-----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, MiDLc06H+QB6AdIQRRfNRdlJ/leyXK0pQUgDvS2oBlpy18azBLVyb8AFhg3l1YlQ 1YsdQ2DfYIqkm+u72jgI+g== 0000950103-97-000258.txt : 19970423 0000950103-97-000258.hdr.sgml : 19970423 ACCESSION NUMBER: 0000950103-97-000258 CONFORMED SUBMISSION TYPE: POS AM PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19970422 SROS: NONE 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: POS AM SEC ACT: 1933 Act SEC FILE NUMBER: 333-07691 FILM NUMBER: 97584695 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 POS AM 1 As filed with the Securities and Exchange Commission on April 22, 1997 Registration No. 333-07691 ============================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 POST-EFFECTIVE AMