the related Certificateholders of the percentage in aggregate of Fractional Undivided Interests in the related Pass Through Trust specified in this Pass Through Agreement in connection with such action, any Certificateholder of a Pass Through Certificate of such Series, the serial number of which is shown by the evidence to be included among the outstanding serial numbers of the Pass Through Certificates of such Series, the Certificateholders of which have consented to such action, may, by filing written notice at the Corporate Trust Office and upon proof of holding as provided in this Article VI, revoke such action so far as concerns such Pass Through Certificate. Except as aforesaid, any such action taken shall be conclusive and binding upon such Certificateholder for such Pass Through Certificate and upon all future Certificateholders and owners of such Pass Through Certificate and of any Pass Through Certificates issued in exchange or substitution therefor, irrespective of whether or not any notation in regard thereto is made upon any such Pass Through Certificate or otherwise. Any action taken by such Certificateholders of the percentage in aggregate of Fractional Undivided Interests in the related Pass Through Trust specified in this Pass Through Agreement in connection with such action shall be conclusively binding upon the Pass Through Trustee and all the Certificateholders of such Series. SECTION 6.06. ERISA. Unless otherwise specified in the applicable Series Supplement, no employee benefit plan subject to Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or individual retirement account or plan subject to Section 4975 of the Code (hereinafter collectively referred to as an "ERISA Plan"), may acquire or hold any of the Pass Through Certificates. If the Pass Through Certificates are not described in the applicable Series Supplement as being eligible for purchase by ERISA Plans, the purchase by any person of any Pass Through Certificate constitutes a representation by such person to the Company, the Related Owner Participants, the Related Owner Trustees, the Related Indenture Trustees and the Pass Through Trustee that such person is not an ERISA Plan and that such person is not acquiring, and has not acquired, such Pass Through Certificate with assets of an ERISA Plan. ARTICLE VII REMEDIES OF PASS THROUGH TRUSTEE AND CERTIFICATEHOLDERS SECTION 7.01. Events of Default. If, for any Pass Through Trust, an Indenture Event of Default under an Indenture relating to any Equipment Certificate that constitutes Trust Property of such Pass Through Trust (an "Event of Default") shall occur and be continuing, then, and in each and every case, the Pass Through Trustee may vote all of the Equipment Certificates under such Indenture held by such Pass Through Trust, and upon the direction of the Majority In Interest of Certificateholders of the related Series, the Pass Through Trustee shall vote a corresponding majority of such Equipment Certificates in favor of directing the applicable Related Indenture Trustee to declare the unpaid principal of such Equipment Certificates then outstanding, together with interest accrued but unpaid thereon and all other amounts due under such Equipment Certificates and the related Indenture, to be due and payable under, and in accordance with the provisions of, such Indenture. In addition, if such Event of Default shall have occurred and be continuing, the Pass Through Trustee may in accordance with such related Indenture vote such Equipment Certificates to direct the applicable Related Indenture Trustee regarding the exercise of remedies provided in such Indenture. If, for any Pass Through Trust, an Event of Default shall have occurred and be continuing, the Pass Through Trustee may, and upon the direction of the Majority In Interest of Certificateholders of the related Series shall, by such officer or agent as it may appoint, sell, convey, transfer and deliver any Equipment Certificates held in such Pass Through Trust that are subject to the corresponding Indenture Event of Default, without recourse to or warranty by the Pass Through Trustee or any Certificateholder of such Series, to any Person. In any such case, the Pass Through Trustee shall sell, assign, contract to sell or otherwise dispose of and deliver any such Equipment Certificates in one or more parcels at public or private sale or sales, at any location or locations at the option of the Pass Through Trustee, all upon such terms and conditions as it may reasonably deem advisable and at such prices as it may reasonably deem advisable, for cash. If the Pass Through Trustee so decides or is required to sell or otherwise dispose of any Equipment Certificates pursuant to this Section 7.01, the Pass Through Trustee shall take such of the actions described above as it may reasonably deem most effective to complete the sale or other disposition of such Equipment Certificates, so as to provide for the payment in full of all amounts due on such Equipment Certificates with respect to the related Series. Notwithstanding the foregoing, any action taken by the Pass Through Trustee under this Section 7.01 shall not, in the reasonable judgment of the Pass Through Trustee, be adverse to the best interests of the Certificateholders of such Series. SECTION 7.02. Incidents of Sale of Equipment Certificates. Upon any sale of all or any part of the Equipment Certificates held in any Pass Through Trust made either under the power of sale given under this Pass Through Agreement or the related Series Supplement or otherwise for the enforcement of this Pass Through Agreement and the related Series Supplement, the following shall be applicable: (1) Any Certificateholder of the related Series, the Pass Through Trustee in its individual or any other capacity or any other Person may bid for and purchase any of such Equipment Certificates, and upon compliance with the terms of sale, may hold, retain, possess and dispose of such Equipment Certificates in its or their own absolute right without further accountability. (2) The receipt of the Pass Through Trustee or of the officer making such sale shall be a sufficient discharge to any purchaser for his or her purchase money, and, after paying such purchase money and receiving such receipt, such purchaser or its personal representative or assigns shall not be obliged to see to the application of such purchase money, or be in any way answerable for any loss, misapplication or non-application thereof. (3) Any moneys collected by the Pass Through Trustee upon any sale made either under the power of sale given by this Pass Through Agreement or the related Series Supplement or otherwise for the enforcement of the related Pass Through Trust, shall be deposited and distributed as a Special Payment as provided in Article V hereof. SECTION 7.03. Pass Through Trustee May Prove Debt. If any amount payable under any Equipment Certificate held by any Pass Through Trust is not paid when due and payable, the Pass Through Trustee, in its own name and as trustee of an express trust, as holder of such Equipment Certificate shall be, to the extent permitted by and in accordance with the terms of the related Indenture Documents, entitled and empowered to institute any action or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceedings to judgment or final decree, and may enforce any such judgment or final decree against the applicable Owner Trustee, in the case of an Equipment Trust Certificate, or the Company, in the case of an Equipment Purchase Certificate, or other obligor upon such Equipment Certificate and collect in the manner provided by law out of the property of such Owner Trustee, or the Company or such other obligor upon such Equipment Certificate, as the case may be, wherever situated, the moneys adjudged or decreed to be payable. All rights of action and of asserting claims under this Pass Through Agreement, or under any of the Pass Through Certificates, may be prosecuted and enforced by the Pass Through Trustee without the possession of any of such Pass Through Certificates or the production thereof in any trial or other proceedings relative thereto, and any such action or proceedings instituted by the Pass Through Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Pass Through Trustee, each predecessor Pass Through Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Certificateholders of the related Series. In any proceedings brought by the Pass Through Trustee (and also any proceedings involving the interpretation of any provision of this Pass Through Agreement or any Series Supplement to which the Pass Through Trustee shall be a party) the Pass Through Trustee shall be held to represent all the Certificateholders of the related Series, and it shall not be necessary to make any such Certificateholders parties to any such proceedings. SECTION 7.04. Remedies Cumulative. Each and every right, power and remedy given to the Pass Through Trustee or to any of the Certificateholders of any Series specifically or otherwise under any Pass Through Trust shall be cumulative and shall be in addition to every other right, power and remedy specifically given thereunder or now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy whether specifically given thereunder or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by the Pass Through Trustee or the Certificateholders of the related Series, and the exercise or the beginning of the exercise of any power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy. No delay or omission by the Pass Through Trustee or of any such Certificateholder in the exercise of any right, remedy or power or in the pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the applicable Owner Trustee, if any, or the Company, as the case may be, or to be an acquiescence therein. SECTION 7.05. Suits for Enforcement. If an Indenture Event of Default has occurred, has not been waived and is continuing, the Pass Through Trustee may in its discretion and subject to its rights of appropriate indemnification under Sections 7.07 and 8.03 and Article IX hereof, to the extent permitted by and in accordance with the Indenture Documents, proceed to protect and enforce its rights and rights of the Certificateholders of the related Series by such appropriate judicial proceedings as the Pass Through Trustee shall deem most effectual to protect and enforce any of such rights, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement under the related Pass Through Trust or in aid of the exercise of any power granted thereunder or to enforce any other legal or equitable right vested in the Pass Through Trustee or the Certificateholders under such Pass Through Trust or by law; provided that any sale of any portion of the related Trust Property shall be done in accordance with Section 7.02 hereof. SECTION 7.06. Discontinuance of Proceedings. If the Pass Through Trustee or any Certificateholder of any Series institutes any proceeding to enforce any right, power or remedy under the related Pass Through Trust, and such proceeding is discontinued or abandoned for any reason or is determined adversely to the Pass Through Trustee or such Certificateholder, then and in every such case the applicable Owner Trustee, if any, and the applicable Indenture Trustee, the Pass Through Trustee, the Certificateholders of such Series and the Company shall, subject to any determination in such proceeding, be restored to their former positions and rights under such Pass Through Trust with respect to the Trust Property and all rights, remedies and powers of the Pass Through Trustee and such Certificateholders shall continue as if no such proceeding had been instituted. SECTION 7.07. Limitations on Suits by Certificateholders. No Certificateholder of any Series shall have any right by virtue or by availing of any provision of the related Pass Through Trust to institute any action or proceeding at law or in equity or in bankruptcy or otherwise upon or under or with respect to such Pass Through Trust, or for the appointment of a trustee, receiver, liquidator, custodian or other similar official or for any other remedy thereunder, unless such Certificateholder previously has notified the Pass Through Trustee in writing of an Event of Default under such Pass Through Trust and of the continuance thereof, as provided herein, and the Certificateholders of the related Pass Through Certificates then Outstanding (or the proxy therefor) representing in the aggregate not less than 50% of the Fractional Undivided Interests of Pass Through Certificates then Outstanding under such Pass Through Trust have requested in writing that the Pass Through Trustee institute such action or proceedings in its own name as trustee under such Pass Through Trust and have offered to the Pass Through Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby, and the Pass Through Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such action or proceedings and no direction inconsistent with such written request has been given to the Pass Through Trustee pursuant to Section 7.10 hereof; it being understood and intended, and being expressly covenanted by such Certificateholder with every other Certificateholder of such Series and the Pass Through Trustee, that no one or more Certificateholders of such Series shall have any right in any manner whatever to affect, disturb or prejudice the rights of any other Certificateholder of such Series or to obtain or seek to obtain priority over or preference to any other Certificateholder of such Series or to enforce any right under the related Pass Through Trust, except in the manner provided therein and for the equal, ratable and common benefit of all Certificateholders of such Series. For the protection and enforcement of the provisions of this Section 7.07, each and every Certificateholder of the related Series and the Pass Through Trustee shall be entitled to such relief as can be given either at law or in equity. SECTION 7.08. Unconditional Right of Certificateholders to Receive Principal, Interest and Premium, and to Institute Certain Suits. Notwithstanding any other provision in this Pass Through Agreement, any Series Supplement or any Pass Through Certificate issued pursuant to such Series Supplement, the right of any Certificateholder of the related Series to receive distributions on such Pass Through Certificate of Scheduled Payments or Special Payments pursuant to Article V hereof on or after the respective due dates set forth in such Series Supplement, or, subject to Section 7.07 hereof, to institute suit for the enforcement of any such distribution on or after such respective dates as provided herein or therein, shall not be impaired or affected without the consent of such Certificateholder. The purchase by any Certificateholder of any Pass Through Certificate constitutes the consent of such Certificateholder to the retention by the Pass Through Trustee of certain amounts otherwise distributable to such Certificateholder in accordance with Section 5.05 hereof. SECTION 7.09. Control by Certificateholders. A Majority In Interest of Certificateholders of any Series has the right with respect to the related Pass Through Trust to direct the Pass Through Trustee as to the time, method, and place of conducting any proceeding for any remedy available to the Pass Through Trustee, or exercising any trust or power conferred on the Pass Through Trustee under such Pass Through Trust; provided that such direction is not otherwise than in accordance with law and the provisions of such Pass Through Trust and the Pass Through Trustee has received, to the extent provided in Sections 7.07 and 8.03 and Article IX hereof, such reasonable indemnification as it may require against the costs, expenses and liabilities to be incurred by the Pass Through Trustee; and provided further that the Pass Through Trustee has the right to decline to follow any such direction if the Pass Through Trustee, being advised by counsel, determines that the action or proceeding so directed may not lawfully be taken or if the Pass Through Trustee in good faith by its board of directors, the executive committee, or a trust committee of directors or Responsible Officers of the Pass Through Trustee determines that the action or proceedings so directed would involve the Pass Through Trustee in personal liability or if the Pass Through Trustee in good faith so determines that the actions or forebearances specified in or pursuant to such direction would be unduly prejudicial to the interests of the Certificateholders of such Series not joining in the giving of said direction, it being understood that the Pass Through Trustee shall have no duty to ascertain whether or not such actions or forebearances are unduly prejudicial to such Certificateholders. Nothing in this Pass Through Agreement or any Series Supplement shall impair the right of the Pass Through Trustee in its discretion to take any action deemed proper by the Pass Through Trustee with respect to the related Pass Through Trust and which is not inconsistent with such direction by Certificateholders of the related Series. SECTION 7.10. Waiver of Past Events of Default. Upon written instructions from a Majority in Interest of Certificateholders of any Series, the Pass Through Trustee shall waive any past Event of Default under the related Pass Through Trust or the related Series Supplement and its consequences and upon such waiver such Event of Default will cease to exist and any Event of Default arising therefrom will be deemed to have been cured for every purpose of such Pass Through Trust, but no such waiver will extend to any subsequent or other Event of Default thereunder or impair any right consequent thereon; provided that any such waiver will be effective to waive any such past Event of Default and its consequences as described above if, but only if, the correlative Indenture Event of Default has been waived under the related Indenture by the requisite holders of the Equipment Certificates outstanding thereunder; and provided further that in the absence of written instructions from all Certificateholders of any Series (or the proxy therefor), the Pass Through Trustee shall not waive any Event of Default (i) consisting of the failure to pay any principal of, or premium (if any), or interest on, or other amounts due under, any Equipment Certificate held by the related Pass Through Trust and the consequent failure to distribute any related Scheduled Payment or Special Payment pursuant to Article V hereof on or after the respective due date therefor set forth in the related Series Supplement or (ii) in respect of a covenant or provision under any Pass Through Trust that, under Article XI hereof or the related Series Supplement, cannot be modified or amended without the consent of each Certificateholder of the related Series (or the proxy therefor). SECTION 7.11. Notice of Pass Through Defaults. The Pass Through Trustee shall, in the manner and to the extent required by Section 313(c) of the Trust Indenture Act, notify the Certificateholders of any Series of all Pass Through Defaults under the related Pass Through Trust known to the Pass Through Trustee, unless such Pass Through Defaults have been cured before the giving of such notice; provided that under no circumstances shall the Pass Through Trustee give such notice until the earlier of the time at which such Pass Through Default becomes an Event of Default or the expiration of a period of 60 days from the occurrence of such Pass Through Default; and provided further that, except in the case of the failure to pay any principal of or interest on or any other amount due under any of the Equipment Certificates held by any Pass Through Trust and the consequent failure to distribute any related Scheduled Payment or Special Payment pursuant to Article V hereof on or after the respective due date therefor set forth in the related Series Supplement, the Pass Through Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trust committee of directors or trustees or Responsible Officers of the Pass Through Trustee in good faith determines that the withholding of such notice is in the interests of the Certificateholders of the related Series. ARTICLE VIII CONCERNING THE PASS THROUGH TRUSTEE SECTION 8.01. Acceptance by Pass Through Trustee. The Pass Through Trustee, upon the execution and delivery of a Series Supplement creating a Pass Through Trust and providing for the issuance of a Series of Pass Through Certificates, shall acknowledge its acceptance of all right, title and interest in and to the Equipment Certificates to be acquired as Trust Property of such Pass Through Trust pursuant to the applicable Participation Agreements and Section 2.02 hereof, and shall declare that the Pass Through Trustee holds and will hold such right, title, and interest, together with all other property constituting the Trust Property of such Pass Through Trust, for the benefit of all then present and future Certificateholders of such Series, upon the trusts set forth in such Pass Through Trust. SECTION 8.02. Pass Through Trustee's Liens. The Pass Through Trustee agrees that it will, in its individual capacity and at its own cost and expense (without any right of indemnity in respect of any such cost or expense under Article IX hereof) promptly take such action as may be necessary to duly discharge all Liens on any part of the Trust Property of any Pass Through Trust that result from claims (i) against it in its individual capacity not related to the administration of such Trust Property or any other transaction pursuant to this Pass Through Agreement or the related Series Supplement, or (ii) against it as Pass Through Trustee hereunder or in its individual capacity which arise out of the negligence or willful misconduct of the Pass Through Trustee as such negligence or willful misconduct shall be determined by a final decision of a court of competent jurisdiction. SECTION 8.03. Certain Rights of the Pass Through Trustee. Subject to the Trust Indenture Act: (a) the Pass Through Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, Officer's Certificate or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, note, coupon, security or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request of any Related Indenture Trustee or Related Owner Trustee in connection with any Pass Through Trust shall be sufficiently evidenced by an Officer's Certificate (unless other evidence in respect thereof is specifically prescribed herein) upon which the Pass Through Trustee may rely to prove or establish a matter set forth therein; (c) the Pass Through Trustee may consult with counsel and any advice or Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in good faith and in accordance with such advice or Opinion of Counsel; (d) the Pass Through Trustee shall not be obligated to exercise any of the trusts or powers vested in it under any Pass Through Trust at the request, order or direction of the Certificateholders of the related Series in accordance with the provisions thereof, unless such Certificateholders have offered to the Pass Through Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred therein or thereby; (e) the Pass Through Trustee shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion, rights or powers conferred upon it under any Pass Through Trust; (f) prior to the occurrence of an Event of Default under any Pass Through Trust and after the curing or waiving of all Events of Default thereunder, the Pass Through Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, note, security, or other paper or document unless requested in writing to do so by the Majority in Interest of Certificateholders of the related Series; provided that if the payment within a reasonable time to the Pass Through Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Pass Through Trustee, not reasonably assured to the Pass Through Trustee by the security afforded to it by the terms of such Pass Through Trust, the Pass Through Trustee may require reasonable indemnity against such expenses or liabilities as a condition to proceeding; the reasonable expenses of every such examination shall be paid by the Pass Through Trustee or any predecessor trustee, and shall be repaid by the Company upon demand; (g) the Pass Through Trustee may execute any of the trusts or powers under any Pass Through Trust or perform any duties hereunder or thereunder either directly or by or through agents or attorneys not regularly in its employ and the Pass Through Trustee shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed by it with due care; and (h) the Pass Through Trustee shall not be required to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers under any Pass Through Trust, if the Pass Through Trustee has determined in good faith that the repayment of such funds or adequate indemnity against such liability is not reasonably assured to it. SECTION 8.04. Pass Through Trustee Not Responsible for Recitals. The Pass Through Trustee assumes no responsibility for the correctness of the recitals contained herein or in any Pass Through Certificates, except for the execution and authentication of such Pass Through Certificates by the Pass Through Trustee in accordance with Sections 2.05 and 2.06 hereof, respectively. SECTION 8.05. Pass Through Trustee and Agents May Hold Pass Through Certificates; Collections. The Pass Through Trustee and any agent of the Pass Through Trustee, in its individual or any other capacity, may become the owner or pledgee of Pass Through Certificates with the same rights it would have if it were not the Pass Through Trustee or such agent and, subject to the applicable provisions of the Trust Indenture Act, may otherwise deal with the Company, any Related Indenture Trustee or Related Owner Trustee and receive, collect, hold and retain collections therefrom with the same rights it would have if it were not the Pass Through Trustee or such agent. SECTION 8.06. Moneys Held by Pass Through Trustee. Subject to Sections 5.04 and 12.04 hereof, all moneys received by the Pass Through Trustee shall, until used or applied as provided herein, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by mandatory provisions of law. Subject to Section 5.04 hereof, neither the Pass Through Trustee nor any agent thereof shall be under any liability for interest on any moneys received by it hereunder. SECTION 8.07. Right of Pass Through Trustee to Rely on Officer's Certificate. Subject to Section 8.03 hereof, whenever in the administration of any Pass Through Trust the Pass Through Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting any action thereunder, such matter (unless other evidence in respect thereof is specifically prescribed herein) may, in the absence of bad faith on the part of the Pass Through Trustee, be deemed to be conclusively proved and established by an Officer's Certificate delivered to the Pass Through Trustee by the Company, any Related Indenture Trustee or any Related Owner Trustee, as the case may be, and such certificate, in the absence of bad faith on the part of the Pass Through Trustee, shall be full warrant to the Pass Through Trustee for any action taken, suffered or omitted by it under the provisions of this Pass Through Agreement upon the faith thereof. SECTION 8.08. Compensation. The Company agrees to pay, and the Pass Through Trustee shall be entitled to receive, reasonable compensation and payment or reimbursement for its reasonable advances, expenses and disbursements (including the reasonable compensation and expenses and disbursements of its counsel, agents and other persons not regularly in its employ) incurred in connection with its services rendered hereunder or in any way relating to or arising out of the administration of any Pass Through Trust or the related Trust Property, except any such advance, expense or disbursement attributable to the Pass Through Trustee's negligence, willful misconduct or bad faith or incurred as a result of the breach of its representation, warranty or covenant set forth in Sections 3.03(iv) and 8.02 hereof, and shall have a priority claim on such Trust Property for the payment of such compensation, advances, expenses and disbursements to the extent that such compensation, advances, expenses and disbursements shall not be paid by the Company. In addition, the Pass Through Trustee shall be entitled to reimbursement from, and shall have a priority claim on, all property and funds held or collected by the Pass Through Trustee with respect to any Series or the related Pass Through Trust in its capacity as Pass Through Trustee for any tax incurred without negligence, bad faith or willful misconduct on its part, arising out of or in connection with the acceptance or administration of such Pass Through Trust (other than any tax attributable to the Pass Through Trustee's compensation for serving as such), including any costs and expenses incurred in contesting the imposition of any such tax. If the Pass Through Trustee reimburses itself from the Trust Property of such Pass Through Trust for any such tax it shall within 20 days mail a brief report setting forth the circumstances thereof to all Certificateholders of the related Series as their names and addresses appear in the related Register. ARTICLE IX INDEMNIFICATION OF PASS THROUGH TRUSTEE BY THE COMPANY The Company hereby agrees to assume liability for, and does hereby indemnify, save and keep harmless the Pass Through Trustee, in its individual capacity, and its successors, assigns, agents and servants, with respect to the claims of the Pass Through Trustee for payment or reimbursement under Section 8.08 hereof and from and against any and all liabilities, losses, damages, penalties, taxes (excluding any taxes payable by the Pass Through Trustee on or measured by any compensation received by the Pass Through Trustee for its services under this Pass Through Agreement), claims, actions, suits, costs, expenses or disbursements (including legal fees and expenses) of any kind and nature whatsoever which may be imposed on, or incurred by, the Pass Through Trustee in its individual capacity in any way relating to or arising out of this Pass Through Agreement, or any Series Supplement or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the administration of any Pass Through Trust or the related Trust Property or the action or inaction of the Pass Through Trustee hereunder, except only (i) in the case of negligence, willful misconduct or bad faith of the Pass Through Trustee in the performance of its duties hereunder or under any Series Supplement, (ii) as may result from the inaccuracy of any representation or warranty of the Pass Through Trustee herein or in any Participation Agreement or (iii) as otherwise provided in Section 8.02 hereof. The Pass Through Trustee in its individual capacity shall be entitled to indemnification, from the related Trust Property, for any liability, loss, damage, penalty, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this Article IX to the extent not reimbursed by the Company or others, but without releasing any of them from their respective agreements of reimbursement; and to secure the same the Pass Through Trustee shall have a prior Lien on such Trust Property. The indemnities contained in this Article IX shall survive the termination of this Pass Through Agreement or any Pass Through Trust and the resignation or removal of the Pass Through Trustee hereunder or thereunder. ARTICLE X SUCCESSOR TRUSTEES SECTION 10.01. Resignation and Removal of Pass Through Trustee; Appointment of Successor. (a) The Pass Through Trustee may resign at any time as trustee of any Pass Through Trust without cause by giving at least 45 days prior written notice to the Company, the Related Indenture Trustees and the Related Owner Trustees, if any, such resignation to be effective upon the acceptance of the trusteeship by a successor Pass Through Trustee. In addition, a Majority in Interest of Certificateholders of any Series or the Company may at any time remove the related Pass Through Trustee without cause by an instrument in writing delivered to the Company (in the case of removal by a Majority in Interest of Certificateholders of any Series), the Related Owner Trustees, if any, the Related Indenture Trustees and the Pass Through Trustee, and the Pass Through Trustee shall promptly notify each Certificateholder of such Series of such removal in writing, such removal to be effective upon the acceptance of the trusteeship by a successor Pass Through Trustee. In the case of the resignation or removal of the Pass Through Trustee, the Company or a Majority in Interest of Certificateholders of the related Series may appoint a successor Pass Through Trustee by an instrument signed by the Company or such Certificateholders, as the case may be. If a successor Pass Through Trustee shall not have been appointed within 90 days after such notice of resignation or removal, the Pass Through Trustee, the Company or any Certificateholder of the related Series may apply to any court of competent jurisdiction to appoint a successor Pass Through Trustee to act until such time, if any, as a successor shall have been appointed as provided above. The successor Pass Through Trustee so appointed by such court shall immediately and without further act be superseded by any successor Pass Through Trustee appointed by the Company or a Majority in Interest of Certificateholders as provided above within one year from the date of the appointment by such court. (b) If at any time any of the following occurs with respect to any Pass Through Trust: (i) the Pass Through Trustee fails to comply with the requirements of Section 310(G) of the Trust Indenture Act after written request for such compliance by any Certificateholder of the related Series who has been a bona fide Certificateholder of such Series for at least six months; (ii) the Pass Through Trustee ceases to be eligible in accordance with the provisions of Section 10.02 hereof to act as trustee for such Pass Through Trust and fails to resign after written request for such resignation by the Company or by any such bona fide Certificateholder; or (iii) the Pass Through Trustee becomes incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver or liquidator of the Pass Through Trustee or of its property shall be appointed, or any public officer takes charge or control of the Pass Through Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; then the Company may remove the Pass Through Trustee and appoint a successor trustee by written instrument, one copy of which instrument shall be delivered to the Pass Through Trustee so removed and one copy to the successor trustee, or, subject to the provisions of Section 315(e) of the Trust Indenture Act, any Certificateholder of the related Series who has been a bona fide Certificateholder of such Series for at least six months may, on behalf of itself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Pass Through Trustee and the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Pass Through Trustee and appoint a successor trustee, which removal and appointment shall become effective upon acceptance of appointment by the successor trustee as provided in Section 10.03 hereof. The successor Pass Through Trustee so appointed by such court shall immediately and without further act be superseded by any successor Pass Through Trustee appointed by the Company or the Certificateholders of the related Series as provided in subsection (a) above within one year from the date of appointment by such court. SECTION 10.02. Persons Eligible for Appointment as Pass Through Trustee. Each Pass Through Trust shall at all times have a Pass Through Trustee which shall be a Person eligible to act as trustee under Section 310(a) of the Trust Indenture Act and shall be a corporation organized and doing business under the laws of the United States of America or of any State or the District of Columbia having a combined capital and surplus of at least $100,000,000, or a direct or indirect subsidiary of such a corporation, or a member of a bank holding company group, having a combined capital and surplus of at least $100,000,000 and such subsidiary or member itself having a capital and surplus of at least $10,000,000, which corporate trustee shall be a citizen of the United States of America as defined under Title 49 of the United States Code, as amended, and which is authorized under such laws to exercise corporate trust powers and is subject to supervision of examination by federal, State or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section 10.02, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Pass Through Trustee ceases to be eligible in accordance with the provisions of this Section 10.02 to act as trustee for any Pass Through Trust, the Pass Through Trustee shall resign immediately as Pass Through Trustee for such Pass Through Trust in the manner and with the effect specified in Section 10.01 hereof. SECTION 10.03. Acceptance of Appointment by Successor Trustee. Any successor trustee appointed as provided in Section 10.01 hereof for any Pass Through Trust shall execute and deliver to the Company and to its predecessor trustee an instrument accepting such appointment with respect to such Pass Through Trust, and thereupon the resignation or removal of the predecessor trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all rights, powers, duties and obligations of its predecessor with respect to such Pass Through Trust, as if such successor trustee was originally named as trustee of such Pass Through Trust. Notwithstanding the foregoing, on the written request of the Company or the successor trustee, the trustee ceasing to act shall, upon payment of its charges then unpaid and subject to Section 12.04 hereof, pay over to the successor trustee all moneys at the time held by it with respect to such Pass Through Trust and shall execute and deliver an instrument transferring to such successor trustee all such rights, powers, duties and obligations. Upon request of any such successor trustee, the Company shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers. Any trustee ceasing to act shall, nevertheless, retain a prior claim upon all property or funds held or collected by such trustee with respect to such Pass Through Trust to secure any amounts then due it pursuant to the provisions of Article IX hereof. If a successor trustee is appointed with respect to one or more (but not all) of the Pass Through Trusts created pursuant to this Pass Through Agreement, the predecessor trustee and each successor trustee with respect to such Pass Through Trusts shall execute and deliver a supplemental agreement hereto which shall be sufficient with respect to each such Pass Through Trust to effect the removal of any predecessor trustee retiring and to vest the successor trustee with all rights, powers, duties and obligations of its predecessor under each such Pass Through Trust as to which the predecessor Pass Through Trustee is retiring, as if such successor trustee was originally named as Pass Through Trustee hereunder or under the applicable Series Supplement, and shall add to or change any of the provisions of this Pass Through Agreement and the applicable Series Supplement as shall be necessary to provide for or facilitate the administration of such Pass Through Trust hereunder by more than one Pass Through Trustee. An institution satisfying the criteria specified in Section 10.02 hereof may be appointed, including pursuant to the relevant Series Supplement, as the Pass Through Trustee in respect of any Series issued or proposed to be issued if such institution shall execute and deliver to the Company with respect to the relevant Pass Through Trust an instrument (which may be the relevant Series Supplement) accepting such appointment and shall thereupon become vested with all the rights, powers, trusts and duties of the Pass Through Trustee in respect of such Pass Through Trust. It is understood that except as provided in Section 10.05 hereof nothing herein or in any supplemental agreement or Series Supplement shall constitute any Pass Through Trustee a co-trustee of any Pass Through Trustee and that each Pass Through Trustee may be the Pass Through Trustee of one or more separate Pass Through Trusts. No institution shall accept appointment as a Pass Through Trustee as provided in this Section 10.03 unless at the time of such acceptance such institution shall be eligible under the provisions of Article X hereof to act as trustee of the relevant Pass Through Trust. Upon acceptance of appointment by a successor trustee as provided in this Section 10.03, the successor trustee shall notify the Certificateholders of the related Series of such appointment by first-class mail at their last addresses as they shall appear in the Register, and shall mail a copy of such notice to the Company, the Related Indenture Trustees and the Related Owner Trustees, if any. If the acceptance of appointment is substantially contemporaneous with the resignation, then the notice called for by the preceding sentence may be combined with the notice called for by Section 10.01 hereof. SECTION 10.04. Merger, Conversion, Consolidation or Succession to Business of Pass Through Trustee. Any corporation into which the Pass Through Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Pass Through Trustee is a party, or any corporation succeeding to the corporate trust business of the Pass Through Trustee, shall be the successor to the Pass Through Trustee hereunder, provided that, anything herein to the contrary notwithstanding, such corporation shall be eligible under the provisions of Section 10.02 hereof to act as trustee hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto. If, with respect to any Pass Through Trusts at the time of such succession to the Pass Through Trustee, any of the Pass Through Certificates of the related Series have been authenticated but not delivered, such successor may adopt the certificate of authentication of any such predecessor Pass Through Trustee and deliver such Pass Through Certificates so authenticated; and, if at that time any of such Pass Through Certificates have not been authenticated, such successor may authenticate such Pass Through Certificates either in the name of any of its predecessor or in its own name as the successor Pass Through Trustee; and in all such cases such certificate of authentication shall have the full force of the certificate of authentication of the Pass Through Trustee set forth in Section 2.01 hereof; provided that the right to adopt the certificate of authentication of any predecessor Pass Through Trustee or to authenticate Pass Through Certificates in the name of any predecessor Pass Through Trustee shall apply only to its successor or successors by merger, conversion or consolidation. SECTION 10.05. Appointment of Separate Pass Through Trustees. (a) At any time or times, for the purpose of meeting any legal requirements of any jurisdiction in which any part of the Trust Property of any Pass Through Trust may at the time be located or in which any action of the Pass Through Trustee may be required to be performed or taken, the Pass Through Trustee, by an instrument in writing signed by it, may appoint one or more individuals or corporations to act as separate trustee or separate trustees or co-trustee, acting jointly with the Pass Through Trustee, of all or any part of such Trust Property, to the full extent that local law makes it necessary for such separate trustee or separate trustees or co-trustee, acting jointly with the Pass Through Trustee, to act. (b) The Pass Through Trustee and, at the request of the Pass Through Trustee, the Company, shall execute, acknowledge and deliver all such instruments as may be required by the legal requirements of any jurisdiction or by any such separate trustee or separate trustees or co-trustee for the purpose of more fully confirming such title, rights or duties to such separate trustee or separate trustees or co-trustee. Upon the acceptance in writing of such appointment by any such separate trustee or separate trustees or co-trustee, it, he, she or they shall be vested with such title to such Trust Property or any part thereof, and with such rights, powers, duties and obligations, as shall be specified in the instrument of appointment, and such rights, powers, duties and obligations shall be conferred or imposed upon and exercised or performed by the Pass Through Trustee, or the Pass Through Trustee and such separate trustee or separate trustees or co-trustee jointly with the Pass Through Trustee subject to all the terms of this Pass Through Agreement, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed the Pass Through Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations shall be exercised and performed by such separate trustee or separate trustees or co-trustee, as the case may be. Any separate trustee or separate trustees or co-trustee may, at any time by an instrument in writing, constitute the Pass Through Trustee its, her or his attorney-in-fact and agent with full power and authority to do all acts and things and to exercise all discretion on its, her or his behalf and in its, her or his name. In case any such separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, the title to any Trust Property and all assets, property, rights, powers, duties and obligations and duties of such separate trustee or co-trustee shall, so far as permitted by law, vest in and be exercised by the Pass Through Trustee, without the appointment of a successor to such separate trustee or co-trustee unless and until a successor is appointed. (c) All provisions of this Pass Through Agreement which are for the benefit of the Pass Through Trustee (including without limitation Article IX hereof) shall extend to and apply to each separate trustee or co-trustee appointed pursuant to the foregoing provisions of this Section 10.06. (d) For any Pass Through Trust, every additional trustee and separate trustee hereunder shall, to the extent permitted by law, be appointed and act and the Pass Through Trustee shall act, subject to the following provisions and conditions: (i) all powers, duties, obligations and rights conferred upon the Pass Through Trustee in respect of the receipt, custody, investment and payment of moneys shall be exercised solely by the Pass Through Trustee; (ii) all other rights, powers, duties and obligations conferred or imposed upon the Pass Through Trustee shall be conferred or imposed and exercised or performed by the Pass Through Trustee and such additional trustee or trustees and separate trustee or trustees jointly except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed, the Pass Through Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust Property in any such jurisdiction) shall be exercised and performed by such additional trustee or trustees or separate trustee or trustees; (iii) no power hereby given to, or exercisable by, any such additional trustee or separate trustee shall be exercised hereunder by such additional trustee or separate trustee except jointly with, or with the consent of, the Pass Through Trustee; and (iv) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder. If at any time the Pass Through Trustee shall deem it no longer necessary or prudent in order to conform to any such law, the Pass Through Trustee shall execute and deliver all instruments and agreements necessary or proper to remove any additional trustee or separate trustee. (e) Any request, approval or consent in writing by the Pass Through Trustee to any additional trustee or separate trustee shall be sufficient warrant to such additional trustee or separate trustee, as the case may be, to take such action as may be so requested, approved or consented to. (f) Notwithstanding any other provision of this Section 10.06, the powers of any additional trustee or separate trustee shall not exceed those of the Pass Through Trustee hereunder. SECTION 10.06. Preferential Claims. Reference is made to Section 311 of the Trust Indenture Act. For purposes of Section 311(b)(4) and (6) of such Act: (a) "cash transaction" means any transaction in which full payment for goods or securities sold is made within seven days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand; and (b) "self-liquidating paper" means any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred by the Company for the purpose of financing the purchase, processing, manufacturing, shipment, storage or sale of goods, wares or merchandise and which is secured by documents evidencing title to, possession of, or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship with the Company arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation. ARTICLE XI SUPPLEMENTS AND AMENDMENTS TO THIS PASS THROUGH AGREEMENT AND OTHER DOCUMENTS SECTION 11.01. Supplemental Agreements Without Consent of Certificateholders. The Company and the Pass Through Trustee may enter into an agreement or agreements supplemental hereto for one or more of the following purposes: (a) to provide for the formation of any Pass Through Trust, the issuance of the related Series and the other matters contemplated by Section 2.01(b) hereof; (b) to evidence the succession of another corporation to the Company, or successive successions, and the assumption by the successor corporation of the covenants, agreements and obligations of the Company herein and in each Series Supplement; (c) to add to the covenants of the Company such further covenants, restrictions, conditions or provisions as the Pass Through Trustee shall consider to be for the protection of the Certificateholders of any Series; (d) to surrender any right or power conferred upon the Company herein or in any Series Supplement; (e) to cure any ambiguity or to correct or supplement any provision contained herein or in any Series Supplement that may be defective or inconsistent with any other provision contained herein or in such Series Supplement; or to modify any other provision in regard to matters or questions arising under this Pass Through Agreement or under any Series Supplement as the Company may deem necessary or desirable and that will not adversely affect the interests of the related Certificateholders; (f) to correct or amplify the description of any property at any time that constitutes Trust Property or better to assure, convey and confirm unto the Pass Through Trustee any such property to be included in any such Trust Property; (g) to evidence and provide for the acceptance and appointment under this Pass Through Agreement by the Pass Through Trustee or a successor trustee with respect to one or more Pass Through Trusts and to add to or change any of the provisions hereof as may be necessary to provide for or facilitate the administration of one or more Pass Through Trusts by more than one trustee, pursuant to the requirements of Section 10.03 hereof; (h) to modify, eliminate or add to the provisions of this Pass Through Agreement or any Series Supplement to the extent necessary to continue the qualification of this Pass Through Agreement or such Series Supplement (including any supplemental agreement) under the Trust Indenture Act, or under any similar federal statute enacted after the date hereof, and to add to this Pass Through Agreement or any Series Supplement such other provisions as may be expressly permitted by the Trust Indenture Act, excluding, however, the provisions referred to in Section 316(a)(2) of the Trust Indenture Act as in effect on the date hereof or any corresponding provision in any similar federal statute enacted after the date hereof; (i) to make any other amendments or modifications to this Pass Through Agreement, provided such amendments or modifications shall only apply to one or more Series to be issued after the date of such amendment or modification; or (j) to add, eliminate or change any provision hereunder so long as such action shall not adversely affect the interests of the Certificateholders of any Series; provided that no such supplemental agreement shall cause any Pass Through Trust to become taxable as an association within the meaning of Treasury Regulation Section 301.7701-4. The Pass Through Trustee is hereby authorized to join in the execution of any such supplemental agreement, to make any further appropriate agreements and stipulations that may be contained therein and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Pass Through Trustee shall not be obligated to enter into any such supplemental agreement that adversely affects the Pass Through Trustee's own rights, duties or immunities under this Pass Through Agreement, any Series Supplement or otherwise, whether in its official or individual capacity. Any supplemental agreement contemplated by this Section 11.01 may be executed without the consent of the Certificateholders of the Outstanding Pass Through Certificates of any Series, notwithstanding any of the provisions of Section 11.02 hereof. SECTION 11.02. Supplemental Agreements With Consent of Certificate-holders. With the consent (evidenced as provided in Article VI) of the Majority in Interest of Certificateholders of any Series, the Company and the Pass Through Trustee may, from time to time and at any time, enter into an agreement or agreements supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Pass Through Agreement or of the related Series Supplement or of modifying in any manner the rights of the related Certificateholders; provided, that no such supplemental agreement shall cause any Pass Through Trust to become taxable as an association within the meaning of Treasury Regulation Section 301.7701-4; and provided further that, without the consent of each Certificateholder of such Series (or the proxy therefor), no such amendment of or supplement to this Pass Through Agreement or such related Series Supplement, or modification of the terms of, or consent under, any thereof, shall: (a) modify any of the provisions of Section 7.10 or this Section 11.02, (b) reduce the amount or extend the time of payment of any amount owing or payable on the related Equipment Certificates or distributions to be made on any related Pass Through Certificate pursuant to Article V, or alter the currency in which any amount payable under any such Pass Through Certificate is to be paid, or impair the right of any related Pass Through Certificateholder to commence legal proceedings to enforce a right to receive payment hereunder, (c) reduce, modify or amend any indemnities in favor of any Certificateholder (except as consented to by each such Certificateholder adversely affected thereby (or the proxy therefor)), or (d) create or permit the creation of any Lien on the related Trust Property or any part thereof, or deprive any related Certificateholder of the benefit of the related Pass Through Trust with respect to the related Trust Property, whether by disposition of such Trust Property or otherwise, except as provided in Section 7.02 or in connection with the exercise of remedies under Article VII. Upon the request of the Company and upon the filing with the Pass Through Trustee of evidence of the consent of the applicable Certificateholders required under this Section 11.02 and other documents, if any, required by Section 6.01, the Pass Through Trustee shall join with the Company in the execution of such supplemental agreement unless such supplemental agreement affects the Pass Through Trustee's own rights, duties or immunities under this Pass Through Agreement or the related Series Supplement or otherwise, in which case the Pass Through Trustee may in its discretion, but shall not be obligated to, enter into such supplemental agreement. It shall not be necessary for the consent of the Certificateholders of any Series under this Section 11.02 to approve the particular form of any proposed supplemental agreement, but it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution by the Company and the Pass Through Trustee of any supplemental agreement relating to any Pass Through Trust pursuant to the provisions of this Section 11.02, the Pass Through Trustee shall mail a notice thereof by first-class mail to the related Certificateholders at their addresses as they shall appear on the related Register, setting forth in general terms the substance of such supplemental agreement. Any failure of the Pass Through Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental agreement. SECTION 11.03. Effect of Supplemental Agreements. Upon the execution of any supplemental agreement pursuant to the provisions hereof and of any applicable Series Supplement, this Pass Through Agreement and such Series Supplement shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities hereunder and under the related Pass Through Trust of the Pass Through Trustee, the Company and the related Certificateholders shall thereafter be determined, exercised and enforced hereunder and thereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental agreement shall be and be deemed to be part of the terms and conditions of this Pass Through Agreement and such Pass Through Trust for any and all purposes. SECTION 11.04. Documents to Be Given to Trustee. The Pass Through Trustee, subject to the provisions of Sections 8.02 and 8.03 hereof, may receive an Opinion of Counsel as conclusive evidence that any such supplemental agreement complies with the applicable provisions of this Pass Through Agreement and any applicable Series Supplement. SECTION 11.05. Notation on Pass Through Certificates in Respect of Supplemental Agreements. Pass Through Certificates of any Series authenticated and delivered after the execution of any supplemental agreement relating to such Series pursuant to the provisions of this Article XI may bear a notation in form approved by the Pass Through Trustee as to any matter provided for by such supplemental agreement. If the Company or the Pass Through Trustee shall so determine, new Pass Through Certificates for such Series so modified as to conform, in the opinion of the Company and the Pass Through Trustee, to any modification of this Pass Through Agreement contained in any such supplemental agreement may be provided by the Company, executed and authenticated by the Pass Through Trustee and delivered in exchange for the Outstanding Pass Through Certificates of such Series. SECTION 11.06. Trust Indenture Act. Any supplemental agreement executed pursuant to the terms of this Article XI shall on the date of the execution thereof conform to the provisions of the Trust Indenture Act as in force on such date. SECTION 11.07. Revocation and Effect of Consents. Until an amendment or waiver becomes effective, a consent to it by a Certificateholder is a continuing consent by such Certificateholder and every subsequent Certificateholder of the related Pass Through Certificate, even if notation of the consent is not made on such Pass Through Certificate. However, any such Certificateholder or subsequent Certificateholder may revoke the consent as to his or her Pass Through Certificate if the Pass Through Trustee receives the notice of revocation before the date the amendment or waiver becomes effective. After an amendment or waiver becomes effective, it shall bind every Certificateholder affected by such amendment or waiver. SECTION 11.08. Amendments, Waivers, etc., of Related Indenture Documents. If the Pass Through Trustee, as holder of any Equipment Certificate in trust for the benefit of the Certificateholders of any Series, receives a request for a consent to any modification, amendment or supplement to any related Indenture or other related Indenture Document or to give any consent, waiver, authorization or approval under such related Indenture or such other related Indenture Documents, the Pass Through Trustee shall forthwith notify each Certificateholder of such Series, as shown on the related Register as of such date, of such request. Such notice shall request instructions from such Certificateholders with respect to such request. Subject to Section 7.10 hereof, the Pass Through Trustee shall, as the holder of such Equipment Certificate, consent or vote with respect thereto in the same proportion as so instructed by the respective Certificateholders of the related Pass Through Certificates. Notwithstanding the foregoing, but subject to Section 7.09 hereof, if an Event of Default shall have occurred and be continuing, the Pass Through Trustee may, in its own discretion and at its own direction, consent and notify the Related Indenture Trustee of such consent to any modification, amendment, supplement or waiver under any related Indenture Document. ARTICLE XII TERMINATION OF PASS THROUGH TRUSTS; UNCLAIMED MONEYS SECTION 12.01. Termination of Pass Through Trusts. For any Pass Through Trust created by this Pass Through Agreement as supplemented by a related Series Supplement, such Pass Through Trust and the respective obligations and responsibilities of the Company and the Pass Through Trustee under such Pass Through Trust shall terminate upon the distribution to all Certificateholders of the related Series and the Pass Through Trustee of all amounts required to be distributed to them pursuant to this Pass Through Agreement and the related Series Supplement and the disposition of all property held as part of the Trust Property of such Pass Through Trust; provided that in no event shall such Pass Through Trust continue beyond the final expiration date determined as provided in such Series Supplement. Notice of termination of any Pass Through Trust, specifying the applicable Distribution Date upon which the Certificateholders of the related Series may surrender their Pass Through Certificates to the Pass Through Trustee for payment of the final distribution and cancellation thereof, shall be mailed promptly by the Pass Through Trustee to such Certificateholders not earlier than the 60th day and not later than the 20th day next preceding such final distribution specifying (i) the Distribution Date upon which such final distribution will be made and that such distribution will be made only upon presentation and surrender of the related Pass Through Certificates at the office or agency of the Pass Through Trustee specified therein, (ii) the amount of any such final distribution, and (iii) that the Record Date otherwise applicable to such Distribution Date is not applicable. The Pass Through Trustee shall notify the related Registrar at the time such Certificateholders are notified of such final distribution. Upon presentation and surrender of the Pass Through Certificates of such Series, the Pass Through Trustee shall distribute all amounts distributable on such Pass Through Certificates on such Distribution Date pursuant to Section 5.02 hereof. SECTION 12.02. Application by Pass Through Trustee of Funds Deposited for Payment of Pass Through Certificates. Subject to Section 12.04 hereof, all moneys deposited with the Pass Through Trustee for payment pursuant to Section 12.01 hereof shall be held in trust and applied by it to the prompt payment, either directly or through any Paying Agent, to the Certificateholders of the particular Pass Through Certificates for the payment or redemption of which such moneys have been deposited with the Pass Through Trustee, of all sums due and to become due thereon; but such money need not be segregated from other funds except to the extent required by law. In the event that all of the Certificateholders of such Series shall not surrender their Certificates for cancellation within six months after the date specified in the above-mentioned written notice, the Pass Through Trustee shall give a second written notice to the remaining Certificateholders of such Series to surrender their Certificates for cancellation and to receive the final distribution with respect thereto. SECTION 12.03. Repayment of Moneys Held by Paying Agent. In connection with the satisfaction and discharge of any Pass Through Trust, all moneys then held by any Paying Agent for such Pass Through Trust shall, upon demand of the Pass Through Trustee, be repaid to it and thereupon such Paying Agent shall be released from all further liability with respect to such moneys. SECTION 12.04. Transfer of Moneys Held by Pass Through Trustee and Paying Agent Unclaimed for Two Years and Eleven Months. Any moneys deposited with or paid to the Pass Through Trustee or any Paying Agent to be distributed on any Pass Through Certificate and not applied but remaining unclaimed for two years and eleven months after the date upon which such amount has become due and payable, shall, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, be paid to the applicable Related Indenture Trustees by the Pass Through Trustee or such Paying Agent and the applicable Certificateholder shall, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property laws, thereafter look only to such Related Indenture Trustees for any payment which such Certificateholder may be entitled to collect, and all liability of the Pass Through Trustee, or any Paying Agent with respect to such moneys shall thereupon cease. ARTICLE XIII MISCELLANEOUS SECTION 13.01. Capacity in Which Acting. The Pass Through Trustee acts hereunder and under any Pass Through Trust not in its individual capacity but solely as trustee except as expressly provided herein or in the related Series Supplement. SECTION 13.02. No Legal Title to Trust Property in Certificateholders. No Certificateholder of any Series shall have legal title to any part of the Trust Property of the related Pass Through Trust. No transfer, by operation of law or otherwise, of any Pass Through Certificate or other right, title and interest of any Certificateholder in and to such Trust Property or under the related Pass Through Trust shall operate to terminate such Pass Through Trust or entitle such Certificateholder or any successor or transferee of such Certificateholder to an accounting or to the transfer to it of legal title to any part of such Trust Property. SECTION 13.03. Certificates Nonassessable and Fully Paid. No Certificateholder of any Series shall be personally liable for obligations of the related Pass Through Trust, the Fractional Undivided Interests represented by the Pass Through Certificates of such Series shall be nonassessable for any losses or expenses of such Pass Through Trust or for any reason whatsoever, and upon authentication of such Pass Through Certificates by the Pass Through Trustee pursuant to Section 3.02 hereof, such Pass Through Certificates will be and shall be deemed fully paid. No Certificateholder of such Series shall have any right (except as expressly provided herein) to vote or in any manner otherwise control the operation and management of the related Trust Property, the related Pass Through Trust, or the obligations of the parties hereto, nor shall anything set forth herein, in the related Series Supplement or in the related Pass Through Certificates be construed so as to constitute the Certificateholders of such Series from time to time as partners or members of an association. SECTION 13.04. Pass Through Agreement for the Benefit of the Company, the Pass Through Trustee and the Certificateholders. Nothing in this Pass Through Agreement, in any Series Supplement or in any Pass Through Certificate, whether express or implied, shall be construed to give to any person other than the Company, the Pass Through Trustee, as trustee and in its individual capacity, and the Certificateholders of the respective related Series any legal or equitable right, remedy or claim under or in respect of this Pass Through Agreement, any Pass Through Trust or any such Pass Through Certificate. SECTION 13.05. Limitation on Rights of Certificateholders. The death or incapacity of any Certificateholder of any Series shall not operate to terminate this Pass Through Agreement or the related Pass Through Trust, nor entitle such Certificateholder's legal representatives or heirs to claim an accounting or to take any action or commence any proceeding in any court for a partition or winding up of such Pass Through Trust, nor otherwise affect the rights, obligations, and liabilities of the parties hereto or any of them. No Certificateholder of any Series shall be entitled to revoke the related Pass Through Trust. SECTION 13.06. Notices. Unless otherwise expressly specified or permitted by the terms hereof or the applicable Series Supplement with respect to any Pass Through Trust, all notices, requests, demands, authorizations, directions, consents, waivers or documents provided or permitted by this Pass Through Agreement or such Series Supplement to be made, given, furnished or filed with respect to such Pass Through Trust shall be in writing, mailed by certified mail, postage prepaid, or by confirmed facsimile, and (i) if to State Street Bank and Trust Company, as Pass Through Trustee, at its office at Two International Place, 4th Floor, Boston, MA 02110, (fax (617) 664-5371), Attention: Corporate Services Division or (ii) if to the Company, addressed to it at its office at 2007 Corporate Avenue, Memphis, Tennessee 38132 (fax (901) 395-4758), Attention: Vice President and Treasurer, with a copy to Executive Vice President and General Counsel at 1980 Nonconnah Drive, Memphis, Tennessee 38132 (fax (901) 395-4758), and as to any Series, as otherwise specified in the Series Supplement related thereto. The Company or the Pass Through Trustee as to any Series, by notice to the other, may designate additional or different addresses for subsequent notices or communications. Any party hereto may change the address to which notices to such party will be sent by giving notice of such change to the other party to this Pass Through Agreement. Where this Pass Through Agreement or any Series Supplement provides for notice to Certificateholders of any Series, such notice shall be sufficiently given (unless otherwise expressly provided herein) if in writing and mailed, first-class postage prepaid, to each such Certificateholder entitled thereto, at his or her last address as it appears in the related Register. In any case where notice to Certificateholders of any Series is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Certificateholder shall affect the sufficiency of such notice with respect to other Certificateholders of such Series. Where this Pass Through Agreement or any Series Supplement provides for notice in any manner, such notice may be waived in writing by the person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Certificateholders shall be filed with the Pass Through Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail notice to any Certificateholders when such notice is required to be given pursuant to any provision of this Pass Through Agreement or any related Series Supplement, then any manner of giving such notice as shall be satisfactory to the Pass Through Trustee shall be deemed to be a sufficient giving of such notice. SECTION 13.07. Officer's Certificate and Opinion of Counsel; Statements to Be Contained Therein. Upon any application or demand by the Company to the Pass Through Trustee to take any action, the Company shall furnish to the Pass Through Trustee (i) an Officer's Certificate stating that all conditions precedent, if any, provided for in this Pass Through Agreement and the applicable Series Supplement relating to the proposed action have been complied with and that the proposed action is in conformity with the requirements of this Pass Through Agreement and such Series Supplement, or (ii) an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or demand as to which the furnishing of such documents is specifically required by any provision of this Pass Through Agreement or such Series Supplement relating to such particular application or demand, no additional certificate or opinion need be furnished. Each certificate or opinion required by this Pass Through Agreement or any Series Supplement and delivered to the Pass Through Trustee with respect to compliance with a condition or covenant provided for in this Pass Through Agreement or such Series Supplement, except for the certificate required by Section 4.03(d) hereof shall include (a) a statement that the person making such certificate or opinion has read such covenant or condition, (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based, (c) a statement that, in the opinion of such person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with and (d) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. Any certificate, statement or opinion of counsel may be based, insofar as it relates to factual matters information with respect to which is in the possession of the Company, upon the certificate, statement or opinion of or representations by an officer or officers of the Company unless such counsel knows that the certificate, statement or opinion or representations with respect to the matters upon which his or her certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of an officer of the Company or of counsel thereto may be based, insofar as it relates to accounting matters, upon a certificate or opinion of or representations by an accountant or firm of accountants employed by the Company unless such officer or counsel, as the case may be, knows that the certificate or opinion or representations with respect to the accounting matters upon which such certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate or opinion of any independent firm of public accountants filed with the Pass Through Trustee shall contain a statement that such firm is independent. SECTION 13.08. Conflict of Any Provision of Pass Through Agreement with the Trust Indenture Act. If and to the extent that any provision of this Pass Through Agreement limits, qualifies or conflicts with another provision included in this Pass Through Agreement by operation of Sections 310 to 317, inclusive, of the Trust Indenture Act (an "incorporated provision"), such incorporated provision shall control. SECTION 13.09. Severability. Any provision of this Pass Through Agreement or any Series Supplement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or thereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 13.10. No Oral Modifications or Continuing Waivers. No terms or provisions of this Pass Through Agreement, any Series Supplement, or any Pass Through Certificates may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party or other person against whom enforcement of the change, waiver, discharge or termination is sought; and any waiver of the terms hereof or thereof shall be effective only in the specific instance and for the specific purpose given. SECTION 13.11. Successors and Assigns. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, each of the parties hereto and the successors and permitted assigns of each, all as herein provided. Any request, notice, direction, consent, waiver or other instrument or action by any Certificateholder shall bind the successors and assigns of such Certificateholder. SECTION 13.12. Headings. The headings of the various Articles and Sections herein and in the table of contents hereto are for the convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 13.13. Normal Commercial Relations. Anything contained in this Pass Through Agreement to the contrary notwithstanding, the Pass Through Trustee and any Certificateholder, or any bank or other affiliate of any such party, may conduct any banking or other financial transactions, and have banking or other commercial relationships, with the Company fully to the same extent as if this Pass Through Agreement were not in effect, including without limitation the making of loans or other extensions of credit to the Company for any purpose whatsoever, whether related to any of the transactions contemplated hereby or otherwise. SECTION 13.14. Governing Law; Counterpart Form. THROUGH CERTIFICATE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Pass Through Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 13.15. Distributions Due on Days Other than Business Days. If, for any Pass Through Trust, any Distribution Date is not a Business Day, then such distribution need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the applicable Distribution Date, and no interest shall accrue for the intervening period. IN WITNESS WHEREOF, the parties hereto have caused this Pass Through Agreement to be duly executed this 25th day of June, 1996 by their respective officers thereunto duly authorized, and acknowledge that this Pass Through Agreement has been made and delivered in the City of New York, and this Pass Through Agreement shall be effective only upon such execution and delivery. STATE STREET BANK AND TRUST COMPANY not in its individual capacity, except as otherwise expressly provided herein, but solely as Pass Through Trustee By: /s/ J.E. MOGAVERO ------------------------------------ Name: J.E. Mogavero Title: Assistant Vice President FEDERAL EXPRESS CORPORATION By: /s/ ROBERT D. HENNING ------------------------------------ Name: Robert D. Henning Title: Assistant Treasurer and Managing Director - Structured Finance Exhibit A to Pass Through Agreement FORM OF PASS THROUGH CERTIFICATE [THIS IS A REGISTERED GLOBAL CERTIFICATE REFERRED TO IN SECTION 2.12 OF THE PASS THROUGH TRUST AGREEMENT. Unless this pass through certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Pass Through Trustee or its agent for registration or transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE THEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.](1) - ------------------------- (1) This paragraph is required only if the Pass Through Certificates are to be represented by the Registered Global Certificate. Subject to and in accordance with the terms of the Pass Through FEDERAL EXPRESS CORPORATION PASS THROUGH TRUST, 199__ - __ 199_ Pass Through Certificate, Series ___ CUSIP ______ Final Regular Distribution Date: _______ evidencing a fractional undivided interest in a pass through trust, the property of which includes certain Equipment Certificates. Certificate No. _______ Applicable interest rate on Equipment Certificates held in Pass Through Trust, 199__ - _____: ____%. $___________ Fractional Undivided Interest representing _______ of the Pass Through Trust per $1,000 face amount. THIS CERTIFIES THAT ______________, for value received, is the registered owner of a $_________ (_____________ dollars) Fractional Undivided Interest in the Federal Express Corporation Pass Through Trust, 199_-_ (the "Pass Through Trust") created and declared by State Street Bank and Trust company, as pass through trustee (the "Pass Through Trustee"), pursuant to the Pass Through Trust Agreement dated as of June 1, 1996 (the "Pass Through Agreement"), as supplemented by Series Supplement __ thereto dated ____________, 199_ (the "Series Supplement") between the Pass Through Trustee and Federal Express Corporation, a Delaware corporation (the "Company"), a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Pass Through Agreement and the Series Supplement. This Pass Through Certificate is one of the duly authorized Pass Through Certificates designated as "Federal Express Corporation 199_ Pass Through Certificates, Series _______." This Pass Through Certificate is issued under and is subject to the terms, provisions, and conditions of the Pass Through Agreement and the Series Supplement, to which the Certificateholder of this Pass Through Certificate by virtue of the acceptance hereof assents and by which such Certificateholder is bound. The property of the Pass Through Trust (the "Trust Property") includes certain Equipment Certificates (the "Equipment Certificates"). Each series of Equipment Certificates is secured by a security interest in (A) an aircraft leased to or owned by the Company and, in the case of a leased aircraft, an assignment of the rights of the Related Owner Trustee with respect to such aircraft, including the right to receive rent and other amounts payable under the related Lease or Indenture with respect to such aircraft or (B) a collateral account holding securities purchased with the proceeds of the sale of such series of Equipment Certificates. The Certificateholders have no rights, benefits or interests in respect of any other separate trust established pursuant to the terms of the Pass Through Agreement for any other series of Pass Through Certificates issued pursuant thereto. Subject to and in accordance with the terms of the Pass Through Agreement and the Series Supplement, from funds then available to the Pass Through Trustee, there will be distributed on each ______ and _____ (a "Regular Distribution Date"), commencing on _______, __, to the Person in whose name this Pass Through Certificate is registered at the close of business on the 15th day preceding the applicable Regular Distribution Date, an amount in respect of the Scheduled Payments on the Equipment Certificates due on such Regular Distribution Date, equal to the product of the percentage interest in the Pass Through Trust evidenced by this Pass Through Certificate and an amount equal to the sum of such Scheduled Payments. Subject to and in accordance with the terms of the Pass Through Agreement and the Series Supplement, if Special Payments on the Equipment Certificates are received by the Pass Through Trustee, from funds then available to the Pass Through Trustee, there shall be distributed on the applicable Special Distribution Date, to the Person in whose name this Pass Through Certificate is registered at the close of business on the 15th day preceding such Special Distribution Date, an amount in respect of such Special Payments on the Equipment Certificates, equal to the product of the percentage interest in the Pass Through Trust evidenced by this Pass Through Certificate and an amount equal to the sum of such Special Payments so received. If a Distribution Date is not a Business Day, distribution shall be made on the immediately following Business Day with the same force and effect as if made on such Distribution Date and no interest shall accrue during the intervening period. The Special Distribution Date shall be the ______ day of the month determined as provided in the Pass Through Agreement and the Series Supplement, except in certain circumstances, in which case it will be the date of receipt of proceeds by the Pass Through Trustee as provided in the Series Supplement. The Pass Through Trustee shall mail notice of each Special Payment and the Special Distribution Date therefor to the Certificateholder of this Pass Through Certificate. Distributions on this Pass Through Certificate will be made by the Pass Through Trustee to the Person entitled thereto, without the presentation or surrender of this Pass Through Certificate or the making of any notation hereon. Except as otherwise provided in the Pass Through Agreement and notwithstanding the above, the final distribution on this Pass Through Certificate will be made after notice mailed by the Pass Through Trustee of the pendency of such distribution and only upon presentation and surrender of this Pass Through Certificate at the office or agency of the Pass Through Trustee specified in such notice. [NO EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR INDIVIDUAL RETIREMENT ACCOUNT OR PLAN SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (HEREINAFTER COLLECTIVELY REFERRED TO AS AN "ERISA" PLAN), MAY ACQUIRE OR HOLD ANY OF THE PASS THROUGH CERTIFICATES. THE PURCHASE BY ANY PERSON OF ANY PASS THROUGH CERTIFICATE CONSTITUTES A REPRESENTATION BY SUCH PERSON TO FEDERAL EXPRESS CORPORATION, THE RELATED OWNER PARTICIPANTS, THE RELATED OWNER TRUSTEES, THE RELATED INDENTURE TRUSTEES AND THE PASS THROUGH TRUSTEE OR THEIR RESPECTIVE SUCCESSORS, AS THE CASE MAY BE, THAT SUCH PERSON IS NOT AN ERISA PLAN AND THAT SUCH PERSON IS NOT ACQUIRING, AND HAS NOT ACQUIRED, SUCH PASS THROUGH CERTIFICATE WITH ASSETS OF AN ERISA PLAN.](*)(*) - ------------------------- (*)(*) Subject to revision as set forth in Section 6.06 hereof. This Pass Through Certificate shall be governed by and construed in accordance with the laws of the State of New York. Reference is hereby made to the further provisions of this Pass Through Certificate set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Pass Through Trustee, by manual signature, this Pass Through Certificate shall not be entitled to any benefit under the related Pass Through Trust or be valid for any purpose. IN WITNESS WHEREOF, the Pass Through Trustee has caused this Pass Through Certificate to be duly executed. FEDERAL EXPRESS CORPORATION PASS THROUGH TRUST, SERIES 199__-__ By: __________________________, as Pass Through Trustee By: _______________________ Authorized Signatory [FORM OF THE PASS THROUGH TRUSTEE'S CERTIFICATE OF AUTHENTICATION] Dated: This is one of the Pass Through Certificates referred to in the within-mentioned Pass Through Agreement and related Series Supplement. _________________________, as Pass Through Trustee By: ______________________ Authorized Signatory [Reverse of Pass Through Certificate] The Pass Through Certificates do not represent a direct obligation of, or an obligation guaranteed by, or an interest in, the Company or the Pass Through Trustee or any affiliate thereof. The Pass Through Certificates are limited in right of payment, all as more specifically set forth on the face hereof and in the Pass Through Agreement and the Series Supplement. All payments or distributions made to Certificateholders under the Pass Through Agreement shall be made only from the Trust Property and only to the extent that the Pass Through Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of the Pass Through Agreement and the Series Supplement. Each Certificateholder of this Pass Through Certificate, by its acceptance hereof, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to such Certificateholder as provided in the Pass Through Agreement and the Series Supplement. In connection with withholding taxes, under certain circumstances the Pass Through Trustee may retain certain amounts otherwise distributable to a Certificateholder. The purchase by any Certificateholder of any Pass Through Certificate constitutes the consent of such Certificateholder to such retention in accordance with the terms of the Pass Through Agreement. This Pass Through Certificate does not purport to summarize the Pass Through Agreement and the Series Supplement and reference is made to the Pass Through Agreement and the Series Supplement for information with respect to the interests, rights, benefits, obligations, proceeds, and duties evidenced hereby. A copy of the Pass Through Agreement may be examined by any Certificateholder upon request, during normal business hours at the principal office of the Pass Through Trustee, and at such other places designated by the Pass Through Trustee. As of the date of issuance of this Pass Through Certificate, and assuming that no prepayment or default in respect of the Equipment Certificates shall occur, the aggregate scheduled repayments of principal on the Equipment Certificates for the Pass Through Trust and the resulting Pool Factors for the Pass Through Trust after taking into account each such repayment are set forth below: Pass Through Trust, 199__-___ Scheduled Principal Regular Payments on Distribution Date Equipment Certificates Pool Factor - ----------------------- ------------------------ ------------- $ 0.0000000 The Pass Through Agreement and the Series Supplement permits, with certain exceptions provided therein, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Certificateholders under the Pass Through Trust at any time by the Company and the Pass Through Trustee with the consent of the Majority In Interest of Certificateholders in the Pass Through Trust. Any such consent by the Certificateholder of this Pass Through Certificate shall be conclusive and binding on such Certificateholder and upon all future Certificateholders of this Pass Through Certificate and of any Pass Through Certificate issued upon the transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent is made upon this Pass Through Certificate. The Pass Through Agreement and the Series Supplement also permits the amendment thereof, in certain limited circumstances, without the consent of the Certificateholders of any of the Pass Through Certificates. As provided in the Pass Through Agreement and the the Series Supplement and subject to certain limitations set forth therein, the transfer of this Pass Through Certificate is registrable in the Register upon surrender of this Pass Through Certificate for registration of transfer at the facilities or agencies maintained by the Pass Through Trustee in its capacity as Registrar, or by any successor Registrar, duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Pass Through Trustee and the Registrar duly executed by the Certificateholder hereof or such Certificateholder's attorney duly authorized in writing, and thereupon one or more new Pass Through Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Pass Through Trust will be issued to the designated transferee or transferees. The Pass Through Certificates are issuable only as registered Pass Through Certificates without coupons in minimum denominations of $1,000 fractional undivided interest and integral multiples thereof. As provided in the Pass Through Agreement and the Series Supplement and subject to certain limitations set forth therein, the Pass Through Certificates are exchangeable for new Pass Through Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Pass Through Trust, as requested by the Certificateholder surrendering the same. No service charge will be made for any such registration of transfer or exchange, but the Pass Through Trustee may require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith. The Pass Through Trustee, the Registrar, and any agent of the Pass Through Trustee or the Registrar may treat the person in whose name this Pass Through Certificate is registered as the owner hereof for all purposes, and neither the Pass Through Trustee, the Registrar, nor any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Pass Through Agreement and the Series Supplement and the Pass Through Trust created thereby shall terminate upon the distribution to Certificateholders of all amounts required to be distributed to them pursuant to the Pass Through Agreement and the Series Supplement and the disposition of all property held as part of the Trust Property. Exhibit B to Pass Through Agreement __________________________________________ SERIES SUPPLEMENT 199__-___ Dated __________, 199__ Between ___________________________________ as Pass Through Trustee, and FEDERAL EXPRESS CORPORATION to PASS THROUGH TRUST AGREEMENT Dated as of June 1, 1996 $__________________ Federal Express Corporation Pass Through Trust, 199__-___ Federal Express Corporation 199__ Pass Through Certificates, Series ___ __________________________________________ TABLE OF CONTENTS Page RECITALS.................................... ............................ 1 ARTICLE I CERTAIN DEFINITIONS ARTICLE II DESIGNATIONS; TRUST FORMATION; ISSUANCE OF PASS THROUGH CERTIFICATES SECTION 2.01. Designations; Aggregate Amount............................ 4 SECTION 2.02. Declaration of Trust; Authorization....................... 4 SECTION 2.03. Issuance of Pass Through Certificates..................... 5 SECTION 2.04. Purchase of Equipment Certificates........................ 5 SECTION 2.05. Representations and Warranties of the Company............. 5 SECTION 2.06. Conditions Precedent...................................... 5 SECTION 2.07. Acceptance of Appointment of Pass Through Trustee......... 5 ARTICLE III DISTRIBUTION AND RECORD DATES; CERTIFICATE AND SPECIAL PAYMENT ACCOUNTS; CONCERNING AUTHENTICATING AGENT, PAYING AGENT AND REGISTRAR AND THE CERTIFICATEHOLDERS SECTION 3.01. Distribution Dates........................................ 6 SECTION 3.02. Record Dates.............................................. 6 SECTION 3.03. Certificate Account and Special Payments Account.......... 6 SECTION 3.04. Form of Pass Through Certificates......................... 7 SECTION 3.05. Indenture Documents....................................... 7 SECTION 3.06. Appointment of Authenticating Agent; Paying Agent and Registrar....................... 7 SECTION 3.07. Predelivery Funding....................................... 7 SECTION 3.08. ERISA..................................................... 8 SECTION 3.09. Registered Global Certificate............................. 9 ARTICLE IV MISCELLANEOUS SECTION 4.01. Governing Law; Counterpart Form........................... 9 SECTION 4.02. Reports by the Company.................................... 9 SECTION 4.03. Modification and Ratification of Pass Through Agreement... 9 SECTION 4.04. Termination............................................... 9 EXHIBIT A Form of Pass Through Certificate SCHEDULE Equipment Certificates; Related Indenture Documents SERIES SUPPLEMENT 199__-___ SERIES SUPPLEMENT 199__-___, dated _________, 199__ (this "Series Supplement"), between FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Company") and ______________________________________, a _____________________ company, as Pass Through Trustee (the "Pass Through Trustee"), to the Pass Through Trust Agreement, dated as of June 1, 1996 (the "Pass Through Agreement"), between the Company and State Street Bank and Trust Company, a Massachusetts trust company. RECITALS WHEREAS, capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, Section 2.01 of the Pass Through Agreement provides, among other things, that the Company and the Pass Through Trustee may execute and deliver one or more series supplements, each for the purpose of forming a separate pass through trust for the benefit of the certificateholders of the series of pass through certificates to be issued pursuant to such pass through trust, appointing an institution to act as Pass Through Trustee if different from the institution executing the Pass Through Agreement, establishing certain terms of such pass through certificates, and pursuant to which the pass through certificates of such series shall be executed and authenticated by the Pass Through Trustee and delivered as directed by the Company; WHEREAS, pursuant to the Participation Agreements, the Company has agreed to cause the Equipment Certificates to be issued and sold to the Pass Through Trustee, and the Pass Through Trustee has agreed to purchase the Equipment Certificates, which will be held in trust as Trust Property for the benefit of the Certificateholders; WHEREAS, in order to facilitate such sale, the Company has agreed, pursuant to the Underwriting Agreement, to cause the Pass Through Trustee to issue and sell the Pass Through Certificates to the Underwriters; WHEREAS, pursuant to the Pass Through Agreement and the terms of this Series Supplement, the Pass Through Trustee will execute, authenticate and deliver the Pass Through Certificates to the Underwriters upon receipt by the Pass Through Trustee of the purchase price therefor, which will be applied in accordance with this Series Supplement to purchase the Equipment Certificates; WHEREAS, the Pass Through Trustee hereby declares the creation of this Pass Through Trust for the benefit of the Certificateholders, and the initial Certificateholders of such Pass Through Certificates, as the grantors of such Pass Through Trust, by their respective acceptances of such Pass Through Certificates, join in the creation of such Pass Through Trust; WHEREAS, to facilitate the sale of the Equipment Certificates to, and the purchase of the Equipment Certificates by, the Pass Through Trustee on behalf of this Pass Through Trust, the Company has duly authorized the execution and delivery of this Series Supplement as the "issuer," as such term is defined in and solely for purposes of the Securities Act, of the Pass Through Certificates and as the "obligor," as such term is defined in and solely for purposes of the Trust Indenture Act, with respect to all such Pass Through Certificates; and WHEREAS, this Series Supplement is subject to the provisions of the Trust Indenture Act and shall, to the extent applicable, be governed by such provisions; IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows: ARTICLE I CERTAIN DEFINITIONS All terms used in this Series Supplement that are defined in the Pass Through Agreement, either directly or by reference therein, have the meanings assigned to them therein as supplemented by this Article I, if applicable, except to the extent the context requires otherwise. Any such defined term that is defined in the Pass Through Agreement as relating to a particular Pass Through Trust or Series rather than to any Pass Through Trust or Series generally shall, when used in this Series Supplement, relate solely to the Federal Express Corporation Pass Through Trust, 199__-___, or the Federal Express Corporation 199__ Pass Through Certificates, Series ___, as the case may be, whether or not expressly so stated herein. "Aircraft" means ___________________________ aircraft , including the Engines (as such term is defined in the related Participation Agreement) relating thereto, (i) leased or to be leased by the Owner Trustee to the Company pursuant to a Lease or (ii) to be purchased by the Company as provided, and under the circumstances specified, in Section 3.07 hereof) and, collectively, means all of the foregoing. "Authenticating Agent" has the meaning set forth in Section 3.06 hereof. "Certificate Account" means the Certificate Account specified in Section 3.03 hereof. "Certificateholders" means the Certificateholders of the Series of Pass Through Certificates designated in Section 2.01 hereof. "Collateral Account" means the Collateral Account established pursuant to the Indenture for Federal Express Corporation Trust No. N_____FE into which the proceeds of sale of the related Equipment Certificates will be deposited. "Cut-off Date for Pass Through Trust" is inapplicable. "Delivery Date" means, for any Equipment Certificates, the Refunding Date (as such term is defined in the related Participation Agreement) for such Equipment Certificates. "Equipment Certificates" means those Equipment Certificates listed in Schedule I hereto. "Issuance Date" means the date defined as the Closing Time in the Underwriting Agreement. "Participation Agreements" means those Participation Agreements listed in Schedule I hereto. "Pass Through Certificates" means the Pass Through Certificates designated in Section 2.01 hereof. "Pass Through Trust," "this Pass Through Trust" and other like words means the Pass Through Trust designated in Section 2.01 hereof. "Paying Agent" means the Person specified as such in Section 3.06 hereof. "Record Date" means any Record Date specified in Section 3.02 hereof. "Registrar" means the Person specified as such in Section 3.06 hereof. "Regular Distribution Date" means any Regular Distribution Date specified in Section 3.01 hereof. "Special Distribution Date" means, for any Special Payment, the Special Distribution Date for such Special Payment specified in Section 3.01 hereof. "Special Payments Account" means the Special Payments Account specified in Section 3.03 hereof. "Trust Property" means all money, instruments, including the Equipment Certificates that have been issued by the related Owner Trustee and delivered to and accepted by the Pass Through Trustee for the benefit of the Certificateholders, and other property held as the property of this Pass Through Trust, including all distributions thereon and proceeds thereof. "Underwriters" means the several Underwriters named in the Underwriting Agreement. "Underwriting Agreement" means the Underwriting Agreement dated _________, 199__ among the Company and ____________________________. ARTICLE II DESIGNATIONS; TRUST FORMATION; ISSUANCE OF PASS THROUGH CERTIFICATES SECTION 2.01. Designations; Aggregate Amount. The Pass Through Trust created hereby shall be designated Federal Express Corporation Pass Through Trust, 199__-___ (herein sometimes called this "Pass Through Trust"). The Pass Through Certificates evidencing Fractional Undivided Interests in such Pass Through Trust shall be designated as the Federal Express Corporation 199__ Pass Through Certificates, Series ___ (herein sometimes called the "Series ___ Pass Through Certificates"). The Series ___ Pass Through Certificates shall be the only instruments evidencing a fractional undivided interest in such Pass Through Trust. Except as provided in Sections 2.08, 2.09 and 2.11 of the Pass Through Agreement, the aggregate amount of Series ___ Pass Through Certificates that may be authenticated, delivered and outstanding under this Series Supplement is limited to $_________________. SECTION 2.02. Declaration of Trust; Authorization. Each initial Certificateholder, by its acceptance of any Series ___ Pass Through Certificate is hereby deemed (1) as grantor, to join in the creation and declaration of this Pass Through Trust and (2) as beneficiary of such Pass Through Trust, to authorize and direct the Pass Through Trustee to execute and deliver all documents to which the Pass Through Trustee is a party that may be necessary or desirable to consummate the transactions contemplated hereby and to exercise its rights and perform its duties under the Participation Agreements, the Indentures, the Pass Through Agreement and this Series Supplement. The Pass Through Trustee hereby acknowledges and accepts this grant of trust and declares that it will hold the Trust Property as Pass Through Trustee of this Pass Through Trust for the use and benefit of the Certificateholders. SECTION 2.03. Issuance of Pass Through Certificates. Subject to the terms set forth herein, on the Issuance Date (i) the Company shall direct the Underwriters to execute a wire transfer or intra-bank transfer to the Pass Through Trustee in the amount of the total proceeds payable by such Underwriters pursuant to the Underwriting Agreement with respect to the Series ___ Pass Through Certificates and (ii) the Pass Through Trustee shall deliver the Series ___ Pass Through Certificates to the Underwriters as provided in the Underwriting Agreement upon receipt by the Pass Through Trustee of such proceeds. SECTION 2.04. Purchase of Equipment Certificates. On the Issuance Date, the Pass Through Trustee shall purchase, in accordance with Section 2.02 of the Pass Through Agreement, each of the Equipment Certificates upon the satisfaction or waiver of the conditions for such purchase by the Pass Through Trustee set forth in the related Participation Agreement. SECTION 2.05. Representations and Warranties of the Company. All of the representations and warranties of the Company set forth or incorporated by reference in Section 1 of the Underwriting Agreement are incorporated by reference in this Series Supplement as if set forth herein and the Company represents and warrants that such representations and warranties are true and correct on the date hereof, except to the extent that such representations and warranties expressly relate solely to an earlier date or later date (in which case such representations and warranties were correct on and as of such earlier date or will be correct on and as of such later date, as the case may be). SECTION 2.06. Conditions Precedent. The obligations of the Pass Through Trustee to participate in the transactions described in Sections 2.03 and 2.04 hereof are subject to (i) receipt by the Pass Through Trustee of a certificate of the Company to the same effect as the certificate of the Company delivered to the Underwriters pursuant to Section 5(c) of the Underwriting Agreement, and (ii) satisfaction or waiver of the conditions for the purchase by the Underwriters of the Pass Through Certificates set forth in Section 5 of the Underwriting Agreement, which satisfaction or waiver for the purposes hereof shall be conclusively demonstrated by the receipt by the Pass Through Trustee of the total proceeds payable by such Underwriters pursuant to the Underwriting Agreement with respect to the Series ___ Pass Through Certificates. SECTION 2.07. Acceptance of Appointment of Pass Through Trustee. __________________________ represents and warrants that it is qualified to serve as Pass Through Trustee and satisfies the criteria specified in Section 10.02 of the Pass Through Agreement for eligibility as a Pass Through Trustee. _______________________________ hereby agrees to serve as Pass Through Trustee for the Pass Through Certificates and acknowledges its appointment as Pass Through Trustee in accordance with the provisions of, and subject to all of the terms and conditions set forth in, the Pass Through Agreement and this related Series Supplement upon the execution and delivery of this Series Supplement. ARTICLE III DISTRIBUTION AND RECORD DATES; CERTIFICATE AND SPECIAL PAYMENT ACCOUNTS; CONCERNING AUTHENTICATING AGENT, PAYING AGENT AND REGISTRAR AND THE CERTIFICATEHOLDERS SECTION 3.01. Distribution Dates. The Regular Distribution Dates are each _____________ and ____________, commencing on ____________, 199__. The Special Distribution Date for any month in which a Special Payment is to be distributed will be the __________ day of such month, except that the Special Distribution Date for any Special Payment received by the Pass Through Trustee in connection with a prepayment of any Equipment Certificate pursuant to Section 6.02(a)(i), 6.02(a)(v) or, in the case of the Indenture in respect of Federal Express Corporation Trust No. N_____FE, 6.02(a)(vi) of the related Indenture will correspond to the date of the receipt of such Special Payment by the Pass Through Trustee. Notice of such Special Payment shall be mailed as soon as practicable after receipt by the Pass Through Trustee of the notice of such prepayment. SECTION 3.02. Record Dates. The Record Dates for the Regular Distribution Dates are __________ and ___________, respectively, and the Record Date for any Special Distribution Date is the fifteenth day preceding such Special Distribution Date, in any event, whether or not such date is a Business Day. SECTION 3.03. Certificate Account and Special Payments Account. In accordance with Section 5.01(a) of the Pass Through Agreement and upon receipt of any Scheduled Payment, the Pass Through Trustee shall immediately deposit such Scheduled Payment into the Certificate Account, a separate and non-interest bearing account designated by the Pass Through Trustee to be used for such purpose. In accordance with Section 5.01(b) of the Pass Through Agreement and upon receipt of any Special Payment, the Pass Through Trustee shall immediately deposit such Special Payment into the Special Payments Account, a separate and, except as provided in Section 5.04 of the Pass Through Agreement, non-interest bearing account designated by the Pass Through Trustee to be used for such purpose. SECTION 3.04. Form of Pass Through Certificates. Subject to Section 2.07 of the Pass Through Agreement, each of the Series ___ Pass Through Certificates will be substantially in the form of Exhibit A hereto. The Series ___ Pass Through Certificates will be issued pursuant to a book-entry system in the form of one Registered Global Certificate and subject to the conditions set forth in the Letter of Representations among the Company, the Pass Through Trustee and The Depository Trust Company. SECTION 3.05. Indenture Documents. The related Indenture Documents are listed in Schedule I hereto. SECTION 3.06. Appointment of Authenticating Agent; Paying Agent and Registrar. (a) The Pass Through Trustee may appoint an authenticating agent (the "Authenticating Agent") with respect to the Pass Through Certificates which shall be authorized to act on behalf of the Pass Through Trustee to authenticate the Pass Through Certificates issued upon original issue and upon exchange or registration of transfer thereof or pursuant to Section 2.09 of the Pass Through Agreement. Pass Through Certificates so authenticated shall be entitled to the benefits of the Pass Through Agreement and this Series Supplement and shall be valid and obligatory for all purposes as if authenticated by the Pass Through Trustee. Whenever reference is made in the Pass Through Agreement or this Series Supplement to the authentication and delivery of Pass Through Certificates by the Pass Through Trustee or the Pass Through Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Pass Through Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Pass Through Trustee by an Authenticating Agent. (b) The Paying Agent, Registrar and Authenticating Agent for the Series ___ Pass Through Certificates initially shall be _________________________. ________________________________________ hereby represents and warrants to the Company that it is qualified to serve as Paying Agent, Registrar and Authenticating Agent under the provisions of, and subject to all of the terms and conditions set forth in, the Pass Through Agreement and this related Series Supplement. SECTION 3.07. Predelivery Funding. During the period between the date of issuance of Equipment Certificates by the Owner Trustee in respect of Federal Express Corporation Trust No. N_____FE and the delivery date of the related Aircraft, such Equipment Certificates will not be secured by such Aircraft or the related Lease, but will be secured by the Collateral Account. Pursuant to the related Indenture, the Owner Trustee will deposit the proceeds from the sale of the related Equipment Certificates into the Collateral Account for the benefit of the related Indenture Trustee. Sums deposited in the Collateral Account will be invested in: (a) direct obligations of the United States of America or obligations fully guaranteed by the United States of America; (b) commercial paper rated A-1/P-1 by Standard & Poor's Ratings Group and Moody's Investors Service, Inc., respectively or, if such ratings are unavailable, rated by any nationally recognized rating organization in the United States equal to the highest rating assigned by such rating organization; (c) overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers; and (d) overnight repurchase agreements with respect to the securities described in clause (a) above entered into with an office of a bank or trust company which is located in the United States of America of any bank or trust company which is organized under the laws of the United States or any state thereof and has capital, surplus and undivided profits aggregating at least $500 million. The Company will pay to the Indenture Trustee on demand any losses on such investments. On the delivery date of such Aircraft, upon satisfaction or waiver of the conditions to the Indenture Trustee's release of amounts in the Collateral Account, the Indenture Trustee will release such amounts. Such amounts will be applied by the Indenture Trustee in accordance with the related Participation Agreement to pay a portion of the purchase price for such Aircraft on the delivery date thereof. The Company will pay to the Indenture Trustee on such delivery date the excess, if any, of the portion of the purchase price for such Aircraft required to be paid by the Indenture Trustee over the amounts released from the Collateral Account net of investment earnings (which will be paid to the Company). The Company is obligated to cause the proceeds of the Equipment Certificates to be utilized to acquire such Aircraft in all circumstances other than the failure of the manufacturer to deliver such Aircraft. Accordingly, if the related Owner Participant does not make available its portion of the purchase price on the delivery date of such Aircraft or the Company does not enter into the related Lease on or prior to ______________, 199__ for any reason other than the failure of the manufacturer to deliver such Aircraft, the Company will purchase such Aircraft and assume on a fully recourse basis all of the obligations of the Owner Trustee under the related Equipment Certificates pursuant to an indenture containing terms substantially identical to those contained in the Leases and Indentures in respect of Federal Express Corporation Trust No. N____FE. In such case, the Indenture Trustee will release the amounts in the Collateral Account to the Company to pay a portion of the purchase price for such Aircraft. SECTION 3.08. ERISA. [Any Person who is, or who in acquiring a Pass Through Certificate is or may be using the assets of, an employee benefit plan subject to Title I of The Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or an individual retirement account or plan subject to Section 4975 of the Code, or any trust established under any such plan or account, may acquire or hold any of the Pass Through Certificates, if such Person determines either that an administrative or a statutory exemption from the prohibited transaction rules under Section 406 of ERISA and Section 4975 of the Code is applicable to its purchase and holding of a Pass Through Certificate or that its purchase and holding of a Pass Through Certificate will not result in a prohibited transaction under Section 406 of ERISA and Section 4975 of the Code.]** ______________________ ** Subject to revision as set forth in Section 6.06 of The Pass Through Agreement. SECTION 3.09. Registered Global Certificate. The Series ___ Pass Through Certificates are to be issued in whole in the form of a Registered Global Certificate, and Section 2.12 of the Pass Through Agreement shall, accordingly, be applicable. The Depository for the Registered Global Certificate and the Letter of Representations is The Depository Trust Company. ARTICLE IV MISCELLANEOUS SECTION 4.01. Governing Law; Counterpart Form. AS PROVIDED IN SECTION 13.14 OF THE PASS THROUGH AGREEMENT, THIS SERIES SUPPLEMENT AND EACH SERIES ___ PASS THROUGH CERTIFICATE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Series Supplement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 4.02. Reports by the Company. In addition to the reports required to be provided by the Company pursuant to Section 4.03 of the Pass Through Agreement, the Company agrees to furnish to the Pass Through Trustee from time to time, such other financial information as the Pass Through Trustee may reasonably request. SECTION 4.03. Modification and Ratification of Pass Through Agreement. The Pass Through Agreement is incorporated herein by reference in its entirety, and shall be deemed to be a part of this Series Supplement as if set forth in full herein, and is in all respects ratified and confirmed, as supplemented and modified by this Series Supplement. SECTION 4.04. Termination. In no event shall this Pass Through Trust continue beyond the expiration of 21 years after the death of the last survivor of George Pataki, Governor of New York State, living on the date of this Series Supplement. IN WITNESS WHEREOF, the parties have caused their names to be signed hereto by their respective officers thereunto duly authorized, all on the day and year first above written. FEDERAL EXPRESS CORPORATION By: _________________________________________ Name: Robert D. Henning Title:Assistant Treasurer and Managing Director - Structured Finance ____________________________________________, as Pass Through Trustee By: _________________________________________ Name: Title: Exhibit A to Series Supplement FORM OF PASS THROUGH CERTIFICATE THIS IS A REGISTERED GLOBAL CERTIFICATE REFERRED TO IN SECTION 2.12 OF THE PASS THROUGH TRUST AGREEMENT. [Unless this pass through certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Pass Through Trustee or its agent for registration or transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE THEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.]* ______________________ * This paragraph is required only if the Pass Through Certificates are to be represented by the Registered Global Certificate. FEDERAL EXPRESS CORPORATION PASS THROUGH TRUST, 199__-___ 199__ Pass Through Certificate, Series ___ CUSIP _________________ Final Regular Distribution Date: __________, ______ evidencing a fractional undivided interest in a pass through trust, the property of which includes certain Equipment Certificates. Certificate No. _______ Applicable interest rate on Equipment Certificates held in Pass Through Trust, 199__-___: _____%. $___________ Fractional Undivided Interest representing _______ of the Pass Through Trust per $1,000 face amount. THIS CERTIFIES THAT ____________________, for value received, is the registered owner of a $_________ (_____________ dollars) Fractional Undivided Interest in the Federal Express Corporation Pass Through Trust, 199__-___ (the "Pass Through Trust") created and declared by ___________________________, as pass through trustee (the "Pass Through Trustee"), pursuant to the Pass Trust Agreement dated as of June 1, 1996 (the "Pass Through Agreement"), as supplemented by Series Supplement 199__-___ thereto dated ________, 199__ (the "Series Supplement") between the Pass Through Trustee and Federal Express Corporation, a Delaware corporation (the "Company"), a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Pass Through Agreement and the Series Supplement. This Pass Through Certificate is one of the duly authorized Pass Through Certificates designated as "Federal Express Corporation 199__ Pass Through Certificates, Series ___." This Pass Through Certificate is issued under and is subject to the terms, provisions, and conditions of the Pass Through Agreement and the Series Supplement, to which the Certificateholder of this Pass Through Certificate by virtue of the acceptance hereof assents and by which such Certificateholder is bound. The property of the Pass Through Trust (the "Trust Property") includes certain Equipment Certificates (the "Equipment Certificates"). Each series of Equipment Certificates is secured by a security interest in (A) an aircraft leased to or owned by the Company and, in the case of a leased aircraft, an assignment of the rights of the Related Owner Trustee with respect to such aircraft, including the right to receive rent and other amounts payable under the related Lease or Indenture with respect to such aircraft or (B) a collateral account holding securities purchased with the proceeds of the sale of such series of Equipment Certificates. The Certificateholders have no rights, benefits or interests in respect of any other separate trust established pursuant to the terms of the Pass Through Agreement for any other series of Pass Through Certificates issued pursuant thereto. Subject to and in accordance with the terms of the Pass Through Agreement and the Series Supplement, from funds then available to the Pass Through Trustee, there will be distributed on each ___________ and ___________ (a "Regular Distribution Date"), commencing on ___________, 199__, to the Person in whose name this Pass Through Certificate is registered at the close of business on the 15th day preceding the applicable Regular Distribution Date, an amount in respect of the Scheduled Payments on the Equipment Certificates due on such Regular Distribution Date, equal to the product of the percentage interest in the Pass Through Trust evidenced by this Pass Through Certificate and an amount equal to the sum of such Scheduled Payments. Subject to and in accordance with the terms of the Pass Through Agreement and the Series Supplement, if Special Payments on the Equipment Certificates are received by the Pass Through Trustee, from funds then available to the Pass Through Trustee, there shall be distributed on the applicable Special Distribution Date, to the Person in whose name this Pass Through Certificate is registered at the close of business on the 15th day preceding such Special Distribution Date, an amount in respect of such Special Payments on the Equipment Certificates, equal to the product of the percentage interest in the Pass Through Trust evidenced by this Pass Through Certificate and an amount equal to the sum of such Special Payments so received. If a Distribution Date is not a Business Day, distribution shall be made on the immediately following Business Day with the same force and effect as if made on such Distribution Date and no interest shall accrue during the intervening period. The Special Distribution Date shall be the _______ day of the month determined as provided in the Pass Through Agreement and the Series Supplement, except in certain circumstances, in which case it will be the date of receipt of proceeds by the Pass Through Trustee as provided in the Series Supplement. The Pass Through Trustee shall mail notice of each Special Payment and the Special Distribution Date therefor to the Certificateholder of this Pass Through Certificate. Distributions on this Pass Through Certificate will be made by the Pass Through Trustee to the Person entitled thereto, without the presentation or surrender of this Pass Through Certificate or the making of any notation hereon. Except as otherwise provided in the Pass Through Agreement and notwithstanding the above, the final distribution on this Pass Through Certificate will be made after notice is mailed by the Pass Through Trustee of the pendency of such distribution and only upon presentation and surrender of this Pass Through Certificate at the office or agency of the Pass Through Trustee specified in such notice. [Any Person who is, or who in acquiring this Pass Through Certificate is or may be using the assets of, an employee benefit plan subject to Title I of The Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or an individual retirement account or plan subject to Section 4975 of the Code, or any trust established under any such plan or account, may acquire or hold any of the Pass Through Certificates, if such Person determines either that an administrative or a statutory exemption from the prohibited transaction rules under Section 406 of ERISA and Section 4975 of the Code is applicable to its purchase and holding of this Pass Through Certificate or that its purchase and holding of this Pass Through Certificate will not result in a prohibited transaction under Section 406 of ERISA and Section 4975 of the Code.]** ______________________ ** Subject to revision as set forth in Section 6.06 of The Pass Through Agreement. This Pass Through Certificate shall be governed by and construed in accordance with the laws of the State of New York. Reference is hereby made to the further provisions of this Pass Through Certificate set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Pass Through Trustee, by manual signature, this Pass Through Certificate shall not be entitled to any benefit under the Pass Through Trust or be valid for any purpose. IN WITNESS WHEREOF, the Pass Through Trustee has caused this Pass Through Certificate to be duly executed. FEDERAL EXPRESS CORPORATION PASS THROUGH TRUST, 199__-___ _______________________________________, as Pass Through Trustee By: ________________________________ Authorized Signatory [FORM OF THE PASS THROUGH TRUSTEE'S CERTIFICATE OF AUTHENTICATION] Dated: This is one of the Pass Through Certificates referred to in the within-mentioned Pass Through Agreement and the Series Supplement. _______________________________________, as Pass Through Trustee By: ________________________________ Authorized Signatory Reverse of Pass Through Certificate] The Pass Through Certificates do not represent a direct obligation of, or an obligation guaranteed by, or an interest in, the Company or the Pass Through Trustee or any affiliate thereof. The Pass Through Certificates are limited in right of payment, all as more specifically set forth on the face hereof and in the Pass Through Agreement and the Series Supplement. All payments or distributions made to Certificateholders under the Pass Through Agreement shall be made only from the Trust Property and only to the extent that the Pass Through Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of the Pass Through Agreement and the Series Supplement. Each Certificateholder of this Pass Through Certificate, by its acceptance hereof, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to such Certificateholder as provided in the Pass Through Agreement and the Series Supplement. In connection with withholding taxes, under certain circumstances the Pass Through Trustee may retain certain amounts otherwise distributable to a Certificateholder. The purchase by any Certificateholder of any Pass Through Certificate constitutes the consent of such Certificateholder to such retention in accordance with the terms of the Pass Through Agreement. This Pass Through Certificate does not purport to summarize the Pass Through Agreement and the Series Supplement and reference is made to the Pass Through Agreement and the Series Supplement for information with respect to the interests, rights, benefits, obligations, proceeds and duties evidenced hereby. A copy of the Pass Through Agreement may be examined by any Certificateholder upon request during normal business hours at the principal office of the Pass Through Trustee, and at such other places designated by the Pass Through Trustee. As of the date of issuance of this Pass Through Certificate, and assuming that no prepayment or default in respect of payment on the Equipment Certificates shall occur, the aggregate scheduled repayments of principal on the Equipment Certificates for the Pass Through Trust and the resulting Pool Factors for the Pass Through Trust after taking into account each such repayment are set forth below: Pass Through Trust, 199__-___ Scheduled Principal Payments on Regular Equipment Distribution Dates Certificates Pool Factor - ---------------------------- -------------- ------------- The Pass Through Agreement and the Series Supplement permit, with certain exceptions provided therein, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Certificateholders under the Pass Through Trust at any time by the Company and the Pass Through Trustee with the consent of the Majority In Interest of Certificateholders in the Pass Through Trust. Any such consent by the Certificateholder of this Pass Through Certificate shall be conclusive and binding on such Certificateholder and upon all future Certificateholders of this Pass Through Certificate and of any Pass Through Certificate issued upon the transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent is made upon this Pass Through Certificate. The Pass Through Agreement and the Series Supplement also permit the amendment thereof, in certain limited circumstances, without the consent of the Certificateholders of any of the Pass Through Certificates. As provided in the Pass Through Agreement and the Series Supplement and subject to certain limitations set forth therein, the transfer of this Pass Through Certificate is registrable in the Register upon surrender of this Pass Through Certificate for registration of transfer to the Pass Through Trustee in its capacity as Registrar, or by any successor Registrar, duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Pass Through Trustee and the Registrar duly executed by the Certificateholder hereof or such Certificateholder's attorney duly authorized in writing, and thereupon one or more new Pass Through Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Pass Through Trust will be issued to the designated transferee or transferees. The Pass Through Certificates are issuable only as registered Pass Through Certificates without coupons in minimum denominations of $1,000 fractional undivided interests and integral multiples thereof. As provided in the Pass Through Agreement and the Series Supplement and subject to certain limitations set forth therein, the Pass Through Certificates are exchangeable for new Pass Through Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Pass Through Trust, as requested by the Certificateholder surrendering the same. No service charge will be made for any such registration of transfer or exchange, but the Pass Through Trustee may require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith. The Pass Through Trustee, the Registrar, and any agent of the Pass Through Trustee or the Registrar may treat the person in whose name this Pass Through Certificate is registered as the owner hereof for all purposes, and neither the Pass Through Trustee, the Registrar, nor any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Pass Through Agreement and the Series Supplement and the Pass Through Trust created thereby shall terminate upon the distribution to Certificateholders of all amounts required to be distributed to them pursuant to the Pass Through Agreement and the Series Supplement and the disposition of all property held as part of the Trust Property. Schedule I to Series Supplement Federal Express Corporation Pass Through Trust, 199__-___ Equipment Certificates; Related Indenture Documents Equipment Certificates (Federal Express Corporation Trust No. N FE): Interest Rate: ________% Maturity: _____________ Principal Amount: $____________ Related Indenture Documents: EX-4.C.2 7 Exhibit 4(c)(2) TRUST INDENTURE AND SECURITY AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N_____) Dated as of _______________, 199_ between _________________________, Not in its Individual Capacity, but solely As Owner Trustee, Owner Trustee and _________________________, Not in its Individual Capacity, but solely As Indenture Trustee, Indenture Trustee COVERING ONE [MANUFACTURER/MODEL] AIRCRAFT SERIAL NO. _____, REGISTRATION NO. N_____ TABLE OF CONTENTS Page Initial Recitals......................................................... 1 Granting Clause.......................................................... 2 Habendum Clause.......................................................... 5 ARTICLE 1 DEFINITIONS SECTION 1.01. Definitions.............................................. 5 ARTICLE II ISSUE, EXECUTION, FORM AND REGISTRATION OF CERTIFICATES; COLLATERAL ACCOUNT SECTION 2.01. Authentication and Delivery of Certificates.............. 6 SECTION 2.02. Execution of Certificates................................ 6 SECTION 2.03. Certificate of Authentication............................ 6 SECTION 2.04. Form and Terms of Certificates; Payments of Principal, Make-Whole Premium and Interest.......................... 7 SECTION 2.05. Payments from Trust Indenture Estate Only................ 8 SECTION 2.06. Registration, Transfer and Exchange...................... 9 SECTION 2.07. Mutilated, Defaced, Destroyed, Lost and Stolen Certificates............................................. 10 SECTION 2.08. Cancellation of Certificates; Destruction Thereof........ 11 SECTION 2.09. Temporary Certificates................................... 11 SECTION 2.10. Termination of Interest in Trust Indenture Estate........ 12 SECTION 2.11. Certificates in Respect of Replacement Aircraft.......... 12 SECTION 2.12. Establishment of Collateral Account...................... 12 SECTION 2.13. Investment of Funds on Deposit in the Collateral Account. 13 SECTION 2.14. Release of Debt Portion on Delivery Date................. 14 SECTION 2.15. Cut-Off Date............................................. 14 ARTICLE III COVENANTS SECTION 3.01. Payment of Principal, Make-Whole Premium and Interest.... 14 SECTION 3.02. Offices for Payments, etc................................ 15 SECTION 3.03. Appointment to Fill a Vacancy in Office of Indenture Trustee.................................................. 15 SECTION 3.04. Paying Agents............................................ 15 SECTION 3.05. Covenants of the Trust Company and the Owner Trustee..... 16 SECTION 3.06. Intentionally Left Blank................................. 17 SECTION 3.07. Disposal of Indenture Estate............................. 17 SECTION 3.08. No Representations or Warranties as to Aircraft or Documents................................................ 17 SECTION 3.09. Further Assurances; Financing Statements................. 18 ARTICLE IV HOLDER LISTS SECTION 4.01. Holder Lists; Ownership of Certificates.................. 18 SECTION 4.02. Intentionally Left Blank................................. 18 ARTICLE V RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 5.01. Basic Rent Distribution.................................. 19 SECTION 5.02. Event of Loss and Replacement; Prepayment................ 19 SECTION 5.03. Payment After Indenture Event of Default, etc............ 20 SECTION 5.04. Certain Payments......................................... 21 SECTION 5.05. Other Payments........................................... 21 SECTION 5.06. Payments to Owner Trustee................................ 21 SECTION 5.07. Application of Payments.................................. 22 SECTION 5.08. Investment of Amounts Held by Indenture Trustee.......... 22 SECTION 5.09. Withholding Taxes........................................ 23 ARTICLE VI PREPAYMENT OF CERTIFICATES SECTION 6.01. No Prepayment Prior to Maturity.......................... 23 SECTION 6.02. Prepayment of Certificates............................... 23 SECTION 6.03. Notice of Prepayment to Holders.......................... 25 SECTION 6.04. Deposit of Prepayment Price.............................. 25 SECTION 6.05. Certificates Payable on Prepayment Date.................. 26 SECTION 6.06. Mandatory Sinking Fund Prepayments....................... 26 ARTICLE VII REMEDIES OF INDENTURE TRUSTEE AND HOLDERS SECTION 7.01. Indenture Event of Default............................... 27 SECTION 7.02. Remedies................................................. 29 SECTION 7.03. Return of Aircraft, etc.................................. 31 SECTION 7.04. Indenture Trustee May Prove Debt......................... 34 SECTION 7.05. Remedies Cumulative...................................... 35 SECTION 7.06. Suits for Enforcement.................................... 36 SECTION 7.07. Discontinuance of Proceedings............................ 36 SECTION 7.08. Limitations on Suits by Holders.......................... 36 SECTION 7.09. Unconditional Right of Holders to Receive Principal, Interest and Make-Whole Premium, and to Institute Certain Suits............................................ 37 SECTION 7.10. Control by Holders....................................... 37 SECTION 7.11. Waiver of Past Indenture Default......................... 38 SECTION 7.12. Notice of Indenture Default.............................. 38 SECTION 7.13. Waiver of Appraisement, etc.; Laws....................... 38 ARTICLE VIII RIGHTS OF THE OWNER TRUSTEE AND THE OWNER PARTICIPANT SECTION 8.01. Certain Rights of Owner Trustee and Owner Participant.... 40 SECTION 8.02. Owner Participant's Right to Elect to Prepay the Certificates, and to Provide for Payment................. 41 SECTION 8.03. Certain Rights of Owner Participant...................... 42 ARTICLE IX CONCERNING THE INDENTURE TRUSTEE SECTION 9.01. Acceptance of Trusts..................................... 43 SECTION 9.02. Duties and Responsibilities of the Indenture Trustee; During an Indenture Event of Default; Prior to an Indenture Event of Default............................... 43 SECTION 9.03. Certain Rights of the Indenture Trustee.................. 46 SECTION 9.04. Indenture Trustee Not Responsible for Recitals, Disposition of Certificates or Application of Proceeds Thereof.................................................. 47 SECTION 9.05. Indenture Trustee and Agents May Hold Certificates; Collections, etc......................................... 47 SECTION 9.06. Moneys Held by Indenture Trustee......................... 47 SECTION 9.07. Right of Indenture Trustee to Rely on Officers' Certificate, etc......................................... 47 SECTION 9.08. Replacement Airframes and Replacement Engines............ 48 SECTION 9.09. Indenture Supplement for Replacements.................... 51 SECTION 9.10. Effect of Replacement.................................... 51 SECTION 9.11. Compensation............................................. 51 ARTICLE X CONCERNING THE HOLDERS SECTION 10.01. Evidence of Action Taken by Holders..................... 52 SECTION 10.02. Proof of Execution of Instruments and of Holding of Certificates............................................ 52 SECTION 10.03. Holders to Be Treated as Owners......................... 52 SECTION 10.04. Certificates Owned by Owner Trustee and the Lessee Deemed Not Outstanding.................................. 53 SECTION 10.05. Right of Revocation of Action Taken..................... 54 SECTION 10.06. ERISA Plan Prohibition.................................. 54 ARTICLE XI INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE ARTICLE XII SUCCESSOR TRUSTEES SECTION 12.01. Notice of Successor Owner Trustee....................... 56 SECTION 12.02. Resignation and Removal of Indenture Trustee; Appointment of Successor................................ 56 SECTION 12.03. Persons Eligible for Appointment as Indenture Trustee... 57 SECTION 12.04. Acceptance of Appointment by Successor Trustee.......... 57 SECTION 12.05. Merger, Conversion, Consolidation or Succession to Business of Indenture Trustee........................... 58 SECTION 12.06. Appointment of Separate Trustees........................ 59 ARTICLE XIII SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE AND OTHER DOCUMENTS SECTION 13.01. Supplemental Indentures Without Consent of Holders...... 61 SECTION 13.02. Supplemental Indentures With Consent of Holders......... 62 SECTION 13.03. Effect of Supplemental Indenture........................ 64 SECTION 13.04. Documents to Be Given to Indenture Trustee.............. 64 SECTION 13.05. Notation on Certificates in Respect of Supplemental Indentures.............................................. 64 SECTION 13.06. No Request Necessary for Lease Supplement or Indenture Supplement.............................................. 64 SECTION 13.07. Amendments, Waivers, etc. of Other Indenture Documents.. 64 ARTICLE XIV SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS SECTION 14.01. Satisfaction and Discharge of Indenture; Termination of Indenture............................................... 66 SECTION 14.02. Application by Indenture Trustee of Funds Deposited for Payment of Certificates................................. 67 SECTION 14.03. Repayment of Moneys Held by Paying Agent................ 67 SECTION 14.04. Transfer of Moneys Held by Indenture Trustee and Paying Agent Unclaimed for Two Years and Eleven Months....... 67 ARTICLE XV MISCELLANEOUS SECTION 15.01. Capacity in Which Acting................................ 68 SECTION 15.02. No Legal Title to Trust Indenture Estate in Holders..... 68 SECTION 15.03. Sale of Trust Indenture Estate by Indenture Trustee is Binding................................................. 68 SECTION 15.04. Indenture for Benefit of Owner Trustee, Indenture Trustee, Owner Participant and Holders.................. 68 SECTION 15.05. No Action Contrary to the Lessee's Rights Under the Lease................................................... 69 SECTION 15.06. Notices................................................. 69 SECTION 15.07. Officers' Certificates and Opinions of Counsel; Statements to Be Contained Therein...................... 70 SECTION 15.08. Severability............................................ 70 SECTION 15.09. No Oral Modifications or Continuing Waivers............. 71 SECTION 15.10. Successors and Assigns.................................. 71 SECTION 15.11. Headings................................................ 71 SECTION 15.12. Normal Commercial Relations............................. 71 SECTION 15.13. Governing Law; Counterpart Form......................... 71 EXHIBIT A -- Form of Indenture Supplement EXHIBIT B -- Form of Certificate Schedule I -- Intentionally Left Blank Schedule II -- Definitions TRUST INDENTURE AND SECURITY AGREEMENT TRUST INDENTURE AND SECURITY AGREEMENT dated as of ___________, 199_, between ______________________, a ______________________, not in its individual capacity, except as otherwise specifically set forth herein (when acting in such individual capacity, the "Trust Company"), but solely as owner trustee (the "Owner Trustee") under the Trust Agreement, as defined herein, and ______________________, a ______________________, as Indenture Trustee hereunder (the "Indenture Trustee"). W I T N E S S E T H : WHEREAS, capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, the Owner Participant and the Trust Company have, immediately prior to the execution and delivery of this Indenture, entered into the Trust Agreement whereby, among other things, (i) the Owner Trustee has declared a certain trust for the use and benefit of the Owner Participant, subject, however, to the Lien of this Indenture, and (ii) the Owner Trustee is authorized and directed to execute and deliver this Indenture; WHEREAS, the Owner Trustee desires by this Indenture to provide, among other things, (i) for the issuance by the Owner Trustee of the Certificates which collectively evidence participation by the Holders in the payment of the Purchase Price for the Aircraft, as provided in the Participation Agreement and (ii) for the assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate hereunder, among other things, of certain of the Owner Trustee's right, title and interest in the Liquid Collateral and after the Delivery Date for the assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate hereunder, among other things, of certain of the Owner Trustee's right, title and interest in and to the Aircraft, the Lease and payments and other amounts received hereunder or thereunder in accordance with the terms hereof (other than Excepted Payments), as security for the Owner Trustee's obligations to the Holders and for the ratable benefit and security of such Holders; WHEREAS, all things have been done to make the Certificates, when executed by the Owner Trustee, and authenticated, issued and delivered hereunder, the valid obligations of the Owner Trustee; and WHEREAS, all things necessary to make this Indenture the valid, binding and legal obligation of the Owner Trustee, enforceable in accordance with its terms, have been done and performed and have happened; NOW, THEREFORE, the parties agree as follows: GRANTING CLAUSE NOW, THEREFORE, in consideration of the mutual promises contained herein and 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 Certificates from time to time outstanding under this Indenture and all other amounts due hereunder and (ii) the performance and observance by the Owner Trustee of all the agreements, covenants and provisions in this Indenture, in the Certificates, in the Participation Agreement and in the Lease contained for the benefit of the Holders of the Certificates, and the prompt payment of any and all amounts from time to time owing under the Participation Agreement by the Owner Trustee, the Owner Participant and the Lessee to the Holders and for the uses and purposes and subject to the terms and provisions of this Indenture, and in consideration of the premises and of the covenants in this Indenture and in the Certificates and of the purchase of the Certificates by their Holders, and of the sum of $1 paid to the Owner Trustee by the Indenture Trustee at or before the delivery of this Indenture, the receipt and sufficiency of which is hereby acknowledged, the Owner Trustee 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 and grant a security interest in and confirm to the Indenture Trustee, its successors and assigns, in trust for the equal and ratable security and benefit of the Holders from time to time of the Certificates, a first priority security interest in and first mortgage Lien on all estate, right, title and interest of the Owner Trustee in, to and under the following described property, rights and privileges other than Excepted Payments, which collectively, excluding Excepted Payments but including all property specifically subjected to the Lien of this Indenture by the terms hereof, by any Indenture Supplement or any mortgage supplemental to this Indenture, are included within the Trust Indenture Estate: (1) The Airframe, as the same will be more particularly described in the Indenture Supplement to be executed and delivered with respect to the Airframe as provided in this Indenture and any airframe substituted in replacement thereof pursuant to the provisions of this Indenture, and all Parts in respect thereof; (2) The Engines, as the same will be more particularly described in the Indenture Supplement to be executed and delivered with respect to the Aircraft as provided in this Indenture whether or not such Engines shall be installed in or attached to the Airframe or any other airframe, and any Replacement Engine therefor, and all Parts in respect thereof; (3) The Lease and all Rent thereunder, including, without limitation, all amounts of Basic Rent and Supplemental Rent, and payments of any kind thereunder and including all rights of the Owner Trustee to execute any election or option or to give any notice, consent, waiver or approval under or in respect of the Lease or to accept any surrender of the Aircraft or any part thereof as well as any rights, powers or remedies on the part of the Owner Trustee, whether arising under the Lease or by statute or at law or in equity or otherwise arising out of any Event of Default; (4) The Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the Engine Consent and Agreement, the Bills of Sale and the Manufacturer's warranty bill of sale referred to in Section __ of the Purchase Agreement Assignment, including all rights of the Owner Trustee to execute any election or option or to give any notice, consent, waiver or approval under or in respect of any of the foregoing documents and instruments; (5) All the tolls, rents, issues, profits, products, revenues and other income of the property subjected or required to be subjected to the Lien of this Indenture, and all of the estate, right, title and interest of the Owner Trustee in and to the same and every part of said property; (6) The Collateral Account, the Liquid Collateral and all other moneys and securities (including Permitted Investments) now or hereafter paid or deposited or required to be paid or deposited to or with the Indenture Trustee by or for the account of the Owner Trustee pursuant to any term of any Operative Agreement, except the Tax Indemnity Agreement, and held or required to be held by the Indenture Trustee hereunder; and (7) All proceeds of the foregoing. EXCLUDING, HOWEVER, from the foregoing grant from the Lien and security interest of this Indenture and from the Trust Indenture Estate, all Excepted Payments, including without limitation all right, title and interest of the Owner Participant in, to and under the Tax Indemnity Agreement and any moneys due or to become due under the Tax Indemnity Agreement and subject to the rights granted to the Owner Trustee or the Owner Participant hereunder, including without limitation, the rights of the Owner Participant and Owner Trustee under Sections 2.05, 7.02, 8.01, 8.02, 8.03, 13.01 and 13.02 hereof. HABENDUM CLAUSE TO HAVE AND TO HOLD the aforesaid property unto the Indenture Trustee, its successors and assigns, in trust for the equal and ratable benefit and security of the Holders from time to time of the Certificates, without any priority of any one Certificate over any other and for the uses and purposes and subject to the terms and conditions set forth in this Indenture, including, without limitation, the rights of the Owner Trustee and the Owner Participant under Sections 2.05, 7.02, 8.01, 8.02, 8.03, 13.01 and 13.02 hereof; It is expressly agreed that anything contained in this Indenture to the contrary notwithstanding, the Owner Trustee shall remain liable under the Indenture Documents to perform all of the obligations assumed by it under any of those documents, all in accordance with and pursuant to the terms and provisions of those documents, and the Indenture Trustee and the Holders of the Certificates shall have no obligation or liability under the Indenture Documents by reason of or arising out of the assignment under this Indenture, nor shall the Indenture Trustee or the Holders of the Certificates be required or obligated in any manner to perform or fulfill any obligations of the Owner Trustee under or pursuant to the Indenture Documents or, except as expressly provided in this Indenture, 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. Until such time as this Indenture and the Lien hereby created shall terminate and subject to the limitations contained in Sections 8.01, 13.01 and 13.02 hereof, the Owner Trustee hereby constitutes the Indenture Trustee the true and lawful attorney of the Owner Trustee, irrevocably, with full power (in the name of the Owner Trustee or otherwise) to (A) ask, require, demand, receive, compound and give acquittance for any and all Basic Rent, Supplemental Rent payable to the Owner Trustee, Stipulated Loss Value payments, insurance proceeds and any and all moneys and claims for moneys due and to become due under or arising out of the Indenture Documents (other than Excepted Payments), and all other property which now or hereafter constitutes part of the Trust Indenture Estate, to endorse any checks or other instruments or orders in connection with the same and to file any claims, take any action or institute any proceeding which the Indenture Trustee may deem to be necessary or advisable in the premises and (B) subject to Section 8.01 hereof, to sue for, compound and give acquittance for, to settle, adjust or compromise any claim for any and all such Rents, income and other sums which are assigned under the Granting Clause hereof as fully as the Owner Trustee could itself do. Under the Lease the Lessee is directed to make all payments of Rent (other than Excepted Payments) payable to the Owner Trustee and all other amounts (other than Excepted Payments) which are required to be paid to or deposited with the Owner Trustee pursuant to the Lease directly to the Indenture Trustee at such address in the United States of America as the Indenture Trustee shall specify for application as provided in this Indenture. The Owner Trustee agrees that if, notwithstanding such provision, it shall have received any such amounts, promptly on receipt of any such payment, it will transfer to the Indenture Trustee any and all moneys from time to time received by the Owner Trustee constituting part of the Trust Indenture Estate for distribution by the Indenture Trustee pursuant to this Indenture, except that the Owner Trustee shall accept for distribution pursuant to the Trust Agreement (i) any amounts distributed to it by the Indenture Trustee under this Indenture, and (ii) any Excepted Payments. Concurrently with the delivery of this Indenture, the Owner Trustee has delivered to the Indenture Trustee executed counterparts of the Trust Agreement, the Participation Agreement, the chattel paper original counterpart of the Lease and Lease Supplement, and the full warranty bill of sale referred to in the definition of Bills of Sale. The Owner Trustee agrees that at any time and from time to time, upon the written request of the Indenture Trustee, the Owner Trustee will promptly and duly execute and deliver or cause to be duly executed and delivered any and all such further instruments and documents as the Indenture Trustee may reasonably deem desirable in obtaining the full benefits of the assignment under this Indenture and of the rights and powers granted in this Indenture. It is hereby further covenanted and agreed by and between the parties as follows: ARTICLE 1 DEFINITIONS SECTION 1.01. Definitions. Unless the context otherwise requires, capitalized terms utilized herein shall have the meanings set forth in Schedule II hereto for all purposes of this Indenture and shall be equally applicable to both the singular and plural forms of the terms defined. ARTICLE II ISSUE, EXECUTION, FORM AND REGISTRATION OF CERTIFICATES; COLLATERAL ACCOUNT SECTION 2.01. Authentication and Delivery of Certificates. Forthwith upon the execution and delivery of this Indenture, and from time to time thereafter, Certificates in an aggregate principal amount not in excess of the amount specified in Section 2.04 (except as otherwise provided in Sections 2.06 and 2.07) shall be executed by the Owner Trustee and delivered to the Indenture Trustee for authentication, and the Indenture Trustee shall thereupon authenticate and deliver said Certificates to or upon the oral or written order of the Owner Trustee, signed, if written, by an authorized officer of the Owner Trustee, without any further action by the Owner Trustee. SECTION 2.02. Execution of Certificates. The Certificates shall be signed on behalf of the Owner Trustee by an authorized officer of the Trust Company. Such signatures may be the manual or facsimile signatures of such officer and minor errors or defects in any reproduction of any such signature shall not affect the validity or enforceability of any Certificate which has been duly authenticated and delivered by the Indenture Trustee. In case any officer of the Trust Company who shall have signed any of the Certificates shall cease to be such officer before the Certificate so signed shall be authenticated and delivered by the Indenture Trustee or disposed of by the Trust Company, such Certificate nevertheless may be authenticated and delivered or disposed of as though the person who signed such Certificate had not ceased to be such officer of the Owner Trustee; and any Certificate may be signed on behalf of the Owner Trustee by such person or persons as, at the actual date of the execution of such Certificate, shall be the proper officers of the Trust Company, although at the date of the execution and delivery of this Indenture any such person was not such officer. Certificates bearing the signatures of individuals who were authorized officers of the Trust Company at the time such Certificates were issued shall bind the Owner Trustee, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Certificates or did not hold such offices at the respective dates of such Certificates. SECTION 2.03. Certificate of Authentication. Only such Certificates as shall bear thereon a certificate of authentication substantially in the form set forth in Exhibit B, executed by the Indenture Trustee by manual signature of one of its authorized officers, shall be entitled to the security and benefits of this Indenture or be valid or obligatory for any purpose. Such certificate by the Indenture Trustee upon any Certificate executed by the Owner Trustee shall be conclusive evidence that the Certificate so authenticated has been duly authenticated and delivered hereunder and that the Holder, as evidenced on the Register, is entitled to the security and benefits of this Indenture. SECTION 2.04. Form and Terms of Certificates; Payments of Principal, Make-Whole Premium and Interest. The Certificates and the Indenture Trustee's certificate of authentication shall be substantially in the form set forth in Exhibit B hereto. Certificates may differ with respect to Maturity and as to other terms. The Certificates shall be issuable as registered securities without coupons and shall be numbered, lettered, or otherwise distinguished in such manner or in accordance with such plans as the Owner Trustee executing the same may determine with the approval of the Indenture Trustee. The aggregate principal amount of Certificates that may be authenticated and delivered under this Indenture is limited as provided in the form of Certificate attached as Exhibit B hereto. The Certificates shall be issued in registered form only and in denominations of $1,000 and any integral multiple thereof, shall be dated the Delivery Date, and shall be issued in the Maturities and principal amounts, and shall bear interest at the rates per annum, specified in the form of Certificate set forth in Exhibit B. Any of the 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 Certificates are admitted to trading, or to conform to general usage. Each Certificate shall bear interest from the date of 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 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 Certificate shall bear interest at the Past Due Rate on any principal of any Certificate and on any other amount payable hereunder or under the Certificates, 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 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 3.02 hereof; provided, however, that interest may be payable at the option of the Indenture Trustee or its Paying Agent, as defined in Section 3.04, by mailing checks for such interest payable to or upon the written order of the Holders entitled thereto as they shall appear on the Register. The Holder at the close of business on any Record Date with respect to any Interest Payment Date shall be entitled to receive the interest if any payable on such Interest Payment Date notwithstanding any transfer or exchange of such Certificate subsequent to the Record Date and prior to such Interest Payment Date, except if and to the extent the Owner Trustee shall default in the payment of the interest due on such Interest 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 or more than fifteen 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 15 days preceding such subsequent Record Date. SECTION 2.05. Payments from Trust Indenture Estate Only. All payments to be made by the Owner Trustee under this Indenture shall be made only from the income and the proceeds from the Lessor's Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Lessor's Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make distributions of the amounts due in respect of the Certificates in accordance with the terms hereof and thereof. Each Holder by its acceptance of a Certificate agrees that it will look solely to the income and proceeds from the Trust Indenture Estate to the extent available for distribution to it as provided herein and that neither the Owner Participant, the Owner Trustee, the Trust Company nor the Indenture Trustee is personally liable to such Holder for any amounts payable under this Indenture or such Certificate or for any amounts payable or liability under any Certificate or this Indenture, except as expressly provided herein in the case of the Trust Company, the Owner Trustee or the Indenture Trustee, or in the case of the Owner Participant, except as expressly provided in the Participation Agreement. The Trust Company is not personally liable to any Holder, the Lessee, the Owner Participant or the Indenture Trustee for any amounts payable under this Indenture or for any liability under this Indenture or the Certificates, except as a result of the Trust Company's gross negligence or willful misconduct, or as otherwise expressly provided herein or in the Participation Agreement. If (1) all or any part of the Lessor's Estate becomes the property of a debtor subject to the reorganization provisions of the Bankruptcy Code, (2) pursuant to such reorganization provisions the Owner Participant is required, by reason of the Owner Participant being held to have recourse liability to the debtor or the trustee of the debtor directly or indirectly, to make payment on account of any amount payable as principal of or interest, Make-Whole Premium or other amounts payable on the Certificates, and (3) the Indenture Trustee actually receives any Excess Amount, as defined below, which reflects any payment by the Owner Participant on account of (2) above, then the Indenture Trustee shall promptly refund to the Owner Participant such Excess Amount. For purposes of this paragraph, "Excess Amount" means the amount by which such payment exceeds the amount which would have been received by the Indenture Trustee if the Owner Participant had not become subject to the recourse liability referred to in (2) above. Nothing contained in this paragraph shall prevent the Indenture Trustee from enforcing any personal recourse obligation (and retaining the proceeds thereof) of the Owner Participant under the Participation Agreement, this Indenture (other than referred to in clause (2)) or the Trust Agreement (and any exhibits or annexes thereto), or from retaining any amount paid by the Owner Participant under Sections 5.01, 8.02 and 8.03 hereof. Nothing contained herein shall be construed as requiring any Holder to refund any amount distributed to such Holder pursuant to this Indenture. SECTION 2.06. Registration, Transfer and Exchange. The Indenture Trustee will keep, on behalf of the Owner Trustee, at each office or agency to be maintained for the purpose as provided in Section 3.02 hereof a Register or Registers on which, subject to such reasonable regulations as it may prescribe, it will register, and will register the transfer of, Certificates as provided in this Article. Such Register shall be in written form in the English language or in any other form capable of being converted into such form within a reasonable time. Upon due presentation for registration of transfer of any Certificate at any such office or agency, the Owner Trustee shall execute and the Indenture Trustee shall authenticate and deliver in the name of the transferee or transferees a new Certificate or Certificates of the same Maturity and interest rate and in authorized denominations for an equal aggregate principal amount. Any Certificate or Certificates may be exchanged for a Certificate or Certificates of the same Maturity and interest rate but in other authorized denominations, in an equal aggregate principal amount. Certificates to be exchanged shall be surrendered at any office or agency to be maintained by the Indenture Trustee for the purpose as provided in Section 3.02 hereof, and the Owner Trustee shall execute and the Indenture Trustee shall authenticate and deliver in exchange therefor the Certificate or Certificates which the Holder making the exchange shall be entitled to receive, bearing numbers not contemporaneously or previously outstanding. All Certificates presented for registration of transfer, exchange, prepayment or payment shall (if so required by the Owner Trustee or the Indenture Trustee) be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Owner Trustee and the Indenture Trustee duly executed by the Holder or its attorney duly authorized in writing and (except in the case of transfers pursuant to Section 14 of the Participation Agreement) the Indenture Trustee may require evidence satisfactory to it as to the compliance of any such transfer with the Securities Act. The Indenture Trustee may require payment from the Holder of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any exchange or registration of transfer of Certificates. No service charge shall be levied for any such transaction. The Indenture Trustee shall not be required to exchange or register a transfer of any Certificates (a) for a period of 15 days immediately preceding the first mailing of notice of prepayment of such Certificates or (b) with respect to which notice of prepayment has been given pursuant to Section 6.03 and such notice has not been revoked. All Certificates issued upon any transfer or exchange of Certificates shall be valid obligations of the Owner Trustee, evidencing the same debt, and entitled to the same security and benefits under this Indenture, as the Certificates surrendered upon such transfer or exchange. SECTION 2.07. Mutilated, Defaced, Destroyed, Lost and Stolen Certificates. In case any temporary or definitive Certificate shall become mutilated, defaced or be apparently destroyed, lost or stolen, the Owner Trustee in its discretion may execute, and upon the oral or written request of any officer of the Trust Company, the Indenture Trustee shall authenticate and deliver, a new Certificate of like Maturity, bearing a number not contemporaneously or previously outstanding, in exchange and substitution for the mutilated or defaced Certificate, or in lieu of and substitution for the Certificate so apparently destroyed, lost or stolen. In case of any Certificate so apparently destroyed, lost or stolen, the applicant for a substitute Certificate shall furnish to the Owner Trustee and to the Indenture Trustee such security or indemnity as may be required by them to indemnify and defend and to save each of them harmless and evidence to their satisfaction of the apparent destruction, loss or theft of such Certificate and of the ownership thereof. Upon the issuance of any substitute Certificate, the Owner Trustee or the Indenture Trustee may require payment from the Holder of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses connected therewith. In case any Certificate which has matured or is about to mature, or has been called for prepayment in full, shall become mutilated or defaced or be apparently destroyed, lost or stolen, the Owner Trustee may, instead of issuing a substitute Certificate, pay or authorize the payment of the same (without surrender thereof except in the case of a mutilated or defaced Certificate), if the applicant of any Certificate so apparently destroyed, lost or stolen, for such payment shall furnish to the Owner Trustee and to the Indenture Trustee such security or indemnity as any of them may require to save each of them harmless and the applicant shall also furnish to the Owner Trustee and the Indenture Trustee evidence to their satisfaction of the apparent destruction, loss or theft of such Certificate and of the ownership thereof. Every substitute Certificate issued pursuant to the provisions of this Section by virtue of the fact that any Certificate is apparently destroyed, lost or stolen shall constitute an original additional contractual obligation of the Owner Trustee, whether or not the apparently destroyed, lost or stolen Certificate shall be enforceable at any time by anyone and shall be entitled to all the security and benefits of (but shall be subject to all the limitations of rights set forth in) this Indenture equally and proportionately with any and all other Certificates duly authenticated and delivered hereunder. All Certificates shall be held and owned upon the express condition that, to the extent permitted by law, the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, defaced, or apparently destroyed, lost or stolen Certificates and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender. SECTION 2.08. Cancellation of Certificates; Destruction Thereof. All Certificates surrendered for payment, prepayment, registration of transfer or exchange, if surrendered to the Owner Trustee or any agent of the Owner Trustee or the Indenture Trustee, shall be delivered to the Indenture Trustee for cancellation or, if surrendered to the Indenture Trustee, shall be cancelled by it; and no Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture. The Indenture Trustee shall destroy cancelled Certificates held by it and deliver a certificate of destruction to the Owner Trustee. If the Owner Trustee shall acquire any of the Certificates, such acquisition shall not operate as a prepayment or satisfaction of the indebtedness represented by such Certificates unless and until the same are delivered to the Indenture Trustee for cancellation. SECTION 2.09. Temporary Certificates. Pending the preparation of definitive Certificates, the Owner Trustee may execute and, upon the oral or written request of an officer of the Owner Trustee, the Indenture Trustee shall authenticate and deliver temporary Certificates (printed, lithographed, typewritten or otherwise reproduced, in each case in form satisfactory to the Indenture Trustee). Temporary Certificates shall be issuable as registered Certificates without coupons, of any authorized denomination, and substantially in the form of the definitive Certificates but with such omissions, insertions and variations as may be appropriate for temporary Certificates, all as may be determined by the Owner Trustee with the concurrence of the Indenture Trustee. Temporary Certificates may contain such reference to any provisions of this Indenture as may be appropriate. Every temporary Certificate shall be executed by the Owner Trustee and, upon the oral or written request of an authorized officer of the Owner Trustee, be authenticated by the Indenture Trustee upon the same conditions and in substantially the same manner, and with like effect, as the definitive Certificates. Without unreasonable delay the Owner Trustee shall execute and shall furnish definitive Certificates and thereupon temporary Certificates shall be surrendered in exchange therefor without charge at any office or agency to be maintained by the Indenture Trustee for the purpose pursuant to Section 3.02, and, upon the oral or written request of an authorized officer of the Owner Trustee, the Indenture Trustee shall authenticate and deliver in exchange for such temporary Certificates an equal aggregate principal amount of definitive Certificates of the same Maturities and interest rates and in authorized denominations. Until so exchanged, temporary Certificates shall be entitled to the same security and benefits under this Indenture as definitive Certificates. SECTION 2.10. Termination of Interest in Trust Indenture Estate. A Holder shall not, as such, have any further interest in, or other right with respect to, the Trust Indenture Estate when and if the principal amount of and Make-Whole Premium, if any, and interest on and other amounts due under all Certificates held by such Holder and all other sums payable to such Holder hereunder shall have been paid in full. SECTION 2.11. Certificates in Respect of Replacement Aircraft. Upon the execution and delivery of an Indenture Supplement covering a replacement airframe and/or Replacement Engine, as provided in Section 9.09 hereof, each Certificate shall be deemed to have been issued in connection with such replacement airframe and/or Replacement Engine and each Certificate issued thereafter upon a transfer or exchange of, or as a replacement for, a Certificate, shall be designated as having been issued in connection with such replacement airframe and/or Replacement Engine, but without any other change therein except as provided for in this Article II. SECTION 2.12. Establishment of Collateral Account. (a) The Indenture Trustee shall establish, or cause to be established, with ________, who represents and warrants that it is a financial intermediary (as defined in Section 8-313(4) of the _____________ Uniform Commercial Code), in its name as secured party hereunder an Eligible Deposit Account entitled "___________________________________, as secured party under the Trust Indenture and Security Agreement (Federal Express Corporation Trust No. N_____) dated as of _______________, 199_, with the Owner Trustee referred to therein". (b) If at any time the Collateral Account ceases to be an Eligible Deposit Account, the Indenture Trustee shall within two (2) Business Days, establish a new Collateral Account meeting the conditions specified in the definition of Eligible Deposit Account, and shall transfer any cash or any investments in the Collateral Account to such new Collateral Account. (c) The Indenture Trustee shall have exclusive dominion and control of the Collateral Account and all funds therein, and shall make withdrawals from the Collateral Account only in accordance with this Indenture. (d) ________, agrees to send confirmation to the Indenture Trustee that it has credited the Specified Investments to the Collateral Account and to make appropriate entries on its books identifying the Specified Investments as pledged to the Indenture Trustee. SECTION 2.13. Investment of Funds on Deposit in the Collateral Account. (a) Funds deposited in the Collateral Account shall be invested and reinvested by the Indenture Trustee, subject to Section 15.02 of the Participation Agreement, at the risk of the Owner Trustee, in Specified Investments selected by the Lessee for the account of the Owner Trustee in accordance with Section 2.13(b) below; provided, however, that if Specified Investments meeting the requirements of Section 2.13(b) are not available on any day on which funds are to be invested as contemplated by the preceding provisions of this Section 2.13(a), the Indenture Trustee may leave such funds in the Collateral Account uninvested until the earliest of (i) the date on which an appropriate Specified Investment becomes available, (ii) the Delivery Date and (iii) the Cut-Off Date. The Indenture Trustee shall maintain possession of the negotiable instruments or securities, if any, evidencing such Specified Investments and, in the case of any Specified Investments in book-entry form, such Specified Investments shall be credited to an account of the Indenture Trustee or a financial intermediary with the applicable Federal Reserve Bank; provided, however, if the account is credited to the financial intermediary, the financial intermediary shall make written confirmation thereof to the Indenture Trustee and make an appropriate entry on its books identifying the Specified Investments as pledged to the Indenture Trustee. All proceeds of and any income, interest and other payments and distributions on or with respect to any Specified Investments shall be deposited in or credited to the Collateral Account and thereafter shall be held, invested and applied by the Indenture Trustee in accordance with this Indenture. The Indenture Trustee shall promptly notify the Owner Trustee and the Lessee of any Losses. (b) On the Certificate Closing Date, the Indenture Trustee shall invest the amount deposited in the Collateral Account pursuant to Section 2.01(c) of the Participation Agreement in Specified Investments selected by the Lessee for the account of the Owner Trustee which mature prior to _______________, 199_. If the Delivery Date is postponed pursuant to Section 3.02(c) or Section 3.05 of the Participation Agreement, the proceeds of the Specified Investments maturing prior to such postponed Delivery Date shall be invested in Specified Investments and any such Specified Investments shall mature within two weeks of the rescheduled Delivery Date or if no notice of a rescheduled Delivery Date has been given, within two weeks of the Cut-Off Date. (c) If for any reason the Indenture Trustee shall be required to make any distributions of the Liquid Collateral prior to the maturity date of any Specified Investment, the Indenture Trustee shall cause the same to be sold in accordance with standard commercial practices, and the Lessee, for the account of the Owner Trustee, shall forthwith compensate the Indenture Trustee for any Losses as provided in Section 15.02(a) of the Participation Agreement. SECTION 2.14. Release of Debt Portion on Delivery Date. Subject to the satisfaction or waiver of the conditions precedent to the Indenture Trustee's obligations set forth in Section 4.02 of the Participation Agreement, on the Delivery Date the Indenture Trustee shall release from the Collateral Account an amount of Liquid Collateral equal to the lesser of (A) the Debt Portion and (B) the amount actually in the Collateral Account on the Delivery Date. Such amount so released, together with the amount of any Losses received from the Lessee pursuant to Section 15.02(a) of the Participation Agreement, shall be used to finance a portion of the Purchase Price payable by (x) the Owner Trustee as contemplated by Section 3.02(a) of the Participation Agreement or (y) if the fifth sentence of Section 3.05(a) of the Participation Agreement shall be applicable, by the Lessee as contemplated by such sentence. Any amount remaining in the Collateral Account after such release (net of any uncompensated Losses) shall be remitted by the Indenture Trustee on behalf of the Owner Trustee to the Lessee pursuant to Section 3.02(a)(C) of the Participation Agreement. SECTION 2.15. Cut-Off Date. In the case of a prepayment under Section 6.02(a)(vi) hereof, the Indenture Trustee shall release from the Collateral Account all amounts held in the Collateral Account on such date. Such amount so released, together with the amount of any Losses received from the Lessee pursuant to Sections 15.02(a) and 15.02(c) of the Participation Agreement, shall be applied to pay amounts due under Section 6.02(b)(1) hereof on the Cut-Off Date, and any amount (net of any uncompensated Losses) remaining after such release and application shall be remitted by the Indenture Trustee, on behalf of the Owner Trustee, to the Lessee. ARTICLE III COVENANTS SECTION 3.01. Payment of Principal, Make-Whole Premium and Interest. The Owner Trustee covenants and agrees that it will duly and punctually pay or cause to be paid the principal of, and interest and Make-Whole Premium, if any, and all other amounts due on, each of the Certificates and under this Indenture at the place or places, at the respective times and in the manner provided in this Indenture and in the Certificates. Principal and interest and other amounts due hereunder or under the Certificates shall be payable in Dollars on the due date thereof, to the Indenture Trustee at the Corporate Trust Office (or such other account at such other financial institution as the Indenture Trustee may designate for the purpose). If any amount payable under the Certificates or under this Indenture falls due on a day which is not a Business Day, then such sum shall be payable on the next succeeding Business Day, without (provided that payment is made on such next succeeding Business Day) additional interest thereon for the period of such extension. SECTION 3.02. Offices for Payments, etc. So long as any of the Certificates remain outstanding, the Indenture Trustee will maintain the following: (a) an office or agency in ___________ where the Certificates may be presented for payment and (b) a facility or agency in New York, New York where the Certificates may be presented for registration of transfer and for exchange and for prepayment as provided in this Indenture (the "Registrar"). The Registrar shall keep a register (the "Register") with respect to the Certificates and their transfer and exchange. The Indenture Trustee may appoint one or more co-registrars ("Co-Registrars") for the Certificates and may terminate any such appointment at any time upon written notice. The term "Registrar" includes any Co-Registrar. The Indenture Trustee shall initially act as Registrar. SECTION 3.03. Appointment to Fill a Vacancy in Office of Indenture Trustee. The Owner Trustee, whenever necessary to avoid or fill a vacancy in the office of Indenture Trustee, will, with the consent of the Lessee, appoint, in the manner provided in Section 12.02, an Indenture Trustee, so that there shall at all times be an Indenture Trustee hereunder. SECTION 3.04. Paying Agents. Whenever the Indenture Trustee in its sole discretion shall appoint a paying agent (the "Paying Agent"), it will cause the Paying Agent to execute and deliver an instrument in which the Paying Agent shall agree with the Indenture Trustee, subject to the provisions of this Section: (a) that it will hold all sums received by it as such agent for the payment of the principal of, and interest and Make-Whole Premium, if any, on the Certificates (whether such sums have been paid to it by the Indenture Trustee or the Owner Trustee) in trust for the benefit of the Holders or of the Indenture Trustee, and (b) that it will give the Indenture Trustee notice of any failure by the Owner Trustee to make any payment of the principal of or interest or Make-Whole Premium, if any, on the Certificates when the same shall be due and payable. Anything in this Section to the contrary notwithstanding, the agreements to hold sums in trust as provided in this Section are subject to the provisions of Sections 14.03 and 14.04 hereof. SECTION 3.05. Covenants of the Trust Company and the Owner Trustee. (a) The Trust Company hereby covenants and agrees as follows: (i) the Trust Company will perform its covenants set forth in Sections 6.04(b) and 6.04(c) of the Participation Agreement; and (ii) the Trust Company will not directly or indirectly create, incur, assume or suffer to exist any Lessor's Liens against, on or with respect to the Aircraft or the Lessor's Estate or the Trust Indenture Estate. (b) The Owner Trustee hereby covenants and agrees as follows: (i) the Owner Trustee will perform its obligations under the Lease; (ii) the Owner Trustee will perform its covenant set forth in Section 6.04(b) of the Participation Agreement; (iii) in the event a Responsible Officer of the Owner Trustee shall have actual knowledge of an Indenture Event of Default or an Event of Loss, the Owner Trustee will give prompt written notice of such Indenture Event of Default or Event of Loss to the Indenture Trustee, the Lessee and the Owner Participant; (iv) the Owner Trustee will furnish to the Indenture Trustee, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates, financial statements and other instruments furnished to the Owner Trustee under the Lease, including, without limitation, a copy of each report or notice received pursuant to Section 11 of the Lease, to the extent that the same shall not have been furnished to the Indenture Trustee; (v) the Owner Trustee will not enter into any business or other activity other than the business of owning the Aircraft, the leasing thereof to the Lessee and the carrying out of the transactions contemplated hereby and by the Lease, the Participation Agreement, the Trust Agreement and the other Indenture Documents; (vi) the Owner Trustee will not directly or indirectly create, incur, assume or suffer to exist any Lessor's Liens in or with respect to the Trust Indenture Estate or any of the properties or assets of the Trust Indenture Estate resulting from the acts or omissions of or claims against the Owner Trustee (including, without limitation, the nonpayment of any taxes based on or measured by the revenues or income of the Owner Trustee); (vii) the Owner Trustee will not (except as permitted herein) assign or pledge, so long as this Indenture shall remain in effect and shall not have been terminated pursuant to Section 14.01, any of its right, title or interest hereby assigned to anyone other than the Indenture Trustee, and, with respect to such right, title and interest hereby assigned, will not, except as expressly provided in this Indenture, (i) accept any payment from the Lessee or any Permitted Sublessee, enter into any agreement amending or supplementing any of the Indenture Documents, execute any waiver or modification of, or consent under, the terms of any of the Indenture Documents, (ii) settle or compromise any claim arising under any of the Indenture Documents, (iii) submit or consent to the submission of any dispute, difference or other matter arising under or in respect of any of the Indenture Documents to arbitration thereunder or (iv) incur, or suffer to exist, any Indebtedness; and (viii)the Owner Trustee agrees to indemnify the Indenture Trustee upon demand for any and all indemnity amounts which are payable by the Lessee to such Indenture Trustee pursuant to Articles 7 and 8 of the Participation Agreement. SECTION 3.06. Intentionally Left Blank. SECTION 3.07. Disposal of Indenture Estate. (a) At any time and from time to time any part of the Trust Indenture Estate may be sold or disposed of in accordance with the provisions of this Indenture and the Lease. The Indenture Trustee shall, from time to time, release any part of the Trust Indenture Estate so sold or disposed of or as to which an Event of Loss has occurred or as to which the Lease has been terminated from the Lien of this Indenture. In addition, to the extent that such property constitutes an Airframe or Engine, the further requirements of Section 9.08 hereof shall be complied with. SECTION 3.08. No Representations or Warranties as to Aircraft or Documents. NEITHER THE INDENTURE TRUSTEE NOR THE OWNER TRUSTEE NOR THE TRUST COMPANY NOR THE OWNER PARTICIPANT MAKES OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT OR ANY ENGINE WHATSOEVER, except that the Trust Company warrants that on the Delivery Date (a) the Owner Trustee shall have received whatever title was conveyed to it by the Lessee, and (b) the Aircraft shall be free and clear of Lessor's Liens attributable to the Trust Company. Neither the Trust Company, the Indenture Trustee nor the Owner Participant makes or shall be deemed to have made any representation or warranty as to the validity, legality or enforceability of this Indenture, the Trust Agreement, the Certificates or any Indenture Document or as to the correctness of any statement contained in any thereof, except for the representations and warranties of the Trust Company, the Indenture Trustee and the Owner Participant made under this Indenture or in the Participation Agreement. SECTION 3.09. Further Assurances; Financing Statements. At any time and from time to time, upon the request of the Indenture Trustee or the Lessee, the Owner Trustee shall promptly and duly execute and deliver any and all such further instruments and documents as may be specified in such request and as are necessary or desirable to perfect, preserve or protect the Liens and assignments created or intended to be created hereby, or to obtain for the Indenture Trustee the full benefit of the specific rights and powers granted herein, including, without limitation, the execution and delivery of Uniform Commercial Code financing statements and continuation statements with respect thereto, or similar instruments relating to the perfection of the Liens or assignments created or intended to be created hereby. ARTICLE IV HOLDER LISTS SECTION 4.01. Holder Lists; Ownership of Certificates. (a) The Indenture Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of the Holders. If the Indenture Trustee is not the Registrar, the Registrar shall furnish to the Indenture Trustee semi-annually not more than 15 days after each Record Date, as of such Record Date, or at such other times as the Indenture Trustee may request in writing, a list, in such form and as of such date as the Indenture Trustee may reasonably require, containing all the information in the possession or control of the Registrar as to the names and addresses of the Holders and the amounts and Maturities of the Certificates held by such Holders. (b) Ownership of the Certificates shall be proved by the Register kept by the Registrar. SECTION 4.02. Intentionally Left Blank. ARTICLE V RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 5.01. Basic Rent Distribution. Except as otherwise provided in Section 5.03 hereof, each installment of Basic Rent, Rent paid by the Owner Participant under Section 3.01 of Lease, any payment of interest on overdue installments of Basic Rent, any payment received by the Indenture Trustee pursuant to Section 8.03 hereof and any payment received by the Indenture Trustee pursuant to Section 15.02(b) or 15.02(c) of the Participation Agreement shall be promptly distributed in the following order of priority: first, so much of such installment or payment as shall be required to pay in full the aggregate amount of the payment or payments of principal and interest and other amounts (as well as any interest on overdue principal and, to the extent permitted by law, on Make-Whole Premium, if any, interest and other amounts) then due under all Certificates shall be distributed to the Holders ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each such Certificate bears to the aggregate amount of the payments then due under all such Certificates, and, second, the balance if any of such installment or payment remaining thereafter shall be distributed to the Owner Trustee, or as the Owner Trustee may request, for distribution pursuant to the Trust Agreement; provided, however, that if an Indenture Event of Default shall have occurred and be continuing, then such balance shall not be distributed as provided in this clause "second" but shall be held by the Indenture Trustee as part of the Trust Indenture Estate until whichever of the following shall first occur: (a) all Indenture Events of Default shall have been cured, in which event such balance shall be distributed as provided in this clause "second", (b) such Indenture Event of Default shall have continued for a period of 180 days, in which event such balance shall be distributed as provided in this clause "second", or (c) Section 5.03 hereof shall be applicable in which event such balance shall be distributed in accordance with the provisions thereof. SECTION 5.02. Event of Loss and Replacement; Prepayment. (a) Except as otherwise provided in Section 5.03 hereof, any payment received by the Indenture Trustee as the result of an Event of Loss with respect to the Aircraft or as the result of, or in connection with any event under the Lease giving rise to a prepayment pursuant to Section 6.02 hereof, shall be promptly distributed by the Indenture Trustee in the following order of priority: first, to reimburse the Indenture Trustee for any costs or expenses reasonably incurred in connection with such prepayment, as the case may be, second, as provided in clause "second" of Section 5.03 hereof, and third, as provided in clause "third" of Section 5.03 hereof; provided that if a replacement airframe shall be substituted for an Airframe subject to an Event of Loss as provided in Section 11.03 of the Lease and Section 9.08 hereof, any proceeds which result from such Event of Loss and are paid to the Indenture Trustee shall be held by the Indenture Trustee as part of the Trust Indenture Estate and, unless otherwise applied pursuant to Section 5.01 or 5.03 hereof, such proceeds shall be released to the Lessee upon the release of such damaged Airframe and the replacement thereof as herein provided. (b) Any amounts received directly or indirectly from any governmental authority, insurer or other party pursuant to any provision of Section 10 or 11 of the Lease as the result of loss or damage not constituting an Event of Loss with respect to the Aircraft, or as a result of such loss or damage constituting an Event of Loss if and to the extent that such amounts would at the time be required to be paid to the Lessee pursuant to said Section 10 or 11 but for the fact that an Event of Default shall have occurred and be continuing, shall be held by the Indenture Trustee as security for the obligations of the Lessee under the Lease and the Participation Agreement and shall be invested in accordance with the terms of Section 5.08 hereof and at such time as the conditions for payment to the Lessee specified in said Section 10 or 11, as the case may be, shall be fulfilled and there shall not be continuing any Event of Default, such amount, and the proceeds of any investment thereof, shall, to the extent not theretofore applied, be paid to the Lessee to the extent provided in the Lease. SECTION 5.03. Payment After Indenture Event of Default, etc. Except as otherwise provided in Sections 5.02(b), 5.04(b), 5.04(c) and 5.05(b) hereof, all payments received and all amounts held or realized by the Indenture Trustee (a) after an Indenture Event of Default shall have occurred and so long as such an Indenture Event of Default shall be continuing, and after the Indenture Trustee has received a request in accordance with Section 7.10 hereof, or (b) after the Certificates shall have become due and payable as provided in Section 7.02(b) or (c) hereof, shall be promptly distributed by the Indenture Trustee in the following order of priority: first, so much of such payments or amounts as shall be required to reimburse the Indenture Trustee for any tax, expense, charge or other loss (including, without limitation, all amounts to be expended at the expense of, or charged upon the tolls, rents, revenues, issues, products and profits of, the property included in the Trust Indenture Estate pursuant to Section 7.03(b) hereof) incurred by the Indenture Trustee (to the extent not previously reimbursed) (including, without limitation, the expenses of any sale, taking or other proceeding, attorneys' fees and expenses, court costs, and any other expenditures incurred or expenditures or advances made by the Indenture Trustee in the protection, exercise or enforcement of any right, power or remedy or any damages sustained by the Indenture Trustee, liquidated or otherwise, upon such Indenture Event of Default) shall be applied by the Indenture Trustee in reimbursement of such expenses; second, so much of such payments or amounts as shall be required to pay in full the aggregate unpaid principal amount of all Outstanding Certificates, all accrued but unpaid interest thereon to the date of distribution and all other amounts due hereunder and thereunder, shall be distributed to the Holders, and if the aggregate amount so to be distributed shall be insufficient to pay all such amounts in full as aforesaid, then such amount shall be distributed ratably, without priority of one over the other, in the proportion that the aggregate unpaid principal amount of all Certificates held by each such Holder, the accrued but unpaid interest thereon to the date of distribution and all other amounts due hereunder and thereunder, bears to the aggregate unpaid principal amount of all Outstanding Certificates, plus accrued but unpaid interest thereon to the date of distribution and all other amounts due hereunder and thereunder (it being understood that amounts payable hereunder shall not include Make-Whole Premium); and third, the balance, if any of such payments or amounts remaining thereafter shall be distributed to the Owner Trustee for distribution pursuant to the Trust Agreement. SECTION 5.04. Certain Payments. (a) Except as otherwise provided in this Indenture, any payments received by the Indenture Trustee which are to be applied according to any provision in any other Indenture Document shall be applied thereunder in accordance therewith. (b) The Indenture Trustee will distribute, promptly upon receipt, any indemnity or other payment received by it from the Owner Trustee or the Lessee pursuant to Article 8 of the Participation Agreement or as Supplemental Rent, directly to the Person (which may include the Indenture Trustee) entitled thereto. (c) Notwithstanding anything to the contrary contained herein, any sums received by the Indenture Trustee which constitute Excepted Payments shall be distributed promptly upon receipt by the Indenture Trustee directly to the Person or Persons entitled thereto. SECTION 5.05. Other Payments. Any payments received by the Indenture Trustee for which no provision as to the application thereof is made elsewhere in this Indenture or in any other Indenture Document (including without limitation Section 9 of the Lease) shall be distributed by the Indenture Trustee (a) to the extent received or realized at any time prior to the payment in full of all obligations to the Holders, in the order of priority specified in Section 5.01 hereof, and (b) to the extent received or realized at any time after payment in full of all obligations to the Holders, in the following order of priority: first, in the manner provided in clause "first" of Section 5.03 hereof and second, in the manner provided in clause "third" of Section 5.03 hereof. SECTION 5.06. Payments to Owner Trustee. Any amounts distributed hereunder by the Indenture Trustee to the Owner Trustee shall be paid to the Owner Trustee by wire transfer of immediately available funds of the type received by the Indenture Trustee at such office and to such account or accounts of such entity or entities as shall be designated by notice from the Owner Trustee to the Indenture Trustee from time to time. The Owner Trustee hereby notifies the Indenture Trustee that unless and until the Indenture Trustee receives notice to the contrary from the Owner Trustee, all amounts to be distributed to the Owner Trustee hereunder for distribution in accordance with the Trust Agreement shall be distributed by wire transfer of immediately available funds of the type received by the Indenture Trustee to such account of the Owner Participant as may be specified pursuant to Section 2.06 of the Trust Agreement. SECTION 5.07. Application of Payments. Each payment of principal of and interest or other amounts due on each Certificate shall, except as otherwise provided herein, be applied, first, to the payment of interest on such Certificate due and payable to the date of such payment, as provided in such Certificate, as well as any interest on overdue principal and Make-Whole Premium, if any, and, to the extent permitted by law, interest and other amounts due thereunder, second, to the payment of any other amount (other than the principal of such Certificate) due hereunder to the Holder of such Certificate or under such Certificate, third, to the payment of the principal of such Certificate if then due hereunder or under such Certificate and fourth, the balance, if any remaining thereafter, to the payment of the principal of such Certificate remaining unpaid (provided that such Certificate shall not be subject to prepayment without the consent of the affected Holder except as permitted by Sections 6.02, 6.06 and 8.02 hereof). SECTION 5.08. Investment of Amounts Held by Indenture Trustee. Amounts held by the Indenture Trustee pursuant to the proviso to Section 5.01 hereof, pursuant to Section 5.02(b) hereof or pursuant to any provision of any Indenture Document providing for investment of sums pursuant to this Section 5.08 shall be invested by the Indenture Trustee from time to time in securities selected by (i) so long as no Event of Default shall have occurred and be continuing, the Lessee or (ii) so long as an Event of Default shall have occurred and be continuing, the Indenture Trustee and of the type listed in clauses (i) through (iv) of Section 23.01 of the Lease. Unless otherwise expressly provided in this Indenture, any income realized as a result of any such investment, net of the Indenture Trustee's reasonable fees and expenses in making such investment, shall 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, net of earnings and such reasonable fees and expenses, shall be charged against the principal amount invested. The Lessee shall be responsible for and will promptly pay to the Indenture Trustee or the Lessor, as the case may be, on demand, the amount of any loss realized as the result of any such investment (together with any fees, commissions and other costs and expenses, if any, incurred by the Indenture Trustee or the Lessor in connection with such investment), such amount to be disposed of in accordance with the terms hereof or the Lease, as the case may be. The Indenture Trustee shall not be liable for any loss resulting from any investment made by it under this Indenture in accordance with instructions from the Lessee other than by reason of its willful misconduct or gross negligence, and any such investment may be sold (without regard to its maturity) by the Indenture Trustee without instructions whenever the Indenture Trustee reasonably believes such sale is necessary to make a distribution required by this Indenture. Unless otherwise confirmed in writing, an account statement delivered by the Indenture Trustee to the Owner Trustee (with a copy to the Lessee) shall be deemed written confirmation by the Owner Trustee that the investment transactions identified therein accurately reflect the investment directions given to the Indenture Trustee by or on behalf of the Owner Trustee, unless the Owner Trustee (or the Lessee on its behalf) notifies the Indenture Trustee in writing to the contrary within 30 days of the date of receipt of such statement. SECTION 5.09. Withholding Taxes. The Indenture Trustee shall withhold any Taxes required to be withheld on payments to any Holder who is not a "United States person", within the meaning of the Code, except to the extent that such Holder has furnished evidence satisfactory to the Indenture Trustee of any exemption from withholding claimed by such Holder and under no circumstances shall the failure of any such Holder to receive any amounts so withheld constitute an Indenture Event of Default. Notwithstanding any provision to the contrary in Sections 5.01 through 5.05 hereof and subject to Article 7 of the Participation Agreement, if the Lessee is required to pay any such Tax, or any interest or penalty thereon, or to indemnify the Owner Participant or the Owner Trustee with respect thereto pursuant to Article 7 of the Participation Agreement, the Lessee shall be entitled to receive any payments otherwise distributable to the Holder of any Certificate who was subject to such Tax pursuant to Sections 5.01 to 5.05 hereof until the foregoing amounts shall have been recovered in full by the Lessee. ARTICLE VI PREPAYMENT OF CERTIFICATES SECTION 6.01. No Prepayment Prior to Maturity. Except as provided in Sections 6.02, 6.06 and 8.02 hereof, the Certificates may not be prepaid prior to their respective Maturities. SECTION 6.02. Prepayment of Certificates. (a) The Outstanding Certificates shall be prepaid in full (and not in part): (i) If an Event of Loss occurs with respect to the Aircraft (unless pursuant to Section 11.03 of the Lease and Section 9.08 hereof a Replacement Aircraft is substituted therefor). (ii) If the Lessee, pursuant to Section 4.02(a) of the Lease, gives notice of purchase of the Aircraft. (iii) If the Owner Participant, gives notice of prepayment to the Indenture Trustee pursuant to Section 8.02 hereof. (iv) If the Lessee, pursuant to Section 10.01 of the Lease, gives notice of a voluntary termination for obsolescence or surplus. (v) Pursuant to Section 14.01 of the Participation Agreement in connection with a refinancing of the Certificates. (vi) As contemplated by Section 2.15 hereof and Section 3.05(b) of the Participation Agreement if the Delivery Date has not occurred on or prior to the Cut-Off Date. (b) In the event of a prepayment of the Certificates pursuant to Sections 6.02(a)(ii), (iv) and (v) above, the Lessee, in accordance with and subject to the terms (including timing of notice) of Section 4.02(a) or Section 10.01 of the Lease or Section 14 of the Participation Agreement, as the case may be, shall give irrevocable written notice to the Owner Trustee and the Indenture Trustee and to the Holders of all of the Certificates specifying the Business Day on which the Owner Trustee is directed to prepay the Certificates in full but not in part. In the case of a prepayment of the Certificates pursuant to Section 6.02(a)(i) above, the Certificates shall be prepaid in full but not in part on the Loss Payment Date as defined in Section 11.02 of the Lease. In the case of a prepayment of the Certificates pursuant to Sections 6.02(a)(ii) and (iii) above, the Certificates shall be prepaid in full but not in part on the date so designated in the notice referred to in such Section. In the case of a prepayment of the Certificates pursuant to Section 6.02(a)(iv) above, the Certificates shall be prepaid in full but not in part on the Rent Payment Date next succeeding the Termination Date. In the case of a prepayment of the Certificates pursuant to Section 6.02(a)(vi) above, the Certificates shall be prepaid on the 15th day following the Cut-Off Date. The day on which the Certificates are to be prepaid pursuant to this Section 6.01(b) is herein referred to as the "Prepayment Date". On or prior to the Prepayment Date, immediately available funds shall be deposited with the Indenture Trustee in an amount in respect of the Certificates equal to the sum of, in the event of a prepayment of the Certificates (1) pursuant to Sections 6.02(a)(i) and 6.02(a)(iii) above, (A) the aggregate principal amount of such Certificates then outstanding, (B) accrued interest on the Certificates to the Prepayment Date and (C) all other aggregate sums due any Holder or the Indenture Trustee hereunder or under the Participation Agreement or the Lease and (2) pursuant to Sections 6.02(a)(ii), 6.02(a)(iv), 6.02(a)(v) and 6.02(a)(vi), the sums specified in the clauses (A), (B) and (C) of clause (1) above plus (D) a Make-Whole Premium, (the aggregate amount required to be paid pursuant to this sentence in the case of clauses (i), (ii), (iii), (iv) and (v) of the preceding paragraph (a) being herein referred to as the "Prepayment Price"). Any Certificate issued pursuant to Section 14.01(c) of the Participation Agreement may bear interest at a rate other than the Debt Rate. The parties hereto agree to enter into any amendments to this Indenture necessary to effect such Refinancing. (c) If, in accordance with and subject to the satisfaction of the conditions set forth in Section 6.11 of the Participation Agreement, the Lessee shall assume all of the obligations of the Owner Trustee hereunder, under the Certificates and all other Operative Agreements, the Owner Participant and the Owner Trustee shall (except for prior acts) be released and discharged from any further obligations hereunder and under the Certificates and all other Operative Agreements. (d) Unless otherwise provided herein, in the Lease or in the Participation Agreement, notice of prepayment pursuant to this Section 6.02 shall be given no fewer than 30 days prior to the Prepayment Date and shall be irrevocable, if not previously revoked, from and after 30 days prior to the Prepayment Date. If, pursuant to the last section of Section 10.01(f) of the Lease, no Termination Date shall occur, the Lessee shall give notice thereof to the Indenture Trustee, and the prepayment to be effected in respect of the Prepayment Date associated with such Prepayment Date shall not occur. SECTION 6.03. Notice of Prepayment to Holders. In order to effect any prepayment set forth in Section 6.02(a) hereof, the Indenture Trustee shall give prompt notice by first class mail of prepayment to each Holder of an Outstanding Certificate. Such notice may be revoked by the Owner Trustee at any time on or before the Prepayment Date by prompt notice to the Holders except as otherwise provided in the Lease or the Participation Agreement. All notices of prepayment shall state: (1) the Prepayment Date, (2) the applicable basis for determining the Prepayment Price, (3) that on the Prepayment Date, subject to the provisions hereof, the Prepayment Price will become due and payable, and that interest on the Certificates shall cease to accrue on and after such Prepayment Date, and (4) the place or places where such Certificates are to be surrendered for payment. SECTION 6.04. Deposit of Prepayment Price. On the Prepayment Date or the [Sinking Fund Prepayment] Date (as defined in Section 6.06 hereof), the Owner Trustee shall, to the extent an amount equal to the Prepayment Price or the [Sinking Fund Prepayment] Price (as defined in Section 6.06 hereof), as the case may be, shall not then be held in cash or Permitted Investments (marked-to-market net of all costs and expenses of liquidation thereof) by the Indenture Trustee in immediately available funds, pay to the Indenture Trustee an amount equal to the difference between (a) the amount then so held and (b) the Prepayment Price or the [Sinking Fund Prepayment] Price, as the case may be. If there shall so be on deposit and/or deposited the applicable Prepayment Price or [Sinking Fund Prepayment] Price on or prior to a Prepayment Date or [Sinking Fund Prepayment] Date, interest shall cease to accrue in respect of all or, in the case of a mandatory sinking fund prepayment, the relevant portion being prepaid of, the Outstanding Certificates on and after such Prepayment Date or such [Sinking Fund Prepayment] Date. SECTION 6.05. Certificates Payable on Prepayment Date. On the Prepayment Date, the Outstanding Certificates shall (except (A) if the Owner Trustee has requested the Indenture Trustee to revoke such notice of prepayment in accordance with Section 6.03 hereof or (B) as otherwise provided in the Lease) become due and payable and from and after such Prepayment Date (unless there shall be a default in the payment of the Prepayment Price) such Certificates shall cease to bear interest. Upon surrender of any such Certificate for prepayment in accordance with said notice, the Holder of such Certificate shall be paid its pro rata portion of the Prepayment Price. If any Certificate called for prepayment shall not be so paid upon surrender thereof for prepayment, the principal shall, until paid, continue to bear interest from the Prepayment Date at the interest rate applicable to such Certificate. SECTION 6.06. Mandatory Sinking Fund Prepayments. The Certificates shall also be subject to partial prepayment, on a pro rata basis on each date specified in this Section (a "[Sinking Fund Prepayment] Date"). The Owner Trustee shall deposit funds sufficient to pay the [Sinking Fund Prepayment] Price with the Indenture Trustee as provided in Section 6.04 hereof. The Indenture Trustee shall pay from the amounts so deposited on each applicable [Sinking Fund Prepayment] Date to the Holders of each Certificate then Outstanding on a pro rata basis the aggregate principal amount set forth below, together with accrued interest to such [Sinking Fund Prepayment] Date, but without Make-Whole Premium (the "[Sinking Fund Prepayment] Price"): [Sinking Fund Prepayment] Date Principal Amount - ------------------------------------- ------------------ Total $
In lieu of making all or any part of any payment of Basic Rent in cash in respect of an amount up to the [Sinking Fund Prepayment] Price payable on any [Sinking Fund Prepayment] Date, the Lessee may at its option deliver to the Indenture Trustee Certificates theretofore purchased or otherwise acquired by the Lessee and the Lessee shall receive as a credit against the Basic Rent payment due on such date an amount equal to the aggregate [Sinking Fund Prepayment] Price due on such date in respect of such delivered Certificates. Certificates so delivered shall be received by the Indenture Trustee at the [Sinking Fund Prepayment] Price. If the Lessee proposes to deliver Certificates to the Indenture Trustee pursuant to this paragraph, the Lessee shall give the Indenture Trustee irrevocable notice thereof at least 20 days prior to such [Sinking Fund Prepayment] Date. The Lessee shall deposit such Certificates with the Indenture Trustee at least 5 days prior to such [Sinking Fund Prepayment] Date. ARTICLE VII REMEDIES OF INDENTURE TRUSTEE AND HOLDERS SECTION 7.01. Indenture Event of Default. (a) "Indenture Event of Default" means any of the following events (whatever the reason for such Indenture Event of Default and whether it shall be voluntary or involuntary or come about or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (i) any Event of Default specified in Article 16 of the Lease (other than an Event of Default arising solely as the result of the failure to make an Excepted Payment); (ii) any failure by the Owner Trustee to observe or perform any covenant or obligation of the Owner Trustee in this Indenture (other than any such failure arising by reason of an Event of Default) and the continuance of such failure for a period of thirty (30) days after written notice thereof identified as a "Notice of Indenture Event of Default" to the Owner Trustee and the Owner Participant by the Indenture Trustee or by Certificate Holders of no less than 25% in aggregate principal amount of Outstanding Certificates specifying such failure to so observe or perform and requiring it to be remedied (or if such default is curable the continuance of such failure for up to 120 days after such notice if during such 120-day period the Lessor or the Owner Participant, as the case may be, shall be diligently attempting to cure such breach); (iii) to the extent not resulting from an Event of Default, any failure by the Owner Participant or the Owner Trustee (i) to pay principal, interest or Make-Whole Premium, if any, with respect to any Certificate when due, if such failure shall continue unremedied for a period of 5 Business Days or (ii) to pay any other amounts hereunder or under the Certificates when due, if such failure shall continue for a period of thirty (30) days; (iv) (A) any representation or warranty made by the Trust Company, the Owner Trustee or the Owner Participant in Article 6 of the Participation Agreement, in Section 5.01 of the Lease or in any other Indenture Document or in any certificate of the Trust Company, the Owner Trustee or the Owner Participant furnished to the Indenture Trustee or any Holder in connection herewith or therewith or pursuant hereto or thereto shall prove to have been incorrect when made and was and remains in any respect material to the rights and remedies of the Holders under this Indenture, the Certificates, the Participation Agreement or the Lease and if such misrepresentation is capable of being corrected as of a subsequent date and if such correction is being sought diligently, such misrepresentation shall not have been corrected within 30 days following notice thereof identified as a "Notice of Indenture Event of Default" being given to the Trust Company, the Owner Trustee and the Owner Participant by the Indenture Trustee or by Certificate Holders of no less than 25% in aggregate principal amount of Outstanding Certificates; or (B) any covenant made by the Trust Company, the Owner Trustee, or the Owner Participant in Article 6 of the Participation Agreement shall be breached in any respect and was and remains material to the rights and remedies of the Holders under this Indenture, the Certificates, the Participation Agreement or the Lease and such breach shall remain unremedied for a period of thirty (30) days after there has been given to the Owner Trustee and the Owner Participant by the Indenture Trustee or by Certificate Holders of no less than 25% in aggregate principal amount of Outstanding Certificates a written notice identified as a "Notice of Indenture Event of Default" specifying such breach and requiring it to be remedied; (v) the Owner Trustee, the Lessor's Estate or the Owner Participant shall file any petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future bankruptcy, insolvency or similar statute, law or regulation; (vi) the Owner Trustee, the Lessor's Estate or the Owner Participant shall file any answer admitting or not contesting the material allegations of a petition filed against the Owner Trustee or the Lessor's Estate in any proceeding referred to in clause (vii) below or seek or consent or acquiesce in the appointment of any trustee, custodian, receiver or liquidator of the Owner Trustee, the Lessor's Estate and the Owner Participant or of all or any substantial part of its properties; or (vii) without the consent or acquiescence of the Owner Trustee, the Lessor's Estate and the Owner Participant, an order shall be entered constituting an order for relief or approving a petition for relief or reorganization or any other petition seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or other similar relief under any present or future bankruptcy, insolvency or similar statute, law or regulation, or if any such petition shall be filed against the Owner Trustee, the Lessor's Estate and the Owner Participant and such petition shall not be dismissed within 60 days, or if, without the consent or acquiescence of the Owner Trustee Lessor's Estate and Owner Participant, an order shall be entered appointing a trustee, custodian, receiver or liquidator of the Owner Trustee or of all or any substantial part of the properties of the Owner Trustee and such order shall not be dismissed within 60 days. SECTION 7.02. Remedies. (a) If an Indenture Event of Default shall have occurred and be continuing and so long as the same shall be continuing unremedied, then and in every such case, the Indenture Trustee may, and when required by the provisions of Article IX or Section 7.02(c) hereof, shall (i) exercise any or all of the rights and powers and pursue any and all of the remedies pursuant to this Article VII and (ii) in the event such Indenture Event of Default is an Indenture Event of Default referred to in paragraph (a) of Section 7.01 hereof, and after the expiration of ten days (the "Enforcement Date") from the time the Indenture Trustee notifies the Owner Trustee and the Owner Participant that it intends to exercise its remedies (including acceleration of the Certificates) hereunder, exercise any and all of the remedies pursuant to Article 17 of the Lease. The Indenture Trustee may take possession of all or any part of the properties covered or intended to be covered by the Lien and security interest created hereby or pursuant hereto and may exclude the Owner Participant, the Owner Trustee, the Lessee and any transferee of the Lessee and all persons claiming under any of them wholly or partly therefrom. In addition, the Indenture Trustee may exercise any other right or remedy in lieu of or in addition to the foregoing that may be available to it under applicable law, or proceed by appropriate court action to enforce the terms hereof, of the Lease, or both, or to rescind the Lease. Without limiting any of the foregoing, it is understood and agreed that the Indenture Trustee may exercise any right of sale of the Aircraft available to it, even though it shall not have taken possession of the Aircraft and shall not have possession thereof at the time of such sale. The Indenture Trustee may only exercise remedies hereunder while an Indenture Event of Default is in existence that is also an Event of Default if the Indenture Trustee simultaneously exercises one or more remedies under the Lease with respect to the Aircraft; provided that the requirement that the Indenture Trustee exercise such remedies under the Lease shall not apply in circumstances where the Indenture Trustee is involuntarily stayed or prohibited by applicable law or court order from exercising such remedies under the Lease; and provided further, that the foregoing proviso shall have no force and effect in any one or more of the following circumstances: (A) for a period of 90 days after the date of the order for relief in a Chapter 11 case of the Lessee under the Bankruptcy Code unless the Lessee elects to return the Aircraft or to permit the repossession of the Aircraft before the expiration of such 90-day period and the Indenture Trustee actually repossesses the Aircraft; and (B) for so long as the 60-day period specified in Section 1110 of the Bankruptcy Code is extended pursuant to Section 1110(b) of the Bankruptcy Code with the consent of the Indenture Trustee; it being understood that reference in this sentence to particular Sections of the Bankruptcy Code as in effect on the date hereof shall include any substantially similar successor provisions. (b) Notwithstanding Section 7.02(c) hereof, if an Indenture Event of Default referred to in clause (v), (vi) or (vii) of Section 7.01 hereof shall have occurred, or an Event of Default referred to in clause (e), (f) or (g) of Section 16.01 of the Lease shall have occurred, then and in every such case the unpaid principal of all Outstanding Certificates, together with interest accrued but unpaid thereon and all other amounts due thereunder and hereunder, but without Make-Whole Premium, shall immediately and without further act become due and payable, without presentment, demand, protest or notice, all of which are hereby waived. (c) If any Indenture Event of Default not described in the preceding paragraph (b) shall have occurred and be continuing, then and in every such case, 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 Certificates, at any time, by written notice or notices to the Owner Trustee and the Lessee, declare the principal of all the Certificates to be due and payable, whereupon the unpaid principal of all Outstanding Certificates, together with accrued but unpaid interest thereon and all other amounts due thereunder, but without Make-Whole Premium (except to the extent a Make-Whole Premium was theretofore payable by virtue of Section 6.02(a)(ii), 6.02(a)(iii), 6.02(a)(iv) or 6.02(a)(v) hereof), shall immediately become due and payable without presentment, demand, protest or other notice, all of which are hereby waived. At any time after such declaration and prior to the sale or disposition of the Trust Indenture Estate, however, the Holders of not less than 50% in aggregate principal amount of Outstanding Certificates, by notice to the Indenture Trustee, the Owner Trustee and the Lessee, may rescind such declaration, whether made by the Indenture Trustee on its own accord or as directed, if (x) there has been paid or deposited with the Indenture Trustee a sum sufficient to pay all overdue installments of interest on all Certificates (together, to the extent permitted by law, with interest on such overdue installments of interest), the principal on any Certificates that has become due otherwise than by such declaration of acceleration, all sums paid or advanced by the Indenture Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee, its agents and counsel, or (y) all Indenture Events of Default (other than the nonpayment of principal that has become due solely because of such acceleration) have been either cured or waived as provided in Section 7.11 hereof. No such rescission shall affect any subsequent default or impair any right consequent thereon. (d) Each Holder shall be entitled at any sale to a credit against any purchase price bid at such sale by such Holder all or any part of the unpaid obligations owing to such Holder secured by the Lien of this Indenture. SECTION 7.03. Return of Aircraft, etc. Subject to Section 7.02 hereof: (a) If an Indenture Event of Default shall have occurred and be continuing, at the request of the Indenture Trustee, the Owner Trustee 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 all or any part of the Trust Indenture Estate to which the Indenture Trustee shall at the time be entitled hereunder. If the Owner Trustee shall for any reason fail to execute and deliver such instruments and documents after such request by the Indenture Trustee, the Indenture Trustee may (i) obtain a judgment conferring on the Indenture Trustee the right to immediate possession and requiring the Owner Trustee to execute and deliver such instruments and documents to the Indenture Trustee, to the entry of which judgment the Owner Trustee hereby specifically consents, and (ii) pursue all or part of the Trust Indenture Estate wherever such Trust Indenture Estate may be found and may enter any of the premises of the Lessee and search for and take possession of and remove the Trust Indenture Estate. All expenses of obtaining such judgment or of pursuing, searching for and taking such property shall, until paid, be secured by the Lien of this Indenture. (b) Upon every such taking of possession or title, the Indenture Trustee may, from time to time, at the expense of the Trust Indenture Estate, make all such expenditures for maintenance, insurance, repairs, replacements, alterations, additions and improvements to and of the Trust 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 the Trust Indenture Estate and to carry on the business and, without limiting the express provisions of Section 8.01 hereof, to exercise all rights and powers of the Owner Participant and the Owner Trustee relating to the Trust Indenture Estate, 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 the Trust Indenture Estate or any part thereof as the Indenture Trustee may determine; and, except for Excepted Payments (other than Excepted Payments payable to the Indenture Trustee), the Indenture Trustee shall be entitled to collect and receive directly all rents (including Rent), revenues, issues, income, products and profits of the Trust Indenture Estate and every part thereof without prejudice to the right of the Indenture Trustee under any provision hereof to collect and receive all cash held by, or required to be deposited with, the Indenture Trustee hereunder. Such rents (including Rent), revenues, issues, income, products and profits shall be applied to pay the expenses of the use, operation, storage, leasing, control, management or disposition of the Trust Indenture Estate and of conducting the business thereof, 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 the Trust Indenture Estate or any part thereof (including the employment of engineers and accountants to examine, inspect and make reports upon the properties and books and records of the Owner Trustee), 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. (c) If an Indenture Event of Default shall have occurred and be continuing and the Indenture Trustee shall be entitled to exercise remedies hereunder, and subject to Article VIII hereof, the Indenture Trustee, either with or without taking possession, and either before or after taking possession, and without instituting any legal proceedings whatsoever, may sell, assign, transfer and deliver the whole or, from time to time, to the extent permitted by law, any part of the Trust Indenture Estate, or any part thereof, or interest therein, at any private sale or public auction, with or without demand, advertisement or notice, except as expressly provided for below in this Section 7.03(c), for cash or credit or for other property, for immediate or future delivery, and for such price or prices and on such terms as the Indenture Trustee in its sole discretion may determine; provided, that any such action shall be at the time lawful and that all mandatory legal requirements shall be complied with. The Indenture Trustee shall, to the extent permitted by law, give the Owner Trustee, the Owner Participant and the Lessee at least 30 days' notice of any public or private sale. Such notice, in the case of a public sale, shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours as the Indenture Trustee shall fix in the notice of such sale. At any such sale, the Trust Indenture Estate may be sold in one lot as an entirety or in separate lots. The Indenture Trustee shall not be obligated to make any sale pursuant to such notice. The Indenture Trustee may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for such sale, and any such sale may be made at any time or place to which the same may be so adjourned without further notice or publication. The Indenture Trustee may exercise such right of sale without possession or production of the Certificates or proof of ownership thereof, and as representative of the Holders may exercise such right without notice to the Holders or without including the Holders as parties to any suit or proceedings relating to the foreclosure of any part of the Trust Indenture Estate. The Owner Trustee shall execute any and all such bills of sale, assignments and other documents, and perform and do all other acts and things requested by the Indenture Trustee in order to permit consummation of any sale of the Trust Indenture Estate in accordance with this Section 7.03(c) and to effectuate the transfer or conveyance referred to in the first sentence of this Section 7.03(c). Notwithstanding any other provision of this Indenture, the Indenture Trustee shall not sell the Trust Indenture Estate or any part thereof unless the Certificates shall have been accelerated. (d) To the extent permitted by applicable law, the Indenture Trustee or any Holder may be a purchaser of the Trust Indenture Estate or any part thereof or any interest therein at any sale thereof, whether pursuant to foreclosure or power of sale or otherwise. The Indenture Trustee may apply against the purchase price therefor the amount then due hereunder or under any of the Certificates secured hereby and any Holder may apply against the purchase price therefor the amount then due to it hereunder, under any other Indenture Document or under the Certificates held by such Holder to the extent that such portion of the purchase price as it would have received had it been entitled to share any distribution thereof. The Indenture Trustee or any Holder or nominee thereof shall, upon any such purchase, acquire good title to the property so purchased, free of the Lien of this Indenture and, to the extent permitted by applicable law, free of all rights of redemption in the Owner Trustee or the Owner Participant in respect of the property so purchased. (e) Subject to Article VIII hereof, the Owner Trustee hereby irrevocably appoints and constitutes the Indenture Trustee the true and lawful attorney-in-fact of the Owner Trustee in its name and stead and on its behalf, for the purpose of effectuating any sale, assignment, transfer or delivery for the enforcement of the Lien of this Indenture, whether pursuant to foreclosure or power of sale or otherwise, to execute and deliver all such bills of sale, assignments and other instruments as the Indenture Trustee may consider necessary or appropriate, with full power of substitution, and the Owner Trustee hereby ratifies and confirms all that such attorney or any substitute shall lawfully do by virtue hereof. Nevertheless, if so requested by the Indenture Trustee or any purchaser, the Owner Trustee shall ratify and confirm any such sale, assignment, transfer or delivery, by executing and delivering to the Indenture Trustee or such purchaser all bills of sale, assignments, releases and other proper instruments to effect such ratification and confirmation as may be designated in any such request. (f) The Indenture Trustee shall, as a matter of right, be entitled to the appointment of a receiver (who may be the Indenture Trustee or any successor or nominee) for all or any part of the Trust Indenture Estate, whether such receivership be incidental to a proposed sale of the Trust Indenture Estate or the taking of possession thereof or otherwise, and the Owner Trustee hereby consents to the appointment of such receiver and will not oppose any such appointment. Any receiver appointed for all or any part of the Trust Indenture Estate shall be entitled to exercise all of the rights and powers of the Indenture Trustee with respect to the Trust Indenture Estate. (g) Any sale of the Trust Indenture Estate or any part thereof or any interest therein, whether pursuant to foreclosure or power of sale or otherwise hereunder, shall be a perpetual bar against the Owner Trustee after the expiration of the period, if any, during which the Owner Trustee shall have the benefit of prepayment laws which may not be waived pursuant to Section 7.13 hereof. SECTION 7.04. Indenture Trustee May Prove Debt. If the Owner Trustee shall fail to pay any amount payable hereunder or under the Certificates, the Indenture Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any action or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceedings to judgment or final decree, and may enforce any such judgment or final decree against the Owner Trustee and collect in the manner provided by law out of the property of the Owner Trustee wherever situated, the moneys adjudged or decreed to be payable; provided, that any sale of any portion of the Trust Indenture Estate shall be done in accordance with Section 7.03(c) hereof. In case there shall be pending proceedings relative to the Owner Trustee under the Bankruptcy Code or any other applicable Federal or state bankruptcy, insolvency or other similar law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Owner Trustee or its property, or in case of any other comparable judicial proceedings relative to the Owner Trustee, or to the creditors or property of the Owner Trustee, the Indenture Trustee, irrespective of whether the principal of the Certificates shall then be due and payable as therein or herein expressed or by declaration or otherwise and irrespective of whether the Indenture Trustee shall have made any demand pursuant to the provisions of this Section, shall be entitled and empowered, by intervention in such proceedings or otherwise: (a) to file and prove a claim or claims for the whole amount of principal, interest and other amounts owing and unpaid in respect of the Certificates or hereunder, and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee (including any claim for reasonable compensation to the Indenture Trustee and each predecessor Indenture Trustee, and their respective agents, attorneys and counsel, and for reimbursement of the Indenture Trustee and each predecessor Indenture Trustee, except as a result of negligence or bad faith) and of the Holders allowed in any judicial proceedings relative to the Owner Trustee or to the creditors or property of the Owner Trustee, (b) unless prohibited by applicable law and regulations, to vote on behalf of the Holders in any election of a trustee or a standby trustee in arrangement, reorganization, liquidation or other bankruptcy or insolvency proceedings or person performing similar functions in comparable proceedings, and (c) to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute all amounts received with respect to the claims of the Holders and of the Indenture Trustee on their behalf; and any trustee, receiver, or liquidator, custodian or other similar official is hereby authorized by each of the Holders to make payments to the Indenture Trustee, and, in the event that the Indenture Trustee shall consent to the making of payments directly to the Holders, to pay to the Indenture Trustee such amounts as shall be sufficient to cover reasonable compensation to the Indenture Trustee, each predecessor Indenture Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee except as a result of negligence or willful misconduct. Nothing contained herein shall be deemed to authorize the Indenture Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Certificates or the rights of any Holder thereof, or to authorize the Indenture Trustee to vote in respect of the claim of any Holder in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar person. All rights of action and of asserting claims under this Indenture, or under any of the Certificates, may be prosecuted and enforced by the Indenture Trustee without the possession of any of the Certificates or the production thereof in any trial or other proceedings relative thereto, and any such action or proceedings instituted by the Indenture Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Indenture Trustee, each predecessor Indenture Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Holders. In any proceedings brought by the Indenture Trustee (and also any proceedings involving the interpretation of any provision of this Indenture to which the Indenture Trustee shall be a party) the Indenture Trustee shall be held to represent all the Holders of the Certificates, and it shall not be necessary to make any Holders parties to any such proceedings. SECTION 7.05. Remedies Cumulative. Each and every right, power and remedy given to the Indenture Trustee specifically or otherwise in this Indenture shall be cumulative and shall be in addition to every other right, power and remedy specifically given herein or now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy whether specifically given herein 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 or the Holders, and the exercise or the beginning of the exercise of any power or remedy shall not constitute or 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 or of any Holder 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 Owner Trustee or the Lessee or to be an acquiescence therein. SECTION 7.06. Suits for Enforcement. If an Indenture Event of Default has occurred, has not been waived and is continuing, the Indenture Trustee may in its discretion and subject to its rights of appropriate indemnification under Sections 7.08 and 9.03 and Article XI hereof proceed to protect and enforce its rights and rights of the Holders by such appropriate judicial proceedings as the Indenture Trustee shall deem most effectual to protect and enforce any of such rights, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture or to enforce any other legal or equitable right vested in the Indenture Trustee or the Holders by this Indenture or by law; provided, that any sale of any portion of the Trust Indenture Estate shall be done in accordance with Section 7.03(c) hereof. SECTION 7.07. Discontinuance of Proceedings. In case the Indenture Trustee or any Holder shall have instituted any proceeding to enforce any right, power or remedy under this Indenture by foreclosure, entry or otherwise, and such proceeding shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Indenture Trustee or such Holder, then and in every such case the Owner Trustee, the Indenture Trustee, the Holders and the Lessee shall, subject to any determination in such proceeding, be restored to their former positions and rights hereunder with respect to the Trust Indenture Estate, and all rights, remedies and powers of the Indenture Trustee and the Holders shall continue as if no such proceeding had been instituted. SECTION 7.08. Limitations on Suits by Holders. No Holder of any Certificate shall have any right by virtue or by availing of any provision of this Indenture to institute any action or proceeding at law or in equity or in bankruptcy or otherwise upon or under or with respect to this Indenture, or for the appointment of a trustee, receiver, liquidator, custodian or other similar official or for any other remedy hereunder, unless such Holder previously shall have given to the Indenture Trustee written notice of an Indenture Event of Default and of the continuance thereof, as hereinbefore provided, and the Holders of not less than 25% in aggregate principal amount of Outstanding Certificates shall have made written request upon the Indenture Trustee to institute such action or proceedings in its own name as trustee hereunder and shall have offered to the Indenture Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby and the Indenture Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such action or proceedings and no direction inconsistent with such written request shall have been given to the Indenture Trustee pursuant to Section 7.10 hereof; it being understood and intended, and being expressly covenanted by the Holder of each Certificate with every other Holder of each other Certificate and the Indenture Trustee, that no one or more Holders shall have any right in any manner whatever to affect, disturb or prejudice the rights of any other Holder or the Lien of this Indenture or any part of the Trust Indenture Estate or to obtain or seek to obtain priority over or preference to any other such Holder or to enforce any right under this Indenture, except in the manner provided herein and for the equal, ratable and common benefit of all Holders. For the protection and enforcement of the provisions of this Section, each and every Holder and the Indenture Trustee shall be entitled to such relief as can be given either at law or in equity. SECTION 7.09. Unconditional Right of Holders to Receive Principal, Interest and Make-Whole Premium, and to Institute Certain Suits. Notwithstanding any other provision in this Indenture and any provision of any Certificate, the right of any Holder to receive payment of the principal of and interest and Make-Whole Premium, if any, on such Certificate on or after the respective due dates and in the manner expressed in such Certificate, or, subject to Section 7.08 hereof, to institute suit for the enforcement of any such payment on or after such respective dates as provided herein, shall not be impaired or affected without the consent of such Holder. SECTION 7.10. Control by Holders. The Majority in Interest of Certificate Holders shall have the right to direct the Indenture Trustee as to the time, method, and place of conducting any proceeding for any remedy available to the Indenture Trustee, or exercising any trust or power conferred on the Indenture Trustee by this Indenture; provided that such direction shall not be otherwise than in accordance with law and the provisions of this Indenture and the Indenture Trustee shall have received, to the extent provided in Sections 7.08 and 9.03 and Article XI hereof, such reasonable indemnification as it may require against the costs, expenses and liabilities to be incurred by the Indenture Trustee; and provided further that (subject to the provisions of Section 9.02 hereof) the Indenture Trustee shall have the right to decline to follow any such direction if the Indenture Trustee, being advised by counsel, shall determine that the action or proceeding so directed may not lawfully be taken or if the Indenture Trustee in good faith by its board of directors, the executive committee, or a trust committee of directors or Responsible Officers of the Indenture Trustee shall determine that the action or proceedings so directed would involve the Indenture Trustee in personal liability or if the Indenture Trustee in good faith shall so determine that the actions or forebearances specified in or pursuant to such direction shall be unduly prejudicial to the interests of Holders not joining in the giving of said direction, it being understood that (subject to Section 9.02 hereof) the Indenture Trustee shall have no duty to ascertain whether or not such actions or forebearances are unduly prejudicial to such Holders. Nothing in this Indenture shall impair the right of the Indenture Trustee in its discretion to take any action deemed proper by the Indenture Trustee and which is not inconsistent with the direction by the Majority in Interest of Certificate Holders. SECTION 7.11. Waiver of Past Indenture Default. Upon written instructions from the Majority in Interest of Certificate Holders, the Indenture Trustee shall waive any past Indenture Default and its consequences and upon any such waiver such Indenture Default shall cease to exist and any Indenture 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 Indenture Default or impair any right consequent thereon; provided, however, that in the absence of written instructions from all Holders, the Indenture Trustee shall not waive any Indenture Default (a) in the payment of the principal of, or Make-Whole Premium, if any, or interest on, or other amounts due under, any Certificate then Outstanding, or (b) in respect of a covenant or provision hereof which, under Article XIII hereof, cannot be modified or amended without the consent of each Holder. SECTION 7.12. Notice of Indenture Default. The Indenture Trustee shall transmit to the Owner Trustee, the Holders and to the Owner Participant notice of all Indenture Defaults actually known to a Responsible Officer of the Indenture Trustee, such notice to be transmitted by mail to the Holders within 90 days, and to the Owner Trustee and the Owner Participant promptly after the occurrence thereof, unless such Indenture Default shall have been cured before the giving of such notice; provided that under no circumstances shall the Indenture Trustee give such notice to the Holders until the expiration of a period of 60 days from the occurrence of such Indenture Default; and provided further that, except in the case of default in the payment of the principal of or interest on or any other amount due under any of the Certificates, the Indenture Trustee shall be protected in withholding such notice to the Holders if and so long as the board of directors, the executive committee, or a trust committee of directors or trustees and/or Responsible Officers of the Indenture Trustee in good faith determines that the withholding of such notice is in the interests of the Holders. SECTION 7.13. Waiver of Appraisement, etc.; Laws. The Owner Trustee covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any appraisement, valuation, stay, extension or prepayment law wherever enacted, now or at any time hereafter in force, in order to prevent or hinder the enforcement of this Indenture or the execution of any power granted herein to the Indenture Trustee, or the absolute sale of the Trust Indenture Estate, or any part thereof, or the possession thereof by any purchaser at any sale under this Article VII; and the Owner Trustee for itself and all who may claim under it, so far as it or any of them now or hereafter lawfully may, hereby waives the benefit of all such laws. The Owner Trustee for itself and all who may claim under it waives, to the extent that it lawfully may, all right to have the property in the Trust Indenture Estate marshalled upon any foreclosure hereof, and agrees that any court having jurisdiction to foreclose this Indenture may order the sale of the Trust Indenture Estate as an entirety. If any law referred to in this Section 7.13 and now in force, of which the Owner Trustee or its successors might take advantage despite this Section 7.13, shall hereafter be repealed or cease to be in force, such law shall not thereafter be deemed to constitute any part of the contract herein contained or to preclude the application of this Section 7.13. ARTICLE VIII RIGHTS OF THE OWNER TRUSTEE AND THE OWNER PARTICIPANT SECTION 8.01. Certain Rights of Owner Trustee and Owner Participant. Notwithstanding any other provision of this Indenture, including the Granting Clause, the following rights shall be reserved to the Owner Trustee or the Owner Participant, as the case may be (as separate and independent rights), to the extent described herein: (a) at all times the Owner Trustee shall have the right, together with the Indenture Trustee, to receive from the Lessee all notices, certificates, reports, filings, opinions of counsel and other documents and all information which the Lessee is permitted or required to give or furnish to the Owner Trustee or the Lessor pursuant to any Indenture Document; (b) so long as no Indenture Event of Default shall have occurred and be continuing, the Owner Trustee shall have the right (i) to the exclusion of the Indenture Trustee, but subject to the provisions of Sections 13.07(a) and 13.07(c) hereof, (A) except as specified in clause (ii) below, to exercise the rights, elections and options of the Lessor to make any decision or determination and to give any notice, consent, waiver or approval as may be requested under the Lease, (B) to exercise all rights of the Lessor under Articles 4 and 10 of the Lease with respect to the retention or purchase by the Lessee or the Lessor of the Aircraft or the exercise by the Lessee of the Lessee's renewal and purchase options and (C) to approve as satisfactory any accountants, engineers or counsel to render services for or issue opinions to the Owner Trustee pursuant to express provisions of the Indenture Documents and (ii) together with the Indenture Trustee (each acting independently), to exercise inspection rights pursuant to Article 14 of the Lease and to require the Lessee to take any action and execute and deliver such documents and assurances as the "Lessor" may from time to time reasonably request pursuant to Article 19 of the Lease; (c) at all times the Owner Trustee shall have the right, as the Lessor, together with the Indenture Trustee (each acting independently) to seek specific performance of the covenants of the Lessee under the Lease relating to the protection, insurance and maintenance of the Aircraft and to maintain separate insurance with respect to the Aircraft pursuant to Article 13 of the Lease; (d) at all times and whether or not an Indenture Event of Default has occurred and is continuing, each of the Owner Trustee, the Trust Company and the Owner Participant shall have the right, to the exclusion of the Indenture Trustee, to demand, collect, sue for or otherwise receive and enforce the payment of Excepted Payments due and payable to it; and (e) at all times prior to the foreclosure of the Liens of this Indenture the consent of the Owner Trustee (with the consent of the Owner Participant) shall be required to amend, modify or supplement, directly or indirectly, any Indenture Document. SECTION 8.02. Owner Participant's Right to Elect to Prepay the Certificates, and to Provide for Payment. (a) At any time after an Event of Default has occurred and has continued for a period of at least 180 days, and provided that (i) no Indenture Event of Default (that does not arise out of a Event of Default) has occurred and is continuing and (ii) the Certificates shall not have become due and payable as provided in Section 7.02(b) or 7.02(c) hereof, the Owner Participant may, but shall be under no obligation to, direct the Owner Trustee to cause the prepayment of all but not less than all of the Certificates then Outstanding by notifying the Indenture Trustee of such election, which notice in order to be effective shall state that it is irrevocable and shall designate a Prepayment Date not less than 30 days and not more than 60 days after the date of such notice which the Owner Trustee shall, in the manner provided for in Section 6.04 hereof, deposit the sum of amounts contemplated by paragraph "first" under Section 5.03 and the aggregate Prepayment Price of all such Certificates with the Indenture Trustee. The Indenture Trustee shall notify each Holder of such prepayment in the manner provided for in Section 6.03 hereof. (b) At any time while the Certificates shall have become due and payable as provided in Section 7.02(b) or 7.02(c) hereof, the Owner Participant may, but shall be under no obligation to, direct the Owner Trustee to pay to the Indenture Trustee for distribution to the Holders in the manner provided for in Section 5.01 hereof an amount equal to the sum of (i) amounts contemplated by paragraph "first" under Section 5.03, (ii) the aggregate unpaid principal amount of all Outstanding Certificates, (iii) all accrued but unpaid interest thereon to the Prepayment Date and (iv) all other amounts due hereunder and thereunder, but without Make-Whole Premium (unless previously payable). The Owner Trustee shall give written notice of such payment to the Indenture Trustee, which notice, in order to be effective, shall state that it is irrevocable and shall designate a date not less than 30 days and not more than 60 days thereafter as the Prepayment Date. The Indenture Trustee shall promptly notify each Holder of an Outstanding Certificate of such payment. If such payment by the Owner Trustee to the Indenture Trustee is made, the Certificates shall cease to accrue interest from and after the Prepayment Date, and after distribution of such payment to the Holders, the Indenture Trustee shall release the Trust Indenture Estate from the Lien of this Indenture. (c) From and after the deposit by the Owner Trustee of the applicable Prepayment Price with the Indenture Trustee pursuant to Section 8.02(a) or the payment by the Owner Trustee of the amount specified in Section 8.02(b), the Owner Trustee shall be entitled to exercise all remedies of the Indenture Trustee under Article VII hereof as well as of the Lessor under the Lease. SECTION 8.03. Certain Rights of Owner Participant. (a) If (A) there shall occur an Event of Default under the Lease as a result of the Lessee's failure to make any payment of an installment of Basic Rent, and (B) the Owner Trustee shall have paid or caused to be paid on or prior to the Enforcement Date (as defined in Section 7.02 hereof) all principal and interest on the Certificates then due (as well as any interest on overdue principal and (to the extent permitted by applicable law) interest, but not including any principal or interest becoming due on account of such Event of Default), then the failure of the Lessee to make the payment of such installment of Basic Rent or of interest on account of such installment's being overdue shall not constitute an Indenture Event of Default (including any Indenture Event of Default under Section 7.01(a) resulting from such failure) under this Indenture and any declaration based solely on the same shall be deemed to be automatically rescinded. Nothing contained in the preceding sentence shall be deemed to entitle the Owner Trustee to declare the Lease to be in default or to exercise any rights and powers or pursue any remedies pursuant to Article 17 of the Lease or otherwise, except that the Owner Trustee or the Owner Participant may attempt to recover any amount paid by it or them under this Indenture by demanding of the Lessee payment of such amount, or by commencing an action at law against the Lessee for the payment of such amount or taking appropriate action in a pending action at law against the Lessee pursuant to Section 17.01(a)(v), but only said Section 17.01(a)(v), of the Lease. Upon curing any such Event of Default pursuant to this Section 8.03, the Owner Trustee or the Owner Participant, as the case may be, shall, so long as no Indenture Event of Default shall have occurred and be continuing, be subrogated on an unsecured basis to all the rights of the Indenture Trustee under the Lease in respect of the payment giving rise to such Event of Default, and any right to any interest in respect of same, and shall be entitled to any payment of Basic Rent (or interest thereon) actually made by the Lessee in respect of such cured payment upon receipt by the Indenture Trustee; provided that no such amount shall be paid to the Owner Trustee or the Owner Participant until all amounts then due and payable to each Certificate Holder hereunder and thereunder shall have been paid in full and no Indenture Event of Default shall have occurred and be continuing. Notwithstanding anything in this Indenture or the Lease to the contrary, neither the Owner Participant nor the Owner Trustee collectively, shall be entitled to cure more than three consecutive Events of Default in the payment of Basic Rent or more than six such Events of Default in total. (b) If (A) there shall occur an Event of Default under the Lease for any reason other than the Lessee's failure to make any payment of an installment of Basic Rent (B) such Event of Default is curable by the payment of money and (C) the Owner Trustee shall have taken or caused to be taken such action necessary to cure and shall have cured such Event of Default prior to the date the Certificates shall have been accelerated or the date on which the Indenture Trustee shall have commenced any remedy under this Indenture in any material respect, then the failure of the Lessee to perform such covenant, condition or agreement, the observance or performance of which was accomplished by the Owner Trustee hereunder shall not constitute an Indenture Event of Default (including any Indenture Event of Default under Section 7.01(iv)(B) resulting from such failure) under this Indenture and any declaration based solely on the same shall be deemed to be automatically rescinded. Nothing contained in the preceding sentence shall be deemed to entitle the Owner Trustee or the Owner Participant to declare the Lease to be in default or to exercise any rights and powers or pursue any remedies pursuant to Article 17 of the Lease or otherwise, except that the Owner Trustee or the Owner Participant may attempt to recover any amount paid by it or them in effecting such cure by demanding of the Lessee payment of such amount, or by commencing an action at law against the Lessee for the payment of such amount or taking appropriate action in a pending action at law against the Lessee pursuant to Section 17.01(a)(v), but only said Section 17.01(a)(v), of the Lease. Upon curing any such Event of Default pursuant to this Section 8.03(b), the Owner Trustee or the Owner Participant, as the case may be, shall be subrogated to all the rights of the Indenture Trustee under the Lease in respect of the payment, agreement or covenant giving rise to such Event of Default, and any right to any interest in respect of same, and shall be entitled to any payment or other performance upon receipt by the Indenture Trustee; provided that no such amount shall be paid to the Owner Trustee or the Owner Participant until all amounts then due and payable to each Certificate Holder hereunder and thereunder shall have been paid in full and no Indenture Event of Default shall have occurred and be continuing. ARTICLE IX CONCERNING THE INDENTURE TRUSTEE SECTION 9.01. Acceptance of Trusts. The Indenture Trustee hereby accepts the trusts imposed upon it by this Indenture, and covenants and agrees to perform the same as expressed herein and agrees to receive and disburse all moneys constituting part of the Trust Indenture Estate in accordance with the terms hereof. SECTION 9.02. Duties and Responsibilities of the Indenture Trustee; During an Indenture Event of Default; Prior to an Indenture Event of Default. (a) The Indenture Trustee, prior to the occurrence of an Indenture Event of Default and after the curing or waiving of all Indenture Events of Default which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In case an Indenture Event of Default has occurred (which has not been cured or waived) the Indenture Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. No provision of this Indenture shall be construed to relieve the Indenture Trustee from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that: (i) prior to the occurrence of an Indenture Event of Default and after the curing or waiving of all Indenture Events of Default which may have occurred: (x)the duties and obligations of the Indenture trustee shall be determined solely by the express provisions of this Indenture, and the Indenture Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read in to this Indenture against the Indenture Trustee; and (y)in the absence of bad faith on the part of the Indenture Trustee, the Indenture Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any statements, certificates or opinions furnished to the Indenture Trustee and conforming to the requirements of this Indenture; but in the case of any such statements, certificate or opinions which by any provision hereof are specifically required to be furnished to the Indenture Trustee, the Indenture Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture; (ii) the Indenture Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Indenture Trustee, unless it shall be proved that the Indenture Trustee was negligent in ascertaining the pertinent facts; and (iii) the Indenture Trustee shall not be liable with respect to any action taken or not taken by it in good faith in accordance with the direction of the Holders of not less than a majority in aggregate principal amount of Outstanding Certificates relating to the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee, or exercising any trust or power conferred upon the Indenture Trustee, under this Indenture. None of the provisions contained in this Indenture shall require the Indenture Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if the Indenture Trustee shall have determined in good faith that the repayment of such funds or adequate indemnity against such liability is not reasonably assured to it. The Indenture Trustee will execute and the Owner Trustee will file or cause to be filed such continuation statements with respect to financing statements relating to the security interest created hereunder in the Trust Indenture Estate as may be specified from time to time in written instructions of the Holders of not less than 25% in aggregate principal amount of Certificates (which instructions may, by their terms, be operative only at a future date and which shall be accompanied by the execution form of such continuation statement so to be filed); provided that, notwithstanding the foregoing, the Indenture Trustee may execute and file or cause to be filed any financing statement which it from time to time deems appropriate. (b) If any Event of Default shall have occurred and be continuing and, after the Enforcement Date, on request of the Holders of not less than 25% in aggregate principal amount of Outstanding Certificates and subject to indemnification, to the extent provided in Sections 7.08 and 9.03 and Article XI hereof, as it may require against the costs, expenses and liabilities to be incurred, the Indenture Trustee shall exercise such remedies under Article 17 of the Lease as shall be specified in such request. (c) The Indenture Trustee agrees that it will, in its individual capacity and at its own cost and expense (but without any right of indemnity in respect of any such cost or expense under Article XI hereof) promptly take such action as may be necessary to duly discharge all Liens on any part of the Trust Indenture Estate which result from claims against it in its individual capacity not related to the administration of the Trust Indenture Estate or any other transaction pursuant to this Indenture or any document included in the Trust Indenture Estate. (d) The Indenture Trustee will execute and deliver to the Lessee for filing in accordance with Section 18 of the Lease any properly presented document, instrument or financing or continuation statement specified in any opinion delivered pursuant to Section 5.03(e) of the Participation Agreement. The Indenture Trustee may rely on the act of presentation of any such document, instrument, financing or continuation statement as evidencing the fact that it is properly prepared and presented, provided that the Indenture Trustee shall promptly correct any error in any such document, instrument, financing or continuation statement of which a Responsible Officer of the Indenture Trustee has actual knowledge. (e) 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 Lessee directly to such Holder. SECTION 9.03. Certain Rights of the Indenture Trustee. Subject to Section 9.02 hereof: (a) the Indenture Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, Officers' Certificate or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, note, coupon, security or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request, direction, order or demand of the Owner Trustee mentioned herein shall be sufficiently evidenced by an Officers' Certificate (unless other evidence in respect thereof be herein specifically prescribed) upon which the Indenture Trustee may rely to prove or establish a matter set forth therein; (c) the Indenture Trustee may consult with counsel and any advice or Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in good faith and in accordance with such advice or Opinion of Counsel; (d) the Indenture Trustee shall be under no obligation to exercise any of the trusts or powers vested in it by this Indenture at the request, order or direction of any of the Holders pursuant to the provisions of this Indenture, unless such Holders shall have offered to the Indenture Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred therein or thereby; (e) the Indenture Trustee shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion, rights or powers conferred upon it by this Indenture; (f) prior to the occurrence of an Indenture Event of Default hereunder and after the curing or waiving of all Indenture Events of Default, the Indenture Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, note, coupon, security, or other paper or document unless requested in writing to do so by the Majority in Interest of Certificate Holders; provided that, if the payment within a reasonable time to the Indenture Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Indenture Trustee, not reasonably assured to the Indenture Trustee by the security afforded to it by the terms of this Indenture, the Indenture Trustee may require reasonable indemnity against such expenses or liabilities as a condition to proceeding; the reasonable expenses of every such examination shall be paid by the Owner Trustee or, if paid by the Indenture Trustee or any predecessor trustee, shall be repaid by the Owner Trustee upon demand; and (g) the Indenture Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys not regularly in its employ and the Indenture Trustee shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care by it hereunder. SECTION 9.04. Indenture Trustee Not Responsible for Recitals, Disposition of Certificates or Application of Proceeds Thereof. The Indenture Trustee assumes no responsibility for the correctness of the recitals contained herein and in the Certificates, except the Indenture Trustee's certificates of authentication. The Indenture Trustee makes no representation as to the validity or sufficiency of this Indenture or of the Certificates. The Indenture Trustee shall not be accountable for the use or application by the Owner Trustee of any of the Certificates or of the proceeds thereof. SECTION 9.05. Indenture Trustee and Agents May Hold Certificates; Collections, etc. The Indenture Trustee or any agent of the Indenture Trustee in its individual or any other capacity may become the owner or pledgee of Certificates with the same rights it would have if it were not the Indenture Trustee or such agent and may otherwise deal with the Owner Trustee and receive, collect, hold and retain collections from the Owner Trustee with the same rights it would have if it were not the Indenture Trustee or such agent. SECTION 9.06. Moneys Held by Indenture Trustee. Subject to Sections 5.08 hereof and 14.04 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. Neither the Owner Trustee nor, subject to Section 5.08 hereof, the Indenture Trustee nor any agent thereof shall be under any liability for interest on any moneys received by it hereunder. SECTION 9.07. Right of Indenture Trustee to Rely on Officers' Certificate, etc. Subject to Sections 9.02 and 9.03 hereof, whenever in the administration of the trusts of this Indenture the Indenture Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting any action hereunder, such matter (unless other evidence in respect thereof be specifically prescribed herein) may, in the absence of bad faith on the part of the Indenture Trustee, be deemed to be conclusively proved and established by an Officers' Certificate delivered to the Indenture Trustee, and such certificate, in the absence of bad faith on the part of the Indenture Trustee, shall be full warrant to the Indenture Trustee for any action taken, suffered or omitted by it under the provisions of this Indenture upon the faith thereof. SECTION 9.08. Replacement Airframes and Replacement Engines. At any time and from time to time any Airframe or Engine which has been subject to an Event of Loss and may, or is required to, be replaced under Section 10.03, 11.03 or 11.04 of the Lease by a replacement airframe or Replacement Engine, as the case may be, shall be replaced in accordance with the provisions of this Section 9.08 and the provisions of said Sections of the Lease, the Owner Trustee shall, from time to time, direct the Indenture Trustee to execute and deliver to or as directed in writing by the Owner Trustee an appropriate instrument releasing such Airframe and/or Engine as appropriate from the Lien of this Indenture and the Indenture Trustee shall execute and deliver such instrument as aforesaid without recourse or warranty, but only upon receipt by or deposit with the Indenture Trustee of the following: (1) A written request from the Owner Trustee requesting such release and specifically describing the Airframe and/or Engine(s) to be so released. (2) A certificate signed by a duly authorized officer of the Lessee stating the following: A. With respect to the replacement of any Airframe: (i) a description of the Airframe subject to the Event of Loss including the manufacturer, model, FAA registration number (or other applicable registration information) and manufacturer's serial number; (ii)a description of the replacement airframe, including the manufacturer, model, FAA registration number (or other applicable registration information) and manufacturer's serial number; (iii)that on the date of the Indenture Supplement relating to the replacement airframe the Owner Trustee will be the legal owner of and have good and marketable title to such replacement airframe free and clear of all Liens except Liens permitted under Section 6.01 of the Lease, that such replacement airframe will on such date be in at least as good operating condition and repair as required by the terms of the Lease, and that such replacement airframe has been or, substantially concurrently with such replacement, will be duly registered in the name of the Owner Trustee under the Aviation Act or under the law then applicable to the registration of the Airframe and that an airworthiness certificate has been duly issued under the Aviation Act (or such other applicable law) with respect to such replacement airframe and that such registration and certificate is, or will be, in full force and effect, and that the Lessee will have the full right and authority to use such replacement airframes; (iv)that the insurance required by Article 13 of the Lease is in full force and effect with respect to such replacement airframe and all premiums then due thereon have been paid in full; (v)that the replacement airframe is of the same or an improved make or model as the Airframe requested to be released from this Indenture; (vi)that the value of the replacement airframe as of the date of such certificate is not less than the value of the Airframe requested to be released (assuming such Airframe was in the condition and repair required to be maintained under the Lease); (vii)that no Event of Default has occurred and is continuing or would result from the making and granting of the request for release and the addition of a replacement airframe; (viii)that the release of the Airframe subject to the Event of Loss will not impair the security of the Indenture in contravention of any of the provisions of this Indenture; (ix)that upon such replacement, the Lien of this Indenture will apply to the replacement airframes and such Lien will be a first priority security interest in favor of the Indenture Trustee; and (x)that each of the conditions specified in Section 11.03 of the Lease with respect to such replacement airframe has been satisfied. B. With respect to the replacement of any Engine: (i) a description of the Engine subject to the Event of Loss including the manufacturer's serial number; (ii)a description of the Replacement Engine including the manufacturer's name, the engine model and serial number; (iii)that on the date of the Indenture Supplement relating to the Replacement Engine the Owner Trustee will be the legal owner of such Replacement Engine free and clear of all Liens except Liens permitted under Section 6.01 of the Lease, and that such Replacement Engine will on such date be in at least as good operating condition and repair as required by the terms of the Lease; (iv)that the value of the Replacement Engine as of the date of such certificate is not less than the value of the Engine to be released (assuming such Engine was in the condition and repair required to be maintained under the Lease); (v)that the release of the Engine subject to the Event of Loss will not impair the security of the Indenture in contravention of any of the provisions of this Indenture; (vi)that upon such replacement, the Lien of this Indenture will apply to the Replacement Engine; and (vii)that each of the conditions specified in Section 10.03, 11.03 or 11.04 of the Lease with respect to such Replacement Engine has been satisfied. (3) The appropriate instruments (i) transferring to the Owner Trustee title to the replacement airframe or Replacement Engine to be received as consideration for the Airframe or Engine to be released and (ii) assigning to the Owner Trustee the benefit of all manufacturer's and vendor's warranties, if any, generally available with respect to such replacement airframe or Replacement Engine, and an Indenture Supplement subjecting such replacement airframe or Replacement Engine to the Trust Agreement and to the Lien of this Indenture. (4) A certificate from a firm of independent aircraft appraisers of national standing satisfactory to the Indenture Trustee and the Owner Trustee confirming the accuracy of the information set forth in clause (2)A.(vi) of this Section 9.08. (5) The opinion of Messrs. Davis Polk & Wardwell, special counsel to the Lessee, or other counsel reasonably satisfactory to the Indenture Trustee, stating that: (i) the certificates, opinions and other instruments and/or property which have been or are therewith delivered to and deposited with the Indenture Trustee conform to the requirements of this Indenture and the Lease and, upon the basis of such application, the property so sold or disposed of may be properly released from the Lien of this Indenture and all conditions precedent herein provided for relating to such release have been complied with; and (ii)the replacement airframe or Replacement Engine has been validly subjected to the Lien of this Indenture and covered by the Lease, the instruments subjecting such replacement airframe or Replacement Engine to the Lease and to the Lien of this Indenture, as the case may be, have been duly filed for recordation pursuant to the Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary or advisable in order to establish and perfect the title of the Owner Trustee to and the Lien of this Indenture on such replacement airframe or Replacement Engine and the Indenture Trustee should be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to such replacement airframe or Replacement Engine, provided, that such opinion need not be to the effect specified in the foregoing clause to the extent that the benefits of such Section 1110 would not have been, by reason of a change in law or governmental interpretation thereof after the date hereof, available to the Indenture Trustee with respect to the Aircraft immediately prior to such substitution had such Event of Loss not occurred. SECTION 9.09. Indenture Supplement for Replacements. In the event of the substitution of a replacement airframe or a Replacement Engine as contemplated by Section 10.03 or Article 11 of the Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of the Holders and the Lessee, subject to fulfillment of the conditions precedent and compliance by the Lessee with its obligations set forth in Section 10.03 or Article 11 of the Lease, to execute and deliver an Indenture Supplement as contemplated by Section 9.08(3) hereof and, provided no Event of Default shall have occurred and be continuing, execute and deliver to the Lessee an appropriate instrument releasing the Airframe or Engine being replaced from the Lien of this Indenture. SECTION 9.10. Effect of Replacement. In the event of the substitution of a replacement airframe or a Replacement Engine as contemplated by Section 10.01 or Article 11 of the Lease and Section 9.08 hereof, all provisions of this Indenture relating to the Airframe or Engine or Engines being replaced shall be applicable to such replacement airframe or Replacement Engine or Engines with the same force and effect as if such replacement airframe or Replacement Engine or Engines were the same Airframe or engine or engines, as the case may be, as the Airframe or Engine or Engines being replaced but for the Event of Loss with respect to the Airframe or Engine or Engines being replaced. SECTION 9.11. Compensation. The Owner Trustee covenants and agrees to pay, and the Indenture Trustee shall be entitled to receive, reasonable compensation and payment or reimbursement for its reasonable advances, expenses and disbursements (including the reasonable compensation and expenses and disbursements of its counsel, agents and other persons not regularly in its employ) in connection with its services rendered hereunder or in any way relating to or arising out of the administration of the Trust Indenture Estate and shall have a priority claim on the Trust Indenture Estate for the payment of such compensation, advances, expenses and disbursements to the extent that such compensation, advances, expenses and disbursements shall not be paid by the Lessee, and shall have the right to use or apply any moneys held by it hereunder in the Trust Indenture Estate toward such payments; provided that, so long as the Lease is in effect, the Indenture Trustee shall not make any claim for payment under this Section 9.11 against the Owner Trustee without first making demand on the Lessee for payment of such claim. The Indenture Trustee agrees that it shall have no right against any Holder, the Trust Company or the Owner Participant for any fee as compensation for its services as trustee under this Indenture. ARTICLE X CONCERNING THE HOLDERS SECTION 10.01. Evidence of Action Taken by Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing, and, except as otherwise expressly provided herein, such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee and, if expressly required herein, to the Owner Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Sections 9.02 and 9.03 hereof) conclusive in favor of the Indenture Trustee and the Owner Trustee, if made in the manner provided in this Article. (b) For the purpose of determining the Holders entitled to vote or consent to any direction, waiver or other action of such Holders under Section 7.10 or 7.11 hereof, the Lessee may set a record date for such vote or consent by specifying such record date in an Officer's Certificate delivered to the Indenture Trustee. Such record date shall be a date not more than 15 days prior to the first solicitation of such vote or consent. SECTION 10.02. Proof of Execution of Instruments and of Holding of Certificates. Subject to Sections 9.02 and 9.03 hereof, the execution of any instrument by a Holder or his agent or proxy may be proved in accordance with such reasonable rules and regulations as may be prescribed by the Indenture Trustee. The holding of Certificates shall be proved by the Register or by a certificate of the Registrar. SECTION 10.03. Holders to Be Treated as Owners. Prior to due presentment for registration of transfer of any Certificate, the Owner Trustee, the Indenture Trustee, any agent of the Owner Trustee or the Indenture Trustee, the Paying Agent, if any, the Registrar and the Lessee may deem and treat the Person in whose name such Certificate shall be registered upon the Register as the absolute owner of such Certificate (whether or not such Certificate shall be overdue and notwithstanding any notation of ownership or other writing thereon) for the purpose of receiving payment of or on account of the principal of and, subject to the provisions of this Indenture, interest on such Certificate and for all other purposes; and neither the Owner Trustee nor the Indenture Trustee (nor any agent of the Owner Trustee or the Indenture Trustee) nor the Paying Agent, if any, nor the Registrar nor the Lessee shall be affected by any notice to the contrary. All such payments so made to any such person, or upon his order, shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Certificate. SECTION 10.04. Certificates Owned by Owner Trustee and the Lessee Deemed Not Outstanding. In determining whether the Holders of the requisite aggregate principal amount of Certificates have concurred in any direction, consent or waiver under this Indenture, Certificates which are owned by the Owner Trustee, the Owner Participant, Trust Company, the Lessee or by any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Owner Trustee, the Owner Participant, Trust Company or the Lessee shall be disregarded and deemed not to be Outstanding for the purpose of any such determination; provided that for the purpose of determining whether the Indenture Trustee shall be protected in relying on any such direction, consent or waiver, only if a Responsible Officer of the Indenture Trustee has actual knowledge that certain Certificates are so owned by any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Owner Trustee, the Owner Participant, Trust Company shall such Certificates be so disregarded; and provided further that if all Certificates which would be deemed Outstanding in the absence of the foregoing provision are owned by the Owner Trustee, the Owner Participant, Trust Company or the Lessee or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Owner Trustee, the Owner Participant, Trust Company or the Lessee, then such Certificates shall be deemed Outstanding for the purpose of any such determination. Certificates so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Indenture Trustee the pledgee's right so to act with respect to such Certificates and that the pledgee is not the Owner Trustee, the Owner Participant, Trust Company or the Lessee or any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Owner Trustee, the Owner Participant, Trust Company or the Lessee. In case of a dispute as to such right, the advice of counsel shall be full protection in respect of any decision made by the Indenture Trustee in accordance with such advice, unless the Lessee, the Owner Trustee, the Trust Company, or the Owner Participant are actually named in the Register. Upon request of the Indenture Trustee, the Owner Trustee, the Owner Participant, Trust Company and the Lessee shall furnish to the Indenture Trustee promptly an Officers' Certificate listing and identifying all Certificates, if any, known by the Owner Trustee, the Owner Participant, Trust Company or the Lessee to be owned or held by or for the account of any of the above-described persons; and, subject to Sections 9.02 and 9.03 hereof, the Indenture Trustee shall be entitled to accept such Officers' Certificate as conclusive evidence of the facts set forth therein and of the fact that all Certificates not listed therein are outstanding for the purpose of any such determination. SECTION 10.05. Right of Revocation of Action Taken. At any time prior to (but not after) the evidencing to the Indenture Trustee, as provided in Section 10.01, of the taking of any action by the Holders of the percentage in aggregate principal amount of the Certificates specified in this Indenture in connection with such action, any Holder of a Certificate, the serial number of which is shown by the evidence to be included among the serial numbers of the Certificates the Holders of which have consented to such action, may, by filing written notice at the Corporate Trust Office and upon proof of holding as provided in this Article, revoke such action so far as concerns such Certificate. Except as aforesaid, any such action taken by the Holder shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Certificate and of any Certificates issued in exchange or substitution therefor, irrespective of whether or not any notation in regard thereto is made upon any such Certificate or otherwise. Any action taken by the Holders of the percentage in aggregate principal amount of the Certificates specified in this Indenture in connection with such action shall be conclusively binding upon the Owner Trustee, the Indenture Trustee and the Holders of all the Certificates. SECTION 10.06. ERISA Plan Prohibition. No employee benefit plan subject to Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or individual retirement account or employee benefit plan subject to Section 4975 of the Internal Revenue Code of 1986, as amended, 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 Certificates. The purchase by any person of any Certificate constitutes a representation by such person to the Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee that such person is not an ERISA Plan and that such person is not acquiring, and has not acquired, such Certificate with assets of an ERISA Plan. ARTICLE XI INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE The Owner Trustee, not individually but solely in its capacity as Owner Trustee under the Trust Agreement, hereby agrees, whether or not any of the transactions contemplated hereby shall be consummated, to assume liability for, and does hereby indemnify, protect, save and keep harmless the Indenture Trustee, in its individual capacity, and its successors, assigns, agents and servants solely from the Lessor's Estate, with respect to the claims of the Indenture Trustee for payment or reimbursement under Section 9.11 hereof and from and against any and all liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes payable by the Indenture Trustee on or measured by any compensation received by the Indenture Trustee for its services under this Indenture), claims, actions, suits, costs, expenses or disbursements (including legal fees and expenses) of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Indenture Trustee (whether or not also agreed to be indemnified against by any other person under any other document) in any way relating to or arising out of this Indenture, or any other Indenture Documents or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, nonacceptance, rejection, ownership, delivery, lease, possession, use, operation, condition, sale, return or other disposition of the Aircraft or any Engine (including, without limitation, latent and other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Indenture Estate or the action or inaction of the Indenture Trustee hereunder, except only (a) in the case of willful misconduct or gross negligence of the Indenture Trustee in the performance of its duties hereunder, (b) as may result from the inaccuracy of any representation or warranty of the Indenture Trustee in the Participation Agreement, (c) as otherwise provided in Section 9.02(c) hereof or (d) as otherwise excluded by the terms of Article 7 or Article 8 of the Participation Agreement from the Lessee's general indemnity to the Indenture Trustee under said Section; provided that so long as the Lease is in effect, the Indenture Trustee shall not make any claim under this Article XI for any claim or expense indemnified by the Lessee under the Participation Agreement without first making demand on the Lessee for payment of such claim or expense. The Indenture Trustee shall be entitled to indemnification, from the Trust Indenture Estate, for any liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this Article XI to the extent not reimbursed by the Lessee or others, but without releasing any of them from their respective agreements of reimbursement; and to secure the same the Indenture Trustee shall have a prior Lien on the Trust Indenture Estate. The indemnities contained in this Article XI shall survive the termination of this Indenture and the resignation or removal of the Indenture Trustee. Upon payment in full by the Owner Trustee of any indemnity pursuant to this Article XI, the Owner Trustee shall, so long as no Indenture Event of Default shall have occurred and be continuing, be subrogated to the rights of the Indenture Trustee, if any, in respect of the matter as to which the indemnity was paid. ARTICLE XII SUCCESSOR TRUSTEES SECTION 12.01. Notice of Successor Owner Trustee. In the case of any appointment of a successor to the Owner Trustee pursuant to the Trust Agreement or any merger, conversion, consolidation or sale of substantially all of the corporate trust business of the Owner Trustee pursuant to the Trust Agreement, the successor Owner Trustee shall give prompt written notice thereof to the Indenture Trustee. SECTION 12.02. Resignation and Removal of Indenture Trustee; Appointment of Successor. (a) The Indenture Trustee or any successor thereto may resign at any time without cause by giving at least 30 days' prior written notice to the Owner Trustee, the Owner Participant, the Lessee and each Holder, such resignation to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In addition, the Majority in Interest of the Certificate Holders or the Owner Trustee, with the consent of the Lessee and the Majority in Interest of the Certificate Holders may at any time remove the Indenture Trustee without cause by an instrument in writing delivered to the Lessee, the Owner Trustee, the Owner Participant, and the Indenture Trustee, and the Indenture Trustee shall promptly notify each Holder thereof in writing, such removal to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In the case of the resignation or removal of the Indenture Trustee, the Majority in Interest of the Certificate Holders, or the Owner Trustee, with the consent of the Lessee and the Majority in Interest of the Certificate Holders, may appoint a successor Indenture Trustee by an instrument signed by such Holders. If a successor Indenture Trustee shall not have been appointed within 90 days after such notice of resignation or removal, the Indenture Trustee, the Owner Trustee, the Lessee, the Owner Participant, 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 provided above. The successor Indenture Trustee so appointed by such court shall immediately and without further act be superseded by any successor Indenture Trustee appointed as provided above. (b) In case at any time any of the following shall occur: (i) the Indenture Trustee shall cease to be eligible in accordance with the provisions of Section 12.03 hereof and shall fail to resign after written request therefor by the Owner Trustee or by any such Holder; or (ii) 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; then the Owner Trustee may remove the Indenture Trustee and, with the consent of the Lessee, appoint a successor trustee by written instrument, in duplicate, executed by a Responsible Officer of the Owner Trustee, one copy of which instrument shall be delivered to the Indenture Trustee so removed and one copy to the successor trustee, or, subject to the provisions of Section 7.13 hereof, any Holder who has been a bona fide Holder for at least six months may, on behalf of himself 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. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Indenture Trustee and appoint a successor trustee, which removal and appointment shall become effective upon acceptance of appointment by the successor trustee as provided in Section 12.04 hereof. The successor Indenture Trustee so appointed by such court shall immediately and without further act be superseded by any successor Indenture Trustee appointed as provided above within one year from the date of appointment by such court. SECTION 12.03. Persons Eligible for Appointment as Indenture Trustee. There shall at all times be an Indenture Trustee hereunder which shall be a corporation organized and doing business under the laws of the United States of America or of any State or the District of Columbia having a combined capital and surplus of at least $100,000,000, or a direct or indirect subsidiary of such a corporation, or a member of a bank holding company group, having a combined capital and surplus of at least $100,000,000 and such subsidiary or member itself having a capital and surplus, in the case of the original Indenture Trustee or an affiliate of the original Indenture Trustee, of at least $10,000,000 and in any other case of at least $75,000,000, if there is such an institution willing, able and legally qualified to perform the duties of the Indenture Trustee hereunder upon reasonable or customary terms. Such corporate trustee shall be a citizen of the United States as defined in Section 101(16) of the Aviation Act, and shall be authorized under such laws to exercise corporate trust powers and shall be subject to supervision of examination by Federal, State or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Indenture Trustee shall cease to be eligible in accordance with the provisions of this Section, the Indenture Trustee shall resign immediately in the manner and with the effect specified in Section 12.02 hereof. SECTION 12.04. Acceptance of Appointment by Successor Trustee. Any successor trustee appointed as provided in Section 12.02 hereof shall execute and deliver to the Owner Trustee, the Lessee, and to its predecessor trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all rights, powers, duties and obligations of its predecessor hereunder, with like effect as if originally named as trustee herein; but, nevertheless, on the written request of the Owner Trustee or of the successor trustee, upon payment of its charges then unpaid, the trustee ceasing to act shall, subject to Section 14.04 hereof, pay over to the successor trustee all moneys at the time held by it hereunder and shall execute and deliver an instrument transferring to such successor trustee all such rights, powers, duties and obligations. Upon request of any such successor trustee, the Owner Trustee shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers. Any trustee ceasing to act shall, nevertheless, retain a prior claim upon all property or funds held or collected by such trustee to secure any amounts then due it pursuant to the provisions of Article XI hereof. No successor trustee shall accept appointment as provided in this Section 12.04 unless at the time of such acceptance such successor trustee shall be eligible under the provisions of Section 12.03 hereof. Upon acceptance of appointment by a successor trustee as provided in this Section 12.04, the successor trustee shall mail notice thereof by first-class mail to the Holders at their last addresses as they shall appear in the Register, and shall mail a copy of such notice to the Lessee and the Owner Trustee. If the acceptance of appointment is substantially contemporaneous with the resignation, then the notice called for by the preceding sentence may be combined with the notice called for by Section 12.02 hereof. SECTION 12.05. Merger, Conversion, Consolidation or Succession to Business of Indenture Trustee. 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 succeeding to the corporate trust business of the Indenture Trustee, shall be the successor to the Indenture Trustee hereunder, provided that, anything herein to the contrary notwithstanding, such corporation shall be eligible under the provisions of Section 12.03 hereof, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case at the time such successor to the Indenture Trustee shall succeed to the trusts created by this Indenture any of the Certificates shall have been authenticated but not delivered, any such successor to the Indenture Trustee may adopt the certificate of authentication of any predecessor Indenture Trustee and deliver such Certificates so authenticated; and, in case at that time any of the Certificates shall not have been authenticated, any successor to the Indenture Trustee may authenticate such Certificates either in the name of any predecessor hereunder or in the name of the successor Indenture Trustee; and in all such cases such certificate shall have the full force which it is anywhere in the Certificates or in this Indenture provided that the certificate of the Indenture Trustee shall have; provided, that the right to adopt the certificate of authentication of any predecessor Indenture Trustee or to authenticate Certificates in the name of any predecessor Indenture Trustee shall apply only to its successor or successors by merger, conversion or consolidation. SECTION 12.06. 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 Trust 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 Trust 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 Owner Trustee, shall execute, acknowledge and deliver all such instruments as may be required by the legal requirements of any jurisdiction or by any such separate trustee or separate trustees or co-trustee for the purpose of more fully confirming such title, rights or duties to such separate trustee or separate trustees or co-trustee. Upon the acceptance in writing of such appointment by any such separate trustee or separate trustees or co-trustee, it, he or they shall be vested with such title to the Trust Indenture Estate or any part thereof, and with such rights, powers, duties and obligations, as shall be specified in the instrument of appointment, and such rights, powers, duties and obligations shall be conferred or imposed upon and exercised or performed by the Indenture Trustee, or the Indenture Trustee and such separate trustee or separate trustees or co-trustee jointly with the Indenture Trustee subject to all the terms of this Indenture, 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 shall be exercised and performed by such separate trustee or separate trustees or co-trustee, as the case may be. Any separate trustee or separate trustees or co-trustee may, at any time by an instrument in writing, constitute the 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 Trust Indenture Estate and all assets, property, rights, powers, duties and obligations and duties of such separate trustee or co-trustee shall, so far as permitted by law, vest in and be exercised by the Indenture Trustee, without the appointment of a successor to such separate trustee or co-trustee unless and until a successor is appointed. (c) All provisions of this Indenture which are for the benefit of the Indenture Trustee (including without limitation Article XI hereof) shall extend to and apply to each separate trustee or co-trustee appointed pursuant to the foregoing provisions of this Section 12.06. (d) Every additional trustee and separate 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, investment and payment of moneys shall be exercised solely by the Indenture Trustee; (ii) all other rights, powers, duties and obligations conferred or imposed upon the Indenture Trustee shall be conferred or imposed and exercised or performed by the Indenture Trustee and such additional trustee or trustees and separate trustee or trustees jointly except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed, the 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 Trust Indenture Estate in any such jurisdiction) shall be exercised and performed by such additional trustee or trustees or separate trustee or trustees; (iii) no power hereby given to, or exercisable by, any such additional trustee or separate trustee shall be exercised hereunder by such additional trustee or separate trustee except jointly with, or with the consent of, the Indenture Trustee; and (iv) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder. If at any time the Indenture Trustee shall deem it no longer necessary or prudent in order to conform to any such law, the Indenture Trustee shall execute and deliver an indenture supplemental hereto and all other instruments and agreements necessary or proper to remove any additional trustee or separate trustee. (e) Any request, approval or consent in writing by the Indenture Trustee to any additional trustee or separate trustee shall be sufficient warrant to such additional trustee or separate trustee, as the case may be, to take such action as may be so requested, approved or consented to. (f) Notwithstanding any other provision of this Section 12.06, the powers of any additional trustee or separate trustee shall not exceed those of the Indenture Trustee hereunder. ARTICLE XIII SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE AND OTHER DOCUMENTS SECTION 13.01. Supplemental Indentures Without Consent of Holders. The Owner Trustee (when authorized by the Owner Participant) and the Indenture Trustee, without consent of the Holders, may enter into an indenture or indentures supplemental hereto for one or more of the following purposes: (a) to convey, transfer, assign, mortgage or pledge any property or assets to the Indenture Trustee as security for the Certificates; (b) to evidence the succession of another corporation to the Owner Trustee or successive successions, and the assumption by the successor corporation of the covenants, agreements and obligations of the Owner Trustee herein and in the Certificates; (c) to add to the covenants of the Owner Trustee such further covenants, restrictions, conditions or provisions as it and the Indenture Trustee shall consider to be for the protection of the Holders, and to make the occurrence, or the occurrence and continuance, of a default in any such additional covenants, restrictions, conditions or provisions an Indenture Event of Default permitting the enforcement of all or any of the several remedies provided herein; provided, that in respect of any such additional covenant, restriction, condition or provision such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such an Indenture Event of Default or may limit the remedies available to the Indenture Trustee upon such an Indenture Event of Default or may limit the right of not less than the Majority in Interest of Certificate Holders to waive such an Indenture Event of Default; (d) to surrender any rights or power conferred herein upon the Owner Trustee or the Owner Participant; (e) to cure any ambiguity or to correct or supplement any provision contained herein or in any supplemental indenture which may be defective or inconsistent with any other provision contained herein or in any supplemental indenture; or to make such other provisions in regard to matters or questions arising under this Indenture or under any supplemental indenture as the Owner Trustee may deem necessary or desirable and which shall not adversely affect the interests of the Holders; (f) 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 replacement airframe or Replacement Engines to the Lien of this Indenture in accordance with the provisions hereof or with the Lease or to release from the Lien of this Indenture property that has been substituted on or removed from the Aircraft as contemplated in Section 3.07 hereof; provided that supplements to this Indenture entered into for the purpose of subjecting replacement airframe or Replacement Engines to the Lien of this Indenture need only be executed by the Owner Trustee and the Indenture Trustee; (g) to provide for the issuance under this Indenture of Certificates in coupon form (including Certificates registrable as to principal only) and to provide for exchangeability of such Certificates with Certificates issued hereunder in fully registered form, and to make all appropriate changes for such purpose; (h) to effect the re-registration of the Aircraft pursuant to Section 5.03(b) of the Participation Agreement; and (i) to add, eliminate or change any provision hereunder so long as such action shall not adversely affect the interests of the Holders. The Indenture Trustee is hereby authorized to join in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations which may be contained therein and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Indenture Trustee shall not be obligated to enter into any such supplemental indenture which adversely affects the Indenture Trustee's own rights, duties or immunities under this Indenture or otherwise. Any supplemental indenture may be executed without the consent of the Holders of Outstanding Certificates, notwithstanding any of the provisions of Section 13.02. SECTION 13.02. Supplemental Indentures With Consent of Holders. With the consent (evidenced as provided in Article X) of the Majority in Interest of Certificate Holders, the Owner Trustee (when authorized by the Owner Participant) and the Indenture Trustee may, from time to time and at any 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 any supplemental indenture or of modifying in any manner the rights of the Holders; provided, however, that, without the consent of each Holder, no such amendment of or supplement to this Indenture or any indenture supplemental hereto, or modification of the terms of, or consent under, any thereof, shall (a) modify any of the provisions of Section 7.11 or this Section 13.02, (b) reduce the amount or extend the time of payment of any amount owing or payable under any Certificate or reduce the interest payable on any Certificate (except that only the consent of the Holder shall be required for any decrease in any amounts of or the rate of interest payable on such Certificate or any extension for the time of payment of any amount payable under such Certificate), or alter or modify the provisions of Article V hereof with respect to the order of priorities in which distributions thereunder shall be made as between the Holder and the Owner Trustee or the Owner Participant or with respect to the amount or time of payment of any such distribution, or alter or modify the circumstances under which a Make-Whole Premium shall be payable, or alter the currency in which any amount payable under any Certificate is to be paid, or impair the right of any Holder to commence legal proceedings to enforce a right to receive payment hereunder, (c) reduce, modify or amend any indemnities in favor of any Holder or in favor of or to be paid by the Owner Participant (except as consented to by each Person adversely affected thereby), or (d) create or permit the creation of any Lien on the Trust Indenture Estate or any part thereof prior to or pari passu with the Lien of this Indenture, except as expressly permitted herein, or deprive any Holder of the benefit of the Lien of this Indenture on the Trust Indenture Estate, except as provided in Section 7.02 hereof or in connection with the exercise of remedies under Article VII. This Section 13.02 shall not apply to any indenture or indentures supplemental hereto permitted by, and complying with the terms of, Section 13.06 hereof. Upon the request of the Owner Trustee (at the direction of the Owner Participant) and upon the filing with the Indenture Trustee of evidence of the consent of Holders and other documents, if any, required by Section 10.01, the Indenture Trustee shall join with the Owner Trustee and the Lessee in the execution of such supplemental indenture unless such supplemental indenture affects the Indenture Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Indenture Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture. It shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution by the Owner Trustee, the Indenture Trustee and the Lessee of any supplemental indenture pursuant to the provisions of this Section, the Indenture Trustee shall mail a notice thereof by first-class mail to the Holders at their addresses as they shall appear on the registry books of the Registrar, setting forth in general terms the substance of such supplemental indenture. Any failure of the Indenture Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. SECTION 13.03. Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Indenture Trustee, the Owner Trustee, the Lessee and the Holders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes. SECTION 13.04. Documents to Be Given to Indenture Trustee. The Indenture Trustee, subject to the provisions of Sections 9.02 and 9.03, may receive an Officers' Certificate and an Opinion of Counsel as conclusive evidence that any such supplemental indenture complies with the applicable provisions of this Indenture. SECTION 13.05. Notation on Certificates in Respect of Supplemental Indentures. Certificates authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article may bear a notation in form approved by the Indenture Trustee as to any matter provided for by such supplemental indenture. If the Owner Trustee or the Indenture Trustee shall so determine, new Certificates so modified as to conform, in the opinion of the Owner Trustee and the Indenture Trustee, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Owner Trustee, authenticated by the Indenture Trustee and delivered in exchange for the Outstanding Certificates. SECTION 13.06. No Request Necessary for Lease Supplement or Indenture Supplement. Notwithstanding anything contained in Section 13.02 hereof, no written request or consent of the Indenture Trustee, any Holder or the Owner Participant pursuant to Section 13.02 hereof shall be required to enable the Owner Trustee to enter into any supplement to the Lease with the Lessee pursuant to the terms of the Lease to subject a replacement airframe or Replacement Engine thereto or to execute and deliver an Indenture Supplement pursuant to the terms hereof. SECTION 13.07. Amendments, Waivers, etc. of Other Indenture Documents. (a) Without the consent of the Majority in Interest of Certificate Holders, the respective parties to the Participation Agreement, the Lease and the Trust Agreement may not modify, amend or supplement any of said agreements, or give any consent, waiver, authorization or approval thereunder, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions thereof or of modifying in any manner the rights of the respective parties thereunder; provided, however, that the actions specified in subsection (b) of this Section 13.07 may be taken without the consent of any Holder. (b) The Participation Agreement, the Lease and the Trust Agreement may, at any time and from time to time, be amended or supplemented without the consent of any Holder: (i) to effect any modification, amendment, addition or deletion expressly provided for in the Lease, the Participation Agreement or the Trust Agreement (including, without limitation, Article 3 of the Lease but excluding any provisions describing the manner in which such Operative Document may be amended or modified); or (ii) to effect any modification or amendment of, addition to or deletion from the Lease, the Participation Agreement or the Trust Agreement if, as reflected in an Opinion of Counsel pursuant to Section 13.07(d) hereof to the party requesting such action addressed to the other parties to the applicable agreement, such modification, amendment, addition or deletion shall not adversely affect the interests of Holders. The Indenture Trustee may, without the consent of any Holder, give any consent, waiver, authorization or approval under any Indenture Document, whether or not provided for therein, if, as reflected in an Opinion of Counsel referred to in Section 13.07(d), such consent, waiver, authorization or approval does not adversely affect the interests of Holders. The consent of the Indenture Trustee shall not be required for any amendment or supplement to the Lease necessary to adjust the percentages for Basic Rent, Stipulated Loss Value or Termination Value pursuant to Section 3.04 of the Lease. (c) No modification, amendment, supplement, consent, waiver, authorization or approval with respect to the Lease, whether effected pursuant to subsection (a) or pursuant to subsection (b) of this Section 13.07 and anything in such subsections or elsewhere in this Indenture to the contrary notwithstanding, shall, without the consent of the Holder of each Outstanding Certificate directly or indirectly affected thereby, reduce the amount of, or change the timing of payment of, any payment of Basic Rent, Supplemental Rent, Stipulated Loss Value or Termination Value below the amount required to pay as and when due (i) all principal, Make-Whole Premium, if any, and interest payable on the Certificates and (ii) any other amounts required to be paid pursuant thereto or hereto, at any time or from time to time. (d) Upon receipt of an Officers' Certificate and an Opinion of Counsel (which Opinion, in the case of the Lessee, shall be by counsel other than an employee of the Lessee unless the related modification, amendment, addition or deletion effects a change that relates solely to the period after there are no longer any Certificates Outstanding) from the Lessee or the Owner Trustee, the Indenture Trustee shall consent and evidence its consent to any action permitted by this Section 13.07 and the Indenture Trustee shall be fully protected in relying on such Officers' Certificate and Opinion of Counsel. ARTICLE XIV SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS SECTION 14.01. Satisfaction and Discharge of Indenture; Termination of Indenture. If at any time after (a) the Owner Trustee shall have paid or caused to be paid the principal of and interest on all the Certificates outstanding hereunder, as and when the same shall have become due and payable, or (b) the Owner Trustee shall have delivered to the Indenture Trustee for cancellation all Certificates theretofore authenticated (other than any Certificates which shall have been destroyed, lost or stolen and which shall have been replaced or paid as provided in Section 2.07 hereof) or (c) (i) all such Certificates not theretofore delivered to the Indenture Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one year or are to be called for prepayment within one year under arrangements satisfactory to the Indenture Trustee for the giving of notice of prepayment by the Indenture Trustee in the name and at the expense of the Owner Trustee, and (ii) the Owner Trustee shall have irrevocably deposited or caused to be deposited with the Indenture Trustee as trust funds the entire amount in cash (other than moneys repaid by the Indenture Trustee or any paying agent to the Owner Trustee in accordance with Section 14.04 hereof) or Government obligations maturing as to principal and interest in such amounts and at such times as will insure the availability of cash sufficient to pay at maturity all such Certificates not theretofore delivered to the Indenture Trustee for cancellation, including principal and interest due or to become due to such date of maturity as the case may be, and if, in any such case, the Owner Trustee shall also pay or cause to be paid all other sums then payable hereunder by the Owner Trustee, then this Indenture shall cease to be of further effect (except as to (A) rights of registration of transfer and exchange, and the Owner Trustee's right of optional prepayment pursuant to Section 6.02(a)(ii), (B) substitution of mutilated, defaced, destroyed, lost or stolen Certificates, (C) rights of Holders to receive payments of principal thereof and interest thereon, upon the original stated due dates therefor (but not upon acceleration), (D) the rights, obligations, indemnities and immunities of the Indenture Trustee hereunder and (E) the rights of the Holders as beneficiaries hereof with respect to the property so deposited with the Indenture Trustee payable to all or any of them), and the Indenture Trustee, on demand of the Owner Trustee accompanied by an Officers' Certificate and an Opinion of Counsel and at the cost and expense of the Owner Trustee, shall execute proper instruments acknowledging such satisfaction of and discharging this Indenture. The Owner Trustee agrees to reimburse and indemnify the Indenture Trustee for any costs or expenses thereafter reasonably and properly incurred and to compensate the Indenture Trustee for any services thereafter reasonably and properly rendered by the Indenture Trustee in connection with this Indenture or the Certificates. Upon (or at any time after) payment in full to the Indenture Trustee, as trust funds, of the principal of and interest on and Make-Whole Premium, if any, and all other amounts due hereunder and under all Certificates and provided that there shall then be no other amounts due to the Holders and the Indenture Trustee hereunder or under the Participation Agreement or otherwise secured hereby, the Owner Trustee shall direct the Indenture Trustee to execute and deliver to or as directed in writing by the Owner Trustee an appropriate instrument releasing the Aircraft from the Lien of this Indenture and releasing the Indenture Documents from the assignment thereof hereunder, and the Indenture Trustee shall execute and deliver such instrument as aforesaid and, at the Owner Trustee's expense, will execute and deliver such other instruments or documents as may be reasonably requested by the Owner Trustee to give effect to such release; provided, however, that this Indenture and the trusts created hereby shall terminate earlier and this Indenture shall be of no further force or effect upon any sale or other final disposition by the Indenture Trustee of all property forming a part of the Trust Indenture Estate and the final distribution by the Indenture Trustee of all moneys or other property or proceeds constituting part of the Trust Indenture Estate in accordance with the terms hereof. Except as aforesaid otherwise provided, this Indenture and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. SECTION 14.02. Application by Indenture Trustee of Funds Deposited for Payment of Certificates. Subject to Section 14.04 hereof, all moneys deposited with the Indenture Trustee pursuant to Section 14.01 hereof shall be held in trust and applied by it to the prompt payment, either directly or through any Paying Agent, to the Holders of the particular Certificates for the payment or prepayment of which such moneys have been deposited with the Indenture Trustee, of all sums due and to become due thereon for principal, interest and Make-Whole Premium, if any, but such money need not be segregated from other funds except to the extent required by law. SECTION 14.03. Repayment of Moneys Held by Paying Agent. Upon the satisfaction and discharge of this Indenture all moneys then held by any Paying Agent under the provisions of this Indenture shall, upon demand of the Owner Trustee, be repaid to it or paid to the Indenture Trustee and thereupon such Paying Agent shall be released from all further liability with respect to such moneys. SECTION 14.04. Transfer of Moneys Held by Indenture Trustee and Paying Agent Unclaimed for Two Years and Eleven Months. Any moneys deposited with or paid to the Indenture Trustee or any Paying Agent for the payment of the principal of or interest or Make-Whole Premium on any Certificate and not applied but remaining unclaimed for two years and eleven months after the date upon which such principal, interest or Make-Whole Premium shall have become due and payable, shall, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, be paid to the Owner Trustee by the Indenture Trustee or such Paying Agent and the Holder of such Certificate, as a general unsecured creditor, shall, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property laws, thereafter look only to the Owner Trustee for any payment which such Holder may be entitled to collect, and all liability of the Indenture Trustee, or any Paying Agent with respect to such moneys shall thereupon cease. ARTICLE XV MISCELLANEOUS SECTION 15.01. Capacity in Which Acting. Each of Trust Company (or its permitted successors or assigns) and the Indenture Trustee acts hereunder not in its individual capacity but solely as trustee except as expressly provided herein and in the other Operative Documents, and, in the case of Trust Company (or its permitted successors or assigns), in the Trust Agreement. SECTION 15.02. No Legal Title to Trust Indenture Estate in Holders. No Holder shall have legal title to any part of the Trust Indenture Estate. No transfer, by operation of law or otherwise, of any Certificate or other right, title and interest of any Holder in and to the Trust Indenture Estate or hereunder shall operate to terminate this Indenture or entitle such Holder or any successor or transferee of such Holder to an accounting or to the transfer to it of legal title to any part of the Trust Indenture Estate. SECTION 15.03. Sale of Trust Indenture Estate by Indenture Trustee is Binding. Any sale or other conveyance of all or any part of the Trust Indenture Estate by the Indenture Trustee made pursuant to the terms of this Indenture or of the Lease shall bind the Lessee, the Owner Trustee, the Holders and the Owner Participant and shall be effective to transfer or convey all right, title and interest of the Indenture Trustee, the Owner Trustee, the Owner Participant and such Holders therein and thereto. 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 with respect thereto by the Indenture Trustee. SECTION 15.04. Indenture for Benefit of Owner Trustee, Indenture Trustee, Owner Participant and Holders. Nothing in this Indenture, whether express or implied, shall be construed to give to any person other than the Trust Company, the Owner Trustee, the Lessee, the Indenture Trustee, as trustee and in its individual capacity, the Owner Participant, and the Holders any legal or equitable right, remedy or claim under or in respect of this Indenture. SECTION 15.05. No Action Contrary to the Lessee's Rights Under the Lease. Notwithstanding any of the provisions of this Indenture or the Trust Agreement to the contrary, so long as no Event of Default shall have occurred and be continuing, neither the Indenture Trustee nor the Owner Trustee will take any affirmative acts that interfere with the peaceful and quiet possession and enjoyment of the Aircraft by the Lessee. SECTION 15.06. Notices. Unless otherwise expressly specified or permitted by the terms hereof, all notices, requests, demands, authorizations, directions, consents, waivers or documents provided or permitted by this Indenture to be made, given, furnished or filed shall be in writing, mailed by certified mail, postage prepaid, or by confirmed telex or telecopy, and (a) if to the Owner Trustee, addressed to it at its office at ______________________________, Attention: Corporate Trust Administration (telecopier _________) (with a copy to the Owner Participant at the address provided for notice pursuant to Section 13.01 of the Participation Agreement), (b) if personally delivered to the Indenture Trustee, at ______________________________, (telecopier _________), Attention: Corporate Trust Department or (c) if to the Owner Participant or the Lessee, addressed to such party at such address as such party shall have furnished by notice to the Owner Trustee and the Indenture Trustee, or, until an address is so furnished, addressed to the address of such party if any, set forth on the signature pages of the Participation Agreement. Any party hereto may change the address to which notices to such party will be sent by giving notice of such change to the other parties to this Indenture. Where this Indenture provides for notice to Holders, such notice shall be sufficiently given (unless otherwise expressly provided herein) if in writing and mailed, first-class postage prepaid, to each Holder entitled thereto, at his last address as it appears in the Register. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Indenture Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail notice to the Owner Trustee and Holders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving of such notice. SECTION 15.07. Officers' Certificates and Opinions of Counsel; Statements to Be Contained Therein. Upon any application or demand by the Lessee or the Owner Trustee to the Indenture Trustee to take any action under any of the provisions of this Indenture, the Lessee or the Owner Trustee, as the case may be, shall furnish to the Indenture Trustee upon request (a) an Officers' Certificate stating that all conditions precedent provided for in this Indenture relating to the proposed action have been complied with and that the proposed action is in conformity with the requirements of this Indenture, and (b) an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or demand as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or demand, no additional certificate or opinion need be furnished. Any certificate, statement or opinion of an officer of the Trust Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of counsel may be based, insofar as it relates to factual matters information with respect to which is in the possession of the Lessee or the Trust Company, upon the certificate, statement or opinion of or representations by an officer or officers of the Lessee or the Trust Company, as the case may be, unless such counsel knows that the certificate, statement or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of an officer of the Lessee or the Trust Company or of counsel thereto may be based, insofar as it relates to accounting matters, upon a certificate or opinion of or representations by an accountant or firm of accountants employed by the Lessee or the Owner Trustee, as the case may be, unless such officer or counsel, as the case may be, knows that the certificate or opinion or representations with respect to the accounting matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate or opinion of any independent firm of public accountants filed with the Indenture Trustee shall contain a statement that such firm is independent. SECTION 15.08. 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 hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 15.09. No Oral Modifications or Continuing Waivers. No terms or provisions of this Indenture or the Certificates may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party or other person against whom enforcement of the change, waiver, discharge or termination is sought; and any waiver of the terms hereof or of any Certificate shall be effective only in the specific instance and for the specific purpose given. SECTION 15.10. Successors and Assigns. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, each of the parties hereto and the successors and permitted assigns of each, all as herein provided. Any request, notice, direction, consent, waiver or other instrument or action by any Holder shall bind the successors and assigns of such Holder. This Indenture and the Trust Indenture Estate shall not be affected by any amendment or supplement to the Trust Agreement or by any other action taken under or in respect of the Trust Agreement, except that each reference in this Indenture to the Trust Agreement shall mean the Trust Agreement as amended and supplemented from time to time to the extent permitted hereby and thereby. SECTION 15.11. Headings. The headings of the various Articles and Sections herein and in the table of contents hereto are for the convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 15.12. Normal Commercial Relations. Anything contained in this Indenture to the contrary notwithstanding, the Owner Participant, the Indenture Trustee and any Holder, or any bank or other affiliate of any such party, may conduct any banking or other financial transactions, and have banking or other commercial relationships, with the Lessee 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 to the Lessee for any purpose whatsoever, whether related to any of the transactions contemplated hereby or otherwise. SECTION 15.13. Governing Law; Counterpart Form. THIS INDENTURE AND EACH CERTIFICATE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Indenture may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed this __ day of ________ 199_ by their respective officers thereunto duly authorized and acknowledge that this Indenture has been made and delivered in the City of New York, and this Indenture shall be effective only upon such execution and delivery. ______________________________, not in its individual capacity, except as otherwise expressly provided herein but solely as Owner Trustee, By_________________________________ Name: Title: ______________________________, not in its individual capacity, except as otherwise expressly provided herein but solely as Indenture Trustee, By_________________________________ Name: Title: Exhibit A to Trust Indenture and Security Agreement INDENTURE SUPPLEMENT INDENTURE SUPPLEMENT dated ______ __, ____, of ________________________, not in its individual capacity but solely as owner trustee (herein called the "Owner Trustee") under the Trust Agreement dated as of ______, 199_ (as at any time amended, herein called the "Trust Agreement") between ________________________, and the Owner Participant named therein. W I T N E S E T H : WHEREAS, the Trust Agreement provides for the execution and delivery of this Indenture Supplement which shall particularly describe the Aircraft and any replacement airframe or Replacement Engine included in the property covered by the Trust Agreement. WHEREAS, the Trust Indenture and Security Agreement dated as of ______, 199_ (herein called the "Indenture") between the Owner Trustee and __________________, as Indenture Trustee (herein called the "Indenture Trustee"), provides for the execution and delivery of a supplement thereto substantially in the form hereof which shall particularly describe the Aircraft (such term and other defined terms in the Indenture being used herein with the same meanings) and any replacement airframe or Replacement Engine included in the Trust Indenture Estate, and shall specifically mortgage such Aircraft, replacement airframe or Replacement Engine, as the case may be, to the Indenture Trustee. WHEREAS,(1) the Indenture relates to the Airframe and Engines described below and a counterpart of the Indenture is attached hereto and made a part hereof and this Indenture Supplement, together with such counterpart of the Indenture, is being filed for recordation on the date hereof with the Federal Aviation Administration as one document. - ------------ (1) This recital is to be included only in the first Indenture Supplement. WHEREAS,(2) the Indenture and an Indenture Supplement dated __________, ___________ (the Indenture being attached to and made a part of such Indenture 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. _________; - ------------ (2) This recital is not to be included in the first Indenture Supplement. NOW, THEREFORE, this Supplement witnesseth, that, to secure 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 Outstanding Certificates under the Indenture and all other amounts due hereunder and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions for the benefit of the Holders contained in the Indenture, in the Lease, in the Participation Agreement and the Certificates, and the prompt payment of any and all amounts from time to time owing under the Participation Agreement by the Owner Trustee, the Owner Participant and the Lessee to the Holders and for the uses and purposes and subject to the terms and provisions of the Indenture and the Certificates, and in consideration of the premises and of the covenants contained in the Indenture, and of the purchase of the Certificates by the Holders, and of the sum of $1 paid to the Owner Trustee by the Indenture Trustee at or before the delivery of the Indenture, the receipt of which is hereby acknowledged, the Owner Trustee 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 security interest in, and confirm, unto the Indenture Trustee, its successors and assigns, in trust for the equal and ratable security and benefit of the Holders, in the trust created by the Indenture, a first priority security interest in and mortgage lien on all estate, right, title and interest of the Owner Trustee in, to and under the following described property: Airframe One (1) Airframe identified as follows: FAA Manufacturer's Registration Serial Manufacturer Model Number Number together with all appliances, equipment, instruments and accessories (including, without limitation, radio and radar) from time to time belonging thereto, owned by the Owner Trustee and installed in or appurtenant to said aircraft. AIRCRAFT ENGINES [_______] aircraft engines, each such engine having 750 or more rated takeoff horsepower or the equivalent thereof, identified as follows: Manufacturer's Serial Manufacturer Model Number together with all equipment and accessories belonging thereto, by whomsoever manufactured, owned by the Owner Trustee and installed in or appurtenant to said aircraft engines. Together with all substitutions, replacements and renewals of the property described above, and all property which shall hereafter become physically attached to or incorporated in the property described above, whether the same are now owned by the Owner Trustee or shall hereafter be acquired by it. As further security for the obligations referred to above and secured by the Indenture and hereby, the Owner Trustee 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, its successors and assigns, for the security and benefit of the Holders, in the trust created by the Indenture, all of the estate, right, title and interest of the Owner Trustee in, to and under the Lease Supplement (other than Excepted Payments, if any) covering the property described above. TO HAVE AND TO HOLD all and singular the aforesaid property unto the Indenture Trustee, its successors and assigns, for the benefit and security of the Holders for the uses and purposes and subject to the terms and provisions set forth in 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 herein and is hereby ratified, approved and confirmed. This Supplement is being delivered in the State of New York. AND, FURTHER, the Owner Trustee hereby acknowledges that the Aircraft/Engines referred to in this Supplement and the aforesaid Lease Supplement has been delivered to the Owner Trustee and is included in the property of the Owner Trustee and covered by all the terms and conditions of the Trust Agreement, subject to the Lien of the Indenture. IN WITNESS WHEREOF, the Owner Trustee has caused this Supplement to be duly executed as of the date first written above by one of its officers thereunto duly authorized. ______________________________, not in its individual capacity but solely as Owner Trustee By_________________________________ Name: Title: Exhibit B to Trust Indenture and Security Agreement [Form of Face of Certificate] No. ________ $________ EQUIPMENT TRUST CERTIFICATE (FEDERAL EXPRESS 199 - [SERIES NAME]) _____________________________, not in its individual capacity but solely as OWNER TRUSTEE UNDER TRUST AGREEMENT DATED AS OF ______, 199_ Interest Rate Maturity [CUSIP] ________________________, not in its individual capacity but solely as Owner Trustee (herein in such capacity called the "Owner Trustee") under that certain Trust Agreement dated as of ______, 199_, between the Owner Participant named therein and __________ Trust Company (herein as such Trust Agreement may be amended or supplemented from time to time called the "Trust Agreement"), hereby promises to pay to _________________, or registered assigns, the principal sum of _______________ Dollars, payable as set forth on the reverse hereof for the Maturity specified above, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, and to pay interest on the principal outstanding from time to time, semiannually on each ________ and _______, on said principal sum in like coin or currency at the rate per annum set forth above from the ________ or the _______, as the case may be, next preceding the date of this Certificate to which interest on the Certificates has been paid or duly provided for, unless the date hereof is a date to which interest on the Certificates has been paid or duly provided for, in which case from the date of this Certificate. Notwithstanding the foregoing, if the date hereof is after any _________ or ________ and before the following ________ or _______, as the case may be, this Certificate shall bear interest from such ________ and _______; provided that, if the Owner Trustee shall default in the payment of interest due on such ________ or _______, then this Certificate shall bear interest from the next preceding ________ or _______ to which interest on the Certificate has been paid or duly provided for. The interest so payable on any ________ or _______ will, except as otherwise provided in the Indenture referred to on the reverse hereof, be paid to the person in whose name this Certificate is registered at the close of business on the __________ or ________ preceding such ________ or _______, whether or not such day is a Business Day. This Certificate shall bear interest at the Past Due Rate on any principal hereof and on any other amount payable hereunder or under the Indenture 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 date thereof to but excluding the date the same is paid in full, payable from time to time on demand of the Indenture Trustee. Principal and interest and other amounts due hereunder shall be payable at the office or agency of ____________ (the "Indenture Trustee") for such purpose; provided that, at the option of the Indenture Trustee, interest may be paid by mailing a check therefor payable to the registered holder entitled thereto at his last address as it appears on the Register. If any amount payable under this Certificate, or under the Indenture, falls due on a day that is not a Business Day, then such sum shall be payable on the next succeeding Business Day, without (provided that payment is made on such next succeeding Business Day) additional interest thereon for the period of such extension. No employee benefit plan subject to Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or individual retirement account or employee benefit plan subject to Section 4975 of the Internal Revenue Code of 1986, as amended, 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 Certificates. The acquiring by any person of any Certificate shall be deemed to constitute a representation by such person to Federal Express Corporation as the Lessee, ________________ as the Owner Participant, the Owner Trustee and the Indenture Trustee or their respective successors, as the case may be, that such person is not an ERISA Plan and that such person is not acquiring, and has not acquired, such Certificate with assets of an ERISA Plan. ________________________ is not acting individually hereunder, but solely as Owner Trustee. Reference is made to the further provisions set forth on the reverse hereof. Such provisions shall for all purposes have the same effect as though fully set forth at this place. This Certificate shall not be secured by or be entitled to any benefit under the Indenture or be valid or obligatory for any purpose unless authenticated by the Indenture Trustee as evidenced by the manual signature of one of its authorized officers on the certificate below. IN WITNESS WHEREOF, the Owner Trustee has caused this Equipment Trust Certificate, (Federal Express 199 - [SERIES NAME]) to be duly executed in its corporate name by its officer thereunto duly authorized. Dated: ___________________________, not in its individual capacity but solely as Owner Trustee By ___________________________ Name: Title: [FORM OF INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This is one of the Equipment Trust Certificates referred to in the within-mentioned Indenture. Dated: ___________________________, not in its individual capacity but solely as Indenture Trustee By __________________________ Authorized Signatory [Form of Reverse of Certificate] This Certificate is one of a duly authorized issue of Certificates issued and to be issued under the Trust Indenture and Security Agreement dated as of ______, 199_, (herein as amended, supplemented or modified from time to time called the "Indenture") between the Owner Trustee and the Indenture Trustee, designated as Equipment Trust Certificates (199 - [SERIES NAME]) limited in aggregate principal amount to $__________ consisting of the following aggregate principal amounts of Certificates with the interest rates per annum and maturities shown: Principal Maturity Amount Interest Rate _______________ $__________ ____% Reference is made to the Indenture and all supplements and amendments thereto (a copy of which is on file with the Indenture Trustee at its principal corporate trust office) for a more complete statement of the terms and provisions thereof, including a statement of the properties conveyed, pledged and assigned thereby, the nature and extent of the security, the respective rights of the Owner Trustee, the Lessee, the Indenture Trustee and the Holders, and the terms upon which the Certificates are, and are to be, executed and delivered, to all of which terms and conditions in the Indenture each Holder hereof agrees by its acceptance of this Certificate. Capitalized Terms not otherwise defined herein shall have the meanings given to them in the Indenture. The principal amount of the Certificate is payable as follows. The Certificate is subject to prepayment in part, pro rata, commencing on _________, ____, in each case through mandatory sinking fund prepayments providing for the prepayment on the sinking fund prepayment dates of the aggregate principal amounts set forth below, together with interest accrued thereon to the applicable sinking fund prepayment date, but without Make-Whole Premium. Sinking Fund Prepayment Date Principal Amount - ------------------------------------- ------------------ Total $
All payments of principal, Make-Whole Premium, if any, and interest and other amounts to be made to the Holder hereof by or at the behest of the Owner Trustee hereunder or under the Indenture shall be made only from the income and proceeds from the Lessor's Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Lessor's Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such distributions in accordance with the terms of the Indenture; provided that under the Lease, the Lessee is obligated to pay or cause to be paid, to the extent such payments are not required to be made from the assets subject to the Lien of this Indenture or the income and proceeds received by the Indenture Trustee therefrom, any net loss arising from the investment of funds held by the Indenture Trustee which but for an Event of Default would be payable to Lessee, and each Holder hereof, by its acceptance of this Certificate, agrees that it will look solely to the income and proceeds from the Trust Indenture Estate to the extent available for distribution to the Holder hereof as provided above and that none of the Owner Participant, __________ Trust Company or the Indenture Trustee is personally liable to the Holder hereof for any amounts payable or any liability under this Certificate or under the Indenture, except as expressly provided in the Indenture (in the case of __________ Trust Company, the Owner Trustee and the Indenture Trustee) or as expressly provided in the Participation Agreement (in the case of the Owner Participant). The Certificates are subject to prepayment in the following circumstances at the price determined as set forth below. (i) If an Event of Loss occurs with respect to the Aircraft (unless pursuant to Section 11.03 of the Lease and Section 9.08 of the Indenture a Replacement Aircraft is substituted therefor). (ii) If the Lessee, pursuant to Section 4.02(a) of the Lease, gives notice of purchase of the Aircraft. (iii) If the Owner Participant, gives notice of prepayment to the Indenture Trustee pursuant to Section 8.02 hereof. (iv) If the Lessee, pursuant to Section 10.01 of the Lease, gives notice of a voluntary termination for obsolescence or surplus. (v) Pursuant to Section 14.01 of the Participation Agreement in connection with a refinancing of the Certificates. (vi) As contemplated by Section 2.15 of the Indenture and Section 3.05(b) of the Participation Agreement if the Delivery Date has not occurred on or prior to the Cut-Off Date. In the event of a prepayment of the Certificates pursuant to Sections 6.02(a)(ii), (iv) and (v) of the Indenture, the Lessee, in accordance with and subject to the terms (including timing of notice) of Section 4.02(a) or Section 10.01 of the Lease or Section 14 of the Participation Agreement, as the case may be, shall give irrevocable written notice to the Owner Trustee and the Indenture Trustee and to the Holders of all of the Certificates specifying the Business Day (the "Prepayment Date") on which the Owner Trustee is directed to prepay the Certificates in full but not in part. In the case of Section 6.02(a)(iv) of the Indenture, the Prepayment Date shall be the Rent Payment Date next succeeding the Termination Date. In the case of Section 6.02(a)(i) of the Indenture, the Prepayment Date shall be the Loss Payment Date as defined in Section 11.02 of the Lease. In the case of Section 6.02(a)(iii) of the Indenture, the Prepayment Date shall be the date designated in the notice of prepayment required by Section 8.02(a) of the Indenture. In the case of a prepayment of the Certificates pursuant to clause (vi) above, the Certificates shall be prepaid on the 15th day following the Cut-Off Date. On or prior to the Prepayment Date, immediately available funds shall be deposited with the Indenture Trustee in an amount in respect of the Certificates equal to the sum of (i) the aggregate principal amount of such Certificates then outstanding, (ii) accrued interest on the Certificates to the Prepayment Date, (iii) all other aggregate sums due any Certificate Holder or the Indenture Trustee hereunder or under the Participation Agreement or the Lease and (iv) a Make-Whole Premium, plus accrued interest, with respect to such Certificates; in the event of a prepayment of the Certificates pursuant to Section 6.02(a)(i) of the Indenture, the funds deposited with the Indenture Trustee shall be in the amount specified in clauses (i) and (ii) above; in the event of a prepayment of the Certificates pursuant to Section 6.02(a)(v) of the Indenture the funds deposited with the Indenture Trustee shall be in the amount specified in Section 14.01 of the Participation Agreement (the aggregate amount required to be paid pursuant to this sentence in the case of clause (i), (ii), (iii), (iv) and (v) of the preceding paragraph being herein referred to as the "Prepayment Price"). Any Certificate issued pursuant to Section 14.01(c) of the Participation Agreement may bear interest at a rate other than the Debt Rate. The parties hereto agree to enter into any amendments to this Indenture necessary to effect such Refinancing. If, in accordance with and subject to the satisfaction of the conditions set forth in Section 6.11 of the Participation Agreement, the Lessee shall assume all of the obligations of the Owner Trustee hereunder, under the Certificates and all other Operative Agreements, the Owner Participant and the Owner Trustee shall (except for prior acts) be released and discharged from any further obligations hereunder and under the Certificates and all other Operative Agreements. If an Indenture Event of Default under the Indenture shall occur and be continuing, the principal of the Certificates may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture provides that in certain events such declaration and its consequences may be waived the Majority in Interest of Certificate Holders. Any such consent or waiver by the Holder of this Certificate shall be conclusive and binding upon such Holder and upon all future Holders and owners of this Certificate and any Certificate that may be issued in exchange or substitution therefor, whether or not any notation thereof is made upon this Certificate or such other Certificates. Moreover, if, and only if, an Event of Default shall occur, the Indenture Trustee may declare the Lease to be in default, and may, to the exclusion of the Owner Trustee, exercise one or more of the remedies of the Owner Trustee provided in the Lease. The Owner Trustee or the Owner Participant may cure a default by the Lessee under the Lease arising from the failure of the Lessee to make any Basic Rent payments under the Lease if such failure of the Lessee to make such payment of Basic Rent shall not constitute the third consecutive such failure or sixth subsequent cumulative such failure. The Owner Trustee or the Owner Participant may cure any other default by the Lessee in the performance of its obligations under the Lease which can be cured by the payment of money by making such payment on behalf of the Lessee. At any time while the Certificates have become immediately due and payable as provided in the Indenture, the Owner Participant may direct the Owner Trustee to pay to the Indenture Trustee for distribution to the Holders an amount equal to the aggregate unpaid principal amount of all Outstanding Certificates plus all accrued but unpaid interest thereon to the date of payment and all other amounts due hereunder, but without Make-Whole Premium. Upon such payment, the Certificates shall cease to accrue interest thereafter. The right of the Holder hereof to institute an action for any remedy under the Indenture is subject to certain restrictions specified in the Indenture, except that the right of the Holder of this Certificate to receive payment of the principal of and interest and Make-Whole Premium, if any on this Certificate on or after the respective due dates, or to institute suit for the enforcement of any such payment, shall not be impaired or affected without the consent of such Holder. The Certificates are issuable only as registered Certificates without coupons in denominations of $1,000 and integral multiples thereof. So long as any of the Certificates remain Outstanding, the Indenture Trustee will maintain an office or agency where the Certificates may be presented for payment and a facility or agency in New York, New York where the Certificates may be presented for registration of transfer and for exchange as provided in the Indenture. As provided in the Indenture and subject to certain limitations therein, this Certificate is transferable, and upon surrender of this Certificate for registration of transfer at the principal corporate trust office of the Indenture Trustee, or at the office or agency maintained for such purposes, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Owner Trustee and the Indenture Trustee duly executed by, the Holder or his attorney duly authorized in writing, one or more new Certificates of the same Maturity and interest rate and of authorized denominations and for the same aggregate principal amount will be issued to the designated transferee or transferees. As provided in the Indenture and subject to certain limitations therein, the Certificates are exchangeable for an equal aggregate principal amount of Certificates of the same Maturity and interest rate and of authorized denominations, as requested by the Holder surrendering the same, upon presentation thereof for such purpose at the principal corporate trust office of the Indenture Trustee, or at an office or agency maintained for such purpose. No service charge shall be levied for any such registration of transfer or exchange, but the Indenture Trustee may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to the due presentment for registration of transfer of this Certificate, the Owner Trustee, the Indenture Trustee, any agent of the Owner Trustee or the Indenture Trustee, the Paying Agent, if any, the Registrar and the Lessee may deem and treat the person in whose name this Certificate is registered as the absolute owner hereof for all purposes whether or not this Certificate is overdue, and neither the Owner Trustee, the Indenture Trustee (nor any agent of the Owner Trustee or the Indenture Trustee), nor the Paying Agent, if any, the Registrar nor the Lessee shall be affected by notice to the contrary. As provided in the Indenture, the Indenture and the Certificates shall be construed in accordance with and governed by the laws of the State of New York. SCHEDULE I INTENTIONALLY LEFT BLANK SCHEDULE II 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. [All other terms used in the Indenture that are defined in the Trust Indenture Act (as defined below) or the Securities Act (as defined below) have the meanings assigned to such terms in the Trust Indenture Act or the Securities Act as in force on the date of the Indenture, except as otherwise expressly provided or unless the context requires.](1) - ----------------- (1) To be used for a qualified Indenture. 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 or Federal Aviation Act. The Federal Aviation Act of 1958, 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. 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. In the case of amounts payable to the Lessor, the Owner Participant, or any corporate affiliate of the Owner Participant, it shall be presumed that such Person is at all times subject to Federal income tax at the maximum marginal rate generally applicable to corporations from time to time. Air Carrier. Any air carrier which is a United States "domestic air carrier" as defined in Part 121 of the Federal Aviation Regulations, and any "foreign air carrier" (as defined in the Act) as to which there is in force a permit granted under Section 402 of the Act. Aircraft. The Airframe to be sold by the Lessee to the Owner Trustee pursuant to the Participation Agreement and leased under the Lease (or any permitted substitute Airframe) together with the _____ 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 11.03 of the Lease. Prior to delivery of the initial Lease Supplement, references in the Operative Agreements (including Section 3.05 of the Participation Agreement) to the Aircraft shall mean the __________________ airframe bearing FAA Registration Number N_____ and Manufacturer's serial number _____, together with _________________________________ engines bearing Manufacturer's serial numbers ___________________. Airframe. The ________________________ aircraft (excluding the Engines or engines from time to time installed thereon) leased by Lessor to Lessee pursuant to the Lease and the Lease Supplement and having the United States FAA Registration Number and manufacturer's serial number specified in the Lease Supplement, including (i) all Parts so long as the same shall be incorporated or installed in or attached to such Airframe, or so long as title to any such Parts shall remain vested in Lessor in accordance with the terms of Section 8.01(b) of the Lease after removal from such Airframe, and (ii) any replacement airframe which may be substituted pursuant to Section 11.03 of the Lease. Ancillary Agreements. Any written agreement of the Lessee entered into on the Delivery Date or at any time thereafter in connection with the transaction contemplated by the Operative Agreements or the Original Agreements, in each case as amended from time to time. Appraisal. The report prepared by BK Associates, Inc. and delivered to the Owner Participant and Lessee on the Delivery Date pursuant to Section 4.02(j) of the Participation Agreement. Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended, and any successor thereto. Basic Rent. The aggregate periodic rent payable for the Aircraft throughout the Basic Term pursuant to Section 3.02 of the Lease. Basic Term. The period commencing at the beginning of the day on the Commencement Date and ending at the end of the day on the day immediately preceding the date _________ years from the Commencement Date, or such earlier date on which the Lease shall be terminated as provided therein. Beneficial Interest. The interest of the Owner Participant under the Trust Agreement. Bills of Sale. Collectively, the FAA Bills of Sale for the Aircraft, an additional full warranty bill of sale covering the Aircraft (and specifically referring to each Engine) executed by the Lessee as owner of the Aircraft in favor of the Owner Trustee and dated the Delivery Date and an additional full warranty bill of sale covering the Aircraft executed by the Manufacturer in favor of Lessee. Burdensome Indemnity Payment. A Loss, as defined in the Tax Indemnity Agreement, which causes the aggregate net present value of all Losses paid or payable by the Lessee as of the determination date discounted semi-annually at the Debt Rate to the date of determination to exceed ___% of the Purchase Price. Business Day. Any day other than a Saturday, Sunday or other day on which commercial banking institutions in __________, ________, ______________, ____, New York, New York, ________________________ or Memphis, Tennessee are authorized or required by law to close. Certificate Closing Date. The date of the closing with respect to the purchase of Certificates by the Pass Through Trustee contemplated by Section 2.01(b) of the Participation Agreement. Certificates. The Equipment Trust Certificates (Federal Express 199_-[SERIES NAME]), issued by the Owner Trustee pursuant to the Indenture and any certificate issued in exchange therefor or replacement thereof pursuant to the Indenture. Change in Tax Law. Any change to the Code or the Treasury regulations promulgated thereunder or the publication of any revenue ruling, revenue procedure or any informational release by the Internal Revenue Service or the Department of Treasury, provided that the Owner Participant or the Lessee has notified the other parties of such change in writing prior to the Delivery Date. Change in Tax Rate. Any amendment, modification, deletion, addition, or change to the Code which is enacted into law after the Delivery Date which changes the highest marginal statutory rate of Federal income tax applicable to the Owner Participant (other than a change which is in the nature of a minimum tax). Citizen of the United States. A citizen of the United States as defined in Section 101(16) of the Act, or any analogous part of any successor or substituted legislation or regulation at the time in effect. Closings. The closing with respect to the acquisition of the Pass Through Certificates by the Underwriters and the closing with respect to the acquisition of Certificates by the Pass Through Trustee. Code. Except as otherwise provided, references to the Code shall mean the Internal Revenue Code of 1986, as amended from time to time. Collateral Account. The deposit account established and maintained pursuant to Section 2.12 of the Indenture. Commencement Date. ________________________. Commission. The Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or if at any time after the execution and delivery of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. Commitment. The amount of the Owner Participant's participation in the Purchase Price required to be made available or paid as provided in Section 3.02 of the Participation Agreement. 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. Cut-Off Date. ___________,19__. Corporate Base Rate. The rate announced from time to time by ________ as its Corporate Base Rate. Debt Portion. The amount specified as such on Schedule I to the Participation Agreement. Debt Rate. The average weighted rate of interest on the Certificates issued pursuant to the Indenture. Default. Any event or condition, which, with the lapse of time or the giving of notice, or both, would constitute an Event of Default. Delayed Delivery Notice. A certificate signed by a Responsible Officer of the Lessee (i) requesting that the Pass Through Trustee temporarily delay purchase of the Certificates to a date later than the Pass Through Closing Date, (ii) stating the amount of the purchase price of each such Certificate and the aggregate purchase price of all such Certificates, (iii) stating the reasons for such delay and (iv) either (1) setting or resetting the Delivery Date (which shall be on or prior to the Cut-Off Date), or (2) indicating that such Delivery Date will be set by subsequent written notice not less than three Business Days prior to such new Delivery Date (which shall be on or prior to the applicable Cut-off Date). Delivery Date. The date on which the Aircraft is to be delivered and sold by the Lessee to the Lessor and leased by the Lessor to the Lessee under the Lease, which date is also the date of the initial Lease Supplement. Delivery Notice. Notice of the Aircraft's Delivery Date, given by the Lessee as provided in Section 3.01 of the Participation Agreement and including any notice with respect to a postponed Delivery Date given by the Lessee pursuant to Section 3.05(c) of the Participation Agreement. Depository. The depository of the Registered Global Certificate, if any, representing the Equipment Trust Certificates issued under the Indenture and any successor to such depository appointed by the Company pursuant hereto. Such depository initially shall be Depository Trust Company, a New York corporation. Eligible Deposit Account. Either (a) a segregated account with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a depository institution with corporate trust powers organized under the laws of the United States or any state thereof, or the District of Columbia, and whose deposits are insured by the Federal Deposit Insurance Corporation, provided that such institution also must have a combined capital and surplus of at least $100,000,000 and a rating of A or better from the Thomson Bank Watch. Eligible Institution. A depository institution organized under the laws of the United States or any one of the states thereof, or the District of Columbia, or any domestic branch of a foreign bank, which in any such case at all times (a) has either (x) a long-term unsecured debt rating of at least Aa2 by Moody's or (y) a short-term certificate of deposit rating of P-1 by Moody's, (b) has either (x) a long-term unsecured debt rating of a least AA by S&P or (y) a short-term certificate of deposit rating of A-1+ by S&P and (c) is a member of the Federal Deposit Insurance Corporation. Engine. Each of the ______________________ engines listed by its manufacturer's serial number in the initial Lease Supplement and leased pursuant to the Lease, whether or not from time to time installed on the Airframe or installed on any other airframe or on any other aircraft, and any Replacement Engine which may from time to time be substituted for an Engine pursuant to Sections 7.02(a)(vii), 10.03, 11.03, 11.04 or 12.02 of the Lease, together with all Parts incorporated or installed in or attached to any such Engine and all Parts removed from any such Engine so long as title to such Parts shall remain vested in the Lessor in accordance with the terms of Article 8 of the Lease after removal from 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 Lease. The term "Engines" means, as of any date of determination, all Engines then leased to the Lessee pursuant to the Lease. Engine Consent and Agreement. The Engine Consent and Agreement dated as of ________, executed by the Engine Manufacturer, as the same may be amended from time to time. Engine Manufacturer. ________________________, a ________ corporation. ERISA. The Employee Retirement Income Security Act of 1974, as amended. Event of Default. Each of the events specified in Article 16 of the Lease. Event of Loss. Any of the following events with respect to the Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A) for a period in excess of 180 days (or in any event if such loss is continuing on the last day of the Term) due to theft or disappearance, or (B) for a period in excess of 60 days (or in any event if such loss is continuing on the last day of the Term) due to the destruction, damage beyond economic repair or rendition of such property permanently unfit for normal use by the Lessee for any reason whatsoever; (ii) any damage to such property which results in an insurance settlement with respect to such property on the basis of a total loss, or constructive or compromised total loss; (iii) (x) condemnation, confiscation or seizure of, or requisition of title to such property, or (y) requisition of use of such property (A) by 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, or (B) by the Government for a period extending beyond the Term, provided that no Event of Loss shall be deemed to have occurred, and the Term shall be extended automatically for a period of up to six months in the event that the Aircraft, the Airframe or any Engine is requisitioned by the Government pursuant to an activation as part of the Civil Reserve Air Fleet Program, as such term is defined in Section 7.02(a)(iv) of the Lease; and (iv) as a result of any law, rule, regulation, order or other action by the Aeronautics Authority or other governmental body having jurisdiction, the use of the Aircraft or Airframe in the normal course of air transportation of cargo shall have been prohibited by virtue of a condition affecting all aircraft of the same type for a period of eighteen (18) consecutive months, unless the Lessee, 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 or for a period extending beyond the end of the Term, unless the Lessee, prior to the expiration of such two (2) year period shall have conformed at least one __________________ aircraft (but not necessarily the Aircraft or the Airframe) to the requirements of any such law, rule, regulation, order, or other action and shall have commenced regular commercial use and shall be diligently carrying forward, on a non-discriminatory basis, all steps necessary or desirable to permit the normal use of the Aircraft by the Lessee; provided, that if there is a conflict between the operation of clause (iv) above and Section 12.05 of the Lease (by reference to Section 12.04(ix) thereof), such Section 12.05 of the Lease shall control. 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 (iv) above. An Event of Loss with respect to the Aircraft shall be deemed to have occurred if any Event of Loss occurs with respect to the Airframe. Excepted Payments. Collectively, (i) all right, title and interest of the Owner Participant or the Owner Trustee in, to and under the Tax Indemnity Agreement and any moneys due or to become due under the Tax Indemnity Agreement and payments of Supplemental Rent or other payments by the Lessee in either case in respect of the Tax Indemnity Agreement, (ii) indemnity payments and interest thereon and other amounts payable by the Lessee to the Owner Participant or to the Trust Company or any of their respective Affiliates, successors, assigns, directors, officers, employees, agents or servants pursuant to Article 7 or 8 of the Participation Agreement or any corresponding payment of Supplemental Rent under the Lease; (iii) proceeds of public liability insurance in respect of the Aircraft payable to the Owner Participant or Trust Company, or any of their Affiliates, successors or assigns, as a result of insurance claims made, or losses suffered, by, or amounts in respect of such indemnities paid for the benefit of, the Owner Participant or the Trust Company either pursuant to the Lease (which shall include proceeds of any self-insurance by the Lessee) or maintained by the Trust Company or the Owner Participant and not required to be maintained under the Lease; (iv) proceeds of any insurance in respect of the Aircraft which is separately acquired and paid for by the Owner Participant (directly or through the Owner Trustee) or the Lessor in accordance with Section 13.05 of the Lease; (v) indemnity payments payable by the Owner Participant to the Trust Company pursuant to Section 6.01 of the Trust Agreement; (vi) Transaction Costs or other expenses paid or payable by the Lessee to, or for the benefit of, the Owner Trustee, Trust Company or the Owner Participant pursuant to Section 9.01 of the Participation Agreement, Section 3.02(b) of the Lease and Section 2.02 of the Participation Agreement; (vii) the right to enforce, and the proceeds of any such enforcement of, any right to receive the proceeds of any of the amounts referred to in clauses (i) through (vi) above and (viii) any payments in respect of interest to the extent attributable to the payments referred to in clauses (i) through (vii) above. Expense and Expenses. Have the meaning specified in Section 8.01(a) of the Participation Agreement. FAA Bills of Sale. The bill of sale for the Airframe on AC Form 8050-2, or such other form as may be approved by the Aeronautics Authority executed by the Lessee in favor of the Lessor and dated the Delivery Date and the bill of sale for the Airframe on AC Form 8050-2, or such other form as may be approved by the Aeronautics Authority executed by the manufacturer in favor of the Lessee. Fair Market Renewal Term. One or more terms of one or more years, but not to exceed ____ years in the aggregate and which term(s) shall immediately follow the end of the Basic Term or the Fixed Renewal Term with respect to which the Lessee has exercised its option to renew the Lease pursuant to Section 4.01(a)(B) thereof. Fair Market Rental. An amount determined on the basis of, and equal in amount to, the rental which would be obtained in an arm's-length transaction between an informed and willing lessee and an informed and willing lessor unaffiliated with such lessee, neither being under any compulsion to lease. In such determination, it shall be assumed that the Aircraft is in the condition required under the Lease in the case of return of the Aircraft pursuant to Article 12 of the Lease. Fair Market Rental shall be determined in accordance with the provisions of Section 4.03 of the Lease. Fair Market Value. An amount determined on the basis of, and equal in amount to, the value which would be obtained in an arm's-length transaction between an informed and willing purchaser under no compulsion to buy and an informed and willing seller unaffiliated with such purchaser and under no compulsion to sell. In such determination it shall be assumed that the Aircraft is in the condition required under the Lease in the case of return of the Aircraft pursuant to Article 12 of the Lease. Fair Market Value shall be determined in accordance with the provisions of Section 4.03 of the Lease. Federal Aviation Administration and FAA. The United States Federal Aviation Administration and any successor agency or agencies thereto. Fixed Renewal Rental. An amount equal to 50% of the average semiannual payments of Basic Rent during the Basic Term as such payments may be adjusted pursuant to Section 3.04 of the Lease. Fixed Renewal Term. Up to ____ renewal terms, each term to be not less than ____ year, but not more than _____ years in the aggregate. Government. The United States of America or an agency or instrumentality thereof. Holder. As of any particular time, the person in whose name a Certificate shall be registered. Indebtedness of any Person means at any time, without duplication, (i) all obligations of such Person for borrowed money or the deferred purchase price of property, or evidenced by bonds, debentures, notes or other similar instruments, or arising under leases that are properly capitalized under generally accepted accounting principles applicable to such Person and (ii) all guarantees by such Person of such obligations described in clause (i) above of third parties. Indemnitee. Each of the Owner Trustee, in its individual capacity and as trustee, the Owner Participant, the Original Loan Participant, the Indenture Trustee, in its individual capacity and as trustee, and any successor (including any trustee which may succeed to the Lessor's interest under the Lease), and any Affiliate, assign, officer, director, employee, agent and servant of any of the foregoing, the Lessor's Estate and the Trust Indenture Estate. Neither the Certificate Holder nor any holder of a Pass Through Certificate shall be deemed to be an Indemnitee. Indenture. The Trust Indenture and Security Agreement, dated as of ___________, 199_, as amended and restated as of _____________, 199_, between the Lessor and the Indenture Trustee and the Indenture Supplement and any amendment or supplement hereto or thereto from time to time entered into. Indenture Default. Any event or condition, which, with the lapse of time or the giving of notice, or both, would constitute an Indenture Event of Default. Indenture Documents. The Participation Agreement, the Trust Agreement (including any Trust Agreement Supplements), the Lease (including any Lease Supplements), the Indenture (including any Indenture Supplements), the Certificates, the Purchase Agreement Assignment, the FAA Bills of Sale, the Consent and Agreement and the Engine Consent and Agreement. Indenture Event of Default. Each of the events specified in Section 7.01 of the Indenture. Indenture Supplement. Any Indenture Supplement, substantially in the form of Exhibit A to the Indenture, entered into between the Indenture Trustee and the Owner Trustee, which Indenture Supplement shall incorporate by reference the provisions of the Indenture including any amendments entered into subsequent to the Delivery Date. Indenture Trustee. _______________________, a national banking association, not in its individual capacity but solely as Indenture Trustee under the Indenture and each other Person which may from time to time be acting as successor trustee under the Indenture. Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate resulting from (i) claims against the Indenture Trustee not related to the administration of the Trust Indenture Estate or any transactions pursuant to the Indenture or any document included in the Trust Indenture Estate or (ii) any act or omission of the Indenture Trustee which is not related to the transactions contemplated by the Operative Agreements or is in violation of any of the terms of the Operative Agreements. Independent Appraisal. An appraisal conducted pursuant to Section 4.03 of the Lease. Independent Investment Banker. An independent investment banking institution of national standing appointed by the Lessee that is independent in fact, does not have any direct financial interests, or any material indirect financial interest, in the Lessee or any Affiliate of the Lessee, and is not connected with the lessee or any Affiliate of the Lessee, as an officer, employee, promoter, underwriter, trustee, partner, director or Person performing similar functions; provided, that if the Indenture Trustee shall not have received written notice of such an appointment at least 10 days prior to the Prepayment Date 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. Interest Payment Date means each _________ and ________ beginning with __________, 199_; provided, that if any such day is not a Business Day, the relevant Interest Payment Date shall be the next succeeding Business Day. Interim Term. The period commencing on the Delivery Date and ending at the end of the day immediately preceding the Commencement Date. Invoice. The invoice for the Aircraft given by the Lessee to the Lessor. Lease. The Lease Agreement dated as of __________, 199_, entered into by the Lessor and the Lessee and the Lease Supplement and any amendment or supplement hereto or thereto from time to time entered into. Lease Supplement. Any Lease Supplement, substantially in the form of Exhibit A to the Lease, entered into between the Lessor and the Lessee for the purpose of leasing the Aircraft pursuant to the terms of the Lease, which Lease Supplement shall incorporate by reference the provisions of the Lease including any amendments or supplements entered into subsequent to the Delivery Date. Lessee. Federal Express Corporation, a Delaware corporation, and its successors and assigns in its capacity as lessee. Lessor. __________ Trust Company, a ________ banking corporation, not in its individual capacity except as otherwise expressly stated, but solely as Owner Trustee under the Trust Agreement, and its successors and assigns. Lessor's Estate. All estate, right, title and interest of the Owner Trustee in and to the Collateral Account, the Liquid Collateral, the Aircraft, the Lease, any Lease Supplement, the Bills of Sale, any warranty with respect to the Airframe and the Engines, all amounts of Basic Rent and Supplemental Rent, including without limitation, insurance proceeds (other than insurance proceeds payable to or for the benefit of the Owner Trustee for its own account or in its individual capacity, the Owner Participant or any Holder or the Indenture Trustee) and requisition, indemnity or other payments of any kind for or with respect to the Aircraft (except amounts owing to the Owner Participant, to the Indenture Trustee, to the Owner Trustee in its individual capacity or any Holder, or to any of their respective directors, officers, employees and agents pursuant to Articles 7 and 8 of the Participation Agreement). Notwithstanding the foregoing, "Lessor's Estate" shall not include any Excepted Payment. Lessor's Liens. Liens on the Lessor's Estate or the Trust Indenture Estate arising as a result of (i) claims against the Lessor, in its individual capacity or as Owner Trustee, or the Owner Participant, in each case not related to the transactions contemplated by the Operative Agreements, (ii) acts or omissions of the Lessor in its individual capacity or as Owner Trustee, and, in the case of the Lessor in its individual capacity, arising from its gross negligence or willful misconduct either not related to the transactions contemplated by or expressly prohibited under the Operative Agreements and any act or omission of the Owner Participant which is not related to the transactions contemplated by the Operative Agreements or is in violation of any of the terms of the Operative Agreements, (iii) Taxes or Expenses imposed against the Lessor, in its individual capacity or as Owner Trustee, Owner Participant, Lessor's Estate or the trust created by the Trust Agreement which are not indemnified against by the Lessee pursuant to the Tax Indemnity Agreement or the Participation Agreement, or (iv) claims against the Lessor or the Owner Participant arising from the voluntary transfer by the Lessor or the Owner Participant of its interests in the Aircraft other than a transfer of the Aircraft pursuant to Section 4.02(a) or Articles 10 or 11 of the Lease and other than a transfer pursuant to the exercise of the remedies set forth in Article 17 of the Lease. Letter of Representations. A letter from the Company and the Owner Trustee to, and accepted by, the Depository, as such letter may be modified or supplemented, or any successor letter thereto. Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or security interest. Liquid Collateral. All amounts and securities deposited from time to time in the Collateral Account and all the products, investments, earnings and proceeds of the foregoing, including, but not limited to, all proceeds of the investment or conversion thereof, voluntary or involuntary, into cash, Specified Investments or other property, all rights to payment of any and every kind, and other forms of obligations, and instruments and other property which at any time constitute all or part or are included in the proceeds of any of the foregoing. Losses. Has the meaning specified in Section 15.02(a) of the Participation Agreement. 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 Certificates outstanding as of such date excluding for purposes of this definition any Certificates held by (i) the Owner Participant unless all Certificates then outstanding shall be held by the Owner Participant, (ii) by the Lessee, (iii) by the Indenture Trustee or (iv) by any Affiliate of either. Make-Whole Premium. With respect to each Certificate to be prepaid pursuant to Sections 6.02(ii), 6.02(iv) and 6.02(v) 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 an excess of (i) the present values of all remaining scheduled payments of such principal amount or portion thereof and interest thereon (excluding interest accrued from the immediately preceding Payment Date to such Prepayment Date) to the Maturity of such Certificate in accordance with generally accepted financial practices assuming a 360-day year consisting of twelve 30-day months at a discount rate equal to Treasury Yield, all as determined by the Independent Investment Banker over (ii) the unpaid principal amount of such Certificate. Manufacturer. _____________________________, a ________ corporation. Maturity. With respect to any Certificate, the date on which the principal amount of such Certificate is due and payable. Net Present Value of Rents. The net present value, as of the Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted at a rate per semi-annual period equal to (a) the Debt Rate as of the date of determination divided by (b) two. Non-U.S. Person. Any Person other than (i) a citizen or resident of the United States, as defined in Section 7701(a)(30) of the Code (for purposes of this definition, the "United States"), (ii) a corporation, partnership or other entity created or organized in or under the laws of the United States or any political subdivision thereof or therein, or (iii) any estate or trust that is subject to United States federal income taxation regardless of the source of its income. Obsolete Parts. Parts which the Lessee deems obsolete or no longer suitable or appropriate for use on the Airframe or any Engine. Officer's Certificate means a certificate signed by a Responsible Officer of the Owner Trustee or the Lessee, as the case may be, delivered to the Indenture Trustee. Each such certificate shall include the statements provided for in Section 15.07. Operative Agreements. The Participation Agreement, the Trust Agreement, the Bills of Sale, the Lease, the Lease Supplement, the Certificates outstanding at the time of reference, the Indenture, the Indenture and Security Agreement Supplement, the Consent and Agreement, the Purchase Agreement Assignment, the Engine Consent and Agreement, the Pass Through Agreement and the Tax Indemnity Agreement, each as amended from time to time. Opinion of Counsel means a written opinion of legal counsel, who in the case of counsel (a) for the Lessee may be (i) an attorney employed by the Lessee who is generally empowered to deliver such written opinions, (ii) Davis Polk & Wardwell or a successor firm or (iii) other counsel designated by the Lessee and reasonably satisfactory to the Indenture Trustee, (b) for the Owner Trustee, may be (i) Potter Anderson & Corroon or (ii) other counsel designated by the Owner Trustee and reasonably satisfactory to the Indenture Trustee and (c) for the Indenture Trustee, may be (i) Powell, Goldstein, Frazer & Murphy or (ii) other counsel designated by the Indenture Trustee. Owner Participant. ____________________________, a __________ corporation, and any successor thereto, and any person to which Owner Participant transfers, in accordance with the Trust Agreement, its right, title and interest in and to the Operative Agreements and the Lessor's Estate. Owner Trustee. __________ Trust Company, a ________ banking corporation, not in its individual capacity except as otherwise expressly stated, but solely as Owner Trustee under the Trust Agreement, and its successors and assigns. Owner's Economic Return. The Owner Participant's anticipated after-tax yield and aggregate after-tax cash flow during the Interim Term and the Basic Term utilizing the multiple investment sinking fund method of analysis, computed on the basis of the same methodology and assumptions as were utilized by the Owner Participant in determining Basic Rent, Stipulated Loss Value and Termination Value percentages, as such assumptions may be adjusted for events which have been the basis of adjustments to Rent pursuant to Section 3.04 of the Lease. Participation Agreement. The Participation Agreement, dated as of ___________, 199_ among the Lessee, the Owner Trustee not in its individual capacity except as otherwise expressly stated therein, but solely as trustee, the Owner Participant, the Pass Through Trustee, solely as pass through trustee, and the Indenture Trustee in its individual capacity and as trustee as amended, modified or supplemented, or the terms thereof waived. 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 and, so long as title thereto shall remain vested in the Lessor in accordance with the terms of Article 8 of the Lease, after removal from the Airframe or Engines. Pass Through Agreement. The Pass Through Trust Agreement dated as of ___________, 199_ between the Lessee 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 199_ Pass Through Certificates, Series ___ or 199_ Pass Through Certificates, Series ___, in each case as issued by the related Pass Through Trust; and "Pass Through Certificates" means all of the Pass Through Certificates issued by each of the Pass Through Trusts. Pass Through Closing Date. The Business Day on which the sale of the Pass Through Certificates to the Underwriter pursuant to the Underwriting Agreements takes place. Pass Through Trust. The Federal Express Pass Through Trust, 199_-____ or Federal Express Pass Through Trust 199_-_, in each case formed pursuant to the related Series Supplement in accordance with the Pass Through Agreement; and "Pass Through Trusts" means both of such Pass Through Trusts. 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. Past Due Rate. At any time a rate of interest per annum equal to __% per annum plus the Debt Rate. Paying Agent has the meaning set forth in Section 3.04 of the Indenture. Payment Date. Each _______ and ___________, commencing _____________, 199_, thereafter until all Certificates have been paid in full. Payment Default. Any event specified in Section 16.01(a) or 16.01(b) of the Lease which with the giving of notice or lapse of time or both would constitute an Event of Default. Permitted Investments. Those investments enumerated in Section 23.01(a ) (i), (ii), (iii) and (iv) of the Lease. Person. Any individual, sole proprietorship, partnership, joint venture, joint stock company, trust, unincorporated organization, association, corporation, institution, entity or government (federal, state, local, foreign or any agency, instrumentality, division or body thereof). Prepayment Date. The meaning specified in Section 6.02 of the Indenture. Prepayment Price. The meaning specified in Section 6.02(b) of the Indenture. Proposed Termination Date. The proposed date of termination of the Lease as specified by the Lessee in its notice given pursuant to Section 10.01 thereof Purchase Agreement. The Purchase Agreement, dated as of _____________, between the Manufacturer and the Lessee relating to the purchase by the Lessee of the Aircraft, as originally executed or as modified, amended or supplemented in accordance with the terms thereof, but only insofar as the foregoing relates to the Aircraft. Purchase Agreement Assignment. The Purchase Agreement Assignment dated as of _____, executed by the Lessee and the Owner Trustee. Purchase Option Date. ______________________. Purchase Option Price. The amount to be paid by Lessee to Lessor on the Purchase Option Date pursuant to Section 4.02(a)(B) of the Lease, which amount is set forth in the Appraisal. Purchase Price. Has the meaning specified in Section 2.01(b) of the Participation Agreement. Record Date. As used with respect to any Interest Payment Date (except a date for payment for defaulted interest), __________ for __________ Interest Payment Dates and _________ for ____________ Interest Payment Dates, whether or not such date is a Business Day. Recourse Amount. Has the meaning specified in Section 14.10 of the Participation Agreement. Refinancing. A non-recourse loan to the Lessor arranged pursuant to Section 14.01 of the Participation Agreement. Register has the meaning set forth in Section 3.02 of the Indenture. Registered Global Certificate. The Equipment Trust Certificate, if any, issued to the Depository in accordance with Section 2.12 of the Indenture and bearing the legend prescribed in Exhibit B to the Indenture. Registrar. Has the meaning set forth in Section 3.02 of the Indenture. Renewal Rent. The amount payable by the Lessee as rent in accordance with Section 4.01 of the Lease during any Renewal Term. Renewal Term. Any of the Fixed Renewal Terms or Fair Market Renewal Terms which immediately follow the end of the Basic Term with respect to which the Lessee has exercised its option to renew the Lease pursuant to Section 4.01(a) thereof. Rent. All payments due from the Lessee under the Lease as Basic Rent, Renewal Rent and Supplemental Rent, collectively. Rent Payment Date. Each _________ and __________, commencing ___________, 199_, and continuing thereafter during the Term. Replacement Engine. A ______________________ ______ 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 7.02(a)(vii), 10.03, 11.03 11.04, or 12.02 of the Lease and leased pursuant to the Lease, together with all Parts relating to such engine. Responsible Officer. With respect to the Owner Trustee (except for purposes of the Trust Agreement) or 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 party, any corporate officer or other employee of a party who, in the normal performance of his 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. Scheduled Delivery Date. The Delivery Date specified in the Delivery Notice pursuant to Section 3.01 of the Participation Agreement. Securities Act. The Securities Act of 1933, as amended. SEC. The Securities and Exchange Commission of the United States and any successor agencies or authorities. Series Supplement. The Series Supplement 199_-_ to be executed and delivered by the Lessee and the Pass Through Trustee or the Series Supplement 199_-_ to be executed and delivered by the Lessee and the Pass Through Trustee, in each case 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. Significant Expenditure. Has the meaning specified in Section 4.02(a)(D) of the Lease. Sinking Fund Payment Date. __________________ Sinking Fund Payment Price. _________________ Special Aviation Counsel. Daugherty, Fowler & Peregrin. Specified Investments. Shall mean (a) direct obligations of the United States of America or obligations fully guaranteed by the United States of America; (b) commercial paper rated A-1/P-1 by Standard & Poor's Ratings Group and Moody's Investors Service, Inc., respectively or, if such ratings are unavailable, rated by any nationally recognized rating organization in the United States equal to the highest rating assigned by such rating organization; (c) overnight federal funds transactions with members of the Federal Reserve Systems arranged by federal funds brokers; and (d) overnight repurchase agreements with respect to the securities described in clause (a) above entered into with an office of a bank or trust company which is located in the United States of America of any bank or trust company which is organized under the laws of the United States or any state thereof and has capital surplus and undivided profits aggregating at least $500 million. Stipulated Loss Value. As of any Stipulated Loss Value Determination Date during the Basic Term, the amount determined by multiplying the Purchase Price by the percentage set forth in Schedule III of the Lease under the heading "Stipulated Loss Value Factors" opposite such date (as such Schedule III may be adjusted from time to time as provided in Section 3.04 of the Lease), and during any Renewal Term, the amount determined pursuant to Section 4.01(b) of the Lease. Notwithstanding any other provisions of the Lease or the Participation Agreement or the Indenture, each Stipulated Loss Value for the Aircraft shall be, under any circumstances and in any event, an amount, together with Basic Rent due and owing through the date of payment of Stipulation Loss Value, at least sufficient to pay in full as of such date of payment the aggregate unpaid principal amount of and accrued interest on the Certificates outstanding on such date of payment. Stipulated Loss Value Determination Date. Each date set forth on Schedule III of the Lease under the heading "Stipulated Loss Value Factors." Supplemental Rent. All amounts, liabilities and obligations which the Lessee assumes or agrees to pay under the Lease or under the Participation Agreement or Tax Indemnity Agreement or any other Ancillary Agreement to the Lessor or others, including, without limitation, payments of Stipulated Loss Value and amounts calculated by reference to Termination Value and any other amounts due on the Certificates pursuant to the Indenture, and all amounts required to be paid by Lessee under the agreements, covenants and indemnities contained in the Lease or in the Participation Agreement, but excluding Basic Rent or the Fixed Renewal Rental. Tax. Shall have the meaning set forth in Section 7.01(a) of the Participation Agreement. Tax Indemnity Agreement. The Tax Indemnity Agreement, dated as of ___________, 199_, between the Lessee and the Owner Participant, as from time to time modified, amended or supplemented pursuant to its applicable provisions. Term. The Interim Term and the Basic Term of the lease for the Aircraft under the Lease and, if renewed pursuant to Section 4.01 of the Lease, each Renewal Term for the Aircraft for which the Lease is renewed, or such earlier date on which the Lease is terminated pursuant to its terms. Termination Date. A Rent Payment Date during the Basic Term that is on or after _________________. Termination Value. As of any Termination Date, the amount determined by multiplying the Purchase Price by the percentage set forth in Schedule IV of the Lease under the heading "Termination Value Factors" opposite such Termination Date (as such Schedule IV may be adjusted from time to time as provided in Section 3.04 of the Lease). Notwithstanding any other provisions of the Lease, the Participation Agreement or the Indenture, each Termination Value shall be, under any circumstances and in any event, an amount, together with Basic Rent due and owing through the date of payment of any amount calculated by reference to Termination Value, at least sufficient to pay in full as of such date of payment of the aggregate unpaid principal amount of and accrued interest on the Certificates outstanding on such date of payment. Transaction Costs. All of the documented costs and expenses incurred by the Lessee, the Owner Trustee, the Underwriters, the Indenture Trustee and the Participants as contemplated by Section 9.01(a) of the Participation Agreement. "Treasury Yield". (i) In the case of a 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 Certificate and (ii) in the case of a 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 Lessee) corresponding in maturity to such 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 bid price as of 10:00 a.m. and 2:00 p.m. New York time, on the second Business Day preceding the Prepayment Date. Trust Agreement. The Trust Agreement, dated as of _________, 1992, between the Owner Participant and the Owner Trustee in its individual capacity, as from time to time modified, amended or supplemented pursuant to its applicable provisions and in accordance with the Operative Agreements. Trust Company. __________ Trust Company, a ________ banking corporation, in its individual capacity and not as Owner Trustee, and its successors under the Trust Agreement, in their respective individual capacities and not as Owner Trustees. [Trust Indenture Act. Except as otherwise provided in Section 4.04, 13.01 and 13.08 of the Indenture, the Trust Indenture Act of 1939, as amended, as in force on the date that the Indenture was first qualified under such Act.](2) - ------------------- (2) To be added in the case of a qualified Indenture. Trust Indenture Estate. The property, rights and privileges described in the Granting Clause of the Indenture, other than (i) Excepted Payments, including, without limitation all right, title and interest of the Owner Participant in, to and under the Tax Indemnity Agreement and any moneys due and to become due under the Tax Indemnity Agreement, all as provided in the Indenture, and (ii) rights granted to the Owner Trustee or the Owner Participant under the Indenture, including without limitation Sections 2.05, 7.02, 8.01, 8.02, 8.03, 13.01 and 13.02 thereof. Underwriters. __________________. Underwriting Agreement. The agreement among the Lessee and the several Underwriters dated _______________, 199_, 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 401 or Section 418 of the Federal Aviation Act, and as to which there is in force an air carrier operating certificate issued pursuant to 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. EX-4.E.2 8 Exhibit 4(e)(2) PARTICIPATION AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N_____) Dated as of _______________, 199_ among FEDERAL EXPRESS CORPORATION, Lessee ________________________, Owner Participant ________________________, Not in Its Individual Capacity Except as Otherwise Expressly Set Forth Herein, but Solely as Owner Trustee, Owner Trustee ________________________, Indenture Trustee and ________________________, Pass Through Trustee ______________________________ LEVERAGED LEASE OF ONE [MANUFACTURER/MODEL] AIRCRAFT SERIAL NO. ______, REGISTRATION NO. ______ TABLE OF CONTENTS Page Initial Recitals........................................................... 1 ARTICLE 1 ARTICLE 2 ISSUANCE OF PASS THROUGH CERTIFICATES; ISSUANCE AND PURCHASE OF CERTIFICATES Section 2.01. Transfer of Funds........................................ 3 Section 2.02. Certificates............................................. 4 Section 2.03. Owner Participant's Instructions to Owner Trustee........ 4 Section 2.04. Pre-Delivery Date Adjustments to Basic Rent, Stipulated Loss Values and Termination Values..................... 4 ARTICLE 3 PARTICIPATION IN INVESTMENT ON DELIVERY DATE; DELIVERY OF AIRCRAFT Section 3.01. Lessee's Notice of Delivery Date......................... 5 Section 3.02. Commitments to Participate in Purchase Price............. 5 Section 3.03. Owner Participant's Instructions to Owner Trustee........ 7 Section 3.04. Transaction Costs........................................ 8 Section 3.05. Postponement of Delivery Date............................ 8 Section 3.06. Closing.................................................. 10 ARTICLE 4 CONDITIONS PRECEDENT Section 4.01. Conditions Precedent (Certificate Closing Date).......... 10 Section 4.02. Conditions Precedent (Delivery Date)..................... 16 Section 4.03. Opinion of Special Aviation Counsel...................... 22 Section 4.04. Conditions Precedent to Lessee's Obligations............. 22 ARTICLE 5 LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS Section 5.01. Lessee's Representations and Warranties.................. 22 Section 5.02. Intentionally Left Blank................................. 27 Section 5.03. Certain Covenants of Lessee.. ........................... 27 Section 5.04. Survival of Representations and Warranties............... 32 ARTICLE 6 OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS Section 6.01. Acquisitions and Offerings of Participations............. 32 Section 6.02. Citizenship.............................................. 32 Section 6.03. Representations, Warranties and Covenants of Owner Participant............................................ 33 Section 6.04. Representations and Warranties of Owner Trustee.......... 36 Section 6.05. Representations and Warranties of the Indenture Trustee.. 38 Section 6.06. Intentionally Left Blank................................. 40 Section 6.07. Indenture Trustee's Notice of Default.................... 40 Section 6.08. Releases from Indenture.................................. 40 Section 6.09. Covenant of Quiet Enjoyment.............................. 40 Section 6.10. Survival of Representations, Warranties and Covenants.... 40 Section 6.11. Lessee's Assumption of the Certificates.................. 40 Section 6.12. Indebtedness of Owner Trustee............................ 42 Section 6.13. Pass Through Trustee Representations and Warranties...... 42 ARTICLE 7 TAXES Section 7.01. Lessee's Obligation to Pay Taxes......................... 43 Section 7.02. After-Tax Basis.......................................... 46 Section 7.03. Time of Payment.......................................... 46 Section 7.04. Contests................................................. 47 Section 7.05. Refunds.................................................. 48 Section 7.06. Lessee's Reports......................................... 48 Section 7.07. Survival of Obligations.................................. 49 Section 7.08. Property Taxes........................................... 49 ARTICLE 8 GENERAL INDEMNITY Section 8.01. Generally................................................ 49 Section 8.02. After-Tax Basis.......................................... 52 Section 8.03. Subrogation.............................................. 53 Section 8.04. Notice and Payment....................................... 53 Section 8.05. Refunds.................................................. 53 Section 8.06. Defense of Claims........................................ 54 Section 8.07. Survival of Obligations.................................. 54 ARTICLE 9 TRANSACTION COSTS Section 9.01. Transaction Costs and Other Costs........................ 54 ARTICLE 10 SUCCESSOR OWNER TRUSTEE Section 10.01. Appointment of Successor Owner Trustee.................. 56 ARTICLE 11 LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND EACH CERTIFICATEHOLDER Section 11.01. Liabilities of the Owner Participant.................... 58 Section 11.02. Interest of Holders of Certificates..................... 58 ARTICLE 12 OTHER DOCUMENTS Section 12.01. Consent of Lessee to Other Documents.................... 58 Section 12.02. Further Assurances...................................... 59 ARTICLE 13 NOTICES Section 13.01. Notices................................................. 59 ARTICLE 14 REFINANCING Section 14.01. Refinancing............................................. 60 ARTICLE 15 MISCELLANEOUS Section 15.01. Owner for Federal Tax Purposes.......................... 62 Section 15.02. Collateral Account...................................... 63 Section 15.03. Counterparts............................................ 63 Section 15.04. No Oral Modifications................................... 63 Section 15.05. Captions................................................ 64 Section 15.06. Successors and Assigns.................................. 64 Section 15.07. Concerning the Owner Trustee, Pass Through Trustee and Indenture Trustee..................................... 64 Section 15.08. Severability............................................ 64 Section 15.09. Public Release of Information........................... 65 Section 15.10. Certain Limitations on Reorganization................... 65 Section 15.11. Governing Law........................................... 65 Section 15.12. Section 1110 Compliance................................. 65 Section 15.13. Authorization to Owner Trustee.......................... 65 ARTICLE 16 CONFIDENTIALITY Section 16.01. Confidentiality......................................... 66 SCHEDULE I Debt Portion and Owner Participant Amount SCHEDULE II Definitions SCHEDULE III Permitted Country List SCHEDULE IV Pass Through Trust Information EXHIBIT A(1)(a)(i) Opinion of Lessee's Counsel (Certificate Closing Date) EXHIBIT A(1)(a)(ii) Opinion of Lessee's Counsel (Delivery Date) EXHIBIT A(1)(b)(i) Opinion of Lessee's Special Counsel (Certificate Closing Date) EXHIBIT A(1)(b)(ii) Opinion of Lessee's Special Counsel (Delivery Date) EXHIBIT A(2)(a) Opinion of Owner Participant's Special Counsel EXHIBIT A(2)(b) Opinion of Owner Participant's Counsel EXHIBIT A(3) Opinion of Indenture Trustee's Special Counsel EXHIBIT A(4)(a) Opinion of Owner Trustee's Special Counsel (Certificate Closing Date) EXHIBIT A(4)(b) Opinion of Owner Trustee's Special Counsel (Delivery Date) EXHIBIT A(5) Opinion of Pass Through Trustee's Special Counsel EXHIBIT A(6) Opinion of Engine Manufacturer's Counsel EXHIBIT A(7) Opinion of Manufacturer's Counsel EXHIBIT A(8) Opinion of Special Aviation Counsel EXHIBIT B Form of Lease Agreement EXHIBIT C Form of Indenture EXHIBIT D Form of Trust Agreement EXHIBIT E Form of Purchase Agreement Assignment, Consent and Agreement and Engine Consent and Agreement PARTICIPATION AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N_____) This PARTICIPATION AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N_____) is entered into as of _______________, 199_ (the "Participation Agreement" or "Agreement"), by and among FEDERAL EXPRESS CORPORATION, a Delaware corporation (herein, together with its successors and permitted assigns, the "Lessee"), ________________________, a ________________________ (herein, together with its successors and permitted assigns, the "Owner Participant"), ________________________, a ________________________, not in its individual capacity, except as otherwise expressly stated herein, but solely as owner trustee under the Trust Agreement referred to below (in such capacity as trustee, together with its successors and permitted assigns, the "Owner Trustee"), ________________________, a ________________________, not in its individual capacity, except as otherwise expressly stated herein, but solely as indenture trustee under the Indenture referred to below (in such capacity as trustee, together with its successors and permitted assigns, the "Indenture Trustee") and ________________________, a ________________________, not in its individual capacity, except as otherwise expressly stated herein, but solely as pass through trustee (in such capacity as trustee, together with its successors and permitted assigns, the "Pass Through Trustee"). W I T N E S S E T H : WHEREAS, capitalized terms used but not defined in the Recitals shall have the respective meanings set forth or referred to below; WHEREAS, the Owner Participant has entered into the Trust Agreement with the Owner Trustee in its individual capacity, substantially in the form of Exhibit D hereto, pursuant to which Trust Agreement the Owner Trustee agrees, among other things, to hold the Lessor's Estate for the benefit of the Owner Participant on the terms specified in the Trust Agreement, subject to the Lien of the Indenture. WHEREAS, on the Pass Through Closing Date, a closing will occur with respect to the public offering of Pass Through Certificates issued by each Pass Through Trust, an allocable amount of the proceeds of which offering will be used by the Pass Through Trustee to purchase for each such Pass Through Trust the Certificates of the interest rate and Maturity applicable thereto. WHEREAS, concurrently with the execution and delivery hereof, the Owner Trustee and the Indenture Trustee are entering into the Indenture for the benefit of the Pass Through Trustee, pursuant to which the Owner Trustee is issuing the Certificates to the Pass Through Trustee as evidence of the loans made by the Pass Through Trustee to the Owner Trustee, the proceeds of which loans will be deposited by the Owner Trustee in the Collateral Account. WHEREAS, prior to the Delivery Date, the Certificates will be secured by the Liquid Collateral. WHEREAS, pursuant to the terms of the Trust Agreement, the Owner Trustee will be authorized and directed by the Owner Participant: (a) on the Delivery Date, to purchase the Aircraft from the Lessee; (b) on the Certificate Closing Date, to execute and deliver the Lease substantially in the form of Exhibit B hereto, pursuant to which, subject to the terms and conditions set forth in said Lease, the Owner Trustee agrees to lease to the Lessee, and the Lessee agrees to lease from the Owner Trustee, the Aircraft on the Delivery Date, such lease to be effected by the execution and delivery of a Lease Supplement, in the form of Exhibit A to the Lease, covering the Aircraft and incorporating by reference all of the terms of the Lease; (c) on the Certificate Closing Date, to execute and deliver the Indenture, substantially in the form of Exhibit C hereto, for the benefit of the Holders from time to time of the Certificates, pursuant to which the Owner Trustee agrees, among other things, (A) to deposit, mortgage and pledge with the Indenture Trustee, as part of the Trust Indenture Estate, all of the Lessor's Estate but not Excepted Payments, (B) on the Certificate Closing Date, to issue Certificates substantially in the form set forth in Exhibit B to the Indenture, the proceeds of the sale of which will be held by the Owner Trustee in the Collateral Account until released on the Delivery Date for use by the Owner Trustee (or, in certain circumstances, the Lessee) towards payment of the Purchase Price for the Aircraft, and (C) on the Delivery Date, to execute and deliver the Indenture and Security Agreement Supplement, substantially in the form of Exhibit A to the Indenture, covering the Aircraft and supplementing the Indenture; and (d) on the Certificate Closing Date, to execute and deliver the Purchase Agreement Assignment, whereby the Lessee assigns to the Owner Trustee certain of the Lessee's rights and interests under the Purchase Agreement to the extent that the same relate to the Aircraft (except to the extent reserved in said Purchase Agreement Assignment), which Purchase Agreement Assignment is to include as an annex a Consent and Agreement executed by the Manufacturer and an Engine Consent and Agreement executed by the Engine Manufacturer, said Purchase Agreement Assignment, Consent and Agreement and Engine Consent and Agreement to be substantially in the form of Exhibit E hereto. WHEREAS, on the Delivery Date pursuant to and subject to the terms and conditions of this Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the Engine Consent and Agreement and the Bills of Sale, the Owner Trustee will purchase, and receive title to, the Aircraft from the Lessee and lease the Aircraft to the Lessee pursuant to the Lease (or, in certain, circumstances, the Lessee will purchase the Aircraft). NOW, THEREFORE, in consideration of the mutual agreements contained herein and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows: ARTICLE 1 Unless the context otherwise requires, the terms defined in Schedule II hereto are incorporated herein for all purposes of this Agreement and shall be equally applicable to both the singular and the plural forms of the terms so defined. ARTICLE 2 ISSUANCE OF PASS THROUGH CERTIFICATES; ISSUANCE AND PURCHASE OF CERTIFICATES Section 2.01. Transfer of Funds. (a) On or before the Pass Through Closing Date, the Pass Through Trustee and the Lessee, in accordance with the Pass Through Agreement, shall enter into the Series Supplements, and, subject to the terms and conditions set forth therein, on the Pass Through Closing Date (i) the Lessee shall direct the Underwriters to execute a wire transfer or intra-bank transfer to the Pass Through Trustee in the amount of the total proceeds payable pursuant to the Underwriting Agreement with respect to the Pass Through Certificates and (ii) the Pass Through Trustee shall deliver the Pass Through Certificates to the Underwriters upon receipt by the Pass Through Trustee of such proceeds. (b) Subject to the satisfaction or waiver of the conditions set forth herein, on the Certificate Closing Date, on behalf of each Pass Through Trust, from an allocable amount of the proceeds of the sale of the related Pass Through Certificates, the Pass Through Trustee shall purchase the Certificates specified for such Pass Through Trust on Schedule IV hereto. For each Pass Through Trust, the Pass Through Trustee shall pay an amount equal to the principal amount of Certificates of the Maturity and having the interest rate that relates to such Pass Through Trust, which amounts in the aggregate shall equal the aggregate principal amount of the Certificates as specified in Section 2.04 of the Indenture. The aggregate amount payable by the Pass Through Trustee pursuant to this Section 2.01(b) shall be payable by wire transfer or intra-bank transfer to the Indenture Trustee on behalf of the Owner Trustee. (c) On the Certificate Closing Date, the Indenture Trustee shall, on behalf of the Owner Trustee, deposit, by wire transfer or intra-bank transfer, the amounts received by it pursuant to Section 2.01(b) hereof in the Collateral Account pursuant to the Indenture. (d) On the Certificate Closing Date concurrently with the events specified in Section 2.01(b) hereof, the parties hereto shall execute and deliver, to the extent they are parties thereto, and consent to the execution and delivery of (if they are not parties thereto), the Lease, the Indenture and the Trust Agreement, and the other documents listed in Section 4.01(d) hereof, and the Owner Trustee shall execute and deliver to the Indenture Trustee for authentication, and the Indenture Trustee shall authenticate and deliver to the Pass Through Trustee, upon the request of the Owner Trustee, the Certificates as provided in Section 2.02 hereof. (e) The Closings shall take place at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017. Section 2.02. Certificates. Subject to the satisfaction or waiver of the conditions set forth herein, on the Certificate Closing Date, the Owner Participant will instruct the Owner Trustee to execute and deliver to the Indenture Trustee, and the Indenture Trustee shall authenticate and deliver, upon the request of the Owner Trustee, to the Pass Through Trustee for each Pass Through Trust, the Certificates specified for such Pass Through Trust on Schedule IV attached hereto, which (i) shall be issued in the principal amount and in the Maturity set forth for such Certificate in Schedule IV hereto, (ii) shall bear interest at the interest rate set forth for such Certificate in Schedule IV hereto, (iii) shall be issued in such form and on such terms as are specified in the Indenture, (iv) shall be dated and authenticated on the Certificate Closing Date and shall bear interest from the Certificate Closing Date and (v) shall be registered in the name of the Pass Through Trustee on behalf of such Pass Through Trust. Section 2.03. Owner Participant's Instructions to Owner Trustee. The Owner Participant agrees that the issuance of Certificates in accordance with the terms hereof shall constitute, without further act, authorization and direction by the Owner Participant to the Owner Trustee to take the action specified in Section 1.01 (other than clauses (a) and (c)) of the Trust Agreement and confirmation that all conditions to closing in respect of the Certificate Closing Date set forth in Section 4.01 (but not Section 4.02) hereof were either met to the satisfaction of the Owner Participant or, if not so met, were in any event waived by it. Section 2.04. Pre-Delivery Date Adjustments to Basic Rent, Stipulated Loss Values and Termination Values. On or prior to the Delivery Date, the percentages for Basic Rent referred to in Schedule II of the Lease and the percentages for Stipulated Loss Value and Termination Value in Schedule III and Schedule IV, respectively, of the Lease shall be adjusted (upward or downward), subject to the procedures set forth in Section 3.04 of the Lease and the minimum values established by Section 3.05 of the Lease and the definitions of Stipulated Loss Value and Termination Value, to reflect changes in the pricing assumptions with respect to (i) the Delivery Date being other than _______________, ____, (ii) a different rate of interest or amortization schedule assumed by the Owner Participant in calculating such percentages from that assumed by the Owner Participant in originally calculating such percentages, (iii) Transaction Costs being other than as assumed in Section 10.01 hereof, (iv) any change in the length of the Interim Term or the Basic Term and (v) a Change in Tax Law which occurs after the date of the execution of this Agreement but on or prior to the Delivery Date. Notwithstanding anything herein to the contrary, the Lessee shall have no obligation to enter into the transaction contemplated by this Agreement other than with respect to Transaction Costs as described in Section 2.03 below and its obligation to purchase the Aircraft as provided in Section 3.05(a) hereof if, as a result of a Change in Tax Law after the date of execution of this Agreement but on or prior to the Delivery Date, the Net Present Value of Rents is increased by 150 basis points or more. ARTICLE 3 PARTICIPATION IN INVESTMENT ON DELIVERY DATE; DELIVERY OF AIRCRAFT Section 3.01. Lessee's Notice of Delivery Date. The Lessee agrees to give the Owner Participant, the Indenture Trustee, the Owner Trustee and the Pass Through Trustee at least three (3) Business Days' written or facsimile notice prior to the Delivery Date (which notice shall be effective only if received not later than 10:00 a.m. (New York City time) on the date that is at least three (3) Business Days prior to the Delivery Date), which Delivery Notice shall specify the amount of the Purchase Price, the amount of the Owner Participant's Commitment, the Debt Portion, the Delivery Date for the Aircraft, the serial number of the Airframe and each Engine, and the Aeronautics Authority registration number for the Aircraft. Section 3.02. Commitments to Participate in Purchase Price. (a) Participation in Purchase Price. Subject to the terms and conditions of this Agreement, on the Delivery Date, (i) the Indenture Trustee agrees to release the Debt Portion or such lesser amount as may then be held in the Collateral Account together with the Lessee Shortfall (as defined in clause (iii) below), if any, to the Owner Trustee for application to the Purchase Price as provided below, (ii) the Owner Participant agrees to participate in the Lessor's payment of the Purchase Price by making an investment in the beneficial ownership of the Lessor's Estate in an amount equal to the amount set forth in Schedule I hereto, (iii) the Lessee agrees to pay to the Indenture Trustee the excess, if any, of (I) the Debt Portion over (II) the amount as may then be held in the Collateral Account (the "Lessee Shortfall") as provided in Section 15.02(a) hereof, and (iv) the Lessee shall sell the Aircraft to the Owner Trustee and the Owner Trustee shall immediately thereafter lease the Aircraft to the Lessee pursuant to the Lease. In consideration for the transfer of ownership and title to the Owner Trustee, the following cash payments will be made by wire transfer of immediately available funds on the Delivery Date: (A) by the Owner Trustee to the Lessee, an amount equal to the Purchase Price as set forth in Schedule I hereto, as evidenced by the Invoice and (B) by the Indenture Trustee, on behalf of the Owner Trustee, to the Lessee the excess of any amounts as may then be held in the Collateral Account over the Debt Portion. (b) Payment of Commitment. The Owner Participant agrees, subject to the terms and conditions of this Agreement, to make the amount of its Commitment available to the Owner Trustee on the Delivery Date specified in the Delivery Notice pursuant to Section 3.03 hereof by wire transfer, initiated by 9:00 a.m. (New York City time on such day) of such amount in immediately available funds, to the Owner Trustee for deposit in its account at __________________________________, ABA No. _________, Account Number ________, Attention: _________________, Reference _______________. The amount of the Owner Participant's Commitment shall be held for the account of the Owner Participant by the Owner Trustee until released by the Owner Participant or its special counsel at closing or until returned to the Owner Participant in accordance with Section 3.02(c) hereof. (c) No Obligation to Increase Commitments; Delayed Delivery. (i) If the Indenture Trustee shall default in its obligation to make the amount of its Debt Portion available pursuant hereto, the Owner Participant shall have no obligation to make any portion of such Debt Portion available or to increase the amount of its respective Commitment, and the obligations of the Owner Participant shall remain subject to the terms and conditions of this Agreement. (ii) Subject to the provisions of Section 3.05 hereof, if the closing of the transactions contemplated by the Operative Agreements shall not have been consummated by 2:00 p.m. (New York City time), or such earlier time as directed by the Lessee, on the Scheduled Delivery Date, the Owner Trustee shall, if instructed in writing by the Lessee, at the risk and expense of the Lessee, use its reasonable best efforts to cause the Owner Participant's Commitment to be invested and reinvested to the extent practicable at the direction received by it from the Lessee (with a copy to the Owner Participant), at the risk of the Lessee, in Permitted Investments consisting of either commercial paper or time deposits; provided, however, that in the absence of instructions by 2:00 p.m. (New York City time) the Owner Trustee shall use its reasonable best efforts to cause such amount or the proceeds thereof to be invested and reinvested to the extent practicable in overnight Eurodollar time deposits. Earnings on any such investments shall be applied to the Lessee's payment obligations, if any, to such Owner Participant pursuant to the next succeeding paragraph, and the balance, if any, of such earnings remaining after such application shall be paid in accordance with the Lessee's written instructions. If for any reason (i) the Operative Agreements shall not be executed and delivered by the respective parties thereto and/or the Delayed Delivery Date shall not occur (whether by reason of a failure to meet a condition precedent thereto set forth in Article 4 hereof or otherwise) on or before the third Business Day after the Scheduled Delivery Date (or earlier if requested by the Owner Participant) or, if earlier, the Cut-Off Date, or (ii) the Lessee has notified the Owner Trustee (with a copy to the Owner Participant) prior to 2:00 p.m. (New York City time) on any date after the Scheduled Delivery Date that it does not intend to go forward to close the transactions contemplated hereby for such Delivery Date, the Owner Participant may cancel any funding arrangements made to fund its Commitment on the Scheduled Delivery Date but the Owner Participant's Commitment hereunder with respect to the Aircraft shall not be terminated thereby until the Cut-Off Date, whereupon the Owner Participant's Commitment hereunder shall terminate. On such third Business Day (or such earlier date) or the Cut-Off Date, as the case may be, or the earliest practicable Business Day thereafter, the Owner Trustee shall return the amounts held by it hereunder to the Owner Participant, provided that the Owner Trustee shall have had a reasonable time to liquidate any Permitted Investments it has been authorized to invest in pursuant to the preceding paragraph and to obtain the proceeds therefrom in funds of the type originally received, and the Lessee shall pay interest on such funds to the Owner Participant at the Debt Rate, such interest to be payable for the period from and including such Scheduled Delivery Date to but excluding the date such funds are returned to the Owner Participant in accordance with the terms hereof; provided that if any such funds are returned to the Owner Participant after 2:00 p.m. (New York City time) on any such date, such funds shall be deemed for purposes of this paragraph to have been returned on the next succeeding Business Day. The Lessee shall reimburse the Owner Trustee on demand for any loss incurred by the Owner Trustee as a result of the investment of funds by the Owner Trustee in accordance with the terms of this Section 3.02(c). Further, the Lessee shall indemnify the Owner Trustee and hold it harmless from and against any cost or expense the Owner Trustee may incur as a result of any investment of funds or transfer of funds referred to herein in accordance with the terms hereof. The Owner Trustee shall not be liable for failure to invest such funds except as otherwise provided herein or for any losses incurred on such investments except for any losses arising out of its own gross negligence or willful misconduct. Section 3.03. Owner Participant's Instructions to Owner Trustee. The Owner Participant agrees that the release of its Commitment in accordance with the terms hereof shall constitute, without further act, authorization and direction by the Owner Participant to the Owner Trustee to take the actions specified in Sections 1.01(a) and (c) of the Trust Agreement and confirmation that all conditions to closing set forth in Section 4.02 hereof were either met to the satisfaction of the Owner Participant or, if not so met, were in any event waived by it. Section 3.04. Transaction Costs. If the transactions contemplated by this Article 3 are consummated, as and when any portion of Transaction Costs becomes due and payable, the Owner Participant shall, as soon as practicable upon receipt of bills or invoices for the amounts payable make such payments or, if the Lessee shall have already made such payment, shall reimburse the Lessee therefor or shall, as soon as practicable, furnish the Owner Trustee funds sufficient to, and the Owner Trustee shall, as soon as practicable, make payment of such portion to the Person or Persons entitled to payment upon presentation to the Owner Trustee of bills or invoices for the amount of such payment. If such transactions are not consummated, the Lessee shall pay or cause to be paid all the Transaction Costs; provided, however that if the failure of such transactions to be consummated is due to (i) a failure of the Owner Participant to obtain investment approval to proceed with the transaction contemplated hereby, (ii) a failure to negotiate the Operative Agreements in good faith by the Owner Participant or (iii) a wrongful act by the Owner Participant, the Lessee shall have no obligation to pay those costs and expenses incurred directly by the Owner Participant in connection with the transactions contemplated by this Agreement described in Sections 9.01(a)(i) and (ix) hereof, but the Lessee shall be obligated to pay all other Transaction Costs. Section 3.05. Postponement of Delivery Date. (a) If the Owner Participant shall for any reason fail or refuse to make the full amount of its Commitment available on the Delivery Date in accordance with the terms of Section 3.02 hereof, the Owner Trustee will promptly give each party confirmed facsimile notice thereof and the Lessee shall postpone the Delivery Date for a period of not more than five (5) Business Days, but in no event later than the Cut-Off Date. If the Owner Participant shall for any reason fail or refuse to make the full amount of its Commitment available in accordance with the terms of Section 3.02 hereof on such postponed Delivery Date, (i) if the Owner Participant fails to make available its Commitment in breach of its obligations under this Agreement, the Lessee shall cause the Owner Participant to assign to another equity investor identified by the Lessee its interest in the Lessor's Estate pursuant to Section 6.03(d) hereof and (ii) if no such equity investor is identified, or if such equity investor fails to close such transactions, or if the Owner Participant fails to make available its Commitment for any other reason than as specified in clause (i) above, the Owner Participant's interest in the Lessor's Estate shall be automatically conveyed to the Lessee without any further action, and the parties hereto shall take such actions as may be advisable or necessary to give effect to such conveyance. From and after any such conveyance, the Owner Participant's obligations hereunder and under the other Operative Agreements shall cease. The exception to the Lessee's indemnity set forth in clause (viii) of Section 8.01(b) hereof shall not be applicable to any such conveyance other than a conveyance pursuant to clause (i) above. For the avoidance of doubt, it is understood and agreed that if for any reason other than the failure of the Manufacturer to deliver the Aircraft, the Lessee does not enter into the Lease Supplement with the Owner Trustee on or prior to the Cut-Off Date, the Indenture Trustee and the Pass Through Trustee agree that the Lessee shall purchase the Aircraft and assume all of the obligations of the Owner Trustee under the Certificates upon satisfaction of the requirements set forth in Section 4.02 hereof, as the same may be modified by the provisions of Section 6.11 hereof and as otherwise necessary to reflect a full recourse secured aircraft financing of the Lessee. If the Lessee has identified an equity investor under the circumstances set forth in clause (i) above, the Owner Participant agrees to assign its interest in the Lessor's Estate as provided in said clause (i). In case of any such conveyance pursuant to said clause (i) (but subject to the satisfaction of the conditions precedent specified herein), the Indenture Trustee shall release the Debt Portion or such lesser amount as may then be held in the Collateral Account for application to the payments contemplated in the last sentence of Section 3.02(a) hereof. (b) Release of Obligations. If the Delivery Date has not occurred on or prior to the Cut-Off Date (i) in the case of the Indenture Trustee and the Pass Through Trustee, as a result of a failure of the Manufacturer to deliver the Aircraft, or (ii) in the case of the Owner Participant, for any reason, then, in such event, the Owner Trustee shall not purchase the Aircraft from the Manufacturer, and the parties to the Operative Agreements shall have no further obligations or liabilities under any of said Operative Agreements with respect to the Aircraft, including the obligation of the Owner Participant to participate in the payment of the Purchase Price, and such documents shall terminate and have no further force or effect with respect to the Aircraft; provided, however, that the Lessee shall provide, no later than the Cut-Off Date, notice of prepayment to the Indenture Trustee and the Certificates shall be prepaid on the 15th day following the Cut-Off Date as provided in Section 6.02(a)(vi) of the Indenture and Section 15.02(c) hereof and provided further, that (i) the Lessee's obligation to pay any Transaction Costs as provided in Section 3.04 hereof (to the extent such section is applicable) and to indemnify such parties to the extent provided in such documents, shall not be diminished or modified in any respect and (ii) the obligations of the Owner Trustee, the Indenture Trustee and the Lessee to return funds and pay interest, costs, expenses and other amounts thereon or in respect thereof as provided in Section 3.02 hereof shall continue. (c) Optional Postponement. Without limiting the provisions of Section 3.02(c) hereof, the Scheduled Delivery Date may be postponed from time to time (but in no event shall the Delivery Date be later than the Cut-Off Date) for any reason, other than pursuant to Section 3.05(a) hereof, if the Lessee gives the Owner Participant, the Indenture Trustee, the Owner Trustee and the Pass Through Trustee confirmed facsimile notice (or telephone notice followed by written confirmation) of such postponement and notice of the date to which the Delivery Date has been postponed, such notice of postponement to be received by each party no later than 11:00 a.m. (New York City time) on the Business Day preceding the Scheduled Delivery Date. Section 3.06. Closing. The closing with respect to the purchase and lease of the Aircraft on the Delivery Date shall take place at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017. ARTICLE 4 CONDITIONS PRECEDENT Section 4.01. Conditions Precedent (Certificate Closing Date). The parties agree that the obligation of each of the Owner Participant, the Owner Trustee, the Indenture Trustee and the Pass Through Trustee to participate in the transactions contemplated hereby on the Certificate Closing Date are subject to the fulfillment to the satisfaction of the Owner Participant, the Owner Trustee, the Indenture Trustee and the Pass Through Trustee (or waiver by the Owner Participant, the Owner Trustee, the Indenture Trustee or the Pass Through Trustee), prior to or on the Certificate Closing Date, of the following conditions precedent: (a) Certificates. On the Certificate Closing Date, there shall have been duly issued and delivered by the Owner Trustee to the Pass Through Trustee for each Pass Through Trust, against payment therefor the Certificates, duly authenticated dated the Certificate Closing Date and registered in the name of the Pass Through Trusts. The Pass Through Certificates shall be registered under the Securities Act, any applicable state securities laws shall have been complied with, and the Pass Through Agreement shall have been qualified under the Trust Indenture Act. The Pass Through Trustee shall, in accordance with Section 2.01 of the Pass Through Agreement, execute, authenticate and deliver Pass Through Certificates, dated the Certificate Closing Date and of the maturities, in the principal amounts, bearing the interest rates and of the other economic terms specified in the Series Supplements, and deliver such Pass Through Certificates to the Underwriters as specified in such request against payment by the Underwriters of an amount equal to the principal amount thereof. (b) Legal Investment. No change shall have occurred in applicable laws or regulations, or interpretations of any such laws or regulations by applicable regulatory authorities, which, in the opinion of the Owner Participant, the Pass Through Trustee or the Indenture Trustee, would make it illegal for the Owner Participant, the Pass Through Trustee or the Indenture Trustee, and no change in circumstances outside the control of the Owner Participant, the Pass Through Trustee or the Indenture Trustee shall have occurred which would otherwise make it illegal or otherwise in contravention of guidance issued by regulatory authorities for the Owner Participant, the Pass Through Trustee or the Indenture Trustee, to participate in the transaction to be consummated on the Certificate Closing Date; and no action or proceeding shall have been instituted nor shall governmental action before any court, governmental authority or agency be threatened which in the opinion of counsel for the Owner Participant, the Pass Through Trustee or the Indenture Trustee is not frivolous, nor shall any order have been issued or proposed to be issued by any court, or governmental authority or agency, as of the Certificate Closing Date, to set aside, restrain, enjoin or prevent the consummation of any of the transactions contemplated by this Agreement or by any of the other Operative Agreements. (c) Other Commitments; Approvals. The Underwriters shall have transferred the funds specified in Section 2.01(a) and all conditions thereunder shall have been satisfied or waived. (d) Documents. This Agreement and the following documents shall have been duly authorized, executed and delivered by the respective party or parties thereto, shall each be satisfactory in form and substance to such parties (acting directly or by authorization to its special counsel) and shall each be in full force and effect; there shall not have occurred any default thereunder, or any event which with the lapse of time or the giving of notice or both would be a default thereunder, and copies executed or certified as requested by each party of such documents shall have been delivered to such party or its special counsel (provided that counterpart No. 1 of the Lease shall be delivered to the Indenture Trustee): (i) this Agreement; (ii) the Lease; (iii) the Trust Agreement; (iv) the Indenture; (v) the Tax Indemnity Agreement (to be delivered to the Lessee and the Owner Participant only); (vi) the Purchase Agreement together with a warranty bill of sale from the Manufacturer; (vii) the Purchase Agreement Assignment; (viii)the Consent and Agreement; (ix) the Engine Consent and Agreement; and (x) any Ancillary Agreements. (e) Financing Statements. A Uniform Commercial Code ("UCC") financing statement or statements covering all the security interests created by or pursuant to the Granting Clause of the Indenture shall have been executed and delivered by the Owner Trustee, as debtor, and by the Indenture Trustee, as secured party, 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 the Underwriters are necessary or desirable to perfect said security interests. (f) Corporate Documents. The Owner Trustee, the Indenture Trustee, the Pass Through Trustee, the Owner Participant, the Lessee and the Underwriters (acting directly or by authorization to its counsel) shall have received the following, in each case in form and substance satisfactory to it: (i) copies, certified by the Secretary or an Assistant Secretary of the Lessee, of the certificate of incorporation and bylaws of the Lessee and of the resolutions of the Board of Directors of the Lessee duly authorizing the execution, delivery and performance by the Lessee of this Agreement, the Lease, the Tax Indemnity Agreement, the Pass Through Agreement, the Series Supplements, the other Operative Agreements to which Lessee is or is to be a party and each other document to be executed and delivered by the Lessee in connection with the transactions contemplated hereby together with an incumbency certificate of the Lessee as to the person or persons authorized to execute and deliver said documents on behalf of the Lessee and the signatures of such person or persons; (ii) a copy of the articles of incorporation and bylaws and other instruments of the Owner Participant certified by the Secretary or Assistant Secretary of the Owner Participant (or other like instruments satisfactory to the Owner Trustee, the Owner Participant, the Indenture Trustee and the Pass Through Trustee), authorizing the execution and delivery by the Owner Participant of this Agreement and the Trust Agreement, together with an incumbency certificate of the Owner Participant as to the person or persons authorized to execute and deliver said documents on behalf of the Owner Participant and the signatures of such person or persons; (iii) a copy of the charter and bylaws and other instruments of __________ Trust Company, certified by the Secretary or Assistant Secretary of __________ Trust Company (or other like instruments satisfactory to such Participant), authorizing the execution and delivery by __________ Trust Company or the Owner Trustee, as the case may be, of this Agreement, the Trust Agreement, the Indenture, each of the other Operative Agreements to which it is or is to be a party and the Certificates, whether in its individual capacity or as Owner Trustee, together with an incumbency certificate of __________ Trust Company as to the person or persons authorized to execute and deliver said documents on behalf of __________ Trust Company and the signatures of such person or persons; (iv) a copy of the charter and bylaws and other instruments of the Indenture Trustee, certified by the Secretary or Assistant Secretary of the Indenture Trustee (or other like instruments satisfactory to such Participant), authorizing the execution and delivery by the Indenture Trustee of each of this Agreement, the Indenture and the other Operative Agreements to which it is or is to be a party, 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; (v) a copy of the articles of association and by-laws 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, delivery and performance by the Pass Through Trustee of this Participation Agreement, the Pass Through Agreement, the Series Supplements and any other document executed or authenticated by or on behalf of the Pass Through Trustee in connection with the transactions contemplated hereby, together with an incumbency certificate as to the person or persons authorized to execute and deliver such documents on behalf of the Pass Through Trustee; and (vi) such other documents, evidences, materials, and information with respect to the Lessee, the Owner Trustee, the Indenture Trustee, the Pass Through Trustee and the Owner Participant as any such Person may reasonably request in order to establish the consummation of the transactions contemplated by this Agreement. (g) Officer's Certificate of Lessee. On the Certificate Closing Date, the following statements shall be true, the Pass Through Trustee, the Owner Participant, the Owner Trustee and the Indenture Trustee shall have received a certificate signed by the Assistant Treasurer or any other duly authorized officer of the Lessee, dated the Certificate Closing Date, stating that: (i)the representations and warranties of the Lessee contained in the Operative Agreements (excluding the Tax Indemnity Agreement) and in any certificate delivered pursuant hereto or thereto are true and correct on and as of the Certificate Closing Date as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date, in which case such certificate shall state that such representations and warranties were true and correct on and as of such earlier date); (ii)no material adverse change has occurred in the financial condition, business or operations of the Lessee from that shown in the unaudited consolidated financial statements of the Lessee for the quarter ending _________________; and (iii) no event has occurred and is continuing which constitutes an Event of Loss, a Default or an Event of Default under the Lease. (h) Officer's Certificate of Owner Participant. On the Certificate Closing Date, the following statements shall be true, and the Pass Through Trustee, the Owner Trustee and the Indenture Trustee shall have received a certificate from the Owner Participant signed by a duly authorized officer of the Owner Participant dated the Certificate Closing Date, stating that: (i)the representations and warranties of the Owner Participant contained in this Agreement and the Trust Agreement and in any certificate delivered pursuant hereto are true and correct on and as of the Certificate Closing Date as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date, in which case such certificate shall state that such representations and warranties were true and correct on and as of such earlier date); (ii)no Lessor's Liens attributable to the Owner Participant exist; and (iii) no event has occurred and is continuing which constitutes or, with notice or lapse of time or both would constitute, due to any action or inaction on the part of the Owner Participant, an Event of Default or an Indenture Event of Default. (i) Other Officer's Certificates. On the Certificate Closing Date, the following statements shall be true, and the Lessee, the Owner Participant, the Pass Through Trustee, the Owner Trustee and the Indenture Trustee shall have received a certificate from each of the Owner Trustee (in the case of the Lessee, the Owner Participant, the Pass Through Trustee, and the Indenture Trustee), the Indenture Trustee (in the case of the Lessee, the Owner Participant, the Pass Through Trustee, and the Owner Trustee) and the Pass Through Trustee (in the case of the Owner Participant, the Lessee, the Owner Trustee and the Indenture Trustee) signed by a duly authorized officer, dated the Certificate Closing Date, stating with respect to the Owner Trustee, the Pass Through Trustee or the Indenture Trustee, as the case may be, that: (i)the representations and warranties of the Owner Trustee in its individual capacity and as trustee, the Pass Through Trustee in its individual capacity and as trustee and the Indenture Trustee in its individual capacity and as trustee contained in this Agreement, the Lease and in the Indenture and in any certificate delivered hereto or thereto are true and correct on and as of the Certificate Closing Date as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date, in which case such certificate shall state that such representations and warranties were true and correct on and as of such earlier date); (ii)to the best of its knowledge, no event has occurred and is continuing or would result from the purchase or lease of the Aircraft, which constitutes or which, but for the lapse of time or the giving of notice, or both, would constitute, an Event of Default or an Indenture Event of Default; and (iii) there are no Lessor's Liens attributable to ______________ or the Owner Trustee affecting the Trust Indenture Estate or the Lessor's Estate or any part thereof. (j) Legal Opinions. Each party hereto (acting directly or by authorization to its special counsel) and the Underwriters shall have received from the following counsel the respective legal opinions satisfactory to it as to scope and substance (and covering such other matters as it may reasonably request) and dated the Certificate Closing Date: (i) _______________, Esq., Vice President, Law - Corporate and Business Transactions of the Lessee, in the form of Exhibit A(1)(a)(i) hereto; (ii)_____________________, special counsel for the Owner Participant, in the form of Exhibit A(2)(a) hereto and _______________, Esq., general counsel for the Owner Participant, in the form of Exhibit A(2)(b) hereto; (iii)_____________________, special counsel for the Indenture Trustee, in the form of Exhibit A(3) hereto; (iv)_____________________, special counsel for the Pass Through Trustee, in the form of Exhibit A(4) hereto; (v) _____________________, special counsel for the Owner Trustee, in the form of Exhibit A(5)(a)(i) hereto; and (vi)Davis Polk & Wardwell, special counsel for the Lessee, in the form of Exhibit A(1)(b)(i) hereto. (k) Organizational Documents. Davis Polk & Wardwell, special counsel to Lessee, and _____________________, special counsel to the Owner Participant, shall have received copies, certified as of the Certificate Closing Date as being accurate, of the corporate organizational documents of the Lessee, the Owner Participant, the Owner Trustee, the Pass Through Trustee and the Indenture Trustee. (l) Payment of Taxes. (A) All taxes payable in connection with the execution, delivery, recording and filing of all financing statements and the documents and instruments referred to in subparagraph (e) of this Section 4.01, or in connection with the purchase of the Aircraft by the Owner Trustee and the issuance of the Certificates and the making by the Owner Participant of its equity investment and for which the Lessee is responsible hereunder shall have been duly paid or caused to be paid in full by the Lessee; (B) All sales or use taxes and duties related to the consummation of the transactions contemplated by the Operative Agreements and for which the Lessee is responsible pursuant to Article 7 hereof shall have been duly paid in full by the Lessee other than, in the case of both clauses (A) and (B), such taxes which are being contested by the Lessee in good faith and by appropriate proceedings so long as such proceedings do not involve any material danger of the sale, forfeiture or loss of the Aircraft. (m) No Indenture Event of Default. No Indenture Event of Default attributable to either ____________ or the Owner Trustee shall have occurred and be continuing. (n) Event of Default; Default; Event of Loss. No Default or Event of Default or Event of Loss or event, which with the passage of time or if continued unremedied or unaltered would constitute an Event of Loss, shall have occurred or be in existence. (o) Withholding Tax Certificate. The Lessee shall have received evidence that each Holder which is not a U.S. person has delivered duly executed Treasury Department Forms 4224, 1001, W-8 or W-9, as the case may be, to the Pass Through Trustee relating to all amounts payable to such Holders. (p) Other Agreements. The Lessee and the Pass Through Trustee shall have entered into the Pass Through Agreement and the Series Supplements, all conditions to the effectiveness of each thereof shall have been satisfied or waived and the Pass Through Certificates shall have been issued pursuant to the Series Supplements. The Lessee shall have entered into the Underwriting Agreement, all conditions to the effectiveness thereof shall have been satisfied or waived, and the Pass Through Certificates shall have been delivered pursuant to the Underwriting Agreement. Section 4.02. Conditions Precedent (Delivery Date). The parties agree that the obligation of each of the Owner Participant, the Owner Trustee, the Indenture Trustee and the Pass Through Trustee to participate in the transactions contemplated hereby on the Delivery Date are subject to the fulfillment to the satisfaction of the Owner Participant, the Owner Trustee, the Indenture Trustee and the Pass Through Trustee (or waiver by the Owner Participant, the Owner Trustee, the Indenture Trustee or the Pass Through Trustee), prior to or on the Delivery Date, of the following conditions precedent: (a) Notice, Etc. Each party hereto shall have received a Delivery Notice pursuant to Section 3.01 hereof at least three (3) Business Days prior to the Delivery Date. (b) Legal Investment. No change shall have occurred in applicable laws or regulations, or interpretations of any such laws or regulations by applicable regulatory authorities, which, in the opinion of the Owner Participant, the Pass Through Trustee or the Indenture Trustee, would make it illegal for the Owner Participant, the Pass Through Trustee or the Indenture Trustee, and no change in circumstances outside the control of the Owner Participant, the Pass Through Trustee or the Indenture Trustee shall have occurred which would otherwise make it illegal or otherwise in contravention of guidance issued by regulatory authorities for the Owner Participant, the Pass Through Trustee or the Indenture Trustee, to participate in the transaction to be consummated on the Delivery Date; and no action or proceeding shall have been instituted nor shall governmental action before any court, governmental authority or agency be threatened which in the opinion of counsel for the Owner Participant, the Pass Through Trustee or the Indenture Trustee is not frivolous, nor shall any order have been issued or proposed to be issued by any court, or governmental authority or agency, as of the Delivery Date, to set aside, restrain, enjoin or prevent the consummation of any of the transactions contemplated by this Agreement or by any of the other Operative Agreements. (c) Documents. The documents referred to in Section 4.01(d) hereof shall each be in full force and effect and the following documents shall have been duly authorized, executed and delivered by the respective party or parties thereto, shall each be satisfactory in form and substance to such parties (acting directly or by authorization to its special counsel) and shall each be in full force and effect; there shall not have occurred any default thereunder, or any event which with the lapse of time or the giving of notice or both would be a default thereunder, and copies executed or certified as requested by each party of such documents shall have been delivered to such party or its special counsel (provided that counterpart No. 1 of the Lease Supplement shall be delivered to the Indenture Trustee): (i) the Lease Supplement covering the Aircraft, dated the Delivery Date; (ii) an Indenture and Security Agreement Supplement covering the Aircraft, dated the Delivery Date; (iii) the Invoice; and (iv) the Bills of Sale. (d) Insurance. The Pass Through Trustee and the Indenture Trustee shall each have received such evidence as it deems appropriate to establish, including, without limitation, an independent insurance broker's report, together with certificates of insurance from such broker, in form and substance satisfactory to the Pass Through Trustee and the Indenture Trustee, that the insurance required by Article 13 of the Lease is in effect. (e) Title, Airworthiness and Registration. On the Delivery Date, the following statements shall be true, and the Owner Participant, the Owner Trustee, the Pass Through Trustee and the Indenture Trustee shall have received evidence from the Lessee reasonably satisfactory to each such Person to the effect that: (A) the Owner Trustee has good and marketable title to the Aircraft, free and clear of Liens, except the rights of the Owner Trustee and the Lessee under the Lease, the rights of the Indenture Trustee under the Indenture and the beneficial interest of the Owner Participant created by the Trust Agreement and the interest created by the Indenture and the Indenture Supplement; (B) the Aircraft has been duly certified by the Aeronautics Authority as to type and airworthiness in accordance with the terms of the Operative Agreements; (C) on the Delivery Date, the FAA Bill of Sale, the Lease and Lease Supplement, the Trust Agreement, the Indenture, and the Indenture Supplement shall have been duly filed for recordation with the Federal Aviation Administration pursuant to the Act; (D) the Aircraft shall be registered in the name of the Owner Trustee and the Lessee shall have permanent authority to operate the Aircraft. (f) Officers' Certificate of Lessee. On the Delivery Date, the following statements shall be true, the Pass Through Trustee, the Owner Participant, the Owner Trustee and the Indenture Trustee shall have received a certificate signed by the Assistant Treasurer or any other duly authorized officer of the Lessee, dated the Delivery Date, stating that: (i)the representations and warranties of the Lessee contained in the Operative Agreements (excluding the Tax Indemnity Agreement) and in any certificate delivered pursuant hereto or thereto are true and correct on and as of the Delivery Date as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date, in which case such certificate shall state that such representations and warranties were true and correct on and as of such earlier date); (ii)no material adverse change has occurred in the financial condition, business or operations of the Lessee from that shown in the unaudited consolidated financial statements of the Lessee for the quarter ending _________________; and (iii) no event has occurred and is continuing which constitutes an Event of Loss, a Default or an Event of Default under the Lease. (g) Officer's Certificate of Owner Participant. On the Delivery Date, the following statements shall be true, and the Pass Through Trustee, the Owner Trustee and the Indenture Trustee shall have received a certificate from the Owner Participant signed by a duly authorized officer of the Owner Participant dated the Delivery Date, stating that: (i)the representations and warranties of the Owner Participant contained in this Agreement and the Trust Agreement and in any certificate delivered at the closing pursuant hereto are true and correct on and as of the Delivery Date as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date, in which case such certificate shall state that such representations and warranties were true and correct on and as of such earlier date); (ii)no Lessor's Liens attributable to the Owner Participant exist; and (iii) no event has occurred and is continuing which constitutes or, with notice or lapse of time or both would constitute, due to any action or inaction on the part of the Owner Participant, an Event of Default or an Indenture Event of Default. (h) Other Officer's Certificates. On the Delivery Date, the following statements shall be true, and the Lessee, the Owner Participant, the Pass Through Trustee, the Owner Trustee and the Indenture Trustee shall have received a certificate from each of the Owner Trustee (in the case of the Lessee, the Owner Participant, the Pass Through Trustee, and the Indenture Trustee), the Indenture Trustee (in the case of the Lessee, the Owner Participant, the Pass Through Trustee, and the Owner Trustee) and the Pass Through Trustee (in the case of the Owner Participant, the Lessee, the Owner Trustee and the Indenture Trustee) signed by a duly authorized officer, dated the Delivery Date, stating with respect to the Owner Trustee, the Pass Through Trustee or the Indenture Trustee, as the case may be, that: (i)the representations and warranties of the Owner Trustee in its individual capacity and as trustee, the Pass Through Trustee in its individual capacity and as trustee and the Indenture Trustee in its individual capacity and as trustee contained in this Agreement, the Lease and in the Indenture and in any certificate delivered hereto or thereto are true and correct on and as of the Delivery Date as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date, in which case such certificate shall state that such representations and warranties were true and correct on and as of such earlier date); (ii)to the best of its knowledge, no event has occurred and is continuing or would result from the purchase or lease of the Aircraft, which constitutes or which, but for the lapse of time or the giving of notice, or both, would constitute, an Event of Default or an Indenture Event of Default; and (iii) there are no Lessor's Liens attributable to ______________ or the Owner Trustee affecting the Trust Indenture Estate or the Lessor's Estate or any part thereof. (i) Legal Opinion. Each party hereto (acting directly or by authorization to its special counsel) and the Underwriters shall have received from the following counsel the respective legal opinions satisfactory to it as to scope and substance (and covering such other matters as it may reasonably request) and dated the Delivery Date: (i) _______________, Esq., Vice President, Law - Corporate and Business Transactions of the Lessee, in the form of Exhibit A(1)(a)(ii) hereto; (ii)Davis Polk & Wardwell, special counsel for the Lessee, in the form of Exhibit A(1)(b)(ii) hereto. (iii)_____________________, special counsel for the Owner Trustee, in the form of Exhibit A(5)(a)(ii) hereto; and (iv)counsel for the Engine Manufacturer, in the form of Exhibit A(6) hereto; (v) counsel for the Manufacturer, in the form of Exhibit A(7) hereto; and (vi)Daugherty, Fowler & Peregrin, special aviation counsel, in the form of Exhibit A(8) hereto. (j) Report of Aircraft Expert. The Owner Participant shall have received a report or reports prepared by BK Associates, Inc. addressed to the Owner Participant (with a copy of such report to the Lessee and the Indenture Trustee) which reports shall be in form and substance satisfactory to the Owner Participant, to the effect that: (i) (A) the estimated fair market value of the Aircraft net of any cost to the Owner Participant or the Owner Trustee of return at the end of the Basic Term and the maximum allowable Fixed Renewal Term (determined without including in such value any increase or decrease for inflation or deflation during the Term) is equal to or greater than 20% of the Purchase Price for the Aircraft and (B) at least 20% of the useful economic life of the Aircraft is remaining at the end of the Basic Term and the maximum allowable Fixed Renewal Term; (ii)the estimated useful life of the Aircraft is at least 125% of the Interim Term, the Basic Term and the maximum allowable Fixed Renewal Term; (iii)the Purchase Price of the Aircraft is equal to the fair market value of the Aircraft on the Delivery Date; and (iv)the estimated fair market value of the Aircraft on the Purchase Option Date (taking into account a reasonable estimate for inflation and deflation) is less than or equal to the Purchase Option Price. (k) Payment of Taxes. (A) All taxes payable in connection with the execution, delivery, recording and filing of all financing statements and the documents and instruments referred to in subparagraph (e) of this Section 4.02, or in connection with the purchase of the Aircraft by the Owner Trustee and the issuance of the Certificates and the making by the Owner Participant of its equity investment and for which the Lessee is responsible hereunder shall have been duly paid or caused to be paid in full by the Lessee; (B) All sales or use taxes and duties related to the consummation of the transactions contemplated by the Operative Agreements and for which the Lessee is responsible pursuant to Article 7 hereof shall have been duly paid in full by the Lessee other than, in the case of both clauses (A) and (B), such taxes which are being contested by the Lessee in good faith and by appropriate proceedings so long as such proceedings do not involve any material danger of the sale, forfeiture or loss of the Aircraft. (l) No Indenture Event of Default. No Indenture Event of Default attributable to either ____________ or the Owner Trustee shall have occurred and be continuing. (m) Event of Default; Default; Event of Loss. No Default or Event of Default or Event of Loss or event, which with the passage of time or if continued unremedied or unaltered would constitute an Event of Loss, shall have occurred or be in existence. (n) Payments. The Owner Participant shall have made available its Commitment to the Owner Trustee and the other payments contemplated by Section 3.02 hereof shall have been made. (o) Release of Debt Portion. The Indenture Trustee shall have released the Debt Portion from (or such lesser amount as may then be held in) the Collateral Account. Section 4.03. Opinion of Special Aviation Counsel. Promptly upon the recording of the documents specified in 4.02(e)(C), pursuant to the Act, the Lessee will cause Messrs. Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, to deliver to the Owner Participant, the Owner Trustee, the Pass Through Trustee and the Indenture Trustee an opinion as to the due recording of such documents and as to the lack of filing of any intervening documents with respect to the Aircraft. Section 4.04. Conditions Precedent to Lessee's Obligations. The Lessee's obligation to participate in the transactions contemplated hereby on the Certificate Closing Date is subject to the conditions that, prior to or on the Certificate Closing Date, the Lessee shall have received the certificates and other documents which are referred to in, or the opinions to be addressed to it under, as the case may be, paragraphs (d), (f)(ii)-(v), (h), (i), (j)(ii)-(vi) and (k) of Section 4.01 hereof and the Underwriters shall have made available the amounts required to be paid by them pursuant to Section 2.01 hereof, and the Lessee's obligation to participate in the transactions contemplated hereby on the Delivery Date, is subject to the conditions that, on or prior to the Delivery Date, the Lessee shall have received the documents which are referred to in, or the opinions to be addressed to it under, as the case may be, paragraphs (c), (g), (h) and (i)(ii)-(v) of Section 4.02 hereof and the Indenture Trustee shall have released the Debt Portion from (or such lesser amount as may then be held in) the Collateral Account. ARTICLE 5 LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS Section 5.01. Lessee's Representations and Warranties. The Lessee represents and warrants to the Owner Participant, the Owner Trustee (in its individual capacity and as Owner Trustee), the Pass Through Trustee (in its individual capacity and as Pass Through Trustee) and the Indenture Trustee (in its individual capacity and as Indenture Trustee) that, on the date hereof and as of the Certificate Closing Date and the Delivery Date: (a) the Lessee 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 Lessee require such qualification; (b) the Lessee 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 this Agreement, the Lease, the Tax Indemnity Agreement, the Lease Supplement, the Bills of Sale, the Purchase Agreement, the Purchase Agreement Assignment, the Pass Through Agreement and the Series Supplements (the "Lessee Documents"); (c) the Lessee is an "air carrier" within the meaning of the Act and a holder of a certificate under Sections 401 and 418 of the Act and an "air carrier operating certificate" issued under Section 604 of the Act; (d) the Lessee 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; (e) the Lessee Documents have each been duly authorized, executed and delivered or, in the case of the Operative Agreements identified in Section 4.02(c) hereof, will on the Delivery Date be executed and delivered by the Lessee and constitutes (or will constitute, as the case may be) the legal, valid and binding obligations of the Lessee enforceable against it in accordance with the terms thereof with respect to each other party which shall have duly executed and delivered such documents or substantially performed its obligations thereunder 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; (f) no authorization, consent or approval of, notice to or filing with any governmental authority is required for the execution, delivery or performance by the Lessee of the Lessee Documents or for the use and maintenance of the Aircraft except for those that have been or, on or before the Certificate Closing Date or the Delivery Date will have been duly made, given or accomplished; (g) neither the execution, delivery or performance by the Lessee of the Lessee Documents, nor compliance with the terms and provisions hereof or thereof, conflicts or will conflict with or will result in a breach or violation of any of the terms, conditions or provisions of, or will require any consent or approval under, any law, governmental rule or regulation or the charter documents, as amended, or bylaws, as amended, of the Lessee or any order, writ, injunction or decree of any court or governmental authority against the Lessee or by which it or any of its properties is bound or any indenture, mortgage or contract or other agreement or instrument to which the Lessee is a party or by which it or any of its properties is bound, or constitutes or will constitute a default thereunder or will result in the imposition of any Lien upon any of its properties; (h) except as set forth in the opinion of the Vice President, Law - Corporate and Business Transactions of the Lessee referred to in Section 3.01(l)(i), as to which the Vice President, Law - Corporate and Business Transactions can express no opinion on the date hereof or as of the Certificate Closing Date or the Delivery Date, as the case may be, concerning the Lessee's liability (if any) or the effect of any adverse determination upon the financial condition, business or operations of the Lessee or the ability of the Lessee to perform its obligations under the Lessee Documents, there are no pending or, to the knowledge of the Lessee, threatened actions, suits or proceedings (whether or not purportedly on behalf of the Lessee) pending or, to the knowledge of the Lessee, threatened investigations against or affecting the Lessee or any of its property before or by any court or administrative agency which, if adversely determined would materially and adversely affect the consolidated financial condition, business or operations of the Lessee, or the ability of the Lessee to perform its obligations under the Lessee Documents; (i) the Lessee has filed or caused to be filed all tax returns which are required to be filed and has paid or caused to be paid all taxes shown to be due and payable pursuant to such returns or pursuant to any assessment received by the Lessee (other than assessments the payment of which is being contested in good faith by the Lessee and any assessments, the nonpayment of which would not have a material adverse effect on the Lessee's consolidated financial condition and other than as set forth in the _________ filed in respect of the quarter ended ___________, 199_), and the Lessee has no knowledge of any related actual or proposed deficiency or additional assessment which either in any case or in the aggregate would materially adversely affect the Lessee's consolidated financial condition; (j) except for (A) the filing for recording pursuant to the Act of the documents referred to in Section 3.01(h)(C), (B) the filings referred to in Section 3.01(f) and (C) the taking of possession by the Indenture Trustee of the original counterpart of the Lease, no further action, including any filing or recording of any document, is necessary or advisable in order to establish and perfect the Owner Trustee's title to and interest in the Aircraft as against the Lessee and any third parties, or to perfect the first security interest in and mortgage lien on the Trust Indenture Estate in favor of the Indenture Trustee with respect to such portion of the Aircraft as is covered by the recording system established by the Act; (k) on the Delivery Date the Owner Trustee will receive good and marketable title to the Aircraft, free and clear of Liens, except the rights of the Owner Trustee and the Lessee under the Lease and the Lease Supplement, the Lien of the Indenture, the rights of the Owner Participant under the Trust Agreement and the rights of the Indenture Trustee under the Indenture; (l) the representations and warranties of the Lessee set forth in Section ___ of the Underwriting Agreement are true and correct; (m) with respect to ERISA, except as otherwise disclosed: (i) none of the Pension Plans nor their related trusts have been terminated in a distress termination pursuant to Section 4041(c) of ERISA or by the PBGC pursuant to Section 4042 of ERISA, nor have any actions been taken to so terminate any Pension Plan or related trust and neither the Lessee nor any ERISA Affiliate has incurred or could reasonably expect to incur any material liability with respect to a Pension Plan under Section 4062, 4063, 4064 or 4069 of ERISA; (ii)there have been no "reportable events" (as such term is defined in Section 4043(b) of ERISA) with respect to any Pension Plan which have resulted or could reasonably be expected to result in any material liability of the Lessee; (iii)no "accumulated funding deficiency" (as such term is defined in Section 302 of ERISA or Section 412 of the Code) exists with respect to any Pension Plan, whether or not waived, nor has any request for a waiver under Section 412(d) of the Code been, or is reasonably likely to be, filed with respect to any of the Pension Plans; (iv)neither the Lessee nor any ERISA Affiliate has failed to make any contribution or payment to any Pension Plan which has resulted or could reasonably be expected to result in the imposition of a Lien under Section 302(f) of ERISA or Section 412(n) of the Code; (v) all Pension Plans are in compliance in all material respects with all applicable provisions of ERISA and the Code and have been so administered and operated by the Lessee and/or ERISA Affiliates, as applicable; (vi)neither the Lessee nor any ERISA Affiliate has incurred or is reasonably likely to incur any material withdrawal liability pursuant to Section 4201 or 4204 of ERISA or any material liability under Section 515 of ERISA; and (vii)to the best of the Lessee's knowledge, neither the Lessee nor any ERISA Affiliate has engaged in a "prohibited transaction" (within the meaning of Section 4975 of the Code or Section 406 of ERISA) which could reasonably be expected to subject the Lessee to the tax or penalties on prohibited transactions imposed by Section 4975 of the Code or Section 502 of ERISA; As used in this Section 5.01(m), the term "Pension Plan" means an employee pension benefit plan as defined in Section 3(2) of ERISA (other than a multiemployer plan as defined in Section 4001(a)(3) of ERISA) which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code and which is maintained, or contributed to, by the Lessee or any ERISA Affiliate, and the term "ERISA Affiliate" means any entity which together with the Lessee would be treated as a single employer under Section 414(b), (c), (m) or (o) of the Code; (n) the Lessee is a Citizen of the United States; (o) no governmental approval of any kind is required by the Owner Participant or for the Owner Participant's execution of or performance under this Agreement or any agreement contemplated hereby by reason of any fact or circumstance of the Lessee, the nature of the Aircraft or the Lessee's proposed operations or use of the Aircraft; (p) on the Delivery Date, all premiums with respect to the insurance required to be provided by the Lessee prior to the Delivery Date under Article 13 of the Lease shall have been paid by the Lessee; (q) on the Delivery Date, all sales or use taxes then due and for which the Lessee is responsible pursuant to Article 7 hereof shall have been paid, other than such taxes which are being contested by the Lessee in good faith and by appropriate proceedings so long as such proceedings do not involve any danger of the sale, forfeiture or loss of the Aircraft; (r) the Lessee is not in default under any mortgage, deed of trust, indenture or other instrument or agreement to which the Lessee is a party or by which it or any of its properties or assets may be bound, or in violation of any applicable law, which default or violation would have a material adverse effect on the financial condition, business or operations of the Lessee or its ability to perform any of its obligations under the Lessee Documents; and (s) no Event of Default or Event of Loss or event, which with the passage of time or if continued unremedied or unaltered would constitute an Event of Loss, has occurred or exists. Section 5.02. Intentionally Left Blank. Section 5.03. Certain Covenants of Lessee. The Lessee covenants and agrees with the Owner Participant, the Owner Trustee (in its individual capacity and as Owner Trustee), the Indenture Trustee (in its individual capacity and as Indenture Trustee) and the Pass Through Trustee (in its individual capacity and as Pass Through Trustee) as follows: (a) The Lessee will cause to be done, executed, acknowledged and delivered all such further acts, conveyances and assurances as the Owner Trustee, the Indenture Trustee or any Participant shall reasonably require for accomplishing the purposes of this Agreement, the Bills of Sale, the Indenture, the Indenture Supplement, the Tax Indemnity Agreement, the Lease and the Lease Supplement and the other Operative Agreements to which it is a party; (b) The Lessee at all times hereafter will cause the Aircraft to remain duly registered, in the name of the Owner Trustee, under the Act; provided, however, that the Owner Participant, the Owner Trustee and the Indenture Trustee agree that, if the Lessee has requested their consent to the registration of the Aircraft, in the name of the Owner Trustee (or, if appropriate, in the name of Lessee or a sublessee as a "lessee" or a "sublessee"), at Lessee's expense, in a country listed in Schedule III hereto with which (other than in the case of Taiwan) the United States then maintains normal and full diplomatic relations, the Owner Participant, the Owner Trustee, the Indenture Trustee and Pass Through Trustee will, upon receipt of the assurances and opinion described below, consent to such change in registration. The Owner Participant, the Owner Trustee in its individual capacity, the Pass Through Trustee and the Indenture Trustee shall have received: (i) assurances satisfactory to them: (A) to the effect that the insurance provisions of the Lease have been and will be complied with upon such change of registry; (B) that the Lessee will pay any expenses of the Owner Participant, the Owner Trustee, the Pass Through Trustee and the Indenture Trustee in connection with such change of registry; (C) as to the continuation of the Indenture as a first priority lien on the Aircraft; (D) as to the protection of the right, title and interest of the Owner Trustee in the Aircraft; (E) that such change will not result in the imposition of, or increase in the amount of, any Tax for which the Lessee is not required to indemnify, or is not then willing to enter into a binding agreement to indemnify, the Owner Participant, the Owner Trustee (or any successor, assign or Affiliate thereof) or the Lessor's Estate pursuant to Article 7 hereof; and (F) that such new country of registry (x) would provide substantially equivalent protection for the rights of owner participants, lessors or lenders in similar transactions as provided under United States law (except that, in the absence of restrictions under the laws of such country on rights and remedies of lessors and secured parties similar to those imposed by Sections 362 and 363 of the Bankruptcy Code, rights and remedies similar to those available under Section 1110 of the Bankruptcy Code shall not be required), and (y) 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 Owner Trustee, the Indenture Trustee, the Pass Through Trustee and the Owner Participant) 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 Lease and the Indenture are legal, valid, binding and enforceable in such jurisdiction; (B) that it is not necessary for the Owner Participant, the Owner Trustee, the Pass Through Trustee or 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 Lessor, the Owner Participant, the Pass Through Trustee and the Indenture Trustee as provided under United States law (with the exception described in paragraph (b)(i)(F) of this Section 5.03); (D) that there is no tort liability of the owner, lessor or mortgagee of an aircraft not in possession thereof under the laws of such jurisdiction, other than tort liability which might have been imposed on such owner, lessor or mortgagee under the laws of the United States or any state thereof (it being understood that, in the event such latter opinion cannot be given in a form satisfactory to the Owner Participant, such opinion shall be waived, if insurance reasonably satisfactory to the Owner Participant, the Indenture Trustee, the Pass Through Trustee and the Owner Trustee, in its individual capacity, is provided, at Lessee's expense to cover such risk); and (E) (unless the Lessee shall have agreed to provide insurance reasonably satisfactory to the Indenture Trustee and the Owner Participant covering the risk of requisition of use of the Aircraft by the government of registry of the Aircraft) 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. (iii) with respect to such other matters as the Owner Participant, the Owner Trustee, the Pass Through Trustee or the Indenture Trustee may reasonably request. (c) The Lessee shall promptly file any reports, or furnish to the Owner Trustee and the Owner Participant such information as may be required to enable the Owner Trustee and the Owner Participant timely to file any reports required to be filed by the Owner Trustee as the Lessor and the Owner Participant under the Lease with any governmental authority; (d) The Lessee will cause the FAA Bill of Sale, the Lease, the Lease Supplement, the Trust Agreement, the Trust Agreement and Trust Indenture Supplement and the Indenture to be promptly filed and recorded and will maintain the recordation thereof, to the extent permitted under the Aviation Act, or required under any other applicable law; (e) The Lessee will furnish to the Owner Participant, the Owner Trustee, the Indenture Trustee and the Pass Through Trustee annually after the execution of this Agreement, by March 31 of each year, commencing with the year 199_, an opinion of Special Aviation Counsel, or other counsel acceptable to the Lessor and the Indenture Trustee specified from time to time by the Lessee: (i) stating either (1) that in the opinion of such counsel such action has been taken with respect to the recording, filing, re-recording and re-filing of the Lease, the Indenture, the Trust Agreement, and any supplements to any of them and any financing statements, continuation statements or other instruments, and all other action has been taken, as is necessary to maintain the perfection of the security interests created by said documents and reciting the details of such action, or (2) that in the opinion of such counsel no such action is necessary to maintain the perfection of such security interests; (ii) specifying all other action which needs to be taken during the succeeding 14 months in order to maintain the perfection of such security interests; and (iii) stating that the Owner Trustee is the owner of legal title to the Aircraft, and the Aircraft is free and clear of all Liens, except the security interest created by the Indenture and such as are permitted by the Lease and the Indenture. (f) The Lessee shall preserve and maintain its corporate existence and all of its rights, privileges and franchises necessary in the normal conduct of its business; (g) The Lessee shall not enter into any merger or consolidation, or convey, transfer or lease all or substantially all of its assets as an entirety to any Person, unless the surviving corporation or Person which acquires by conveyance, transfer or lease all or substantially all of the assets of the Lessee as an entirety (i) is a domestic corporation organized and existing under the laws of the United States or a political subdivision thereof, (ii) is a Citizen of the United States, (iii) is a certificated Air Carrier, (iv) expressly assumes by an instrument in writing in form and substance satisfactory to the Indenture Trustee, the Pass Through Trustee and the Owner Trustee all of the Lessee's obligations hereunder and under the Lease and each agreement contemplated hereby and thereby, and the Lessee delivers such instrument to the Indenture Trustee, the Pass Through Trustee, the Owner Participant and the Owner Trustee, (v) provides an opinion from counsel to the Lessee which counsel shall be reasonably satisfactory to the Owner Participant and the Indenture Trustee and which opinion shall be reasonably satisfactory to the Owner Participant and the Indenture Trustee that such merger, consolidation, conveyance, transfer or lease and the instrument noted in clause (iv) above comply with this Section 5.03(g), that such instrument is a legal, valid and binding obligation of, and is enforceable against, such survivor or Person, and that all conditions precedent herein provided for relating to such transaction have been complied with, and (vi) immediately after such merger, consolidation or conveyance, transfer or lease, as the case may be, the surviving company is in compliance with all of the terms and conditions of this Agreement and the Lease and each agreement contemplated hereby and thereby; provided that no such merger, consolidation or conveyance, transfer or lease shall be permitted if the same gives rise to an Event of Default; (h) The Lessee agrees to give prompt written notice to each Participant and the Indenture Trustee of any change in the address of its chief executive office (as such term is used in Section 9-103(3) of the Tennessee Uniform Commercial Code) or of any change in its corporate name; and (i) The Lessee agrees to furnish to the Owner Participant, the Lessor and the Indenture Trustee: (A) as soon as available, but in any event within one hundred twenty (120) days after the end of each fiscal year of the Lessee, a consolidated balance sheet as of the end of such fiscal year, and the related consolidated statements of income, retained earnings and cash flows for the fiscal year then ended as prepared and certified by the Lessee's independent certified public accountants, including their opinion; (B) within sixty (60) days after the end of the first, second and third quarterly accounting periods in each fiscal year of the Lessee, a consolidated balance sheet of the Lessee prepared by it as of the close of the accounting period then ended, together with the related consolidated statements of income, retained earnings and cash flows for such accounting period certified by the chief accounting officer or a financial vice president of the Lessee; (C) promptly upon their general transmission, copies of all regular and periodic reports furnished by the Lessee to its stockholders; (D) promptly after filing with the Securities and Exchange Commission, copies of the Lessee's annual reports on Form 10-K, quarterly reports on Form 10-Q and, if requested, any registration statement or prospectus filed by the Lessee with any securities exchange or with the SEC; (E) promptly upon any officer of the Lessee obtaining knowledge of any condition or event which constitutes an Event of Default, an officer's certificate specifying the nature and period of existence thereof and what action the Lessee has taken or is taking or proposes to take with respect thereto; and (F) from time to time, such other financial information as the Lessor, the Owner Participant or the Indenture Trustee may reasonably request. Concurrently with the delivery of the financial statements referred to in clause (A) above, the Lessee shall deliver to the Lessor, the Owner Participant, and the Indenture Trustee a certificate of the Lessee, signed by any one of the President, the Chief Financial Officer, the General Counsel, the Treasurer or the principal accounting officer of the Lessee, stating that the signer, or an officer reporting to same, is familiar with the relevant terms of this Agreement and the Lease and the signer has reviewed, or has caused to be made under such person's supervision a review, of the activities of the Lessee and that, to the best of his or her knowledge, there does not exist an Event of Default. Section 5.04. Survival of Representations and Warranties. The representations and warranties of the Lessee provided in Sections 5.01 and 5.02 shall survive the Closings hereunder and the expiration or other termination of this Agreement, the Tax Indemnity Agreement, the Trust Agreement, the Indenture and the Lease. ARTICLE 6 OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS Section 6.01. Acquisitions and Offerings of Participations. Owner Trustee. The Owner Trustee represents and warrants, in its individual capacity, that neither it nor anyone acting on its behalf has directly or indirectly offered or will directly or indirectly offer any beneficial interest in the Lessor's Estate, or in any similar security relating to the Aircraft, for sale to, or solicited any offer to acquire any of the sale from anyone (other than the Owner Participant). Section 6.02. Citizenship. (a) Generally. Each of the Owner Trustee, in its individual capacity, and the Owner Participant severally represents and warrants that it is or will be a Citizen of the United States on the Delivery Date. If the Owner Participant or Owner Trustee in its individual capacity does not comply with the requirements of this Section 6.02, the Owner Trustee, the Indenture Trustee and the Owner Participant hereby agree that a Default or an Event of Default shall not be deemed to have occurred and be continuing under the Lease due to non-compliance by the Lessee with the registration requirements in the Lease and Section 5.03(b) hereof. (b) Owner Trustee. The Owner Trustee, in its individual capacity, agrees that if at any time it shall have knowledge that it has ceased to be a Citizen of the United States, it will resign immediately as the Owner Trustee if such citizenship is necessary under the Act as in effect at such time or, if it is not necessary under the Act as in effect at such time, if it is informed in writing by the Lessee or the Owner Participant that such lack of United States citizenship would have any adverse effect on the Lessee or the Owner Participant. The Owner Trustee, in its individual capacity, further agrees that if at any time it appears reasonably probable that it will cease to be a Citizen of the United States based on information that is (i) known to a Responsible Officer or (ii) generally known to the public, it will promptly so notify, to the extent permitted by law, all parties to this Agreement. (c) Owner Participant. The Owner Participant agrees, solely for the benefit of the Lessee, the Indenture Trustee, the Pass Through Trustee and the Holders, that if (i) it shall cease to be, or believes itself likely to cease to be, a Citizen of the United States and (ii) the Aircraft shall or would therefore become ineligible for registration in the name of the Owner Trustee under the Act and regulations then applicable thereunder, then the Owner Participant acting continuously and in good faith, shall give notice thereof to the Lessee and the Indenture Trustee and shall (at its own expense and without any reimbursement or indemnification from the Lessee) promptly effect a voting trust or other similar arrangement or take any other action as may be necessary to prevent any deregistration, or to maintain the United States registration, of the Aircraft. It is agreed that the Owner Participant shall be liable to pay promptly on request (A) to each of the other parties hereto and to each Holder any damages actually suffered by any such other party or Holder as the result of the representation and warranty of the Owner Participant in the first sentence of Section 6.02(a) proving to be untrue as of the Delivery Date; (B) to the Lessee as reimbursement an amount equal to the average daily Basic Rent or Renewal Rent for each day after the Owner Participant's loss of citizenship that results in a loss of United States registration and grounding of the Aircraft; and (C) to the Lessee, any sublessee or any Holder for any damages which may be actually incurred by the Lessee, any Sublessee or any Holder as a result of the Owner Participant's failure to comply with its obligations pursuant to the first sentence of this Section 6.02(c). Each party hereto agrees, upon the request and at the sole expense of the Owner Participant, to cooperate with the Owner Participant to undertake any reasonable request in complying with its obligations under the provisions of the first sentence of this Section 6.02(c). Section 6.03. Representations, Warranties and Covenants of Owner Participant. (a) Representations and Warranties. In addition to and without limiting its other representations and warranties provided for in this Article 6, the Owner Participant represents and warrants that: (i) it is a corporation duly incorporated and validly existing in good standing under the laws of its jurisdiction of incorporation and it has full corporate power, authority and legal right to enter into and to carry out the transactions contemplated by this Agreement, the Tax Indemnity Agreement, and the Trust Agreement; (ii) the execution, delivery and performance by it of this Agreement, the Tax Indemnity Agreement, and the Trust Agreement have been duly authorized by all necessary corporate action on its part and, assuming the accuracy of the Lessee's representations in Section 5.01(o) hereof, do not require any governmental approvals that would be required to be obtained by the Owner Participant; (iii) based in part on the representations, warranties and covenants contained in Section 5.01(m), 5.02 and 6.01(b), neither the execution, delivery or performance by the Owner Participant of this Agreement, the Tax Indemnity Agreement, and the Trust Agreement nor compliance with the terms and provisions hereof or thereof, conflicts or will conflict with or will result in a breach or violation of any of the terms, conditions or provisions of, any law, governmental rule or regulation applicable to the Owner Participant or the charter documents, as amended, or bylaws, as amended, of the Owner Participant or any order, writ, injunction or decree of any court or governmental authority against the Owner Participant or by which it or any of its properties is bound or any indenture, mortgage or contract or other agreement or instrument to which the Owner Participant is a party or by which it or any of its properties is bound, or constitute or will constitute a default thereunder or will result in the imposition of any lien upon any of its properties; (iv) this Agreement, the Tax Indemnity Agreement and the Trust Agreement have been or on the Delivery Date will be duly authorized, executed and delivered by the Owner Participant and constitute or on the Delivery Date will constitute the legal, valid and binding obligation of the Owner Participant enforceable against it in accordance with their terms except as such enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization or other similar laws of general application to or affecting the enforcement of creditors' rights, or equitable principles; (v) it is not in default under any mortgage, deed of trust, indenture or other instrument or agreement to which the Owner Participant 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 ability of the Owner Participant to perform its obligations under this Agreement, the Tax Indemnity Agreement and the Trust Agreement to which it is or is to be a party; (vi) it is a Citizen of the United States on the Refunding Date and in the event that it ceases to be a Citizen of the United States, it will comply with Section 6.02(c); (vii) there are no pending or, to the knowledge of the Owner Participant, threatened actions or proceedings against the Owner Participant before any court or administrative agency which would materially adversely affect the ability of the Owner Participant to perform its obligations under this Agreement, the Tax Indemnity Agreement, and the Trust Agreement; (viii)neither the execution and delivery by it of this Agreement, the Tax Indemnity Agreement, or the Trust Agreement nor the performance of its obligations thereunder requires the consent or approval of or the giving of notice to, the registration with, or the taking of any other action in respect of, any governmental authority or agency that would be required to be obtained or taken by the Owner Participant except for filings contemplated by this Agreement; (ix) on the Delivery Date the Owner Participant shall have a tangible net worth of at least $50,000,000.00 or the obligations of the Owner Participant shall be guaranteed by an Affiliate of the Owner Participant that has a tangible net worth of at least $50,000,000; and (x) no part of the funds to be used by it to acquire the interests to be acquired by it under this Agreement constitutes assets (within the meaning of ERISA and any applicable rules and regulations) of an employee benefit plan subject to Title I of ERISA or of any individual retirement account or an employee benefit plan subject to Section 4975 of the Code. Notwithstanding the foregoing or anything else contained in this Agreement, the Owner Participant makes no representation or warranty in this Agreement with respect to laws, rules or regulations relating to aviation or to the nature or use of the equipment owned by the Owner Trustee, other than such laws, rules or regulations relating to the citizenship requirements of the Owner Participant under applicable aviation law. (b) Lessor's Liens. The Owner Participant further represents, warrants and covenants that there are no Lessor's Liens against, on or with respect to the Aircraft or the Lessor's Estate or the Trust Indenture Estate attributable to it, and that there will not be any Lessor's Lien against, on or with respect to the Aircraft or the Lessor's Estate or the Trust Indenture Estate attributable to it on the Certificate Closing Date. The Owner Participant agrees with and for the benefit of the Lessee, the Indenture Trustee, the Pass Through Trustee and each Holder that the Owner Participant will, at its own cost and expense, take such action as may be necessary to duly discharge and satisfy in full, promptly after the same first becomes known to the Owner Participant, any Lessor's Lien against, on or with respect to the Lessor's Estate or the Trust Indenture Estate attributable to the Owner Participant (or an Affiliate thereof) or the consolidated group of taxpayers of which it is a part); provided, however, that the Owner Participant shall not be required to so discharge or satisfy such Lessor's Lien while it is contesting such Lien in good faith (having provided adequate reserves to the extent required in accordance with generally accepted accounting principles) by appropriate proceedings diligently prosecuted and of which the Owner Participant shall have given notice to the Indenture Trustee as long as: (i)such contest does not involve any material danger of the sale, forfeiture or loss of title to any part of the Trust Indenture Estate or materially adversely affect the Lien on the Trust Indenture Estate created by the Indenture, or materially interfere with the payment of Rent or the timely application thereof to payments of principal of and interest on, the Certificates or to other amounts payable to the Indenture Trustee or each Holder or the material performance of any other terms under the Lease; and (ii)such contest does not interfere with the Lessee's right of quiet enjoyment under the Lease as provided in Section 6.09 of this Agreement and in Section 18.01 of the Lease. (c) Indemnity for Lessor's Liens. The Owner Participant agrees to indemnify and hold harmless the Lessee, the Indenture Trustee and each Holder and any subsequent Holder from and against any loss, cost, expense or damage which may be suffered by the Lessee, the Indenture Trustee or any such Holder as the result of the failure of the Owner Participant to discharge and satisfy any Lessor's Liens attributable to the Owner Participant or the consolidated group of tax payers of which it is a part and required to be discharged as described in Section 6.03(b). (d) Assignment of Interests of Owner Participant. The Owner Participant agrees that it will not assign, convey or otherwise transfer any of its right, title or interest in and to the Operative Agreements or the Lessor's Estate except in accordance with the provisions of Article 5 of the Trust Agreement. (e) Owner Participant Payments. The Owner Participant agrees, solely for the benefit of the Owner Trustee, to make available to the Owner Trustee funds sufficient to pay to the Indenture Trustee on the Commencement Date an amount equal to the difference between the amounts of principal and interest scheduled to be paid on the Certificates on such date, and the amount of Basic Rent, if any, scheduled to be paid by the Lessee on such date (the "Excess Amount"), and the Owner Trustee shall upon receipt thereof make such funds available to the Indenture Trustee to pay amounts due and owing under the Certificates on the Commencement Date, provided that the Owner Participant shall not be obligated to make such funds available if an Event of Default under the Lease shall have occurred and be continuing on the date on which such funds are to be made available, but in any event the Lessee shall be obligated to make a pre-payment of Basic Rent pursuant to the Lease in an amount sufficient to pay in full the amounts of principal and interest due on the Certificates on such date. Section 6.04. Representations and Warranties of Owner Trustee. (a) In addition to and without limiting its other representations and warranties provided for in this Article 6, the Owner Trustee represents and warrants, in its individual capacity with respect to items (i), (ii), (v) and (vi) as the Owner Trustee with respect to item (iii) below and in its individual capacity or as the Owner Trustee as indicated in item (iv) below that: (i) it is a ___________________ duly organized and validly existing in good standing under the laws of the ___________________ with its principal place of business and chief executive office (as such terms are used in Article 9 of the Uniform Commercial Code) in __________, ________, and, assuming the Trust Agreement has been duly authorized, executed and delivered by the Owner Participant, has full corporate power and authority, in its individual capacity or as the Owner Trustee, as the case may be, to execute, deliver and perform this Agreement, the Trust Agreement, the Lease, the Certificates and the Indenture; (ii) the execution, delivery and performance by the Owner Trustee, either in its individual capacity or as the Owner Trustee, as the case may be, of this Agreement, the Trust Agreement, the Lease, the Certificates and the Indenture have been duly authorized by all necessary corporate action on its part, and do not contravene its certificate of incorporation or by-laws; (iii) each of this Agreement, the Trust Agreement, the Lease, the Certificates and the Indenture constitute the legal, valid and binding obligation of the Owner Trustee enforceable against it in accordance with its respective terms and the performance by the Owner Trustee of any of its obligations thereunder does not contravene any lease, regulation or contractual restriction binding on the Owner Trustee; (iv) there are no pending or, to its knowledge, threatened actions or proceedings against the Owner Trustee before any court or administrative agency which would materially and adversely affect the ability of the Owner Trustee, either in its individual capacity or as the Owner Trustee, as the case may be, to perform its obligations under this Agreement, the Trust Agreement, the Lease, the Certificates and the Indenture; (v) it shall give the Lessee, the Indenture Trustee and the Owner Participant thirty (30) days prior written notice in the event of any change in its chief executive office; and (vi) neither the execution and delivery by it, either in its individual capacity or as the Owner Trustee, as the case may be, of any of this Agreement, the Trust Agreement, the Lease, the Certificates and the Indenture, requires the consent or approval of or the giving of notice to, the registration with, or the taking of any other action in respect of, any Federal or ________ governmental authority or agency governing its banking or trust powers. (b) Lessor's Liens. The Owner Trustee, in its individual capacity, further represents, warrants and covenants that there are no Lessor's Liens against, on or with respect to the Aircraft or the Lessor's Estate or the Trust Indenture Estate attributable to it in its individual capacity, and that there will not be any Lessor's Liens against, on or with respect to the Aircraft or the Lessor's Estate or the Trust Indenture Estate attributable to it in its individual capacity on the Certificate Closing Date or the Delivery Date. The Owner Trustee, in its trust capacity, and at the cost and expense of the Lessee, covenants that it will in its trust capacity promptly take such action as may be necessary to discharge duly any Lessor's Liens attributable to it in its trust capacity. The Owner Trustee, in its individual capacity, covenants and agrees that it will at its own expense take such action as may be necessary to duly discharge and satisfy in full, promptly after the same shall first become known to it, any Lessor's Liens against, on or with respect to the Lessor's Estate or the Trust Indenture Estate attributable to it in its individual capacity or the consolidated group of taxpayers of which it (in such capacity) is a part which may arise at any time after the date of this Agreement; provided, however, that the Owner Trustee shall not be required to so discharge or satisfy a Lessor's Lien while it is contesting such lien in good faith by appropriate proceedings diligently prosecuted and of which the Owner Trustee shall have given notice to the Owner Participant and the Indenture Trustee as long as: (i)such contest does not involve any danger of the sale, forfeiture or loss of title to any part of the Trust Indenture Estate or, as to the Owner Participant, the Lessor's Estate, or adversely affect the Lien on the Trust Indenture Estate created by the Indenture or interfere with the payment of Rent or the timely application thereof to payments of principal of, and interest on, the Certificates or to other amounts payable to the Indenture Trustee or each Holder or the performance of any other terms under the Lease; and (ii)such contest does not interfere with the Lessee's right of quiet enjoyment under the Lease as provided in Section 6.09 of this Agreement and Section 18.01 of the Lease. (c) Indemnity for Lessor's Liens. The Owner Trustee, in its individual capacity, agrees to indemnify and hold harmless the Lessee, the Indenture Trustee, the Owner Participant, each Holder, the Pass Through Trustee, the Owner Trustee and any subsequent Holder from and against any loss, cost, expense or damage which may be suffered by the Lessee, the Indenture Trustee, the Owner Participant, each Holder, the Pass Through Trustee, the Owner Trustee or any such Holder as a result of the failure of the Owner Trustee to discharge and satisfy any Lessor's Liens attributable to it in its individual capacity, as described in Section 6.04(b). (d) Securities Act. None of ____________, the Owner Trustee or any Person authorized by either of them to act on its behalf has directly or indirectly offered or sold any interest in the Lessor's Estate or the Certificates, or in any similar security relating to the Lessor's Estate, or in any security the offering of which for purposes of the Securities Act of 1933, as amended, would be deemed to be part of the same offering as the offering of the aforementioned securities to, or solicited any offer to acquire any of the same from, any Person. Section 6.05. Representations and Warranties of the Indenture Trustee. (a) The Indenture Trustee in its individual capacity represents as follows: (i) it is a ___________________ duly organized and validly existing in good standing under the laws of the ___________________ and has the corporate power and authority to enter into and perform its obligations under the Indenture and this Agreement and to authenticate the Certificates to be delivered on the Certificate Closing Date; (ii) the Indenture, this Agreement and the authentication of the Certificates to be delivered on the Certificate Closing Date have been duly authorized by all necessary corporate action on its part, and neither the execution and delivery thereof nor its performance of any of the terms and provisions thereof will violate any Federal or ______________ law or regulation relating to its banking or trust powers or contravene or result in any breach of, or constitute any default under, its articles of association or by-laws; (iii) each of the Indenture and this Agreement has been duly executed and delivered by it and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, is the legal, valid and binding obligation of the Indenture Trustee, enforceable against the Indenture Trustee in accordance with its terms except as such enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights; and (iv) neither the execution and delivery by it of the Indenture, this Agreement and the other Operative Agreements to which it is or is to be a party, nor the performance by it of any of the transactions contemplated hereby or thereby, requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action in respect of, any Federal or state governmental authority or agency governing its banking and trust powers. (b) The Indenture Trustee, in its individual capacity, further represents, warrants and covenants that there are no Indenture Trustee's Liens attributable to it in its individual capacity against, on or with respect to the Lessor's Estate or the Trust Indenture Estate or, as at and following the Delivery Date, the Aircraft, and that there will not be any Indenture Trustee's Liens against, on or with respect to the Lessor's Estate or the Trust Indenture Estate on the Certificate Closing Date or, as at and following the Delivery Date, the Aircraft. The Indenture Trustee, in its individual capacity, covenants and agrees that it will at its own expense take such action as may be necessary to duly discharge and satisfy in full, promptly after the same shall first become known to it, any Indenture Trustee's Liens against, on or with respect to the Aircraft or the Lessor's Estate or the Trust Indenture Estate attributable to it in its individual capacity. (c) Indemnity for Indenture Trustee's Liens. The Indenture Trustee, in its individual capacity, agrees to indemnify and hold harmless the Lessee, the Owner Participant, each Holder, the Owner Trustee and any subsequent Holders from and against any loss, cost, expense or damage which may be suffered by the Lessee, the Indenture Trustee, the Owner Participant, the Owner Trustee or any Holders as a result of the failure of the Indenture Trustee to discharge and satisfy any Indenture Trustee's Liens attributable to it in its individual capacity, as described in Section 6.05(b). Section 6.06. Intentionally Left Blank. Section 6.07. Indenture Trustee's Notice of Default. The Indenture Trustee agrees to give the Owner Participant notice of any Payment Default promptly upon its having actual knowledge thereof. Section 6.08. Releases from Indenture. The Indenture Trustee covenants and agrees, for the benefit of the Lessee and the Owner Participant, to execute and deliver the instruments of release from the Lien of the Indenture which it is required to execute and deliver in accordance with the provisions of Section 14.01 of the Indenture, and the Owner Participant agrees, for the benefit of the Lessee, to cause the Owner Trustee to request the Indenture Trustee to execute and deliver such instruments of release. Section 6.09. Covenant of Quiet Enjoyment. Each of the Owner Participant, the Indenture Trustee, the Pass Through Trustee and the Owner Trustee covenants and agrees as to itself only that, so long as no Event of Default under the Lease has occurred and is continuing, the Owner Participant (or the Owner Trustee or the Pass Through Trustee or the Indenture Trustee, as the case may be) nor any Person lawfully claiming through the Owner Participant (or the Owner Trustee or the Indenture Trustee, as the case may be) shall interfere with the Lessee's right quietly to enjoy the Aircraft during the Term without hindrance or disturbance by the Owner Participant (or the Owner Trustee or the Pass Through Trustee or the Indenture Trustee, as the case may be). Section 6.10. Survival of Representations, Warranties and Covenants. The representations, warranties and covenants of the Owner Participant, the Owner Trustee (in its individual and trust capacities), the Pass Through Trustee and the Indenture Trustee provided for in this Article 6, and their respective obligations under any and all of them, shall survive the closing of this transaction and the expiration or other termination of this Agreement, the Lease, the Indenture or the Trust Agreement. Section 6.11. Lessee's Assumption of the Certificates. (a) Subject to compliance by the Lessee with all of its obligations under the Operative Agreements, each of the Owner Participant, the Owner Trustee, the Indenture Trustee, the Pass Through Trustee and the Lessee covenants and agrees that if the Lessee elects to terminate the Lease and to purchase the Aircraft pursuant to Section 4.02(a)(A), (B), (D) or (E) of the Lease, then the Owner Trustee will transfer to the Lessee, without recourse or warranty (except as to the absence of Lessor's Liens) all of the Owner Trustee's right, title and interest in and to the Aircraft, and if the Lessee, in connection with such purchase, elects to assume the obligations of the Owner Trustee pursuant to the Indenture and the Certificates, each of the parties shall execute and deliver appropriate documentation permitting the Lessee to assume such obligations on the basis of full recourse to the Lessee, maintaining the security interest in the Aircraft created by the Indenture, releasing the Owner Participant and the Owner Trustee from all obligations in respect of the Certificates except any obligations which shall have occurred prior to such assumption, the Indenture and all other Operative Agreements and all such other actions as are reasonably necessary to permit such assumption by the Lessee. (b) In connection with such assumption: (i) the Lessee shall execute and deliver an instrument satisfactory in form and substance to the Indenture Trustee (A) pursuant to which the Lessee irrevocably and unconditionally assumes and undertakes, with full recourse to the Lessee, to pay, satisfy and discharge when and as due (at the stated maturity thereof, by acceleration or otherwise) the principal of, Make-Whole Premium, if any, and interest on all Certificates then outstanding (or on the Lessee's substituted obligations) in accordance with their terms and to punctually perform and observe all of the covenants and obligations hereunder and under the Indenture (as the same may be amended in connection with such assumption) to be performed or observed by the Owner Trustee and (B) which incorporates therein such provisions from the Lease as may be appropriate, including, without limitation, events of default substantially similar in scope and effect to those set forth in the Lease and covenants substantially similar to the covenants of the Lessee under the Lease; (ii) the instrument referred to in paragraph (i) of this Section 6.11(b), any Uniform Commercial Code financing statements relating thereto, and any other documents which shall be necessary to establish the Lessee's title to and interest in the Aircraft or to establish and perfect the security interest in the Aircraft (or the Lessee's substituted obligations) shall be filed in such form, manner and places as are necessary for such purpose; and (iii) the Indenture Trustee shall have received (A) from counsel for the Lessee (who may be the Lessee's General Counsel) a legal opinion, in form and substance satisfactory to the Indenture Trustee (w) with respect to the compliance of the assumption contemplated hereby with the terms, provisions and conditions hereof, (x) with respect to the validity and enforceability of the instrument referred to in paragraph (i) of this Section 6.11(b) and (y) with respect to the establishment and perfection of the first and prior Lien and security interest in the Aircraft (or the Lessee's substituted obligations) referred to in paragraph (ii) of this Section 6.11(b), and (B) from Special Aviation Counsel, a legal opinion comparable to the respective opinions delivered on the Certificate Closing Date with such changes therein as may be appropriate in light of such assumption and covering such additional matters as the Indenture Trustee shall reasonably request. (c) The Lessee shall pay all reasonable expenses of the Indenture Trustee in connection with such assumption. Section 6.12. Indebtedness of Owner Trustee. So long as the Indenture is in effect, the Owner Trustee, not in its individual capacity, but solely as trustee under the Trust Agreement, shall not incur any indebtedness for borrowed money except as expressly contemplated herein or in any other Operative Agreement excluding the Tax Indemnity Agreement and shall not engage in any business or other activity other than the transactions contemplated herein or in any other Operative Agreement excluding the Tax Indemnity Agreement and all necessary or appropriate activity related thereto. Section 6.13. Pass Through Trustee Representations and Warranties. The Pass Through Trustee, in its individual capacity, represents and warrants as of the date hereof (except as otherwise provided), as of the Pass Through Closing Date, the Certificate Closing Date and the Delivery Date that: (i) it is a ___________________ duly organized and validly existing in good standing under the laws of the ___________________ and has the corporate power and authority to enter into and perform its obligations under the Pass Through Agreement, the Series Supplements and this Agreement and to execute and authenticate the Pass Through Certificates to be delivered on the Pass Through Closing Date; (ii) the execution, delivery and performance of this Agreement, the Pass Through Agreement and the Series Supplements and the performance of its obligations hereunder and thereunder (including the execution and authentication of the Pass Through Certificates to be delivered on the Pass Through Closing Date) have been duly authorized by all necessary corporate action on its part, and, subject to (A) the registration of the issuance and sale of the Pass Through Certificates under the Securities Act, (B) compliance with any applicable state securities laws and (C) the qualification of the Pass Through Agreement under the Trust Indenture Act, neither the execution and delivery thereof nor its performance of any of the terms and provisions thereof will violate any Federal law or regulation relating to its banking or trust powers or contravene or result in any breach of, or constitute any default under its articles of association, or by-laws or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it or its properties may be bound or affected; and (iii) each of this Agreement and the Pass Through Agreement has been, and as of the Pass Through Closing Date the Series Supplements will be, duly executed and delivered by it and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, is or will be, as the case may be, the legal, valid and binding obligation of the Pass Through Trustee, enforceable in accordance with its terms except as limited by bankruptcy, insolvency, moratorium, reorganization, receivership, fraudulent conveyance or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights and remedies generally from time to time in effect, regardless of whether such enforceability is considered in a proceeding at equity or at law. ARTICLE 7 TAXES Section 7.01. Lessee's Obligation to Pay Taxes. (a) Generally. The Lessee agrees promptly to pay when due, and to indemnify and hold each Indemnitee harmless from all license and registration fees and all taxes, fees, levies, imposts, recording duties, charges or withholdings of any nature whatsoever, together with any assessments, penalties, fines, additions to tax or interest thereon (individually, a "Tax," and collectively called "Taxes"), however imposed (whether imposed upon any Indemnitee, the Lessee, all or any part of the Aircraft, Airframe, any Engine or any Part or on the Lessor's Estate or otherwise), by any Federal, state or local government or taxing authority in the United States, or by any government or taxing authority of a foreign country or of any political subdivision or taxing authority thereof or by a territory or possession of the United States or an international taxing authority, upon or with respect to, based upon or measured by: (i) the Aircraft, the Airframe, any Engine or any Part; (ii) the location, replacement, conditioning, control, purchase, reregistration, repossession, improvement, maintenance, redelivery, manufacture, acquisition, purchase, financing, refinancing, mortgaging, ownership, acceptance, rejection, delivery, non-delivery, leasing, subleasing, transport, insuring, inspection, registration, assembly, abandonment, preparation, installment, possession, use, operation, return, presence, storage, repair, transfer of title, modification, rebuilding, imposition of any lien, sale or other disposition of the Aircraft, Airframe or any part thereof or interest therein; (iii) the rentals, receipts or earnings arising from the purchase, financing, ownership, delivery, leasing, possession, use, operation, return, storage, transfer of title, sale or other disposition of the Aircraft, the Airframe or any part thereof; (iv) any or all of the Operative Agreements; (v) the property, or the income or other proceeds received with respect to the property, held by the Owner Trustee under the Trust Agreement or after an Event of Default under the Lease, by the Indenture Trustee under the Indenture; (vi) otherwise with respect to or by reason of the transactions described in or contemplated by the Pass Through Agreement, the Series Supplements, the Operative Agreements; or (vii) the payment of the principal or interest or other amounts payable with respect to the Pass Through Certificates or Certificates. (b) Exceptions. The indemnity provided for in Section 7.01(a) shall not extend to any of the following: (i) Taxes imposed on or measured by the net or gross income or excess profits, receipts, minimum tax, capital, franchise, net worth or conduct of business taxes of any Indemnitee (other than sales, use, rental, license, ad valorem, property and taxes in the nature of the foregoing) (the "Income Taxes") and value-added taxes, except in the case of an Income Tax, to the extent that such Income Tax would have been imposed by any state or local government or taxing authority in the United States or by a government or taxing authority of a foreign country or of any political subdivision or taxing authority thereof if the operation, registration, location, presence, or use of the Aircraft, Airframe or any part thereof, in such state or foreign country were the sole connection between such Indemnitee and such jurisdiction; provided, however, that the provisions of this paragraph (b)(i) shall not exclude from the indemnity described in Section 7.01(a) any Income Taxes for which the Lessee would be required to indemnify an Indemnitee so that any payment under the Operative Agreements is made on an After-Tax Basis; (ii) Taxes arising out of or measured by acts, omissions, events or periods of time (or any combination of the foregoing) which occur after (and not fairly attributable to acts, omissions or events occurring prior to) the payment of all amounts payable by the Lessee pursuant to the Operative Agreements, or the earlier discharge in full of the Lessee's payment obligations under the Lease, and the earliest of (x) the expiration of the Term of the Lease and return of the Aircraft in accordance with Article 12 of the Lease, or (y) the termination of the Lease in accordance with the applicable provisions of the Lease and return of the Aircraft, except that Taxes incurred in connection with the exercise of any remedies pursuant to Article 17 of the Lease following the occurrence of an Event of Default shall not be excluded from the indemnity described in Section 7.01(a); (iii) As to the Owner Trustee, taxes imposed against the Owner Trustee upon or with respect to any fees for services rendered in its capacity as trustee under the Trust Agreement or, as to the Indenture Trustee, taxes imposed against the Indenture Trustee upon or with respect to any fees received by it for services rendered in its capacity as trustee under the Indenture; (iv) Taxes imposed on an Indemnitee that would not have been imposed but for the willful misconduct, or gross negligence of such Indemnitee or the breach by such Indemnitee of any representation, warranty or covenant contained in the Operative Agreements or any document delivered in connection therewith; (v) Taxes imposed on the Owner Trustee or the Owner Participant or any successor, assign or Affiliate thereof which became payable by reason of any voluntary or involuntary transfer or disposition by such Indemnitee subsequent to the Delivery Date, including revocation of the Trust, of any interest in some or all of the Aircraft, Airframe, Engines or Parts thereof or its interest in the Lessor's Estate (other than Taxes that result from transfers or dispositions which occur (x) while an Event of Default under the Lease has occurred and is continuing at the time of such transfer or disposition or (y) by reason of dispositions which occur as a result of the exercise of the Lessee's right to participate in a pooling or interchange agreement pursuant to Articles 7 or 8 of the Lease or as a result of the exercise of the Lessee's right of replacement pursuant to Articles 8, 9, 10 or 11 or Section 12.02 of the Lease or (z) pursuant to the exercise of a purchase option by the Lessee under 4.02 of the Lease (other than the purchase option referred to in Section 4.02(a)(B) of the Lease) or a disposition of the Aircraft under Article 10 of the Lease); (vi) Taxes imposed on the Owner Participant for which the Lessee is obligated to indemnify the Owner Participant pursuant to the Tax Indemnity Agreement; (vii) Any Taxes imposed on a successor, assign or other transferee of any entity or person which on the Certificate Closing Date is an Indemnitee (for purposes of this clause (vii) an original Indemnitee) or such original Indemnitee to the extent that such Taxes exceed the amount of Taxes that would have been imposed and would have been indemnifiable pursuant to Section 7.01(a) had there not been a succession, assignment or other transfer by an original Indemnitee of any such interest of such Indemnitee in the Aircraft or any part thereof or any interest in or under any Operative Agreement or any proceeds thereunder or any interest in the Trust Indenture Estate or the mortgaged property provided, however, that the exclusion provided by this clause (vii) shall not apply in the case of any transfer occurring after a declaration of an Event of Default that shall be continuing; (viii)any Taxes which have been included in the Purchase Price; (ix) any Taxes which would not have been imposed but for a Lessor's Lien or a Indenture Trustee's Lien; and (x) Taxes with respect to any prohibited transaction, within the meaning of Section 4975(c)(1) of the Code or Section 406 of ERISA. (c) Withholding. The Pass Through Trustee shall withhold any Taxes required to be withheld on payments to any Holder who is not a U.S. person except to the extent that such Holder has furnished evidence satisfactory to the Pass Through Trustee of any exemption from withholding claimed by such Holder. If by reason of any Holder's failure promptly to notify the Pass Through Trustee that it is not a U.S. person entitled to an exemption, the Pass Through Trustee fails to withhold a Tax required to be withheld with respect to any Pass Through Certificate, the Lessee will indemnify the Owner Trustee and the Owner Participant against any such Taxes required to be withheld and any interest and penalties with respect thereto. The Pass Through Trustee in its individual capacity shall indemnify the Lessee for interest and penalties on such withholding tax if it received appropriate notification of such Holder's status and failed to withhold. Section 7.02. After-Tax Basis. The amount which the Lessee shall be required to pay with respect to any Tax indemnified against under Section 7.01 shall be an amount sufficient to restore the Indemnitee, on an After-Tax Basis, to the same position such party would have been in had such Tax not been incurred. If any Indemnitee actually realizes a tax benefit by reason of the payment of any Tax paid or indemnified against by the Lessee, such Indemnitee shall promptly pay to the Lessee to the extent such tax benefit was not previously taken into account in computing such payment, but not before the Lessee shall have made all payments then due to such Indemnitee under this Agreement, the Tax Indemnity Agreement and any other Operative Agreement, an amount equal to the lesser of (x) the sum of such tax benefit plus any other tax benefit realized by such Indemnitee that would not have been realized but for any payment made by such Indemnitee pursuant to this sentence and not already paid to the Lessee, and (y) the amount of the payment required to be made under Sections 7.01 and 7.02 by the Lessee to such Indemnitee plus the amount of any other payments by the Lessee to such Indemnitee theretofore required to be made under Sections 7.01 and 7.02 (and the excess, if any, of the amount described in clause (x) above over the amount described in clause (y) above shall be carried forward and applied to reduce pro tanto any subsequent obligations of the Lessee to make payments pursuant to Section 7.01); provided, however, that notwithstanding the foregoing portions of this sentence, such Indemnitee shall not be obligated to make any payment to the Lessee pursuant to this sentence as long as an Event of Default shall have occurred and be continuing under the Lease. The Lessee shall reimburse on an After-Tax Basis such Indemnitee for any payment of a tax benefit pursuant to the preceding sentence to the extent that such tax benefit is disallowed or reduced in a taxable year subsequent to the year of such payment (including the expiration of any tax credit carryovers or carrybacks of such Indemnitee that would not otherwise have expired). Section 7.03. Time of Payment. Any amount payable to an Indemnitee pursuant to this Article 7 shall be paid within 30 days after receipt of a written demand therefor from such Indemnitee accompanied by a written statement describing in reasonable detail the basis for such indemnity and the computation of the amount so payable, provided that in the case of amounts which are being contested by the Lessee in good faith or by the Indemnitee pursuant to Section 7.04, such amount shall be payable 30 days after the time such contest is finally resolved. Section 7.04. Contests. If a written claim is made against any Indemnitee for Taxes with respect to which the Lessee is liable for a payment or indemnity hereunder, such Indemnitee shall promptly give the Lessee notice in writing of such claim and shall furnish the Lessee with copies of any requests for information from any taxing authority relating to such Taxes with respect to which the Lessee may be required to indemnify hereunder; provided, however, that the failure of an Indemnitee to give such notice or furnish such copy shall not terminate any of the rights of such Indemnitee under this Article 7, except to the extent that the Lessee has been materially and adversely prejudiced by the failure to provide such notice. The Indemnitee shall in good faith, with due diligence and at the Lessee's expense, if timely requested in writing by the Lessee, contest (or, at the Indemnitee's option, require the Lessee to contest in the name of the Lessee, if permitted by law, or the Indemnitee) the validity, applicability or amount of such Taxes by: (i)resisting payment thereof if lawful and practicable or not paying the same except under protest if protest is necessary and proper in each case so long as non-payment will not result in a material risk of the sale, forfeiture or loss of, or the creation of a Lien other than a Lessor's Lien on the Aircraft, Airframe or any parts; or (ii)if the payment be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings. If the Indemnitee elects to conduct the contest it shall determine in consultation with the Lessee, the manner in which to contest such Taxes and the Indemnitee shall advise the Lessee of actions to be taken in implementing such contest and shall consider in good faith any suggestion made by the Lessee as to the method of pursuing such contest. Notwithstanding the preceding sentences of this Section 7.04, such Indemnitee shall not be required to take any action unless the Lessee shall have (i) agreed to indemnify the Indemnitee for any liability or reasonable expense which such Indemnitee incurred as a result of contesting such Taxes including without limitation (y) reasonable attorneys' and accountants' fees and (z) the amount of any interest, penalty or additions to tax which may ultimately be payable as the result of contesting such Taxes, (ii) delivered to the Indemnitee a written acknowledgment of the Lessee's obligation to such Indemnitee pursuant to this Agreement to the extent that the contest is not successful, provided, however, that such acknowledgement shall not preclude the Lessee from raising defenses to liability under this Agreement if a decision in such contest is rendered which articulates the cause of such Tax and the cause, as so articulated, is not one for which the Lessee is responsible to pay an indemnity hereunder and (iii) made all payments and indemnities (other than contested payments and indemnities) then due to the Indemnitee hereunder or with respect to any of the transactions contemplated by or under the Operative Agreements. In no event shall such Indemnitee be required or the Lessee permitted to contest pursuant to this Section 7.04 the imposition of any Tax for which the Lessee is obligated to indemnify any Indemnitee hereunder unless, if such contest shall be conducted in a manner referencing payment of the claim in advance, Lessee shall have advanced sufficient funds, on an interest free basis to make the payment required, and agreed to indemnify the Indemnitee against any additional net after-tax cost to such Indemnitee of such advance. Nothing contained in this Section 7.04 shall require any Indemnitee to contest, or permit Lessee to contest, a claim which such Indemnitee would otherwise be required to contest pursuant to this Section 7.04, if such Indemnitee shall waive payment by Lessee of any amount that might otherwise be payable by Lessee under this Article 8 in connection with such claim. Section 7.05. Refunds. Upon receipt by an Indemnitee of a refund of all or any part of any Taxes which the Lessee shall have paid for such Indemnitee or for which the Lessee shall have reimbursed or indemnified such Indemnitee, and provided there shall not have occurred and be continuing any Event of Default (in which case payment shall not be made to the Lessee until such Event of Default shall have been cured), such Indemnitee shall pay to the Lessee an amount equal to the amount of such refund less (x) reasonable expenses not previously reimbursed, (y) all payments then due to such Indemnitee under this Article 7 and (z) Taxes payable with respect to receipt thereof, including interest received attributable thereto, plus any tax benefit actually realized by such Indemnitee as a result of any payment by such Indemnitee made pursuant to this sentence. Section 7.06. Lessee's Reports. In case any report or return is required to be made with respect to any obligation of the Lessee under this Article 7, the Lessee shall make such report or return, except for any such report or return that the Owner Trustee or the Owner Participant has notified the Lessee that it intends to file, in such manner as will show the ownership of the Aircraft in the Owner Trustee and shall send a copy of the applicable portions of such report or return to the Indemnitee and the Owner Trustee or will notify the Indemnitee of such requirement and make such report or return in such manner as shall be satisfactory to such Indemnitee and the Owner Trustee. The Lessee will provide such information as the Owner Trustee or the Owner Participant may reasonably require from the Lessee to enable the Owner Trustee or the Owner Participant to fulfill its tax filing requirements with respect to the transactions contemplated by the Operative Agreements, other than the Tax Indemnity Agreement, and any audit information request arising from any such filing. The Owner Trustee or the Owner Participant will provide such information as the Lessee may reasonably require from the Owner Participant to enable the Lessee to fulfill its tax filing requirements with respect to the transactions contemplated by the Operative Agreements, other than the Tax Indemnity Agreement, and any audit information request arising from such filing. The Lessee shall hold the Owner Trustee and the Owner Participant harmless from and against any liabilities, including penalties, additions to tax, fines and interest, imposed upon the Owner Trustee or the Owner Participant to the extent directly attributable to any insufficiency or inaccuracy in any return, statement, or report prepared by the Lessee or information supplied by the Lessee, or directly attributable to the Lessee's failure to supply information as required by this Section 7.06. The Owner Trustee and the Owner Participant shall hold the Lessee harmless from and against any liabilities, including penalties, additions to tax, fines and interest, imposed upon the Lessee to the extent directly attributable to any insufficiency or inaccuracy in any information the Owner Trustee or the Owner Participant is required to supply to the Lessee pursuant to this Section 7.06. Section 7.07. Survival of Obligations. The representations, warranties, indemnities and agreements of the Lessee provided for in this Article 7 and the Lessee's obligations under any and all of them shall survive the expiration or other termination of the Operative Agreements but, as to such indemnities, only with respect to losses, liabilities, obligations, damages, penalties, claims, actions, suits, costs, expenses and disbursements caused by events occurring or existing prior to or incurred in the process of (i) the return or disposition of the Aircraft under Article 12 or Article 17 of the Lease, or (ii) the termination of the Lease or the Indenture or, if later, the return of the Aircraft. Section 7.08. Property Taxes. To the extent permitted by the applicable state or local law, the Lessee shall pay directly any personal property tax, ad valorem tax or similar tax applicable to the Aircraft, the Airframe, any Engine, or any Parts and file any returns or reports required with respect thereto; provided, however, that the Lessee shall not make any statements or take any action which would indicate that the Lessee is the owner of the Aircraft, the Airframe, any Engine or any Part or would otherwise be inconsistent with the terms of the Lease and the position thereunder of the Owner Trustee and the Owner Participant. Copies of such returns or reports, together with evidence of payment of any tax due, shall be sent by the Lessee to the Owner Participant on request. ARTICLE 8 GENERAL INDEMNITY Section 8.01. Generally. (a) The Lessee agrees to indemnify each Indemnitee against and agrees to protect, defend, save and keep harmless each Indemnitee from any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, disbursements and expenses (including legal fees and expenses and all costs and expenses relating to amendments, supplements and waivers under the Operative Agreements, the Pass Through Agreement and the Series Supplements except as otherwise provided in Section 9.01 of every kind and nature (whether or not any of the transactions contemplated by this Agreement are consummated) (individually, an "Expense," collectively, "Expenses"), which may be imposed on, incurred or suffered by or asserted against any Indemnitee, in any way relating to, based on or arising out of: (i) this Agreement, the Lease, the Indenture, the Trust Agreement, the Pass Through Agreement, the Series Supplements or any other Operative Agreement or any sublease or any transactions contemplated hereby or thereby; (ii) the operation, possession, use, non-use, maintenance, storage, overhaul, delivery, non-delivery, control, repair or testing of the Aircraft, Airframe, or any Engine or any engine used in connection with the Airframe, or any part thereof by the Lessee any sublessee or any other Person whatsoever, whether or not such operation, possession, use, non-use, maintenance, storage, overhaul, delivery, non-delivery, control, repair or testing is in compliance with the terms of the Lease, including without limitation, claims for death, personal injury or property damage or other loss or harm to any Person whatsoever, including, without limitation, any passengers, shippers or other persons wherever located, and claims relating to any laws, rules or regulations, including, without limitation, environmental control, noise and pollution laws, rules or regulation; (iii) the manufacture, design, sale, return, purchase, acceptance, rejection, delivery, non-delivery, condition, repair, modification, servicing, rebuilding, airworthiness, registration, reregistration, performance, non-performance, sublease, merchantability, fitness for use, alteration, substitution or replacement of any Airframe, Engine, or Part under the Lease, or other transfer of use or possession, or other disposition of the Aircraft, the Airframe, or any Engine, including, without limitation, latent and other defects, whether or not discoverable, strict tort liability, and any claims for patent, trademark or copyright infringement; (iv) any breach of or failure to perform or observe, or any other non-compliance with, any condition, covenant or agreement to be performed, or other obligations of the Lessee under any of the Operative Agreements, or the falsity or inaccuracy of any representation or warranty of the Lessee in any of the Operative Agreements (other than representations and warranties in the Tax Indemnity Agreement); (v) with respect to the Indenture Trustee, the enforcement of the terms of the Indenture or any document in connection with the Indenture and the administration of the Trust Indenture Estate; and (vi) the offer, issuance, sale or delivery of any Certificate or any Pass Through Certificate or interest in the Lessor's Estate in the manner contemplated by this Agreement, the Indenture, the Indenture Supplement or the Trust Agreement and in the case of the Owner Participant, its obligations arising under Section 6.01 of the Trust Agreement. The foregoing indemnity by the Lessee is intended to include and cover, but is not limited to, any Expense to which the Indemnitees may be subject as a result of their respective ownership or leasing of any interest in the Aircraft, Airframe, any Engine or Part during the Term, whether or not in the Lessee's possession or control, insofar as such Expense relates to any activity or event whatsoever involving such item while it is under lease to the Lessee (or after termination of the Lease in connection with the exercise of remedies thereunder to the extent that such Expense is attributable to the transactions contemplated hereby and by the other Operative Agreements), and such Expense does not fall within any of the exceptions listed in Section 8.01(b) hereof. (b) Exceptions. The indemnity provided for in Section 8.01(a) shall not extend to any Expense of any Indemnitee: (i) resulting from or arising out of the willful misconduct or gross negligence of such Indemnitee; (ii) in respect of the Aircraft to the extent attributable to acts or events which occur after the Aircraft is no longer part of the Lessor's Estate or leased under the Lease or, if the Aircraft remains a part of the Lessor's Estate, after the expiration of the Term (other than pursuant to Article 17 of the Lease, in which case the indemnity provided in Section 8.01(a) hereof shall survive for so long as Lessor shall be entitled to exercise remedies under such Article 17), or from acts or events which occur after return of possession of the Aircraft by the Lessee in accordance with the provisions of the Lease but in any such case only to the extent not fairly attributable to acts or omissions of the Lessee prior to expiration of the Term, including without limitation the Lessee's failure to fully discharge all of its obligations under the Lease or the other Operative Agreements; (iii) which is a Tax, whether or not the Lessee is required to indemnify therefor pursuant to Article 7 or pursuant to the Tax Indemnity Agreement; (iv) which is a cost or expense required to be paid by the Owner Participant pursuant to Section 9.01 and which is reflected in Basic Rent; (v) which would not have been incurred by such Indemnitee if such Indemnitee had not been in breach of its representations or warranties, or had not defaulted in the observance and performance of the terms and provisions provided to be observed and performed by it, in this Agreement, the Lease, the Indenture, the Trust Agreement, or any other Operative Agreement to which it is a party unless such breach or default shall be a result of the breach or default of any of the foregoing by the Lessee; (vi) which is a payment required to be made by the Owner Participant pursuant to Section 2.01 but nothing contained in this Section 8.01(b)(vi) shall be deemed or construed to limit the obligations of the Lessee to the Indenture Trustee and Holders pursuant to Section 3.05 of the Lease; (vii) in the case of the Owner Participant, Lessor's Liens to the extent attributable to the Owner Participant, in the case of the Owner Trustee, Lessor's Liens to the extent attributable to the Owner Trustee and in the case of the Indenture Trustee, Indenture Trustee's Liens; (viii)in the case of the Owner Participant or the Owner Trustee, to the extent resulting from or arising out of, the offer or sale by the Owner Participant or the Owner Trustee after the Certificate Closing Date of any interest in the Aircraft, the Lessor's Estate or the Trust Agreement or any similar interest, unless such offer or sale shall occur during a period when an Event of Default has occurred and is continuing; or (ix) resulting from or arising out of any prohibited transaction, within the meaning of Section 4975(c)(1) of the Code or Section 406 of ERISA. Section 8.02. After-Tax Basis. The amount which the Lessee shall be required to pay with respect to any Expense indemnified against under Section 8.01 shall be an amount sufficient to restore the Indemnitee, on an After-Tax Basis, to the same position such party would have been in had such Expense not been incurred. If any Indemnitee realizes a permanent tax benefit by reason of the payment of such Expense paid or indemnified against by the Lessee which was not considered in the computation thereof, such Indemnitee shall promptly pay to the Lessee, but not before the Lessee shall have made all payments theretofore due such Indemnitee under this Agreement, the Tax Indemnity Agreement and any other Operative Agreement, an amount equal to the lesser of (x) the sum of such tax benefit plus any other permanent tax benefit realized by such Indemnitee as the result of any payment made by such Indemnitee pursuant to this sentence and (y) the amount of such payment pursuant to this Section 8.02 by the Lessee to such Indemnitee plus the amount of any other payments by the Lessee to such Indemnitee theretofore made pursuant to this Section 8.02 less the amount of any payments by such Indemnitee to the Lessee theretofore made pursuant to this Section 8.02 (and the excess, if any, of the amount described in clause (x) above over the amount described in clause (y) above shall be carried forward and applied to reduce pro tanto any subsequent obligations of the Lessee to make payments pursuant to this Section 8.02), it being intended that no Indemnitee should realize a net tax benefit pursuant to this Section 8.02 unless the Lessee shall first have been made whole for any payments by it to such Indemnitee pursuant to this Section 8.02; provided, however, that notwithstanding the foregoing portions of this sentence, such Indemnitee shall not be obligated to make any payment to the Lessee pursuant to this sentence as long as an Event of Default shall have occurred and be continuing. Any taxes that are imposed on any Indemnitee as a result of the disallowance or reduction of such tax benefit referred to in the next preceding sentence in a taxable year subsequent to the year of allowance and utilization by such Indemnitee (including the expiration of any tax credit carryovers or carrybacks of such Indemnitee that would not otherwise have expired) shall be indemnifiable pursuant to the provisions of Section 7.01 hereof. Section 8.03. Subrogation. Upon the payment in full of any indemnity pursuant to this Article 8 by the Lessee (but not earlier), the Lessee shall be subrogated to any right of the Indemnitee in respect of the matter against which such indemnity has been made. Section 8.04. Notice and Payment. Each Indemnitee and the Lessee shall give prompt written notice one to the other of any liability of which such party has knowledge for which the Lessee is, or may be, liable under this Article 8; provided, however, that failure to give such notice shall not terminate any of the rights of Indemnitees under this Article 8, except to the extent that the Lessee has been materially prejudiced by the failure to provide such notice. Unless otherwise provided in the Operative Agreements, any amount payable to an Indemnitee pursuant to this Article 8 shall be paid within 30 days after receipt of a written demand therefor from such Indemnitee accompanied by a written statement describing in reasonable detail the basis for such indemnity and the computation of the amount so payable, provided that in the case of amounts which are being contested by the Lessee in good faith or by the Indemnitee pursuant to Section 8.06, such amount shall be payable 30 days after the time such contest is finally resolved. Section 8.05. Refunds. If any Indemnitee shall obtain a recovery of all or any part of any amount which the Lessee shall have paid to such Indemnitee or for which the Lessee shall have reimbursed such Indemnitee under this Article 8, and provided there shall not have occurred an Event of Default (in which case payment shall not be made to the Lessee until such Event of Default shall have been cured) such Indemnitee shall pay to the Lessee the amount of any such recovery, including interest received with respect to the recovery, net of any Taxes paid or payable as a result of the receipt of the recovery and interest, plus any net additional income tax benefits realized by Indemnitee as the result of any payment made pursuant to this sentence less any reasonable costs and expense of any Indemnitee not reimbursed by the Lessee; provided, however, that such amount shall not be payable (a) before such time as the Lessee shall have made all payments or indemnities then due and payable to such Indemnitee under this Article 8 or (b) to the extent that the amount of such payment would exceed the amount of all prior payments by the Lessee to such Indemnitee pursuant to this Article 8, less the amount of all prior payments by such Indemnitee to the Lessee pursuant to this Article 8. Any subsequent loss of such recovery or tax benefit shall be subject to full indemnification hereunder. Section 8.06. Defense of Claims. The Lessee or its insurers shall have the right (in each such case at the Lessee's sole expense) to investigate or, provided that the Lessee or its insurers shall not reserve the right to dispute liability with respect to any insurance policies pursuant to which coverage is sought, defend any claim covered by insurance for which indemnification is sought pursuant to this Article 8 and each Indemnitee shall cooperate with the Lessee or its insurers with respect thereto. No Indemnitee shall enter into any settlement or other compromise with respect to any claim described in this Section 8.06 without the prior written consent of the Lessee, which consent shall not unreasonably be withheld, unless such Indemnitee waives its right to be indemnified under this Article 8 with respect to such claim. Section 8.07. Survival of Obligations. The representations, warranties, indemnities and agreements of the Lessee provided for in this Article 8 and the Lessee's obligations under any and all of them shall survive the closing of this transaction and the expiration or other termination of this Agreement, the Tax Indemnity Agreement, the Trust Agreement, the Indenture and the Lease but, as to such indemnities, only with respect to losses, liabilities, obligations, damages, penalties, claims, actions, suits, costs, expenses and disbursements caused by events occurring or existing prior to or incurred in the process of (i) the return or disposition of the Aircraft under Article 12 or Article 17 of the Lease, or (ii) the termination of the Lease or the Indenture or, if later, the return of the Aircraft. ARTICLE 9 TRANSACTION COSTS Section 9.01. Transaction Costs and Other Costs. (a) Transaction Costs. For the purposes of this Agreement, Transaction Costs are ___% of the Purchase Price and include, without limitation, the following: (i) The reasonable fees, expenses and disbursements of (A) Special Aviation Counsel, (B) ______________, special counsel for the Owner Participant, (C) _______________, special counsel for the Indenture Trustee, (D) _______________, special counsel for the Owner Trustee, (E) Davis Polk & Wardwell, special counsel to the Lessee and (F) ______________, special counsel for the Pass Through Trustee; (ii) Printing and duplicating expenses and all fees, taxes and other charges payable in connection with the recording or filing on or before the Delivery Date of the instruments described in this Agreement, the fees and expenses of ______________, financial advisor to the Owner Participant and the fees and expenses (including computer time-sharing charges) of _______________, financial advisor to the Lessee; (iii) The initial fees, initial expenses, initial disbursements and the initial costs of distributing the Certificates and Pass Through Certificates (but not the continuing fees, expenses, disbursements and costs of distribution) of the Owner Trustee, as lessor under the Lease and as trustee under the Trust Agreement and with respect to the administration of the Lease and the Lessor's Estate, and of the Indenture Trustee as trustee under the Indenture with respect to the administration of the Trust Indenture Estate; (iv) Reimbursement to the Owner Participant for any and all fees, expenses and disbursements of the character referred to above which shall have been paid by the Owner Participant (including without limitation any amounts paid in connection with any report by _____________); (v) Reasonable out-of-pocket expenses of the Owner Participant; (vi) Any other amounts approved by the Lessee and the Owner Participant; (vii) The initial fees, expenses and disbursements of the Underwriters and (counsel for the Underwriters), other than those fees, expenses and disbursements contemplated by the Underwriting Agreement, as being payable by the Underwriters; and (ix) The reasonable fees and expenses of the Lessee's financial advisor. (b) Payment. If the transactions contemplated by this Agreement are consummated, as and when any portion of Transaction Costs becomes due and payable, the Owner Participant shall immediately make such payment or, if the Lessee shall have already made such payment, shall reimburse the Lessee therefor or shall, as soon as practicable, furnish the Owner Trustee funds sufficient to, and the Owner Trustee shall, as soon as practicable, make payment of such portion to the person or persons entitled to payment upon presentation to the Owner Trustee of bills or invoices for the amount of such payment. If such transactions are not so consummated, the Lessee shall pay or cause to be paid the Transaction Costs; provided, however, that if the failure of such transactions to be consummated is due to the Owner Participant's failure to negotiate the Operative Agreements in good faith, the Lessee shall have no obligation to pay any costs and expenses incurred by the Owner Participant in connection with the transactions contemplated by this Agreement, but the Lessee shall be obligated to pay all other Transaction Costs. (c) Continuing Expenses. The continuing fees, expenses and disbursements (including reasonable counsel fees) of the Owner Trustee, as lessor under the Lease and as trustee under the Trust Agreement with respect to the administration of the Lease and the Lessor's Estate, the continuing fees, expenses and disbursements (including reasonable counsel fees and initial fees relating to the establishment of a replacement trustee) of the Indenture Trustee, as trustee under the Indenture with respect to the administration of the Trust Indenture Estate, and the continuing fees, expenses and disbursements (including reasonable counsel fees and critical fees relating to the establishment of a replacement trustee) of the Pass Through Trustee, shall be paid by Lessee, including without limitation any amounts payable to the Indenture Trustee or on account of requests by the Indenture Trustee for indemnification, under Section 9.11 and Article 11 of the Indenture. (d) Amendments and Supplements. Without limitation of the foregoing, the Lessee agrees: (i) to pay to the Owner Trustee, the Owner Participant, the Indenture Trustee and the Pass Through Trustee, all costs and expenses (including reasonable legal fees and expenses) incurred by any of them in connection with the entering into or giving or withholding of any amendments or supplements or waivers or consents, including without limitation, any amendment, waiver, modification or consent resulting from any work-out, restructuring or similar proceeding relating to the performance or nonperformance by the Lessee of its obligations under the Operative Agreements or with respect to this Agreement, the Lease, the Indenture, the Certificates, the Tax Indemnity Agreement or any other document or instrument delivered pursuant to any of them, which amendment, supplement, waiver or consent is required by any provision of any Operative Agreement or is requested by the Lessee or necessitated by the action or inaction of the Lessee; provided, however, that the Lessee shall not be responsible for fees and expenses incurred in connection with the offer, sale or other transfer (whether pursuant to Article 5 of the Trust Agreement or otherwise) by the Owner Participant or the Owner Trustee after the Delivery Date of any interest in Aircraft, the Lessor's Estate or the Trust Agreement or any similar interest; and (ii) to pay the fees, costs and expenses of all appraisers involved in an independent appraisal of the Aircraft to the extent required under Section 4.03 of the Lease. ARTICLE 10 SUCCESSOR OWNER TRUSTEE Section 10.01. Appointment of Successor Owner Trustee. (a) Resignation and Removal. The Owner Trustee or any successor Owner Trustee may resign or may be removed by the Owner Participant, a successor Owner Trustee may be appointed and a corporation may become Owner Trustee under the Trust Agreement only in accordance with the provisions of Section 3.11 of the Trust Agreement and the provision of paragraphs (b) and (c) of this Section 10.01. (b) Conditions to Appointment. The appointment in any manner of a successor Owner Trustee pursuant to Section 3.11 of the Trust Agreement shall be subject to the following conditions: (i) Such successor Owner Trustee shall be a Citizen of the United States; (ii) Such successor Owner Trustee shall be a bank or a trust company having combined capital, surplus and undivided profits of at least $100,000,000; (iii) Such appointment shall not violate any provisions of 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 or create a relationship which would be in violation of 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 (iv) Such successor Owner Trustee shall enter into an agreement or agreements, in form and substance satisfactory to the Lessee, Owner Participant, the Pass Through Trustee and the Indenture Trustee whereby such successor Owner Trustee confirms that it shall be deemed a party to this Agreement, the Trust Agreement, the Lease, the Lease Supplement, the Certificates, the Indenture, and the Indenture Supplement and agrees to be bound by all the terms of such documents applicable to the Owner Trustee and makes the representations and warranties contained in Section 6.04 hereof (except that it may be duly incorporated, validly existing and in good standing under the laws of the United States of America or any State thereof). (c) Appointment. For so long as the Aircraft remains registered under the Act, the Owner Participant agrees to appoint promptly a successor Owner Trustee meeting the requirements of Section 10.01(b) in the event the Owner Participant has knowledge that the Owner Trustee at any time shall not be a Citizen of the United States. (d) Revocation. The Owner Participant agrees not to revoke and terminate the Trust Agreement except in accordance with Section 4.01(a) of the Trust Agreement or amend the Trust Agreement except pursuant to Section 6.02 of the Trust Agreement. ARTICLE 11 LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND EACH CERTIFICATEHOLDER Section 11.01. Liabilities of the Owner Participant. The Owner Participant shall have no obligation or duty to the Lessee or to any Holder with respect to the transactions contemplated by this Agreement, except those obligations or duties expressly set forth in this Agreement, the Indenture, the Trust Agreement, the Tax Indemnity Agreement, the Bills of Sale, the Lease or any other Operative Agreement to which the Owner Participant is a party and the Owner Participant shall not be liable for the performance by any party hereto of such other party's obligations or duties hereunder. Under no circumstances shall the Owner Participant as such be liable to the Lessee, nor shall the Owner Participant be liable to any Holder, for any action or inaction on the part of the Owner Trustee or the Indenture Trustee in connection with this Agreement, the Indenture, the Bills of Sale, the Lease, the Trust Agreement, the ownership of the Aircraft, the administration of the Lessor's Estate or the Trust Indenture Estate or otherwise, whether or not such action or inaction is caused by the willful misconduct or gross negligence of the Owner Trustee or the Indenture Trustee. Section 11.02. Interest of Holders of Certificates. A Holder of a Certificate shall have no further interest in, or other right with respect to, the Trust Indenture Estate when and if the principal of and interest on all Certificates held by such Holder and all other sums payable to such Holder under this Agreement, under the Indenture and under such Certificates shall have been paid in full. ARTICLE 12 OTHER DOCUMENTS Section 12.01. Consent of Lessee to Other Documents. The Lessee hereby consents in all respects to the execution and delivery of the Trust Agreement and the Indenture and to all of the terms of said documents, and the Lessee acknowledges receipt of an executed counterpart of the Trust Agreement and Indenture; it being agreed that such consent shall not be construed to require the Lessee's consent to any future supplement to, or amendment, waiver or modification of the terms of the Trust Agreement, the Indenture or the Certificates, except that prior to the occurrence and continuance of an Event of Default, no section of the Indenture or the Trust Agreement shall be amended or modified in any manner materially adverse to the Lessee without its consent. Section 12.02. Further Assurances. The Lessee agrees that, except as otherwise provided in the Indenture, the Owner Trustee may not enter into any amendment, modification or supplement of, or give any waiver or consent with respect to, or approve any matter or document as being satisfactory under the Lease without the prior consent of the Indenture Trustee and the Owner Participant and that, except as otherwise provided in the Indenture, upon an Indenture Event of Default, the Indenture Trustee may act as the Lessor under the Lease to the exclusion of the Owner Trustee. The Lessee further agrees to deliver to the Indenture Trustee and the Owner Participant a copy of each notice, statement, request, report or other communication given or required to be given to the Owner Trustee under the Lease. ARTICLE 13 NOTICES Section 13.01. Notices. All notices, demands, declarations and other communications required by this Agreement shall be in writing and shall be deemed received (a) if given by telecopier when transmitted and the appropriate telephonic confirmation received if transmitted on a Business Day and during normal business hours of the recipient, and otherwise on the next Business Day following transmission, (b) if given by certified mail, return receipt requested, postage prepaid five Business Days after being deposited in the United States mail, (c) if given by telex, upon receipt by the party transmitting the telex of such party's callback code at the end of such telex (receipt of confirmation in writing not being necessary to the effectiveness of any telex) and (d) if given by Federal Express service or other means, when received or personally delivered, addressed: (a) If to the Lessee, to its office at 2005 Corporate Avenue, Memphis, Tennessee 38132, Attention: Senior Vice President and Chief Financial Officer with a copy to Senior Vice President and General Counsel; telephone (901) 395-3388, facsimile (901) 395-4758; (Telex No. 82-2163, answer back FEDEX INT MFS), or at such other address as Lessee shall from time to time designate in writing to Lessor, Indenture Trustee and the Owner Participant; (b) If to Lessor or Owner Trustee, to its office at ________________________; Attention: _____________________; telephone _____________; facsimile ______________; or to such other address as Lessor shall from time to time designate in writing to the Lessee, the Indenture Trustee, with a copy to Owner Participant at the Owner Participant's address as provided in subsection (c) below; (c) If to the Owner Participant, to its office at ___________________________; Attention: _____________________; telephone _____________; facsimile ______________; or to such other address as the Owner Participant may from time to time designate in writing to the Lessee and the Indenture Trustee; (d) If to Indenture Trustee, to its office at _________________________; Attention: _____________________; telephone _____________; facsimile ______________; or to such other address as the Indenture Trustee shall from time to time designate in writing to the Lessor, the Lessee and the Owner Participant; and (e)If to the Pass Through Trustee, to its office at _______________________; Attention: _____________________; telephone _____________; facsimile ______________; or to such other address as the Pass Through Trustee shall from time to time designate in writing to the Lessor, the Lessee or the Owner Participant. ARTICLE 14 REFINANCING Section 14.01. Refinancing. (a) Subject to the terms and conditions of this Section 14.01, the Lessee may request the Owner Participant to participate in the refinancing in full or in part (but in no event less than all the Certificates of each series being refinanced) of the Certificates during the Basic Term on any Rent Payment Date (a "Refinancing"). So long as there is no material risk of adverse tax consequences, such Refinancing may be placed in either the private or public markets, in the United States or elsewhere, in United States dollars, and on terms reasonably satisfactory to the Owner Participant. The Owner Participant agrees to negotiate promptly in good faith to conclude an agreement with the Lessee as to the term of any such refinancing transaction (including the terms of any debt to be issued in connection with such refinancing and the documentation to be executed in connection therewith). Without the consent of the Owner Participant, the prospectus and other offering materials relating to any Refinancing in the form of a public offering shall not identify the Owner Participant and shall not include any financial statements of the Owner Participant or any Affiliate thereof. In connection with any such Refinancing in the form of a public offering, the Lessee shall indemnify the Owner Participant for any liabilities under federal, state or foreign securities laws resulting from such offering. The aggregate principal amount of the new Certificates issued in connection with each Refinancing shall be the same as the aggregate principal amount outstanding on the Certificates being refinanced (assuming no principal on the old Certificates was due on the date of such refinancing). (b) Such Refinancing shall be permitted at any time after the Delivery Date but only _____ Refinancings shall be permitted during the Basic Term. The Lessee shall give each Loan Participant at least ten days revocable written notice of the proposed date of the Refinancing, which notice shall become irrevocable upon the agreement in principle of the parties to the terms of any such Refinancing as contemplated in Section 14.01(a). If such Refinancing shall occur, then, commencing on the Payment Date next succeeding the date of such Refinancing, each installment of Basic Rent payable under the Lease shall be adjusted by an amount determined by the Owner Participant to provide the Lessee with 100% of the after-tax benefit obtained by the Owner Participant as a result of the Refinancing to the extent the foregoing can be accomplished in a manner consistent with the maintenance of the Owner's Economic Return. At the request and expense of the Lessee, the accuracy of the calculation of such reductions shall be certified to the Lessee by the firm of independent public accountants then retained by the Owner Participant and, in order to enable them to verify such reductions and subject to the execution of an appropriate confidentiality agreement, the Owner Participant shall make available to such accountants all information reasonably necessary for such verification, including the name of the lease analysis program used by the Owner Participant to calculate such reductions. Prior to the consummation of any Refinancing pursuant to this Section 14.01, the Owner Participant and the Lessee shall agree upon a schedule setting forth each installment of Basic Rent giving effect to the reduction of Basic Rent and the Stipulated Loss Values, Purchase Option Price and Termination Values payable pursuant to the Lease as a result of the Refinancing, which shall maintain Owner's Economic Return and comply with Section 3.04 of the Lease, and thereafter the amounts set forth in such schedule shall become the amounts payable under the Lease as installments of Basic Rent, Stipulated Loss Value, Purchase Option Price and Termination Values, as the case may be. Upon the consummation of the Refinancing, the evidence of indebtedness issued pursuant to the Refinancing shall be considered "Certificates" for purposes of this Agreement, the Lease and the Indenture. (c) Intentionally Left Blank. (d) Each party agrees to take or cause to be taken all requested action, including, without limitation, the execution and delivery of any documents and instruments, including, without limitation, amendments or supplements to the Lease, which may be reasonably necessary or desirable to effect such Refinancing, including, in the case of the Owner Participant, direction to the Owner Trustee by the Owner Participant to prepay the relevant Certificates; provided, however, that such Refinancing shall be subject to the satisfaction of each of the following conditions: (i) Payment of principal, accrued interest and any other amounts due and owing on the Certificates payable under Section 6.02 of the Indenture; (ii) Payment in full of all other amounts then due and owing by the Lessee under this Agreement, the Indenture, the Lease, the Trust Agreement, and the Certificates then outstanding shall have been made by the Lessee; (iii) Such party shall have received such opinions of counsel (including, without limitation, an opinion for the benefit of the Owner Participant that such Refinancing shall not result in any adverse tax consequences to Owner Participant), certificates and other documents as it may reasonably request, each in form and substance reasonably satisfactory to such party; (iv) All authorizations, approvals and consents which in the reasonable judgment of the Owner Participant are necessary for such Refinancing shall have been obtained; (v) The Lessee shall have provided or agreed to provide to the Owner Participant, as Supplemental Rent under the Lease, sufficient funds to pay the costs and expenses referred to in Section 14.01(e); and (vi) The satisfaction or waiver by each other party to this Agreement of the conditions set forth in this Section 14.01 to such party's obligations under this Section 14.01. (e) The Lessee shall pay to the Owner Participant and the Owner Participant shall pay, from such funds, all costs and expenses of each party, including the reasonable fees, expenses and disbursements of their respective counsel in connection with a Refinancing or proposed Refinancing pursuant to this Section 14.01; provided, however, that the costs of the Owner Participant shall include only reasonable out-of-pocket expenses. (f) In connection with any prepayment of the Certificates pursuant to Section 6.02 of the Indenture resulting from a Refinancing or the exercise by the Lessee of its purchase option contained in Section 4.02(a)(A), 4.02(a)(B), 4.02(a)(D) or 4.02(a)(E) of the Lease, the Lessee agrees to furnish to the Indenture Trustee and the Pass Through Trustee not later than the third Business Day prior to the Prepayment Date (as defined in said Section 6.02) a calculation of all amounts payable thereon in sufficient detail to indicate the basis for such calculation. ARTICLE 15 MISCELLANEOUS Section 15.01. Owner for Federal Tax Purposes. It is hereby agreed between the Owner Participant and the Lessee (but the Lessee makes no representation to such effect) that for Federal income tax purposes the Owner Participant will be the owner of the Aircraft and the Lessee will be the lessee of the Aircraft. Section 15.02. Collateral Account. (a) The Indenture Trustee shall notify the Owner Trustee and the Lessee of any losses incurred on the Specified Investments in the Collateral Account promptly upon the realization thereof, as well as any fees, commissions and other costs, Taxes (other than income taxes) and expenses, if any, incurred by the Indenture Trustee in connection with its administration of the Collateral Account (collectively, "Losses"). Promptly upon receipt of such notification but, in any event, no later than the earlier of the Delivery Date and the Cut-Off Date, the Lessee shall pay to the Indenture Trustee, on behalf of the Owner Trustee, for deposit into the Collateral Account, an amount equal to such Losses (net of any investment earnings). (b) The Lessee shall pay to the Indenture Trustee, on behalf of the Owner Trustee, on the Commencement Date an amount equal to the aggregate amount of interest accrued on the Certificates from (and including) the Certificate Closing Date to (but excluding) the Delivery Date. (c) If the Aircraft has neither (i) been purchased by the Owner Trustee on the Delivery Date nor (ii) been acquired by the Lessee in the manner contemplated by Section 3.05(a)(ii) hereof, the Lessee agrees to pay to the Indenture Trustee, on behalf of the Owner Trustee, on the 15th day following the Cut-Off Date the excess, if any, of the amounts payable under Section 6.02(b)(1) of the Indenture over the amounts released from the Collateral Account under Section 2.15 of the Indenture. (d) All amounts payable by the Lessee pursuant to this Section 15.02 shall be paid to the Indenture Trustee at its principal office at ____________________________ __________________________________, Attention: __________________________, or as the Indenture Trustee may otherwise direct within the United States, by wire transfer of immediately available funds in U.S. Dollars no later than 10:30 a.m., New York City time, on the due date of such payment. Section 15.03. Counterparts. This Agreement may be executed by the parties in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. Section 15.04. No Oral Modifications. Neither this Agreement nor any of its terms may be terminated, amended, supplemented, waived or modified orally, but only by an instrument in writing signed by the party against which the enforcement of the termination, amendment, supplement, waiver or modification is sought. No such written termination, amendment, supplement, waiver or modification shall be effective unless a signed copy shall have been delivered to the Owner Trustee and the Indenture Trustee. A copy of each such termination, amendment, supplement, waiver or modification shall also be delivered to each other party to this Agreement other than the Original Loan Participant. Section 15.05. Captions. The table of contents preceding this Agreement and the headings of the various Articles and Sections of this Agreement are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions of this Agreement. Section 15.06. Successors and Assigns. The terms of this Agreement shall be binding upon, and shall inure to the benefit of, the Lessee and its successors and assigns, each party and its successors and assigns, including without limitation each Holder of a Certificate, the Owner Participant and its successors and assigns, the Owner Trustee and its successor as Owner Trustee (and any additional trustee appointed), the Indenture Trustee and its successors as Indenture Trustee (and any additional trustee appointed) under the Indenture and the Pass Through Trustee and its successors as Pass Through Trustee (and any additional trustee appointed). Section 15.07. Concerning the Owner Trustee, Pass Through Trustee and Indenture Trustee. Each of __________ Trust Company, ____________ and _____________, is entering into this Agreement solely in their respective capacities, in the case of __________ Trust Company, not in its individual capacity but solely as trustee under the Trust Agreement, in the case of ______________, as trustee under the Pass Through Agreement and in the case of __________________________, as mortgagee under the Indenture, and except as otherwise expressly provided in this Agreement or in the Lease, the Indenture, the Pass Through Agreement or the Trust Agreement, neither ________________________, _____________________ nor _________________________, shall be personally liable for or on account of its statements, representations, warranties, covenants or obligations under this Agreement; provided, however, that each of __________ Trust Company, ________________ and ______________ accepts the benefits running to it under this Agreement, and each agrees that (except as otherwise expressly provided in this Agreement or any other Operative Agreement to which it is a party) it shall be liable in its individual capacity for its own gross negligence or willful misconduct (whether in its capacity as trustee or in its individual capacity), and for any negligence in connection with any inaccuracy of representations and warranties or any breach of covenants (which covenants, in the case of the Indenture Trustee shall be those set forth in Sections 6.05(b) and 6.05(c) hereof and Sections 3.02, 3.04, 3.07, 9.01, 9.02 and 9.06 of the Indenture) made in its individual capacity pursuant to or in connection with this Agreement or the other Operative Agreements to which it is a party. Section 15.08. Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Section 15.09. Public Release of Information. Subject to applicable legal requirements, so long as there shall not have occurred an Event of Default or Indenture Event of Default, each party shall in each instance obtain the prior written approval of each other party concerning the exact text and timing of news releases, articles and other information releases to the public media concerning this Agreement. Section 15.10. Certain Limitations on Reorganization. The Holders of the Certificates and the Indenture Trustee agree that, if (i) the Lessor's Estate or the Trust becomes a debtor subject to the reorganization provisions of the Bankruptcy Code or any other applicable bankruptcy or insolvency statutes, (ii) pursuant to such reorganization provision, the Owner Participant is held to have recourse liability to the Indenture Trustee or the Holder of any Certificate directly or indirectly on account of any amount payable as principal, interest or premium on the Certificates, and (iii) the Holder of any Certificate or the Indenture Trustee actually receives any Recourse Amount which reflects any payment by the Owner Participant on account of (ii) above, then such Certificate Holder or the Indenture Trustee, as the case may be, shall promptly refund to the Owner Participant such Recourse Amount. For purposes of this Section 15.10, "Recourse Amount" means the amount by which the portion of such payment by the Owner Participant on account of clause (ii) above received by such Certificate Holder or Indenture Trustee exceeds the amount which would have been received by such Certificate Holder or the Indenture Trustee if the Owner Participant had not become subject to the recourse liability referred to in (ii) above. Nothing contained in this Section shall prevent any Certificate Holder or the Indenture Trustee from enforcing any individual obligation (and retaining the proceeds thereof) of the Owner Participant under this Agreement or any other Operative Agreement to the extent herein or therein provided, for which the Owner Participant has expressly agreed by the terms of this Agreement to accept individual responsibility. Nothing contained herein shall be construed as requiring any Holder to refund any amount distributed to such Holder pursuant to the Indenture. Section 15.11. Governing Law. This Agreement shall in all respects be governed by, and construed in accordance with, the laws of the State of New York. Section 15.12. Section 1110 Compliance. The Participants and the Lessee agree that the transactions contemplated by the Operative Agreements are intended to be and should be construed so as to be entitled to the benefits and protections of 11 U.S.C. Section 1110. Section 15.13. Authorization to Owner Trustee. The Owner Participant hereby authorizes and instructs the Owner Trustee to enter into, and to perform its obligations contemplated under, this Agreement, the Trust Agreement, the Indenture and the Lease and to execute the Certificates referred to herein and to deliver them to the Indenture Trustee for authentication. The Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee hereby consent to the Lease, the Trust Agreement and the Indenture. ARTICLE 16 CONFIDENTIALITY Section 16.01. Confidentiality. The Owner Trustee, the Owner Participant, the Pass Through Trustee, the Indenture Trustee and the Lessee shall keep the Operative Agreements other than the Lease, the Lease Supplement, the Indenture, the Indenture Supplement, and FAA Bill of Sale (the "Confidential Documents") confidential and shall not disclose, or cause to be disclosed, the same to any Person, except (a) to prospective transferees of the Owner Trustee's or the Owner Participant's interest in the trust or the Aircraft who agree in writing to hold such information confidential and deliver a copy of such agreement to the Lessee, (b) to prospective transferees of the Indenture Trustee's interest or the Pass Through Trustee's interest or any Holder's interest, who agree in writing to hold such information confidential and delivers a copy of such agreement to the Lessee, (c) to the Owner Trustee's or the Owner Participant's accountants, counsel or special counsel who have been instructed and shall have agreed in writing to keep such information confidential or (d) as may be required by any statute, court or administrative order or decree or governmental ruling or regulation, including Internal Revenue Service auditors, state taxing authorities state insurance authorities or state or federal banking authorities, provided, however, that, except with respect to disclosures to Persons described in clause (d) of this sentence, any and all disclosures of all or any part of the Confidential Documents which are permitted 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. IN WITNESS WHEREOF, the parties have caused this Participation Agreement to be executed by their respective, duly authorized officers as of the date first above written. LESSEE: FEDERAL EXPRESS CORPORATION By:__________________________________________ Name: Title: Vice President and Treasurer OWNER PARTICIPANT: _______________________________ By:__________________________________________ Name: Title: OWNER TRUSTEE: _______________________________, not in its individual capacity, but solely as Owner Trustee By:__________________________________________ Name: Title: INDENTURE TRUSTEE: _______________________________, not in its individual capacity, but solely as Indenture Trustee By:__________________________________________ Name: Title: PASS THROUGH TRUSTEE: _______________________________, not in its individual capacity, but solely as Pass Through Trustee By:__________________________________________ Name: Title: SCHEDULE I PURCHASE PRICE, DEBT PORTION AND OWNER PARTICIPANT COMMITMENT Purchase Price $_____________________ Debt Portion $_____________________ Owner Participant Commitment $_____________________ SCHEDULE II 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. [All other terms used in the Indenture that are defined in the Trust Indenture Act (as defined below) or the Securities Act (as defined below) have the meanings assigned to such terms in the Trust Indenture Act or the Securities Act as in force on the date of the Indenture, except as otherwise expressly provided or unless the context requires.](1) - ------------ (1) To be used for a qualified Indenture. 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 or Federal Aviation Act. The Federal Aviation Act of 1958, 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. 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. In the case of amounts payable to the Lessor, the Owner Participant, or any corporate affiliate of the Owner Participant, it shall be presumed that such Person is at all times subject to Federal income tax at the maximum marginal rate generally applicable to corporations from time to time. Air Carrier. Any air carrier which is a United States "domestic air carrier" as defined in Part 121 of the Federal Aviation Regulations, and any "foreign air carrier" (as defined in the Act) as to which there is in force a permit granted under Section 402 of the Act. Aircraft. The Airframe to be sold by the Lessee to the Owner Trustee pursuant to the Participation Agreement and leased under the Lease (or any permitted substitute Airframe) together with the _____ 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 11.03 of the Lease. Prior to delivery of the initial Lease Supplement, references in the Operative Agreements (including Section 3.05 of the Participation Agreement) to the Aircraft shall mean the __________________ airframe bearing FAA Registration Number N_____ and Manufacturer's serial number _____, together with _________________________________ engines bearing Manufacturer's serial numbers ___________________. Airframe. The ________________________ aircraft (excluding the Engines or engines from time to time installed thereon) leased by Lessor to Lessee pursuant to the Lease and the Lease Supplement and having the United States FAA Registration Number and manufacturer's serial number specified in the Lease Supplement, including (i) all Parts so long as the same shall be incorporated or installed in or attached to such Airframe, or so long as title to any such Parts shall remain vested in Lessor in accordance with the terms of Section 8.01(b) of the Lease after removal from such Airframe, and (ii) any replacement airframe which may be substituted pursuant to Section 11.03 of the Lease. Ancillary Agreements. Any written agreement of the Lessee entered into on the Delivery Date or at any time thereafter in connection with the transaction contemplated by the Operative Agreements or the Original Agreements, in each case as amended from time to time. Appraisal. The report prepared by BK Associates, Inc. and delivered to the Owner Participant and Lessee on the Delivery Date pursuant to Section 4.02(j) of the Participation Agreement. Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended, and any successor thereto. Basic Rent. The aggregate periodic rent payable for the Aircraft throughout the Basic Term pursuant to Section 3.02 of the Lease. Basic Term. The period commencing at the beginning of the day on the Commencement Date and ending at the end of the day on the day immediately preceding the date _________ years from the Commencement Date, or such earlier date on which the Lease shall be terminated as provided therein. Beneficial Interest. The interest of the Owner Participant under the Trust Agreement. Bills of Sale. Collectively, the FAA Bills of Sale for the Aircraft, an additional full warranty bill of sale covering the Aircraft (and specifically referring to each Engine) executed by the Lessee as owner of the Aircraft in favor of the Owner Trustee and dated the Delivery Date and an additional full warranty bill of sale covering the Aircraft executed by the Manufacturer in favor of Lessee. Burdensome Indemnity Payment. A Loss, as defined in the Tax Indemnity Agreement, which causes the aggregate net present value of all Losses paid or payable by the Lessee as of the determination date discounted semi-annually at the Debt Rate to the date of determination to exceed ___% of the Purchase Price. Business Day. Any day other than a Saturday, Sunday or other day on which commercial banking institutions in __________, ________, ______________, ____, New York, New York, ________________________ or Memphis, Tennessee are authorized or required by law to close. Certificate Closing Date. The date of the closing with respect to the purchase of Certificates by the Pass Through Trustee contemplated by Section 2.01(b) of the Participation Agreement. Certificates. The Equipment Trust Certificates (Federal Express 199_-[SERIES NAME]), issued by the Owner Trustee pursuant to the Indenture and any certificate issued in exchange therefor or replacement thereof pursuant to the Indenture. Change in Tax Law. Any change to the Code or the Treasury regulations promulgated thereunder or the publication of any revenue ruling, revenue procedure or any informational release by the Internal Revenue Service or the Department of Treasury, provided that the Owner Participant or the Lessee has notified the other parties of such change in writing prior to the Delivery Date. Change in Tax Rate. Any amendment, modification, deletion, addition, or change to the Code which is enacted into law after the Delivery Date which changes the highest marginal statutory rate of Federal income tax applicable to the Owner Participant (other than a change which is in the nature of a minimum tax). Citizen of the United States. A citizen of the United States as defined in Section 101(16) of the Act, or any analogous part of any successor or substituted legislation or regulation at the time in effect. Closings. The closing with respect to the acquisition of the Pass Through Certificates by the Underwriters and the closing with respect to the acquisition of Certificates by the Pass Through Trustee. Code. Except as otherwise provided, references to the Code shall mean the Internal Revenue Code of 1986, as amended from time to time. Collateral Account. The deposit account established and maintained pursuant to Section 2.12 of the Indenture. Commencement Date. ________________________. Commission. The Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or if at any time after the execution and delivery of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. Commitment. The amount of the Owner Participant's participation in the Purchase Price required to be made available or paid as provided in Section 3.02 of the Participation Agreement. 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. Cut-Off Date. ___________,19__. Corporate Base Rate. The rate announced from time to time by ________ as its Corporate Base Rate. Debt Portion. The amount specified as such on Schedule I to the Participation Agreement. Debt Rate. The average weighted rate of interest on the Certificates issued pursuant to the Indenture. Default. Any event or condition, which, with the lapse of time or the giving of notice, or both, would constitute an Event of Default. Delayed Delivery Notice. A certificate signed by a Responsible Officer of the Lessee (i) requesting that the Pass Through Trustee temporarily delay purchase of the Certificates to a date later than the Pass Through Closing Date, (ii) stating the amount of the purchase price of each such Certificate and the aggregate purchase price of all such Certificates, (iii) stating the reasons for such delay and (iv) either (1) setting or resetting the Delivery Date (which shall be on or prior to the Cut-Off Date), or (2) indicating that such Delivery Date will be set by subsequent written notice not less than three Business Days prior to such new Delivery Date (which shall be on or prior to the applicable Cut-off Date). Delivery Date. The date on which the Aircraft is to be delivered and sold by the Lessee to the Lessor and leased by the Lessor to the Lessee under the Lease, which date is also the date of the initial Lease Supplement. Delivery Notice. Notice of the Aircraft's Delivery Date, given by the Lessee as provided in Section 3.01 of the Participation Agreement and including any notice with respect to a postponed Delivery Date given by the Lessee pursuant to Section 3.05(c) of the Participation Agreement. Depository. The depository of the Registered Global Certificate, if any, representing the Equipment Trust Certificates issued under the Indenture and any successor to such depository appointed by the Company pursuant hereto. Such depository initially shall be Depository Trust Company, a New York corporation. Eligible Deposit Account. Either (a) a segregated account with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a depository institution with corporate trust powers organized under the laws of the United States or any state thereof, or the District of Columbia, and whose deposits are insured by the Federal Deposit Insurance Corporation, provided that such institution also must have a combined capital and surplus of at least $100,000,000 and a rating of A or better from the Thomson Bank Watch. Eligible Institution. A depository institution organized under the laws of the United States or any one of the states thereof, or the District of Columbia, or any domestic branch of a foreign bank, which in any such case at all times (a) has either (x) a long-term unsecured debt rating of at least Aa2 by Moody's or (y) a short-term certificate of deposit rating of P-1 by Moody's, (b) has either (x) a long-term unsecured debt rating of a least AA by S&P or (y) a short-term certificate of deposit rating of A-1+ by S&P and (c) is a member of the Federal Deposit Insurance Corporation. Engine. Each of the ______________________ engines listed by its manufacturer's serial number in the initial Lease Supplement and leased pursuant to the Lease, whether or not from time to time installed on the Airframe or installed on any other airframe or on any other aircraft, and any Replacement Engine which may from time to time be substituted for an Engine pursuant to Sections 7.02(a)(vii), 10.03, 11.03, 11.04 or 12.02 of the Lease, together with all Parts incorporated or installed in or attached to any such Engine and all Parts removed from any such Engine so long as title to such Parts shall remain vested in the Lessor in accordance with the terms of Article 8 of the Lease after removal from 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 Lease. The term "Engines" means, as of any date of determination, all Engines then leased to the Lessee pursuant to the Lease. Engine Consent and Agreement. The Engine Consent and Agreement dated as of ________, executed by the Engine Manufacturer, as the same may be amended from time to time. Engine Manufacturer. ________________________, a ________ corporation. ERISA. The Employee Retirement Income Security Act of 1974, as amended. Event of Default. Each of the events specified in Article 16 of the Lease. Event of Loss. Any of the following events with respect to the Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A) for a period in excess of 180 days (or in any event if such loss is continuing on the last day of the Term) due to theft or disappearance, or (B) for a period in excess of 60 days (or in any event if such loss is continuing on the last day of the Term) due to the destruction, damage beyond economic repair or rendition of such property permanently unfit for normal use by the Lessee for any reason whatsoever; (ii) any damage to such property which results in an insurance settlement with respect to such property on the basis of a total loss, or constructive or compromised total loss; (iii) (x) condemnation, confiscation or seizure of, or requisition of title to such property, or (y) requisition of use of such property (A) by 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, or (B) by the Government for a period extending beyond the Term, provided that no Event of Loss shall be deemed to have occurred, and the Term shall be extended automatically for a period of up to six months in the event that the Aircraft, the Airframe or any Engine is requisitioned by the Government pursuant to an activation as part of the Civil Reserve Air Fleet Program, as such term is defined in Section 7.02(a)(iv) of the Lease; and (iv) as a result of any law, rule, regulation, order or other action by the Aeronautics Authority or other governmental body having jurisdiction, the use of the Aircraft or Airframe in the normal course of air transportation of cargo shall have been prohibited by virtue of a condition affecting all aircraft of the same type for a period of eighteen (18) consecutive months, unless the Lessee, 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 or for a period extending beyond the end of the Term, unless the Lessee, prior to the expiration of such two (2) year period shall have conformed at least one __________________ aircraft (but not necessarily the Aircraft or the Airframe) to the requirements of any such law, rule, regulation, order, or other action and shall have commenced regular commercial use and shall be diligently carrying forward, on a non-discriminatory basis, all steps necessary or desirable to permit the normal use of the Aircraft by the Lessee; provided, that if there is a conflict between the operation of clause (iv) above and Section 12.05 of the Lease (by reference to Section 12.04(ix) thereof), such Section 12.05 of the Lease shall control. 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 (iv) above. An Event of Loss with respect to the Aircraft shall be deemed to have occurred if any Event of Loss occurs with respect to the Airframe. Excepted Payments. Collectively, (i) all right, title and interest of the Owner Participant or the Owner Trustee in, to and under the Tax Indemnity Agreement and any moneys due or to become due under the Tax Indemnity Agreement and payments of Supplemental Rent or other payments by the Lessee in either case in respect of the Tax Indemnity Agreement, (ii) indemnity payments and interest thereon and other amounts payable by the Lessee to the Owner Participant or to the Trust Company or any of their respective Affiliates, successors, assigns, directors, officers, employees, agents or servants pursuant to Article 7 or 8 of the Participation Agreement or any corresponding payment of Supplemental Rent under the Lease; (iii) proceeds of public liability insurance in respect of the Aircraft payable to the Owner Participant or Trust Company, or any of their Affiliates, successors or assigns, as a result of insurance claims made, or losses suffered, by, or amounts in respect of such indemnities paid for the benefit of, the Owner Participant or the Trust Company either pursuant to the Lease (which shall include proceeds of any self-insurance by the Lessee) or maintained by the Trust Company or the Owner Participant and not required to be maintained under the Lease; (iv) proceeds of any insurance in respect of the Aircraft which is separately acquired and paid for by the Owner Participant (directly or through the Owner Trustee) or the Lessor in accordance with Section 13.05 of the Lease; (v) indemnity payments payable by the Owner Participant to the Trust Company pursuant to Section 6.01 of the Trust Agreement; (vi) Transaction Costs or other expenses paid or payable by the Lessee to, or for the benefit of, the Owner Trustee, Trust Company or the Owner Participant pursuant to Section 9.01 of the Participation Agreement, Section 3.02(b) of the Lease and Section 2.02 of the Participation Agreement; (vii) the right to enforce, and the proceeds of any such enforcement of, any right to receive the proceeds of any of the amounts referred to in clauses (i) through (vi) above and (viii) any payments in respect of interest to the extent attributable to the payments referred to in clauses (i) through (vii) above. Expense and Expenses. Have the meaning specified in Section 8.01(a) of the Participation Agreement. FAA Bills of Sale. The bill of sale for the Airframe on AC Form 8050-2, or such other form as may be approved by the Aeronautics Authority executed by the Lessee in favor of the Lessor and dated the Delivery Date and the bill of sale for the Airframe on AC Form 8050-2, or such other form as may be approved by the Aeronautics Authority executed by the manufacturer in favor of the Lessee. Fair Market Renewal Term. One or more terms of one or more years, but not to exceed ____ years in the aggregate and which term(s) shall immediately follow the end of the Basic Term or the Fixed Renewal Term with respect to which the Lessee has exercised its option to renew the Lease pursuant to Section 4.01(a)(B) thereof. Fair Market Rental. An amount determined on the basis of, and equal in amount to, the rental which would be obtained in an arm's-length transaction between an informed and willing lessee and an informed and willing lessor unaffiliated with such lessee, neither being under any compulsion to lease. In such determination, it shall be assumed that the Aircraft is in the condition required under the Lease in the case of return of the Aircraft pursuant to Article 12 of the Lease. Fair Market Rental shall be determined in accordance with the provisions of Section 4.03 of the Lease. Fair Market Value. An amount determined on the basis of, and equal in amount to, the value which would be obtained in an arm's-length transaction between an informed and willing purchaser under no compulsion to buy and an informed and willing seller unaffiliated with such purchaser and under no compulsion to sell. In such determination it shall be assumed that the Aircraft is in the condition required under the Lease in the case of return of the Aircraft pursuant to Article 12 of the Lease. Fair Market Value shall be determined in accordance with the provisions of Section 4.03 of the Lease. Federal Aviation Administration and FAA. The United States Federal Aviation Administration and any successor agency or agencies thereto. Fixed Renewal Rental. An amount equal to 50% of the average semiannual payments of Basic Rent during the Basic Term as such payments may be adjusted pursuant to Section 3.04 of the Lease. Fixed Renewal Term. Up to ____ renewal terms, each term to be not less than ____ year, but not more than _____ years in the aggregate. Government. The United States of America or an agency or instrumentality thereof. Holder. As of any particular time, the person in whose name a Certificate shall be registered. Indebtedness of any Person means at any time, without duplication, (i) all obligations of such Person for borrowed money or the deferred purchase price of property, or evidenced by bonds, debentures, notes or other similar instruments, or arising under leases that are properly capitalized under generally accepted accounting principles applicable to such Person and (ii) all guarantees by such Person of such obligations described in clause (i) above of third parties. Indemnitee. Each of the Owner Trustee, in its individual capacity and as trustee, the Owner Participant, the Original Loan Participant, the Indenture Trustee, in its individual capacity and as trustee, and any successor (including any trustee which may succeed to the Lessor's interest under the Lease), and any Affiliate, assign, officer, director, employee, agent and servant of any of the foregoing, the Lessor's Estate and the Trust Indenture Estate. Neither the Certificate Holder nor any holder of a Pass Through Certificate shall be deemed to be an Indemnitee. Indenture. The Trust Indenture and Security Agreement, dated as of ___________, 199_, as amended and restated as of _____________, 199_, between the Lessor and the Indenture Trustee and the Indenture Supplement and any amendment or supplement hereto or thereto from time to time entered into. Indenture Default. Any event or condition, which, with the lapse of time or the giving of notice, or both, would constitute an Indenture Event of Default. Indenture Documents. The Participation Agreement, the Trust Agreement (including any Trust Agreement Supplements), the Lease (including any Lease Supplements), the Indenture (including any Indenture Supplements), the Certificates, the Purchase Agreement Assignment, the FAA Bills of Sale, the Consent and Agreement and the Engine Consent and Agreement. Indenture Event of Default. Each of the events specified in Section 7.01 of the Indenture. Indenture Supplement. Any Indenture Supplement, substantially in the form of Exhibit A to the Indenture, entered into between the Indenture Trustee and the Owner Trustee, which Indenture Supplement shall incorporate by reference the provisions of the Indenture including any amendments entered into subsequent to the Delivery Date. Indenture Trustee. _______________________, a national banking association, not in its individual capacity but solely as Indenture Trustee under the Indenture and each other Person which may from time to time be acting as successor trustee under the Indenture. Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate resulting from (i) claims against the Indenture Trustee not related to the administration of the Trust Indenture Estate or any transactions pursuant to the Indenture or any document included in the Trust Indenture Estate or (ii) any act or omission of the Indenture Trustee which is not related to the transactions contemplated by the Operative Agreements or is in violation of any of the terms of the Operative Agreements. Independent Appraisal. An appraisal conducted pursuant to Section 4.03 of the Lease. Independent Investment Banker. An independent investment banking institution of national standing appointed by the Lessee that is independent in fact, does not have any direct financial interests, or any material indirect financial interest, in the Lessee or any Affiliate of the Lessee, and is not connected with the lessee or any Affiliate of the Lessee, as an officer, employee, promoter, underwriter, trustee, partner, director or Person performing similar functions; provided, that if the Indenture Trustee shall not have received written notice of such an appointment at least 10 days prior to the Prepayment Date 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. Interest Payment Date means each _________ and ________ beginning with __________, 199_; provided, that if any such day is not a Business Day, the relevant Interest Payment Date shall be the next succeeding Business Day. Interim Term. The period commencing on the Delivery Date and ending at the end of the day immediately preceding the Commencement Date. Invoice. The invoice for the Aircraft given by the Lessee to the Lessor. Lease. The Lease Agreement dated as of __________, 199_, entered into by the Lessor and the Lessee and the Lease Supplement and any amendment or supplement hereto or thereto from time to time entered into. Lease Supplement. Any Lease Supplement, substantially in the form of Exhibit A to the Lease, entered into between the Lessor and the Lessee for the purpose of leasing the Aircraft pursuant to the terms of the Lease, which Lease Supplement shall incorporate by reference the provisions of the Lease including any amendments or supplements entered into subsequent to the Delivery Date. Lessee. Federal Express Corporation, a Delaware corporation, and its successors and assigns in its capacity as lessee. Lessor. __________ Trust Company, a ________ banking corporation, not in its individual capacity except as otherwise expressly stated, but solely as Owner Trustee under the Trust Agreement, and its successors and assigns. Lessor's Estate. All estate, right, title and interest of the Owner Trustee in and to the Collateral Account, the Liquid Collateral, the Aircraft, the Lease, any Lease Supplement, the Bills of Sale, any warranty with respect to the Airframe and the Engines, all amounts of Basic Rent and Supplemental Rent, including without limitation, insurance proceeds (other than insurance proceeds payable to or for the benefit of the Owner Trustee for its own account or in its individual capacity, the Owner Participant or any Holder or the Indenture Trustee) and requisition, indemnity or other payments of any kind for or with respect to the Aircraft (except amounts owing to the Owner Participant, to the Indenture Trustee, to the Owner Trustee in its individual capacity or any Holder, or to any of their respective directors, officers, employees and agents pursuant to Articles 7 and 8 of the Participation Agreement). Notwithstanding the foregoing, "Lessor's Estate" shall not include any Excepted Payment. Lessor's Liens. Liens on the Lessor's Estate or the Trust Indenture Estate arising as a result of (i) claims against the Lessor, in its individual capacity or as Owner Trustee, or the Owner Participant, in each case not related to the transactions contemplated by the Operative Agreements, (ii) acts or omissions of the Lessor in its individual capacity or as Owner Trustee, and, in the case of the Lessor in its individual capacity, arising from its gross negligence or willful misconduct either not related to the transactions contemplated by or expressly prohibited under the Operative Agreements and any act or omission of the Owner Participant which is not related to the transactions contemplated by the Operative Agreements or is in violation of any of the terms of the Operative Agreements, (iii) Taxes or Expenses imposed against the Lessor, in its individual capacity or as Owner Trustee, Owner Participant, Lessor's Estate or the trust created by the Trust Agreement which are not indemnified against by the Lessee pursuant to the Tax Indemnity Agreement or the Participation Agreement, or (iv) claims against the Lessor or the Owner Participant arising from the voluntary transfer by the Lessor or the Owner Participant of its interests in the Aircraft other than a transfer of the Aircraft pursuant to Section 4.02(a) or Articles 10 or 11 of the Lease and other than a transfer pursuant to the exercise of the remedies set forth in Article 17 of the Lease. Letter of Representations. A letter from the Company and the Owner Trustee to, and accepted by, the Depository, as such letter may be modified or supplemented, or any successor letter thereto. Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or security interest. Liquid Collateral. All amounts and securities deposited from time to time in the Collateral Account and all the products, investments, earnings and proceeds of the foregoing, including, but not limited to, all proceeds of the investment or conversion thereof, voluntary or involuntary, into cash, Specified Investments or other property, all rights to payment of any and every kind, and other forms of obligations, and instruments and other property which at any time constitute all or part or are included in the proceeds of any of the foregoing. Losses. Has the meaning specified in Section 15.02(a) of the Participation Agreement. 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 Certificates outstanding as of such date excluding for purposes of this definition any Certificates held by (i) the Owner Participant unless all Certificates then outstanding shall be held by the Owner Participant, (ii) by the Lessee, (iii) by the Indenture Trustee or (iv) by any Affiliate of either. Make-Whole Premium. With respect to each Certificate to be prepaid pursuant to Sections 6.02(ii), 6.02(iv) and 6.02(v) 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 an excess of (i) the present values of all remaining scheduled payments of such principal amount or portion thereof and interest thereon (excluding interest accrued from the immediately preceding Payment Date to such Prepayment Date) to the Maturity of such Certificate in accordance with generally accepted financial practices assuming a 360-day year consisting of twelve 30-day months at a discount rate equal to Treasury Yield, all as determined by the Independent Investment Banker over (ii) the unpaid principal amount of such Certificate. Manufacturer. _____________________________, a ________ corporation. Maturity. With respect to any Certificate, the date on which the principal amount of such Certificate is due and payable. Net Present Value of Rents. The net present value, as of the Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted at a rate per semi-annual period equal to (a) the Debt Rate as of the date of determination divided by (b) two. Non-U.S. Person. Any Person other than (i) a citizen or resident of the United States, as defined in Section 7701(a)(30) of the Code (for purposes of this definition, the "United States"), (ii) a corporation, partnership or other entity created or organized in or under the laws of the United States or any political subdivision thereof or therein, or (iii) any estate or trust that is subject to United States federal income taxation regardless of the source of its income. Obsolete Parts. Parts which the Lessee deems obsolete or no longer suitable or appropriate for use on the Airframe or any Engine. Officer's Certificate means a certificate signed by a Responsible Officer of the Owner Trustee or the Lessee, as the case may be, delivered to the Indenture Trustee. Each such certificate shall include the statements provided for in Section 15.07. Operative Agreements. The Participation Agreement, the Trust Agreement, the Bills of Sale, the Lease, the Lease Supplement, the Certificates outstanding at the time of reference, the Indenture, the Indenture and Security Agreement Supplement, the Consent and Agreement, the Purchase Agreement Assignment, the Engine Consent and Agreement, the Pass Through Agreement and the Tax Indemnity Agreement, each as amended from time to time. Opinion of Counsel means a written opinion of legal counsel, who in the case of counsel (a) for the Lessee may be (i) an attorney employed by the Lessee who is generally empowered to deliver such written opinions, (ii) Davis Polk & Wardwell or a successor firm or (iii) other counsel designated by the Lessee and reasonably satisfactory to the Indenture Trustee, (b) for the Owner Trustee, may be (i) Potter Anderson & Corroon or (ii) other counsel designated by the Owner Trustee and reasonably satisfactory to the Indenture Trustee and (c) for the Indenture Trustee, may be (i) Powell, Goldstein, Frazer & Murphy or (ii) other counsel designated by the Indenture Trustee. Owner Participant. ____________________________, a __________ corporation, and any successor thereto, and any person to which Owner Participant transfers, in accordance with the Trust Agreement, its right, title and interest in and to the Operative Agreements and the Lessor's Estate. Owner Trustee. __________ Trust Company, a ________ banking corporation, not in its individual capacity except as otherwise expressly stated, but solely as Owner Trustee under the Trust Agreement, and its successors and assigns. Owner's Economic Return. The Owner Participant's anticipated after-tax yield and aggregate after-tax cash flow during the Interim Term and the Basic Term utilizing the multiple investment sinking fund method of analysis, computed on the basis of the same methodology and assumptions as were utilized by the Owner Participant in determining Basic Rent, Stipulated Loss Value and Termination Value percentages, as such assumptions may be adjusted for events which have been the basis of adjustments to Rent pursuant to Section 3.04 of the Lease. Participation Agreement. The Participation Agreement, dated as of ___________, 199_ among the Lessee, the Owner Trustee not in its individual capacity except as otherwise expressly stated therein, but solely as trustee, the Owner Participant, the Pass Through Trustee, solely as pass through trustee, and the Indenture Trustee in its individual capacity and as trustee as amended, modified or supplemented, or the terms thereof waived. 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 and, so long as title thereto shall remain vested in the Lessor in accordance with the terms of Article 8 of the Lease, after removal from the Airframe or Engines. Pass Through Agreement. The Pass Through Trust Agreement dated as of ___________, 199_ between the Lessee 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 199_ Pass Through Certificates, Series ___ or 199_ Pass Through Certificates, Series ___, in each case as issued by the related Pass Through Trust; and "Pass Through Certificates" means all of the Pass Through Certificates issued by each of the Pass Through Trusts. Pass Through Closing Date. The Business Day on which the sale of the Pass Through Certificates to the Underwriter pursuant to the Underwriting Agreements takes place. Pass Through Trust. The Federal Express Pass Through Trust, 199_-____ or Federal Express Pass Through Trust 199_-_, in each case formed pursuant to the related Series Supplement in accordance with the Pass Through Agreement; and "Pass Through Trusts" means both of such Pass Through Trusts. 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. Past Due Rate. At any time a rate of interest per annum equal to __% per annum plus the Debt Rate. Paying Agent has the meaning set forth in Section 3.04 of the Indenture. Payment Date. Each _______ and ___________, commencing _____________, 199_, thereafter until all Certificates have been paid in full. Payment Default. Any event specified in Section 16.01(a) or 16.01(b) of the Lease which with the giving of notice or lapse of time or both would constitute an Event of Default. Permitted Investments. Those investments enumerated in Section 23.01(a ) (i), (ii), (iii) and (iv) of the Lease. Person. Any individual, sole proprietorship, partnership, joint venture, joint stock company, trust, unincorporated organization, association, corporation, institution, entity or government (federal, state, local, foreign or any agency, instrumentality, division or body thereof). Prepayment Date. The meaning specified in Section 6.02 of the Indenture. Prepayment Price. The meaning specified in Section 6.02(b) of the Indenture. Proposed Termination Date. The proposed date of termination of the Lease as specified by the Lessee in its notice given pursuant to Section 10.01 thereof. Purchase Agreement. The Purchase Agreement, dated as of _____________, between the Manufacturer and the Lessee relating to the purchase by the Lessee of the Aircraft, as originally executed or as modified, amended or supplemented in accordance with the terms thereof, but only insofar as the foregoing relates to the Aircraft. Purchase Agreement Assignment. The Purchase Agreement Assignment dated as of _____, executed by the Lessee and the Owner Trustee. Purchase Option Date. ______________________. Purchase Option Price. The amount to be paid by Lessee to Lessor on the Purchase Option Date pursuant to Section 4.02(a)(B) of the Lease, which amount is set forth in the Appraisal. Purchase Price. Has the meaning specified in Section 2.01(b) of the Participation Agreement. Record Date. As used with respect to any Interest Payment Date (except a date for payment for defaulted interest), __________ for __________ Interest Payment Dates and _________ for ____________ Interest Payment Dates, whether or not such date is a Business Day. Recourse Amount. Has the meaning specified in Section 14.10 of the Participation Agreement. Refinancing. A non-recourse loan to the Lessor arranged pursuant to Section 14.01 of the Participation Agreement. Register has the meaning set forth in Section 3.02 of the Indenture. Registered Global Certificate. The Equipment Trust Certificate, if any, issued to the Depository in accordance with Section 2.12 of the Indenture and bearing the legend prescribed in Exhibit B to the Indenture. Registrar. Has the meaning set forth in Section 3.02 of the Indenture. Renewal Rent. The amount payable by the Lessee as rent in accordance with Section 4.01 of the Lease during any Renewal Term. Renewal Term. Any of the Fixed Renewal Terms or Fair Market Renewal Terms which immediately follow the end of the Basic Term with respect to which the Lessee has exercised its option to renew the Lease pursuant to Section 4.01(a) thereof. Rent. All payments due from the Lessee under the Lease as Basic Rent, Renewal Rent and Supplemental Rent, collectively. Rent Payment Date. Each _________ and __________, commencing ___________, 199_, and continuing thereafter during the Term. Replacement Engine. A ______________________ ______ 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 7.02(a)(vii), 10.03, 11.03 11.04, or 12.02 of the Lease and leased pursuant to the Lease, together with all Parts relating to such engine. Responsible Officer. With respect to the Owner Trustee (except for purposes of the Trust Agreement) or 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 party, any corporate officer or other employee of a party who, in the normal performance of his 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. Scheduled Delivery Date. The Delivery Date specified in the Delivery Notice pursuant to Section 3.01 of the Participation Agreement. Securities Act. The Securities Act of 1933, as amended. SEC. The Securities and Exchange Commission of the United States and any successor agencies or authorities. Series Supplement. The Series Supplement 199_-_ to be executed and delivered by the Lessee and the Pass Through Trustee or the Series Supplement 199_-_ to be executed and delivered by the Lessee and the Pass Through Trustee, in each case 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. Significant Expenditure. Has the meaning specified in Section 4.02(a)(D) of the Lease. Sinking Fund Payment Date. __________________ Sinking Fund Payment Price. _________________ Special Aviation Counsel. Daugherty, Fowler & Peregrin. Specified Investments. Shall mean (a) direct obligations of the United States of America or obligations fully guaranteed by the United States of America; (b) commercial paper rated A-1/P-1 by Standard & Poor's Ratings Group and Moody's Investors Service, Inc., respectively or, if such ratings are unavailable, rated by any nationally recognized rating organization in the United States equal to the highest rating assigned by such rating organization; (c) overnight federal funds transactions with members of the Federal Reserve Systems arranged by federal funds brokers; and (d) overnight repurchase agreements with respect to the securities described in clause (a) above entered into with an office of a bank or trust company which is located in the United States of America of any bank or trust company which is organized under the laws of the United States or any state thereof and has capital surplus and undivided profits aggregating at least $500 million. Stipulated Loss Value. As of any Stipulated Loss Value Determination Date during the Basic Term, the amount determined by multiplying the Purchase Price by the percentage set forth in Schedule III of the Lease under the heading "Stipulated Loss Value Factors" opposite such date (as such Schedule III may be adjusted from time to time as provided in Section 3.04 of the Lease), and during any Renewal Term, the amount determined pursuant to Section 4.01(b) of the Lease. Notwithstanding any other provisions of the Lease or the Participation Agreement or the Indenture, each Stipulated Loss Value for the Aircraft shall be, under any circumstances and in any event, an amount, together with Basic Rent due and owing through the date of payment of Stipulation Loss Value, at least sufficient to pay in full as of such date of payment the aggregate unpaid principal amount of and accrued interest on the Certificates outstanding on such date of payment. Stipulated Loss Value Determination Date. Each date set forth on Schedule III of the Lease under the heading "Stipulated Loss Value Factors." Supplemental Rent. All amounts, liabilities and obligations which the Lessee assumes or agrees to pay under the Lease or under the Participation Agreement or Tax Indemnity Agreement or any other Ancillary Agreement to the Lessor or others, including, without limitation, payments of Stipulated Loss Value and amounts calculated by reference to Termination Value and any other amounts due on the Certificates pursuant to the Indenture, and all amounts required to be paid by Lessee under the agreements, covenants and indemnities contained in the Lease or in the Participation Agreement, but excluding Basic Rent or the Fixed Renewal Rental. Tax. Shall have the meaning set forth in Section 7.01(a) of the Participation Agreement. Tax Indemnity Agreement. The Tax Indemnity Agreement, dated as of ___________, 199_, between the Lessee and the Owner Participant, as from time to time modified, amended or supplemented pursuant to its applicable provisions. Term. The Interim Term and the Basic Term of the lease for the Aircraft under the Lease and, if renewed pursuant to Section 4.01 of the Lease, each Renewal Term for the Aircraft for which the Lease is renewed, or such earlier date on which the Lease is terminated pursuant to its terms. Termination Date. A Rent Payment Date during the Basic Term that is on or after _________________. Termination Value. As of any Termination Date, the amount determined by multiplying the Purchase Price by the percentage set forth in Schedule IV of the Lease under the heading "Termination Value Factors" opposite such Termination Date (as such Schedule IV may be adjusted from time to time as provided in Section 3.04 of the Lease). Notwithstanding any other provisions of the Lease, the Participation Agreement or the Indenture, each Termination Value shall be, under any circumstances and in any event, an amount, together with Basic Rent due and owing through the date of payment of any amount calculated by reference to Termination Value, at least sufficient to pay in full as of such date of payment of the aggregate unpaid principal amount of and accrued interest on the Certificates outstanding on such date of payment. Transaction Costs. All of the documented costs and expenses incurred by the Lessee, the Owner Trustee, the Underwriters, the Indenture Trustee and the Participants as contemplated by Section 9.01(a) of the Participation Agreement. "Treasury Yield". (i) In the case of a 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 Certificate and (ii) in the case of a 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 Lessee) corresponding in maturity to such 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 bid price as of 10:00 a.m. and 2:00 p.m. New York time, on the second Business Day preceding the Prepayment Date. Trust Agreement. The Trust Agreement, dated as of _________, 1992, between the Owner Participant and the Owner Trustee in its individual capacity, as from time to time modified, amended or supplemented pursuant to its applicable provisions and in accordance with the Operative Agreements. Trust Company. __________ Trust Company, a ________ banking corporation, in its individual capacity and not as Owner Trustee, and its successors under the Trust Agreement, in their respective individual capacities and not as Owner Trustees. [Trust Indenture Act. Except as otherwise provided in Section 4.04, 13.01 and 13.08 of the Indenture, the Trust Indenture Act of 1939, as amended, as in force on the date that the Indenture was first qualified under such Act.](2) - ---------------- (2) To be added in the case of a qualified Indenture. Trust Indenture Estate. The property, rights and privileges described in the Granting Clause of the Indenture, other than (i) Excepted Payments, including, without limitation all right, title and interest of the Owner Participant in, to and under the Tax Indemnity Agreement and any moneys due and to become due under the Tax Indemnity Agreement, all as provided in the Indenture, and (ii) rights granted to the Owner Trustee or the Owner Participant under the Indenture, including without limitation Sections 2.05, 7.02, 8.01, 8.02, 8.03, 13.01 and 13.02 thereof. Underwriters. __________________. Underwriting Agreement. The agreement among the Lessee and the several Underwriters dated __________, 199_, 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 401 or Section 418 of the Federal Aviation Act, and as to which there is in force an air carrier operating certificate issued pursuant to 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 III PERMITTED COUNTRY LIST Argentina Luxembourg Australia Malaysia Austria Malta Bahamas Mexico Barbados Netherlands Belgium New Zealand Brazil Norway British Virgin Islands Peoples Republic of China Canada Portugal Cayman Islands Republic of China (Taiwan) Denmark Singapore Egypt South Korea Finland Spain France Sweden Germany Switzerland Greece Thailand Grenada Trinidad & Tabago Hong Kong United Kingdom Iceland Indonesia Ireland Italy Jamaica Japan SCHEDULE IV PASS THROUGH TRUST INFORMATION 1. Federal Express Corporation Pass Through Trust, 199_-__ Federal Express Corporation Trust No. N_____ Interest Rate: ____% Maturity: ________________ Principal Amount: $_____________ 2. Federal Express Corporation Pass Through Trust, 199_-__ Federal Express Corporation Trust No. N_____ Interest Rate: ____% Maturity: ________________ Principal Amount: $_____________ EXHIBIT A(1)(a)(i) TO PARTICIPATION AGREEMENT Opinion of Lessee's Counsel (Certificate Closing Date) EXHIBIT A(1)(a)(ii) TO PARTICIPATION AGREEMENT Opinion of Lessee's Counsel (Delivery Date) EXHIBIT A(1)(b)(i) TO PARTICIPATION AGREEMENT Opinion of Lessee's Special Counsel (Certificate Closing Date) EXHIBIT A(1)(b)(ii) TO PARTICIPATION AGREEMENT Opinion of Lessee's Special Counsel (Delivery Date) EXHIBIT A(2)(a) TO PARTICIPATION AGREEMENT Opinion of Owner Participant's Special Counsel EXHIBIT A(2)(b) TO PARTICIPATION AGREEMENT Opinion of Owner Participant's Counsel EXHIBIT A(3) TO PARTICIPATION AGREEMENT Opinion of Indenture Trustee's Counsel EXHIBIT A(4) TO PARTICIPATION AGREEMENT Opinion of Pass Through Trustee's Counsel EXHIBIT A(5)(a) TO PARTICIPATION AGREEMENT Opinion of Owner Trustee's Counsel (Certificate Closing Date) EXHIBIT A(5)(b) TO PARTICIPATION AGREEMENT Opinion of Owner Trustee's Counsel (Delivery Date) EXHIBIT A(6) TO PARTICIPATION AGREEMENT Opinion of Engine Manufacturer's Counsel EXHIBIT A(7) TO PARTICIPATION AGREEMENT Opinion of Manufacturer's Counsel EXHIBIT A(8) TO PARTICIPATION AGREEMENT Opinion of Special Aviation Counsel EXHIBIT B TO PARTICIPATION AGREEMENT Form of Lease Agreement EXHIBIT C TO PARTICIPATION AGREEMENT Form of Indenture EXHIBIT D TO PARTICIPATION AGREEMENT Form of Trust Agreement EXHIBIT E TO PARTICIPATION AGREEMENT Form of Purchase Agreement Assignment, Consent and Agreement and Engine Consent and Agreement EX-4.F.2 9 Exhibit 4(f)(2) TRUST AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N_____) Dated as of ______________, 199_ between ________________________, Trustor and ________________________, Owner Trustee COVERING ONE [MANUFACTURER/MODEL] AIRCRAFT SERIAL NO. _____, REGISTRATION NO. N_____ TABLE OF CONTENTS PARTIES.................................................................... 1 RECITALS................................................................... 1 ARTICLE 1 THE LESSOR'S ESTATE SECTION 1.01. Authorization and Direction to Owner Trustee............. 1 SECTION 1.02. Declaration of Trust..................................... 2 SECTION 1.03. Conditions Precedent and Advances by Trustor............. 2 ARTICLE 2 DISTRIBUTIONS SECTION 2.01. Predelivery Funding; Rent, Etc........................... 2 SECTION 2.02. Excepted Payments........................................ 3 SECTION 2.03. Other Receipts........................................... 3 SECTION 2.04. Distributions after Default.............................. 4 SECTION 2.05. Distributions after Release of Lien of Indenture......... 4 SECTION 2.06. Manner of Making Distributions........................... 4 ARTICLE 3 THE OWNER TRUSTEE SECTION 3.01. Acceptance of Trust and Duties........................... 5 SECTION 3.02. Limitation on Authority of Owner Trustee................. 6 SECTION 3.03. Notice of Default........................................ 6 SECTION 3.04. Action Upon Instructions................................. 6 SECTION 3.05. Certain Duties and Responsibilities of Owner Trustee..... 7 SECTION 3.06. Certain Rights of Owner Trustee.......................... 8 SECTION 3.07. No Representations or Warranties as to Certain Matters... 10 SECTION 3.08. Status of Moneys Received................................ 11 SECTION 3.09. Self-Dealing............................................. 11 SECTION 3.10. Definition of a Responsible Officer...................... 11 SECTION 3.11. Resignation or Removal of Owner Trustee.................. 12 SECTION 3.12. Estate and Rights of Successor Owner Trustee............. 12 SECTION 3.13. Merger or Consolidation of Owner Trustee................. 13 SECTION 3.14. Co-Trustees.............................................. 13 SECTION 3.15. Interpretation of Agreements............................. 14 SECTION 3.16. Not Acting in Individual Capacity........................ 15 SECTION 3.17. Tax Returns.............................................. 15 ARTICLE 4 TERMINATION OF TRUST SECTION 4.01. Termination.............................................. 15 SECTION 4.02. Distribution of Lessor's Estate upon Termination......... 16 ARTICLE 5 TRANSFER OF BENEFICIAL INTEREST ARTICLE 6 MISCELLANEOUS SECTION 6.01. Indemnification.......................................... 18 SECTION 6.02. Supplements and Amendments............................... 19 SECTION 6.03. Nature of Title of Trustor............................... 20 SECTION 6.04. Power of Owner Trustee to Convey......................... 20 SECTION 6.05. Notices.................................................. 20 SECTION 6.06. Situs of Trust; Applicable Law; Severability............. 21 SECTION 6.07. Successors and Assigns................................... 21 SECTION 6.08. Headings and Table of Contents........................... 21 SECTION 6.09. Definitions.............................................. 22 SECTION 6.10. Identification of Trust.................................. 22 SECTION 6.11. Counterparts............................................. 22 Schedule I Definitions TRUST AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N_____) TRUST AGREEMENT (Federal Express Corporation Trust No. N_____) dated as of _______________, 199__, (this "Agreement") between _____________________, a _____________________________ (in its individual capacity, "TC", and not in its individual capacity but solely as trustee hereunder, the "Owner Trustee"), and _____________________, a ____________________________ (together with its successors and permitted assigns, the "Trustor"); W I T N E S S E T H : WHEREAS, the Trustor desires to create a trust for the purpose of issuing Certificates, the proceeds of which issuance shall initially be held by the Owner Trustee in the Collateral Account and released on the Delivery Date in order to finance a portion of the Purchase Price of the Aircraft, to acquire the Aircraft from the Lessee on the Delivery Date, to lease the Aircraft to the Lessee on the Delivery Date and to receive the benefits provided for herein. WHEREAS, TC is willing to accept the trust as herein provided and to perform its obligations hereunder not in its individual capacity but solely as the Owner Trustee. NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein, TC and the Trustor agree as follows: ARTICLE 1 THE LESSOR'S ESTATE SECTION 1.01. Authorization and Direction to Owner Trustee. The Trustor hereby authorizes and directs the Owner Trustee, not individually but solely as the Owner Trustee hereunder: (a) to execute and deliver as and when specified in Sections 4.01 and 4.02 of the Participation Agreement, this Agreement and each of the other Operative Agreements to which it is a party and to enter into and perform the transactions contemplated thereby; including, without limitation, accepting title to, and delivery of, the Aircraft from the Lessee on the Delivery Date, and to take all appropriate action to cause the Airframe to be registered with the Federal Aviation Administration in the name of the Owner Trustee; (b) to execute and deliver from time to time the Certificates in the manner and subject to the terms and conditions provided in the Participation Agreement and the Indenture; (c) to execute and deliver each other document referred to in the Operative Agreements to which the Owner Trustee is a party or which the Owner Trustee is required to deliver pursuant to the Operative Agreements; (d) subject to the terms of this Agreement, to perform the obligations and duties and, upon instruction of the Trustor, exercise the rights of the Owner Trustee under the Operative Agreements; and (e) to execute and deliver all such other instruments, documents or certificates and take all such other actions in accordance with the directions of the Trustor, as the Trustor may deem necessary or advisable in connection with the Certificate Closing Date and the Delivery Date and the transactions contemplated hereby, the taking of any such action by the Owner Trustee in the presence of the Trustor or its counsel to evidence, conclusively, the direction of the Trustor. SECTION 1.02. Declaration of Trust. TC hereby declares and agrees that it will, and in its capacity the Owner Trustee does, hold the Lessor's Estate upon the trusts herein set forth for the use and benefit of the Trustor, subject, however, to the provisions of, and the Lien created by, the Indenture. SECTION 1.03. Conditions Precedent and Advances by Trustor. The Trustor shall make to the Owner Trustee the advances, if any, required to be made by the Trustor pursuant to Section 6.03(e) of the Participation Agreement in the manner and subject to the conditions provided therein. The Trustor also agrees to make additional advances to the Owner Trustee in such amounts and at such times as may be necessary to permit the Owner Trustee to satisfy its obligations under Section 9.01(b) of the Participation Agreement. The right and obligation of the Owner Trustee to take the actions required by Section 1.01 hereof shall be subject to the condition that the terms and conditions of Sections 4.01 and 4.02 of the Participation Agreement shall have been complied with in a manner satisfactory to the Owner Trustee and the Trustor. ARTICLE 2 DISTRIBUTIONS Section 2.01. Predelivery Funding; Rent, Etc. (a) The Trustor and the Owner Trustee acknowledge that the proceeds from the sale of the Certificates to be effected on the Certificate Closing Date are to be held by the Indenture Trustee in the Collateral Account in the manner specified in the Indenture for application as provided therein and in Section 3.02 of the Participation Agreement. (b) The Trustor and the Owner Trustee acknowledge that the Lease will be security for the Certificates pursuant to the Indenture which provides that all moneys payable by the Lessee to the Owner Trustee under the Lease (other than Excepted Payments) are to be paid to the Indenture Trustee while the Lien of the Indenture is in effect. Except as otherwise provided in Section 2.04, the Owner Trustee shall promptly apply each payment of Excess Amount, Rent (other than Excepted Payments), Stipulated Loss Value, Termination Value, and any proceeds from the sale of the Aircraft received by it as follows: (x) prior to the release of the Lien of the Indenture, each such payment shall be payable directly to the Indenture Trustee (and if any of the same are received by the Owner Trustee shall, upon receipt, be paid over to the Indenture Trustee without deduction, set off or adjustment of any kind) for distribution in accordance with the provisions of Article 5 of the Indenture; provided, that any payments received by the Owner Trustee from (i) the Lessee with respect to the Owner Trustee's fees and disbursements under this Agreement, or (ii) the Trustor pursuant to Section 6.01 shall not be paid over to the Indenture Trustee but shall be retained by the Owner Trustee and applied toward the purpose for which such payments were made; (y) any amount remaining after application in full in accordance with paragraph (x) of this Section 2.01(b) and which represents payments for which provision as to the application thereof is made in any other Operative Agreement shall be applied promptly to the purpose for which such payment shall have been made in accordance with the terms of such Operative Agreement; and (z) after application in accordance with paragraphs (x) and (y) of this Section 2.01(b), or to the extent received from the Indenture Trustee under the terms of the Indenture, the balance, if any, remaining shall be paid to the Trustor. SECTION 2.02. Excepted Payments. All Excepted Payments at any time received by the Owner Trustee shall be distributed promptly to the applicable Person, and such payment shall not be deemed under any circumstances to be part of the Lessor's Estate. SECTION 2.03. Other Receipts. Except as otherwise provided in Section 2.04, any payment received by the Owner Trustee, other than those referred to in Sections 2.01 and 2.02, shall be payable prior to the release of the Lien of the Indenture directly to the Indenture Trustee (and if any of the same are received by the Owner Trustee shall, upon receipt, be paid over to the Indenture Trustee without deduction, set off or adjustment of any kind) for distribution in accordance with the provisions of Article 5 of the Indenture; and following such application or release of Lien, any such payment for which provision as to the application thereof is made in the other Operative Agreements shall be applied promptly to the purpose for which such payment shall have been made in accordance with the terms of the other Operative Agreements, and any such payment received by the Owner Trustee for which no provision as to the application thereof is made in the Operative Agreements or in this Article 2 shall, unless the Trustor shall have otherwise instructed the Owner Trustee in writing, be distributed promptly to the Trustor. SECTION 2.04. Distributions after Default. Except as otherwise provided in Section 2.02, (i) all payments received and amounts realized by the Owner Trustee after an Indenture Event of Default shall have occurred and shall be continuing and after the Certificates shall have become or been declared due and payable pursuant to Section 7.02 of the Indenture or the Lease shall have been declared in default (including, without limitation, any amounts realized by the Owner Trustee or the Trustor from the exercise of any remedies pursuant to Section 17.01 of the Lease), as well as (ii) all funds then held or thereafter received by the Owner Trustee as part of this Trust Agreement, the Lease or otherwise, shall be distributed to the Trustor. SECTION 2.05. Distributions after Release of Lien of Indenture. Except as otherwise provided in Sections 2.01, 2.02, 2.03 and 2.04: (a) all payments received and amounts realized by the Owner Trustee under the Lease or otherwise with respect to the Aircraft or any part thereof (including, without limitation, all payments received pursuant to Section 17.01 of the Lease and amounts realized upon the sale or lease of the Aircraft or any part thereof after the termination of the Lease with respect thereto), to the extent received or realized at any time after the Lien of the Indenture shall have been released pursuant to the terms of the Indenture, and (b) moneys not included in paragraph (a) of this Section 2.05 remaining as part of the Lessor's Estate after payment in full of amounts described in paragraph (a), shall, to the extent required, be retained by the Owner Trustee as reimbursement for all expenses hereunder or under the Lease not theretofore reimbursed under this Agreement, the Lease or otherwise and to which the Owner Trustee is entitled to be reimbursed pursuant to the provisions thereof, and any balance remaining thereafter shall be distributed to the Trustor. SECTION 2.06. Manner of Making Distributions. The Owner Trustee shall make distributions or cause distributions to be made to (i) the Trustor pursuant to this Article 2 by transferring by wire transfer in immediately available funds the amount to be distributed to the account set forth in the Participation Agreement or to such other account or accounts of the Trustor as it may designate from time to time by written notice to the Owner Trustee (and the Owner Trustee shall use reasonable efforts to cause such funds to be transferred by wire transfer on the same day as received, but in any case not later than the next succeeding Business Day), and (ii) the Indenture Trustee pursuant to this Article 2 by paying the amount to be distributed to the Indenture Trustee in the manner specified in the Indenture; provided, that the Owner Trustee shall invest overnight, for the benefit of the Trustor, in investments that would be permitted by Article 23 of the Lease (but only to the extent funds are received on or prior to 1:00 P.M. _____ Time and such investments are available and, if such investments are not available to the Owner Trustee which, after consultation with the Trustor, the Trustor shall direct) all funds not transferred by wire transfer on the same day as they were received. Notwithstanding the foregoing but subject always to the provisions of, and the Lien created by, the Indenture, the Owner Trustee will, if so requested by the Trustor by written notice, pay any and all amounts payable by the Owner Trustee hereunder to the Trustor either (i) by crediting, or causing the Indenture Trustee to credit, such amount or amounts to an account or accounts maintained by the Trustor with the Owner Trustee in its individual capacity or with the Indenture Trustee, as the case may be, in immediately available funds, or (ii) by mailing, or causing the Indenture Trustee to mail, an official bank check or checks in such amount or amounts payable to the Trustor at such address as the Trustor shall have designated in writing to the Owner Trustee. ARTICLE 3 THE OWNER TRUSTEE SECTION 3.01. Acceptance of Trust and Duties. TC accepts the trust hereby created and, subject to Section 1.03 hereof, in its capacity as the Owner Trustee agrees to perform the same, including without limitation, subject to Section 1.03 hereof, the actions specified in Section 1.01 hereof as herein provided. The Owner Trustee agrees to disburse all monies that it receives under the Operative Documents in accordance with the terms hereof. The Owner Trustee shall not be answerable or accountable in its individual capacity except as a result of or arising from (a) the Owner Trustee's willful misconduct or gross negligence (in its individual capacity or as trustee), (b) any breach by the Owner Trustee of its representations, warranties and covenants given in its individual capacity in this Agreement, Article 5 of the Lease, Sections 6.01, 6.02(a) and (b) and 6.04 of the Participation Agreement or its representations, warranties and covenants given in its individual capacity in Section 3.08(ii) of the Indenture, (c) the failure to use ordinary care in receiving, handling and disbursing funds, (d) Lessor's Liens attributable to it in its individual capacity, and (e) taxes, fees, or other charges on, based on, or measured by, any fees, commissions or compensation received by the Owner Trustee in connection with the transactions contemplated by the Lease, the Indenture and this Agreement. SECTION 3.02. Limitation on Authority of Owner Trustee. The Owner Trustee shall have no power, right, duty or authority to manage, control, possess, use, sell, lease, dispose of or otherwise deal with the Airframe, Engines or any other property at any time constituting a part of the Lessor's Estate, or otherwise to take or refrain from taking any action under or in connection with the Operative Agreements, except (i) to execute and deliver the Operative Agreements, (ii) to exercise and carry out or cause to be exercised or carried out the rights, duties and obligations of the Owner Trustee hereunder and under the Operative Agreements, or (iii) as expressly provided in written instructions from the Trustor given pursuant to Section 3.03 or 3.04; provided, that nothing in this Section 3.02 shall limit in any manner the obligation of the Owner Trustee to perform and observe all the terms of the Operative Agreements or the obligations of the Owner Trustee under Article 2 of this Agreement. SECTION 3.03. Notice of Default. In the event that a Responsible Officer in the Corporate Trust Administration of the Owner Trustee shall have actual knowledge of a Default or an Event of Default, or an Indenture Default or an event or condition, which with the lapse of time or the giving of notice, or both, would constitute an Indenture Default, the Owner Trustee shall give or cause to be given to the Trustor and the Indenture Trustee prompt notice (in any event, within ten days of the discovery thereof) of such Default, Event of Default, Indenture Default or such event or condition by telegram, telex, or facsimile followed by prompt written notice thereof by first-class certified mail, postage prepaid, return receipt requested. Subject to the terms of Section 3.06(e) and the rights of the Indenture Trustee under the Indenture, the Owner Trustee shall take such action with respect to such Default, Event of Default, Indenture Default or such event or condition as shall be specified in written instructions from the Trustor, and if the Owner Trustee shall not have received instructions from the Trustee within 20 days after giving notice of such Default, Event of Default, Indenture Default or such event or condition to the Trustor, the Owner Trustee may take such action, or refrain from taking such action, with respect to such Default, Event of Default, Indenture Default or such event or condition as it shall deem advisable in the best interests of the Trustor; provided, that the Owner Trustee shall be under no duty to take or refrain from taking any such action. For all purposes of this Agreement and the Lease, in the absence of actual knowledge of a Responsible Officer of the Owner Trustee, the Owner Trustee shall not be deemed to have knowledge of a Default, Event of Default, Indenture Default or such event or condition unless notified in writing by the Lessee, the Trustor, the Indenture Trustee or any Certificate Holder. SECTION 3.04. Action Upon Instructions. Subject in all respects to the terms of the Operative Agreements and the rights of the Indenture Trustee, the Holders of the Certificates and the Lessee, respectively, thereunder, and subject further to the terms of Article 2 and Sections 3.03, 3.05 and 3.06, upon the written instructions at any time and from time to time of the Trustor, the Owner Trustee will take such of the following actions as may be specified in such instructions: (a) give such notice or direction or exercise such right, remedy or power under the Operative Agreements, or take such other action, as shall be specified in such instructions; (b) take such action to preserve or protect the Lessor's Estate (including the discharge of Liens and encumbrances) as may be specified in such instructions; (c) approve as satisfactory to it all matters required by the terms of the Operative Agreements to be satisfactory to the Owner Trustee (it being understood that without written instructions of the Trustor, the Owner Trustee shall not approve of any matter as satisfactory to it), except such approvals as may be required with respect to the Trustor's transfer of its Beneficial Interest pursuant to Article 5; (d) after the expiration of the term of the Lease, convey in accordance with such instructions, the Aircraft and all of the Owner Trustee's right, title and interest in and to the Aircraft or any part thereof for such amount, on such terms and to such purchaser or purchasers as shall be designated in such instructions, or retain, lease or otherwise dispose of the Aircraft or any part thereof as shall be specified in such instructions; (e) execute and file any financing statement (and any continuation statement with respect to any such financing statement) or any other similar document relating to the Lessor's Estate or the security interests and assignments created by the Operative Agreements, as may be specified in such instructions (which instructions shall be accompanied by an execution form of such financing statement or such continuation statement, as the case may be); and (f) any other action as specified by the Trustor. SECTION 3.05. Certain Duties and Responsibilities of Owner Trustee. (a)(i) the Owner Trustee undertakes to perform such duties and only such duties as are specifically set forth herein, and with the degree of care specified in Section 3.01 hereof, and in accordance with instructions given by the Trustor hereunder, and no implied duties, covenants or obligations shall be read into this Agreement, any such instructions or the Operative Agreements against the Owner Trustee, and the Owner Trustee agrees that it will not manage, control, possess, use, sell, lease, dispose of or otherwise deal with the Aircraft or any part of the Lessor's Estate except as required by the terms of the Operative Agreements, any such instructions and as otherwise provided herein; and (ii)in the absence of bad faith on its part, the Owner Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Owner Trustee and conforming to the requirements of this Agreement or the Operative Agreements, but in the case of any such certificates or opinions which by any provisions hereof or thereof are specifically required to be furnished to the Owner Trustee, the Owner Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Trust Agreement or the Operative Agreements. (b) No provision hereof shall require the Owner Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Notwithstanding the foregoing, the Owner Trustee agrees in its individual capacity that it will, at its own cost and expense, promptly take such action as may be necessary to discharge duly all Lessor's Liens attributable to it in its individual capacity and will claim no indemnity therefor hereunder or under the Participation Agreement. (c) Whether or not therein expressly so provided, every provision of this Agreement relating to the conduct or affecting the liability of or affording protection to the Owner Trustee shall be subject to the provisions of this Section 3.05, except that in the event of a conflict between this Section 3.05 and Section 3.01, Section 3.01 shall be controlling. (d) The Owner Trustee will furnish to the Trustor, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates, financial statements and any other instruments furnished to the Owner Trustee hereunder or under the other Operative Agreements (including those furnished to the Indenture Trustee pursuant to the terms of the Indenture) and not otherwise furnished to the Trustor. SECTION 3.06. Certain Rights of Owner Trustee. Except as otherwise provided in Section 3.05: (a) in the absence of bad faith on its part, the Owner Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order or other paper or document reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request, direction or authorization by any party hereto or to any other Operative Agreement shall be sufficiently evidenced by a request, direction or authorization in writing, delivered to the Owner Trustee, and signed in the name of such party by any of the Chairman of the Board, the President, any Vice President, the Treasurer or Assistant Treasurer or the Secretary or Assistant Secretary or other duly authorized officer of such party; and any resolution of the Board of Directors or committee thereof of such party shall be sufficiently evidenced by a copy of such resolution certified by the Secretary or an Assistant Secretary of such party to have been duly adopted and to be in full force and effect on the date of such certification, and delivered to the Owner Trustee; (c) whenever in the administration of this Agreement the Owner Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder or under any of the other Operative Agreements, the Owner Trustee (unless other evidence be herein or therein specifically prescribed), absent actual knowledge of a Responsible Officer of the Owner Trustee to the contrary, may rely in good faith upon a certificate in writing, delivered to the Owner Trustee and signed by any of the Chairman of the Board, the President, any Vice President, the Treasurer or Assistant Treasurer or the Secretary or Assistant Secretary of the Lessee, the Trustor or the Indenture Trustee and notice of such need for such proof or establishment shall be delivered to the Trustor, who may advise the Owner Trustee in respect of such matter and the Owner Trustee shall act in conformity with such advice; (d) the Owner Trustee may exercise its powers and perform its duties by or through such attorneys, agents and servants as it shall appoint with due care, and it shall be entitled to rely upon the advice of counsel reasonably selected by it with due care and shall be protected by the advice of such counsel in anything done or omitted to be done in accordance with such advice; (e) the Owner Trustee shall not be under any obligation to take any action under this Agreement or under any of the Operative Agreements at the request or direction of the Trustor unless the Persons making such request or direction shall have offered to the Owner Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; nor shall the Owner Trustee be required to take any action deemed to impose on the Owner Trustee any obligation to take any action, if the Owner Trustee shall have been advised by its counsel that such action is unlawful or is contrary to the terms of this Agreement or the Operative Agreements; (f) the Owner Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order or other paper or document unless a Responsible Officer of the Owner Trustee has actual knowledge that the facts or matters stated therein are false or inaccurate, but the Owner Trustee in its discretion may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Owner Trustee shall determine to make such further inquiry or investigation, it shall be entitled, to the same extent permitted to the Lessor under the Lease, to examine the books and records of the Lessee to reasonably determine whether the Lessee is in compliance with the terms and conditions of the Lease and to examine the Airframe and Engines personally or by agent or attorney; and (g) without limiting the generality of Section 3.05 hereof, except as otherwise provided in written instructions given to the Owner Trustee by the Trustor or as otherwise provided in the Indenture, the Owner Trustee shall not have any duty (i) to see to any recording or filing of the Lease or of this Agreement or any financing statement or other notice or document relating thereto or contemplated under the Operative Agreements or to see to the maintenance of any such recording or filing (other than FAA reporting requirements contained in 14 C.F.R. Sections 47.45 and 47.51), (ii) to see to any insurance on the Aircraft or any part thereof or to effect or maintain any such insurance, whether or not the Lessee shall be in default with respect thereto, other than to forward to the Trustor copies of all certificates, reports and other written information which it receives from the Lessee pursuant to the Lease, (iii) to see to the payment or discharge of any tax, assessment or other governmental charges or any Lien (except any Lessor's Lien attributable to it in its individual capacity) owing with respect to, or assessed or levied against any part of the Lessor's Estate, (iv) to confirm or verify any financial statements or reports of the Lessee, or (v) to inspect the Aircraft at any time or ascertain or inquire as to the performance or observance of any of the Lessee's covenants under the Lease. SECTION 3.07. No Representations or Warranties as to Certain Matters. NEITHER THE OWNER TRUSTEE NOR TC MAKES OR SHALL BE DEEMED TO HAVE MADE (a) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, CONDITION, WORKMANSHIP, DESIGN, COMPLIANCE WITH SPECIFICATIONS, CONSTRUCTION, OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, except that TC represents and warrants that on the Delivery Date the Owner Trustee shall have received whatever rights, title and interests in, to and under the Aircraft were conveyed to it by the Lessee and TC represents, warrants and covenants that at all times on and after the Delivery Date the Aircraft shall be free of all Lessor's Liens attributable to it, and that the Owner Trustee shall comply with the last sentence of Section 3.05(b) hereof, or (b) any representation or warranty as to the validity, legality or enforceability of this Agreement or any other Operative Agreement to which the Owner Trustee is a party, or any other document or instrument, or as to the correctness of any statement contained in any thereof, except to the extent that any such representation, warranty or statement is expressly made herein or therein as a representation or warranty by the Owner Trustee or TC and except that TC hereby represents and warrants that this Agreement has been, and (assuming the due authorization, execution and delivery of this Agreement by the Trustor) the Operative Agreements to which the Owner Trustee is a party have been (or at the time of execution and delivery of any such instrument by the Owner Trustee hereunder or pursuant to the terms of the Participation Agreement that such an instrument will be) duly executed and delivered by one of its officers who is or will be, as the case may be, duly authorized to execute and deliver such instruments on behalf of the Owner Trustee and that this Agreement has been duly authorized, executed and delivered by TC and (assuming due authorization, execution and delivery of this Trust Agreement by the Trustor) constitutes the legal, valid and binding obligation of TC enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity. SECTION 3.08. Status of Moneys Received. All moneys received by the Owner Trustee under or pursuant to any provision of this Agreement shall constitute trust funds for the purpose for which they were paid or are held, but need not be segregated in any manner from any other moneys except to the extent required by law and may be deposited by the Owner Trustee under such conditions as may be prescribed or permitted by law for trust funds, or may be invested in direct obligations of the United States. SECTION 3.09. Self-Dealing. The Owner Trustee in its individual capacity, or any corporation in or with which the Owner Trustee may be interested or affiliated, or any officer or director of any such corporation, may have normal commercial relations, and otherwise deal, in the ordinary course of business, with the Lessee or any other corporation having relations with the Lessee to the full extent permitted by law. SECTION 3.10. Definition of a Responsible Officer. For purposes of this Trust Agreement only, "Responsible Officer" when used with respect to the Owner Trustee means the Chairman or the Vice-Chairman of the Board of Directors, the Chairman or Vice-Chairman of the Executive Committee of the Board of Directors, the President, any Vice President (whether or not designated by a number or a word or words added before or after the title "Vice President"), the Secretary, any Assistant Secretary, or any other officer in the Corporate Trust Administration of the Owner Trustee customarily performing functions similar to those performed by any of the above designated officers. SECTION 3.11. Resignation or Removal of Owner Trustee. The Owner Trustee or any successor thereof (a) shall resign if required to do so pursuant to Section 6.02(b) of the Participation Agreement and (b) may resign at any time without cause by giving at least 60 days' prior written notice to the Trustor and the Indenture Trustee, such resignation to be effective only upon the appointment of a successor trustee and the acceptance of such appointment by such successor. In addition, the Trustor may at any time remove the Owner Trustee without cause by an instrument in writing delivered to the Owner Trustee and the Indenture Trustee, such removal to be effective only upon the appointment by the Trustor of a successor Owner Trustee and the acceptance of such appointment by such successor. Upon the giving of notice of resignation or removal of the Owner Trustee, the Trustor may appoint a successor Owner Trustee by an instrument signed by the Trustor. If the Trustor shall not have so appointed a successor Owner Trustee within 30 days after such resignation or removal, the Owner Trustee, the Indenture Trustee or the Trustor may apply to any court of competent jurisdiction to appoint a successor Owner Trustee to act until such time, if any, as a successor or successors shall have been appointed by the Trustor as above provided. Any successor Owner Trustee so appointed by a court shall be superseded by any successor Owner Trustee subsequently appointed by the Trustor. Each successor Owner Trustee appointed as herein provided shall be a trust company or banking corporation which is a Citizen of the United States, having its principal place of business in the United States 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 the Owner Trustee hereunder upon reasonable or customary terms. SECTION 3.12. Estate and Rights of Successor Owner Trustee. Any successor Owner Trustee, however appointed, shall execute and deliver to the predecessor Owner Trustee, with a copy to the Trustor and the Indenture Trustee, an instrument accepting such appointment, and thereupon each successor Owner Trustee, without further act, shall become vested with all the estates, properties, rights, powers, duties and trust of the predecessor Owner Trustee in the trusts hereunder with like effect as if originally named as an Owner Trustee herein, but nevertheless upon the written request of such successor Owner Trustee, such predecessor Owner Trustee shall execute and deliver an instrument transferring to such successor Owner Trustee, upon the trust herein expressed, all estates, properties, rights, powers, duties, property or moneys then held by such predecessor Owner Trustee upon the trusts herein expressed. Upon any such transfer by a predecessor Owner Trustee, such predecessor Owner Trustee shall provide the successor Owner Trustee and Trustor an accounting of the Lessor's Estate and the trusts hereunder. Upon the appointment of any successor Owner Trustee hereunder, the predecessor Owner Trustee will use its best efforts to cause registration of the Aircraft included in the Lessor's Estate to be transferred upon the records of the Aeronautics Authority into the name of the successor Owner Trustee. SECTION 3.13. Merger or Consolidation of Owner Trustee. Any corporation into which the Owner Trustee in its individual capacity may be merged or with which it may be consolidated, or any corporation resulting from any merger or consolidation to which the Owner Trustee shall be a party, or any corporation to which substantially all the business of the Owner Trustee in its individual capacity may be transferred, shall, subject to the last sentence of Section 3.11, be the Owner Trustee under this Agreement without further act; provided, that such corporation shall not also be the Indenture Trustee. SECTION 3.14. Co-Trustees. At any time, if the Owner Trustee and the Trustor shall deem it necessary or prudent or desirable in order to conform to legal requirements of any jurisdiction in which any part of the Lessor's Estate may at the time be located, the Trustor and the Owner Trustee jointly shall have the power, and shall execute and deliver all instruments, to appoint one or more persons approved by the Trustor and the Owner Trustee, to act as co-trustee, or co-trustees, jointly with the Owner Trustee, or separate trustee or separate trustees (except insofar as local law makes it necessary or prudent or desirable for any such co-trustee or separate trustee to act alone), of all or any part of the Lessor's Estate, and to vest in such Person or Persons, in such capacity, such title to the Lessor's Estate or any part thereof, and such rights, powers, duties, trusts or obligations as the Trustor and the Owner Trustee may consider necessary or prudent or desirable. If the Trustor shall not have joined in such appointment within 15 days after the receipt by it of a request so to do, the Owner Trustee alone shall have the power to make such appointment. The Owner Trustee shall not be liable for any act or omission of any co-trustee or separate trustee appointed under this Section 3.14, except with respect to an appointment made pursuant to the immediately preceding sentence if the Owner Trustee shall have failed to exercise due care in making such appointment. No appointment of, or action by, any co-trustee or separate trustee appointed under this Section 3.14 will relieve the Owner Trustee of any of its obligations under any Operative Agreement or otherwise affect any of the terms of the Indenture or adversely affect the interests of the Indenture Trustee or the Holders of the Certificates in the Trust Indenture Estate. Any co-trustee or separate trustee may, at any time by an instrument in writing, constitute the Owner 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. Every additional trustee hereunder shall be a Citizen of the United States and, to the extent permitted by law, be appointed and act, and the Owner Trustee and its successors shall act, subject to the following provisions and conditions: (A) all powers, duties, obligations and rights conferred upon the Owner Trustee in respect of the custody, control and management of monies, the Aircraft or documents authorized to be delivered hereunder or under the Participation Agreement shall be exercised solely by the Owner Trustee; (B) all other rights, powers, duties and obligations conferred or imposed upon the Owner Trustee shall be conferred or imposed upon and exercised or performed by the Owner Trustee and such additional trustee jointly, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed (including the holding of title to the Lessor's Estate) the Owner Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations shall be exercised and performed by such additional trustee; (C) no power given to, or which is provided hereby may be exercised by, any such additional trustee, except jointly with, or with the consent in writing of, the Owner Trustee; (D) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder; and (E) the Trustor, at any time, by an instrument in writing may remove any such additional trustee. SECTION 3.15. Interpretation of Agreements. In the event that the Owner Trustee is unsure as to the application of any provision of this Agreement or any other Operative Agreement or any other agreement relating to the transactions contemplated by the Operative Agreements or such provision is ambiguous as to its application, or is, or appears to be, in conflict with any other applicable provision, or in the event that this Agreement or any other Operative Agreement permits any determination by the Owner Trustee or is silent or incomplete as to the course of action which the Owner Trustee is required to take with respect to a particular set of facts, the Owner Trustee may request instructions of the Trustor and, to the extent that the Owner Trustee acts in good faith in accordance with any instructions received from the Trustor, shall not be liable to any Person; provided, that in the event that no response is made to the Owner Trustee by the Trustor within 25 days after such request, the Owner Trustee shall not be liable to any Person for acts taken by the Owner Trustee in good faith or for any failure to act, except to the extent provided in the last sentence of Section 3.01. SECTION 3.16. Not Acting in Individual Capacity. In carrying out the trust hereby created, the Owner Trustee will act solely as trustee hereunder and not in its individual capacity except as expressly provided herein or in the other Operative Agreements to which it is a party; and all Persons, other than the Trustor as provided in this Agreement, having any claim against the Owner Trustee by reason of the transactions contemplated hereby shall look only to the Lessor's Estate for payment or satisfaction thereof, except to the extent provided in the last sentence of Section 3.01. SECTION 3.17. Tax Returns. The Owner Trustee shall be responsible for the keeping of all appropriate books and records relating to the receipt and disbursement of all moneys under this Agreement or any agreement contemplated hereby. The Trustor shall be responsible for causing to be prepared and filed all income tax returns required to be filed by the Trustor. The Owner Trustee, upon request, will furnish the Trustor with all such information as may be reasonably required from the Owner Trustee in connection with the preparation of such tax returns. The Owner Trustee shall be responsible for causing to be prepared at the request and expense of the Trustor all income tax returns required to be filed with respect to the trust created hereby and shall execute and file such returns. The Trustor, upon request, will furnish the Owner Trustee with all such information as may be reasonably required from the Trustor in connection with the preparation of such income tax returns. ARTICLE 4 TERMINATION OF TRUST SECTION 4.01. Termination. This Agreement and the trust created and provided for hereby shall cease and be terminated in any one of the following events, whichever shall first occur: (a) If the Trustor shall by notice in writing to the Owner Trustee revoke and terminate the trust on and as of a date stated in such notice, which date shall not be less than ten nor more than thirty days from the date of mailing such notice, then on the date specified in such notice the trust created and provided for hereby shall cease and terminate; provided, that this trust shall not be subject to revocation or termination by the Trustor prior to the payment in full and discharge of the Certificates and all other indebtedness secured by the Indenture and the release of the Lien of the Indenture and the security interest granted thereby or prior to termination of the Lease; provided, further, that such notice shall be accompanied by the written agreement of Trustor to assume all of the obligations of the Owner Trustee under the Operative Agreements and all other obligations of the Owner Trustee incurred by it hereunder in its role as the Owner Trustee; (b) The sale or other final disposition by the Owner Trustee of all of its interest in all property constituting or included in the Lessor's Estate and, if the Indenture shall then be in effect, the sale or other disposition by the Indenture Trustee of all of its interest in all property constituting or included in the Lessor's Estate, and the final disposition by the Owner Trustee and, if the Indenture shall then be in effect, the Indenture Trustee, of all moneys or other property or proceeds constituting part of the Lessor's Estate in accordance with the terms hereof; or (c) 110 years from the earlier execution of this Agreement by either party hereto; provided, however, that if the Trust shall be or become valid under applicable law for a period subsequent to 110 years from the earlier execution of this Agreement by either party hereto or, without limiting the generality of the foregoing, if legislation shall become effective providing for the validity or permitting the effective grant of such trust for a period, in gross, exceeding the period for which such trust is hereinabove stated to extend and be valid, then such trust shall not terminate as provided in the first part of this sentence but shall extend to and continue in effect until, but only if such non-termination and extension shall then be valid under applicable law, such time as the same shall, under applicable law, cease to be valid. SECTION 4.02. Distribution of Lessor's Estate upon Termination. Upon any termination of this trust pursuant to the provisions of Section 4.01, the Owner Trustee shall convey the Lessor's Estate to such purchaser or purchasers or the Trustor and for such amount and on such terms as shall be specified in written instructions from the Trustor delivered to the Owner Trustee prior to the date of termination; provided, that (i) if at the time of any termination the Lease remains in force and effect, then the Lessor's Estate shall be sold as a unit (and not in parcels) and subject to the Lease, and (ii) in the event such written instructions are not delivered to the Owner Trustee on or before the date of termination, the Owner Trustee shall transfer title to the Lessor's Estate to the Trustor. Upon making such transfer or sale and accounting for all funds which have come into its hands, the Owner Trustee shall be entitled to receipt of any sums due and owing to the Owner Trustee for expenses incurred pursuant hereto as set forth in Section 2.05. ARTICLE 5 TRANSFER OF BENEFICIAL INTEREST The Trustor may assign, convey or otherwise transfer to a single institutional investor all (but not less than all) of the Beneficial Interest, provided that it gives the Lessee and the Indenture Trustee at least 30 days' notice of such assignment, conveyance or other transfer and provided further that the Trustor agrees by a written instrument in form and substance reasonably satisfactory to the Indenture Trustee and the Owner Trustee to remain liable for all obligations of the Trustor under this Agreement and the Operative Agreements to which the Trustor is a party to the extent (but only to the extent) incurred on or before the date of such transfer and provided that the transferee agrees by a written instrument in form and substance reasonably satisfactory to the Indenture Trustee and the Owner Trustee to assume primary liability for all obligations as a trustor under this Agreement and the Operative Agreements to which such trustor is a party incurred after the date of transfer and the Trustor shall remain secondarily liable for all such obligations assumed by its successor as Trustor; provided, that the Trustor need not so agree to remain and shall not be so secondarily liable if (a) such transferee is (i) a bank, savings institution, finance company, leasing company or trust company, national banking association acting for its own account or in a fiduciary capacity as trustee or agent under any pension, retirement, profit sharing or similar trust or fund, insurance company, fraternal benefit society or corporation acting for its own account having a combined capital and surplus (or, if applicable, consolidated tangible net worth or its equivalent) of not less than $50,000,000, (ii) a subsidiary of any Person described in clause (i) where such Person provides (A) support for the obligations assumed by such transferee reasonably satisfactory to the Lessee, the Owner Trustee and the Indenture Trustee or (B) an unconditional guaranty reasonably satisfactory to the Lessee, the Owner Trustee and the Indenture Trustee of such subsidiary's obligations, or (iii) an Affiliate of the original Trustor, so long as such Affiliate has a combined capital and surplus (or, if applicable, consolidated tangible net worth or its equivalent) of not less than $50,000,000 or the obligations assumed by such Affiliate are guaranteed or otherwise supported to the same extent as the obligations of the original Trustor being transferred were guaranteed or supported immediately prior to such transfer, (b) such transferee is legally capable of binding itself to the obligations of the Trustor and expressly agrees to assume all obligations of the Trustor under the Participation Agreement and this Agreement and (c) such transferee shall provide representations substantially similar to that contained in Section 6.03 of the Participation Agreement. In the event of any such assignment, conveyance and transfer, the transferee shall become a party to this Agreement and shall agree to be bound by all the terms of and will undertake all of the obligations of the Trustor contained in this Agreement and the Operative Agreements in such manner as is reasonably satisfactory to the Owner Trustee and the Indenture Trustee. A transferee hereunder shall be (i) a "United States Person" as defined in Section 7701(a)(30) of the Code (or any successor provision thereto) or if the transferee shall not be such "United States Person" then each Certificate Holder shall be provided an indemnity in form and substance reasonably satisfactory to each such Certificate Holder, for any Taxes that may be imposed on such Certificate Holders (currently or in the future) due to such transferee's failure to be such a "United States Person" and (ii) a Citizen of the United States or has established a voting trust, voting powers or other arrangement to permit the Owner Trustee to be the registered owner of the Aircraft under the Federal Aviation Act. No such assignment, conveyance or transfer shall violate any provision of law or regulation or create a relationship which would be in violation thereof. The Owner Trustee shall not be on notice of or otherwise bound by any such assignment, conveyance or transfer unless and until it shall have received an executed counterpart of the instrument of such assignment, conveyance or transfer. Upon any such disposition by the Trustor to a transferee as above provided, the transferee shall be deemed the "Trustor" for all purposes hereof, and shall be deemed to have made all the payments previously made by its transferor and to have acquired the same interest in the Lessor's Estate as theretofore held by its transferor; and each reference herein to the "Trustor" shall thereafter be deemed a reference to such transferee. Notwithstanding anything to the contrary contained in this Article 5, in no event shall the Trustor transfer its interest in the Beneficial Interest to (i) any entity whose business is that of a nationwide or worldwide overnight or expedited delivery small package air courier, cargo or freight deliverer or which competes with Lessee, and/or (ii) to an employee benefit plan subject to ERISA or an individual retirement account or an employee benefit plan subject to Section 4975 of the Code (hereinafter collectively referred to as an "ERISA Plan"), or to an entity using the assets of an ERISA Plan to acquire its interest in the Beneficial Interest. ARTICLE 6 MISCELLANEOUS SECTION 6.01. Indemnification. The Trustor and its assigns agree to reimburse and save the Owner Trustee, in its individual capacity, harmless against any and all loss, damage, liability, claims, demands, disbursements and expenses, including taxes (excluding taxes imposed against the Owner Trustee upon or with respect to any fees for services rendered in its capacity as Trustee hereunder) and reasonable counsel fees, which are not required to be indemnified by the Lessee pursuant to Section 8.01 of the Participation Agreement and which may be incurred by reason of its being the Owner Trustee or acting hereunder or under the Operative Agreements, but solely by reason thereof and arising out of or relating solely to this Agreement or the Operative Agreements or the Aircraft or the Rents and other sums payable therefor, or by reason of any occurrence directly relating thereto while so acting, and to secure the payment thereof, the Owner Trustee, in its individual capacity, shall have a Lien on the Lessor's Estate and the proceeds thereof, including income, prior to any interest therein of the Trustor and its assigns (but subject to the rights of the Lessee under the Operative Agreements and subject and subordinate to the Lien of the Indenture), except only in respect of any such loss, damage, liability, claims, demands, disbursements and expenses, including taxes and counsel fees, arising from or as a result of (A) the Owner Trustee's willful misconduct or gross negligence (in its individual capacity or as trustee), (B) any inaccuracy of any representation of the Owner Trustee or any breach by the Owner Trustee of its warranties and covenants given in its individual capacity in this Agreement, Article 5 of the Lease, Sections 6.01, 6.02(a) and (b) and 6.04 of the Participation Agreement and its representations and warranties given in its individual capacity in Section 3.08(ii) of the Indenture or elsewhere in the Operative Agreements, (C) the failure to use ordinary care in receiving, handling and disbursing funds, (D) Lessor's Liens attributable to it in its individual capacity, (E) taxes, fees, or other charges on, based on, or measured by, any fees, commissions or compensation received by the Owner Trustee in connection with the transactions contemplated by the Lease, the Indenture and this Agreement, (F) Taxes excluded from indemnification pursuant to Section 7.01(b) of the Participation Agreement (disregarding for the purposes of this Section 6.01, subsections (ii) and (v) of Section 7.01(b) of the Participation Agreement) or (G) Expenses excluded from indemnification pursuant to Section 8.01(b) of the Participation Agreement (disregarding for the purposes of this Section 6.01, subsections (ii), (iv), (vi), and (viii) of Section 8.01(b) of the Participation Agreement); provided, that, before asserting any right to payment or indemnification hereunder, the Owner Trustee shall first demand (but need not exhaust its remedies with respect to) its corresponding right to payment or indemnification from the Lessee pursuant to the Participation Agreement. It is further understood that the distribution by the Owner Trustee of all or any part of the Lessor's Estate as provided in Section 4.02 of this Agreement shall not impair the right of the Owner Trustee to indemnity, payment and reimbursement as herein provided. In the event the Owner Trustee makes any advances at any time to pay or to provide for the payment of any such loss, damage, liability, claim, demand or expense, then the Owner Trustee, in its individual capacity, shall be entitled, in addition to reimbursement for the principal of the sum so advanced, to interest on the amount of such advances at the Corporate Base Rate. The provisions of this Section shall continue in force and effect notwithstanding the termination of this trust or the resignation, inability or incapacity to act or removal of the Owner Trustee. Except as provided in this Section 6.01, the Owner Trustee (in its individual capacity or as trustee) agrees that it shall have no right against the Trustor or (subject to the provisions of the Indenture) the Trust Indenture Estate for any fee as compensation for its services hereunder. SECTION 6.02. Supplements and Amendments. At any time and from time to time, only upon the written request of the Trustor (a) TC and the Trustor shall execute a supplement hereto for the purpose of adding provisions to, or changing or eliminating provisions of, this Agreement as specified in such request and (b) the Owner Trustee shall, subject to the provisions of Article 13 of the Indenture, enter into or consent to such written amendment or modification of or supplement to any of the Operative Agreements as the Indenture Trustee and any other necessary parties may agree to in writing and as may be specified in such request, or execute and deliver such written waiver of the terms of any of the Operative Agreements as may be agreed to in writing by the Indenture Trustee and as may be specified in such request; provided, that (i) the Owner Trustee shall not execute any such supplement, amendment, waiver or modification without the prior written consent of the Trustor, (ii) if in the reasonable opinion of the Owner Trustee any document required to be executed by it pursuant to this Section adversely affects any right or duty of, or immunity or indemnity in favor of, the Owner Trustee under this Agreement or any other Operative Agreement, the Owner Trustee may in its discretion decline to execute such document and (iii) any amendment or supplement to this Agreement that would adversely affect the rights of the Indenture Trustee or the Holders shall be subject to the prior written consent of the Indenture Trustee. It shall not be necessary that any request pursuant to this Section specify the particular form of the proposed document to be executed pursuant to such request, but it shall be sufficient if such request shall indicate the substance thereof. Promptly after the execution by TC or the Owner Trustee of any document pursuant to this Section, the Owner Trustee shall mail a conformed copy thereof to the Trustor and the Indenture Trustee, but the failure of the Owner Trustee to mail such conformed copies shall not impair or affect the validity of such document. SECTION 6.03. Nature of Title of Trustor. The Trustor shall not have any legal title to any part of the Lessor's Estate. No transfer, by operation of law or otherwise, of the right, title and interest of the Trustor in and to the Lessor's Estate or the trusts hereunder shall operate to terminate this Agreement or Lessor's Estate. SECTION 6.04. Power of Owner Trustee to Convey. Any assignment, sale, transfer or other conveyance by the Owner Trustee of the interest of the Owner Trustee in the Operative Agreements or in the Aircraft or any part thereof pursuant to the terms of this Agreement or the Operative Agreements shall bind the Trustor and shall be effective to transfer or convey all right, title and interest of the Owner Trustee and the Trustor in and to the Operative Agreements or the Aircraft or such part thereof. No purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency or regularity of such assignment, sale, transfer or conveyance or as to the application of any sale or other proceeds with respect thereto by the Owner Trustee. SECTION 6.05. Notices. All notices, demands, declarations and other communications required by this Agreement shall be in writing and shall be deemed received (a) if given by telecopier when transmitted and the appropriate telephonic confirmation received if transmitted on a Business Day and during normal business hours of the recipient, and otherwise on the next Business Day following transmission, (b) if given by certified mail, return receipt requested, postage prepaid five Business Days after being deposited in the United States mails, (c) if given by telex, upon receipt by the party transmitting the telex of such party's callback code at the end of such telex (receipt of confirmation in writing not being necessary to the effectiveness of any telex) and (d) if given by Federal Express service or other means, when received or personally delivered, addressed: If to the Owner Trustee:__________________________ __________________________ __________________________ Attention: Facsimile: If to the Trustor: __________________________ __________________________ __________________________ Attention: Facsimile: If to the Indenture Trustee: __________________________ __________________________ __________________________ Attention: Facsimile: or as to any of the foregoing parties at such other address as such party may designate by notice duly given in accordance with this Section to the other parties. SECTION 6.06. Situs of Trust; Applicable Law; Severability. THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ________, INCLUDING ALL MATTERS OF VALIDITY, CONSTRUCTION AND PERFORMANCE. If any provision of this Agreement shall be invalid or unenforceable, the remaining provisions hereof shall continue to be fully effective; provided, that such remaining provisions do not increase the obligations or liabilities of the Owner Trustee or the Trustor. SECTION 6.07. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of, and shall be enforceable by, the parties hereto and their respective successors and permitted assigns, including any successive holder of the Beneficial Interest, but only to the extent the Beneficial Interest has been transferred or assigned in accordance with the limitations of Article 5 of this Agreement. SECTION 6.08. Headings and Table of Contents. The headings of the Articles and Sections of this Agreement and the Table of Contents are inserted for convenience only and shall not affect the meaning or construction of any of the provisions hereof. SECTION 6.09. Definitions. The capitalized terms used herein, unless otherwise herein defined or the context hereof shall otherwise require, shall have the respective meanings set forth in Schedule II to the Participation Agreement dated as of _______________, 199__, among Federal Express Corporation, the Trustor, ________________________, not in its individual capacity but solely as Owner Trustee except as otherwise expressly provided therein, ________________________, as Indenture Trustee and ________________________, as Pass Through Trustee which schedule is attached hereto as Schedule I and by this reference incorporated herein. SECTION 6.10. Identification of Trust. This Trust may for convenience be referred to as the "Federal Express Corporation Trust No. N____FE." SECTION 6.11. Counterparts. This instrument may be executed in any number of counterparts or upon separate signature pages bound together in several counterparts, each of which when so executed shall be deemed to be an original, and such counterparts together shall constitute and be one and the same instrument. IN WITNESS WHEREOF, TC and the Trustor have caused this Agreement to be duly executed all as of the date first above written. ____________________________________ By: ________________________________ Name: Title: ____________________________________ 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. [All other terms used in the Indenture that are defined in the Trust Indenture Act (as defined below) or the Securities Act (as defined below) have the meanings assigned to such terms in the Trust Indenture Act or the Securities Act as in force on the date of the Indenture, except as otherwise expressly provided or unless the context requires.](1) - ------------ (1) To be used for a qualified Indenture. 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 or Federal Aviation Act. The Federal Aviation Act of 1958, 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. 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. In the case of amounts payable to the Lessor, the Owner Participant, or any corporate affiliate of the Owner Participant, it shall be presumed that such Person is at all times subject to Federal income tax at the maximum marginal rate generally applicable to corporations from time to time. Air Carrier. Any air carrier which is a United States "domestic air carrier" as defined in Part 121 of the Federal Aviation Regulations, and any "foreign air carrier" (as defined in the Act) as to which there is in force a permit granted under Section 402 of the Act. Aircraft. The Airframe to be sold by the Lessee to the Owner Trustee pursuant to the Participation Agreement and leased under the Lease (or any permitted substitute Airframe) together with the _____ 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 11.03 of the Lease. Prior to delivery of the initial Lease Supplement, references in the Operative Agreements (including Section 3.05 of the Participation Agreement) to the Aircraft shall mean the __________________ airframe bearing FAA Registration Number N_____ and Manufacturer's serial number _____, together with _________________________________ engines bearing Manufacturer's serial numbers ___________________. Airframe. The ________________________ aircraft (excluding the Engines or engines from time to time installed thereon) leased by Lessor to Lessee pursuant to the Lease and the Lease Supplement and having the United States FAA Registration Number and manufacturer's serial number specified in the Lease Supplement, including (i) all Parts so long as the same shall be incorporated or installed in or attached to such Airframe, or so long as title to any such Parts shall remain vested in Lessor in accordance with the terms of Section 8.01(b) of the Lease after removal from such Airframe, and (ii) any replacement airframe which may be substituted pursuant to Section 11.03 of the Lease. Ancillary Agreements. Any written agreement of the Lessee entered into on the Delivery Date or at any time thereafter in connection with the transaction contemplated by the Operative Agreements or the Original Agreements, in each case as amended from time to time. Appraisal. The report prepared by BK Associates, Inc. and delivered to the Owner Participant and Lessee on the Delivery Date pursuant to Section 4.02(j) of the Participation Agreement. Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended, and any successor thereto. Basic Rent. The aggregate periodic rent payable for the Aircraft throughout the Basic Term pursuant to Section 3.02 of the Lease. Basic Term. The period commencing at the beginning of the day on the Commencement Date and ending at the end of the day on the day immediately preceding the date _________ years from the Commencement Date, or such earlier date on which the Lease shall be terminated as provided therein. Beneficial Interest. The interest of the Owner Participant under the Trust Agreement. Bills of Sale. Collectively, the FAA Bills of Sale for the Aircraft, an additional full warranty bill of sale covering the Aircraft (and specifically referring to each Engine) executed by the Lessee as owner of the Aircraft in favor of the Owner Trustee and dated the Delivery Date and an additional full warranty bill of sale covering the Aircraft executed by the Manufacturer in favor of Lessee. Burdensome Indemnity Payment. A Loss, as defined in the Tax Indemnity Agreement, which causes the aggregate net present value of all Losses paid or payable by the Lessee as of the determination date discounted semi-annually at the Debt Rate to the date of determination to exceed ___% of the Purchase Price. Business Day. Any day other than a Saturday, Sunday or other day on which commercial banking institutions in __________, ________, ______________, ____, New York, New York, ________________________ or Memphis, Tennessee are authorized or required by law to close. Certificate Closing Date. The date of the closing with respect to the purchase of Certificates by the Pass Through Trustee contemplated by Section 2.01(b) of the Participation Agreement. Certificates. The Equipment Trust Certificates (Federal Express 199_-[SERIES NAME]), issued by the Owner Trustee pursuant to the Indenture and any certificate issued in exchange therefor or replacement thereof pursuant to the Indenture. Change in Tax Law. Any change to the Code or the Treasury regulations promulgated thereunder or the publication of any revenue ruling, revenue procedure or any informational release by the Internal Revenue Service or the Department of Treasury, provided that the Owner Participant or the Lessee has notified the other parties of such change in writing prior to the Delivery Date. Change in Tax Rate. Any amendment, modification, deletion, addition, or change to the Code which is enacted into law after the Delivery Date which changes the highest marginal statutory rate of Federal income tax applicable to the Owner Participant (other than a change which is in the nature of a minimum tax). Citizen of the United States. A citizen of the United States as defined in Section 101(16) of the Act, or any analogous part of any successor or substituted legislation or regulation at the time in effect. Closings. The closing with respect to the acquisition of the Pass Through Certificates by the Underwriters and the closing with respect to the acquisition of Certificates by the Pass Through Trustee. Code. Except as otherwise provided, references to the Code shall mean the Internal Revenue Code of 1986, as amended from time to time. Collateral Account. The deposit account established and maintained pursuant to Section 2.12 of the Indenture. Commencement Date. ________________________. Commission. The Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or if at any time after the execution and delivery of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. Commitment. The amount of the Owner Participant's participation in the Purchase Price required to be made available or paid as provided in Section 3.02 of the Participation Agreement. 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. Cut-Off Date. ___________,19__. Corporate Base Rate. The rate announced from time to time by ________ as its Corporate Base Rate. Debt Portion. The amount specified as such on Schedule I to the Participation Agreement. Debt Rate. The average weighted rate of interest on the Certificates issued pursuant to the Indenture. Default. Any event or condition, which, with the lapse of time or the giving of notice, or both, would constitute an Event of Default. Delayed Delivery Notice. A certificate signed by a Responsible Officer of the Lessee (i) requesting that the Pass Through Trustee temporarily delay purchase of the Certificates to a date later than the Pass Through Closing Date, (ii) stating the amount of the purchase price of each such Certificate and the aggregate purchase price of all such Certificates, (iii) stating the reasons for such delay and (iv) either (1) setting or resetting the Delivery Date (which shall be on or prior to the Cut-Off Date), or (2) indicating that such Delivery Date will be set by subsequent written notice not less than three Business Days prior to such new Delivery Date (which shall be on or prior to the applicable Cut-off Date). Delivery Date. The date on which the Aircraft is to be delivered and sold by the Lessee to the Lessor and leased by the Lessor to the Lessee under the Lease, which date is also the date of the initial Lease Supplement. Delivery Notice. Notice of the Aircraft's Delivery Date, given by the Lessee as provided in Section 3.01 of the Participation Agreement and including any notice with respect to a postponed Delivery Date given by the Lessee pursuant to Section 3.05(c) of the Participation Agreement. Depository. The depository of the Registered Global Certificate, if any, representing the Equipment Trust Certificates issued under the Indenture and any successor to such depository appointed by the Company pursuant hereto. Such depository initially shall be Depository Trust Company, a New York corporation. Eligible Deposit Account. Either (a) a segregated account with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a depository institution with corporate trust powers organized under the laws of the United States or any state thereof, or the District of Columbia, and whose deposits are insured by the Federal Deposit Insurance Corporation, provided that such institution also must have a combined capital and surplus of at least $100,000,000 and a rating of A or better from the Thomson Bank Watch. Eligible Institution. A depository institution organized under the laws of the United States or any one of the states thereof, or the District of Columbia, or any domestic branch of a foreign bank, which in any such case at all times (a) has either (x) a long-term unsecured debt rating of at least Aa2 by Moody's or (y) a short-term certificate of deposit rating of P-1 by Moody's, (b) has either (x) a long-term unsecured debt rating of a least AA by S&P or (y) a short-term certificate of deposit rating of A-1+ by S&P and (c) is a member of the Federal Deposit Insurance Corporation. Engine. Each of the ______________________ engines listed by its manufacturer's serial number in the initial Lease Supplement and leased pursuant to the Lease, whether or not from time to time installed on the Airframe or installed on any other airframe or on any other aircraft, and any Replacement Engine which may from time to time be substituted for an Engine pursuant to Sections 7.02(a)(vii), 10.03, 11.03, 11.04 or 12.02 of the Lease, together with all Parts incorporated or installed in or attached to any such Engine and all Parts removed from any such Engine so long as title to such Parts shall remain vested in the Lessor in accordance with the terms of Article 8 of the Lease after removal from 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 Lease. The term "Engines" means, as of any date of determination, all Engines then leased to the Lessee pursuant to the Lease. Engine Consent and Agreement. The Engine Consent and Agreement dated as of ________, executed by the Engine Manufacturer, as the same may be amended from time to time. Engine Manufacturer. ________________________, a ________ corporation. ERISA. The Employee Retirement Income Security Act of 1974, as amended. Event of Default. Each of the events specified in Article 16 of the Lease. Event of Loss. Any of the following events with respect to the Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A) for a period in excess of 180 days (or in any event if such loss is continuing on the last day of the Term) due to theft or disappearance, or (B) for a period in excess of 60 days (or in any event if such loss is continuing on the last day of the Term) due to the destruction, damage beyond economic repair or rendition of such property permanently unfit for normal use by the Lessee for any reason whatsoever; (ii) any damage to such property which results in an insurance settlement with respect to such property on the basis of a total loss, or constructive or compromised total loss; (iii) (x) condemnation, confiscation or seizure of, or requisition of title to such property, or (y) requisition of use of such property (A) by 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, or (B) by the Government for a period extending beyond the Term, provided that no Event of Loss shall be deemed to have occurred, and the Term shall be extended automatically for a period of up to six months in the event that the Aircraft, the Airframe or any Engine is requisitioned by the Government pursuant to an activation as part of the Civil Reserve Air Fleet Program, as such term is defined in Section 7.02(a)(iv) of the Lease; and (iv) as a result of any law, rule, regulation, order or other action by the Aeronautics Authority or other governmental body having jurisdiction, the use of the Aircraft or Airframe in the normal course of air transportation of cargo shall have been prohibited by virtue of a condition affecting all aircraft of the same type for a period of eighteen (18) consecutive months, unless the Lessee, 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 or for a period extending beyond the end of the Term, unless the Lessee, prior to the expiration of such two (2) year period shall have conformed at least one __________________ aircraft (but not necessarily the Aircraft or the Airframe) to the requirements of any such law, rule, regulation, order, or other action and shall have commenced regular commercial use and shall be diligently carrying forward, on a non-discriminatory basis, all steps necessary or desirable to permit the normal use of the Aircraft by the Lessee; provided, that if there is a conflict between the operation of clause (iv) above and Section 12.05 of the Lease (by reference to Section 12.04(ix) thereof), such Section 12.05 of the Lease shall control. 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 (iv) above. An Event of Loss with respect to the Aircraft shall be deemed to have occurred if any Event of Loss occurs with respect to the Airframe. Excepted Payments. Collectively, (i) all right, title and interest of the Owner Participant or the Owner Trustee in, to and under the Tax Indemnity Agreement and any moneys due or to become due under the Tax Indemnity Agreement and payments of Supplemental Rent or other payments by the Lessee in either case in respect of the Tax Indemnity Agreement, (ii) indemnity payments and interest thereon and other amounts payable by the Lessee to the Owner Participant or to the Trust Company or any of their respective Affiliates, successors, assigns, directors, officers, employees, agents or servants pursuant to Article 7 or 8 of the Participation Agreement or any corresponding payment of Supplemental Rent under the Lease; (iii) proceeds of public liability insurance in respect of the Aircraft payable to the Owner Participant or Trust Company, or any of their Affiliates, successors or assigns, as a result of insurance claims made, or losses suffered, by, or amounts in respect of such indemnities paid for the benefit of, the Owner Participant or the Trust Company either pursuant to the Lease (which shall include proceeds of any self-insurance by the Lessee) or maintained by the Trust Company or the Owner Participant and not required to be maintained under the Lease; (iv) proceeds of any insurance in respect of the Aircraft which is separately acquired and paid for by the Owner Participant (directly or through the Owner Trustee) or the Lessor in accordance with Section 13.05 of the Lease; (v) indemnity payments payable by the Owner Participant to the Trust Company pursuant to Section 6.01 of the Trust Agreement; (vi) Transaction Costs or other expenses paid or payable by the Lessee to, or for the benefit of, the Owner Trustee, Trust Company or the Owner Participant pursuant to Section 9.01 of the Participation Agreement, Section 3.02(b) of the Lease and Section 2.02 of the Participation Agreement; (vii) the right to enforce, and the proceeds of any such enforcement of, any right to receive the proceeds of any of the amounts referred to in clauses (i) through (vi) above and (viii) any payments in respect of interest to the extent attributable to the payments referred to in clauses (i) through (vii) above. Expense and Expenses. Have the meaning specified in Section 8.01(a) of the Participation Agreement. FAA Bills of Sale. The bill of sale for the Airframe on AC Form 8050-2, or such other form as may be approved by the Aeronautics Authority executed by the Lessee in favor of the Lessor and dated the Delivery Date and the bill of sale for the Airframe on AC Form 8050-2, or such other form as may be approved by the Aeronautics Authority executed by the manufacturer in favor of the Lessee. Fair Market Renewal Term. One or more terms of one or more years, but not to exceed ____ years in the aggregate and which term(s) shall immediately follow the end of the Basic Term or the Fixed Renewal Term with respect to which the Lessee has exercised its option to renew the Lease pursuant to Section 4.01(a)(B) thereof. Fair Market Rental. An amount determined on the basis of, and equal in amount to, the rental which would be obtained in an arm's-length transaction between an informed and willing lessee and an informed and willing lessor unaffiliated with such lessee, neither being under any compulsion to lease. In such determination, it shall be assumed that the Aircraft is in the condition required under the Lease in the case of return of the Aircraft pursuant to Article 12 of the Lease. Fair Market Rental shall be determined in accordance with the provisions of Section 4.03 of the Lease. Fair Market Value. An amount determined on the basis of, and equal in amount to, the value which would be obtained in an arm's-length transaction between an informed and willing purchaser under no compulsion to buy and an informed and willing seller unaffiliated with such purchaser and under no compulsion to sell. In such determination it shall be assumed that the Aircraft is in the condition required under the Lease in the case of return of the Aircraft pursuant to Article 12 of the Lease. Fair Market Value shall be determined in accordance with the provisions of Section 4.03 of the Lease. Federal Aviation Administration and FAA. The United States Federal Aviation Administration and any successor agency or agencies thereto. Fixed Renewal Rental. An amount equal to 50% of the average semiannual payments of Basic Rent during the Basic Term as such payments may be adjusted pursuant to Section 3.04 of the Lease. Fixed Renewal Term. Up to ____ renewal terms, each term to be not less than ____ year, but not more than _____ years in the aggregate. Government. The United States of America or an agency or instrumentality thereof. Holder. As of any particular time, the person in whose name a Certificate shall be registered. Indebtedness of any Person means at any time, without duplication, (i) all obligations of such Person for borrowed money or the deferred purchase price of property, or evidenced by bonds, debentures, notes or other similar instruments, or arising under leases that are properly capitalized under generally accepted accounting principles applicable to such Person and (ii) all guarantees by such Person of such obligations described in clause (i) above of third parties. Indemnitee. Each of the Owner Trustee, in its individual capacity and as trustee, the Owner Participant, the Original Loan Participant, the Indenture Trustee, in its individual capacity and as trustee, and any successor (including any trustee which may succeed to the Lessor's interest under the Lease), and any Affiliate, assign, officer, director, employee, agent and servant of any of the foregoing, the Lessor's Estate and the Trust Indenture Estate. Neither the Certificate Holder nor any holder of a Pass Through Certificate shall be deemed to be an Indemnitee. Indenture. The Trust Indenture and Security Agreement, dated as of ___________, 199_, as amended and restated as of _____________, 199_, between the Lessor and the Indenture Trustee and the Indenture Supplement and any amendment or supplement hereto or thereto from time to time entered into. Indenture Default. Any event or condition, which, with the lapse of time or the giving of notice, or both, would constitute an Indenture Event of Default. Indenture Documents. The Participation Agreement, the Trust Agreement (including any Trust Agreement Supplements), the Lease (including any Lease Supplements), the Indenture (including any Indenture Supplements), the Certificates, the Purchase Agreement Assignment, the FAA Bills of Sale, the Consent and Agreement and the Engine Consent and Agreement. Indenture Event of Default. Each of the events specified in Section 7.01 of the Indenture. Indenture Supplement. Any Indenture Supplement, substantially in the form of Exhibit A to the Indenture, entered into between the Indenture Trustee and the Owner Trustee, which Indenture Supplement shall incorporate by reference the provisions of the Indenture including any amendments entered into subsequent to the Delivery Date. Indenture Trustee. _______________________, a national banking association, not in its individual capacity but solely as Indenture Trustee under the Indenture and each other Person which may from time to time be acting as successor trustee under the Indenture. Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate resulting from (i) claims against the Indenture Trustee not related to the administration of the Trust Indenture Estate or any transactions pursuant to the Indenture or any document included in the Trust Indenture Estate or (ii) any act or omission of the Indenture Trustee which is not related to the transactions contemplated by the Operative Agreements or is in violation of any of the terms of the Operative Agreements. Independent Appraisal. An appraisal conducted pursuant to Section 4.03 of the Lease. Independent Investment Banker. An independent investment banking institution of national standing appointed by the Lessee that is independent in fact, does not have any direct financial interests, or any material indirect financial interest, in the Lessee or any Affiliate of the Lessee, and is not connected with the lessee or any Affiliate of the Lessee, as an officer, employee, promoter, underwriter, trustee, partner, director or Person performing similar functions; provided, that if the Indenture Trustee shall not have received written notice of such an appointment at least 10 days prior to the Prepayment Date 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. Interest Payment Date means each _________ and ________ beginning with __________, 199_; provided, that if any such day is not a Business Day, the relevant Interest Payment Date shall be the next succeeding Business Day. Interim Term. The period commencing on the Delivery Date and ending at the end of the day immediately preceding the Commencement Date. Invoice. The invoice for the Aircraft given by the Lessee to the Lessor. Lease. The Lease Agreement dated as of __________, 199_, entered into by the Lessor and the Lessee and the Lease Supplement and any amendment or supplement hereto or thereto from time to time entered into. Lease Supplement. Any Lease Supplement, substantially in the form of Exhibit A to the Lease, entered into between the Lessor and the Lessee for the purpose of leasing the Aircraft pursuant to the terms of the Lease, which Lease Supplement shall incorporate by reference the provisions of the Lease including any amendments or supplements entered into subsequent to the Delivery Date. Lessee. Federal Express Corporation, a Delaware corporation, and its successors and assigns in its capacity as lessee. Lessor. __________ Trust Company, a ________ banking corporation, not in its individual capacity except as otherwise expressly stated, but solely as Owner Trustee under the Trust Agreement, and its successors and assigns. Lessor's Estate. All estate, right, title and interest of the Owner Trustee in and to the Collateral Account, the Liquid Collateral, the Aircraft, the Lease, any Lease Supplement, the Bills of Sale, any warranty with respect to the Airframe and the Engines, all amounts of Basic Rent and Supplemental Rent, including without limitation, insurance proceeds (other than insurance proceeds payable to or for the benefit of the Owner Trustee for its own account or in its individual capacity, the Owner Participant or any Holder or the Indenture Trustee) and requisition, indemnity or other payments of any kind for or with respect to the Aircraft (except amounts owing to the Owner Participant, to the Indenture Trustee, to the Owner Trustee in its individual capacity or any Holder, or to any of their respective directors, officers, employees and agents pursuant to Articles 7 and 8 of the Participation Agreement). Notwithstanding the foregoing, "Lessor's Estate" shall not include any Excepted Payment. Lessor's Liens. Liens on the Lessor's Estate or the Trust Indenture Estate arising as a result of (i) claims against the Lessor, in its individual capacity or as Owner Trustee, or the Owner Participant, in each case not related to the transactions contemplated by the Operative Agreements, (ii) acts or omissions of the Lessor in its individual capacity or as Owner Trustee, and, in the case of the Lessor in its individual capacity, arising from its gross negligence or willful misconduct either not related to the transactions contemplated by or expressly prohibited under the Operative Agreements and any act or omission of the Owner Participant which is not related to the transactions contemplated by the Operative Agreements or is in violation of any of the terms of the Operative Agreements, (iii) Taxes or Expenses imposed against the Lessor, in its individual capacity or as Owner Trustee, Owner Participant, Lessor's Estate or the trust created by the Trust Agreement which are not indemnified against by the Lessee pursuant to the Tax Indemnity Agreement or the Participation Agreement, or (iv) claims against the Lessor or the Owner Participant arising from the voluntary transfer by the Lessor or the Owner Participant of its interests in the Aircraft other than a transfer of the Aircraft pursuant to Section 4.02(a) or Articles 10 or 11 of the Lease and other than a transfer pursuant to the exercise of the remedies set forth in Article 17 of the Lease. Letter of Representations. A letter from the Company and the Owner Trustee to, and accepted by, the Depository, as such letter may be modified or supplemented, or any successor letter thereto. Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or security interest. Liquid Collateral. All amounts and securities deposited from time to time in the Collateral Account and all the products, investments, earnings and proceeds of the foregoing, including, but not limited to, all proceeds of the investment or conversion thereof, voluntary or involuntary, into cash, Specified Investments or other property, all rights to payment of any and every kind, and other forms of obligations, and instruments and other property which at any time constitute all or part or are included in the proceeds of any of the foregoing. Losses. Has the meaning specified in Section 15.02(a) of the Participation Agreement. 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 Certificates outstanding as of such date excluding for purposes of this definition any Certificates held by (i) the Owner Participant unless all Certificates then outstanding shall be held by the Owner Participant, (ii) by the Lessee, (iii) by the Indenture Trustee or (iv) by any Affiliate of either. Make-Whole Premium. With respect to each Certificate to be prepaid pursuant to Sections 6.02(ii), 6.02(iv) and 6.02(v) 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 an excess of (i) the present values of all remaining scheduled payments of such principal amount or portion thereof and interest thereon (excluding interest accrued from the immediately preceding Payment Date to such Prepayment Date) to the Maturity of such Certificate in accordance with generally accepted financial practices assuming a 360-day year consisting of twelve 30-day months at a discount rate equal to Treasury Yield, all as determined by the Independent Investment Banker over (ii) the unpaid principal amount of such Certificate. Manufacturer. _____________________________, a ________ corporation. Maturity. With respect to any Certificate, the date on which the principal amount of such Certificate is due and payable. Net Present Value of Rents. The net present value, as of the Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted at a rate per semi-annual period equal to (a) the Debt Rate as of the date of determination divided by (b) two. Non-U.S. Person. Any Person other than (i) a citizen or resident of the United States, as defined in Section 7701(a)(30) of the Code (for purposes of this definition, the "United States"), (ii) a corporation, partnership or other entity created or organized in or under the laws of the United States or any political subdivision thereof or therein, or (iii) any estate or trust that is subject to United States federal income taxation regardless of the source of its income. Obsolete Parts. Parts which the Lessee deems obsolete or no longer suitable or appropriate for use on the Airframe or any Engine. Officer's Certificate means a certificate signed by a Responsible Officer of the Owner Trustee or the Lessee, as the case may be, delivered to the Indenture Trustee. Each such certificate shall include the statements provided for in Section 15.07. Operative Agreements. The Participation Agreement, the Trust Agreement, the Bills of Sale, the Lease, the Lease Supplement, the Certificates outstanding at the time of reference, the Indenture, the Indenture and Security Agreement Supplement, the Consent and Agreement, the Purchase Agreement Assignment, the Engine Consent and Agreement, the Pass Through Agreement and the Tax Indemnity Agreement, each as amended from time to time. Opinion of Counsel means a written opinion of legal counsel, who in the case of counsel (a) for the Lessee may be (i) an attorney employed by the Lessee who is generally empowered to deliver such written opinions, (ii) Davis Polk & Wardwell or a successor firm or (iii) other counsel designated by the Lessee and reasonably satisfactory to the Indenture Trustee, (b) for the Owner Trustee, may be (i) Potter Anderson & Corroon or (ii) other counsel designated by the Owner Trustee and reasonably satisfactory to the Indenture Trustee and (c) for the Indenture Trustee, may be (i) Powell, Goldstein, Frazer & Murphy or (ii) other counsel designated by the Indenture Trustee. Owner Participant. ____________________________, a __________ corporation, and any successor thereto, and any person to which Owner Participant transfers, in accordance with the Trust Agreement, its right, title and interest in and to the Operative Agreements and the Lessor's Estate. Owner Trustee. __________ Trust Company, a ________ banking corporation, not in its individual capacity except as otherwise expressly stated, but solely as Owner Trustee under the Trust Agreement, and its successors and assigns. Owner's Economic Return. The Owner Participant's anticipated after-tax yield and aggregate after-tax cash flow during the Interim Term and the Basic Term utilizing the multiple investment sinking fund method of analysis, computed on the basis of the same methodology and assumptions as were utilized by the Owner Participant in determining Basic Rent, Stipulated Loss Value and Termination Value percentages, as such assumptions may be adjusted for events which have been the basis of adjustments to Rent pursuant to Section 3.04 of the Lease. Participation Agreement. The Participation Agreement, dated as of ___________, 199_ among the Lessee, the Owner Trustee not in its individual capacity except as otherwise expressly stated therein, but solely as trustee, the Owner Participant, the Pass Through Trustee, solely as pass through trustee, and the Indenture Trustee in its individual capacity and as trustee as amended, modified or supplemented, or the terms thereof waived. 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 and, so long as title thereto shall remain vested in the Lessor in accordance with the terms of Article 8 of the Lease, after removal from the Airframe or Engines. Pass Through Agreement. The Pass Through Trust Agreement dated as of ___________, 199_ between the Lessee 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 199_ Pass Through Certificates, Series ___ or 199_ Pass Through Certificates, Series ___, in each case as issued by the related Pass Through Trust; and "Pass Through Certificates" means all of the Pass Through Certificates issued by each of the Pass Through Trusts. Pass Through Closing Date. The Business Day on which the sale of the Pass Through Certificates to the Underwriter pursuant to the Underwriting Agreements takes place. Pass Through Trust. The Federal Express Pass Through Trust, 199_-____ or Federal Express Pass Through Trust 199_-_, in each case formed pursuant to the related Series Supplement in accordance with the Pass Through Agreement; and "Pass Through Trusts" means both of such Pass Through Trusts. 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. Past Due Rate. At any time a rate of interest per annum equal to __% per annum plus the Debt Rate. Paying Agent has the meaning set forth in Section 3.04 of the Indenture. Payment Date. Each _______ and ___________, commencing _____________, 199_, thereafter until all Certificates have been paid in full. Payment Default. Any event specified in Section 16.01(a) or 16.01(b) of the Lease which with the giving of notice or lapse of time or both would constitute an Event of Default. Permitted Investments. Those investments enumerated in Section 23.01(a ) (i), (ii), (iii) and (iv) of the Lease. Person. Any individual, sole proprietorship, partnership, joint venture, joint stock company, trust, unincorporated organization, association, corporation, institution, entity or government (federal, state, local, foreign or any agency, instrumentality, division or body thereof). Prepayment Date. The meaning specified in Section 6.02 of the Indenture. Prepayment Price. The meaning specified in Section 6.02(b) of the Indenture. Proposed Termination Date. The proposed date of termination of the Lease as specified by the Lessee in its notice given pursuant to Section 10.01 thereof Purchase Agreement. The Purchase Agreement, dated as of _____________, between the Manufacturer and the Lessee relating to the purchase by the Lessee of the Aircraft, as originally executed or as modified, amended or supplemented in accordance with the terms thereof, but only insofar as the foregoing relates to the Aircraft. Purchase Agreement Assignment. The Purchase Agreement Assignment dated as of _____, executed by the Lessee and the Owner Trustee. Purchase Option Date. ______________________. Purchase Option Price. The amount to be paid by Lessee to Lessor on the Purchase Option Date pursuant to Section 4.02(a)(B) of the Lease, which amount is set forth in the Appraisal. Purchase Price. Has the meaning specified in Section 2.01(b) of the Participation Agreement. Record Date. As used with respect to any Interest Payment Date (except a date for payment for defaulted interest), __________ for __________ Interest Payment Dates and _________ for ____________ Interest Payment Dates, whether or not such date is a Business Day. Recourse Amount. Has the meaning specified in Section 14.10 of the Participation Agreement. Refinancing. A non-recourse loan to the Lessor arranged pursuant to Section 14.01 of the Participation Agreement. Register has the meaning set forth in Section 3.02 of the Indenture. Registered Global Certificate. The Equipment Trust Certificate, if any, issued to the Depository in accordance with Section 2.12 of the Indenture and bearing the legend prescribed in Exhibit B to the Indenture. Registrar. Has the meaning set forth in Section 3.02 of the Indenture. Renewal Rent. The amount payable by the Lessee as rent in accordance with Section 4.01 of the Lease during any Renewal Term. Renewal Term. Any of the Fixed Renewal Terms or Fair Market Renewal Terms which immediately follow the end of the Basic Term with respect to which the Lessee has exercised its option to renew the Lease pursuant to Section 4.01(a) thereof. Rent. All payments due from the Lessee under the Lease as Basic Rent, Renewal Rent and Supplemental Rent, collectively. Rent Payment Date. Each _________ and __________, commencing ___________, 199_, and continuing thereafter during the Term. Replacement Engine. A ______________________ ______ 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 7.02(a)(vii), 10.03, 11.03 11.04, or 12.02 of the Lease and leased pursuant to the Lease, together with all Parts relating to such engine. Responsible Officer. With respect to the Owner Trustee (except for purposes of the Trust Agreement) or 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 party, any corporate officer or other employee of a party who, in the normal performance of his 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. Scheduled Delivery Date. The Delivery Date specified in the Delivery Notice pursuant to Section 3.01 of the Participation Agreement. Securities Act. The Securities Act of 1933, as amended. SEC. The Securities and Exchange Commission of the United States and any successor agencies or authorities. Series Supplement. The Series Supplement 199_-_ to be executed and delivered by the Lessee and the Pass Through Trustee or the Series Supplement 199_-_ to be executed and delivered by the Lessee and the Pass Through Trustee, in each case 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. Significant Expenditure. Has the meaning specified in Section 4.02(a)(D) of the Lease. Sinking Fund Payment Date. __________________ Sinking Fund Payment Price. _________________ Special Aviation Counsel. Daugherty, Fowler & Peregrin. Specified Investments. Shall mean (a) direct obligations of the United States of America or obligations fully guaranteed by the United States of America; (b) commercial paper rated A-1/P-1 by Standard & Poor's Ratings Group and Moody's Investors Service, Inc., respectively or, if such ratings are unavailable, rated by any nationally recognized rating organization in the United States equal to the highest rating assigned by such rating organization; (c) overnight federal funds transactions with members of the Federal Reserve Systems arranged by federal funds brokers; and (d) overnight repurchase agreements with respect to the securities described in clause (a) above entered into with an office of a bank or trust company which is located in the United States of America of any bank or trust company which is organized under the laws of the United States or any state thereof and has capital surplus and undivided profits aggregating at least $500 million. Stipulated Loss Value. As of any Stipulated Loss Value Determination Date during the Basic Term, the amount determined by multiplying the Purchase Price by the percentage set forth in Schedule III of the Lease under the heading "Stipulated Loss Value Factors" opposite such date (as such Schedule III may be adjusted from time to time as provided in Section 3.04 of the Lease), and during any Renewal Term, the amount determined pursuant to Section 4.01(b) of the Lease. Notwithstanding any other provisions of the Lease or the Participation Agreement or the Indenture, each Stipulated Loss Value for the Aircraft shall be, under any circumstances and in any event, an amount, together with Basic Rent due and owing through the date of payment of Stipulation Loss Value, at least sufficient to pay in full as of such date of payment the aggregate unpaid principal amount of and accrued interest on the Certificates outstanding on such date of payment. Stipulated Loss Value Determination Date. Each date set forth on Schedule III of the Lease under the heading "Stipulated Loss Value Factors." Supplemental Rent. All amounts, liabilities and obligations which the Lessee assumes or agrees to pay under the Lease or under the Participation Agreement or Tax Indemnity Agreement or any other Ancillary Agreement to the Lessor or others, including, without limitation, payments of Stipulated Loss Value and amounts calculated by reference to Termination Value and any other amounts due on the Certificates pursuant to the Indenture, and all amounts required to be paid by Lessee under the agreements, covenants and indemnities contained in the Lease or in the Participation Agreement, but excluding Basic Rent or the Fixed Renewal Rental. Tax. Shall have the meaning set forth in Section 7.01(a) of the Participation Agreement. Tax Indemnity Agreement. The Tax Indemnity Agreement, dated as of ___________, 199_, between the Lessee and the Owner Participant, as from time to time modified, amended or supplemented pursuant to its applicable provisions. Term. The Interim Term and the Basic Term of the lease for the Aircraft under the Lease and, if renewed pursuant to Section 4.01 of the Lease, each Renewal Term for the Aircraft for which the Lease is renewed, or such earlier date on which the Lease is terminated pursuant to its terms. Termination Date. A Rent Payment Date during the Basic Term that is on or after _________________. Termination Value. As of any Termination Date, the amount determined by multiplying the Purchase Price by the percentage set forth in Schedule IV of the Lease under the heading "Termination Value Factors" opposite such Termination Date (as such Schedule IV may be adjusted from time to time as provided in Section 3.04 of the Lease). Notwithstanding any other provisions of the Lease, the Participation Agreement or the Indenture, each Termination Value shall be, under any circumstances and in any event, an amount, together with Basic Rent due and owing through the date of payment of any amount calculated by reference to Termination Value, at least sufficient to pay in full as of such date of payment of the aggregate unpaid principal amount of and accrued interest on the Certificates outstanding on such date of payment. Transaction Costs. All of the documented costs and expenses incurred by the Lessee, the Owner Trustee, the Underwriters, the Indenture Trustee and the Participants as contemplated by Section 9.01(a) of the Participation Agreement. "Treasury Yield". (i) In the case of a 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 Certificate and (ii) in the case of a 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 Lessee) corresponding in maturity to such 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 bid price as of 10:00 a.m. and 2:00 p.m. New York time, on the second Business Day preceding the Prepayment Date. Trust Agreement. The Trust Agreement, dated as of _________, 1992, between the Owner Participant and the Owner Trustee in its individual capacity, as from time to time modified, amended or supplemented pursuant to its applicable provisions and in accordance with the Operative Agreements. Trust Company. __________ Trust Company, a ________ banking corporation, in its individual capacity and not as Owner Trustee, and its successors under the Trust Agreement, in their respective individual capacities and not as Owner Trustees. [Trust Indenture Act. Except as otherwise provided in Section 4.04, 13.01 and 13.08 of the Indenture, the Trust Indenture Act of 1939, as amended, as in force on the date that the Indenture was first qualified under such Act.](2) - ------------ (2)To be added in the case of a qualified Indenture. Trust Indenture Estate. The property, rights and privileges described in the Granting Clause of the Indenture, other than (i) Excepted Payments, including, without limitation all right, title and interest of the Owner Participant in, to and under the Tax Indemnity Agreement and any moneys due and to become due under the Tax Indemnity Agreement, all as provided in the Indenture, and (ii) rights granted to the Owner Trustee or the Owner Participant under the Indenture, including without limitation Sections 2.05, 7.02, 8.01, 8.02, 8.03, 13.01 and 13.02 thereof. Underwriters. __________________. Underwriting Agreement. The agreement among the Lessee and the several Underwriters dated ______________, 199_, 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 401 or Section 418 of the Federal Aviation Act, and as to which there is in force an air carrier operating certificate issued pursuant to 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. (2)To be added in the case of a qualified Indenture. EX-4.G.2 10 Exhibit 4(g)(2) LEASE AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N_____) Dated as of _______________, 199_ between ________________________, Not in its Individual Capacity, but Solely as Owner Trustee, Lessor and FEDERAL EXPRESS CORPORATION, Lessee COVERING ONE [MANUFACTURER/MODEL] AIRCRAFT SERIAL NO. _____, REGISTRATION NO. N_____ CERTAIN OF THE RIGHT, TITLE AND INTEREST IN AND TO THIS LEASE AGREEMENT OF _____________________________, AS OWNER TRUSTEE, HAS BEEN ASSIGNED TO AND IS SUBJECT TO A LIEN AND SECURITY INTEREST IN FAVOR OF _____________________________, INDENTURE TRUSTEE UNDER TRUST INDENTURE, MORTGAGE AND SECURITY AGREEMENT DATED AS OF THE DATE HEREOF FOR THE BENEFIT OF THE HOLDERS OF THE CERTIFICATES REFERRED TO IN SUCH TRUST INDENTURE, MORTGAGE AND SECURITY AGREEMENT. THIS LEASE AGREEMENT HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS. ONLY ORIGINAL COUNTERPART NO. __ CONTAINS THE RECEIPT THEREFOR EXECUTED BY _____________________________, ON THE SIGNATURE PAGES THEREOF. TABLE OF CONTENTS Page Initial Recitals.............................................................1 ARTICLE 1 DEFINITIONS ARTICLE 2 ACCEPTANCE UNDER THE LEASE Section 2.01. Sale and Lease of Aircraft............................... 1 Section 2.02. Delivery................................................. 2 Section 2.03. Notice of Purchase Price................................. 2 Section 2.04. Bills of Sale............................................ 2 Section 2.05. Method of Payment........................................ 2 Section 2.06. Recordation of Lease..................................... 2 ARTICLE 3 RENT AND RENT ADJUSTMENT Section 3.01. Owner Participant Payments............................... 3 Section 3.02. Basic Rent............................................... 3 Section 3.03. Supplemental Rent........................................ 3 Section 3.04. Adjustments to Basic Rent, Stipulated Loss Value and Termination Value After the Delivery Date.............. 3 Section 3.05. Minimum Basic Rent....................................... 5 Section 3.06. Payment to Indenture Trustee............................. 5 Section 3.07. Costs and Expenses....................................... 6 ARTICLE 4 RENEWAL OPTIONS AND PURCHASE OPTIONS Section 4.01. Renewal Options.......................................... 6 Section 4.02. Purchase Option.......................................... 7 Section 4.03. Appraisal Procedures..................................... 9 ARTICLE 5 REPRESENTATIONS AND WARRANTIES Section 5.01. Lessor's Representations and Warranties.................. 10 Section 5.02. Disclaimer of Representations and Warranties............. 11 Section 5.03. Modification of Other Warranties......................... 11 ARTICLE 6 LIENS Section 6.01. Liens.................................................... 12 ARTICLE 7 AIRCRAFT REGISTRATION, MAINTENANCE AND OPERATION Section 7.01. Registration, Maintenance and Operation.................. 13 Section 7.02. Possession and Permitted Transfer and Sublease........... 15 Section 7.03. Insignia................................................. 19 ARTICLE 8 REPLACEMENT AND POOLING OF PARTS Section 8.01. Replacement of Parts..................................... 19 Section 8.02. Pooling of Parts......................................... 20 ARTICLE 9 ALTERATIONS, MODIFICATIONS AND ADDITIONS Section 9.01. Required Alterations and Modifications................... 21 Section 9.02. Other Alterations and Modifications...................... 21 ARTICLE 10 VOLUNTARY TERMINATION Section 10.01. Right of Termination Upon Obsolescence or Surplus....... 22 Section 10.02. Retention of Aircraft by the Lessor..................... 25 Section 10.03. Voluntary Termination as to Engines..................... 26 ARTICLE 11 LOSS, DESTRUCTION, REQUISITION Section 11.01. Lessee's Election Rights................................ 26 Section 11.02. Payment of Stipulated Loss Value........................ 27 Section 11.03. Replacement of Airframe and Engines..................... 27 Section 11.04. Event of Loss with Respect to an Engine................. 29 Section 11.05. Application of Payments from the Government or Others... 31 Section 11.06. Requisition of an Airframe and the Installed Engines for Use by Government................................. 32 Section 11.07. Requisition for Use by Government of an Engine Not Installed on the Airframe............................. 32 Section 11.08. Application of Payments During Existence of Certain Defaults.............................................. 33 ARTICLE 12 RETURN OF AIRCRAFT Section 12.01. Return of Aircraft...................................... 33 Section 12.02. Return of Engines....................................... 34 Section 12.03. Return of Manuals....................................... 34 Section 12.04. Condition of Aircraft................................... 34 Section 12.05. Delayed Return of Aircraft.............................. 36 Section 12.06. Storage................................................. 36 Section 12.07. Special Markings........................................ 37 Section 12.08. Lessor's Option to Purchase Parts....................... 37 ARTICLE 13 INSURANCE Section 13.01. Public Liability and Property Damage Liability Insurance............................................. 37 Section 13.02. Insurance Against Loss or Damage to Aircraft and Engines 39 Section 13.03. Application of Insurance Proceeds....................... 41 Section 13.04. Reports................................................. 42 Section 13.05. Lessor's Insurance...................................... 43 Section 13.06. Self-Insurance.......................................... 43 ARTICLE 14 INSPECTION Section 14.01. Right of Inspection..................................... 43 Section 14.02. No Obligation to Inspect................................ 44 ARTICLE 15 ASSIGNMENT Section 15.01. Lessee's Right to Assign................................ 45 Section 15.02. Citizenship............................................. 45 ARTICLE 16 EVENTS OF DEFAULT Section 16.01. Events of Default....................................... 45 ARTICLE 17 REMEDIES Section 17.01. Remedies Upon Lessee's Default.......................... 47 Section 17.02. Cumulative Remedies..................................... 50 Section 17.03. Waiver.................................................. 50 Section 17.04. Lessor's Right to Perform for Lessee.................... 50 ARTICLE 18 COVENANT OF QUIET ENJOYMENT Section 18.01. Quiet Enjoyment......................................... 51 ARTICLE 19 FURTHER ASSURANCES; FINANCIAL INFORMATION Section 19.01. Further Assurances...................................... 51 ARTICLE 20 NET LEASE Section 20.01. Nature of Lease......................................... 52 ARTICLE 21 SUCCESSOR LESSOR Section 21.01. Successor Lessor........................................ 53 Section 22.02. Lease Subject to Indenture.............................. 53 Section 22.03. Consent of Lessee to Assignment of Lease as Security.... 54 ARTICLE 23 SECURITY FUNDS Section 23.01. Investment of Security Funds............................ 54 ARTICLE 24 CONCERNING THE LESSOR Section 24.01. Lessor's Entry Into Lease............................... 55 ARTICLE 25 NOTICES Section 25.01. Notices................................................. 56 ARTICLE 26 MISCELLANEOUS Section 26.01. Section Heading and Captions............................ 57 Section 26.02. References.............................................. 57 Section 26.03. APPLICABLE LAW.......................................... 57 Section 26.04. Severability............................................ 57 Section 26.05. No Oral Modification.................................... 57 Section 26.06. Agreement as Chattel Paper.............................. 58 Section 26.07. Counterparts and Effective Date......................... 58 Section 26.08. Public Release of Information........................... 58 ARTICLE 27 TRUE LEASE Section 27.01. Intent of the Parties................................... 58 Section 27.02. Section 1110 Compliance................................. 58 Schedule I Definitions Schedule II Basic Rent Schedule III Stipulated Loss Values Schedule IV Termination Values Exhibit A Form of Lease Supplement No. 1 Exhibit B Form of Purchase Agreement Assignment, Consent and Agreement and Engine Consent and Agreement LEASE AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N_____) Lease Agreement (this "Lease") made as of _________, 199_, between ____________________, a ______________________, not in its individual capacity except as expressly provided herein but solely as Owner Trustee under the Trust Agreement (as defined in Article 1 below) (the "Lessor"), and FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Lessee"). W I T N E S S E T H : WHEREAS, subject to the terms and conditions set forth in the Participation Agreement (as hereinafter defined), the Lessee desires on the Delivery Date (as hereinafter defined) to sell to and lease from the Lessor and the Lessor is willing to purchase from and lease to the Lessee the Aircraft (as hereinafter defined) in accordance with the terms and conditions set forth in this Lease. NOW, THEREFORE, in consideration of the mutual promises herein, and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged by the parties, the Lessor and the Lessee agree as follows: ARTICLE 1 DEFINITIONS Unless the context otherwise requires, the capitalized terms herein shall have the meanings given in Schedule II of the Participation Agreement, a copy of which schedule is annexed hereto as Schedule I, for all purposes of this Lease and shall be equally applicable to both the singular and the plural forms of the terms defined. ARTICLE 2 ACCEPTANCE UNDER THE LEASE Section 2.01. Sale and Lease of Aircraft. The Lessor, subject to satisfaction or waiver of the conditions set forth in this Lease and in the Participation Agreement, hereby agrees to purchase the Aircraft from the Lessee, and the Lessee agrees to sell the Aircraft to the Lessor on the Delivery Date and simultaneously the Lessor agrees to lease the Aircraft to the Lessee, and the Lessee hereby agrees to lease the Aircraft from the Lessor. Such lease shall last for the Term, at all times during which full legal title to the Aircraft shall remain vested in the Lessor (and its successors and permitted assigns) to the exclusion of the Lessee, notwithstanding the possession and use thereof by the Lessee or any other party. Section 2.02. Delivery. The Lessor hereby authorizes one or more persons designated by the Lessee as the authorized representative or representatives of the Lessor to accept delivery of the Aircraft. The Lessee hereby agrees that such acceptance by such authorized representative or representatives on behalf of the Lessor shall, without further act, irrevocably constitute acceptance by the Lessee of the Aircraft for all purposes of this Lease. Delivery of the Aircraft to the Lessor shall be at Memphis, Tennessee or at such other place as the parties hereto may agree upon. All costs of placing the Aircraft at Memphis, Tennessee or at such other location for delivery on the Delivery Date shall be borne by the Lessee. Section 2.03. Notice of Purchase Price. At least two Business Days prior to the Delivery Date, the Lessee shall give to the Lessor notice of the Aircraft's availability for delivery and sale to the Lessor, which notice shall specify the Purchase Price on the Delivery Date payable by the Lessor pursuant to Section 2.01 of the Participation Agreement. The Lessee's notice shall specify also the manufacturer's serial number of the Airframe and each Engine and the Aeronautics Authority registration number of the Aircraft. Section 2.04. Bills of Sale. The Lessee agrees that simultaneously with payment by the Lessor of the Purchase Price on the Delivery Date, the Lessee will deliver to the Lessor the Manufacturer's full warranty bill of sale covering the Aircraft and the Lessee's full warranty bill of sale covering the Aircraft, and will deliver to Special Aviation Counsel for recordation at the FAA Air Registry in Oklahoma City, Oklahoma, the Manufacturer's FAA Bill of Sale for the Aircraft and the Lessee's FAA Bill of Sale for the Aircraft. The Lessee's Bills of Sale shall be executed by the Lessee, as owner of the Aircraft, in favor of the Lessor, shall be dated the Delivery Date, and shall evidence the conveyance to the Lessor of good and marketable title to the Aircraft, free and clear of all Liens whatsoever, except the right of the Lessee under the Lease and the Lease Supplement, the Lien of the Indenture and the rights of the Owner Participant under the Trust Agreement. Section 2.05. Method of Payment. The Lessor, subject to satisfaction or waiver of the conditions set forth in this Lease and in the Participation Agreement, shall pay the Purchase Price on the Delivery Date in US dollars in immediately available funds by transfer to such parties and in such amounts as is identified in Section 2.01(b) of the Participation Agreement. Section 2.06. Recordation of Lease. Simultaneously with the delivery of the Aircraft hereunder, the Lessee will deliver to Special Aviation Counsel the Lease and Lease Supplement No. 1 for due filing and recordation with the Aeronautics Authority. ARTICLE 3 RENT AND RENT ADJUSTMENT Section 3.01. Owner Participant Payments. The Owner Participant has agreed to make available to the Lessor funds sufficient to pay to the Indenture Trustee on the Commencement Date an amount equal to the difference between the amounts scheduled to be paid on the Certificates on such date and the amount of Basic Rent, if any, scheduled to be paid by the Lessee on such date (without regard to Section 3.05 hereof), all in accordance with the provisions of Section 6.03(e) of the Participation Agreement. To the extent such amount is not paid on the Commencement Date, the Lessee shall make a prepayment of Basic Rent equal to such amount and, if not otherwise reimbursed, the Lessee shall have the right to offset such amount pursuant to Section 3.05 hereof. Section 3.02. Basic Rent. The Lessee agrees to pay to the Lessor, on each Rent Payment Date, Basic Rent for the Aircraft during the Basic Term, each payment being set forth on Schedule II hereto opposite the applicable Rent Payment Date, subject to increase or decrease as provided in Section 3.04 of this Lease. Each payment of Basic Rent shall be made in arrears or in advance, and shall apply to a specific time period, all as stated in Schedule II hereto. Section 3.03. Supplemental Rent. The Lessee agrees to pay or cause to be paid to the Lessor, or to whomever shall be entitled to it, any and all Supplemental Rent promptly as the same shall become due. If the Lessee fails to pay any Supplemental Rent when due, the Lessor shall have all rights, powers and remedies provided for in this Lease, or by law or equity or otherwise in the case of nonpayment of Basic Rent. The Lessee will also pay to the Lessor, on demand, as Supplemental Rent, to the extent permitted by applicable law, an amount equal to interest at the Past Due Rate on any part of any installment of Basic Rent not paid when due, for any period until the same shall be paid and on any payment of Supplemental Rent not paid when due, for the period until the same shall be paid. The expiration or other termination of the Lessee's obligation to pay Basic Rent shall not limit or otherwise modify the obligations of the Lessee with respect to the payment of Supplemental Rent. Section 3.04. Adjustments to Basic Rent, Stipulated Loss Value and Termination Value After the Delivery Date. The percentages for Basic Rent referred to in Schedule II hereto and for Stipulated Loss Value and Termination Value in, respectively Schedule III and Schedule IV hereto shall be adjusted (upward or downward) subject to the minimum value established by Section 3.05 hereof and the definitions of Stipulated Loss Value and Termination Value to reflect (i) payments pursuant to Section 5 of the Tax Indemnity Agreement by an adjustment of Basic Rent, (ii) any costs and expenses paid by the Lessor pursuant to Section 2.01(h) of the Participation Agreement greater or less than the percentage of the Purchase Price set forth therein, (iii) any Refinancing pursuant to Section 14.01 of the Participation Agreement or (iv) any reoptimization required by the Owner Participant of amounts in excess of the outstanding principal and accrued interest on the Loan Certificates or (v) the Delivery Date being other than __________________. Each such adjustment pursuant to clause (i), (ii), (iii) or (v) of the first sentence of this Section 3.04 shall maintain the Owner's Economic Return (and, while maintaining such Return, minimize the aggregate Net Present Value of Rents to the Lessee). In the event of an adjustment pursuant to clause (iv) of the first sentence of this Section 3.04, the Owner Participant may recalculate Basic Rent as set forth in Schedule II hereto in order to maintain the Owner's Economic Return, and recalculate the Excess Amount set forth in Schedule II hereto, the Stipulated Loss Value percentages set forth in Schedule III hereto and the Termination Value percentages set forth in Schedule IV hereto in a manner consistent with such recalculation of Basic Rent; provided that any such recalculations may not (A) increase the Net Present Value of Rents to the Lessee, (B) increase as of any date the sum of (1) the Net Present Value of Rents to the Lessee payable through such date plus (2) the present value of the Stipulated Loss Value, or the Termination Value as of such date, in each case discounted to the Delivery Date at the Debt Rate, beyond such net present values as of the Delivery Date, or (C) otherwise result in any adverse impact (including tax consequences) to the Lessee. The Owner Participant shall promptly notify the Lessee and the Lessor and the Lessee shall promptly notify the Owner Participant and the Lessor of the need for any such adjustment. As promptly as feasible after any such notification, the Lessor shall furnish the Lessee with a notice setting forth the amount of any such adjustments together with the calculations upon which the adjustments are based; provided, however, that the Lessor and the Owner Participant shall not be required to disclose to the Lessee in such notice any confidential or proprietary information (including methodology or assumptions) relating to such calculations. At the request and, subject to the next succeeding sentence, expense of the Lessee, the accuracy of the calculation of such adjustments and the consistency of the calculation with the calculation used to determine Basic Rent shall be verified first, by __________________ _____ or such other financial advisor chosen by the Lessee and second, if such adjustments are still believed to be in error, by a firm of nationally recognized independent public accountants selected by the Lessee and, in order to enable them to verify such adjustments, the Owner Participant shall make available to such accountants (for their own confidential use and not to be disclosed to the Lessee or any other Person and subject to the execution of a satisfactory confidentiality agreement) all information reasonably necessary for such verification, including the name of the lease analysis program used by the Owner Participant to calculate such adjustments. The Lessee will pay the reasonable costs and expenses of the verification under this Section 3.04 unless as a result of such verification process by the independent public accountants Basic Rent is adjusted and such adjustment causes the net present value of Basic Rent, computed as of the Delivery Date and discounted at the Debt Rate to decline by 10 or more basis points (in which event the Owner Participant shall pay the reasonable costs and expenses of such verification process). The Lessor and the Lessee shall execute and deliver an amendment to this Lease to reflect each adjustment under this Section 3.04. All adjustments under this Section 3.04 shall be consistent with the requirements of Revenue Procedure 75-21 and Revenue Procedure 75-28 as in effect on the Delivery Date (or, in the case of a Refinancing, on the date of such adjustment) and shall not cause the Lease to be a "disqualified leaseback or long-term agreement" within the meaning of Section 467 of the Code (in the case of a Refinancing, as in effect on the date of such adjustment) and shall be made in the same manner that such requirements were satisfied in calculating Basic Rent as originally set forth on Schedule II (provided that the test of Rev. Proc. 75-28, Section 4.08 shall be applied on a prospective basis from the date of such adjustment). Section 3.05. Minimum Basic Rent. Notwithstanding any other provisions of the Operative Agreements to the contrary, each installment of Basic Rent due on each Rent Payment Date, shall be, under any and all circumstances, an amount at least sufficient to pay in full any installment of principal of and interest on the Certificates required to be paid pursuant to the Certificates (other than amounts becoming due on account of the exercise of remedies pursuant to Article 17 hereof) on such Rent Payment Date. To the extent that any such scheduled amounts payable by the Owner Participant as referred to in Section 3.01 are not paid when due, for any reason whatsoever, the Lessee shall make a prepayment of Basic Rent in such amounts and on such scheduled due dates. Unless otherwise reimbursed, the Lessee shall be entitled to offset, without limitation of any other rights the Lessee may have against the Lessor for nonpayment of scheduled amounts payable by the Owner Participant as referred to in Section 3.01, against any payments due from the Lessee to the Lessor (including without limitation, Basic Rent and payments due to the Lessor under Article 9 of the Participation Agreement or to the Owner Participant under the Tax Indemnity Agreement and Excepted Payments), until the Lessee has fully offset such prepayment of Basic Rent plus interest thereon at the Corporate Base Rate plus 5% per annum from the date of advance until the date of such offset; provided, however, that in the case of any payment due from the Lessee which is distributable under the terms of the Indenture, the Lessee's right of offset shall be limited to the amount distributable to the Lessor thereunder (and shall not include any amounts distributable to the Indenture Trustee in its individual capacity or to the Holders of the Certificates). No such offset or aggregate combined effect of separate offsets shall reduce the amount of any installment of Basic Rent to an amount insufficient to pay in full the payments then required to be made on account of the principal of and interest on the Certificates then outstanding. Section 3.06. Payment to Indenture Trustee. All Rent payable by the Lessee to the Lessor shall be paid to the Lessor at its principal office at _____________________________________________ , or as the Lessor may otherwise direct, by wire transfer of immediately available funds in Dollars with sufficient information to identify sources and applications of such funds in US Dollars no later than 12:00 noon, ___________ Time on the due date of such payment; provided, however, that so long as the Indenture shall not have been discharged the Lessor hereby directs, and the Lessee agrees, that all Rent (other than Excepted Payments) shall be paid directly to the Indenture Trustee at its principal office at _________________________________________________, Attention: _________________________________ , or as the Indenture Trustee may otherwise direct by wire transfer of immediately available funds in US Dollars no later than 12:00 noon, _________ Time, on the due date of such payment. In any case where a scheduled Rent Payment Date shall not be a Business Day, such Rent Payment Date shall be adjourned to the next succeeding Business Day. Section 3.07. Costs and Expenses. All obligations under this Lease shall be done, performed and complied with at the Lessee's (or any sublessee's) cost and expense, whether or not so expressed, unless otherwise expressly stated to the contrary. ARTICLE 4 RENEWAL OPTIONS AND PURCHASE OPTIONS Section 4.01. Renewal Options. (a) Election to Renew. Provided that (i) no Event of Default shall have occurred and be continuing at the time of renewal, (ii) this Lease has not otherwise expired or terminated, and (iii) the Lessee shall not previously have given notice under Section 4.02 during the Basic Term or the Renewal Term in which a notice of renewal under this Section 4.01 is given, the Lessee may (A) by written notice delivered to the Lessor and the Owner Participant not less than 120 days prior to the end of the Basic Term or the preceding Fixed Renewal Term, as the case may be, elect to extend the Term for ___ Fixed Renewal Term(s) commencing on the expiration of the Basic Term or the preceding Fixed Renewal Term, as the case may be, for a rent equal to the lesser of the then current Fair Market Rental and the Fixed Renewal Rental; and (B) by written notice delivered to the Lessor not less than 120 days prior to the end of the Basic Term or the preceding Renewal Term, as the case may be, elect to extend the Term for a Fair Market Renewal Term commencing on the expiration of the Basic Term or the preceding Renewal Term, as the case may be, for a rent equal to the then-current Fair Market Rental of the Aircraft. The Basic Term may be extended pursuant to the Fair Market Rental option for up to ___ successive one-year periods. (b) Terms and Conditions. Each such renewal shall be on the same terms and conditions as provided herein, except that (i) rent for the Aircraft due during each Renewal Term shall be payable semi-annually in arrears on the dates corresponding to the Rent Payment Dates during such Renewal Term, and (ii) during any Renewal Term, the Stipulated Loss Value for the Aircraft shall as of any Rent Payment Date during the Renewal Term equal a value based on the Fair Market Value of the Aircraft as of the commencement of such Renewal Term assuming the Aircraft is in the condition and repair required to be maintained by the provisions of this Lease. Section 4.02. Purchase Option. (a) Election to Purchase. Provided that (i) this Lease has not otherwise expired or terminated, and (ii) the Lessee shall not have previously given notice under Section 4.01(a) hereof within the required notice period pursuant to this Section 4.02(a), the Lessee may: (A) by written notice delivered to the Lessor, the Indenture Trustee and the Owner Participant not less than 120 days prior to the applicable Rent Payment Date, elect to terminate the Lease and purchase the Aircraft on any Rent Payment Date on or after the fifth anniversary of the Commencement Date, for, at the Lessee's option, either (1) an amount equal to the greater of the Fair Market Value or the Termination Value on such date or (2)(i) the assumption by the Lessee, pursuant to Section 6.11 of the Participation Agreement, of all of the obligations of the Lessor under the Indenture and the Certificates and (ii) the payment to the Lessor of an amount equal to the excess of (A) the greater of (I) the Termination Value for the Aircraft, computed as of the Termination Date or (II) the Fair Market Value of the Aircraft on the Termination Date, over (B) the unpaid principal of the Certificates plus accrued interest as of such date. Such notice (which shall be revocable by the Lessee upon at least 30 days written notice prior to the applicable Rent Payment Date) shall either direct the Lessor to prepay the Certificates in full on such Termination Date pursuant to Section 6.02 of the Indenture or state that the Lessee shall exercise its option to assume the Certificates pursuant to Section 6.11 of the Participation Agreement; or (B) by irrevocable written notice delivered to the Lessor and the Owner Participant not less than 120 days prior to the Purchase Option Date, elect to terminate the Lease and purchase the Aircraft on the Purchase Option Date for, at the Lessee's option, either (1) an amount equal to the Purchase Option Price, or (2) (i) the assumption by the Lessee, pursuant to Section 6.11 of the Participation Agreement of all of the obligations of the Lessor under the Indenture and the Certificates and (ii) the payment to the Lessor of an amount equal to the Purchase Option Price less the unpaid principal of the Certificates plus accrued interest as of such date; or (C) by irrevocable written notice delivered to the Lessor and the Owner Participant not less than 120 days prior to the end of the Basic Term or any Renewal Term, elect to terminate the Lease and purchase the Aircraft on the first day following such Basic Term or Renewal Term at a price equal to the Fair Market Value of the Aircraft on such day; provided, however, that the Lessee shall have paid all Rent due and payable under this Lease on or prior to the expiration of any such Renewal Term; or (D) in the event of any Significant Expenditure (as defined below) with respect to the Aircraft required at any time on or after the third anniversary of the Commencement Date, elect to terminate the Lease and purchase the Aircraft on any Rent Payment Date occurring after such third anniversary for, at the Lessee's option, the amount specified in either Clause (1) or Clause (2) of Section 4.02(a)(A); it being understood that Fair Market Value for this purpose shall be determined without regard to any Significant Expenditure. For purposes of this paragraph (D) the term "Significant Expenditure" means expenditures in respect of non-severable improvements (i.e. improvements which cannot by the terms of Section 9.02(b) be removed from the Aircraft) which in the Lessee's reasonable judgment would exceed $2,500,000 and which the Owner Participant and the Holder will not permit to be financed on similar terms and conditions then available for similar transactions through the issuance of additional non-recourse notes of the Lessor or through additional equity investments of the Owner Participant or both (it being understood that this Section 4.02(D) shall not impose any obligation on the Owner Participant or the Holder to provide such financing); or (E) in the event that a Burdensome Indemnity Payment shall occur at any time on or after the third anniversary of the Commencement Date, elect to terminate the Lease and purchase the Aircraft on the first Rent Payment Date following the date that the Owner Participant provides the Lessee with a written notice (the "Burdensome Indemnity Payment Date") of any Loss (as defined in Section 5 of the Tax Indemnity Agreement) that is a Burdensome Indemnity Payment for, at the Lessee's option, either (1) the payment to the Lessor in immediately available funds of an amount equal to the greater of the Fair Market Value of the Aircraft or the Termination Value for the Aircraft, determined in each case as of such Burdensome Indemnity Payment Date, or (2) the assumption by the Lessee, pursuant to Section 6.11 of the Participation Agreement, of all of the obligations of the Lessor under the Indenture and the Certificates and the payment to the Lessor in immediately available funds of an amount equal to the excess of (A) the greater of (I) the Termination Value for the Aircraft, or (II) the Fair Market Value of the Aircraft, both computed as of the Burdensome Indemnity Payment Date, over (B) the unpaid principal of the Certificates outstanding plus accrued interest as of such date. The Lessee shall give the Lessor, the Owner Participant and the Indenture Trustee not less than 120 days prior written notice of its election to terminate pursuant to Sections 4.02(a)(D) and 4.02(a)(E). Such notice shall either direct the Lessor to prepay the Certificates in full on such Termination Date pursuant to Section 6.02 of the Indenture or state that the Lessee shall exercise its option to assume the Certificates pursuant to Section 6.11 of the Participation Agreement. The Lessee's notice pursuant to Sections 4.02(a)(D) and 4.02(a)(E) hereof shall become irrevocable 10 days prior to the Rent Payment Date or the Burdensome Indemnity Payment Date, as the case may be. (b) Terms and Conditions. (i) If the Lessee elects to purchase the Aircraft pursuant to Section 4.02(a) hereof, the Lessee shall pay to the Lessor on the applicable termination date by wire transfer of immediately available funds all accrued Basic Rent to and including such purchase date (if payable in arrears but not in advance), the applicable purchase price and all other Supplemental Rent due under this Lease (including, without limitation, the Make-Whole Premium, if any) and amounts due under the Participation Agreement and the Tax Indemnity Agreement, whereupon the Lessor will transfer to the Lessee, without recourse or warranty (except as to the absence of Lessor's Liens), all of the Lessor's right, title and interest in and to the Aircraft on an "as-is, where is" basis. In connection with such transfer, the Lessee shall prepare and the Lessor shall execute or arrange for the execution of a bill of sale evidencing such transfer and such other documents as the Lessee may reasonably require. In connection with any termination of the Lease, the Lessee shall pay, at the time of the applicable Termination Date, all related reasonable costs and expenses of the Owner Participant, the Lessor, the Indenture Trustee and the Holders. If no purchase under Section 4.02(a) shall have occurred on the applicable purchase date this Lease shall continue in full force and effect as if no notice had been given by the Lessee. Section 4.03. Appraisal Procedures. (a) Generally. Whenever Fair Market Rental or Fair Market Value are required to be determined under this Lease (unless otherwise provided herein), they shall be determined by the mutual agreement of the Owner Participant and the Lessee in accordance with the definitions of such terms in Article 1. If the Lessee and the Owner Participant cannot agree within twenty (20) days after the Lessee's notice of election to purchase the Aircraft or notice to extend the Term, as the case may be, such amount shall be determined by independent appraisal conducted by appraisers selected pursuant to Section 4.03(b). At any time prior to final determination of such amount pursuant to Section 4.03(b), the Lessee and the Owner Participant shall be entitled to submit to the appraisers (and shall submit to each other any bids submitted to the appraisers) any bids from unrelated third parties, and such bids shall be accorded the weight such appraisers deem appropriate. The Owner Participant and the Lessee shall each have an opportunity to comment on any such bids after receiving a copy thereof. (b) Selection. If an independent appraisal is required pursuant to this Lease, the Owner Participant and the Lessee shall consult for the purpose of appointing a mutually acceptable, qualified aircraft appraiser. If they are unable to agree on a single appraiser within ten (10) Business Days, then the independent appraisal shall be arrived at by mutual agreement of two nationally recognized, independent aircraft appraisers, one chosen by the Owner Participant and one chosen by the Lessee, or, if such appraisers cannot agree on the amount of such appraisal, their appraisals shall be treated in the manner described in Section 4.03(c) hereof with an appraisal arrived at by a third nationally recognized, independent aircraft appraiser chosen by the mutual consent of such two appraisers; provided, however, that if either party shall fail to appoint an appraiser within fifteen (15) Business Days after a written request to do so by the other party, or if such two appraisers cannot agree on the amount of such appraisal and fail to appoint a third appraiser within twenty (20) Business Days after the date of the appointment of the second of such appraisers, then either party may initiate an arbitration proceeding with the American Arbitration Association for purposes of appointing a nationally recognized, independent aircraft appraiser. (c) Valuation. If one appraiser is chosen, the value determined by such appraiser shall be final and binding upon the Owner Participant and the Lessee. If two appraisers are chosen, one appraiser by the Owner Participant and one by the Lessee, and such appraisers agree on the value, such value shall be final and binding upon the Owner Participant and the Lessee. If three appraisers shall be appointed and the difference between the determination which is farther from the middle determination is more than 125% of the difference between the middle determination and the third determination, then such farther determination shall be excluded, the remaining two determinations shall be averaged, and such average shall be final and binding upon the Owner Participant and the Lessee. Otherwise, the average of all three determinations shall be final and binding upon the Owner Participant and the Lessee. (d) Rules of Appraisal. Any appraisal pursuant to this Section 4.03 shall be conducted in accordance with the commercial rules of the American Arbitration Association as then in effect, as modified by this Section 4.03 and the definitions of Fair Market Value and Fair Market Rental. All expenses of any independent appraisal shall be borne by the Lessee, except that each of the Lessee and the Lessor shall bear any fees, costs and expenses of its respective attorneys in connection with such appraisal except in the case of an Event of Default or in the case of a revocation by the Lessee of its election to terminate the Lease pursuant to and permitted by Section 4.02 or Article 10 hereof, in which case such expenses shall be borne by the Lessee. ARTICLE 5 REPRESENTATIONS AND WARRANTIES Section 5.01. Lessor's Representations and Warranties. The Lessor in its individual capacity represents and warrants to the Lessee that on the Delivery Date (i) the Lessor shall have received whatever title to the Aircraft as was conveyed to it by the Lessee, (ii) the Aircraft shall be free of Lessor's Liens attributable to the Lessor in its individual capacity and (iii) the Lessor in its individual capacity is a Citizen of the United States. Section 5.02. Disclaimer of Representations and Warranties. THE LESSEE ACKNOWLEDGES AND AGREES THAT (i) THE AIRFRAME AND EACH ENGINE IS OF A SIZE, DESIGN, AND CAPACITY AND MANUFACTURE SELECTED BY AND ACCEPTABLE TO THE LESSEE, (ii) THE LESSEE IS SATISFIED THAT THE AIRFRAME AND EACH ENGINE IS SUITABLE FOR ITS PURPOSES, (iii) THE LESSOR IS NOT A MANUFACTURER NOR A DEALER IN PROPERTY OF SUCH KIND AND (iv) THE AIRFRAME AND EACH ENGINE IS LEASED HEREUNDER SUBJECT TO ALL APPLICABLE LAWS AND GOVERNMENTAL REGULATIONS NOW IN EFFECT OR HEREAFTER ADOPTED AND IN THE STATE AND CONDITION OF EVERY PART THEREOF WHEN THE SAME FIRST BECAME SUBJECT TO THIS LEASE, WITHOUT REPRESENTATION OR WARRANTY OF ANY KIND BY THE LESSOR, THE INDENTURE TRUSTEE OR THE OWNER PARTICIPANT. THE LESSOR LEASES THE AIRFRAME AND EACH ENGINE, AS-IS, WHERE-IS, AND NEITHER THE LESSOR, THE INDENTURE TRUSTEE, THE PASS THROUGH TRUSTEE NOR THE OWNER PARTICIPANT MAKES, HAS MADE OR SHALL BE DEEMED TO HAVE MADE, AND EACH WILL HAVE BEEN DEEMED TO HAVE EXPRESSLY DISCLAIMED, ANY WARRANTY OR REPRESENTATION EITHER EXPRESS OR IMPLIED, AS TO (A) THE TITLE, AIRWORTHINESS, WORKMANSHIP, CONDITION, FITNESS FOR ANY PARTICULAR USE OR PURPOSE, DESIGN, OPERATION OR MERCHANTABILITY OF THE AIRFRAME, EACH ENGINE OR ANY PART THEREOF, (B) THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, (C) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, (D) THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, (E) THE LESSOR'S TITLE THERETO, (F) THE LESSEE'S OR ANY SUBLESSEE'S RIGHT TO THE QUIET ENJOYMENT THEREOF (EXCEPT THAT THE LESSOR AGREES NOT TO INTERFERE WITH THE LESSEE'S OR ANY SUBLESSEE'S QUIET ENJOYMENT THEREOF EXCEPT AS OTHERWISE PROVIDED IN THIS LEASE) OR (G) ANY OTHER MATTER WHATSOEVER, IT BEING AGREED THAT ALL SUCH RISKS, AS BETWEEN THE LESSOR AND THE LESSEE, ARE TO BE BORNE BY THE LESSEE. It is agreed that, as among the Lessor, the Indenture Trustee, the Pass Through Trustee, the Owner Participant and the Lessee, all risks incident to the matters discussed in the preceding sentence are to be borne by the Lessee. The provisions of this Section 5.02 have been negotiated by the Lessor and the Lessee and, except as provided in Section 5.01 hereof, are intended to be a complete exclusion and negation of any representations or warranties of the Lessor, the Indenture Trustee, the Pass Through Trustee and the Owner Participant, express or implied, with respect to the Airframe and each Engine that may arise pursuant to any law now or hereafter in effect, or otherwise. Section 5.03. Modification of Other Warranties. None of the provisions of this Article 5 or any other provision of this Lease shall be deemed to amend, modify or otherwise affect the representations, warranties or other obligations (express or implied) of the Lessee, the Manufacturer or the Engine Manufacturer or any of their respective subcontractors or suppliers, with respect to the Airframe, the Engines or any Parts incorporated or installed in or attached to the Airframe or Engines, or to release the Lessee, the Manufacturer or the Engine Manufacturer or any of their respective subcontractors or suppliers from any such representation, warranty or obligation. So long as an Event of Default shall not have occurred and be continuing under this Lease and to the extent permitted under the applicable warranty, patent indemnity, or service-life policy, (i) the Lessor and the Lessee agree that the Lessor shall assign or otherwise make available to the Lessee such rights as the Lessor may have under any warranty, patent indemnity, or service-life policy made or given by the Manufacturer or Engine Manufacturer or any of their respective subcontractors or suppliers, and any other claims against the Manufacturer and Engine Manufacturer or any such subcontractor or supplier with respect to the Aircraft; and (ii) all payments pursuant to any manufacturer's or subcontractor's warranty, patent indemnity, or service-life policy obligation shall be paid to the Lessee for application to the cost of repair or correction of any condition of the Aircraft which gave rise to such payment. ARTICLE 6 LIENS Section 6.01. Liens. The Lessee 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 the Lessor's Estate or this Lease or the Aircraft, the Airframe or any Engine or any Part or title thereto or any interest therein except: (a) the respective rights of the Lessor and the Lessee as provided in this Lease, the first and prior perfected security interest and lien of the Indenture and the rights of the Owner Participant, the Lessor and the Indenture Trustee under the Trust Agreement, the Indenture and the Participation Agreement; (b) the rights of any assignee, sublessee or transferee under a sublease or an assignment expressly permitted by the terms of this Lease; (c) Lessor's Liens and Indenture Trustee's Liens to the extent required to be discharged by the Owner Participant, the Lessor or the Indenture Trustee, as the case may be, in accordance with Sections 6.03(b), 6.04(b) or 6.05(b) of the Participation Agreement; (d) Liens for taxes imposed against the Lessor, the Owner Participant, the Indenture Trustee or the Holders, against which the Lessee has not indemnified (and is not obligated to indemnify) the Lessor, the Owner Participant, the Indenture Trustee or the Holders; (e) Liens for taxes imposed against the Lessee 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 the Aircraft, the Airframe or any Engine or any interest therein; (f) materialmen's, mechanics', workmen's, repairmen's, employees' or other like Liens arising against the Lessee in the ordinary course of the Lessee'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 danger of the sale, forfeiture or loss of the Aircraft, the Airframe or any Engine or any interest therein; (g) Liens arising from judgment or awards against the Lessee 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 (h) the right of any Person (other than the Lessee) 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. ARTICLE 7 AIRCRAFT REGISTRATION, MAINTENANCE AND OPERATION Section 7.01. Registration, Maintenance and Operation. The Lessee, at its own cost and expense, shall: (a) upon payment by the Lessor of the Purchase Price on the Delivery Date, cause the Aircraft to be duly registered in the name of the Lessor as owner, pursuant to the Act and, subject to the proviso to Section 5.03(b) of the Participation Agreement, to remain at all times duly registered pursuant to the Act and at all times act in accordance with the rules and regulations of the Aeronautics Authority or the applicable laws, rules and regulations of any other jurisdiction in which the Aircraft may then be registered in accordance with Section 5.03(b) of the Participation Agreement; (b) maintain, 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 condition, ordinary wear and tear excepted, and in any event (i) 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 5.03(b) of the Participation Agreement and the Lessee's maintenance program approved by the applicable Aeronautics Authority, (ii) in the same manner and with the same care used by the Lessee with respect to other ___________ aircraft and __________________________ engines owned or operated by the Lessee, to the extent that the same regulations, and the Lessee's FAA-approved maintenance program shall apply to any such aircraft and related engines, owned or leased by the Lessee, and utilized in similar circumstances, (iii) 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, in each case without in any way discriminating against the Aircraft or any part thereof, whether by reason of its leased status or otherwise; and, provided, however, the Lessee shall not be in default of its obligation in this Section 7.01(b)(iii) to maintain the Aircraft's airworthiness certification in good standing if the Aircraft loses its airworthiness certification, such loss is curable and the Lessee undertakes such cure promptly, diligently, and continuously, using its best efforts but, provided, further, that in the event such loss is not a loss of the character described in clause (iv) of the definition of Event of Loss and is not curable or, if curable, has not been cured within twenty-four (24) months of the date the airworthiness certification was lost, the Lease shall terminate on the Rent Payment Date next succeeding the earlier of (1) the date it is determined that the loss of the airworthiness certificate is not curable, or (2) the date twenty-four (24) months after the airworthiness certificate is lost or (3) the last day of the Term whereupon, in any such case, the Aircraft shall be sold within 90 days after the date of such termination in accordance with the procedure set forth in Section 10.01(b) and the Lessee shall make the payments to the Lessor set forth in Section 10.01(c) and provided, that this Lease shall continue in full force and effect until the Aircraft is sold according to such procedures; (c) 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 (which records, logs and other materials shall, as between the Lessor and the Lessee and all parties claiming through the Lessee, be the property of the Lessor but shall become the property of the Lessee upon purchase by the Lessee of the Aircraft pursuant to the terms of this Lease or upon the occurrence of an Event of Loss and the Lessee's compliance with Section 11.03 hereof); (d) promptly furnish to the Lessor such information within the Lessee's possession as may be required to enable the Lessor to file any reports to be filed by the Lessor with any governmental authority because of the Lessor's ownership of the Aircraft; (e) 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 Lessee 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 Lessee (or if a sublease shall then be in effect, the sublessee thereunder) 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 Lessor, its right, title or interest in the Aircraft or any Engine or the interests of the Indenture Trustee or the Owner Participant therein, or in any Operative Agreement (excluding any interests indemnified for under the Tax Indemnity Agreement); and if any such law, license, rule, regulation or order requires alteration of the Aircraft or any Engine, the Lessee 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; (f) 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 Article 13 or (y) in any area that is a war zone or recognized or, in the Lessee's reasonable judgment, threatened area of hostilities, unless the Lessee 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, Article 13 covering such area (except, in the case of a requisition for use by the Government, to the extent that the Lessee certifies that such insurance is unobtainable after diligent effort or is obtainable only at reasonably high rates or on unduly burdensome terms and conditions) (and naming the Lessor, or so long as this Lease is assigned to the Indenture Trustee, 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 Lessee is using its good faith efforts to remove the Aircraft from such area. Section 7.02. Possession and Permitted Transfer and Sublease. (a) Conditions. The Lessee will not, without the prior written consent of the Lessor and the Owner Participant, sublease 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 Lessee shall comply with the provisions of Article 13, the Lessee may without the prior written consent of the Lessor and the Owner Participant: (i) so long as the sublessee 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 sublease is entered into, (A) sublease the Aircraft or any Engine to a U.S. Air Carrier as to which there is in force a certificate issued pursuant to Section 401 or Section 408 of the Act, (B) sublease the Aircraft to an Air Carrier which is principally based in and domiciled in one of the countries listed on Schedule III of the Participation Agreement, (C) sublease the Aircraft to any Air Carrier principally based in and domiciled in a country which, at the inception of such sublease, is a signatory to the Convention on the International Recognition of Rights in Aircraft, or (D) sublease the Aircraft to any other Air Carrier not described in this Section which shall be reasonably acceptable to the Owner Participant and the Indenture Trustee; provided, that, with respect to clauses (B) and (C) above, at the time of any such sublease (other than with respect to Taiwan) the United States of America maintains normal and full with respect to diplomatic relations with the country in which such Air Carrier is principally based and domiciled. In the case of any sublease (w) such sublessee shall operate and maintain the Aircraft in compliance with this Lease, (x) such sublease shall provide that such sublessee will not transfer possession of, or any other rights to, the subleased Airframe or Aircraft to any other person without the prior written consents of the Lessor and the Owner Participant (except as permitted by subparagraphs (ii) and (iii) below), and (y) such sublease shall expire not later than the expiration of the Basic Term or any applicable Renewal Term hereof. Prior to any sublease to an Air Carrier permitted under this Section 7.02(a)(i)(C) or (D): (I) the maintenance standards of the aeronautical authority of the country of domicile or principal operation of the sublessee taken as a whole shall be not materially less stringent than those of the FAA and the sublease will provide that the maintenance performed during such sublease will meet in all material respects such maintenance standards; (II) the Lessee will provide opinions of counsel reasonably satisfactory to the Lessor and Owner Participant and the Indenture Trustee with respect to the validity and enforceability of the Operative Agreements and the sublease in such country; and 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 Lessee's own cost and expense by the Lessee; (IV) duties and tariffs, if applicable, shall be paid for by the Lessee; and (V) the Lessee shall effect or cause to be effected at the Lessee's own cost and expense all recordings and filings that are required to continue the Lessor's right, title and interest to the Aircraft and rights under the Lease (and sublease) and to perfect the Lien of the 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 Lessee 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 Lease 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 Lessor'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 Lessee shall comply with Section 11.04 of this Lease 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, service, 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 Article 9 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. 20999, as amended, or any similar or substitute programs, so long as the Lessee (or any permitted sublessee or transferee pursuant to this Section) shall promptly notify the Lessor 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 provided, that if such transfer of possession continues beyond the end of the Basic Term or the then-current Renewal Term, the Basic Term or the Renewal Term, as applicable, shall be automatically extended (including the obligation to pay Rent per diem at a rate equal to the average daily Basic Rent over the Basic Term) for up to six (6) months after the end of the Term; (v) install or permit the installation of an Engine on an airframe which is owned by the Lessee or any permitted sublessee free and clear of all Liens, except (A) Liens of the type permitted under Section 6.01 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 Lessee or any permitted sublessee or transferee or purchased by the Lessee 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 Lessor and the Indenture Trustee shall have received from the lessor, conditional vendor or secured party of such airframe a written 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 7.02(a); (vii) install or permit the installation of an Engine on an airframe owned by the Lessee, leased to the Lessee or purchased by the Lessee subject to a conditional sale or other security agreement under circumstances where neither subparagraph (v) nor subparagraph (vi) of this Section 7.02(a) is applicable, provided that such installation shall be deemed an Event of Loss with respect to such Engine and the Lessee shall comply with Section 11.04 hereof in respect of such Engine, the Lessor not intending to waive any right, title or interest it may have to or in such Engine under applicable law until compliance by the Lessee with such Section 11.04; and (viii)enter into a wet lease under which the Lessee has effective control of the Aircraft in the ordinary course of the Lessee's business which shall not be considered a transfer of possession hereunder, provided that the Lessee's obligations under this Lease shall continue in full force and effect notwithstanding any such wet lease. (b) Rights of Transferee. Notwithstanding the provisions of Section 7.02(a) 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 7.02(a) hereof shall be subject and subordinate to, and any sublease or wet lease permitted by Section 7.02(a) hereof shall be made expressly subject and subordinate to, all the terms of this Lease, including, without limitation, the Lessor's right to repossession pursuant to Article 17 and to avoid such sublease upon such repossession, and the Lessee shall remain primarily liable for the performance of all the terms of this Lease to the same extent as if such sublease or transfer had not occurred. Any such sublease shall include appropriate provisions for the maintenance and insurance of the Aircraft, the Airframe and each Engine in accordance with the provisions of this Lease and shall provide assurances reasonably satisfactory to the Lessor that the sublessee may not further sublease any of such equipment. The Lessee shall notify the Lessor and the Indenture Trustee within 60 days after any sublease and will promptly upon request from the Lessor and the Indenture Trustee provide a copy of any sublease which has a term in excess of six (6) months and deliver to Lessor all other documents required hereunder relating to such sublease or transfer of possession. (c) No Release of Lessee/Costs of Subleasing. No sublease, interchange or pooling agreement or other relinquishment of possession permitted under this Article 7 of either the Aircraft, the Airframe or any Engine shall in any way discharge or diminish any of the Lessee's obligations to the Lessor, the Indenture Trustee or the Owner Participant under this Lease, the Participation Agreement or the Tax Indemnity Agreement or extend beyond the end of the Term (except as provided in Section 7.02(a)(iv). Subject to the terms and conditions of this Lease, the Lessee will retain the right to cure any default by any sublessee permitted pursuant to this Section 7.02 and to terminate such sublease upon such default. The Lessee shall pay all costs of the Owner Participant and the Lessor incurred in connection with such subleasing. Section 7.03. Insignia. (a) Nameplate. The Lessee 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 "_________________ TRUST COMPANY, as Owner Trustee, OWNER AND LESSOR," and, so long as such Airframe or Engines shall be subject to the Lien of the Indenture, the additional inscription "___________________________, AS TRUSTEE, Indenture Trustee." (b) Lessee's Marks. During the Term, the Lessee may cause the Aircraft to be lettered "Federal Express Corporation" or may letter, paint or mark it in some other appropriate manner for convenience of identification of the Lessee's interest or the interest of any permitted sublessee (including but not limited to the Lessee's or any permitted sublessee's customary colors and insignia) and to bear insignia plates or other markings identifying the supplier or manufacturer of the Airframe or the Engines or any Parts of either. ARTICLE 8 REPLACEMENT AND POOLING OF PARTS Section 8.01. Replacement of Parts. (a) Generally. The Lessee, 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 9.01 or 9.02 hereof. In addition, the Lessee 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 Lessee, except as otherwise provided in Sections 9.01 or 9.02 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 8.02 hereof and Liens permitted under Section 6.01(f) 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 Lease. (b) Title. All Parts at any time removed from the Airframe or any Engine shall remain the property of the Lessor until such Parts shall be replaced by Parts which have been incorporated or installed in or attached to the Airframe or any Engine and which meet the requirements for replacement Parts specified in Section 8.01(a) hereof. 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 8.02 hereof): (i) title to the replaced Part shall vest in the Lessee, free and clear of all rights of the Lessor, and shall no longer be deemed a Part under this Agreement; (ii) title to such replacement Part shall vest in the Lessor; and (iii) such replacement Part shall become subject to this Lease and to the Lien of the Indenture, and shall be deemed part of the Airframe or such Engine for all purposes to the same extent as the Parts originally incorporated or installed in or attached to the Airframe or such Engine. Section 8.02. Pooling of Parts. Any Part removed from the Airframe or any Engine as permitted in Section 8.01(a) hereof may be subjected by the Lessee to any normal pooling arrangement customary in the airline industry and entered into with other Air Carriers in the ordinary course of the Lessee'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 8.01(a) hereof may be owned by another Air Carrier subject to such normal pooling arrangement, provided that the Lessee, at its own cost and expense and as promptly as possible, either: (a) causes title to such replacement Part to vest in the Lessor in accordance with Section 8.01(b) hereof by the Lessee acquiring title to such replacement Part for the benefit of, and transferring such title to, the Lessor free and clear of all Liens (other than Liens permitted under Section 6.01 hereof); 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 Lessee free and clear of all Liens (other than Liens permitted under Section 6.01 hereof) and by causing title to such further replacement Part to vest in the Lessor in accordance with Section 8.01(b) hereof. All replacement Parts shall meet the standards set forth in Section 8.01(a). ARTICLE 9 ALTERATIONS, MODIFICATIONS AND ADDITIONS Section 9.01. Required Alterations and Modifications. The Lessee, 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 Lessee's operations and aircraft; provided, however, that the Lessee may in good faith contest the validity or application of any such requirements in any reasonable manner that does not adversely affect the Lessor, its title or interest in the Aircraft or any Engine, the first and prior perfected Lien and security interest of the Indenture, or the interests of the Indenture Trustee, the Owner Participant or the Holders of the Certificates in the Aircraft or any Engine, or in any Operative Agreement (excluding any interests indemnified for under the Tax Indemnity Agreement). All such alterations, modifications or additions shall be made on or before the date mandated thereto, taking into account postponements resulting from a contest or otherwise and shall be made at such time and in such a manner so as not to discriminate against the Aircraft whether by reason of its leased status or otherwise. Title to all alterations, modifications and additions made pursuant to this Section 9.01 shall without further act vest in the Lessor and become subject to this Lease. Section 9.02. Other Alterations and Modifications. (a) Generally. The Lessee, 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 Lessee 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 create any adverse tax consequences for the Owner Participant not otherwise indemnified for, 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 Lease, or cause the Airframe or any Engine to become "limited use property" within the meaning of Revenue Procedure 76-30, 1976-2 C.B. 647, 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. (b) Title to Installed Parts. Title to 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 Section 9.02(a) shall without further act vest in the Lessor and become subject to this Lease; provided, however, that the Lessee may remove any such Part at any time during the Term 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 Article 7 or the first sentence of Section 9.01; 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 Lease 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 Lease. (c) Title to Removed Parts. Upon the removal by the Lessee of any such Part as provided in subsection (b) above, title thereto shall, without further act, vest in the Lessee and such Part shall no longer be deemed a Part. Any Part not removed by the Lessee as above provided prior to the return of the Aircraft to the Lessor hereunder shall remain the property of the Lessor and subject to this Lease. ARTICLE 10 VOLUNTARY TERMINATION Section 10.01. Right of Termination Upon Obsolescence or Surplus. (a) Option to Terminate. So long as no Event of Default shall have occurred and be continuing, the Lessee shall have the right, at its option, on any Termination Date, on at least 120 days' prior written notice to the Lessor and the Owner Participant, to terminate this Lease with respect to the lease of the Aircraft as of a Termination Date if the Aircraft shall have become obsolete or surplus to the operations of the Lessee; provided that the Lessee shall have in the event of a termination for obsolescence or surplusage, furnished to the Lessor, the Indenture Trustee and the Owner Participant a certificate of the Lessee's President, Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Treasurer or Assistant Treasurer stating the determination of Lessee that the Aircraft is obsolete or surplus to its needs. The Lessee shall have the right to revoke its notice of termination not less than ten days prior to the proposed Termination Date. (b) Sale Procedure. During the period from the giving of notice pursuant to Section 10.01(a) hereof until the proposed Termination Date, the Lessee, as agent for the Lessor, shall use its reasonable efforts to obtain bids for the cash purchase on the proposed Termination Date (or such earlier date as shall be consented to in writing by the Lessor) of the Airframe which shall have the Engines installed thereon (provided that the Airframe may be sold with engines meeting the requirements set forth herein for Replacement Engines in lieu of the Engines so long as the aggregate number of Engines and Replacement Engines being sold with the Airframe equals three), and the Lessor may, if it desires to do so, seek to obtain such bids. The Lessor and the Owner Participant may, upon request, inspect any bids obtained by Lessee. No bid may be submitted by the Lessee, the Lessor or the Owner Participant, any Person, firm or corporation affiliated with the Lessee, the Lessor or the Owner Participant (or with whom or which the Lessee, the Lessor or the Owner Participant has any arrangement or understanding as to the subsequent use of the Aircraft by the Lessee, the Lessor or the Owner Participant or any of their respective Affiliates) or any agent or person acting on behalf of the Lessee, the Lessor or the Owner Participant or any such Person, firm or corporation. The Lessee may reject any bid which is less than the applicable Termination Value. If the Lessor receives any such bid which is higher than the highest cash bid received by the Lessee, the Lessor shall, at least twenty (20) days prior to the proposed Termination Date, certify to the Lessee in writing the amount and terms of such bid and the name and address of the party submitting such bid. The Lessor may not, less than fifteen (15) days prior to the Termination Date, elect to retain the Aircraft. The Lessee may, not less than ten (10) days prior to the Termination Date, elect to revoke its notice pursuant to Section 10.01(a) hereof. Subject to the provisions of Section 10.02 hereof, on the proposed Termination Date or such earlier date of sale as shall be consented to in writing by the Lessor, the Lessee shall deliver the Airframe which shall have the Engines installed on it (provided that the Airframe may be delivered with engines meeting the requirements set forth herein for Replacement Engines in lieu of the Engines so long as the aggregate number of Engines and Replacement Engines being delivered with the Airframe equals three) to the bidder which shall have submitted the highest cash bid (whether certified to the Lessor by the Lessee or directly received by the Lessor and certified to the Lessee) and shall duly transfer to the Lessor title to any such engines not owned by the Lessor, and the Lessor shall upon payment in full of all amounts due and owing pursuant to Section 10.01(c) hereof, without recourse or warranty (except as to the absence of Lessor's Liens), simultaneously sell the Airframe and Engines or engines to such bidder for the bid price to be paid by wire transfer of immediately available funds. (c) Payments to the Lessor. The total selling price realized at a sale pursuant to Section 10.01(b) hereof shall be retained by the Lessor (or the Indenture Trustee, so long as the Indenture is in force) and, in addition, on or before the proposed Termination Date (or any earlier date of sale), the Lessee shall pay to the Lessor, by wire transfer of immediately available funds, the sum of: (i) the excess, if any, of the Termination Value for the Aircraft computed as of Prepayment Date over the net proceeds of such sale after deducting all documented costs and expenses incurred by the Lessor and Owner Participant in connection with such sale, provided that such documented costs and expenses shall not be deducted with respect to any broker or finder employed by the Lessor in connection with the sale of the Aircraft and which locates the purchaser for the Aircraft; plus (ii) the installment of Basic Rent due with respect to the Aircraft on the Prepayment Date the proposed Termination Date if payable in arrears but not if payable in advance (whether or not the date of sale is on or prior to such Termination Date); plus (iii) all other amounts then due and payable by the Lessee under this Lease or any other Operative Agreement (including but not limited to, any Make-Whole Premium) on or prior to the Prepayment Date. (d) Transfer of Uninstalled Engines. Upon payment of the amounts described in Section 10.01(c) and upon transfer to the Lessor of title to engines which have been returned in lieu of Engines as provided in Section 10.01(b), and upon payment of all other amounts then due under this Lease, the Lessor will transfer to the Lessee, without recourse or warranty (except as to the absence of Lessor's Liens), all of the Lessor's right, title and interest in and to any Engines which were replaced with engines pursuant to Section 10.01(b), and shall deliver to the Lessee such instrument as the Lessor shall have received from the Indenture Trustee, releasing such Engines from the Lien of the Indenture. (e) Limitation on the Lessor's Duties. The Lessor shall be under no duty to solicit bids, to inquire into the efforts of the Lessee to obtain bids or otherwise to take any action in connection with any such sale other than to transfer to the purchaser named in the highest cash bid as referred to above (or to such purchaser and to the Lessee, as the case may be), without recourse or warranty (except as to the absence of Lessor's Liens), all of the Lessor's right, title and interest in and to the Aircraft, against receipt by the Lessor of the payments provided for. (f) Termination of the Lessee's Obligations. Upon the sale of the Aircraft pursuant to this Section 10.01 and upon compliance by the Lessee with the further provisions of this Article 10, the obligation of the Lessee to pay Basic Rent with respect to the Aircraft shall cease for any Rent Payment Date (other than any Basic Rent payable in arrears on the Rent Payment Date falling on the Prepayment Date) occurring after the proposed Termination Date and the Term shall end effective as of the proposed Termination Date. If no sale shall have occurred on or before the proposed Termination Date, this Lease shall continue in full force and effect and, for purposes of Section 10.01(a) hereof, it shall be deemed that the Lessee has rescinded its notice of termination. Section 10.02. Retention of Aircraft by the Lessor. (a) Generally. Notwithstanding Section 10.01, the Lessor may, subject to Section 10.02(b) hereof, elect to retain the Aircraft after receipt of the Lessee's notice of termination given in accordance with Section 10.01(a), by giving the Lessee and the Indenture Trustee written, irrevocable notice of such election not less than fifteen (15) days prior to the proposed Termination Date. If the Lessor so elects, the Lessee shall pay to the Lessor on the proposed Termination Date, by wire transfer of immediately available funds the sum of: (i) the installment of Basic Rent due with respect to the Aircraft on the proposed Prepayment Date if payable in arrears but not if payable in advance (whether or not title to the Aircraft is transferred on or prior to such Termination Date); plus (ii) all other amounts then due and payable by the Lessee under this Lease and any other Operative Agreement including, but not limited to, any Make-Whole Premium, on or prior to the Prepayment Date. (b) Payment of the Certificates. It shall be an absolute condition precedent to the Lessor's right to retain the Aircraft and to the termination of the Term pursuant to this Section 10.02 that, on the Prepayment Date, the Lessor shall have paid to the Holders of the Certificates and such Holders shall have received the entire outstanding principal amount of, any Make-Whole Premium and accrued interest on the Certificates on the Prepayment Date and all other sums due and owing to the Indenture Trustee and the Holders of the Certificates on or prior to the Prepayment Date under this Lease, the Indenture or any other Operative Agreement. In the case of Make-Whole Premium the Lessor may estimate the Make-Whole Premium to be payable on the Prepayment Date but shall, on the Prepayment Date, pay any additional amounts to reflect the actual Make-Whole Premium. (c) Title to Engines. If the Lessor elects to retain the Aircraft pursuant to this Section 10.02, the Lessee shall deliver the Airframe and the Engines (provided that the Airframe may be delivered with engines meeting the requirements set forth herein for Replacement Engines in lieu of the Engines so long as the aggregate number of Engines and engines being delivered with the Airframe equals three) to the Lessor in the same manner as if delivery were made to the Lessor pursuant to Article 12 hereof, and shall duly transfer to the Lessor right, title and interest to any such engines not owned by the Lessor, all in accordance with Article 12 hereof. Upon such delivery of the Airframe and Engines or engines to the Lessor and payment by the Lessee of any amounts required to be paid by the Lessee pursuant to Section 10.02(a) hereof, the Lessor will transfer to the Lessee, without recourse or warranty (except as to the absence of Lessor's Liens), all of the Lessor's right, title and interest in and to any Engines which were replaced by engines pursuant to this Section 10.02(c), and shall deliver to the Lessee such instrument as the Lessor shall have received from the Indenture Trustee, releasing such Engines from the Lien of the Indenture. (d) Termination of the Lessee's Obligations. Upon compliance by the Lessor and the Lessee with the provisions of this Section 10.02 and upon compliance by the Lessee with the further provisions of this Article 10, the obligation of the Lessee to pay Basic Rent with respect to the Aircraft shall cease for any Rent Payment Date (other than Basic Rent payable in arrears on the Rent Payment Date that is the Payment Date) occurring after the proposed Termination Date and the Term shall end effective as of the proposed Termination Date. Section 10.03. Voluntary Termination as to Engines. So long as no Event of Default shall have occurred and be continuing, the Lessee shall have the right at its option and at any time, on at least sixty (60) days' prior written notice to the Lessor, to terminate this Lease with respect to any Engine not then installed or held for use on the Airframe, provided that prior to the date of such termination, the Lessee shall comply with the terms of Section 11.04 hereof to the same extent as if an Event of Loss had occurred with respect to such Engine. ARTICLE 11 LOSS, DESTRUCTION, REQUISITION Section 11.01. Lessee's Election Rights. The Lessee shall notify the Lessor 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 Lessor and the Owner Participant given within 60 days of the occurrence of any Event of Loss, the Lessee shall elect the alternative set forth in Section 11.02 hereof or the alternative set forth in Section 11.03 hereof. The Lessee's failure to make such election within said 60 days shall be deemed to be an election of the alternative set forth in Section 11.02 hereof. Section 11.02. Payment of Stipulated Loss Value. (a) The Lessee shall, if it has so elected, pay to the Lessor, by wire transfer of immediately available funds on a Stipulated Loss Value Determination Date designated by the Lessee upon 30 days irrevocable notice, but in no event later than 180 days following the occurrence of the Event of Loss (the "Loss Payment Date"), the sum of (A) the Stipulated Loss Value for the Aircraft, determined as of the Stipulated Loss Value Determination Date next preceding the Loss Payment Date (or, if the Loss Payment Date occurs on a Stipulated Loss Value Determination Date, determined as of such Stipulated Loss Value Determination Date) together with interest on such amount at the Debt Rate from such Stipulated Loss Value Determination Date to the Loss Payment Date, plus (B) any and all Basic Rent due and payable on or prior to the relevant Stipulated Loss Value Determination Date and unpaid, plus (C) any and all Supplemental Rent due and payable on or prior to such Loss Payment Date minus (D) if the relevant Stipulated Loss Value Determination Date is a Rent Payment Date, the portion, if any, of the Basic Rent installment due and paid by the Lessee on such Stipulated Loss Value Determination Date pursuant to Section 3.02 hereof to the extent such Basic Rent installment (or portion thereof) is designated on Schedule II hereto as being payable in advance, together with an imputed interest amount in respect of such advance payment of Basic Rent (or portion thereof) at the Debt Rate from the date of payment of such Basic Rent installment (or portion thereof) by the Lessee to the Loss Payment Date. (b) Termination of Lease; Title Transfer. Upon payment in full of the amounts due pursuant to Section 11.02(a), the obligation of the Lessee to pay Basic Rent on any Rent Payment Date occurring subsequent to the payment of such amounts shall terminate and the Term shall end. Further, upon such payment, the Lessor will transfer to the Lessee, without recourse or warranty (except as to the absence of Lessor's Liens), all of the Lessor's right, title and interest, if any, in and to the Airframe, Engines and engines with respect to which such Event of Loss occurred, as well as all of the Lessor's right, title and interest in and to any Engines constituting part of the Aircraft but not installed on the Airframe when such Event of Loss occurred, and will deliver to the Lessee such instrument as the Lessor shall have received from the Indenture Trustee, releasing such Aircraft from the Lien of the Indenture. Section 11.03. Replacement of Airframe and Engines. (a) Generally. So long as no Event of Default shall have occurred and be continuing, and subject to Section 11.01 hereof, if the Lessee has elected to replace the Airframe and Engines pursuant to this Section 11.03, the Lessee shall cause to be duly conveyed to the Lessor within one hundred and 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 as described in Section 11.01 hereof has occurred, good and marketable title to a [Make/Model] airframe and good and marketable title to a number of engines equal to the number of Engines with respect to which an Event of Loss has occurred of the same or an improved make and model, owned by the Lessee free and clear of all Liens not excepted in Section 6.01 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 Lease immediately prior to the occurrence of such Event of Loss. In such case and as a condition to such substitution the Lessee, at its own cost and expense, will also promptly: (i) furnish the Lessor with originals of, and the Indenture Trustee with copies of, bills of sale, in form and substance satisfactory to the Lessor and the Indenture Trustee, with respect to such replacement airframe and engines; (ii) cause such replacement airframe and engines to be duly registered in the name of the Lessor pursuant to the Act or the applicable laws of any other jurisdiction in which the Aircraft may then be registered in accordance with Section 5.03(b) of the Participation Agreement; (iii) cause a Lease Supplement with respect to such replacement airframe and engines to be duly executed by the Lessee 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 5.03(b) of the Participation Agreement; (iv) furnish the Lessor with a certificate of a nationally recognized aircraft appraiser reasonably satisfactory to the Indenture Trustee and the Owner Participant 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 Lease immediately prior to the occurrence of such Event of Loss; (v) furnish the Lessor with such evidence as the Lessor or the Indenture Trustee may reasonably request of compliance with the insurance provisions of Article 13 with respect to such replacement airframe and engines; (vi) provide the Owner Participant and the Lessor with (A) an opinion of counsel (which opinion and counsel shall be reasonably satisfactory to the Owner Participant and the Lessor) that it will suffer no adverse tax consequence not otherwise indemnified for as of the Delivery Date as a result of such substitution or (B) a satisfactory indemnity for such consequences; (vii) comply with the provisions of Section 9.08 of the Indenture; (viii)cause an Indenture Supplement with respect to such replacement airframe and engines to be duly executed by the Lessor 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 5.03(b) of the Participation Agreement in order that the Lien of the Indenture shall constitute a first and prior perfected Lien and security interest on and in respect of such replacement airframe and engines; and (ix) take such other action, including the filing of UCC financing statements naming the Indenture Trustee as a secured party with the Secretary of State of Delaware, as the Lessor or the Indenture Trustee may reasonably request in order that such replacement airframe and engines shall be duly and properly titled in the Lessor, leased under this Agreement and subjected to the Lien of the Indenture to the same extent as the replaced Airframe and Engines. (b) Title to Replaced Equipment. Upon compliance by the Lessee with the terms of Section 11.03(a) hereof, the Lessor will transfer to the Lessee (subject to any insurer's salvage rights), without recourse or warranty (except as to the absence of Lessor's Liens), all of the Lessor's right, title and interest, if any, in and to the Airframe and Engines with respect to which such Event of Loss occurred. Any Engine constituting part of the Aircraft, but not installed on the Airframe when such Event of Loss occurred, shall continue to be property of the Lessor and leased under this Lease as part of the same equipment as the replacement airframe and engines. (c) Definitions. Each replacement airframe and engine shall be deemed part of the property leased under this Lease, each such 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) Rent Adjustments. An Event of Loss covered by this Section 11.03 shall not result in any change in Basic Rent, Stipulated Loss Values, Termination Values or Purchase Option Price other than adjustments properly made pursuant to the Tax Indemnity Agreement and the Participation Agreement subject to the provisions of Section 3.05 hereof. Section 11.04. Event of Loss with Respect to an Engine. (a) Generally. 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 Lessee shall give the Lessor and the Indenture Trustee prompt written notice thereof and shall, as soon as practicable but in any event within one hundred and twenty (120) days after the occurrence of such Event of Loss, duly convey or cause to be conveyed to the Lessor, a replacement for the Engine with respect to which such Event of Loss occurred, good and marketable title to a replacement engine, free and clear of all Liens not excepted in Section 6.01 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 Lease 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 Lease. (b) Conditions Precedent. Prior to or at the time of any conveyance of an Engine pursuant to Section 11.04(a) hereof, the Lessee, at its own cost and expense will: (i) furnish the Lessor with, and the Indenture Trustee with copy of a bill of sale, in form and substance satisfactory to the Lessor, with respect to such Replacement Engine; (ii) cause a Lease Supplement covering such Replacement Engine to be duly executed by the Lessee and filed for recordation 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 5.03(b) of the Participation Agreement; (iii) furnish the Lessor with such evidence of compliance with the insurance provisions of Article 13 hereof with respect to such Replacement Engine as the Lessor or the Indenture Trustee may reasonably request; (iv) furnish the Lessor and the Indenture Trustee with a certificate of an aircraft advisor reasonably satisfactory to the Owner Participant (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 Lease immediately prior to the occurrence of such Event of Loss; (v) provide the Owner Participant and the Lessor with (A) an opinion of counsel (which counsel and opinion shall be reasonably satisfactory to the Owner Participant and the Lessor) that it will suffer no adverse tax consequences not otherwise indemnified for as of the Delivery Date as a result of such substitution or (B) a satisfactory indemnity for such consequences; (vi) comply with the provisions of Section 9.08 of the Indenture; (vii) cause an Indenture Supplement with respect to such Replacement Engine to be duly executed by the Lessor 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 be registered as permitted by Section 5.03(b) of the Participation Agreement in order that the Indenture shall constitute a first and prior and perfected Lien and security interest on and in respect of such Replacement Engine; and (viii)take such other action, including the filing of UCC financing statements naming the Indenture Trustee as Secured Party with the Secretary of State of Delaware, as the Lessor or the Indenture Trustee may reasonably request in order that such Replacement Engine be duly and properly titled in the Lessor, leased under this Lease and subjected to the Lien of the Indenture to the same extent as the replaced Engine. (c) Title Transfer. Upon compliance by the Lessee with the terms of Sections 11.04(a) and (b) hereof, the Lessor will transfer to the Lessee (subject to any insurer's salvage rights), without recourse or warranty (except as to the absence of Lessor's Liens), all of the Lessor's right, title and interest, if any, in and to the Engine with respect to which such Event of Loss occurred, and will deliver to the Lessee such instrument as the Lessor shall have received from the Indenture Trustee, releasing such Engine from the Lien of the Indenture. Each Replacement Engine shall, after such conveyance, be deemed part of the property leased under this Lease. An Event of Loss covered by this Section 11.04 shall not result in any change in Basic Rent, Stipulated Loss Values, Termination Values or Purchase Option Price, but may result in payments to be made pursuant to the Tax Indemnity Agreement and the Participation Agreement. Section 11.05. Application of Payments from the Government or Others. (a) Generally. Any payments (other than insurance proceeds the application of which is provided for in Section 13.03 hereof) received at any time by the Lessor or by the Lessee from any governmental authority or any other party, foreign or domestic, with respect to an Event of Loss resulting from the condemnation, confiscation, theft or seizure of, or requisition of title to or use of, the Airframe or any Engine will be applied, as appropriate, in accordance with Section 11.05(b) or Section 11.05(c) hereof. (b) Payments of Stipulated Loss Value. If the payments described in Section 11.05(a) hereof are received with respect to the Airframe or with respect to the Airframe and Engines or engines then installed on the Airframe and the Lessee has elected the alternative set forth in Section 11.02 hereof, so much of such payments as shall not exceed the amount required to be paid by the Lessee pursuant to Section 11.02 hereof shall be paid to the Lessor in reduction of the Lessee's obligations under Section 11.02 hereof if not already paid by the Lessee, or, if such obligations have already been discharged in full by the Lessee, such payments shall be applied to reimburse the Lessee for its payment of such Stipulated Loss Value and, if and to the extent specifically included in such payment, to pay to the Lessee interest on such amount of Stipulated Loss Value at the rate included in such payment if any, or otherwise at the Debt Rate, for the period from the date of payment by the Lessee of the Stipulated Loss Value to the date of reimbursement of the Lessee under this Section 11.05(b). The excess, if any, remaining after such application shall be divided between the Lessor and the Lessee as their respective interests may appear. (c) Payment if the Lessee Elects Replacement. If the payments described in Section 11.05(a) hereof 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 Lessee has elected the alternative set forth in Section 11.03 hereof, or if such payments are received with respect to an Engine not then installed on the Airframe under the circumstances contemplated by Section 11.04 hereof, all such payments shall be paid over to or retained by the Lessee, provided that the Lessee shall have fully performed its obligations pursuant to Section 11.03 or Section 11.04 hereof, as the case may be, with respect to the Event of Loss for which such payments are made. Section 11.06. 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 during the Term, which requisition does not constitute an Event of Loss, the Lessee shall promptly notify the Lessor of such requisition and all of the Lessee's obligations under this Lease with respect to such Airframe and Engines or engines shall continue to the same extent as if such requisition had not occurred except to the extent that any failure or delay in the performance or observance of such obligations (other than obligations for the payment of Rent) by the Lessee shall have been caused by such requisition. All payments received by the Lessor, the Lessee or any permitted sublessee or transferee from the Government or other government of registry of the Aircraft or any agency or instrumentality thereof for the use of the Airframe and Engines or engines during the Term (other than any such requisition which constitutes an Event of Loss, as to which the provisions of Section 11.05 shall govern) shall, so long as no Event of Default shall have occurred and be continuing (otherwise such proceeds shall be held pursuant to Section 23.01 as security for the Lessee's obligations hereunder and under the Participation Agreement), be paid over to, or retained by the Lessee or such permitted sublessee or transferee. All payments received by the Lessor, the Lessee or any such permitted sublessee or transferee from the Government or government of registry or any agency or instrumentality thereof for the use of the Airframe and Engines or engines after the Term shall be paid over to, or retained by, the Lessor (or the Lessee if it shall have purchased the Lessor's interest therein in accordance with the provisions hereof). Section 11.07. 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 Lessee shall replace such Engine by complying with the terms of Section 11.04 hereof to the same extent as if an Event of Loss had occurred with respect to such Engine, and any payments received by the Lessor or the Lessee from the Government or other government of registry or any instrumentality thereof with respect to such requisition shall, so long as no Event of Default shall have occurred and be continuing (otherwise such proceeds shall be held pursuant to Section 23.01 as security for the Lessee's obligations hereunder and under the Participation Agreement), be paid over to or retained by the Lessee, provided that the Lessee shall have fully performed its obligations under Section 11.04 hereof. Section 11.08. Application of Payments During Existence of Certain Defaults. Any amount referred to in Section 11.05, 11.06 or 11.07 hereof which is payable to the Lessee shall not be paid to the Lessee, or, if it has been previously paid directly to the Lessee, shall not be retained by the Lessee, if at the time of such payment an Event of Default shall have occurred and be continuing, but shall be paid to the Indenture Trustee so long as the Lien of the Indenture is in effect and, after the Lien of the Indenture shall be paid to and held by the Lessor as provided in Article 23 hereof as security for the obligations of the Lessee under this Agreement, and at such time as there shall not be continuing any such Event of Default, such amount shall be paid to the Lessee. ARTICLE 12 RETURN OF AIRCRAFT Section 12.01. Return of Aircraft. Unless the Aircraft is purchased by the Lessee as provided in Section 4.02 hereof, at the end of the Term, or upon the termination of this Lease pursuant to Article 10 hereof, the Lessee, at its own cost and expense, will return the Aircraft by delivering it to the Lessor on the last day of the Term or on the Termination Date, as the case may be, at a location and in accordance with the delivery instructions of the Lessor, but on a route determined by Lessee, which may be the Lessee's principal maintenance facility in Memphis, Tennessee or such other location within or outside of the continental United States (or on Lessee's route structure as in effect on the return date), the Airframe thereof fully equipped with the same number of Engines of the same or an improved make and model as were delivered on the Delivery Date (or Replacement Engines), free and clear of all Liens (other than Lessor's Liens), it being understood that all such Engines so returned shall be of identical make and model. The Lessor will give the Lessee at least ten (10) Business Days prior written notice of the place of such return; provided, however, that if the Lessor shall have made the request for storage pursuant to Section 12.06 hereof, the Lessee shall return the Aircraft to the Lessor at the site of the storage. Section 12.02. Return of Engines. If any engine not owned by the Lessor shall be delivered with the Airframe as set forth in Section 12.01 hereof, the Lessee, concurrently with such delivery, will, at its own cost and expense furnish the Lessor with (i) a full warranty bill of sale, in form and substance reasonably satisfactory to the Lessor, with respect to such engine, (ii) an opinion of the Lessee's counsel to the effect that, upon such return, the Lessor will acquire full right, title and interest to such engine and (iii) a certificate as described in Section 11.04(b)(iv) hereof. The Lessee shall take such other action as the Lessor may reasonably request in order that such Replacement Engine shall be duly and properly titled in the Lessor, and the Lessor will then (i) transfer to the Lessee, without recourse or warranty (except as to the absence of Lessor's Liens), all the Lessor's right, title and interest in and to any Engine in lieu of which a Replacement Engine has been delivered pursuant to Section 12.01, and (ii) deliver to the Lessee such instrument as the Lessor shall have received from the Indenture Trustee, releasing such Engine from the Lien of the Indenture. Section 12.03. Return of Manuals. Upon the return of the Aircraft, the Lessee shall deliver to the Lessor all logs, manuals, certificates and technical data, and inspection, modification and overhaul records pertaining to the Airframe, Engines or engines, which are then in the Lessee's or any sublessee's possession and reasonably required for the further sale or lease by the Lessor of the Aircraft, Engines or engines or which are required to be maintained with respect thereto under applicable rules and regulations of the Aeronautics Authority. Section 12.04. Condition of Aircraft. (a) Required Condition. The Aircraft when returned to the Lessor shall, at the Lessee's own cost and expense, meet the following requirements: (i) it shall be registered in the name of the Lessor pursuant to the Act; (ii) it shall be clean by airline and cargo handling operating standards; (iii) the Airframe shall be returned with the Engines, or any replacements thereto as herein authorized, provided that the Airframe shall have an aggregate of _______ Engines (as herein authorized under Section 12.02 hereof) installed thereon, together with the equipment, accessories or parts installed thereon on the Delivery Date or replacements therefor (as herein authorized) and alterations, modifications and additions thereto made in accordance with the provisions of this Lease; (iv) it shall be in the condition required by Section 12.04(b) hereof, and otherwise be in as good condition as when delivered to the Lessor by the Lessee, ordinary wear and tear excepted; (v) it shall have a currently effective airworthiness certificate issued by the Aeronautics Authority; (vi) it shall comply with any then applicable rules and regulations imposed by the Aeronautics Authority and, without limitation of the foregoing, terminate all Aeronautics Authority airworthiness directives and all mandatory service bulletins of, and mandatory modifications required by, the Aeronautics Authority or any manufacturer of the Airframe or Engine, or other manufacturer of an engine then installed on the Airframe (in compliance with Section 12.02 hereof) applicable to the Aircraft and required to be terminated during the Term of the Lease pursuant to Section 9.01 hereof and each Engine shall be serviceable in accordance with the Lessee's Aeronautics Authority approved maintenance program; (vii) it shall be free and clear of all Liens and rights of others (other than the Lessor's Liens) including, without limitation, rights of third parties under pooling, interchange and other agreements referred to in Section 7.02(a) hereof; (viii)it shall be in a standard cargo configuration; and (ix) it shall not be subject to a use prohibition of the character described in clause (iv) of the definition of "Event of Loss"; provided, however, that if such a use prohibition shall have occurred and be continuing and shall be curable by action by the Lessee and the Lessee shall be undertaking such cure promptly, diligently and continuously, using its best efforts, then the Lessee shall have a period of eighteen (18) months from the date of such prohibition to effect such cure and the provisions of Section 12.05(c) hereof shall apply throughout such period. (b) Remaining Time. If, at the time of return of the Aircraft, the Airframe is not being maintained under a continuous maintenance program, then the Airframe shall have remaining until the next scheduled "C" check at least 25% of the allowable hours between "C" checks permitted under the Lessee's FAA-approved maintenance program. If, at the time of return of the Aircraft the Airframe is subject to a continuous maintenance program, there will be no time-before-overhaul requirement. If, at the time of return of the Aircraft, the Engines are not being maintained under an on-condition maintenance program, then the average number of hours on such Engines remaining until the next scheduled engine heavy maintenance visit shall be at least 25% of the allowable hours between engine heavy maintenance visits permitted under the Lessee's FAA-approved maintenance program. If, at the time of return of the Aircraft, the Engines are subject to an on-condition maintenance program, there will be no time-before-overhaul requirement. With respect to maintenance under the Lessee's maintenance program approved by the Aeronautics Authority, the Lessee shall have treated the Aircraft in a nondiscriminatory manner with other [Make/Model] aircraft in the Lessee's fleet, and the Aircraft shall be free and clear of all Liens and rights of others other than the Lessor's Liens and shall be in compliance in every material respect with the Lessee's maintenance program as if the Term were not ending. Section 12.05. Delayed Return of Aircraft. (a) If the return of the Aircraft to the Lessor in compliance with the terms of this Lease shall be delayed beyond the scheduled end of the Term because of the occurrence of an event described in clause (iii)(B) of the definition of Event of Loss, this Lease shall not terminate but shall continue in full force and effect until the earlier to occur of the return of the Aircraft or the expiration of the six-month period (or such shorter period referred to in said clause (iii)(B)) after the scheduled end of the Term, provided that (i) Stipulated Loss Value and Termination Value during such extension shall be an amount determined in accordance with Section 4.01(b) hereof, (ii) the Lessee shall pay on demand, as Basic Rent for each day of such delay and this Lease shall continue, an amount equal to the daily equivalent of the average Basic Rent paid during the Basic Term and any then expiring Renewal Term, in each case with such Basic Rent to include for this purpose the amounts referred to in Section 3.01 hereof, and (iii) neither the Lessee nor any other Person shall use or operate the Aircraft in any manner, except pursuant to the activation of the Civil Reserve Airfleet Program. (b) If, in the case of a delay in return pursuant to paragraph (a) above, at the expiration of the six-month period following the scheduled end of the Term the Aircraft has not been returned to the Lessor, an Event of Loss shall be deemed to have occurred on the date of expiration of such six month period (or such shorter period referred to in paragraph (a) above) and on such date (or at such earlier date as an Event of Loss pursuant to clause (iv) of the definition of Event of Loss shall have occurred) the Lessee shall pay to the Lessor the Stipulated Loss Value for the Aircraft determined as of such date; provided, however, that the Lessor shall have the right to waive payment of Stipulated Loss Value upon return of the Aircraft by the Lessee to the Lessor and acceptance thereof (subject to any use prohibition of the character described in clause (iv) of the definition of Event of Loss). (c) In any other situation in which the Aircraft is not returned to the Lessor upon the expiration of the Term (other than due to a purchase of the Aircraft by the Lessee pursuant to this Lease or by a purchaser under Article 10), the Lessee shall pay on demand as Basic Rent for each day of such delay and this Lease shall continue, an amount equal to the daily equivalent of the average Basic Rent paid during the Basic Term and any then expiring Renewal Term, in each case with such Basic Rent to include for this purpose the amounts referred to in Section 3.01 hereof. Section 12.06. Storage. Upon any expiration or termination of this Lease, at the written request of the Lessor given at least 15 days prior to such expiration or termination, the Lessee will arrange, or will caused to be arranged, at no charge to the Lessor (subject, however, to the last sentence of this Section 12.06), storage at a ramp storage facility for the Aircraft at the Lessee's principal maintenance facilities in Memphis, Tennessee or one of the Lessee's other maintenance facilities or at a location selected by the Lessee used as a location for the parking or storage of aircraft for a period of up to 30 days, if such storage is available. At the end of such 30 day period, if the Lessor so requests within days of before the end of such period, the Lessee will continue to provide such storage at such facility or location for an additional 30 days at the Lessor's expense. If the Lessee is required to move the Aircraft from one storage facility to another, such move shall be at the risk and expense of the Lessor. The maintenance and risk of loss of, and responsibility for obtaining insurance on, the Aircraft shall be the responsibility of the Lessor during any period of storage. Section 12.07. Special Markings. If requested by the Lessor, the Lessee shall, at the Lessee's cost, remove or paint over all insignias and other distinctive markings of the Lessee or any sublessee on the Aircraft. Section 12.08. Lessor's Option to Purchase Parts. At any time after the Lessee has advised the Lessor that it has determined not to renew this Lease or purchase the Aircraft, or the Aircraft is otherwise to be returned to the Lessor, the Lessee shall advise the Lessor of any Part which the Lessee intends to remove as provided in Section 9.02(b) above, and the Lessor may, at its option, upon 30 days notice to the Lessee, purchase any or all of such nonproprietary Parts from the Lessee upon the expiration of the Term at their then Fair Market Value determined in accordance with the provisions of Section 4.03 hereof. ARTICLE 13 INSURANCE Section 13.01. Public Liability and Property Damage Liability Insurance. (a) Public Liability and Property Damage Liability Insurance. The Lessee, 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 respect to similar aircraft and engines which comprise the fleet of the Lessee), with such retentions as the Lessee customarily maintains (subject to the limitations set forth in Section 13.06 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 Lessee and owning or operating aircraft and engines similar to the Aircraft and Engines; provided that such insurance shall not be in amounts less than the amount per occurrence as shall have been agreed to on the Delivery Date by the Owner Participant, Indenture Trustee and the Lessee unless the Aircraft is not operated and appropriate liability insurance for the Aircraft on the ground is maintained; provided that in no event shall the limits of liability for all public liability insurance be less than the amount, per occurrence, as set forth on the insurance certificate delivered on the Delivery Date unless the Aircraft is not operated and appropriate insurance for the Aircraft on the ground is maintained. (b) Government Indemnification. Notwithstanding Section 13.01(a), 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 Lessee shall maintain throughout the period of such requisition such insurance as would otherwise be required under this Section 13.01 (except to the extent that the Lessee 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 Lessor shall accept, in lieu of such insurance coverage, indemnification or insurance from the Government which is substantially the same as otherwise required under this Article 13. (c) Policy Terms. Any policy of insurance carried and maintained in accordance with this Section 13.01, and any policy taken out in substitution or replacement for any such policy subject to the terms, conditions and limitations thereof, shall: (i) name or be amended to name the Lessor in its individual capacity and as owner of the Aircraft, the Indenture Trustee in its capacity as such and the Owner Participant and each of their respective officers and directors in their respective capacities as such as additional insureds (hereinafter in this paragraph (c) sometimes referred to as "Additional Insured"); (ii) provide that, in respect of the interest of any Additional Insured in such policies, the insurance shall not be invalidated by any action or inaction of the Lessee or any Additional Insured as defined under the policy of insurance required under this Section 13.01 (other than such Additional Insured) and shall insure each Additional Insured regardless of any breach or violation of any warranty, declaration or condition contained in such policies by the Lessee or any Additional Insured (other than such Additional Insured) as defined under the policy of insurance required under this Section 13.01; (iii) 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 any Additional Insured or Loss Payee 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 each such Additional Insured of written notice from such insurers of such cancellation, change or lapse; (iv) provide that no Additional Insured shall have any obligation or liability for premiums or other payments, if any, in connection with such insurance; (v) provide that the insurers shall waive any rights of subrogation against the Additional Insured, to the extent that the Lessee has waived its rights under this Lease; provided that the exercise by insurers of rights of subrogation derived from rights retained by the Lessee shall not, in any way, delay payment of any claim that would otherwise be payable by such insurers but for the existence of rights of subrogation derived from rights retained by the Lessee; (vi) 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 any Additional Insured; (vii) provide that all of the provisions of such policy shall operate in the same manner as if there were a separate policy covering each Additional Insured; provided, that such policies shall not operate to increase any insurer's limit of liability; and (viii)be primary, without right of contribution from any other insurance which is carried by any Additional Insured with respect to its interest in the Aircraft. Section 13.02. Insurance Against Loss or Damage to Aircraft and Engines. (a) Hull Insurance. The Lessee, 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 13.06) and in such form and amounts as the Lessee customarily maintains with respect to the aircraft in the Lessee's fleet of the same type and model and operated on the same routes as the Aircraft (except that the Lessee 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 this Lease and the Lien of the Indenture be for an amount not less than an amount equal to the Stipulated Loss Value for the Aircraft from time to time. (b) Policy Terms. Any policies carried and maintained in accordance with this Section 13.02 and any policies taken out in substitution or replacement for any such policies subject to the terms, conditions and limitations thereof shall: (i) name or be amended to name the Lessor in its individual capacity and as owner of the Aircraft, the Indenture Trustee and the Owner Participant and each of their respective officers and directors, in their respective capacities as such, as additional insureds (hereinafter in this paragraph (b) sometimes referred to as "Additional Insured"), and the Lessor, or so long as the Lien of the Indenture shall not have been disclosed, the Indenture Trustee as loss payees (hereinafter in this paragraph (b) sometimes referred to as "Loss Payee"); (ii) provide with respect to coverage provided under this Section 13.02, 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 Stipulated Loss Value for the Aircraft shall be payable to the Lessor (or, so long as the Indenture shall not have been discharged, the Indenture Trustee), it being understood and agreed that in the case of any payment to the Lessor (or the Indenture Trustee) otherwise than in respect of an Event of Loss, the Lessor (or the Indenture Trustee) shall, 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 Lessee or its order, and (ii) the entire amount of any loss involving proceeds of $5,000,000 or less or the amount of any proceeds of any loss in excess of the Stipulated Loss Value for the Aircraft shall be paid to the Lessee or its order unless an Event of Default shall have occurred and be continuing and the insurers have been notified thereof by the Lessor or the Indenture Trustee (and if the insurers have notice of a Payment Default or Event of Default such payment shall be made to the Indenture Trustee); (iii) 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 any Additional Insured or 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 each such Additional Insured or Loss Payee of written notice from such Insurer of such cancellation, change or lapse; (iv) provide that, in respect of the interest of the Lessor (in its individual capacity and as the Owner Trustee), the Owner Participant or the Indenture Trustee (in their respective capacities as such) in such policies the insurance shall not be invalidated by any action or inaction of the Lessee, any Additional Insured or Loss Payee (other than any action or inaction of the Lessee, such Additional Insured or Loss Payee) and shall insure the Lessor (in its individual capacity and as Owner Trustee), the Owner Participant or the Indenture Trustee regardless of any breach or violation of any warranty, declaration or condition in such policies by the Lessee or any other Insured as defined under the policy of insurance required under this Section 13.02; (v) provide that the insurers shall waive any rights of subrogation against the Lessor (in its individual capacity and as Owner Trustee), the Owner Participant or the Indenture Trustee; (vi) 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 any Additional Insured or Loss Payee; (vii) be primary and without rights of contribution from any other insurance which is carried by the Lessor, the Owner Participant or the Indenture Trustee with respect to its interest in the Aircraft; and (viii)provide that the Lessor, the Owner Participant or the Indenture Trustee shall have no obligation or liability for premiums or other payments, if any, in connection with such insurance. Section 13.03. Application of Insurance Proceeds. (a) Generally. All insurance proceeds (other than proceeds from policies carried by the Lessor, the Indenture Trustee or the Owner Participant) received under policies described in Section 13.02 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: (i) 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 Lessee has elected the alternative set forth in Section 11.02 hereof, so much of such proceeds as shall not exceed the amounts required to be paid by the Lessee pursuant to said Section 11.02 hereof shall be applied in reduction of the Lessee's obligation to pay such amounts if not already paid by the Lessee, or if already paid by the Lessee, shall be applied to reimburse the Lessee for its payment of such amounts, provided that no 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 Lessee if and so long as the foregoing proviso is not satisfied, such proceeds shall be held pursuant to Section 23.01 hereof as security for the Lessee's obligations hereunder; or (ii) 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 Lessee has elected the alternative set forth in Section 11.03 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 11.04 hereof, all such proceeds shall be paid to the Indenture Trustee (unless the Indenture has been discharged in which case paid to the Lessor) for disbursement to the order of the Lessee, after the Lessee shall have fully performed the terms of Sections 11.03 or 11.04 hereof, as applicable, with respect to the Event of Loss for which such proceeds are paid, 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 23.01 hereof as security for the Lessee's obligations hereunder. (b) Payment if no Event of Loss. 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 Lessee) for repairs or for replacement property in accordance with Articles 7 and 8 hereof, if not already paid for by the Lessee, and any balance remaining after compliance with said Articles 7 and 8 hereof with respect to such loss shall be paid to the order of the Lessee, provided that no 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 23.01 hereof as security for the Lessee's obligations hereunder. (c) Information. If any Additional Insured becomes subject to any claim covered by any insurance policy maintained pursuant to this Article 13, the Lessee shall make available any information required by such Additional Insured in connection with such claim. Section 13.04. Reports. On or before the Delivery Date and thereafter upon each subsequent renewal date during the Term, the Lessee's aviation insurance broker will furnish to the Lessor, the Indenture Trustee and the Owner Participant a report, 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 Lease. The Lessee will cause its aviation insurance broker to advise the Lessor, the Owner Participant and 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 Lessee of which it has knowledge and which might cause cancellation of all or any part of any insurance carried by the Lessee with respect to the Aircraft. The Lessee will cause such insurance broker to agree to advise the Lessor, Indenture Trustee, and Owner Participant in writing if and when it becomes evident to such broker that any insurance policy carried and maintained on the Aircraft pursuant to this Article 13 will not be renewed at the expiration date. The Lessee will also cause such insurance broker to deliver to the Lessor, the Indenture Trustee and the Owner Participant, on or prior to the date of expiration of any insurance policy referenced in a previously delivered certificate of insurance, a new certificate of insurance, confirming to such parties that such insurance as certified on the Delivery Date continues in full force and effect. If the Lessee shall fail to maintain insurance as required, the Lessor may, at its option, provide such insurance, and in such event, the Lessee shall, upon demand, reimburse the Lessor as Supplemental Rent, for the cost of such insurance; provided, however, that no exercise of said option shall affect the provisions of this Lease, including the provisions that failure by the Lessee to maintain the prescribed insurance shall constitute a waiver of any other rights the Lessor may have against the Lessee, or otherwise constitute an Event of Default. Section 13.05. Lessor's Insurance. The Lessor may insure the Airframe or any Engine at its own cost and expense, including insuring the Aircraft for amounts in excess of the Stipulated Loss Value of the Aircraft, provided that any insurance so maintained by the Lessor shall not result in a reduction of coverage or amounts payable under insurance required or permitted to be maintained by the Lessee under this Article 13 or increase the cost to the Lessee of maintaining such insurance; provided further, that any insurance policies of the Lessor insuring the Airframe or any Engine shall provide for a release to the Lessee of any and all salvage rights in and to the Airframe or any Engine. Section 13.06. Self-Insurance. The Lessee may self-insure the risks required to be insured against by Section 13.01 and Section 13.02 in such reasonable amounts as are then applicable to other aircraft or engines of the Lessee of value comparable to the Aircraft, but in no case shall such self-insurance with respect to all aircraft in the Lessee's fleet in aggregate exceed an amount equal to the lesser of (i) 50% of the highest replacement value of any single aircraft in the Lessee's fleet, or (ii) 1.5% of the average aggregate insured value from time to time of the Lessee'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. ARTICLE 14 INSPECTION Section 14.01. Right of Inspection. At reasonable times, and upon at least five Business Days' prior written notice to the Lessee, the Lessor, Indenture Trustee or the Owner Participant, or their respective authorized representatives, may inspect the Aircraft and upon at least 10 Business Days prior written notice, all Aeronautics Authority-required books and records of the Lessee and any sublessee 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 prospective and permitted transferees of the Lessor's, the Indenture Trustee's or the Owner Participant's interest who agree to hold such information confidential, (b) to the Lessor's, Pass Through Trustee's or the Owner Participant's counsel, independent insurance advisors or other agents and the Holders who agree to hold such information confidential, (c) as may be required by any statute, court or administrative order or decree or governmental ruling or regulation or (d) as may be necessary for purposes of protecting the interests of any such Person or for enforcement of this Lease by the Lessor; provided, however, that any and all disclosures permitted by (c) or (d) 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 Lessee. Notwithstanding the previous sentence, the Lessor and the Owner Participant and their respective authorized representatives shall be entitled to inspect the Aircraft only one time among themselves during any consecutive twelve month period. Upon receipt by the Lessee of a written request from the Owner Participant specifying that the Owner Participant desires to have an authorized representative observe (x) the next heavy maintenance visit or (y) any "C" Check (or substantially equivalent successor type of maintenance work) in each case scheduled to be performed on the Aircraft during the last 18 months of the Term, the Lessee shall cooperate with the Owner Participant to enable the Owner Participant's representative to observe such next scheduled heavy maintenance visit or such "C" Check; provided, that the Owner Participant's authorized representative shall merely observe such heavy maintenance visit or "C" Check, shall not interfere with or extend in any manner the normal conduct or duration of the heavy maintenance visit or "C" Check and shall not be entitled to direct any of the work performed in connection with such heavy maintenance visit or "C" Check. Any inspection or other exercise of rights pursuant to this Section 14.01 shall be made at the sole risk and expense of the Person exercising such inspection or other rights, and no exercise of such inspection or other rights shall interfere with the use of the Aircraft by, or the business of, the Lessee or any sublessee. Section 14.02. No Obligation to Inspect. Neither the Lessor, the Indenture Trustee, nor the Owner Participant shall have any duty to make any inspection pursuant to Section 14.01 and no such party shall incur any liability or obligation by reason of not making any such inspection. ARTICLE 15 ASSIGNMENT Section 15.01. Lessee's Right to Assign. The Lessee shall not, and shall have no authority or power to assign, convey or sublease any of its rights under this Lease without the prior written consent of the Lessor except (i) as otherwise provided in Section 7.02 hereof, or in the case of any requisition by the Government referred to in Section 7.01 hereof, or (ii) to a wholly-owned domestic subsidiary of the Lessee which shall be a certificated Air Carrier. Any such assignment, conveyance or sublease shall in no way relieve the Lessee from any obligation under this Lease, the Participation Agreement or the Tax Indemnity Agreement or any other Operative Agreement or any written agreement of the Lessee entered into in connection with the transactions contemplated by the Operative Agreements, which shall be and remain obligations of the Lessee. The Lessor agrees that it will not assign or convey its right, title and interest in and to this Lease or the Aircraft except as contemplated by or provided in this Lease, the Trust Agreement, the Indenture or the Participation Agreement. The terms and provisions of this Lease shall be binding upon and inure to the benefit of the Lessor and the Lessee and their respective successors and assigns. Section 15.02. Citizenship. The Lessee will at all times be a duly certificated Air Carrier under the Act. ARTICLE 16 EVENTS OF DEFAULT Section 16.01. Events of Default. Each of the following events shall constitute an Event of Default, whether any such event shall be voluntary or involuntary or come about or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body: (a) The Lessee shall fail to make any payment of Basic Rent, Renewal Rent, Stipulated Loss Value, Termination Value, as the case may be, or any payment pursuant to Section 15.02 of the Participation Agreement or penalty on the Certificates within five (5) Business Days after the date when due (except that with respect to any failure to pay Excepted Payments for such period, such failure shall constitute an Event of Default at the discretion of the Person to whom such Excepted Payment is payable; (b) The Lessee shall fail to make any payment of Supplemental Rent (other than amounts described in clause (a) above within thirty (30) days after the Lessee has received written notice from the Person entitled to receive such payment stating that such payment is due (except that with respect to any failure to pay Excepted Payments for such period, such failure shall constitute an Event of Default at the discretion of the Owner Participant); (c) The Lessee shall fail to procure, carry and maintain insurance on the Aircraft in accordance with the provisions of Article 13 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 Lessor of written notice of such lapse or cancellation or the date that such lapse or cancellation is effective as to the Lessor 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; (d) The Lessee shall fail to perform or observe any other covenant, condition or agreement to be performed or observed by it under this Lease, the Participation Agreement or any other Operative Agreement or any other written agreement of the Lessee 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 after the Lessee shall have received written notice from the Lessor or the Owner Participant of such failure, provided, that in the event such failure is curable and so long as (but for no longer than 180 days after such 30 day period) the Lessee shall have promptly undertaken such cure after receipt of such notice which undertaking shall be diligently and continuously pursued using the Lessee's best efforts, such failure shall not constitute an Event of Default; provided, that failure of the Lessee to maintain the registration of the Aircraft under the Act pursuant to the Lessee's covenants and agreement in Section 5.03(b) of the Participation Agreement and in Section 7.01(a) of this Lease, when the lapse of such registration is solely because the Owner Participant or the Lessor has ceased to be a Citizen of the United States, shall not constitute a Default or an Event of Default; (e) An order for relief shall be entered in respect of the Lessee by a court having jurisdiction in the premises in an involuntary case under the federal bankruptcy laws as now or hereafter in effect; or if the Lessee shall consent to the appointment of a custodian, receiver, trustee or liquidator of itself or of a substantial part of its property; or if the Lessee 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 if the Lessee shall file, or the Board of Directors of the Lessee 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 Lessee in any such proceeding; or if the Lessee shall file, or the Board of Directors of the Lessee shall authorize the Lessee 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; (f) An order, judgment or decree shall be entered by any court of competent jurisdiction appointing, without the consent of the Lessee, a custodian, receiver, trustee, or liquidator of the Lessee or of any substantial part of its property, or sequestering any substantial part of the property of the Lessee, or granting any other relief in respect of the Lessee 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 (g) A petition against the Lessee 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 if, under the provisions of any law providing for reorganization or winding-up of corporations which may apply to the Lessee, any court of competent jurisdiction shall assume jurisdiction, custody or control of the Lessee 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 (h) Any representation or warranty made by the Lessee in this Lease or in the Participation Agreement or in any document or certificate furnished by the Lessee in connection with or pursuant to this Lease or the Participation Agreement (except for the Tax Indemnity Agreement) shall at any time prove to have been incorrect at the time made in any respect material to the transactions contemplated by this Lease and, if originally made by the Lessee in good faith, shall remain material and unremedied for a period of thirty (30) days after the Lessee shall have received written notice of such misstatement. ARTICLE 17 REMEDIES Section 17.01. Remedies Upon Lessee's Default. (a) Remedies Generally. Upon the occurrence of any Event of Default and at any time after such occurrence so long as the same shall be continuing, the Lessor may, at its option, declare this Lease to be in default (except that no such declaration shall be required in the case of an Event of Default pursuant to paragraphs (e), (f) or (g) of Section 16.01), and at any time thereafter the Lessor may do, and the Lessee shall comply with, one or more of the following with respect to all or any part of the Airframe and the Engines, as the Lessor in its sole discretion shall elect, to the extent permitted by, and subject to compliance with, any mandatory requirements of applicable law then in effect: (i) Demand in writing that the Lessee shall, and upon such written demand the Lessee shall, at the Lessee's own cost and expense, return promptly to the Lessor all or such part of the Airframe and the Engines as the Lessor may demand in the manner and condition required by, and otherwise in accordance with all of the provisions of, Article 12, or the Lessor, at its option, may enter upon the premises where such Airframe or Engines are located and take immediate possession of and remove such Airframe and Engines (together with any engine which is not an Engine but is installed on the Airframe, subject to all of the rights of the owner, lessor, lien holder or secured party of such engine) without the necessity for first instituting proceedings, or by summary proceedings or otherwise, all without liability of the Lessor to the Lessee for or by reason of such entry or taking of possession, whether for the restoration of damage to property caused by such action or otherwise; (ii) With or without taking possession thereof, sell or otherwise dispose of the Airframe or any Engine, at public or private sale and with or without advertisement or notice to the Lessee, as the Lessor may determine, and the Lessor may hold the Lessee liable for any installment of Basic Rent and Renewal Rent due on or before the date of such sale (and, if Basic Rent or Renewal Rent is payable in arrears, the pro rata portion of the installment of Basic Rent or Renewal Rent due on the next succeeding Rent Payment Date in respect of any period commencing on the immediately preceding Rent Payment Date to the date of such sale), or hold, use, operate, lease to others or keep idle all or any part of the Airframe or any Engine as the Lessor, in its sole discretion, may determine, in any such case free and clear of any rights of the Lessee except as otherwise set forth in this Article 17, and without any duty to account to the Lessee with respect to such action or inaction or for any proceeds except to the extent required by Section 17.01(a)(iv) hereof, in the event the Lessor elects to exercise its rights under said Section, and in connection with any sale of the Aircraft or any part thereof pursuant to this Article 17, the Lessor, the Indenture Trustee, Pass Through Trustee, Holder or the Owner Participant may bid for and purchase such property; (iii) Whether or not the Lessor shall have exercised or shall later at any time exercise any of its rights under Sections 17.01(a)(i) or 17.01(a)(ii) hereof, the Lessor, by written notice to the Lessee specifying a payment date not earlier than 10 days from the date of such notice, may demand that the Lessee pay to the Lessor, and the Lessee shall pay to the Lessor on the payment date specified in such notice, as liquidated damages for loss of a bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent due on Rent Payment Dates occurring after the payment date specified in such notice), any installment of Basic Rent, Renewal Rent and any Supplemental Rent due on or before such payment date (and, if Basic Rent or Renewal Rent is payable in arrears, the pro rata portion of the installment of Basic Rent or Renewal Rent due on the next succeeding Rent Payment Date in respect of the period commencing on the Stipulated Loss Value Determination Date referred to below and ending on the date of such payment), plus an amount equal to the excess, if any, of the Stipulated Loss Value for the Aircraft, computed as of the Stipulated Loss Value Determination Date on or next preceding the payment date specified in such notice over the actual Fair Market Value of the Aircraft, computed as of the Stipulated Loss Value Determination Date on or next preceding the payment date specified in such notice; provided, however, that if (and in any event prior to the time for payment hereunder) the Lessor is unable within a reasonable period of time to recover possession of the Aircraft, or any portion thereof, pursuant to clause (i) above unencumbered by this Lease and free and clear of all Liens (other than Lessor's Liens), Fair Market Value of the Aircraft or such portion, shall at the option of the Lessor to the extent legally enforceable, be zero and after payment in full by the Lessee of the amount specified above and all other amounts due from the Lessee under this Lease and the other Operative Agreements, the Lessor shall promptly transfer (without recourse or warranty other than as to the absence of the Lessor's Liens) all of its right, title and interest in the Aircraft or such portion, to the Lessee; (iv) In the event the Lessor, pursuant to Section 17.01(a)(ii) hereof, shall have sold the Airframe and/or any Engine, the Lessor, in lieu of exercising its rights under Section 17.01(a)(iii) hereof, may, if it shall so elect, demand that the Lessee pay the Lessor, and the Lessee shall pay to the Lessor, on the date of such sale, as liquidated damages for loss of a bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent or Renewal Rent due after the date on which such sale occurs) any unpaid Basic Rent or Renewal Rent due on or before the date on which such sale occurs (and, if Basic Rent or Renewal Rent is payable in arrears, the pro rata portion of the installment of Basic Rent or Renewal Rent due on the next succeeding Rent Payment Date in respect of any period commencing on the Stipulated Loss Value Determination Date referred to below and ending on the date of such sale), and any Supplemental Rent due on or before the date on which such sale occurs, plus an amount equal to the excess, if any, of (A) the Stipulated Loss Value for the Aircraft, computed as of the Stipulated Loss Value Determination Date next preceding the sale date, over (B) the net proceeds of such sale (after deduction of all of the Lessor's costs and expenses of such sale, including, without limitation, costs of storage, overhaul, maintenance, preparation and transportation of the Aircraft and brokers' and attorneys' fees) together with interest, to the extent permitted by applicable law, at the Past Due Rate, on the amount of such excess from the date of such sale to the date of actual payment by the Lessee; (v) Proceed by appropriate court action to enforce the terms of this Lease or to recover damages for its breach; or (vi) Terminate or rescind this Lease as to the Airframe or any or all of the Engines or exercise any other right or remedy which may be available to the Lessor under applicable law. (b) Cost of Exercise of Remedies. In addition, the Lessee shall be liable, except as otherwise provided above, for any and all unpaid Rent due before, after or during the exercise of any of the Lessor's remedies and for all reasonable legal fees and other costs and expenses incurred by the Lessor by reason of the occurrence of any Event of Default or the exercise of the Lessor's remedies, including, without limitation, all costs and expenses incurred in connection with the return of the Airframe or any Engine in accordance with the terms of Article 12 or in placing the Airframe or Engines in the condition and airworthiness required by such Article or in connection with any use, operation, maintenance, storage, or leasing carried out as part of such exercise. Section 17.02. Cumulative Remedies. Except as otherwise provided, no remedy referred to in this Article 17 is intended to be exclusive, but each shall be cumulative and in addition to any other remedy available to the Lessor at law or in equity; and the exercise or beginning of exercise by the Lessor of any one or more of such remedies shall not preclude the simultaneous or later exercise by the Lessor of any or all of such other remedies. Section 17.03. Waiver. No express or implied waiver by the Lessor of any Event of Default shall in any way be, or be construed to be, a waiver of any future or subsequent Event of Default. To the extent permitted by applicable law, the Lessee waives any rights now or in the future conferred by statute or otherwise which may require the Lessor to sell, lease or otherwise use the Airframe or any Engine in mitigation of the Lessor's damages or which may otherwise limit or modify any of the Lessor's rights or remedies under this Article 17. Section 17.04. Lessor's Right to Perform for Lessee. If the Lessee fails to make any required payment of Rent or fails to perform or comply with any of its agreements contained in this Lease (other than the Lessee's obligation to sell the Aircraft to the Lessor pursuant to Article 2), whether or not such failure shall constitute an Event of Default hereunder, the Lessor or the Owner Participant may (but shall not be obligated to) make such payments or perform or comply with such agreement, and the amount of such payment and the amount of the reasonable costs and expenses of the Lessor or the Owner Participant incurred in connection with such payment or the performance of or compliance with such agreement, together with interest (to the extent permitted by applicable law) at the Past Due Rate from the date of the making of such payment or the incurring of such costs and expenses by the Lessor or the Owner Participant, as the case may be, to the date of payment of such Rent by the Lessee, shall be deemed Supplemental Rent payable by the Lessee upon demand. No such payment or performance by the Lessor or the Owner Participant shall be deemed to waive any Default or Event of Default or relieve the Lessee of its obligations hereunder. ARTICLE 18 COVENANT OF QUIET ENJOYMENT Section 18.01. Quiet Enjoyment. So long as no Event of Default shall have occurred and be continuing, each of the parties hereto covenants that neither it nor any other person lawfully claiming through it (other than the holder of a Lien which the Lessee is obligated to discharge pursuant to Article 6 hereof) shall interfere with the Lessee's right to quietly enjoy the Aircraft without hindrance or disturbance by it or any such other Person. ARTICLE 19 FURTHER ASSURANCES; FINANCIAL INFORMATION Section 19.01. Further Assurances. Promptly upon the execution and delivery of the Lease, the Lease Supplement, the Indenture, the Indenture Supplement and the Trust Agreement, the Lessee will cause each such document to be duly filed for recordation in accordance with the Act and will maintain the recordation of the Indenture until the Lien of the Indenture shall have been discharged pursuant to the terms of the Indenture. In addition, the Lessee will, at the Lessee's own cost and expense, promptly and duly execute and deliver to the Lessor, the Owner Participant and the Indenture Trustee such further documents and assurances to carry out the intent and purpose of this Lease and the Indenture and to establish and protect the rights and remedies created or intended to be created in favor of the Lessor under this Lease, and of the Owner Participant under the Operative Agreements, and of the Indenture Trustee under the Indenture, including, without limitation, the execution and filing of Uniform Commercial Code financing and continuation statements, the execution and delivery of supplements and amendments to this Lease and the Indenture, in recordable form, subjecting to this Lease and the Indenture any replacement airframe and/or engines delivered by the Lessee pursuant to Section 11.03 and any Replacement Engine delivered by the Lessee pursuant to Section 11.04 and the recording and filing of counterparts of this Lease and the Indenture in accordance with the laws of such jurisdictions as the Lessor or the Indenture Trustee may from time to time deem advisable. ARTICLE 20 NET LEASE Section 20.01. Nature of Lease. (a) The lease of the Aircraft by the Lessor to the Lessee is a net lease and the Lessee's obligation to pay all costs and expenses of every character, whether seen or unforeseen, ordinary or extraordinary, or structural or nonstructural, in connection with the use, operation, maintenance, repair and reconstruction of the Airframe and each Engine by the Lessee, including, without limitation, the costs and expenses particularly set forth in this Lease, it being the intention of the parties hereto that the obligations of the Lessee shall be absolute and unconditional, shall be separate and independent covenants and agreements, and shall continue unaffected unless and until the covenants have been terminated pursuant to an express provision of this Lease. The obligation to pay Rent shall be absolute and unconditional and (except as otherwise expressly provided with respect to Supplemental Rent) shall be paid without notice or demand and such obligation shall not be affected by any circumstance, including, without limitation: (i) any set-off (except to the extent set forth in Section 3.05 hereof), counterclaim, recoupment, defense or other right which the Lessee may have against the Lessor, the Owner Participant, the Indenture Trustee or anyone else for any reason (including, without limitation, any breach by the Lessor or the Owner Participant of their respective representations, warranties, agreements or covenants contained in any of the Operative Agreements); (ii) any defect in the title, airworthiness, registration, eligibility for registration, condition, design, operation, merchantability or fitness for use of, suitability for a particular purpose of, or any damage to or loss or destruction of, the Aircraft or any portion thereof, or any interruption or cessation in the use or possession of the Aircraft by the Lessee or any sublessee for any reason including, without limitation, by reason of governmental action; (iii) any insolvency, bankruptcy, reorganization or similar case or proceedings by or against the Lessor, the Lessee or any other Person; or (iv) any other circumstance, happening or event whatsoever, whether or not unforeseen, whether similar or dissimilar to any of the foregoing. (b) To the extent permitted by applicable law, the Lessee waives any and all rights which it may now have or which at any time may have conferred upon it, by statute or otherwise, to terminate, cancel, quit, rescind or surrender this Lease, the Airframe, or any Engine or part thereof, other than in accordance with the terms hereof. (c) Except as expressly provided herein, each payment of Rent made by the Lessee shall be final as to the Lessor and the Lessee, and the Lessee will not seek to return or to recover, abate, suspend, defer or reduce all or any part of any such payment of Rent from the Lessor or from the Indenture Trustee for any reason. ARTICLE 21 SUCCESSOR LESSOR Section 21.01. Successor Lessor. The Lessee agrees that in the case of the appointment of any successor trustee for the Lessor pursuant to the terms of the Participation Agreement, such successor trustee shall, upon written notice by such successor to the Lessee, succeed to all the rights, powers and title of the Lessor under this Lease and shall be deemed to be the Lessor and the owner of the Aircraft for all purposes of this Lease without the necessity of any consent or approval by the Lessee and without in any way altering the terms of this Lease or the Lessee's obligations. One such appointment and designation of a successor trustee shall not exhaust the right to appoint and designate further successor trustee pursuant to the Participation Agreement, but such right may be exercised repeatedly so long as this Lease shall be in effect. ARTICLE 22 SECURITY FOR LESSOR'S OBLIGATIONS Section 22.01. Security for Lessor's Obligations to Holders. In order to secure the indebtedness evidenced by the Certificates, the Indenture provides, among other things, for the assignment by the Lessor to the Indenture Trustee of the Trust Indenture Estate, including this Lease and the Lease Supplement and for the creation of a first mortgage and security interest in favor of the Indenture Trustee on the Aircraft. The Lessee consents to and acknowledges such assignment (subject to the reservations and conditions therein set forth) and the receipt of a copy of the Indenture. Section 22.02. Lease Subject to Indenture. This Lease shall be subordinate to the Lien of the Indenture. Notwithstanding the exercise by the Indenture Trustee of any rights or remedies under or in respect of the Indenture, the Lessee shall not be relieved of the obligation to perform all the terms and provisions to be performed by the Lessee under this Lease, and this Lease shall not terminate or be otherwise affected by reason of any such exercise of any such rights and remedies unless after an Event of Default shall have occurred and be continuing this Lease is terminated in respect of the Aircraft upon the election of the Indenture Trustee in connection with the exercise of its rights and remedies under the Indenture in respect of the Aircraft, evidenced by and as stated in written notice of such termination from the Indenture Trustee to the Lessee. Section 22.03. Consent of Lessee to Assignment of Lease as Security. The Lessee hereby accepts and consents to the assignment of this Lease to the Indenture Trustee and pursuant to the terms of the Indenture, the Indenture Trustee's rights to receive payments (other than Excepted Payments) due under this Lease, the right to transfer or assign title to the Aircraft subject to this Lease, to make all waivers and agreements except as otherwise provided in the Indenture, to give all notices, consents and releases and to take all action upon the happening of a Default or Event of Default under this Lease (except as otherwise specifically provided in the Indenture), or to do any and all other things whatsoever which the Lessor is or may become entitled to do under this Lease (except as otherwise provided in the Indenture); all or any of which rights, obligations, benefits and interests may, pursuant to the terms of the Indenture, be reassigned or retransferred by the Indenture Trustee at any time and from time to time (except as otherwise provided in the Indenture); provided, however, that the Lessor, except to the extent, and for such time as, it is unable to do so by virtue of the Indenture, shall remain liable for the performance of all the terms, conditions, covenants and provisions for which it is obligated under this Lease notwithstanding such assignment. ARTICLE 23 SECURITY FUNDS Section 23.01. Investment of Security Funds. (a) Any amounts otherwise payable to the Lessee shall be held by the Lessor as security for, and may be applied by the Lessor against, the obligations of the Lessee under this Lease during such time as there shall have occurred and be continuing a Default or Event of Default, and, at such times as there shall not be continuing a Default or Event of Default, such amounts, net of any amounts which have been applied by the Lessor against the Lessee's obligations hereunder, shall be paid to the Lessee. Any amounts which are held by the Lessor pending payment to the Lessee shall, until paid to the Lessee or applied against the Lessee's obligations hereunder, be invested by the Lessor, as directed from time to time, in writing (and in the absence of a written direction by the Lessee or at any time an Event of Default shall have occurred and be continuing hereunder, the Lessor shall invest such monies in direct obligations of the United States of America), by the Lessee and at the expense and risk of the Lessee, in the following securities (which in the case of securities referred to in subparagraphs (i) through (iv) of this Section 23.01(a) hereof shall mature within ninety (90) days of the date of purchase): (i) direct obligations of the United States of America; or (ii) obligations fully guaranteed by the United States of America; or (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, 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 A-1/P-1 by Standard & Poor's Corporation and Moody's Investors Service, Inc., 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. (b) At any time any invested funds are distributed to the Lessee, there shall be promptly remitted to the Lessee any gain (including interest received) realized as the result of any investment pursuant to Section 23.01(a) hereof (net of any fees, commission and other costs and expenses, if any, incurred by the Lessor in connection with such investment), unless a Default or Event of Default shall have occurred and be continuing in which case such funds shall be applied in the same manner as the principal so invested. The Lessee shall be responsible for and will promptly pay to the Indenture Trustee or the Lessor, as the case may be, on demand, the amount of any loss realized as the result of any such investment (together with any fees, commissions and other costs and expenses, if any, incurred by the Indenture Trustee or the Lessor in connection with such investment), such amount to be disposed of in accordance with the terms of the Indenture or the Lease, as the case may be. ARTICLE 24 CONCERNING THE LESSOR Section 24.01. Lessor's Entry Into Lease. Except as expressly provided herein, the Lessor and the Lessee agree that this Lease is executed by _________ Trust Company individually but solely as Owner Trustee under the Trust Agreement in the exercise of the power and authority conferred and vested in it as such Owner Trustee, that each and all of the representations, undertakings and agreements by __________ Trust Company, or for the purpose or with the intention of binding ____________ Trust Company individually, are intended to bind only the Lessor's Estate, and that in no case whatsoever shall __________ Trust Company be personally liable for any loss in respect of such representations, undertakings and agreements, that actions to be taken by the Lessor pursuant to its obligation hereunder may, in certain instances, be taken by the Lessor only upon specific authority of the Owner Participant, that nothing herein contained shall be construed as creating any liability on __________ Trust Company, individually or personally, to perform any covenant, either express or implied, herein, all such liability, if any, being expressly waived by the Lessee and by each and every person now or hereafter claiming by, through or under the Lessee except with respect to the gross negligence or willful misconduct or __________ Trust Company, and that so far as Trust Company, individually or personally is concerned, the Lessee and any Person claiming by, through or under the Lessee shall look solely to the Lessor's Estate for the performance of any obligation under this Lease; provided, that nothing in this Section 24.01 shall be construed to limit in scope or substance those representations and warranties of ___________ Trust Company in its individual capacity set forth in the Participation Agreement. The term the "Lessor" as used in this Lease shall include any trustee succeeding _____________ Trust Company as Owner Trustee under the Trust Agreement. Any obligation of the Lessor hereunder may be performed by the Owner Participant, and any such performance shall not be construed as revocation of the trust created by the Trust Agreement. Nothing contained in this Lease shall restrict the operation of the provisions of the Trust Agreement with respect to its revocation of the resignation or removal of the Owner Trustee hereunder. ARTICLE 25 NOTICES Section 25.01. Notices. All notices, demands, declarations and other communications required by this Lease shall be in writing and shall be deemed received (a) if given by telecopier when transmitted and the appropriate telephonic confirmation received if transmitted on a Business Day and during normal business hours of the recipient, and otherwise on the next Business Day following transmission, (b) if given by certified mail, return receipt requested, postage prepaid, five Business Days after being deposited in the United States mails, (c) if given by telex, upon receipt by the party transmitting the telex of such party's callback code at the end of such telex (receipt of confirmation in writing not being necessary to the effectiveness of any telex) and (d) if given by Federal Express service or other means, when received or personally delivered, addressed: (a) If to the Lessee, to its office at 2005 Corporate Avenue, Memphis, Tennessee 38132, Attention: Senior Vice President and Chief Financial Officer with a copy to Senior Vice President and General Counsel; telephone (901) 395-3388, facsimile (901) 395-4758; (Telex No. 82-2113, answer back FEDEX INT MFS), or at such other address as the Lessee shall from time to time designate in writing to the Lessor, Indenture Trustee and the Owner Participant; (b) If to the Lessor or Owner Trustee, to its office at ________, ______________________________, Attention: ____________________________; telephone ________________, facsimile ____________________; or to such other address as the Lessor shall from to time designate in writing to the Lessee and the Indenture Trustee, with a copy to Owner Participant at the Owner Participant's address as provided in subsection (c) below; (c) If to the Owner Participant, to its office at ______________, ______________________________, Attention: ____________________________; telephone ________________, facsimile ____________________; or to such other address as the Owner Participant may from time to time designate in writing to the Lessee and the Indenture Trustee; and (d) If to the Indenture Trustee, to its office at ______________, ______________________________, Attention: ____________________________; telephone ________________, facsimile ____________________; or to such other address as the Indenture Trustee shall from time to time designate in writing to the Lessor, the Lessee and the Owner Participant. ARTICLE 26 MISCELLANEOUS Section 26.01. Section Heading and Captions. All article and section headings and captions used in this Lease are purely for convenience and shall not affect the interpretation of this Lease. Section 26.02. References. Any reference to a specific article or section number shall be interpreted as a reference to that article or section of this Lease unless otherwise expressly provided. Section 26.03. APPLICABLE LAW. THIS LEASE SHALL IN ALL RESPECTS BE GOVERNED BY, AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK AND IS BEING DELIVERED IN NEW YORK. Section 26.04. Severability. Any provision of this Lease which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Section 26.05. No Oral Modification. The terms and provisions of this Lease 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. Any such change, waiver, discharge or termination is also subject to the provisions of Article 13 of the Indenture. Section 26.06. Agreement as Chattel Paper. To the extent that this Lease constitutes chattel paper (as such term is defined in the Uniform Commercial Code as in effect in any applicable jurisdiction), no security interest in this Lease may be created through the transfer or possession of any counterpart other than the original counterpart, which shall be identified as counterpart No. 1 and containing the receipt executed by the Indenture Trustee on its signature page. Section 26.07. Counterparts and Effective Date. This Lease may be executed in any number of counterparts, each of which shall be an original (except that only the counterpart bearing the receipt executed by the Indenture Trustee shall be the original for purposes of perfecting a security interest therein as chattel paper under the Uniform Commercial Code), but all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Lease by signing any such counterpart. Section 26.08. Public Release of Information. Provided no Event of Default shall have occurred and be continuing, each party shall in each instance obtain the prior written approval of each party concerning the exact text and timing of news releases, articles and other informational releases to the public media concerning this Lease. ARTICLE 27 TRUE LEASE Section 27.01. Intent of the Parties. It is the intent of the parties to this Lease that for tax purposes this Lease will be a true lease, that the Owner Participant (through its interest in the Lessor) shall at all times be considered to be the owner of the Aircraft which is the subject of this Lease and that this Lease conveys to the Lessee no right, title or interest in the Aircraft except as a lessee. Section 27.02. 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 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 provisions thereof. IN WITNESS WHEREOF, the Lessor and the Lessee have each caused this Lease to be duly executed as of the date first above written. LESSOR: _______________________________, except as expressly provided herein, not in its individual capacity but solely as Owner Trustee By: ______________________________________________ Name: Title: LESSEE: FEDERAL EXPRESS CORPORATION By: _______________________________________________ Name: Title: Vice President and Treasurer 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. [All other terms used in the Indenture that are defined in the Trust Indenture Act (as defined below) or the Securities Act (as defined below) have the meanings assigned to such terms in the Trust Indenture Act or the Securities Act as in force on the date of the Indenture, except as otherwise expressly provided or unless the context requires.](1) - ------------ (1) To be used for a qualified Indenture. 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 or Federal Aviation Act. The Federal Aviation Act of 1958, 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. 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. In the case of amounts payable to the Lessor, the Owner Participant, or any corporate affiliate of the Owner Participant, it shall be presumed that such Person is at all times subject to Federal income tax at the maximum marginal rate generally applicable to corporations from time to time. Air Carrier. Any air carrier which is a United States "domestic air carrier" as defined in Part 121 of the Federal Aviation Regulations, and any "foreign air carrier" (as defined in the Act) as to which there is in force a permit granted under Section 402 of the Act. Aircraft. The Airframe to be sold by the Lessee to the Owner Trustee pursuant to the Participation Agreement and leased under the Lease (or any permitted substitute Airframe) together with the _____ 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 11.03 of the Lease. Prior to delivery of the initial Lease Supplement, references in the Operative Agreements (including Section 3.05 of the Participation Agreement) to the Aircraft shall mean the __________________ airframe bearing FAA Registration Number N_____ and Manufacturer's serial number _____, together with _________________________________ engines bearing Manufacturer's serial numbers ___________________. Airframe. The ________________________ aircraft (excluding the Engines or engines from time to time installed thereon) leased by Lessor to Lessee pursuant to the Lease and the Lease Supplement and having the United States FAA Registration Number and manufacturer's serial number specified in the Lease Supplement, including (i) all Parts so long as the same shall be incorporated or installed in or attached to such Airframe, or so long as title to any such Parts shall remain vested in Lessor in accordance with the terms of Section 8.01(b) of the Lease after removal from such Airframe, and (ii) any replacement airframe which may be substituted pursuant to Section 11.03 of the Lease. Ancillary Agreements. Any written agreement of the Lessee entered into on the Delivery Date or at any time thereafter in connection with the transaction contemplated by the Operative Agreements or the Original Agreements, in each case as amended from time to time. Appraisal. The report prepared by BK Associates, Inc. and delivered to the Owner Participant and Lessee on the Delivery Date pursuant to Section 4.02(j) of the Participation Agreement. Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended, and any successor thereto. Basic Rent. The aggregate periodic rent payable for the Aircraft throughout the Basic Term pursuant to Section 3.02 of the Lease. Basic Term. The period commencing at the beginning of the day on the Commencement Date and ending at the end of the day on the day immediately preceding the date _________ years from the Commencement Date, or such earlier date on which the Lease shall be terminated as provided therein. Beneficial Interest. The interest of the Owner Participant under the Trust Agreement. Bills of Sale. Collectively, the FAA Bills of Sale for the Aircraft, an additional full warranty bill of sale covering the Aircraft (and specifically referring to each Engine) executed by the Lessee as owner of the Aircraft in favor of the Owner Trustee and dated the Delivery Date and an additional full warranty bill of sale covering the Aircraft executed by the Manufacturer in favor of Lessee. Burdensome Indemnity Payment. A Loss, as defined in the Tax Indemnity Agreement, which causes the aggregate net present value of all Losses paid or payable by the Lessee as of the determination date discounted semi-annually at the Debt Rate to the date of determination to exceed ___% of the Purchase Price. Business Day. Any day other than a Saturday, Sunday or other day on which commercial banking institutions in __________, ________, ______________, ____, New York, New York, ________________________ or Memphis, Tennessee are authorized or required by law to close. Certificate Closing Date. The date of the closing with respect to the purchase of Certificates by the Pass Through Trustee contemplated by Section 2.01(b) of the Participation Agreement. Certificates. The Equipment Trust Certificates (Federal Express 199_-[SERIES NAME]), issued by the Owner Trustee pursuant to the Indenture and any certificate issued in exchange therefor or replacement thereof pursuant to the Indenture. Change in Tax Law. Any change to the Code or the Treasury regulations promulgated thereunder or the publication of any revenue ruling, revenue procedure or any informational release by the Internal Revenue Service or the Department of Treasury, provided that the Owner Participant or the Lessee has notified the other parties of such change in writing prior to the Delivery Date. Change in Tax Rate. Any amendment, modification, deletion, addition, or change to the Code which is enacted into law after the Delivery Date which changes the highest marginal statutory rate of Federal income tax applicable to the Owner Participant (other than a change which is in the nature of a minimum tax). Citizen of the United States. A citizen of the United States as defined in Section 101(16) of the Act, or any analogous part of any successor or substituted legislation or regulation at the time in effect. Closings. The closing with respect to the acquisition of the Pass Through Certificates by the Underwriters and the closing with respect to the acquisition of Certificates by the Pass Through Trustee. Code. Except as otherwise provided, references to the Code shall mean the Internal Revenue Code of 1986, as amended from time to time. Collateral Account. The deposit account established and maintained pursuant to Section 2.12 of the Indenture. Commencement Date. ________________________. Commission. The Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or if at any time after the execution and delivery of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. Commitment. The amount of the Owner Participant's participation in the Purchase Price required to be made available or paid as provided in Section 3.02 of the Participation Agreement. 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. Cut-Off Date. ___________,19__. Corporate Base Rate. The rate announced from time to time by ________ as its Corporate Base Rate. Debt Portion. The amount specified as such on Schedule I to the Participation Agreement. Debt Rate. The average weighted rate of interest on the Certificates issued pursuant to the Indenture. Default. Any event or condition, which, with the lapse of time or the giving of notice, or both, would constitute an Event of Default. Delayed Delivery Notice. A certificate signed by a Responsible Officer of the Lessee (i) requesting that the Pass Through Trustee temporarily delay purchase of the Certificates to a date later than the Pass Through Closing Date, (ii) stating the amount of the purchase price of each such Certificate and the aggregate purchase price of all such Certificates, (iii) stating the reasons for such delay and (iv) either (1) setting or resetting the Delivery Date (which shall be on or prior to the Cut-Off Date), or (2) indicating that such Delivery Date will be set by subsequent written notice not less than three Business Days prior to such new Delivery Date (which shall be on or prior to the applicable Cut-off Date). Delivery Date. The date on which the Aircraft is to be delivered and sold by the Lessee to the Lessor and leased by the Lessor to the Lessee under the Lease, which date is also the date of the initial Lease Supplement. Delivery Notice. Notice of the Aircraft's Delivery Date, given by the Lessee as provided in Section 3.01 of the Participation Agreement and including any notice with respect to a postponed Delivery Date given by the Lessee pursuant to Section 3.05(c) of the Participation Agreement. Depository. The depository of the Registered Global Certificate, if any, representing the Equipment Trust Certificates issued under the Indenture and any successor to such depository appointed by the Company pursuant hereto. Such depository initially shall be Depository Trust Company, a New York corporation. Eligible Deposit Account. Either (a) a segregated account with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a depository institution with corporate trust powers organized under the laws of the United States or any state thereof, or the District of Columbia, and whose deposits are insured by the Federal Deposit Insurance Corporation, provided that such institution also must have a combined capital and surplus of at least $100,000,000 and a rating of A or better from the Thomson Bank Watch. Eligible Institution. A depository institution organized under the laws of the United States or any one of the states thereof, or the District of Columbia, or any domestic branch of a foreign bank, which in any such case at all times (a) has either (x) a long-term unsecured debt rating of at least Aa2 by Moody's or (y) a short-term certificate of deposit rating of P-1 by Moody's, (b) has either (x) a long-term unsecured debt rating of a least AA by S&P or (y) a short-term certificate of deposit rating of A-1+ by S&P and (c) is a member of the Federal Deposit Insurance Corporation. Engine. Each of the ______________________ engines listed by its manufacturer's serial number in the initial Lease Supplement and leased pursuant to the Lease, whether or not from time to time installed on the Airframe or installed on any other airframe or on any other aircraft, and any Replacement Engine which may from time to time be substituted for an Engine pursuant to Sections 7.02(a)(vii), 10.03, 11.03, 11.04 or 12.02 of the Lease, together with all Parts incorporated or installed in or attached to any such Engine and all Parts removed from any such Engine so long as title to such Parts shall remain vested in the Lessor in accordance with the terms of Article 8 of the Lease after removal from 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 Lease. The term "Engines" means, as of any date of determination, all Engines then leased to the Lessee pursuant to the Lease. Engine Consent and Agreement. The Engine Consent and Agreement dated as of ________, executed by the Engine Manufacturer, as the same may be amended from time to time. Engine Manufacturer. ________________________, a ________ corporation. ERISA. The Employee Retirement Income Security Act of 1974, as amended. Event of Default. Each of the events specified in Article 16 of the Lease. Event of Loss. Any of the following events with respect to the Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A) for a period in excess of 180 days (or in any event if such loss is continuing on the last day of the Term) due to theft or disappearance, or (B) for a period in excess of 60 days (or in any event if such loss is continuing on the last day of the Term) due to the destruction, damage beyond economic repair or rendition of such property permanently unfit for normal use by the Lessee for any reason whatsoever; (ii) any damage to such property which results in an insurance settlement with respect to such property on the basis of a total loss, or constructive or compromised total loss; (iii) (x) condemnation, confiscation or seizure of, or requisition of title to such property, or (y) requisition of use of such property (A) by 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, or (B) by the Government for a period extending beyond the Term, provided that no Event of Loss shall be deemed to have occurred, and the Term shall be extended automatically for a period of up to six months in the event that the Aircraft, the Airframe or any Engine is requisitioned by the Government pursuant to an activation as part of the Civil Reserve Air Fleet Program, as such term is defined in Section 7.02(a)(iv) of the Lease; and (iv) as a result of any law, rule, regulation, order or other action by the Aeronautics Authority or other governmental body having jurisdiction, the use of the Aircraft or Airframe in the normal course of air transportation of cargo shall have been prohibited by virtue of a condition affecting all aircraft of the same type for a period of eighteen (18) consecutive months, unless the Lessee, 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 or for a period extending beyond the end of the Term, unless the Lessee, prior to the expiration of such two (2) year period shall have conformed at least one __________________ aircraft (but not necessarily the Aircraft or the Airframe) to the requirements of any such law, rule, regulation, order, or other action and shall have commenced regular commercial use and shall be diligently carrying forward, on a non-discriminatory basis, all steps necessary or desirable to permit the normal use of the Aircraft by the Lessee; provided, that if there is a conflict between the operation of clause (iv) above and Section 12.05 of the Lease (by reference to Section 12.04(ix) thereof), such Section 12.05 of the Lease shall control. 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 (iv) above. An Event of Loss with respect to the Aircraft shall be deemed to have occurred if any Event of Loss occurs with respect to the Airframe. Excepted Payments. Collectively, (i) all right, title and interest of the Owner Participant or the Owner Trustee in, to and under the Tax Indemnity Agreement and any moneys due or to become due under the Tax Indemnity Agreement and payments of Supplemental Rent or other payments by the Lessee in either case in respect of the Tax Indemnity Agreement, (ii) indemnity payments and interest thereon and other amounts payable by the Lessee to the Owner Participant or to the Trust Company or any of their respective Affiliates, successors, assigns, directors, officers, employees, agents or servants pursuant to Article 7 or 8 of the Participation Agreement or any corresponding payment of Supplemental Rent under the Lease; (iii) proceeds of public liability insurance in respect of the Aircraft payable to the Owner Participant or Trust Company, or any of their Affiliates, successors or assigns, as a result of insurance claims made, or losses suffered, by, or amounts in respect of such indemnities paid for the benefit of, the Owner Participant or the Trust Company either pursuant to the Lease (which shall include proceeds of any self-insurance by the Lessee) or maintained by the Trust Company or the Owner Participant and not required to be maintained under the Lease; (iv) proceeds of any insurance in respect of the Aircraft which is separately acquired and paid for by the Owner Participant (directly or through the Owner Trustee) or the Lessor in accordance with Section 13.05 of the Lease; (v) indemnity payments payable by the Owner Participant to the Trust Company pursuant to Section 6.01 of the Trust Agreement; (vi) Transaction Costs or other expenses paid or payable by the Lessee to, or for the benefit of, the Owner Trustee, Trust Company or the Owner Participant pursuant to Section 9.01 of the Participation Agreement, Section 3.02(b) of the Lease and Section 2.02 of the Participation Agreement; (vii) the right to enforce, and the proceeds of any such enforcement of, any right to receive the proceeds of any of the amounts referred to in clauses (i) through (vi) above and (viii) any payments in respect of interest to the extent attributable to the payments referred to in clauses (i) through (vii) above. Expense and Expenses. Have the meaning specified in Section 8.01(a) of the Participation Agreement. FAA Bills of Sale. The bill of sale for the Airframe on AC Form 8050-2, or such other form as may be approved by the Aeronautics Authority executed by the Lessee in favor of the Lessor and dated the Delivery Date and the bill of sale for the Airframe on AC Form 8050-2, or such other form as may be approved by the Aeronautics Authority executed by the manufacturer in favor of the Lessee. Fair Market Renewal Term. One or more terms of one or more years, but not to exceed ____ years in the aggregate and which term(s) shall immediately follow the end of the Basic Term or the Fixed Renewal Term with respect to which the Lessee has exercised its option to renew the Lease pursuant to Section 4.01(a)(B) thereof. Fair Market Rental. An amount determined on the basis of, and equal in amount to, the rental which would be obtained in an arm's-length transaction between an informed and willing lessee and an informed and willing lessor unaffiliated with such lessee, neither being under any compulsion to lease. In such determination, it shall be assumed that the Aircraft is in the condition required under the Lease in the case of return of the Aircraft pursuant to Article 12 of the Lease. Fair Market Rental shall be determined in accordance with the provisions of Section 4.03 of the Lease. Fair Market Value. An amount determined on the basis of, and equal in amount to, the value which would be obtained in an arm's-length transaction between an informed and willing purchaser under no compulsion to buy and an informed and willing seller unaffiliated with such purchaser and under no compulsion to sell. In such determination it shall be assumed that the Aircraft is in the condition required under the Lease in the case of return of the Aircraft pursuant to Article 12 of the Lease. Fair Market Value shall be determined in accordance with the provisions of Section 4.03 of the Lease. Federal Aviation Administration and FAA. The United States Federal Aviation Administration and any successor agency or agencies thereto. Fixed Renewal Rental. An amount equal to 50% of the average semiannual payments of Basic Rent during the Basic Term as such payments may be adjusted pursuant to Section 3.04 of the Lease. Fixed Renewal Term. Up to ____ renewal terms, each term to be not less than ____ year, but not more than _____ years in the aggregate. Government. The United States of America or an agency or instrumentality thereof. Holder. As of any particular time, the person in whose name a Certificate shall be registered. Indebtedness of any Person means at any time, without duplication, (i) all obligations of such Person for borrowed money or the deferred purchase price of property, or evidenced by bonds, debentures, notes or other similar instruments, or arising under leases that are properly capitalized under generally accepted accounting principles applicable to such Person and (ii) all guarantees by such Person of such obligations described in clause (i) above of third parties. Indemnitee. Each of the Owner Trustee, in its individual capacity and as trustee, the Owner Participant, the Original Loan Participant, the Indenture Trustee, in its individual capacity and as trustee, and any successor (including any trustee which may succeed to the Lessor's interest under the Lease), and any Affiliate, assign, officer, director, employee, agent and servant of any of the foregoing, the Lessor's Estate and the Trust Indenture Estate. Neither the Certificate Holder nor any holder of a Pass Through Certificate shall be deemed to be an Indemnitee. Indenture. The Trust Indenture and Security Agreement, dated as of ___________, 199_, as amended and restated as of _____________, 199_, between the Lessor and the Indenture Trustee and the Indenture Supplement and any amendment or supplement hereto or thereto from time to time entered into. Indenture Default. Any event or condition, which, with the lapse of time or the giving of notice, or both, would constitute an Indenture Event of Default. Indenture Documents. The Participation Agreement, the Trust Agreement (including any Trust Agreement Supplements), the Lease (including any Lease Supplements), the Indenture (including any Indenture Supplements), the Certificates, the Purchase Agreement Assignment, the FAA Bills of Sale, the Consent and Agreement and the Engine Consent and Agreement. Indenture Event of Default. Each of the events specified in Section 7.01 of the Indenture. Indenture Supplement. Any Indenture Supplement, substantially in the form of Exhibit A to the Indenture, entered into between the Indenture Trustee and the Owner Trustee, which Indenture Supplement shall incorporate by reference the provisions of the Indenture including any amendments entered into subsequent to the Delivery Date. Indenture Trustee. _______________________, a national banking association, not in its individual capacity but solely as Indenture Trustee under the Indenture and each other Person which may from time to time be acting as successor trustee under the Indenture. Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate resulting from (i) claims against the Indenture Trustee not related to the administration of the Trust Indenture Estate or any transactions pursuant to the Indenture or any document included in the Trust Indenture Estate or (ii) any act or omission of the Indenture Trustee which is not related to the transactions contemplated by the Operative Agreements or is in violation of any of the terms of the Operative Agreements. Independent Appraisal. An appraisal conducted pursuant to Section 4.03 of the Lease. Independent Investment Banker. An independent investment banking institution of national standing appointed by the Lessee that is independent in fact, does not have any direct financial interests, or any material indirect financial interest, in the Lessee or any Affiliate of the Lessee, and is not connected with the lessee or any Affiliate of the Lessee, as an officer, employee, promoter, underwriter, trustee, partner, director or Person performing similar functions; provided, that if the Indenture Trustee shall not have received written notice of such an appointment at least 10 days prior to the Prepayment Date 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. Interest Payment Date means each _________ and ________ beginning with __________, 199_; provided, that if any such day is not a Business Day, the relevant Interest Payment Date shall be the next succeeding Business Day. Interim Term. The period commencing on the Delivery Date and ending at the end of the day immediately preceding the Commencement Date. Invoice. The invoice for the Aircraft given by the Lessee to the Lessor. Lease. The Lease Agreement dated as of __________, 199_, entered into by the Lessor and the Lessee and the Lease Supplement and any amendment or supplement hereto or thereto from time to time entered into. Lease Supplement. Any Lease Supplement, substantially in the form of Exhibit A to the Lease, entered into between the Lessor and the Lessee for the purpose of leasing the Aircraft pursuant to the terms of the Lease, which Lease Supplement shall incorporate by reference the provisions of the Lease including any amendments or supplements entered into subsequent to the Delivery Date. Lessee. Federal Express Corporation, a Delaware corporation, and its successors and assigns in its capacity as lessee. Lessor. __________ Trust Company, a ________ banking corporation, not in its individual capacity except as otherwise expressly stated, but solely as Owner Trustee under the Trust Agreement, and its successors and assigns. Lessor's Estate. All estate, right, title and interest of the Owner Trustee in and to the Collateral Account, the Liquid Collateral, the Aircraft, the Lease, any Lease Supplement, the Bills of Sale, any warranty with respect to the Airframe and the Engines, all amounts of Basic Rent and Supplemental Rent, including without limitation, insurance proceeds (other than insurance proceeds payable to or for the benefit of the Owner Trustee for its own account or in its individual capacity, the Owner Participant or any Holder or the Indenture Trustee) and requisition, indemnity or other payments of any kind for or with respect to the Aircraft (except amounts owing to the Owner Participant, to the Indenture Trustee, to the Owner Trustee in its individual capacity or any Holder, or to any of their respective directors, officers, employees and agents pursuant to Articles 7 and 8 of the Participation Agreement). Notwithstanding the foregoing, "Lessor's Estate" shall not include any Excepted Payment. Lessor's Liens. Liens on the Lessor's Estate or the Trust Indenture Estate arising as a result of (i) claims against the Lessor, in its individual capacity or as Owner Trustee, or the Owner Participant, in each case not related to the transactions contemplated by the Operative Agreements, (ii) acts or omissions of the Lessor in its individual capacity or as Owner Trustee, and, in the case of the Lessor in its individual capacity, arising from its gross negligence or willful misconduct either not related to the transactions contemplated by or expressly prohibited under the Operative Agreements and any act or omission of the Owner Participant which is not related to the transactions contemplated by the Operative Agreements or is in violation of any of the terms of the Operative Agreements, (iii) Taxes or Expenses imposed against the Lessor, in its individual capacity or as Owner Trustee, Owner Participant, Lessor's Estate or the trust created by the Trust Agreement which are not indemnified against by the Lessee pursuant to the Tax Indemnity Agreement or the Participation Agreement, or (iv) claims against the Lessor or the Owner Participant arising from the voluntary transfer by the Lessor or the Owner Participant of its interests in the Aircraft other than a transfer of the Aircraft pursuant to Section 4.02(a) or Articles 10 or 11 of the Lease and other than a transfer pursuant to the exercise of the remedies set forth in Article 17 of the Lease. Letter of Representations. A letter from the Company and the Owner Trustee to, and accepted by, the Depository, as such letter may be modified or supplemented, or any successor letter thereto. Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or security interest. Liquid Collateral. All amounts and securities deposited from time to time in the Collateral Account and all the products, investments, earnings and proceeds of the foregoing, including, but not limited to, all proceeds of the investment or conversion thereof, voluntary or involuntary, into cash, Specified Investments or other property, all rights to payment of any and every kind, and other forms of obligations, and instruments and other property which at any time constitute all or part or are included in the proceeds of any of the foregoing. Losses. Has the meaning specified in Section 15.02(a) of the Participation Agreement. 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 Certificates outstanding as of such date excluding for purposes of this definition any Certificates held by (i) the Owner Participant unless all Certificates then outstanding shall be held by the Owner Participant, (ii) by the Lessee, (iii) by the Indenture Trustee or (iv) by any Affiliate of either. Make-Whole Premium. With respect to each Certificate to be prepaid pursuant to Sections 6.02(ii), 6.02(iv) and 6.02(v) 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 an excess of (i) the present values of all remaining scheduled payments of such principal amount or portion thereof and interest thereon (excluding interest accrued from the immediately preceding Payment Date to such Prepayment Date) to the Maturity of such Certificate in accordance with generally accepted financial practices assuming a 360-day year consisting of twelve 30-day months at a discount rate equal to Treasury Yield, all as determined by the Independent Investment Banker over (ii) the unpaid principal amount of such Certificate. Manufacturer. _____________________________, a ________ corporation. Maturity. With respect to any Certificate, the date on which the principal amount of such Certificate is due and payable. Net Present Value of Rents. The net present value, as of the Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted at a rate per semi-annual period equal to (a) the Debt Rate as of the date of determination divided by (b) two. Non-U.S. Person. Any Person other than (i) a citizen or resident of the United States, as defined in Section 7701(a)(30) of the Code (for purposes of this definition, the "United States"), (ii) a corporation, partnership or other entity created or organized in or under the laws of the United States or any political subdivision thereof or therein, or (iii) any estate or trust that is subject to United States federal income taxation regardless of the source of its income. Obsolete Parts. Parts which the Lessee deems obsolete or no longer suitable or appropriate for use on the Airframe or any Engine. Officer's Certificate means a certificate signed by a Responsible Officer of the Owner Trustee or the Lessee, as the case may be, delivered to the Indenture Trustee. Each such certificate shall include the statements provided for in Section 15.07. Operative Agreements. The Participation Agreement, the Trust Agreement, the Bills of Sale, the Lease, the Lease Supplement, the Certificates outstanding at the time of reference, the Indenture, the Indenture and Security Agreement Supplement, the Consent and Agreement, the Purchase Agreement Assignment, the Engine Consent and Agreement, the Pass Through Agreement and the Tax Indemnity Agreement, each as amended from time to time. Opinion of Counsel means a written opinion of legal counsel, who in the case of counsel (a) for the Lessee may be (i) an attorney employed by the Lessee who is generally empowered to deliver such written opinions, (ii) Davis Polk & Wardwell or a successor firm or (iii) other counsel designated by the Lessee and reasonably satisfactory to the Indenture Trustee, (b) for the Owner Trustee, may be (i) Potter Anderson & Corroon or (ii) other counsel designated by the Owner Trustee and reasonably satisfactory to the Indenture Trustee and (c) for the Indenture Trustee, may be (i) Powell, Goldstein, Frazer & Murphy or (ii) other counsel designated by the Indenture Trustee. Owner Participant. ____________________________, a __________ corporation, and any successor thereto, and any person to which Owner Participant transfers, in accordance with the Trust Agreement, its right, title and interest in and to the Operative Agreements and the Lessor's Estate. Owner Trustee. __________ Trust Company, a ________ banking corporation, not in its individual capacity except as otherwise expressly stated, but solely as Owner Trustee under the Trust Agreement, and its successors and assigns. Owner's Economic Return. The Owner Participant's anticipated after-tax yield and aggregate after-tax cash flow during the Interim Term and the Basic Term utilizing the multiple investment sinking fund method of analysis, computed on the basis of the same methodology and assumptions as were utilized by the Owner Participant in determining Basic Rent, Stipulated Loss Value and Termination Value percentages, as such assumptions may be adjusted for events which have been the basis of adjustments to Rent pursuant to Section 3.04 of the Lease. Participation Agreement. The Participation Agreement, dated as of ___________, 199_ among the Lessee, the Owner Trustee not in its individual capacity except as otherwise expressly stated therein, but solely as trustee, the Owner Participant, the Pass Through Trustee, solely as pass through trustee, and the Indenture Trustee in its individual capacity and as trustee as amended, modified or supplemented, or the terms thereof waived. 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 and, so long as title thereto shall remain vested in the Lessor in accordance with the terms of Article 8 of the Lease, after removal from the Airframe or Engines. Pass Through Agreement. The Pass Through Trust Agreement dated as of ___________, 199_ between the Lessee 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 199_ Pass Through Certificates, Series ___ or 199_ Pass Through Certificates, Series ___, in each case as issued by the related Pass Through Trust; and "Pass Through Certificates" means all of the Pass Through Certificates issued by each of the Pass Through Trusts. Pass Through Closing Date. The Business Day on which the sale of the Pass Through Certificates to the Underwriter pursuant to the Underwriting Agreements takes place. Pass Through Trust. The Federal Express Pass Through Trust, 199_-____ or Federal Express Pass Through Trust 199_-_, in each case formed pursuant to the related Series Supplement in accordance with the Pass Through Agreement; and "Pass Through Trusts" means both of such Pass Through Trusts. 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. Past Due Rate. At any time a rate of interest per annum equal to __% per annum plus the Debt Rate. Paying Agent has the meaning set forth in Section 3.04 of the Indenture. Payment Date. Each _______ and ___________, commencing _____________, 199_, thereafter until all Certificates have been paid in full. Payment Default. Any event specified in Section 16.01(a) or 16.01(b) of the Lease which with the giving of notice or lapse of time or both would constitute an Event of Default. Permitted Investments. Those investments enumerated in Section 23.01(a ) (i), (ii), (iii) and (iv) of the Lease. Person. Any individual, sole proprietorship, partnership, joint venture, joint stock company, trust, unincorporated organization, association, corporation, institution, entity or government (federal, state, local, foreign or any agency, instrumentality, division or body thereof). Prepayment Date. The meaning specified in Section 6.02 of the Indenture. Prepayment Price. The meaning specified in Section 6.02(b) of the Indenture. Proposed Termination Date. The proposed date of termination of the Lease as specified by the Lessee in its notice given pursuant to Section 10.01 thereof. Purchase Agreement. The Purchase Agreement, dated as of _____________, between the Manufacturer and the Lessee relating to the purchase by the Lessee of the Aircraft, as originally executed or as modified, amended or supplemented in accordance with the terms thereof, but only insofar as the foregoing relates to the Aircraft. Purchase Agreement Assignment. The Purchase Agreement Assignment dated as of _____, executed by the Lessee and the Owner Trustee. Purchase Option Date. ______________________. Purchase Option Price. The amount to be paid by Lessee to Lessor on the Purchase Option Date pursuant to Section 4.02(a)(B) of the Lease, which amount is set forth in the Appraisal. Purchase Price. Has the meaning specified in Section 2.01(b) of the Participation Agreement. Record Date. As used with respect to any Interest Payment Date (except a date for payment for defaulted interest), __________ for __________ Interest Payment Dates and _________ for ____________ Interest Payment Dates, whether or not such date is a Business Day. Recourse Amount. Has the meaning specified in Section 14.10 of the Participation Agreement. Refinancing. A non-recourse loan to the Lessor arranged pursuant to Section 14.01 of the Participation Agreement. Register has the meaning set forth in Section 3.02 of the Indenture. Registered Global Certificate. The Equipment Trust Certificate, if any, issued to the Depository in accordance with Section 2.12 of the Indenture and bearing the legend prescribed in Exhibit B to the Indenture. Registrar. Has the meaning set forth in Section 3.02 of the Indenture. Renewal Rent. The amount payable by the Lessee as rent in accordance with Section 4.01 of the Lease during any Renewal Term. Renewal Term. Any of the Fixed Renewal Terms or Fair Market Renewal Terms which immediately follow the end of the Basic Term with respect to which the Lessee has exercised its option to renew the Lease pursuant to Section 4.01(a) thereof. Rent. All payments due from the Lessee under the Lease as Basic Rent, Renewal Rent and Supplemental Rent, collectively. Rent Payment Date. Each _________ and __________, commencing ___________, 199_, and continuing thereafter during the Term. Replacement Engine. A ______________________ ______ 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 7.02(a)(vii), 10.03, 11.03 11.04, or 12.02 of the Lease and leased pursuant to the Lease, together with all Parts relating to such engine. Responsible Officer. With respect to the Owner Trustee (except for purposes of the Trust Agreement) or 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 party, any corporate officer or other employee of a party who, in the normal performance of his 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. Scheduled Delivery Date. The Delivery Date specified in the Delivery Notice pursuant to Section 3.01 of the Participation Agreement. Securities Act. The Securities Act of 1933, as amended. SEC. The Securities and Exchange Commission of the United States and any successor agencies or authorities. Series Supplement. The Series Supplement 199_-_ to be executed and delivered by the Lessee and the Pass Through Trustee or the Series Supplement 199_-_ to be executed and delivered by the Lessee and the Pass Through Trustee, in each case 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. Significant Expenditure. Has the meaning specified in Section 4.02(a)(D) of the Lease. Sinking Fund Payment Date. __________________ Sinking Fund Payment Price. _________________ Special Aviation Counsel. Daugherty, Fowler & Peregrin. Specified Investments. Shall mean (a) direct obligations of the United States of America or obligations fully guaranteed by the United States of America; (b) commercial paper rated A-1/P-1 by Standard & Poor's Ratings Group and Moody's Investors Service, Inc., respectively or, if such ratings are unavailable, rated by any nationally recognized rating organization in the United States equal to the highest rating assigned by such rating organization; (c) overnight federal funds transactions with members of the Federal Reserve Systems arranged by federal funds brokers; and (d) overnight repurchase agreements with respect to the securities described in clause (a) above entered into with an office of a bank or trust company which is located in the United States of America of any bank or trust company which is organized under the laws of the United States or any state thereof and has capital surplus and undivided profits aggregating at least $500 million. Stipulated Loss Value. As of any Stipulated Loss Value Determination Date during the Basic Term, the amount determined by multiplying the Purchase Price by the percentage set forth in Schedule III of the Lease under the heading "Stipulated Loss Value Factors" opposite such date (as such Schedule III may be adjusted from time to time as provided in Section 3.04 of the Lease), and during any Renewal Term, the amount determined pursuant to Section 4.01(b) of the Lease. Notwithstanding any other provisions of the Lease or the Participation Agreement or the Indenture, each Stipulated Loss Value for the Aircraft shall be, under any circumstances and in any event, an amount, together with Basic Rent due and owing through the date of payment of Stipulation Loss Value, at least sufficient to pay in full as of such date of payment the aggregate unpaid principal amount of and accrued interest on the Certificates outstanding on such date of payment. Stipulated Loss Value Determination Date. Each date set forth on Schedule III of the Lease under the heading "Stipulated Loss Value Factors." Supplemental Rent. All amounts, liabilities and obligations which the Lessee assumes or agrees to pay under the Lease or under the Participation Agreement or Tax Indemnity Agreement or any other Ancillary Agreement to the Lessor or others, including, without limitation, payments of Stipulated Loss Value and amounts calculated by reference to Termination Value and any other amounts due on the Certificates pursuant to the Indenture, and all amounts required to be paid by Lessee under the agreements, covenants and indemnities contained in the Lease or in the Participation Agreement, but excluding Basic Rent or the Fixed Renewal Rental. Tax. Shall have the meaning set forth in Section 7.01(a) of the Participation Agreement. Tax Indemnity Agreement. The Tax Indemnity Agreement, dated as of ___________, 199_, between the Lessee and the Owner Participant, as from time to time modified, amended or supplemented pursuant to its applicable provisions. Term. The Interim Term and the Basic Term of the lease for the Aircraft under the Lease and, if renewed pursuant to Section 4.01 of the Lease, each Renewal Term for the Aircraft for which the Lease is renewed, or such earlier date on which the Lease is terminated pursuant to its terms. Termination Date. A Rent Payment Date during the Basic Term that is on or after _________________. Termination Value. As of any Termination Date, the amount determined by multiplying the Purchase Price by the percentage set forth in Schedule IV of the Lease under the heading "Termination Value Factors" opposite such Termination Date (as such Schedule IV may be adjusted from time to time as provided in Section 3.04 of the Lease). Notwithstanding any other provisions of the Lease, the Participation Agreement or the Indenture, each Termination Value shall be, under any circumstances and in any event, an amount, together with Basic Rent due and owing through the date of payment of any amount calculated by reference to Termination Value, at least sufficient to pay in full as of such date of payment of the aggregate unpaid principal amount of and accrued interest on the Certificates outstanding on such date of payment. Transaction Costs. All of the documented costs and expenses incurred by the Lessee, the Owner Trustee, the Underwriters, the Indenture Trustee and the Participants as contemplated by Section 9.01(a) of the Participation Agreement. "Treasury Yield". (i) In the case of a 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 Certificate and (ii) in the case of a 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 Lessee) corresponding in maturity to such 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 bid price as of 10:00 a.m. and 2:00 p.m. New York time, on the second Business Day preceding the Prepayment Date. Trust Agreement. The Trust Agreement, dated as of _________, 1992, between the Owner Participant and the Owner Trustee in its individual capacity, as from time to time modified, amended or supplemented pursuant to its applicable provisions and in accordance with the Operative Agreements. Trust Company. __________ Trust Company, a ________ banking corporation, in its individual capacity and not as Owner Trustee, and its successors under the Trust Agreement, in their respective individual capacities and not as Owner Trustees. [Trust Indenture Act. Except as otherwise provided in Section 4.04, 13.01 and 13.08 of the Indenture, the Trust Indenture Act of 1939, as amended, as in force on the date that the Indenture was first qualified under such Act.](2) - ------------------ (2) To be added in the case of a qualified Indenture. Trust Indenture Estate. The property, rights and privileges described in the Granting Clause of the Indenture, other than (i) Excepted Payments, including, without limitation all right, title and interest of the Owner Participant in, to and under the Tax Indemnity Agreement and any moneys due and to become due under the Tax Indemnity Agreement, all as provided in the Indenture, and (ii) rights granted to the Owner Trustee or the Owner Participant under the Indenture, including without limitation Sections 2.05, 7.02, 8.01, 8.02, 8.03, 13.01 and 13.02 thereof. Underwriters. __________________. Underwriting Agreement. The agreement among the Lessee and the several Underwriters dated _____________, 199_, 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 401 or Section 418 of the Federal Aviation Act, and as to which there is in force an air carrier operating certificate issued pursuant to 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 BASIC RENT (As a Percentage of Purchase Price) Rent Payment Date Advance Arrears ---- ------- ------- [On each Rent Payment Date, the Lessee will pay as Basic Rent, an amount that will be at least sufficient to pay in full, as of such Rent Payment Date, the aggregate unpaid principal amount of due and unpaid installments on the Certificates outstanding on such Rent Payment Date, together with the accrued and unpaid interest thereon.] SCHEDULE III STIPULATED LOSS VALUES Stipulated Loss Date Value Factor ---- ------------ [Stipulated Loss Value will be an amount at least sufficient to pay in full, as of the date of payment thereof, the aggregate unpaid principal amount of the Certificates outstanding on such date of payment, together with the accrued and unpaid interest thereon.] SCHEDULE IV TERMINATION VALUES Termination Termination Date Value Factor ---- ------------ [Termination Value will be in an amount at least sufficient to pay in full, as of the date of payment thereof, the aggregate unpaid principal amount of the Certificates outstanding on such date of payment, together with the accrued and unpaid interest thereon.] [EXHIBIT A to Lease Agreement] THE INTEREST OF LESSOR UNDER THIS LEASE SUPPLEMENT NO. IS SUBJECT TO A SECURITY INTEREST LEASE SUPPLEMENT NO. LEASE SUPPLEMENT NO. _, dated ___ __, 199_, between _______________ TRUST COMPANY, a _________ banking corporation, not in its individual capacity, but solely as Owner Trustee under the Trust Agreement dated as of ______ __, 199_ (the "Lessor"), and FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Lessee"). W I T N E S S E T H : WHEREAS, the Lessor and the Lessee have entered into that certain Lease Agreement dated as of ____ __, 199_ (the "Lease", the defined terms in the Lease being used in this Lease Supplement with the same meaning as in the Lease), which provides for the execution and delivery of a Lease Supplement, substantially in the form of this Lease Supplement No. _, for the purpose of leasing under the Lease the aircraft and engines described below ("Aircraft") as and when delivered by the Lessor to the Lessee in accordance with the terms of the Lease; WHEREAS, the Lease relates to the Aircraft; WHEREAS, a counterpart of the Lease is attached to and made a part of this Lease Supplement, and this Lease Supplement, together with such attachment, is being filed for recordation on this date with the FAA as one document. NOW, THEREFORE, for and in consideration of the premises and other good and sufficient consideration, the Lessor and the Lessee agree as follows: Section 1. Delivered Aircraft. The Lessor hereby delivers and leases to the Lessee under the Lease, and the Lessee hereby accepts and leases from the Lessor under the Lease, the following described [Make/Model] Aircraft (the "Delivered Aircraft"), which Delivered Aircraft as of the date of this Lease Supplement consists of the following: (a) [Make/Model] Airframe; U.S. Registration Number ______; Manufacturer's Serial No. _____; and (b) Three (3) [Make/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). Section 2. Delivery Date. The Delivery Date of the Delivered Aircraft is the date of this Lease Supplement. Section 3. Purchase Price. The Purchase Price of the Delivered Aircraft shall be the amount set forth in Schedule II of the Participation Agreement. Section 4. Term. The Term for the Delivered Aircraft shall commence on the Delivery Date, and shall terminate on _______ __, ____, unless earlier terminated or extended pursuant to the terms of the Lease. Section 5. Rent. The Lessee hereby agrees to pay the Lessor Rent for the Delivered Aircraft throughout the Term thereof in accordance with the terms and provisions of the Lease. Section 6. Lessee's Acceptance of Delivered Aircraft. The Lessee hereby confirms to the Lessor that the Delivered Aircraft has been duly marked in accordance with Section 7.03 of the Lease and that the Lessee has accepted the Delivered Aircraft for all purposes hereof and of the Lease, as being free and clear of all Liens except Lessor's Liens. Section 7. Incorporation of Lease By Reference. All the provisions of the Lease are hereby incorporated by reference in this Lease Supplement to the same extent as if fully set forth in this Lease Supplement. Section 8. Governing Law. THIS LEASE SUPPLEMENT SHALL IN ALL RESPECT BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK AND IS BEING DELIVERED IN THE STATE OF NEW YORK. Section 9. Counterparts. This Lease Supplement may be executed in any number of counterparts, each of which shall be an original (except that only the counterpart bearing the receipt executed by Indenture Trustee shall be the original for purposes of perfecting a security interest therein as chattel paper under the Uniform Commercial Code), but all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Lease Supplement by signing any such counterpart. IN WITNESS WHEREOF, the Lessor and the Lessee have caused this Lease Supplement to be duly executed as of the day and year first above written. LESSOR: _______________________________, except as expressly provided herein, not in its individual capacity but solely as Owner Trustee By: ______________________________________________ Name: Title: LESSEE: FEDERAL EXPRESS CORPORATION By: _______________________________________________ Name: Title: Vice President and Treasurer Receipt of this original counterpart of the Lease Supplement is hereby acknowledged on this __ day of ___ 199_. Indenture Trustee: ___________________________, not in its individual capacity, but solely as Indenture Trustee By: ______________________________________________ Name: Title: [EXHIBIT B to Lease Agreement] Intentionally Left Blank [Form varies depending on Manufacturer] EX-4.I 11 Exhibit 4(i) ============================================================================== TRUST INDENTURE _______________ Dated as of July 1, 1996 between FEDERAL EXPRESS CORPORATION, as Issuer and THE FIRST NATIONAL BANK OF CHICAGO, as Trustee _______________ DEBT SECURITIES ============================================================================== Reconciliation and tie between Trust Indenture Act of 1939 (the "Trust Indenture Act") and Indenture Indenture Trust Indenture Act Section Section - ------------------------------------------------- ------- Section 310(a)(1)................................ 609 (a)(2).................................... 609 (b)....................................... 610 Section 311(b)(4)................................ 613 (b)(6).................................... 613 Section 312(a)................................... 701 (b)....................................... 702 (c)....................................... 702 Section 313(a)................................... 703 (b)(2).................................... 703 (c)....................................... 703 (d)....................................... 703 Section 314(a)................................... 704 (c)(1).................................... 102 (c)(2).................................... 102 (e)....................................... 102 (f)....................................... 102 Section 316(a) (last sentence)................... 101 (a)(1)(A)................................. 502, 512 (a)(1)(B)................................. 513 (b)....................................... 508 Section 317(a)(1)................................ 503 (a)(2).................................... 504 (b)....................................... 1003 Section 318(a)................................... 107
_________________________ This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture. NOTE: Section 318(c) of the Trust Indenture Act provides that the provisions of Sections 310-317 are a part of and govern every qualified indenture, whether or not physically contained therein. TABLE OF CONTENTS PAGE ---- Parties.............................................................. 1 Recitals of the Company.............................................. 1 ARTICLE ONE Definitions and Other Provisions of General Application Section 101. Definition: Act............................................................ 2 Additional Amounts............................................. 2 Affiliate...................................................... 2 Authenticating Agent........................................... 2 Board of Directors............................................. 2 Board Resolution............................................... 2 Business Day................................................... 3 Commission..................................................... 3 Company........................................................ 3 Company Request; Company Order................................. 3 Conversion Event............................................... 3 Corporate Trust Office......................................... 3 Corporation.................................................... 3 Currency....................................................... 3 CUSIP Number................................................... 3 Defaulted Interest............................................. 3 Depository..................................................... 4 Dollars........................................................ 4 ECU............................................................ 4 European Monetary System....................................... 4 European Union................................................. 4 Event of Default............................................... 4 Foreign Currency............................................... 4 Global Security................................................ 4 Government Obligations......................................... 4 Holder......................................................... 5 Indenture...................................................... 5 Indexed Security............................................... 5 Interest....................................................... 5 Interest Payment Date.......................................... 5 _________________________ NOTE: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture. Maturity....................................................... 5 Officer's Certificate.......................................... 5 Opinion of Counsel............................................. 5 Original Issue Discount Security............................... 5 Outstanding.................................................... 5 Paying Agent................................................... 7 Person......................................................... 7 Place of Payment............................................... 7 Predecessor Security........................................... 7 Redemption Date................................................ 7 Redemption Price............................................... 7 Regular Record Date............................................ 7 Responsible Officer............................................ 7 Securities..................................................... 7 Security Register and Security Registrar....................... 7 Special Record Date............................................ 8 Stated Maturity................................................ 8 Subsidiary..................................................... 8 Trustee........................................................ 8 Trust Indenture Act............................................ 8 Vice President................................................. 8 Section 102. Compliance Certificates and Opinions.................. 8 Section 103. Form of Documents Delivered to Trustee................ 9 Section 104. Acts of Holders....................................... 9 Section 105. Notices, Etc. to Trustee and Company.................. 10 Section 106. Notice to Holders; Waiver............................. 10 Section 107. Conflict with Trust Indenture Act..................... 11 Section 108. Effect of Headings and Table of Contents.............. 11 Section 109. Successors and Assigns................................ 11 Section 110. Separability Clause................................... 11 Section 111. Benefits of Indenture................................. 11 Section 112. Governing Law......................................... 12 Section 113. Legal Holidays........................................ 12 Section 114. Language of Notices................................... 12 Section 115. Counterparts.......................................... 12 ARTICLE TWO Security Forms Section 201. Forms Generally....................................... 12 Section 202. Form of Trustee's Certificate of Authentication....... 13 Section 203. Global Securities..................................... 13 ARTICLE THREE The Securities Section 301. Amount Unlimited; Issuable in Series.................. 14 Section 302. Denominations......................................... 17 Section 303. Execution, Authentication, Delivery and Dating........ 18 Section 304. Temporary Securities.................................. 19 Section 305. Registration, Transfer and Exchange................... 20 Section 306. Mutilated, Destroyed, Lost and Stolen Securities...... 22 Section 307. Payment of Interest; Interest Rights Preserved........ 23 Section 308. Persons Deemed Owners................................. 25 Section 309. Cancellation.......................................... 25 Section 310. Computation of Interest............................... 25 ARTICLE FOUR Satisfaction and Discharge Section 401. Satisfaction and Discharge of Indenture............... 26 Section 402. Application of Trust Money............................ 27 ARTICLE FIVE Remedies Section 501. Events of Default..................................... 27 Section 502. Acceleration of Maturity; Rescission and Annulment.... 29 Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee................... 30 Section 504. Trustee May File Proofs of Claim...................... 30 Section 505. Trustee May Enforce Claims Without Possession of Securities................... 31 Section 506. Application of Money Collected........................ 32 Section 507. Limitation on Suits................................... 32 Section 508. Unconditional Right of Holders to Receive Principal Premium and Interest.......... 33 Section 509. Restoration of Rights and Remedies.................... 33 Section 510. Rights and Remedies Cumulative........................ 33 Section 511. Delay or Omission Not Waiver.......................... 33 Section 512. Control by Holders.................................... 34 Section 513. Waiver of Past Defaults............................... 34 Section 514. Undertaking for Costs................................. 34 Section 515. Waiver of Stay or Extension Laws...................... 35 ARTICLE SIX The Trustee Section 601. Certain Duties and Responsibilities.................. 35 Section 602. Notice of Defaults.................................... 36 Section 603. Certain Rights of Trustee............................. 37 Section 604. Not Responsible for Recitals or Issuance of Securities 38 Section 605. May Hold Securities................................... 38 Section 606. Money Held in Trust................................... 38 Section 607. Compensation and Reimbursement........................ 38 Section 608. Intentionally Left Blank.............................. 39 Section 609. Corporate Trustee Required; Eligibility............... 39 Section 610. Resignation and Removal; Appointment of Successor..... 40 Section 611. Acceptance of Appointment by Successor................ 41 Section 612. Merger, Conversion, Consolidation or Succession to Business.......................... 43 Section 613. Preferential Claims................................... 43 Section 614. Appointment of Authenticating Agent................... 43 ARTICLE SEVEN Holders' Lists and Reports By Trustee and Company Section 701. Company to Furnish Trustee Names and Addresses of Holders..................... 45 Section 702. Preservation of Information; Communications to Holders.......................... 46 Section 703. Reports by Trustee.................................... 47 Section 704. Reports by Company.................................... 47 ARTICLE EIGHT Consolidation, Merger, Conveyance, Transfer or Lease Section 801. Company May Consolidate, Etc. on Certain Terms........ 48 Section 802. Successor Corporation Substituted..................... 49 ARTICLE NINE Supplemental Indentures Section 901. Supplemental Indentures Without Consent of Holders.... 49 Section 902. Supplemental Indentures with Consent of Holders....... 50 Section 903. Execution of Supplemental Indentures.................. 51 Section 904. Effect of Supplemental Indentures..................... 52 Section 905. Conformity with Trust Indenture Act................... 52 Section 906. Reference in Securities to Supplemental Indentures.... 52 ARTICLE TEN Covenants Section 1001. Payment of Principal, any Premium, Interest and Additional Amounts............................. 52 Section 1002. Maintenance of Office or Agency....................... 52 Section 1003. Money for Securities Payments to be Held in Trust..... 53 Section 1004. Corporate Existence................................... 54 Section 1005. Statement as to Default............................... 55 Section 1006. Additional Amounts.................................... 55 ARTICLE ELEVEN Redemption of Securities Section 1101. Applicability of Article.............................. 56 Section 1102. Election to Redeem; Notice to Trustee................. 56 Section 1103. Selection by Trustee of Securities to be Redeemed..... 56 Section 1104. Notice of Redemption.................................. 57 Section 1105. Deposit of Redemption Price........................... 58 Section 1106. Securities Payable on Redemption Date................. 58 Section 1107. Securities Redeemed in Part........................... 58 ARTICLE TWELVE Intentionally Left Blank ARTICLE THIRTEEN Defeasance and Covenant Defeasance Section 1301. Applicability of Article; Company's Option to Effect Defeasance or Covenant Defeasance........ 59 Section 1302. Defeasance and Discharge.............................. 59 Section 1303. Covenant Defeasance................................... 60 Section 1304. Conditions to Defeasance or Covenant Defeasance....... 60 Section 1305. Deposited Money and Government Obligations to be Held in Trust; Other Miscellaneous Provisions...... 62 ARTICLE FOURTEEN Sinking Funds Section 1401. Applicability of Article.............................. 63 Section 1402. Satisfaction of Sinking Fund Payments with Securities. 63 Section 1403. Redemption of Securities for Sinking Fund............. 64 ARTICLE FIFTEEN Securities in Foreign Currencies Section 1501. Applicability of Article.............................. 64 SCHEDULE I Supplemental Indenture................................ EXHIBIT A Form of Debt Security................................. TRUST INDENTURE --------------- INDENTURE, dated as of July 1, 1996, between Federal Express Corporation, a Delaware Corporation (the "Company") and The First National Bank of Chicago, a national banking association organized under the laws of the United States of America, as trustee (the "Trustee"). RECITALS WHEREAS, the Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its senior unsecured debentures, bonds, notes or other evidences of indebtedness (herein called the "Securities"), unlimited as to principal amount, to bear such rates of interest, to mature at such time or times, to be issued in one or more series and to have such other provisions as shall be fixed as hereinafter provided; WHEREAS, the Company has duly authorized the execution and delivery of this Indenture. All things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done; and WHEREAS, this Indenture is subject to the provisions of the Trust Indenture Act of 1939, as amended, and the rules and regulations of the Securities and Exchange Commission promulgated thereunder that are required to be part of this Indenture and, to the extent applicable, shall be governed by such provisions. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders (as herein defined) thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities or of any series thereof, as follows: ARTICLE ONE Definitions and Other Provisions of General Application Section 101. Definitions. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles and, except as otherwise herein expressly provided, the term "generally accepted accounting principles" or "GAAP" with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted in the United States of America as of the date of such computation; and (4) the words "herein," "hereof," "hereto" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. Certain terms used principally in certain Articles hereof are defined in those Articles. "Act" when used with respect to any Holder, has the meaning specified in Section 104. "Additional Amounts" means any additional amounts which are required hereby or by any Security, under circumstances specified herein or therein, to be paid by the Company in respect of certain taxes, assessments or other governmental charges imposed on Holders specified therein and which are owing to such Holders. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Authenticating Agent" means any Person authorized by the Trustee to act on behalf of the Trustee to authenticate Securities of one or more series. "Board of Directors" means the board of directors of the Company or any duly authorized committee of the board of directors of the Company. "Board Resolution" means a copy of one or more resolutions certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, delivered to the Trustee. "Business Day" means any day other than Saturday, Sunday or other day on which banking institutions in New York, Illinois or Tennessee are authorized or obligated by law to close. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, as amended, or, if at any time after the execution of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Company" means Federal Express Corporation or any successor Corporation which shall have become such under this Indenture. "Company Request" or "Company Order" means a written request or order signed in the name of the Company by its President or any Vice President and delivered to the Trustee. "Conversion Event" means the cessation of use of (i) a Foreign Currency both by the government of the country or the confederation which issued such Foreign Currency and for the settlement of transactions by a central bank or other public institutions of or within the international banking community, (ii) the ECU both within the European Monetary System and for the settlement of transactions by public institutions of or within the European Union or (iii) any currency unit or composite currency other than the ECU for the purposes for which it was established. "Corporate Trust Office" means the principal corporate trust office of the Trustee at which at any particular time its corporate trust business shall be principally administered, which office at the date of original execution of this Indenture is located at One First National Plaza, Suite 0126, Chicago, Illinois 60670-0126. "Corporation" includes corporations and limited liability companies and, except for purposes of Article Eight, associations, companies and business trusts. "Currency," with respect to any payment, deposit or other transfer in respect of the principal of or any premium or interest on or any Additional Amounts with respect to any Security, means Dollars or the Foreign Currency, as the case may be, in which such payment, deposit or other transfer is required to be made by or pursuant to the terms hereof or such Security and, with respect to any other payment, deposit or transfer pursuant to or contemplated by the terms hereof or such Security, means Dollars. "CUSIP Number" means the alphanumeric designation assigned to a Security by Standard & Poor's Ratings Group, CUSIP Service Bureau. "Defaulted Interest" has the meaning specified in Section 307. "Depository" means, with respect to the Securities of any series issuable upon original issuance in whole or in part in the form of one or more Global Securities, the clearing agency registered under the Securities Exchange Act of 1934, as amended, specified for that purpose as contemplated by Section 301. "Dollars" means a dollar or other equivalent unit of legal tender for payment of debts in the United States of America. "ECU" means the European Currency Units as defined and revised from time to time by the Counsel of the European Community. "European Monetary System" means the European Monetary System established by the Resolution of December 5, 1978 of the Council of the European Community. "European Union" means the European Community, the European Coal and Steel Community and the European Atomic Energy Community. "Event of Default" has the meaning specified in Section 501. "Foreign Currency" means any currency, currency unit or composite currency, including, without limitation, the ECU, issued by the government of one or more countries other than the United States or by any recognized confederation or association of such governments. "Global Security" means a Security bearing the legend specified in Section 203 evidencing all or part of a series of Securities, issued to the Depository with respect to such series or its nominee and registered in the name of such Depository or nominee. "Government Obligations" means securities which are (x) direct obligations of the United States of America or the other government or governments in the confederation which issued the Foreign Currency in which the principal of or any premium or interest on any Security or any Additional Amounts in respect thereof shall be payable, in each case where the payment or payments thereunder are supported by the full faith and credit of such government or governments, or (y) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America or such other governments or governments, in each case where the payment or payments thereunder are unconditionally guaranteed as a full faith and credit obligation by the United States of America or such other governments or governments, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank as custodian with respect to any such Government Obligation or a specific payment of principal of or interest on any such Government Obligation held by such custodian for the account of the holder of a depository receipt, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect to the Government Obligation or the specific payment of principal of or interest on the Government Obligation evidenced by such depository receipt. "Holder" means a Person in whose name a Security is registered in the Security Register. "Indenture" means this instrument as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof and shall include the terms of each particular series of Securities established as contemplated by Section 301. "Indexed Security" means a Security the terms of which provide that the principal amount thereof payable at Stated Maturity may be more or less than the principal face amount thereof at original issuance. "Interest," with respect to any Original Issue Discount Security which by its terms bears interest only after Maturity, means interest payable after Maturity and, when used with respect to a Security which provides for the payment of Additional Amounts pursuant to Section 1006, includes such Additional Amounts. "Interest Payment Date," with respect to any Security, means the Stated Maturity of an installment of interest on such Security. "Maturity," with respect to any Security, means the date on which the principal of such Security, or an installment of principal, becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, notice of redemption or repurchase or otherwise and includes the Redemption Date. "Officer's Certificate" means a certificate signed by the Chairman of the Board, the President or any Vice President of the Company, and delivered to the Trustee. "Opinion of Counsel" means a written opinion of counsel, who may be an employee of or of counsel to the Company, or other counsel reasonably satisfactory to the Trustee. "Original Issue Discount Security" means any Security issued pursuant to this Indenture which provides for declaration of an amount less than the principal face amount thereof to be due and payable upon acceleration of the Maturity pursuant to Section 502. "Outstanding," when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except: (i) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation; (ii) Securities for whose payment at the Maturity thereof money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; provided that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; (iii) Securities for whose payment or redemption money or Government Obligations as contemplated by Section 1304 in the necessary amount have been theretofore deposited with the Trustee (or another trustee satisfying the requirements of Section 609) in trust for the Holders of such Securities in accordance with Section 1305; and (iv) Securities which have been paid pursuant to Section 306 or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, unless there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Company; provided, however, that in determining whether the Holders of the requisite principal amount of the Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, (i) the principal amount of an Original Issue Discount Security that shall be deemed to be Outstanding shall be equal to the amount of the principal thereof that would be due and payable as of the date of such determination upon acceleration of the Maturity thereof pursuant to Section 502, (ii) the principal amount of any Indexed Security that may be counted in making such determination and that shall be deemed outstanding for such purpose shall be equal to the principal face amount of such Indexed Security at original issuance, unless otherwise provided in this Indenture, (iii) the principal amount of a Security denominated in a Foreign Currency shall be the Dollar equivalent, determined on the date of original issuance of such Security, of the principal amount (or, in the case of an Original Issue Discount Security, the Dollar equivalent on the date of original issuance of such Security of the amount determined as provided in (i) above) of such Security, and (iv) Securities owned by the Company or any other obligor or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which the Trustee knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor or any Affiliate of the Company or of such other obligor. "Paying Agent" means any Person authorized by the Company to pay the principal of (and premium, if any) or interest on any Securities on behalf of the Company. "Person" means any individual, Corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Place of Payment," with respect to the Securities of any series, means the place where the principal of (and premium, if any), interest on, and Additional Amounts with respect to, the Securities of that series are payable as provided in or pursuant to this Indenture or such Securities. "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security. "Redemption Date," with respect to any Security or portion thereof to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture or such Security. "Redemption Price," with respect to any Security or portion thereof to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture or such Security. "Regular Record Date" for the interest payable on any Interest Payment Date on the Securities of any series means the date specified in or pursuant to this Indenture or such Security as the "Regular Record Date." "Responsible Officer," means any officer of the Trustee in its Corporate Trust Office and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of knowledge of and familiarity with the particular subject. "Securities" has the meaning stated in the first recital of this Indenture and more particularly means any Securities authenticated and delivered under this Indenture, provided, however, that if at any time there is more than one Person acting as Trustee under this Indenture, "Securities" with respect to any such Person shall mean securities authenticated and delivered under this Indenture, exclusive, however, of Securities of any series as to which such Person is not Trustee. "Security Register" and "Security Registrar" have the respective meanings specified in Section 305. "Special Record Date" for the payment of any Defaulted Interest on any Security means a date fixed by the Trustee pursuant to Section 307. "Stated Maturity," with respect to any Security or any installment of principal thereof or interest thereon or any Additional Amounts, means the date established by or pursuant to this Indenture or such Security as the fixed date on which the principal of such Security or such installment of principal or interest is, or such Additional Amounts are, due and payable. "Subsidiary" means any Corporation of which at the time of determination the Company or one or more Subsidiaries owns or controls, directly or indirectly, more than 50% of the shares of voting stock. For the purposes of this definition, "voting stock" means stock which ordinarily has voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency. "Trustee" means the Person named as the "Trustee" in the first paragraph of this Indenture until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean or include each Person who is then a Trustee hereunder. If at any time there is more than one such Person, "Trustee" shall mean such Person and as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of such series. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended, as in force at the date as of which this instrument was executed, except as provided in Section 905. "Vice President," when used with respect to the Company or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president." Section 102. Compliance Certificates and Opinions. Except as otherwise expressly provided in this Indenture, upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee an Officer's Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with or an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent, if any, have been complied with, except that, in the case of any such application or request as to which the furnishing of such documents or any of them is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished. Any Officer's Certificate will comply with Section 314(e) of the Trust Indenture Act. Section 103. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon an Opinion of Counsel, unless such officer knows, or in the exercise of reasonable care should know, that the opinion with respect to the matters upon which the certificate or opinion is based are erroneous. Any such Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture or any Security, they may, but need not, be consolidated and form one instrument. Section 104. Acts of Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 601) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved in any reasonable manner which the Trustee deems sufficient and in accordance with such reasonable rules as the Trustee may determine; and the Trustee may in any instance require further proof with respect to any of the matters referred to in this Section. (c) The ownership of Securities shall be proved by the Security Register. (d) If the Company shall solicit from the Holders of Securities of any series any request, demand, authorization, direction, notice, consent, waiver or other Act, the Company may, at its option, fix in advance a record date for the determination of Holders of Securities entitled to give such request, demand, authorization, direction, notice, consent, waiver or other Act, but the Company shall have no obligation to do so. Any such record date shall be fixed at the Company's discretion. If such a record date is fixed, such request, demand, authorization, direction, notice, consent and waiver or other Act may be sought or given before or after the record date, but only the Holders of Securities of record at the close of business on such record date shall be deemed to be Holders of Securities for the purpose of determining whether Holders of the requisite proportion of Securities of such series Outstanding have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the Securities of such series Outstanding shall be computed as of such record date. (e) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee, any Security Registrar, any Paying Agent or the Company in reliance thereon, whether or not notation of such action is made upon such Security. Section 105. Notices, Etc. to Trustee and Company. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with: (1) the Trustee by any Holder or the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office; or (2) the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company at 2007 Corporate Avenue, Memphis, Tennessee 38132, attention Vice President and Treasurer, or at any other address previously furnished in writing to the Trustee by the Company. Section 106. Notice to Holders; Waiver. Where this Indenture or any Security provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein or in such Security expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at the Holder's address as it appears in the Security Register, not later than the latest date, or not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given or provided. Where this Indenture or any Security provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder. Section 107. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be included in this Indenture by any of the provisions of the Trust Indenture Act, such required provision shall control. Section 108. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. Section 109. Successors and Assigns. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. Section 110. Separability Clause. In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 111. Benefits of Indenture. Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture. Section 112. Governing Law. This Indenture and the Securities shall be governed by and construed in accordance with the laws of the State of Tennessee. Section 113. Legal Holidays. In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day at any Place of Payment, then (notwithstanding any other provision of this Indenture or of the Securities) payment of interest or principal (and premium, if any) or any Additional Amounts need not be made at such Place of Payment on such date, but may be made on the next succeeding Business Day at such Place of Payment with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at the Stated Maturity, and no interest shall accrue with respect to such payments for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be, to the next succeeding Business Day. Section 114. Language of Notices. Any request, demand, authorization, direction, notice, consent, election or waiver required or permitted under this Indenture shall be in the English language, except that, if the Company so elects, any published notice may be in an official language of the country of publication. Section 115. Counterparts. This Indenture may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. ARTICLE TWO Security Forms Section 201. Forms Generally. The Securities of each series shall be in substantially the form attached hereto as Exhibit A as shall be established by or pursuant to a Board Resolution or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution of the Securities. If any form of Securities of any series is established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at the same time as or prior to the delivery of the Company Order contemplated by Section 303 for the authentication and delivery of such Securities. The definitive Securities may be produced in any manner determined by the officers executing such Securities, as evidenced by their execution of such Securities. Unless otherwise provided in or pursuant to this Indenture or any Securities, the Securities shall be issuable in registered form without coupons and shall not be issuable upon the exercise of warrants. Section 202. Form of Trustee's Certificate of Authentication. This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. The First National Bank of Chicago, as Trustee By: ___________________________ Authorized Officer Section 203. Global Securities. Unless otherwise provided in or pursuant to this Indenture or any Securities, the Securities shall be issued in global form. Any such Security may provide that it or any number of such Securities shall represent the aggregate amount of all Outstanding Securities of such series (or such lessor amount as is permitted by the terms thereof) from time to time endorsed thereon and may also provide that the aggregate amount of Outstanding Securities represented thereby may from time to time be increased or reduced to reflect exchanges. Any endorsement of any Security in global form to reflect the amount, or any increase or decrease in the amount, or changes in the rights of Holders, of Outstanding Securities represented thereby shall be made in such manner and by such Person as shall be specified therein or in the Company Order to be delivered pursuant to Section 303 or 304 with respect thereto. Subject to the provisions of Section 303 and, if applicable, Section 304, the Trustee shall deliver and redeliver any Security in permanent global form in the manner and upon instructions given by the Person specified therein or in the applicable Company Order. If a Company Order pursuant to Section 303 or 304 has been, or simultaneously is, delivered, any instructions by the Company with respect to a Security in global form shall be in writing but need not be accompanied by or contained in an Officer's Certificate and need not be accompanied by an Opinion of Counsel. Notwithstanding the provisions of Section 307, unless otherwise specified in or pursuant to this Indenture or any Securities, payment of principal of, any premium and interest on, and any Additional Amounts in respect of, any Security in global form shall be made to the Person specified therein. Notwithstanding the provisions of Section 308 and except as provided in the preceding paragraph, the Company, the Trustee and any agent of the Company and the Trustee shall treat as the Holder, the holder of such global Security in registered form. Any Global Security authenticated and delivered hereunder shall bear a legend in substantially the following form: "This Security is a Global Security within the meaning of the Indenture hereinafter referred to and is registered in the name of a Depository or a nominee of a Depository. This Security is exchangeable for Securities registered in the name of a Person other than the Depository or its nominee only in the limited circumstances described in the Indenture, and no transfer of this Security (other than a transfer of this Security as a whole by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository) may be registered except in such limited circumstances." ARTICLE THREE The Securities Section 301. Amount Unlimited; Issuable in Series. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued in one or more series. There shall be established in or pursuant to a Board Resolution and (subject to Section 303) set forth in an Officer's Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any series (subject to the last paragraph of this Section 301): (1) the title of the Securities and the series in which such Securities shall be included (which shall distinguish the Securities of the series from all other Securities); (2) any limit upon the aggregate principal amount of the Securities of the series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 304, 305, 306, 906 or 1107 and except for any Securities which, pursuant to Section 303 are deemed never to have been authenticated and delivered hereunder); (3) the date or dates on which the principal of the Securities of the series is payable; (4) the Person to whom any interest on any Security of the series shall be payable if other than the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, the rate or rates, which may be fixed or variable, at which the Securities of the series shall bear interest, if any, if the rate is variable, the manner of calculation thereof, the date or dates from which such interest shall accrue, the Interest Payment Dates on which such interest shall be payable and the Regular Record Date for the interest payable on any Interest Payment Date; (5) the place or places where the principal of (and premium, if any) and interest, if any, on Securities of the series shall be payable; (6) the date or dates on which, the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the series may be redeemed, in whole or in part, at the option of the Company; (7) the obligation, if any, of the Company to redeem or purchase Securities of the series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof and the date or dates on which, the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the series shall be redeemed or purchased, in whole or in part, pursuant to such obligation and any provisions for the remarketing of such securities so redeemed or purchased; (8) if other than denominations of $1,000 and any integral multiple thereof, the denominations in which Securities of the series shall be issuable; (9) if other than the principal amount thereof, the portion of the principal amount of Securities of the series which shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 502 or the method by which such portion is to be determined; (10) the application, if any, of either or both of Section 1302 and Section 1303 to the Securities of the series; (11) if other than Dollars, the Foreign Currency in which payment of the principal of, any premium or interest on or any Additional Amounts with respect to any of such Securities shall be payable; (12) if the principal of (and premium, if any) or interest, if any, on the Securities of that series are to be payable, at the election of the Company or a holder thereof, in a currency (including a composite currency) other than that in which the Securities are stated to be payable, the date or dates on which, the period or periods within which, and the terms and conditions upon which, such election may be made; (13) if the amount of payments of principal of (and premium if any) or interest, if any, on the Securities of the series may be determined with reference to an index, formula or other method or methods based on a currency (including a composite currency) other than that in which the Securities are stated to be payable, the terms and conditions upon which and the manner in which such amounts shall be determined and paid or payable; (14) if the amount of payments of principal of, any premium or interest on the Securities of the series may be determined with reference to an index, the manner in which such amounts shall be determined; (15) whether any Securities of the series are to be issuable upon original issuance in the form of one or more Global Securities and, if so, (i) the Depository with respect to such Global Security or Securities and (ii) the circumstances under which any such Global Security may be exchanged for Securities registered in the name of, and any transfer of such Global Security may be registered to, a Person other than such Depository or its nominee, if other than as set forth in Section 305; (16) whether and under what circumstances Additional Amounts on such Securities or any of them shall be payable; (17) the notice, if any, to Holders regarding the determination of interest on a floating rate Security and the manner of giving such notice, and the basis upon which interest shall be calculated if other than that of a 360-day year of twelve 30-day months; (18) intentionally left blank; (19) any deletions from, modifications of or additions to the Events of Default or covenants of the Company with respect to any Securities, whether or not such Events of Default or covenants are consistent with the Events of Default or covenants set forth herein; (20) if any of such Securities are to be issuable in global form and are to be issuable in definitive form (whether upon original issue or upon exchange of a temporary Security) only upon receipt of certain certificates or other documents or satisfaction of other conditions, then the form and terms of such certificates, documents or conditions; (21) if there is more than one Trustee, the identify of the Trustee and, if not the Trustee, the identity of each Security Registrar, Paying Agent or Authenticating Agent with respect to such Securities; and (22) any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture) and any deletions from or modifications or additions to this Indenture in respect of such series. All Securities of any one series shall be substantially identical except as to denomination, currency, rate of interest, or method of determining the rate of interest, if any, Maturity, and the date from which interest, if any, shall accrue and except as may otherwise be provided in or pursuant to such Board Resolution referred to above and (subject to Section 303) set forth in the Officer's Certificate referred to above or in any indenture supplemental hereto. If any of the terms of the series are established by action taken pursuant to a Board Resolution, a copy of the Board Resolution shall be delivered to the Trustee at the same time as or prior to the delivery of the Officer's Certificate setting forth the terms of the series. Notwithstanding any contrary terms of this Section 301, the terms of the Securities of any series may provide, without limitation, that the Securities shall be authenticated and delivered by the Trustee on original issue from time to time upon telephonic or written order of Persons designated in the Officer's Certificate or supplemental indenture and that such Persons are authorized to determine, consistent with such Officer's Certificate or any supplemental indenture, such terms and conditions of the Securities of such series as are specified in such certificate or supplemental indenture. All Securities of any one series may be reopened for issuances of additional Securities of such series or to establish additional terms of such series of Securities. Section 302. Denominations. Unless otherwise provided in or pursuant to this Indenture, the principal of, any premium and interest on and any Additional Amounts with respect to the Securities shall be payable in Dollars. The Securities of each series shall be issuable only in fully registered form without coupons in such denominations as shall be specified pursuant to Section 301. In the absence of any such provision with respect to the Securities of any series, the Securities of such series shall be issuable in denominations of $1,000 and any integral multiple thereof. Securities not denominated in Dollars shall be issuable in such denominations as are established with respect to such Securities in or pursuant to this Indenture. Section 303. Execution, Authentication, Delivery and Dating. The Securities shall be executed on behalf of the Company by its President or any Vice President, under its corporate seal reproduced thereon attested by its Secretary or any Assistant Secretary. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were the proper officers of the Company when their signatures were affixed to such Securities shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order shall authenticate and deliver such Securities. If the form or terms of the Securities of the series have been established in or pursuant to one or more Board Resolutions or indentures supplemental hereto as permitted by Sections 201 and 301, in authenticating such Securities and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon: (1) an Opinion of Counsel to the effect that: (a) if the form of such Securities has been established by or pursuant to Board Resolution as permitted by Section 201, that such form has been established in conformity with the provisions of this Indenture; (b) if the terms of such Securities have been established by or pursuant to Board Resolution as permitted by Section 301, that such terms have been established in conformity with the provisions of this Indenture; (c) this Indenture has been qualified under the Trust Indenture Act; and (d) that such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general applicability relating to or affecting the enforcement of creditors' rights and to general equity principles and will entitle the Holders thereof to the benefits of this Indenture; and (2) an Officer's Certificate stating that, to the best knowledge of the Person executing such certificate, no event which is, or after notice or lapse of time would become, an Event of Default with respect to any of the Securities shall have occurred and be continuing. Notwithstanding the provisions of Section 301 and of the preceding paragraph, if all Securities of a series are not to be originally issued at one time, it shall not be necessary to deliver an Opinion of Counsel, Officer's Certificate or the Company Order otherwise required at or prior to the time of authentication of each Security of such series if such documents are delivered at or prior to the time of authentication upon original issuance of the first Security of such series to be issued. Each Security shall be dated the date of its authentication. No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by, or on behalf of, the Trustee or by the Authenticating Agent by manual signature. Such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 309 together with a written statement (which need not comply with Section 102 and need not be accompanied by an Opinion of Counsel) stating that such Security has never been issued and sold by the Company, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall not be entitled to the benefits of this Indenture. The Trustee shall not be required to authenticate or to cause an Authentication Agent to authenticate any Securities if the issue of such Securities pursuant to this Indenture will affect the Trustee's own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee. Section 304. Temporary Securities. Pending the preparation of definitive Securities of any series, the Company may execute and deliver to the Trustee, and, upon Company Order, the Trustee shall authenticate and deliver in the manner provided in Section 303, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers of the Company executing such Securities may determine, as evidenced by their execution of such Securities. Such temporary Securities may be in global form. If temporary Securities of any series are issued, the Company will cause definitive Securities to be prepared without unreasonable delay. After the preparation of definitive Securities of such series, the temporary Securities of such series shall be exchangeable for definitive Securities of such series upon surrender of the temporary Securities at the office or agency of the Company in a Place of Payment for that series, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities of any series the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Securities of the same series and of like tenor of authorized denomination containing terms and provisions that are identical to those of any temporary Securities. Until so exchanged the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of the same series. Section 305. Registration, Transfer and Exchange. The Company shall cause to be kept at the Corporate Trust Office a register (the register maintained in such office and in any other office or agency of the Company in a Place of Payment being herein sometimes collectively referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. The Trustee is hereby appointed "Security Registrar" for the purpose of registering Securities and transfers of Securities as herein provided. The Company shall have the right to remove and replace from time to time the Security Registrar for any series of Securities; provided that no such removal or replacement shall be effective until a successor Security Registrar with respect to such series of Securities shall have been appointed by the Company and shall have accepted such appointment by the Company. In the event that the Trustee shall not be or shall cease to be Security Registrar with respect to a series of Securities, it shall have the right to examine the Security Register for such series at all reasonable times. There shall be only one Security Register for each series of Securities. Upon surrender for registration of transfer of any Security of any series at the office or agency of the Company in a Place of Payment for such series, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of the same series, of any authorized denominations and of a like aggregate principal amount and tenor containing identical terms and provisions. At the option of the Holder, Securities of any series may be exchanged for other Securities of the same series containing identical terms and provisions in any authorized denominations and of a like aggregate principal amount and tenor, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive. All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange. Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed, by the Holder thereof or the Holder's attorney duly authorized in writing. No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 304, 906 or 1107 not involving any transfer. Except as otherwise provided herein, the Company shall not be required (i) to issue, register the transfer of or exchange Securities of any series during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Securities of such series selected for redemption under Section 1103 and ending at the close of business on the day of such mailing, or (ii) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part. Notwithstanding the foregoing, except as otherwise specified as contemplated by Section 301, any Global Security of any series shall be exchangeable for definitive Securities only if: (a) such Depository is unwilling, unable or ineligible to continue as Depository with respect to such Global Security and a successor depository is not appointed by the Company within 90 days or if at any time the Depository with respect to such Global Security ceases to be a clearing agency registered under the Securities Exchange Act of 1934, as amended, or (b) the Company executes and delivers to the Trustee a Company Order providing that such Global Security shall be so exchangeable and the transfer thereof so registrable. If the beneficial owners of interests in a Global Security are entitled to exchange such interests for definitive Securities as the result of an event described in the preceding sentence, then without unnecessary delay but in any event not later than the earliest date on which such interests may be so exchanged, the Company shall deliver to the Trustee definitive Securities in such form and denominations as are required by or pursuant to this Indenture, and of the same series, containing identical terms and in aggregate principal amount equal to the principal amount of such Global Security, executed by the Company. On or after the earliest date on which such interests may be so exchanged, such Global Security shall be surrendered from time to time by the Depository and in accordance with instructions given to the Trustee and the Depository (which instructions shall be in writing but need not be contained in or accompanied by an Officers Certificate or be accompanied by an Opinion of Counsel), as shall be specified in the Company Order with respect thereto to the Trustee, as the Company's agent for such purpose, to be exchanged, in whole or in part, for definitive Securities as described above without charge. The Trustee shall authenticate and make available for delivery, in exchange for each portion of such surrendered Global Security, a like aggregate principal amount of definitive Securities of the same series of authorized denominations and of like tenor as the portion of such Global Security to be exchanged, which shall be in the form of Securities, as shall be specified by the beneficial owner thereof, provided, however, that no such exchanges may occur during a period beginning at the opening of business 15 days before any selection of Securities of the same series to be redeemed and ending on the relevant Redemption Date. Promptly following any such exchange in part, such global Security shall be returned by the Trustee to such Depository in accordance with the instructions of the Company referred to above. If a Security is issued in exchange for any portion of a Global Security after the close of business at the office or agency for such Security where such exchange occurs on or after (i) any Regular Record Date for such Security and before the opening of business at such office or agency on the next Interest Payment Date, or (ii) any Special Record Date for such Security and before the opening of business at such office or agency on the related proposed date for payment of interest or Defaulted Interest, as the case may be, interest shall not be payable on such Interest Payment Date or proposed date for payment, as the case may be, in respect of such Security, but shall be payable on such Interest Payment Date or proposed date for payment, as the case may be, only to the Person to whom interest in respect of such portion of such Global Security shall be payable in accordance with the provisions of this Indenture. Section 306. Mutilated, Destroyed, Lost and Stolen Securities. If (i) any mutilated Security is surrendered to the Trustee or if there shall be delivered to the Company and the Trustee evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) there shall be delivered to the Company and the Trustee such indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee shall authenticate and deliver, in lieu of any such mutilated, destroyed, lost or stolen Security, a new Security of the same series containing identical terms and of like tenor and principal amount and bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security. Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Security of any series issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute a separate obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of the same series duly issued hereunder. The provisions of this Section, as amended or supplemented pursuant to this Indenture, are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. Section 307. Payment of Interest; Interest Rights Preserved. Unless otherwise provided as contemplated by Section 301 with respect to any series of Securities, interest on and any Additional Amounts with respect to any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest. Any interest on, and any Additional Amounts with respect to, any Security of any series which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in Clause (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Person in whose name the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security of such series and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment. Such money when deposited will be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder of Securities of such series at the Holder's address as it appears in the Security Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following Clause (2). (2) The Company may make payment of any Defaulted Interest on the Securities of any series in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this Clause, such manner of payment shall be deemed practicable by the Trustee. Unless otherwise provided in or pursuant to this Indenture or the Securities of any particular series pursuant to the provisions of this Indenture, at the option of the Company, interest on Securities may be paid by mailing a check to the address of the Person entitled thereto as such address shall appear in the Security Register or by transfer to an account maintained by the payee with a bank located in the United States. Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. Section 308. Persons Deemed Owners. Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of (and premium, if any) and (subject to Sections 305 and 307) interest on and any Additional Amounts with respect to such Security and for all other purposes whatsoever, whether or not any payment with respect to such Security shall be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. No Holder of any beneficial interest in any Global Security held on its behalf by a Depository shall have any rights under this Indenture with respect to such Global Security, and such Depository may be treated by the Company, the Trustee, and any agent of the Company or the Trustee as the owner of such Global Security for all purposes whatsoever. None of the Company, the Trustee, any Paying Agent or the Security Registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Section 309. Cancellation. All Securities surrendered for payment, redemption, registration of transfer, exchange or for credit against any sinking fund payment shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly canceled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever and may deliver to the Trustee (or to an Authenticating Agent for delivery to the Trustee) for cancellation any Securities previously authenticated hereunder which the Company has not issued and sold, and all Securities so delivered shall be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section, except as expressly permitted by this Indenture. All canceled Securities held by the Trustee shall be disposed of as directed by a Company Order. Section 310. Computation of Interest. Except as otherwise specified pursuant to Section 301 for Securities of any series, interest on the Securities of each series shall be computed on the basis of a 360-day year of twelve 30-day months. ARTICLE FOUR Satisfaction and Discharge Section 401. Satisfaction and Discharge of Indenture. This Indenture shall upon Company Request cease to be of further effect with respect to any series of Securities specified in such Company Request (except as to rights of registration of transfer or exchange of Securities), and the Trustee on receipt of the Company Request, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture as to such series, when: (1) either (A) all Securities of such series theretofore authenticated and delivered (other than (i) Securities of such series which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 306 and (ii) Securities of such series for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 1003) have been delivered to the Trustee for cancellation; or (B) all such Securities not theretofore delivered to the Trustee for cancellation: (i) have become due and payable, or (ii) will become due and payable at their Stated Maturity within one year, or (iii) if redeemable at the option of the Company are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, and the Company, in the case of (i), (ii) or (iii) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose an amount sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal (and premium, if any) and interest and any Additional Amounts to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be. (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and (3) the Company has delivered to the Trustee an Officer's Certificate or an Opinion of Counsel, stating that all conditions precedent herein relating to the satisfaction and discharge of this Indenture with respect to such Securities have been complied with. In the event there are Securities of two or more series hereunder, the Trustee shall be required to execute an instrument acknowledging satisfaction and discharge of this Indenture only if requested to do so with respect to Securities of such series as to which it is Trustee and if the other conditions thereto are met. Notwithstanding the satisfaction and discharge of this Indenture with respect to the Securities of any series, the obligations of the Company to the Trustee under Section 607, the obligations of the Trustee to any Authenticating Agent under Section 614 and, if money shall have been deposited with the Trustee pursuant to subclause (B) of clause (1) of this Section, the obligations under Sections 304, 305, 306, 1002 and 1003, and the obligation to pay Additional Amounts, if any, with respect to such Securities as contemplated by Section 1006 (but only to the extent that any Additional Amounts payable with respect to such Securities exceed the amount deposited in respect of such Additional Amounts pursuant to Section 401(1)(B), shall survive. Section 402. Application of Trust Money. Subject to the provisions of the penultimate paragraph of Section 1003, all money and Government Obligations deposited with the Trustee pursuant to Section 401 and Article 13 shall be held in trust and applied by it, in accordance with the provisions of the Securities of the series for which such deposit was made and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any), interest and Additional Amounts for whose payment such money and Government Obligations has been deposited with the Trustee; but such money and Government Obligations need not be segregated from other funds except to the extent required by law. ARTICLE FIVE Remedies Section 501. Events of Default. "Event of Default," wherever used herein with respect to the Securities of any series, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body), unless such event is specifically deleted or modified in or pursuant to the supplemental indenture, Board Resolution or Officer's Certificate establishing the terms of such series pursuant to this Indenture: (1) default in the payment of any interest upon any Security of such series when it becomes due and payable, and continuance of such default for a period of 30 days; (2) default in the payment of the principal of (or premium, if any, on) any Security of such series at its Maturity; (3) default in the performance, or breach, of any covenant, agreement or warranty of the Company in this Indenture (other than a covenant, agreement or warranty a default in whose performance is elsewhere in this Section specifically dealt with or which has expressly been included in this Indenture solely for the benefit of series of Securities other than such series) and continuance of such default for a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 50% in principal amount of the Outstanding Securities of such series a written notice specifying such default and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; (4) default in the deposit of any sinking fund payment when and as due by the terms of a Security of such series; (5) the entry by a court having jurisdiction of a decree or order adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under federal bankruptcy law or any other applicable federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days; (6) the commencement by the Company of proceedings to be adjudicated a bankrupt or insolvent, or the consent by it to the commencement of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under federal bankruptcy law or any other applicable federal or state law, or the consent by it to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of the Company or of any substantial part of its property, or the making by it of a general assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company in furtherance of any such action; or (7) any other Event of Default provided pursuant to Section 301 with respect to Securities of such series. Section 502. Acceleration of Maturity; Rescission and Annulment. If an Event of Default with respect to Securities of any series at the time Outstanding occurs and is continuing, then in every such case the Trustee or the Holders of not less than 50% in principal amount of the Outstanding Securities of such series may declare the principal amount of all the Securities of such series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such principal amount shall become immediately due and payable. At any time after such a declaration of acceleration with respect to Securities of any series has been made and before the Stated Maturity thereof, the Holders of a majority in principal amount of the Outstanding Securities of such series, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if: (1) the Company has paid or deposited with the Trustee a sum sufficient to pay: (A) all overdue installments of interest on and any Additional Amounts with respect to all Securities of such series; (B) the principal of (and premium, if any on) any Securities of such series which have become due otherwise than by such declaration of acceleration and interest thereon at the rate borne by the Securities of such series and any Additional Amounts; (C) to the extent that payment of such interest or Additional Amounts is lawful, interest upon overdue interest or Additional Amounts at the rate borne by the Securities of such series; and (D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (2) all Events of Default with respect to the Securities of such series, other than the non-payment of the principal of Securities of such series which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 513. No such rescission shall affect any subsequent default or impair any right consequent thereon. Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee. The Company covenants that if: (1) default is made in the payment of any interest on any Securities when such interest becomes due and payable and such default continues for a period of 30 days, or (2) default is made in the payment of the principal of (or premium, if any, on) any Securities at the Maturity thereof, the Company will, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal (and premium, if any) and interest and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal (and premium, if any) and on any overdue interest, at the rate borne by the Securities and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sum so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon such Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon such Securities, wherever situated. If an Event of Default with respect to Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of the Securities of such series by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. Section 504. Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal (and premium, if any) or interest or Additional Amounts) shall be entitled and empowered, by intervention in such proceeding or otherwise, (i) to file and prove a claim for the whole amount of principal (and premium, if any) and interest and Additional Amounts owing and unpaid in respect of the Securities and to file such other papers and documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding, and (ii) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 607. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. Section 505. Trustee May Enforce Claims Without Possession of Securities. All rights of action and claims under this Indenture or the Securities may be prosecuted by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered. Section 506. Application of Money Collected. Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal (or premium, if any), interest or Additional Amounts, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: First: To the payment of all amounts due the Trustee under Section 607; Second: To the payment of the amounts then due and unpaid for principal of (and premium, if any), interest and Additional Amounts on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal (and premium, if any), interest and Additional Amounts, respectively; and Third: To the payment of the remainder, if any, to the Company or any other Person lawfully entitled thereto. Section 507. Limitation on Suits. No Holder of any Security of any series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless: (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of such series; (2) the Holders of not less than 50% in principal amount of the Outstanding Securities of such series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (3) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceedings; and (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Securities of such series. It being understood and intended that no one or more Holders of Securities shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the right of any other such Holders of Securities of such series, or to obtain or to seek to obtain priority or preference over any other such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders of Securities. Section 508. Unconditional Right of Holders to Receive Principal, Premium and Interest. Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of (and premium, if any, on) and (subject to Section 307) interest on, and any Additional Amounts with respect to, such Security on the respective Stated Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment and such rights shall not be impaired without the consent of such Holder. Section 509. Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceedings has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. Section 510. Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 306, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 511. Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. Section 512. Control by Holders. The Holders of a majority in principal amount of the Outstanding Securities of any series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities of such series, provided that: (1) such direction shall not be in conflict with any rule of law or with this Indenture or with such Securities; (2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction; and (3) subject to Section 601, the Trustee need not take any action which might be prejudicial to the Holders of such series not consenting. Section 513. Waiver of Past Defaults. The Holders of not less than a majority in principal amount of the Outstanding Securities of any series may on behalf of the Holders of all the Securities of such series waive any past default hereunder with respect to such series and its consequences, except a default: (1) in the payment of the principal of (or premium, if any) or interest on any Security of such series, or (2) in respect of a covenant or provision hereof which under Article Nine cannot be modified or amended without the consent of the Holder of each Outstanding Security of such series affected. Upon any such waiver, such default shall cease to exist with respect to such series, 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. Section 514. Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Security by acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Company, to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Securities of any series, or to any suit instituted by any Holder for the enforcement of the payment of the principal of (or premium, if any) or interest on any Security on or after the respective Stated Maturities expressed in such Security (or, in the case of redemption, on or after the Redemption Date). Section 515. Waiver of Stay or Extension Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE SIX The Trustee Section 601. Certain Duties and Responsibilities. (a) Except during the continuance of an Event of Default, (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture. (b) In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this 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 his or her own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct; except that: (1) this Subsection shall not be construed to limit the effect of Subsection (a) of this Section; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority in principal amount of the Outstanding Securities of any series relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Securities of such series; and (4) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (d) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. Section 602. Notice of Defaults. Within 90 days after the occurrence of any default hereunder with respect to the Securities of any series, the Trustee shall transmit by mail to all Holders of Securities of such series, as their names and addresses appear in the Security Register, notice of such default hereunder known to the Trustee, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal of (or premium, if any) or interest on any Security, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors or Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interest of the Holders of Securities of such series; and provided, further, that in the case of any default of the character specified in Section 501(3) with respect to the Securities of such series no such notice to Holders shall be given until at least 60 days after the occurrence thereof. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default with respect to Securities of such series. Section 603. Certain Rights of Trustee. Subject to the provisions of Section 601: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officer's Certificate; (d) the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit; and (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. Section 604. Not Responsible for Recitals or Issuance of Securities. The recitals contained herein and in the Securities, except the Trustee's certificates of authentication, shall be taken as the statements of the Company, and the Trustee or any Authenticating Agent assume no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities, except that the Trustee represents that it is duly authorized to execute and deliver this Indenture, authenticate the Securities and perform its obligations hereunder and that the statements made by it in a Statement of Eligibility and Qualification on Form T-1 supplied to the Company are true and accurate, subject to the qualifications set forth therein. The Trustee or any Authenticating Agent shall not be accountable for the use or application by the Company of Securities or the proceeds thereof. Section 605. May Hold Securities. The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Section 613, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such other agent. Section 606. Money Held in Trust. Except as otherwise provided herein, money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed with the Company. Section 607. Compensation and Reimbursement. The Company agrees: (1) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder; (2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (3) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent that any such loss, liability or expense was due to the Trustee's negligence or bad faith. Section 608. Intentionally Left Blank Section 609. Corporate Trustee Required; Eligibility. (1) There shall at all times be a Trustee hereunder which shall: (i) be a Corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia authorized under such laws to exercise corporate trust powers; (ii) be eligible under Section 310(a) of the Trust Indenture Act to act as trustee under an indenture qualified under the Trust Indenture Act; and (iii) have a combined capital and surplus of at least $100,000,000 and subject to supervision or examination by federal or state authority. If such Corporation publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. (2) The following Indenture shall be considered specifically described herein for purposes of clause (i) of the proviso contained in Section 310(b)(1) of the Trust Indenture Act: Indenture between AllianceAirport Authority Inc. (the "Authority") and The First National Bank of Chicago, as trustee, dated as of April 1, 1996 relating to the Authority's Special Facilities Revenue Bonds (Federal Express Corporation Project), Series 1996. Section 610. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 611. (b) The Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to the Company. If the instrument of acceptance by a successor Trustee required by Section 611 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. (c) The Trustee may be removed at any time with respect to the Securities of any series by the Company or by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series, delivered to the Trustee, and to the Company in the case of an Act of the Holders. (d) If at any time: (1) the Trustee shall fail to comply with the obligations imposed upon it under Section 310(b) of the Trust Indenture Act with respect to the Securities after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months; (2) the Trustee shall cease to be eligible under Section 609 and shall fail to resign after written request therefor by the Company or by any such Holder; or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (i) the Company may remove the Trustee with respect to all Securities or the Securities of such series, or (ii) subject to Section 514, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of such Holder and all other similarly situated, petition any court of competent jurisdiction for the removal of the Trustee with respect to all Securities of such series and the appointment of a successor Trustee. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, with respect to the Securities of one or more series, the Company shall promptly appoint a successor Trustee or Trustees with respect to the Securities of that or those Series (it being understood that any such successor Trustee may be appointed with respect to the Securities of one or more or all of such series and that at any time there shall be only one Trustee with respect to the Securities of any particular series). If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Securities of any series shall be appointed by Act of the Holders of 75% in principal amount of the Outstanding Securities of such series delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 611, become the successor Trustee with respect to the Securities of such series and supersede the successor Trustee appointed by the Company. If no successor Trustee with respect to the Securities of any series shall have been so appointed by the Company or the Holders and accepted appointment in the manner required by Section 611, any Holder who has been a bona fide Holder of a Security of such series for at least six months may, on behalf of such Holder and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. (f) The Company shall give notice of each resignation and each removal of the Trustee with respect to the Securities of any series and each appointment of a successor Trustee with respect to the Securities of any series by mailing written notice of such event by first-class mail, postage prepaid, to all Holders of Securities of such series as their names and addresses appear in the Security Register. Each notice shall include the name of the successor Trustee with respect to the Securities of such series and the address of its Corporate Trust Office. Section 611. Acceptance of Appointment by Successor. (a) In case of the appointment hereunder of a successor Trustee with respect to all Securities, every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. (b) In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series, the Company, the retiring Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which, (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee. It being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee. Upon the execution and delivery of such supplemental indenture, the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company or any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Trustee relates. (c) Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in paragraph (a) or (b) of this Section, as the case may be. (d) No successor Trustee shall accept its appointment unless at the time of such a acceptance such successor Trustee shall be qualified and eligible under this Article. Section 612. Merger, Conversion, Consolidation or Succession to Business. Any Corporation into which the 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 Trustee shall be a party, or any Corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such Corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities. Section 613. Preferential Claims. Reference is made to Section 311 of the Trust Indenture Act. For purposes of Section 311(b)(4) and (6) of such Act: (1) "cash transaction" means any transaction in which full payment for goods or securities sold is made within seven days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand; and (2) "self-liquidating paper" means any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred by the Company for the purpose of financing the purchase, processing, manufacturing, shipment, storage or sale of goods, wares or merchandise and which is secured by documents evidencing title to, possession of, or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship with the Company arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation. Section 614. Appointment of Authenticating Agent. At any time when any of the Securities remain Outstanding the Trustee may appoint an Authenticating Agent or Agents with respect to one or more series of Securities which shall be authorized to act on behalf of the Trustee to authenticate Securities of such series issued upon original issuance, exchange, registration of transfer or partial redemption thereof or pursuant to Section 306, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in the Indenture to the authentication and delivery of Securities by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a Corporation organized and doing business under the laws of the United States of America, any state thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by federal or state authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section. Any Corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any Corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any Corporation succeeding to the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided that such Corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent. An Authenticating Agent may resign at any time by giving 30 days' written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provision of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and shall mail written notice of such appointment by first-class mail, postage prepaid, to all Holders of Securities of the series with respect to which such Authenticating Agent will serve, as their names and addresses appear in the Security Register. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provision of this Section. The Trustee agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section, and the Trustee shall be entitled to be reimbursed for such payments, subject to the provisions of Section 607. If an appointment with respect to one or more series is made pursuant to this Section, the Securities of such series may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternate certificate of authentication in the following form: This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. THE FIRST NATIONAL BANK OF CHICAGO, as Trustee By _______________________________ As Authenticating Agent By _______________________________ Authorized Officer ARTICLE SEVEN Holders' Lists and Reports by Trustee and Company Section 701. Company to Furnish Trustee Names and Addresses of Holders. The Company will furnish or cause to be furnished to the Trustee with respect to the Securities of each series: (a) semi-annually, not later than each Interest Payment Date for such series (or, in the case of any series not having semi-annual Interest Payment Dates, semi-annually, not later than the dates determined pursuant to Section 301 for such series) a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of the preceding Regular Record Date (or as of such other date determined pursuant to Section 301 for such series) therefor, and (b) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished; provided, however, that so long as the Trustee is the Security Registrar no such list shall be required to be furnished. Section 702. Preservation of Information; Communications to Holders. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders of the Securities of each series contained in the most recent list furnished to the Trustee as provided in Section 701 and the names and addresses of such Holders received by the Trustee in its capacity as Security Registrar. The Trustee may destroy any list of the Holders of Securities of any series furnished to it as provided in Section 701 upon receipt of a new list of such Holders. (b) If three or more Holders of Securities of any series (herein referred to as "applicants") apply in writing to the Trustee, and furnish to the Trustee reasonable proof that each such applicant has owned a Security of such series for a period of at least six months preceding the date of such application, and such application states that the applicants desire to communicate with other Holders of Securities of such series with respect to their rights under this Indenture or under the Securities of such series and is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee shall, within five Business Days after the receipt of such application, at its election, either: (i) afford such applicants access to the information preserved at the time by the Trustee in accordance with Section 702(a) with respect to the Securities of such series, or (ii) inform such applicants as to the approximate number of Holders of Securities of such series whose names and addresses appear in the information preserved at the time by the Trustee in accordance with Section 702(a), and as to the approximate cost of mailing to such Holders the form of proxy or other communication, if any, specified in such application. If the Trustee shall elect not to afford such applicants access to such information, the Trustee shall, upon the written request of such applicants, mail to each Holder of Securities of such series whose name and address appear in the information preserved at the time by the Trustee in accordance with Section 702(a) a copy of the form or proxy or other communication which is specified in such request, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within five days after such tender the Trustee shall mail to such applicants and file with the Commission, together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interest of the Holders or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If the Commission, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or if, after the entry of an order sustaining one or more of such objections, the Commission shall find, after notice and opportunity for hearing, that all the objections so sustained have been met and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Holders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise the Trustee shall be relieved of any obligation or duty to such applicants respecting their application. (c) Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders in accordance with Section 702(b), regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 702(b). Section 703. Reports by Trustee. (a) Within 60 days after May 1 of each year commencing with the year 1997, the Trustee shall transmit by mail to all Holders, as their names and addresses appear in the Security Register, such brief report dated as of such May 1, if any, as may be required by Section 313(a) of the Trust Indenture Act. (b) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which any Securities are listed, with the Commission and with the Company. The Company will notify the Trustee when any Securities are listed on any stock exchange. Section 704. Reports by Company. The Company shall: (1) file with the Trustee, within 15 days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports which the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934; or, if the Company is not required to file information, documents or reports pursuant to either of said Sections, then it shall file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Securities Exchange Act of 1934 in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations; (2) file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and (3) transmit by mail to all Holders, as their names and addresses appear in the Security Register, within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Company pursuant to paragraphs (1) and (2) of this Section as may be required by rules and regulations prescribed from time to time by the Commission. ARTICLE EIGHT Consolidation, Merger, Conveyance, Transfer or Lease Section 801. Company May Consolidate, Etc. on Certain Terms. Nothing contained in this Indenture or in any of the Securities shall prevent any consolidation or merger of the Company with or into any other Person, or successive consolidations or mergers in which the Company or its successor or successors shall be a party or parties, or shall prevent any conveyance, transfer or lease of the property of the Company as an entirety or substantially as an entirety, to any Person, unless: (1) in case the Company shall consolidate with or merge into another Corporation or convey, transfer or lease its properties and assets as, or substantially as, an entirety to any Person, the Corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance, transfer, or lease the properties and assets of the Company, as, or substantially as, an entirety shall be a Corporation organized and existing under the laws of the United States of America, any state thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of (and premium, if any), interest on and any Additional Amounts with respect to all the Securities and the performance of every covenant of this Indenture on the part of the Company to be performed or observed; (2) immediately after giving effect to such transaction, no Event of Default, or event which after notice or lapse of time, or both, would become an Event of Default, shall have occurred and be continuing; and (3) the Company shall have delivered to the Trustee an Officer's Certificate or an Opinion of Counsel, stating that such consolidation, merger, conveyance, transfer or lease and such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with. Section 802. Successor Corporation Substituted. Upon any consolidation by the Company with or merger by the Company into any other Corporation or any conveyance, transfer or lease of the properties and assets of the Company as, or substantially as, an entirety to any Person in accordance with Section 801, the successor Corporation formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Corporation has been named as the Company herein, and thereafter, except in the case of a lease to another Person, the predecessor Corporation shall be relieved of all obligations and covenants under this Indenture and the Securities. ARTICLE NINE Supplemental Indentures Section 901. Supplemental Indentures Without Consent of Holders. Without the consent of any Holders, the Company and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company herein and in the Securities; (2) to add to the covenants of the Company for the benefit of the Holders of all or any series of Securities (and, if such covenants are to be for the benefit of less than all series of Securities, stating that such covenants are expressly being included solely for the benefit of such series) or to surrender any right or power herein conferred upon the Company; (3) to add any additional Events of Default with respect to Securities of any or all series; (4) to change or eliminate any of the provisions of this Indenture, provided that any such change or elimination shall become effective only when there is no Security Outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision; (5) to secure the Securities of any or all series; (6) to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture, provided such action shall not adversely affect the interests of the Holders of Securities of any series in any material respect; (7) to add to or change any of the provisions of this Indenture to such extent as shall be necessary to permit or facilitate the issuance of Securities in bearer form, registrable or not registrable as to principal, and with or without interest coupons; (8) to establish the form or terms of Securities of any series as permitted by Sections 201 and 301; (9) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 611(b); (10) to add to, delete from or revise the conditions, limitations and restrictions on the authorized amount, terms or purposes of issue, authentication and delivery of Securities, as herein set forth; (11) to supplement any of the provisions of this Indenture to such extent as shall be necessary to permit or facilitate the defeasance and discharge of any series of Securities pursuant to Article 13, provided that no such supplement shall materially adversely affect the interest of the Holders of any Securities then Outstanding; or (12) to amend or supplement any provision contained herein or in any supplemental indenture, provided that no such amendment or supplement shall materially adversely affect the interest of the Holders of any Securities then Outstanding. Section 902. Supplemental Indentures with Consent of Holders. With the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities of each series affected by such supplemental indenture, by Act of said Holders delivered to the Company and the Trustee, the Company and the Trustee may 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 of the Holders of Securities of such series under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby, (1) change the Stated Maturity of the principal of, or any installment of interest on, any such Security, or reduce the principal amount thereof or any interest thereon or any premium payable upon the redemption thereof, or reduce the amount of the principal of an Original Issue Discount Security that would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502, or change any Place of Payment where, or the currency in which, any such Security or any premium or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date); (2) reduce the percentage in principal amount of the Outstanding Securities of any series, the consent of whose Holders is required for any such supplemental indenture, or the consent of those Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture; or (3) modify any of the provisions of this Section or Section 513, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby. A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of the Holders of Securities of such series with respect to such covenant or the provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities or any other series. It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. Section 903. Execution of Supplemental Indentures. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Section 904. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Section 905. Conformity with Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect. Section 906. Reference in Securities to Supplemental Indentures. Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series. ARTICLE TEN Covenants Section 1001. Payment of Principal, any Premium, Interest and Additional Amounts. The Company covenants and agrees for the benefit of the Holders of each series of Securities that it will duly and punctually pay the principal of (and premium, if any) and interest on and any Additional Amounts with respect to the Securities of that series in accordance with the terms of the Securities and this Indenture. Section 1002. Maintenance of Office or Agency. The Company will maintain in each Place of Payment for any series of Securities an office or agency where Securities of such series may be presented or surrendered for registration or transfer or exchange and where notices and demands to or upon the Company in respect of the Securities of such series and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. The Company may also from time to time designate one or more other offices or agencies where the Securities of one or more series may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in each Place of Payment for Securities of any series for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. Unless otherwise specified with respect to any Securities pursuant to Section 301, if and so long as the Securities of any series (i) are denominated in a Foreign Currency or (ii) may be payable in a Foreign Currency, or so long as it is required under any other provision of this Indenture, then the Company will maintain with respect to each such series of Securities, or as so required, at least one exchange rate agent. Section 1003. Money for Securities Payments to be Held in Trust. If the Company shall at any time act as its own Paying Agent with respect to any series of Securities, it will, on or before each due date of the principal of (and premium, if any) or interest on any of the Securities of such series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal (and premium, if any) or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act. Whenever the Company shall have one or more Paying Agents for any series of Securities, it will, on or before each due date of the principal of or interest on any Securities of such series, deposit with a Paying Agent a sum sufficient to pay the principal (or premium, if any) or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act. The Company will cause each Paying Agent for any series of Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will: (1) hold all sums held by it for the payment of the principal of (and premium, if any) or interest on Securities of such series in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (2) give the Trustee notice of any default by the Company (or any other obligor upon the Securities of such series) in the making of any payment of principal (and premium, if any) or interest on the Securities of such series; and (3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money deposited with the Trustee or any Paying Agent, or received by the Trustee (or another trustee satisfying the requirements of Section 609) in respect of Government Obligations deposited with the Trustee (or such other trustee) pursuant to Section 1304, or then held by the Company, in trust for the payment of the principal of (and premium, if any) or interest on any Security of any series and remaining unclaimed for two years after such principal (and premium, if any) or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust. The Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease. The Trustee or such Paying Agent, before being required to make any such repayment, may publish, in the English language, in a newspaper customarily published on each Business Day and of general circulation in the City of New York, New York, or to be mailed to such Holder or both, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the earlier of the date of such publication or such mailing, any unclaimed balance of such money then remaining will be repaid to the Company. Section 1004. Corporate Existence. Subject to Article Eight, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights (charter and statutory) and franchises; provided, however, that the foregoing shall not obligate the Company to preserve any such right or franchise if the Company shall determine that the preservation thereof is no longer desirable in the conduct of its business and that the loss thereof is not disadvantageous in any material respect to any Holder. Section 1005. Statement as to Default. The Company will deliver to the Trustee, within 120 days after the end of each fiscal year, an Officer's Certificate, stating as to each signer thereof that he or she is familiar with the affairs of the Company and whether or not to such officer's knowledge the Company is in compliance (without regard to any period of grace or requirement of notice) with all conditions and covenants of this Indenture. The officer executing such certificate shall be the Company's principal executive, finance or accounting officer and such certificate need not comply with Section 314(e) of the Trust Indenture Act. Section 1006. Additional Amounts If any Securities of a series provide for the payment of Additional Amounts, the Company agrees to pay to the Holder of any such Security Additional Amounts as provided in or pursuant to this Indenture or such Securities. Whenever in this Indenture there is mentioned, in any context, the payment of the principal of or any premium or interest on, or in respect of, any Security of any series or the net proceeds received on the sale or exchange of any Security of any series, such mention shall be deemed to include mention of the payment of Additional Amounts provided by the terms of such series established hereby or pursuant hereto to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof pursuant to such terms, and express mention of the payment of Additional Amounts (if applicable) in any provision hereof shall not be construed as excluding Additional Amounts in those provisions hereof where such express mention is not made. Except as otherwise provided in or pursuant to this Indenture or the Securities of the applicable series, if the Securities of a series provide for the payment of Additional Amounts, at least 10 days prior to the first Interest Payment Date with respect to such series of Securities (or if the Securities of such series shall not bear interest prior to Maturity, the first day on which a payment of principal is made), and at least 10 days prior to each date of payment of principal or interest if there has been any change with respect to the matters set forth in the below-mentioned Officer's Certificate, the Company shall furnish to the Trustee and the Paying Agent, if other than the Trustee, an Officer's Certificate instructing the Trustee and such Paying Agent whether such payment of principal of an premium, if any, or interest on the Securities of such series shall be made to Holders of Securities of such series who are United States aliens without withholding for or on account of any tax, assessment or other governmental charge described in the Securities of such series. If any such withholding shall be required, then such Officer's Certificate shall specify by country the amount, if any, required to be withheld on such payments to such Holders of Securities, and the Company agrees to pay to the Trustee or such Paying Agent the Additional Amounts required by the terms of such Securities. ARTICLE ELEVEN Redemption of Securities Section 1101. Applicability of Article. Securities of any series which are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and (except as otherwise specified pursuant to Section 301 for Securities of any series) in accordance with this Article. Section 1102. Election to Redeem; Notice to Trustee. In case of any redemption of less than all the Securities of any series, the Company shall, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Securities of such series to be redeemed and, if applicable, of the tenor of the Securities to be redeemed. In the case of any redemption of Securities prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture, the Company shall furnish the Trustee with an Officer's Certificate evidencing compliance with such restriction. Section 1103. Selection by Trustee of Securities to be Redeemed. If less than all the Securities of any series are to be redeemed (unless all of the Securities of a specified tenor are to be redeemed), the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series subject to such redemption and not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to the minimum authorized denomination for Securities of that series and tenor or any integral multiple thereof) of the principal amount of Securities of such series of a denomination larger than the minimum authorized denomination for Securities of that series. If less than all of the Securities of such series and of a specified tenor are to be redeemed, the particular Securities to be redeemed shall be selected not more than 45 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series and specified tenor not previously called for redemption in accordance with the preceding sentence. The Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed. Section 1104. Notice of Redemption. Notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed. Failure to give notice by mailing in the manner herein provided to the Holder of any Securities designated for redemption as a whole or in part, or any defect in the notice to any such Holder, shall not affect the validity of the proceedings for the redemption of any other Securities or portion thereof. All notices of redemption shall state: (1) the Redemption Date; (2) the Redemption Price; (3) if less than all the Outstanding Securities of any Series and tenor are to be redeemed, the identification (and, in the case of partial redemption, the principal amounts) of the particular Securities to be redeemed; (4) that on the Redemption Date the Redemption Price will become due and payable upon each such Security to be redeemed and that interest thereon will cease to accrue on and after said date; (5) the place or places where such Securities are to be surrendered for payment of the Redemption Price; (6) that the redemption is for a sinking fund, if such is the case; (7) in case any Security is to be redeemed in part only, the notice which relates to such Security shall state that on and after the Redemption Date, upon surrender of such Security, the Holder of such Security will receive, without charge, a new Security or Securities of authorized denominations for the principal amount thereof remaining unredeemed; and (8) the CUSIP Number or the Euroclear or the Cedel Bank reference numbers of such Securities, if any (or any other numbers used by a Depository to identify such Securities). Notice of redemption of Securities to be redeemed shall be given by the Company or, on Company Request, by the Trustee at the expense of the Company. Section 1105. Deposit of Redemption Price. On or before any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest on, all the Securities which are to be redeemed on that date. Section 1106. Securities Payable on Redemption Date. Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price) such Securities shall cease to bear interest. Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption Price, together with accrued interest to the Redemption Date; provided, however, that installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Regular or Special Record Dates according to their terms and the provisions of Section 307. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate borne by the Security. Section 1107. Securities Redeemed in Part. Any Security which is to be redeemed only in part shall be surrendered at an office or agency of the Company at a Place of Payment therefor (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or the Holder's attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities of the same series and of like tenor of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered. If a Global Security is so surrendered, the Company shall execute, and the Trustee shall authenticate and deliver to the Depository, without service charge, a new Global Security in a denomination equal to and in exchange for the unredeemed portion of the principal of the Global Security so surrendered. ARTICLE TWELVE Intentionally Left Blank ARTICLE THIRTEEN Defeasance and Covenant Defeasance Section 1301. Applicability of Article; Company's Option to Effect Defeasance or Covenant Defeasance. If pursuant to Section 301 provision is made for either or both of (a) defeasance of the Securities of a series under Section 1302 or (b) covenant defeasance of the Securities of a series under Section 1303 to apply to Securities of any series, then the provisions of such Section or Sections, as the case may be, together with the other provisions of this Article Thirteen, shall be applicable to the Securities of such series, and the Company may at its option, at any time, with respect to the Securities of such series, elect to have either Section 1302 (if applicable) or Section 1303 (if applicable) be applied to the Outstanding Securities of such series upon compliance with the conditions set forth below in this Article Thirteen. Section 1302. Defeasance and Discharge. Upon the Company's exercise of the above option applicable to this Section, the Company shall be deemed to have been discharged from its obligations with respect to the Outstanding Securities of such series on the date the conditions set forth below are satisfied (hereinafter, "defeasance"). For this purpose, such defeasance means that the Company shall be deemed to have paid and discharged the entire indebtedness represented by the Outstanding Securities of such series and to have satisfied all its other obligations under such Securities and this Indenture insofar as such Securities are concerned (and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following which shall survive until otherwise terminated or discharged hereunder: (A) the rights of Holders of Outstanding Securities of such series to receive, solely from the trust fund described in Section 1304 and as more fully set forth in such Section, payments in respect of the principal of (and premium, if any) and interest, if any, on and Additional Amounts, if any, with respect to, such Securities when such payments are due; (B) the Company's obligations with respect to such Securities under Sections 304, 305, 306, 607, 1002, 1003 and 1006 (but only to the extent that any Additional Amounts payable exceed the amount deposited in respect of such Additional Amounts pursuant to Section 1304(1) below); (C) the rights, powers, trusts, duties and immunities and other provisions in respect of the Trustee hereunder; and (D) this Article Thirteen. Subject to compliance with this Article Thirteen, the Company may exercise its option under this Section 1302 notwithstanding the prior exercise of its option under Section 1303 with respect to the Securities of such series. Section 1303. Covenant Defeasance. Upon the Company's exercise of the above option applicable to this Section, the Company shall be released from its obligations under Sections 801, 1005, 501(3) (as to Sections 801 and 1005), 501(5), 501(6) and 501(7) (if Section 501(7) is specified as applicable to the Securities of such series) with respect to the Outstanding Securities of such series on and after the date the conditions set forth below are satisfied (hereinafter, "covenant defeasance"). For this purpose, such covenant defeasance means that, with respect to the Outstanding Securities of such series, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such Section, whether directly or indirectly by reason of any reference elsewhere herein to any such Section or by reason of any reference in any such Section to any other provision herein or in any other document, but the remainder of this Indenture and such Securities shall be unaffected thereby. Following a covenant defeasance, payment of the Securities of such series may not be accelerated because of an Event of Default specified above in this Section 1303. Section 1304. Conditions to Defeasance or Covenant Defeasance. The following shall be the conditions to application of either Section 1302 or Section 1303 to the Outstanding Securities of such series. (1) The Company shall irrevocably have deposited or caused to be deposited with the Trustee (or another trustee satisfying the requirements of Section 609 who shall agree to comply with the provisions of this Article Thirteen applicable to it) as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of such Securities, (A) an amount in Dollars or in such Foreign Currency in which such Securities are then specified as payable at Stated Maturity, or (B) Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide on the due date of any payment, money in an amount, or (C) a combination thereof, sufficient, without reinvestment, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, and which shall be applied by the Trustee (or other qualifying trustee) to pay and discharge, (i) the principal of (and premium, if any, on) and each installment of principal of (and premium, if an) and interest on the Outstanding Securities of such series on the Stated Maturity of such principal or installment of principal or interest and (ii) any mandatory sinking fund payments or analogous payments applicable to the Outstanding Securities of such series on the day on which such payments are due and payable in accordance with the terms of this Indenture and of such Securities. Before such a deposit, the Company may make arrangements satisfactory to the Trustee for the redemption of any series of Securities at a future date in accordance with any redemption provisions contained in the Supplemental Indenture relating to such series, which shall be given effect in applying the foregoing. (2) No Event of Default or event with which notice of lapse of time or both would become an Event of Default with respect to the Securities of such series shall have occurred and be continuing on the date of such deposit and, with respect to defeasance only, at any time during the period ending on the 123rd day after the date of such deposit (it being understood that this condition shall not be deemed satisfied until the expiration of such period). (3) Such defeasance or covenant defeasance shall not cause the Trustee for the Securities of such series to have a conflicting interest for purposes of the Trust Indenture Act with respect to any securities of the Company. (4) Such defeasance or covenant defeasance shall not result in a breach or violation of, or constitute a default under, this Indenture or any other agreement or instrument to which the Company is a party or by which it is bound. (5) Such defeasance or covenant defeasance shall not cause any Securities of such series then listed on any registered national securities exchange under the Securities Exchange Act of 1934, as amended, to be deleted. (6) In the case of an election under Section 1302, the Company shall have delivered to the Trustee an Opinion of Counsel stating that (x) the Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (y) since the date of this Indenture there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Outstanding Securities of such series will not recognize income, gain or loss for federal income tax purposes as a result of such defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance had not occurred. (7) In the case of an election under Section 1303, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders of the Outstanding Securities of such series will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred. (8) Such defeasance or covenant defeasance shall be effected in compliance with any additional terms, conditions or limitations which may be imposed on the Company in connection therewith pursuant to Section 301. (9) The Company shall have delivered to the Trustee an Officer's Certificate or an Opinion of Counsel, stating that all conditions precedent provided for in the Indenture relating to either the defeasance under Section 1302 or the covenant defeasance under Section 1303 (as the case may be) have been complied with. Section 1305. Deposited Money and Government Obligations to be Held in Trust; Other Miscellaneous Provisions. Subject to the provisions of the last paragraph of Section 1003, all money and Government Obligations (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee -- collectively, for purposes of this Section 1305, the "Trustee") pursuant to Section 1304 in respect of the Outstanding Securities of such series shall be held in trust and applied by the Trustee, in accordance with the provisions of such Securities and this Indenture, to the payment, either directly or through any Paying Agent (but not including the Company acting as its own Paying Agent) as the Trustee may determine, to the Holders of such Securities, of all sums due and to become due thereon in respect of principal (and premium, if any) and interest and Additional Amounts, if any, but such money need not be segregated from other funds except to the extent required by law. Unless otherwise specified in or pursuant to this Indenture or any Security, if after a deposit referred in Section 1302 has been made, (a) Holder of a Security in respect of which such deposit was made is entitled to, and does, elect pursuant to Section 301 or the terms of such Security to receive payment in a Currency other than that in which the deposit pursuant to 1302 has been made in respect of such Security, or (b) a Conversion Event occurs in respect of the Foreign Currency in which the deposit pursuant to Section 1302 has been made, the indebtedness represented by such Security shall be deemed to have been, and will be, fully discharged and satisfied through the payment of the principal of (and premium, if any), and interest, if any, on and Additional Amounts, if any, with respect to, such Security as the same becomes due out of the proceeds yielded by converting (from time to time as specified below in the case of any such election) the amount or other property deposited in respect of such Security into the Currency in which such Security becomes payable as a result of such election or Conversion Event based on (x) in the case of payments made pursuant to clause (a) above, the applicable market exchange rate for such Currency in effect on the second Business Day prior to each payment date, or (y) with respect to a Conversion Event, the applicable market exchange rate for such Foreign Currency in effect (as nearly as feasible) at the time of the Conversion Event. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the Government Obligations deposited pursuant to Section 1304 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the Outstanding Securities of such series. Anything in this Article Thirteen to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon Company Request any money or Government Obligations held by it as provided in Section 1304 which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof which would then be required to be deposited to effect an equivalent defeasance or covenant defeasance. ARTICLE FOURTEEN Sinking Funds Section 1401. Applicability of Article. The provisions of this Article shall be applicable to any sinking fund for the retirement of Securities of a series, except as otherwise permitted or required in or pursuant to this Indenture or any Security of such series issued pursuant to this Indenture. The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a "mandatory sinking fund payment," and any payment in excess of such minimum amount provided for by the terms of Securities of such series is herein referred to as an "optional sinking fund payment." If provided for by the terms of Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 1402. Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of Securities of such series and this Indenture. Section 1402. Satisfaction of Sinking Fund Payments with Securities. The Company may (1) deliver Outstanding Securities of a series (other than any of such Securities previously called for redemption) and (2) apply as a credit Securities of such series which have been redeemed either at the election of the Company pursuant to the terms of such series of Securities, or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities, in each case in satisfaction of all or any part of any sinking fund payment required to be made pursuant to the terms of such Securities, as provided by the terms of such Securities, provided that such Securities have not been previously so credited. Such Securities shall be received and credited for such purpose by the Trustee at the Redemption Price specified in such Securities for redemption through operation of the sinking fund and the amount of such required sinking fund payment shall be reduced accordingly. Section 1403. Redemption of Securities for Sinking Fund. Not less than 75 days prior to each sinking fund payment date for any series of Securities, the Company will deliver to the Trustee an Officer's Certificate specifying the amount of the next ensuing mandatory sinking fund payment for such series pursuant to the terms of such series, the portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting Securities of that series pursuant to Section 1402, and the optional amount, if any, to be added in cash to the next ensuing mandatory sinking fund payment, hereof and will also deliver to the Trustee any Securities to be so delivered. Not less than 45 days prior to each such sinking fund payment date, the Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 1103 and cause notice of the redemption thereof to be given the name of and at the expense of the Company in the manner provided in Section 1104. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 1106 and 1107. ARTICLE FIFTEEN Securities in Foreign Currencies Section 1501. Applicability of Article. Whenever this Indenture provides for (i) any action by, or the determination of any of the rights of, Holders of Securities of any series in which not all of such Securities are denominated in the same Currency, or (ii) any distribution to Holders of Securities, in the absence of any provision to the contrary in this Indenture or the Securities, any amount in respect of any Security denominated in a Currency other than Dollars shall be treated for any such action or distribution as that amount of Dollars that could be obtained for such amount on such reasonable basis of exchange and as of the record date with respect to Securities of such series (if any) for such action, determination of rights or distribution (or, if there shall be no applicable record date, such other date reasonably proximate to the date of such action, determination of rights or distribution) as the Company may specify in a written notice to the Trustee or, in the absence of such written notice, as the Trustee may determine. IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed and attested, all as of the day and year first above written. FEDERAL EXPRESS CORPORATION, Issuer Attest: ______________________________ By __________________________ Name: Name: Title: Title: THE FIRST NATIONAL BANK OF CHICAGO, as Trustee Attest: ______________________________ By __________________________ Name: Name: Title: Title: SCHEDULE I FEDERAL EXPRESS CORPORATION AND THE FIRST NATIONAL BANK OF CHICAGO, as Trustee __________________________________________________________________ Supplemental Indenture No. __ Dated as of _____________, ______ __________________________________________________________________ ___% Notes due __________________, ______ SUPPLEMENTAL INDENTURE NO. ___, dated as of __________, _____ between Federal Express Corporation, a Delaware Corporation (the "Company") and The First National Bank of Chicago, a national banking association organized under the laws of the United States of America (herein called the "Trustee") as Trustee (the "Trustee"). RECITALS OF THE COMPANY The Company and the Trustee have executed and delivered an Indenture dated as of July 1, 1996, as amended or supplemented (the "Indenture") to provide for the issuance from time to time of the Company's Securities. Sections 201 and 301 of the Indenture provide that the form and terms of Securities of any series may be established pursuant to an indenture supplemental to the Indenture. All things necessary to make the Securities, when executed by the Company and authenticated and delivered hereunder and under the Indenture and duly issued by the Company and to make this Supplemental Indenture No. ___ a valid agreement of the Company, in accordance with their and its terms, have been done. NOW, THEREFORE, this Indenture witnesseth: For and in consideration of the premises and the purchase of the Securities by the holders hereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of the holders of the Securities of the series hereby established, as follows: ARTICLE ONE Relation to the Indenture; Definitions and Other Provisions of General Application Section 1.01. Relation to the Indenture. This Supplemental Indenture No. ___ constitutes an integral part of the Indenture. Section 1.02. Definitions and Other Provisions of General Application. For all purposes of this Supplemental Indenture No. ___ unless otherwise specified herein: (a) all terms defined in this Indenture which are used and not otherwise defined herein shall have the meanings they are given in the Indenture; and (b) the provisions of general application stated in Section 101 of the Indenture shall apply to this Supplemental Indenture No. __, except that the words "herein," "hereof," "hereto" and "hereunder" and other words of similar import refer to this Supplemental Indenture as a whole and not to the Indenture or any particular Article, Section or other subdivision of the Indenture or this Supplemental Indenture No. ___. ARTICLE TWO The Series of Notes Section 2.01. Title. There shall be a series of Securities designated the "___% Notes due __________, __________" (the "Notes"). Section 2.02. Principal Amount. The aggregate principal amount of the Notes which may be authenticated and delivered under this Supplemental Indenture shall not exceed $__________ (except for Notes which may be authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Notes pursuant to Sections 304, 305, 306, 906 or 1107 of the Indenture). Section 2.03. Maturity. The date on which the principal of the Notes shall be payable shall be __________. Section 2.04. Interest. [The Notes shall bear interest at the rate of [ ]% per annum. Interest shall accrue from __________, _____ or from the most recent Interest Payment Date to which interest has been paid or provided for. Accrued interest shall be payable on _________, _____ and on each _____ and _____ thereafter, to the persons in whose names the Notes are registered at the close of business on the preceding _____ or _____, as the case may be.] [Insert other interest provisions if necessary] Section 2.05. Place of Payment. [The Place of Payment for the Notes shall be at the Corporate Trust office of the Trustee at ____________ or such other office of the Paying Agent as the Paying Agent may reasonably request by notice to the Company and the Trustee (if the Paying Agent is not the Trustee).] Section 2.06. Redemption. [Insert redemption terms] The provisions of Article Thirteen of the Indenture [shall/shall not] apply to the Notes. Section 2.08. Intentionally left blank. Section 2.09. Form of Notes. The Notes shall be in the form of Exhibit A attached hereto. Section 2.10 Currency. [Insert currency terms.] Section 2.11 Sinking Fund. [Insert sinking fund terms.] Section 2.13 Additional Amounts. The provisions of Section 1006 of the Indenture [shall/shall not] apply to the Notes. ARTICLE THREE Miscellaneous Provisions Section 3.01. Supplemental Indenture. The Indenture, as supplemented and amended by this Supplemental Indenture No. __, is in all respects hereby adopted, ratified and confirmed. Section 3.02. Counterparts. This Supplemental Indenture No. __ may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture No. __ to be duly executed, as of the day and year first written above. FEDERAL EXPRESS CORPORATION Attest: _______________________________ By ___________________________ Name: Name: Title: Title: THE FIRST NATIONAL BANK OF CHICAGO Attest: ______________________________ By __________________________ Name: Name: Title: Title: Exhibit A to Indenture REGISTERED No. ____________ PRINCIPAL AMOUNT: $ __________________ CUSIP NO. ____________ FEDERAL EXPRESS CORPORATION ___% Note due __________,____ UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE "DEPOSITORY") (55 WATER STREET, NEW YORK, NEW YORK), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY, AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. UNLESS AND UNTIL THIS NOTE IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE THEREOF OR BY A NOMINEE THEREOF TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR NOMINEE OF SUCH SUCCESSOR DEPOSITORY. FEDERAL EXPRESS CORPORATION, a Delaware Corporation, (the "Company" which term includes any successor Person under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay CEDE & CO. C/O THE DEPOSITORY TRUST COMPANY 55 WATER STREET NEW YORK, NEW YORK 10041 or registered assigns, the principal sum of DOLLARS on ______________________,________ (the "Maturity Date") and to pay interest thereon from ______________,__________ or from the most recent "Interest Payment Date" to which interest has been paid or duly provided for, semi-annually on _______________ and ______________ of each year, commencing ____________,_________, and on the Maturity Date, at the rate of _____% per annum, until the principal hereof is paid or duly provided for. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on the "Regular Record Date" for such interest, which shall be the ____________ or ___________ (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the registered Holder on such Regular Record Date and may either be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee referred to on the reverse hereof, notice of which shall be given to Holders of Notes of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. The Company will at all times appoint and maintain a Paying Agent (which may be the Trustee) authorized by the Company to pay the principal of and interest on any Notes of this series on behalf of the Company and having an office or agency in Chicago, Illinois and in such other cities, if any, as the Company may designate in writing to the Trustee (the "Place of Payment") where Notes of this series may be presented or surrendered for payment and where notices, designations or requests in respect for payments with respect to Notes of this series may be served. The Company has initially appointed The First National Bank of Chicago as such Paying Agent. Interest payments on this Note will be computed and paid on the basis of a 360-day year of twelve 30-day months. Interest payable on this Note on any Interest Payment Date and on the Maturity Date will include interest accrued from and including the most recent Interest Payment Date to which interest has been paid or duly provided for (or from and including _____,___________, if no interest has been paid on this Note) to but excluding such Interest Payment Date or the Maturity Date, as the case may be. If any Interest Payment Date or the Maturity Date falls on a day that is not a Business Day (as defined below), principal or interest payable with respect to such Interest Payment Date or Maturity Date, as the case may be, will be paid on the next succeeding Business Day with the same force and effect as if it were paid on the date such payment was due, and no interest shall accrue on the amount so payable for the period from and after such Interest Payment Date or the Maturity Date, as the case may be. "Business Day" means any day other than Saturday, Sunday or other day on which banking institutions in New York, Illinois or Tennessee are obligated or authorized by law to close. The principal and interest payable on this Note will be made by wire transfer of immediately available funds to the Holder hereof in such currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts. Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the Certificate of Authentication hereon has been executed by the Trustee by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. FEDERAL EXPRESS CORPORATION By:_______________________________ Name: Title: Attest: _______________________________ Name: Title: CERTIFICATE OF AUTHENTICATION This is one of the Notes of the series designated therein referred to in the within-mentioned Indenture. THE FIRST NATIONAL BANK OF CHICAGO, As Trustee By:____________________________ Authorized Signatory Dated:__________________________ FEDERAL EXPRESS CORPORATION ___% Note due ______________,____ This Note is one of a duly authorized issue of securities of the Company (herein called the "Notes"), limited in aggregate principal amount to $________________ (except as otherwise provided in the Indenture), issued and to be issued as one series of debt securities of the Company under an Indenture, dated as of July __, 1996, as amended and supplemented from time to time (the "Indenture"), between the Company and The First National Bank of Chicago, as Trustee (the "Trustee," which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered. In addition to the Notes, the Company is authorized to issue an unlimited amount of debt securities in one or more series (herein collectively with the Notes called the "Debt Securities") under the Indenture. This Note is not redeemable at the option of the Company or at the option of the Holder prior to the Maturity Date [and is not subject to any sinking fund]. In case an Event of Default with respect to the Notes of this series shall occur and be continuing, the principal of the Notes of this series may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture contains provisions for defeasance at any time of (i) the entire indebtedness of this Note or (ii) certain respective covenants and Events of Default with respect to this Note, in each case upon compliance with certain conditions set forth therein, which provisions apply to the Notes. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Debt Securities or each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of a majority in principal amount of each series of Debt Securities to be affected if less than all series are to be affected by such modification or amendment. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Debt Securities of each series at the time Outstanding, on behalf of the Holders of all Debt Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note or Notes issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, places and rate, and in the currency herein prescribed. As provided in the Indenture and subject to certain limitations herein and therein set forth, the transfer of this Note is registerable in the Security Register, upon surrender of this Note for registration of transfer at the office or agency of the Company in the Place of Payment, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar, duly executed by, the Holder hereof or its attorney duly authorized in writing, and thereupon one or more new Notes of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. As provided in the Indenture and subject to certain limitations herein and therein set forth, Notes of this series issued in definitive registered form are exchangeable for the same aggregate principal amount of Notes of this series and of like tenor and authorized denominations, as requested by the Holder surrendering the same. The Notes of this series are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple of $1,000 in excess thereof. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. No recourse under or upon any obligation, covenant or agreement of the Corporation in the Indenture or any indenture supplemental thereto or in any Note, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, officer or director, as such, of the Corporation or of any successor Corporation, either directly or through the Corporation or any successor Corporation, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance hereof and as part of the consideration for the issue hereof. At the option of the Corporation and upon satisfaction of certain conditions specified in the Indenture, either (a) the Corporation shall be deemed to have paid and discharged the entire indebtedness on the Notes or (b) the Corporation need not comply with certain covenants contained in the Indenture, in each case upon the deposit by the Corporation with the Trustee in trust for the Holders of the Notes of an amount of funds or obligations issued or guaranteed by the United States of America sufficient to pay and discharge upon the stated maturity thereof the entire indebtedness evidenced by the Notes, all as provided in the Indenture . This Note shall be governed by and construed in accordance with the laws of the State of Tennessee. All terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture. ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations. TEN COM - as tenants in common TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT ______________ Custodian ______________ (Cust) (Minor) under Uniform Gifts to Minors Act _________________________________ (State) Additional abbreviations may also be used though not in the above list. __________________________________ ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sell(s), assigns(s) and transfer(s) unto ____________________________________________________________________________ ____________________________________________________________________________ PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE _____________________________ /____________________________/ ____________________________________________________________________________ ____________________________________________________________________________ (Please Print or Type Name and Address Including Postal Zip Code of Assignee) ____________________________________________________________________________ the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints ____________________________________________________________________________ ____________________________________________________________________________to transfer said Note on the books of the Company, with full power of substitution in the premises. Dated:_____________________________ Signature Guaranteed _______________________________________ NOTICE: Signature must be guaranteed NOTICE: The signature to this by a member firm of the New York Stock assignment must correspond Exchange or a commercial bank or trust with the name as written upon company. the face of the within Note in every particular, without alteration or enlargement or any change whatever. EX-5.A.1 12 Exhibit 5(a)(1) [Letterhead of Davis Polk & Wardwell] July 3, 1996 Federal Express Corporation 2005 Corporate Avenue Memphis, Tennessee 38132 Ladies and Gentlemen: We have acted as special counsel for Federal Express Corporation, a Delaware corporation (the "Corporation"), in connection with the preparation and filing with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"), of a shelf Registration Statement on Form S-3 (the "Registration Statement"). The Registration Statement relates to up to $1,000,000,000 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 First Security Bank, National Association, as Owner Trustee (the "Owner Trustee"), State Street Bank and Trust Company, 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, and in any subsequently filed prospectus supplements, relating to the Certificates that constitutes part of the Registration Statement. Very truly yours, /s/ DAVIS POLK & WARDWELL EX-5.A.2 13 Exhibit 5(a)(2) [Letterhead of Davis Polk & Wardwell] July 3, 1996 Federal Express Corporation 2005 Corporate Avenue Memphis, Tennessee 38132 Ladies and Gentlemen: We have acted as special counsel for Federal Express Corporation, a Delaware corporation (the "Corporation"), in connection with the preparation and filing with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"), of a shelf Registration Statement on Form S-3 (the "Registration Statement"). The Registration Statement relates to up to $1,000,000,000 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 dated as of June 1, 1996 between the Corporation and State Street Bank and Trust Company, as Pass Through Trustee (the "Pass Through Trustee"), 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 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 constitutes, and each applicable Series Supplement when duly executed and delivered will constitute, valid and binding agreements of each of the parties thereto, and (B) the Pass Through Certificates, when duly authorized, executed, issued, delivered and authenticated by the Pass Through Trustee in accordance with the terms of the Pass Through Agreement and each applicable Series Supplement and sold in accordance with the related purchase agreement or underwriting agreement between the Corporation and the purchasers or underwriters, as the case may be, named therein, will be valid and binding obligations of the Pass Through Trustee and will be entitled to the benefits of the Pass Through Agreement and each applicable Series Supplement. In giving the foregoing opinion we do not purport to be experts on, or to express any opinion herein concerning, any laws other than the laws of the state of New York and the laws of the United States. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the references to our firm under the captions "Legal Matters" and "Federal Income Tax Consequences" in the prospectus, and in any subsequently filed prospectus supplements, relating to the Pass Through Certificates that constitutes part of the Registration Statement. Very truly yours, /s/ DAVIS POLK & WARDWELL EX-5.B 14 Exhibit 5(b) [Letterhead of Bingham, Dana & Gould LLP] July 3, 1996 Federal Express Corporation 2005 Corporate Avenue Memphis, Tennessee 38132 Attention: Chief Financial Officer RE: FEDERAL EXPRESS CORPORATION -- PASS THROUGH CERTIFICATES -- SHELF REGISTRATION Ladies and Gentlemen: We are acting as special counsel to State Street Bank and Trust Company, individually ("SSB"), and as Pass Through Trustee (the "Pass Through Trustee") under the Pass Through Trust Agreement, dated as of June 1, 1996 (the "Agreement"), between Federal Express Corporation (the "Company") and the Pass Through Trustee. Pursuant to the Agreement and one or more supplemental agreements to be entered into from time to time between the Company and the Pass Through Trustee, the Pass Through Trustee will execute, authenticate and deliver, upon the Company's request, Pass Through Certificates in one or more series in an aggregate principal amount of up to $1,000,000,000.00 ("Pass Through Certificates"), to be registered with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "1933 Act"), under the Company's Registration Statement on Form S-3 filed on the date hereof, (the "Registration Statement"). Except as otherwise defined herein, terms used herein shall have the meanings set forth in the Agreement. Our representation of the Pass Through Trustee has been as special counsel for the purposes stated above. As to all matters of fact (including factual conclusions and characterizations and descriptions of purpose, intention or other state of mind), we have relied entirely upon (i) the representations of the parties set forth in the Operative Agreements and (ii) certificates delivered to us by the management of SSB and have assumed, without independent inquiry, the accuracy of those representations and certificates. We have examined the Agreement, the Pass Through Certificates, the Certificate of the Massachusetts Commissioner of Banks as to SSB, and originals, or copies certified or otherwise identified to our satisfaction, of other such records, documents, certificates, or other instruments as we have deemed necessary or advisable for the purposes of this opinion. We have assumed the genuineness of all signatures (other than those on behalf of SSB and the Pass Through Trustee), the conformity to the originals of all documents reviewed by us as copies, the authenticity and completeness of all original documents reviewed by us in original or copy form and the legal competence of each individual executing any document (other than on behalf of SSB and the Pass Through Trustee). Each opinion set forth below relating to the enforceability of any agreement or instrument against the Pass Through Trustee, is subject to the following general qualifications: (i) as to any agreement to which the Pass Through Trustee, as applicable, is a party, we assume that such agreement is the legal, valid and binding obligation of each other party (other than the Pass Through Trustee) thereto; (ii) the enforceability of any obligation of the Pass Through Trustee may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, marshalling and other similar laws and rules of law affecting the enforcement generally of creditors' rights and remedies (including such as may deny giving effect to waivers of debtors' or guarantors' rights); (iii) the enforcement of any rights and the availability of any specific or equitable relief of any kind may in all cases be subject to an implied duty of good faith and to general principles of equity (regardless of whether such enforceability or relief is considered in a proceeding at law or in equity). Subject to the limitation set forth below, we have made such examination of law as we have deemed necessary for the purposes of this opinion. The opinions set forth in paragraphs 1 and 2 below are based on and limited to the Federal laws of the United States and the internal substantive laws of the Commonwealth of Massachusetts and the opinion set forth in paragraph 3 below is based on and limited to the internal substantitive laws of the Commonwealth of Massachusetts. No opinion is expressed herein as to the application or effect of federal securities laws or as to the securities or so-called "Blue Sky" laws of any state or other jurisdiction. In addition, no opinion is expressed as to matters governed by Title 49 of the United States Code, or by any other law, statute, rule or regulation of the United States relating to the acquisition, ownership, registration, use, operation, maintenance, repair, replacement or sale of or the nature of the Aircraft, Airframe or Engines. With your permission, with respect to paragraph 2 below in connection with our opinion relating to the legality, validity and binding effect of the documents there referred to, to the extent that the laws of the Commonwealth of Massachusetts do not govern such documents, we have assumed that the laws of the jurisdictions whose laws govern such documents are not materially different from the internal substantive laws of the Commonwealth of Massachusetts. Based on and subject to the foregoing, we are of the opinion that: 1. State Street Bank is a Massachusetts trust company duly organized and validly existing in good standing with the Massachusetts Commissioner of Banks under the laws of the Commonwealth of Massachusetts with the power and authority to execute, deliver and carry out, individually or as Pass Through Trustee, as the case may be, the terms of the Agreement, the supplements contemplated thereby and the Pass Through Certificates. 2. With respect to the Pass Through Certificates, when (a) supplemental agreements contemplated by the Agreement shall have been prepared in accordance with the terms of the Agreement, (b) the Agreement and such supplemental agreements shall have been duly authorized, executed and delivered by the Company and the Pass Through Trustee in accordance with the terms and conditions of the Agreement, and (c) the Pass Through Certificates shall have been duly executed, authenticated, issued and delivered by the Pass Through Trustee and sold as contemplated by each of the Registration Statement, the Prospectus and the Agreement as so supplemented, assuming that the terms of the Pass Through Certificates are in compliance with then applicable law, (i) the Agreement, as so supplemented will constitute a valid and binding obligation of the Pass Through Trustee enforceable against the Pass Through Trustee in accordance with its terms, and (ii) the Pass Through Certificates will be validly issued and will be entitled to the benefits of the Agreement as so supplemented. 3. The discussion in the prospectus forming part of the Registration Statement entitled "Certain Massachusetts Taxes," insofar as it relates to statements of law or legal conclusions, is correct in all material respects. We hereby consent to the filing of this opinion as an Exhibit to the Registration Statement, and to the reference to us under the captions "Legal Matters" and "Certain Massachusetts Taxes," in the prospectus and in any subsequently filed prospectus supplements. In giving this consent, we do not thereby admit that we are in the category of person whose consent is required under Section 7 of the 1933 Act or the Rules and Regulations of the Securities and Exchange Commission. Very truly yours, /s/ BINGHAM, DANA & GOULD LLP EX-5.C 15 Exhibit 5(c) [Letterhead of Ray, Quinney & Nebeker] July 3, 1996 Federal Express Corporation 2005 Corporate Avenue Memphis, Tennessee 38132 Attention: Chief Financial Officer RE: FEDERAL EXPRESS CORPORATION -- EQUIPMENT TRUST CERTIFICATES -- SHELF REGISTRATION Ladies and Gentlemen: We have acted as counsel to First Security Bank, National Association, a national banking association, in its individual capacity ("First Security") 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 $1,000,000,000 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 First Security and the owner participant named therein (the "Owner Participant"), and one or more Trust Indenture and Security Agreements (individually an "Indenture", collectively the "Indentures") among the Owner Trustee, State Street Bank and Trust Company ("SSB") 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 originals or copies of such other documents, such corporate records, certificates and other statements of governmental officials and corporate officers and other representatives of the corporations or entities referred to herein and such other instruments as we have deemed necessary or appropriate for the purposes of this opinion. The opinions set forth herein are limited to the federal laws of the United States of America governing the banking and trust powers of First Security, the laws of the State of Utah 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 Utah, 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. Based upon the foregoing and upon an examination of such questions of law as we have considered necessary or appropriate, and subject to the assumptions, exceptions and qualifications set forth below, we advise you that, in our opinion: 1. First Security is a national banking association duly organized and validly existing under the laws of the United States of America holding a valid certificate to do business as a national banking association, with banking and trust powers. 2. Upon the execution and delivery by First Security and the Owner Trustee, as the case may be, of each of the Trust Agreements and the Indentures and assuming that at the time of such execution and delivery First Security continues in existence as a national banking association in good standing and has maintained its current full corporate power and authority to enter into and perform the Trust Agreements and the Indentures, each of the Trust Agreements and the Indentures will constitute a legal, valid and binding obligation of the Owner Trustee (and, to the extent set forth in the respective Trust Agreements and Indentures, of First Security) enforceable against the Owner Trustee (and, to the extent set forth in the respective Trust Agreements and Indentures, against First Security) in accordance with its terms subject to (i) applicable bankruptcy, insolvency, moratorium, reorganization, receivership and similar laws affecting the rights and remedies of creditors generally, and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); and assuming each of the Trust Agreements was properly authorized, executed and delivered by the owner participant named therein and that the terms of the Trust Agreements are not in violation of any laws, documents, judgments, regulations or other provisions applicable to the owner participant, each of the Trust Agreements constitutes, under the laws of the State of Utah, a legal, valid and binding obligation of the owner participant enforceable against the owner participant named therein in accordance with its terms subject to (i) applicable bankruptcy, insolvency, moratorium, reorganization, receivership and similar laws affecting the rights and remedies of creditors generally, and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 3. Assuming (i) the due authorization, execution and delivery of each of the Indentures by each of the parties to each such document (other than First Security or the Owner Trustee, as the case may be), (ii) that each such party (other than First Security 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 First Security 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 First Security 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 First Security 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 First Security or the Owner Trustee, as the case may be, the Indentures will constitute valid and binding agreements of First Security or the Owner Trustee, as the case may be, and (b) upon the due execution by the Owner Trustee and the due authentication by SSB 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 and in any subsequently filed prospectus supplements forming part of the Registration Statement. In giving this consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the 1933 Act or the rules and regulations of the Securities and Exchange Commission. Very truly yours, /s/ RAY, QUINNEY & NEBEKER EX-5.D.1 16 Exhibit 5(d)(1) [COMPANY LETTERHEAD] July 3, 1996 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 four prospectuses contained therein (collectively, the "Prospectuses") with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Securities Act"). The Registration Statement relates to: (i) Equipment Trust Certificates, to be issued in one or more series in an aggregate principal amount of up to $1 billion pursuant to one or more Trust Indenture and Security Agreements (the "Indentures") to be entered into among the Company, State Street Bank and Trust Company, as Indenture Trustee, and First Security Bank, National Association, a national banking association, as Owner Trustee; (ii) Pass Through Certificates, to be issued in one or more series in an aggregate amount of up to $1 billion pursuant to a Pass Through Trust Agreement (the "Pass Through Agreement") dated as of June 1, 1996 between the Company and State Street Bank and Trust Company, as Pass Through Trustee; (iii) Debt Securities, to be issued in one or more series in an aggregate principal amount of up to $1 billion pursuant to a Trust Indenture to be entered into between the Company and The First National Bank of Chicago, as Trustee; or (iv) Preferred Stock and Common Stock of the Company, to be issued in an aggregate amount of up to $1 billion. 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 Pass Through Agreement and the forms of Indentures filed with the Securities and Exchange Commission. Based upon the foregoing, it is my opinion that: 1. The Company is a corporation duly organized and validly existing in good standing under the laws of the State of Delaware and is duly authorized to carry on the business in which it is engaged. 2. The execution and delivery by the Company of each Indenture and the Pass Through Agreement has been duly authorized by the Company. I am qualified to practice law in the State of Tennessee and I do not purport to be an expert on, or to express any opinion herein concerning, any laws other than the laws of the State of Tennessee, the corporate laws of the State of Delaware and the federal laws of the United States. I hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to me under the heading "Legal Matters" in the Prospectuses and in any subsequently filed Prospectus Supplements. In giving such consent, I do not admit that I am in the category of persons whose consent is required under Section 7 of the Securities Act. Sincerely, FEDERAL EXPRESS CORPORATION /s/ GEORGE W. HEARN ----------------------------- George W. Hearn Vice President - Law EX-5.D.2 17 Exhibit 5(d)(2) [COMPANY LETTERHEAD] July 3, 1996 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 four prospectuses contained therein (collectively, the "Prospectuses") with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Securities Act"). The Registration Statement relates to: (i) Equipment Trust Certificates, to be issued in one or more series in an aggregate principal amount of up to $1 billion pursuant to one or more Trust Indenture and Security Agreements to be entered into among the Company, State Street Bank and Trust Company, as Indenture Trustee, and First Security Bank, National Association, a national banking association, as Owner Trustee; (ii) Pass Through Certificates, to be issued in one or more series in an aggregate amount of up to $1 billion pursuant to a Pass Through Trust Agreement dated as of June 1, 1996 between the Company and State Street Bank and Trust Company, as Pass Through Trustee; (iii) Debt Securities, to be issued in one or more series in an aggregate principal amount of up to $1 billion pursuant to a Trust Indenture (the "Trust Indenture") to be entered into between the Company and The First National Bank of Chicago, as Trustee; or (iv) Preferred Stock and Common Stock of the Company, to be issued in an aggregate amount of up to $1 billion (collectively referred to herein as the "Shares"). In connection with the opinions expressed below, I or attorneys under my supervision have examined originals, or copies certified to my satisfaction, of such agreements, documents, certificates and statements of government officials and other papers as we have deemed necessary or advisable as a basis for such opinions. In such examination we have assumed the genuineness of all signatures and the authenticity of all documents submitted to us as originals, and the conformity with the originals of all documents submitted to us as copies. I or attorneys under my supervision have also examined the form of Trust Indenture filed with the Securities and Exchange Commission. Based upon the foregoing, it is my opinion that: 1. The Company is a corporation duly organized and validly existing in good standing under the laws of the State of Delaware and is duly authorized to carry on the business in which it is engaged. 2. The execution and delivery by the Company of the Trust Indenture has been duly authorized by the Company. 3. Subject to (i) the determination of the terms of the Debt Securities in accordance with the Trust Indenture, (ii) the issuance, sale, authentication and delivery of the Debt Securities as contemplated by the Trust Indenture and the underwriting agreement for debt securities in substantially the form filed as Exhibit 1(c) to the Registration Statement, and (iii) the Registration Statement being declared effective, the Debt Securities, when issued and sold, will be legally issued and the valid and binding obligations of the Company enforceable in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principals relating to or limiting creditors rights generally. 4. The Shares will be legally issued, fully paid and nonassessable when issued and sold and paid for on the terms contemplated by the underwriting agreements for Preferred Stock and Common Stock in substantially the forms filed as Exhibits 1(d) and 1(e), respectively, to the Registration Statement. I do not find it necessary for purposes of this opinion and, accordingly, do not purport to cover herein the application of the "Blue Sky" or securities laws of the various states to the sales of the Debt Securities or the Shares. 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 EX-23.E 18 Exhibit 23(e) Consent of Independent Public Accountants As independent public accountants, we hereby consent to the incorporation by reference in this Form S-3 registration statement of our reports dated June 29, 1995, included (or incorporated by reference) in Federal Express Corporation's Form 10-K for the year ended May 31, 1995, and to all references to our firm included in this registration statement. /s/ ARTHUR ANDERSEN LLP -------------------------- Arthur Andersen LLP Memphis, Tennessee July 1, 1996 EX-24 19 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, Alan B. Graf, Jr. and James S. Hudson, 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, pass through certificates, debt securities, preferred stock and common stock in an aggregate amount up to $1 billion and any and all amendments to such Registration Statement whether filed prior or subsequent to the time such Registration Statement becomes effective, including amendments to the Registration Statement for the same offering that are to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended; 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 18 day of June, 1996. /s/ ROBERT H. ALLEN ------------------- Robert H. Allen STATE OF TEXAS COUNTY OF HARRIS I, Earlene L. 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, Alan B. Graf, Jr. and James S. Hudson, 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, pass through certificates, debt securities, preferred stock and common stock in an aggregate amount up to $1 billion and any and all amendments to such Registration Statement whether filed prior or subsequent to the time such Registration Statement becomes effective, including amendments to the Registration Statement for the same offering that are to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended; 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 18 day of June, 1996. /s/ HOWARD H. BAKER, JR. ----------------------- Howard H. Baker, Jr. STATE OF TENNESSEE COUNTY OF SCOTT I, Betty B. Lowe, 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/ BETTY B. LOWE ----------------- NOTARY PUBLIC My Commission Expires: August 27, 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, Alan B. Graf, Jr. and James S. Hudson, 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, pass through certificates, debt securities, preferred stock and common stock in an aggregate amount up to $1 billion and any and all amendments to such Registration Statement whether filed prior or subsequent to the time such Registration Statement becomes effective, including amendments to the Registration Statement for the same offering that are to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended; 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 June, 1996. /s/ ANTHONY J.A. BRYAN ----------------------- Anthony J.A. Bryan STATE OF Rhode Island COUNTY OF Washington I, Jennifer E. Adams, 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/ JENNIFER E. ADAMS ---------------------- NOTARY PUBLIC My Commission Expires: 6/18/97 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, Alan B. Graf, Jr. and James S. Hudson, 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, pass through certificates, debt securities, preferred stock and common stock in an aggregate amount up to $1 billion and any and all amendments to such Registration Statement whether filed prior or subsequent to the time such Registration Statement becomes effective, including amendments to the Registration Statement for the same offering that are to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended; 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 18th day of June, 1996. /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: April 29, 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, Alan B. Graf, Jr. and James S. Hudson, 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, pass through certificates, debt securities, preferred stock and common stock in an aggregate amount up to $1 billion and any and all amendments to such Registration Statement whether filed prior or subsequent to the time such Registration Statement becomes effective, including amendments to the Registration Statement for the same offering that are to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended; 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 18th day of June, 1996. /s/ RALPH D. DE NUNZIO ---------------------- Ralph D. DeNunzio STATE OF NEW YORK COUNTY OF NEW YORK I, Pauline E. 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: February 28, 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, Alan B. Graf, Jr. and James S. Hudson, 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, pass through certificates, debt securities, preferred stock and common stock in an aggregate amount up to $1 billion and any and all amendments to such Registration Statement whether filed prior or subsequent to the time such Registration Statement becomes effective, including amendments to the Registration Statement for the same offering that are to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended; 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 ____ day of ____________, 1996. ____________________________ Judith L. Estrin STATE OF ________________ COUNTY OF ______________ I, _____________________, 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. ____________________________ NOTARY PUBLIC My Commission Expires: __________________________ 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, Alan B. Graf, Jr. and James S. Hudson, 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, pass through certificates, debt securities, preferred stock and common stock in an aggregate amount up to $1 billion and any and all amendments to such Registration Statement whether filed prior or subsequent to the time such Registration Statement becomes effective, including amendments to the Registration Statement for the same offering that are to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended; 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 18th day of June, 1996. /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: May 31, 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, Alan B. Graf, Jr. and James S. Hudson, 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, pass through certificates, debt securities, preferred stock and common stock in an aggregate amount up to $1 billion and any and all amendments to such Registration Statement whether filed prior or subsequent to the time such Registration Statement becomes effective, including amendments to the Registration Statement for the same offering that are to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended; 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 18th day of June, 1996. /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: June 12, 2000 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, Alan B. Graf, Jr. and James S. Hudson, 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, pass through certificates, debt securities, preferred stock and common stock in an aggregate amount up to $1 billion and any and all amendments to such Registration Statement whether filed prior or subsequent to the time such Registration Statement becomes effective, including amendments to the Registration Statement for the same offering that are to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended; 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 ___ day of __________, 1996. ____________________________ Charles T. Manatt STATE OF ________________ COUNTY OF ______________ I, ____________________, 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. ____________________________ NOTARY PUBLIC My Commission Expires: __________________________ 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, Alan B. Graf, Jr., and James S. Hudson, 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, pass through certificates, debt securities, preferred stock and common stock in an aggregate amount up to $1 billion and any and all amendments to such Registration Statement whether filed prior or subsequent to the time such Registration Statement becomes effective, including amendments to the Registration Statement for the same offering that are to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended; 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 24th day of June, 1996. /s/ GEORGE J. MITCHELL ----------------------- George J. Mitchell STATE OF CALIFORNIA COUNTY OF LOS ANGELES I, Nancy H. Eng, a Notary Public in and for the aforesaid State and County, do hereby certify that George J. Mitchell 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 H. ENG ----------------- NOTARY PUBLIC My Commission Expires: January 20, 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, Alan B. Graf, Jr. and James S. Hudson, 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, pass through certificates, debt securities, preferred stock and common stock in an aggregate amount up to $1 billion and any and all amendments to such Registration Statement whether filed prior or subsequent to the time such Registration Statement becomes effective, including amendments to the Registration Statement for the same offering that are to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended; 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 18th day of June,1996. /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: February 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, Alan B. Graf, Jr. and James S. Hudson, 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, pass through certificates, debt securities, preferred stock and common stock in an aggregate amount up to $1 billion and any and all amendments to such Registration Statement whether filed prior or subsequent to the time such Registration Statement becomes effective, including amendments to the Registration Statement for the same offering that are to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended; 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 18th day of June, 1996. /s/ JOSHUA I. SMITH ------------------- Joshua I. Smith STATE OF MARYLAND COUNTY OF ANNE ARUNDEL I, Gaye P. Cotton, 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/ GAYE P. COTTON ------------------ NOTARY PUBLIC My Commission Expires: April 24, 1999 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, Alan B. Graf, Jr. and James S. Hudson, 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, pass through certificates, debt securities, preferred stock and common stock in an aggregate amount up to $1 billion and any and all amendments to such Registration Statement whether filed prior or subsequent to the time such Registration Statement becomes effective, including amendments to the Registration Statement for the same offering that are to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended; 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 18th day of June, 1996. /s/ PETER S. WILLMOTT --------------------- Peter S. Willmott STATE OF ILLINOIS COUNTY OF COOK I, Joan L. Noble, 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/ JOAN L. NOBLE ----------------- NOTARY PUBLIC My Commission Expires: March 5, 1999 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 Alan B. Graf, Jr. and James S. Hudson, 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, pass through certificates, debt securities, preferred stock and common stock in an aggregate amount up to $1 billion and any and all amendments to such Registration Statement whether filed prior or subsequent to the time such Registration Statement becomes effective, including amendments to the Registration Statement for the same offering that are to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended; 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 20th day of June, 1996. /s/ FREDERICK W. SMITH ---------------------- Frederick W. Smith STATE OF TENNESSEE COUNTY OF SHELBY I, June Y. Fitzgerald, 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/ JUNE Y. FITZGERALD ---------------------- NOTARY PUBLIC My Commission Expires: January 26, 1999 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned, the principal financial officer of FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Corporation"), does hereby constitute and appoint Frederick W. Smith and James S. Hudson, 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, pass through certificates, debt securities, preferred stock and common stock in an aggregate amount up to $1 billion and any and all amendments to such Registration Statement whether filed prior or subsequent to the time such Registration Statement becomes effective, including amendments to the Registration Statement for the same offering that are to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended; 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 18th day of June, 1996. /s/ ALAN B. GRAF, JR. --------------------- Alan B. Graf, Jr. STATE OF TENNESSEE COUNTY OF SHELBY I, Edna M. Kennon, 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/ EDNA M. KENNON ------------------ NOTARY PUBLIC My Commission Expires: September 14, 1999 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 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 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, pass through certificates, debt securities, preferred stock and common stock in an aggregate amount up to $1 billion and any and all amendments to such Registration Statement whether filed prior or subsequent to the time such Registration Statement becomes effective, including amendments to the Registration Statement for the same offering that are to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended; 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 18th day of June, 1996. /s/ JAMES S. HUDSON ------------------- James S. Hudson STATE OF TENNESSEE COUNTY OF SHELBY I, Delores Wolfmeyer, a Notary Public in and for the aforesaid State and County, do hereby certify that James S. Hudson, 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 M. WOLFMEYER ------------------------ NOTARY PUBLIC My Commission Expires: December 1, 1996 EX-25.A 20 Exhibit 25(a) ============================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________ STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE Check if an Application to Determine Eligibility of a Trustee Pursuant to Section 305(b)(2) __ STATE STREET BANK AND TRUST COMPANY (Exact name of trustee as specified in its charter) Massachusetts 04-1867445 (Jurisdiction of incorporation or (I.R.S. Employer organization if not a U.S. national bank) Identification No.) 225 Franklin Street, Boston, Massachusetts 02110 (Address of principal executive offices) (Zip Code) John R. Towers, Esq. Senior Vice President and Corporate Secretary 225 Franklin Street, Boston, Massachusetts 02110 (617)654-3253 (Name, address and telephone number of agent for service) _____________________ Federal Express Corporation (Exact name of obligor as specified in its charter) Delaware 71-0427007 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2005 Corporate Avenue Memphis, Tennessee 38132 (901) 369-3600 (Address of principal executive offices) (Zip Code) ____________________ Equipment Trust Certificates; Pass Through Certificates (Title of indenture securities) ============================================================================== GENERAL Item 1. General Information. ------------------- Furnish the following information as to the trustee: (a) Name and address of each examining or supervisory authority to which it is subject. Department of Banking and Insurance of The Commonwealth of Massachusetts, 100 Cambridge Street, Boston, Massachusetts. Board of Governors of the Federal Reserve System, Washington, D.C., Federal Deposit Insurance Corporation, Washington, D.C. Item 2. Affiliations with Obligor. ------------------------- If the Obligor is an affiliate of the trustee, describe each such affiliation. The obligor is not an affiliate of the trustee or of its parent, State Street Boston Corporation. (See note on page 6.) Item 3. through Item 15. Not applicable. Item 16. List of Exhibits. ---------------- List below all exhibits filed as part of this statement of eligibility. 1. A copy of the articles of association of the trustee as now in effect. A copy of the Articles of Association of the trustee, as now in effect, is on file with the Securities and Exchange Commission as Exhibit 1 to Amendment No. 1 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Morse Shoe, Inc. (File No. 22-17940) and is incorporated herein by reference thereto. 2. A copy of the certificate of authority of the trustee to commence business, if not contained in the articles of association. A copy of a Statement from the Commissioner of Banks of Massachusetts that no certificate of authority for the trustee to commence business was necessary or issued is on file with the Securities and Exchange Commission as Exhibit 2 to Amendment No. 1 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Morse Shoe, Inc. (File No. 22-17940) and is incorporated herein by reference thereto. 3. A copy of the authorization of the trustee to exercise corporate trust powers, if such authorization is not contained in the documents specified in paragraph (1) or (2), above. A copy of the authorization of the trustee to exercise corporate trust powers is on file with the Securities and Exchange Commission as Exhibit 3 to Amendment No. 1 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Morse Shoe, Inc. (File No. 22-17940) and is incorporated herein by reference thereto. 4. A copy of the existing by-laws of the trustee, or instruments corresponding thereto. A copy of the by-laws of the trustee, as now in effect, is on file with the Securities and Exchange Commission as Exhibit 4 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Eastern Edison Company (File No. 33-37823) and is incorporated herein by reference thereto. 5. A copy of each indenture referred to in Item 4. if the obligor is in default. Not applicable. 6. The consents of United States institutional trustees required by Section 321(b) of the Act. The consent of the trustee required by Section 321(b) of the Act is annexed hereto as Exhibit 6 and made a part hereof. 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. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority is annexed hereto as Exhibit 7 and made a part hereof. NOTES In answering any item of this Statement of Eligibility and Qualification which relates to matters peculiarly within the knowledge of the obligor or any underwriter for the obligor, the trustee has relied upon information furnished to it by the obligor and the underwriters, and the trustee disclaims responsibility for the accuracy or completeness of such information. The answer furnished to Item 2. of this statement will be amended, if necessary, to reflect any facts which differ from those stated and which would have been required to be stated if known at the date hereof. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, State Street Bank and Trust Company, a corporation organized and existing under the laws of The Commonwealth of Massachusetts, 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 Boston and The Commonwealth of Massachusetts, on the 17th day of June, 1996. STATE STREET BANK AND TRUST COMPANY By: /s/ E. Decker Adams ----------------------------------- E. Decker Adams Vice President EXHIBIT 6 CONSENT OF THE TRUSTEE Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of 1939, as amended, in connection with the proposed issuance by Federal Express Corporation, of its Equipment Trust Certificates; Pass Through Certificates, we hereby consent that reports of examination by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. STATE STREET BANK AND TRUST COMPANY By: /s/ E. Decker Adams -------------------------------- E. Decker Adams Vice President Dated: June 17, 1996 EXHIBIT 7 Consolidated Report of Condition of State Street Bank and Trust Company of Boston, Massachusetts and foreign and domestic subsidiaries, a state banking institution organized and operating under the banking laws of this commonwealth and a member of the Federal Reserve System, at the close of business December 31, 1995, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act and in accordance with a call made by the Commissioner of Banks under General Laws, Chapter 172, Section 22(a). Thousands of ASSETS Dollars - ------ ------------ Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin ......... 1,331,827 Interest-bearing balances .................................. 5,971,326 Securities ................................................... 6,325,054 Federal funds sold and securities purchased under agreements to resell in domestic offices of the bank and its Edge subsidiary ........................ 5,436,994 Loans and lease financing receivables: Loans and leases, net of unearned income ........ 4,308,339 Allowance for loan and lease losses ............. 63,491 Loans and leases, net of unearned income and allowances .... 4,244,848 Assets held in trading accounts .............................. 1,042,846 Premises and fixed assets .................................... 374,362 Other real estate owned ...................................... 3,223 Investments in unconsolidated subsidiaries ................... 31,624 Customers' liability to this bank on acceptances outstanding . 57,472 Intangible assets ............................................ 68,384 Other assets.................................................. 670,058 Total assets ................................................. 25,558,018 =========== LIABILITIES Deposits: In domestic offices ....................................... 6,880,231 Noninterest-bearing ........................ 4,728,115 Interest-bearing ....................................... 2,152,116 In foreign offices and Edge subsidiary .................... 9,607,427 Noninterest-bearing ........................ 28,265 Interest-bearing ........................... 9,579,162 Federal funds purchased and securities sold under agreements to repurchase in domestic offices of the bank and of its Edge subsidiary .................... 5,913,969 Demand notes issued to the U.S. Treasury and Trading Liabilities ............................................... 530,406 Other borrowed money ........................................ 493,191 Bank's liability on acceptances executed and outstanding .... 57,387 Other liabilities ........................................... 620,287 Total liabilities ........................................... 24,102,898 EQUITY CAPITAL Common stock ................................................ 29,176 Surplus ..................................................... 228,448 Undivided profits ........................................... 1,197,496 Total equity capital ........................................ 1,455,120 Total liabilities and equity capital ........................ 25,558,018 =========== I, Rex S. Schuette, Senior Vice President and Comptroller of the above named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Rex S. Schuette We, the undersigned directors, attest to the correctness of this Report of Condition and 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 issued by the Board of Governors of the Federal Reserve System and is true and correct. David A. Spina Marshall N. Carter Charles F. Kaye 5. A copy of each indenture referred to in Item 4. if the obligor is in default. Not applicable. 6. The consents of United States institutional trustees required by Section 321(b) of the Act. The consent of the trustee required by Section 321(b) of the Act is annexed hereto as Exhibit 6 and made a part hereof. 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. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority is annexed hereto as Exhibit 7 and made a part hereof. NOTES In answering any item of this Statement of Eligibility and Qualification which relates to matters peculiarly within the knowledge of the obligor or any underwriter of the obligor, the trustee has relied upon the information furnished to it by the obligor and the underwriters, and the trustee disclaims responsibility for the accuracy or completeness of such information. The answer to Item 2. of this statement will be amended, if necessary, to reflect any facts which differ from those stated and which would have been required to be stated if known at the date hereof. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, State Street Bank and Trust Company, a corporation duly organized and existing under the laws of The Commonwealth of Massachusetts, 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 Boston and The Commonwealth of Massachusetts, on the 17th day of June, 1996. STATE STREET BANK AND TRUST COMPANY By: /s/ E. Decker Adams ------------------------------- E. Decker Adams Vice President EXHIBIT 6 CONSENT OF THE TRUSTEE Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of 1939, as amended, in connection with the proposed issuance by Federal Express Corporation of its Equipment Trust Certificates; Pass Through Certificates, we hereby consent that reports of examination by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. STATE STREET BANK AND TRUST COMPANY By: /s/ E. Decker Adams --------------------------------- E. Decker Adams Vice President Dated: June 17, 1996 EX-25.B 21 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)____ _______________________ THE FIRST NATIONAL BANK OF CHICAGO (Exact name of trustee as specified in its charter) A National Banking Association 36-0899825 (I.R.S. employer identification number) One First National Plaza, Chicago, Illinois 60670-0126 (Address of principal executive offices) (Zip Code) The First National Bank of Chicago One First National Plaza, Suite 0286 Chicago, Illinois 60670-0286 Attn: Lynn A. Goldstein, Law Department (312) 732-6919 (Name, address and telephone number of agent for service) _______________________ FEDERAL EXPRESS CORPORATION (Exact name of obligor as specified in its charter) Delaware 71-0427007 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification number) 2005 Corporate Avenue Memphis, Tennessee 38132 (Address of principal executive offices) (Zip Code) Debt Securities (Title of Indenture Securities) Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. Comptroller of Currency, Washington, D.C., Federal Deposit Insurance Corporation, Washington, D.C., The Board of Governors of the Federal Reserve System, Washington D.C. (b) Whether it is authorized to exercise corporate trust powers. The trustee is authorized to exercise corporate trust powers. Item 2. Affiliations With the Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. No such affiliation exists with the trustee. Item 16. List of exhibits. List below all exhibits filed as a part of this Statement of Eligibility. 1. A copy of the articles of association of the trustee now in effect.* 2. A copy of the certificates of authority of the trustee to commence business.* 3. A copy of the authorization of the trustee to exercise corporate trust powers.* 4. A copy of the existing by-laws of the trustee.* 5. Not Applicable. 6. The consent of the trustee required by Section 321(b) of the Act. 7. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. 8. Not Applicable. 9. Not Applicable. Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, The First National Bank of Chicago, a national banking association organized and existing under the laws of the United States of America, has duly caused this Statement of Eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Chicago and State of Illinois, on the 24th day of June, 1996. The First National Bank of Chicago, Trustee, By /s/ JOHN R. PRENDIVILLE --------------------------------- John R. Prendiville Vice President *Exhibits 1, 2, 3 and 4 are herein incorporated by reference to Exhibits bearing identical numbers in Item 12 of the Form T-1 of The First National Bank of Chicago, filed as Exhibit 26 to the Registration Statement on Form S-3 of The CIT Group Holdings, Inc. filed with the Securities and Exchange Commission on February 16, 1993 (Registration No. 33-58418). EXHIBIT 6 THE CONSENT OF THE TRUSTEE REQUIRED BY SECTION 321(b) OF THE ACT June 24, 1996 Securities and Exchange Commission Washington, D.C. 20549 Gentlemen: In connection with the qualification of an indenture between Federal Express Corporation and The First National Bank of Chicago, the undersigned, in accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby consents that the reports of examinations of the undersigned, made by Federal or State authorities authorized to make such examinations, may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor. Very truly yours, The First National Bank of Chicago By /s/ JOHN R. PRENDIVILLE --------------------------------- John R. Prendiville Vice President EXHIBIT 7 Legal Title of Bank: The First National Bank Call Date: 03/31/96 of Chicago ST-BK: 17-1630 FFIEC 031 Address: One First National Plaza, Page RC-1 Suite 0460 City, State Zip: Chicago, IL 60670-0460 FDIC Certificate No.: 0/3/6/1/8 Consolidated Report of Condition for Insured Commercial and State-Chartered Savings Banks for March 31, 1996 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding of the last business day of the quarter. Schedule RC--Balance Sheet
Dollar Amounts C400 Thousands RCFD BIL MIL THOU <- -------------- ---- --- --- ---- ---- ASSETS 1. Cash and balances due from depository institutions (from Schedule RC-A): a. Noninterest-bearing balances and currency and coin(1)............. 0081 3,047,140 1.a. b. Interest-bearing balances(2)..... 0071 8,488,390 1.b. 2. Securities a. Held-to-maturity securities (from Schedule RC-B, column A)... 1754 0 2.a. b. Available-for-sale securities (from Schedule RC-B, column D)..... 1773 997,155 2.b. 3. Federal funds sold and securities purchased under agreements to resell in domestic offices of the bank and its Edge and Agreement subsidiaries, and in IBFs: a. Federal Funds sold................ 0276 3,384,301 3.a. b. Securities purchased under agreements to resell.............. 0277 685,531 3.b. 4. Loans and lease financing receivables: a. Loans and leases, net of unearned income (from Schedule RC-C)....... RCFD 2122 16,884,488 4.a. b. LESS: Allowance for loan and lease losses...................... RCFD 3123 358,448 4.b. c. LESS: Allocated transfer risk reserve RCFD 3128 0 4.c. d. Loans and leases, net of unearned income, allowance, and reserve (item 4.a minus 4.b and 4.c) 2125 16,526,040 4.d. 5. Assets held in trading accounts...... 3545 10,974,841 5. 6. Premises and fixed assets (including capitalized leases).................. 2145 592,581 6. 7. Other real estate owned (from Schedule RC-M)....................... 2150 9,952 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M)....... 2130 42,098 8. 9. Customers' liability to this bank on acceptances outstanding.............. 2155 564,435 9. 10.Intangible assets (from Schedule RC-M) 2143 96,463 10. 11.Other assets (from Schedule RC-F).... 2160 1,703,124 11. 12.Total assets (sum of items 1 through 11) 2170 47,112,051 12. - ----------------- (1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held in trading accounts.
Legal Title of Bank: The First National Bank Call Date: 03/31/96 of Chicago ST-BK: 17-1630 FFIEC 031 Address: One First National Plaza, Page RC-2 Suite 0460 City, State Zip: Chicago, IL 60670-0460 FDIC Certificate No.: 0/3/6/1/8 Consolidated Report of Condition for Insured Commercial and State-Chartered Savings Banks for March 31, 1996 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding of the last business day of the quarter. Schedule RC--Balance Sheet
Dollar Amounts C400 Thousands RCFD BIL MIL THOU <- -------------- ---- --- --- ---- ---- LIABILITIES 13. Deposits: a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part 1) RCON 2200 14,251,874 13.a. (1) Noninterest-bearing(1)....... RCON 6631 5,707,786 13.a.(1) (2) Interest-bearing............. RCON 6636 8,544,088 13.a.(2) b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, part II)....................... RCFN 2200 12,839,836 13.b. (1) Noninterest bearing........ RCFN 6631 196,311 13.b.(1) (2) Interest-bearing........... RCFN 6636 12,643,525 13.b.(2) 14. 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: a. Federal funds purchased.......... RCFD 0278 2,692,008 14.a. b. Securities sold under agreements to repurchase.................... RCFD 0279 1,165,032 14.b. 15. a. Demand notes issued to the U.S. Treasury.................... RCON 2840 77,000 15.a. b. Trading Liabilities.............. RCFD 3548 7,103,300 15.b. 16. Other borrowed money: a. With original maturity of one year or less..................... RCFD 2332 2,223,560 16.a. b. With original maturity of more than one year.................... RCFD 2333 144,665 16.b. 17. Mortgage indebtedness and obligations under capitalized leases............ RCFD 2910 283,041 17. 18. Bank's liability on acceptance executed and outstanding............ RCFD 2920 564,435 18. 19. Subordinated notes and debentures... RCFD 3200 1,275,000 19. 20. Other liabilities (from Schedule RC-G) RCFD 2930 1,411,087 20. 21. Total liabilities (sum of items 13 through 20)......................... RCFD 2948 44,030,838 21. 22. Limited-Life preferred stock and related surplus..................... RCFD 3282 0 22. EQUITY CAPITAL 23. Perpetual preferred stock and related surplus..................... RCFD 3838 0 23. 24. Common stock........................ RCFD 3230 200,858 24. 25. Surplus (exclude all surplus related to preferred stock)................. RCFD 3839 2,320,326 25. 26. a. Undivided profits and capital reserves......................... RCFD 3632 559,707 26.a. b. Net unrealized holding gains (losses) on available-for-sale securities....................... RCFD 8434 730 26.b. 27. Cumulative foreign currency translation adjustments............. RCFD 3284 (408) 27. 28. Total equity capital (sum of items 23 through 27)...................... RCFD 3210 3,081,213 28. 29. Total liabilities, limited-life preferred stock, and equity capital (sum of items 21, 22, and 28)....... RCFD 3300 47,112,051 29.
Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the statement below that best describes the most comprehensive level of auditing Number work performed for the bank by independent ------------- external auditors as of any date during 1993........ | RCFD 6724 2| M.1. ------------- 1 = Independent audit of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the bank 2 = Independent audit of the bank's parent holding company conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the consolidated holding company (but not on the bank separately) 3 = Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority) 4. = Directors' examination of the bank performed by other external auditors (may be required by state chartering authority) 5 = Review of the bank's financial statements by external auditors 6 = Compilation of the bank's financial statements by external mauditors 7 =Other audit procedures (excluding tax preparation work) 8 =No external audit work - ------------ (1) Includes total demand deposits and noninterest-bearing time and savings deposits. -----END PRIVACY-ENHANCED MESSAGE-----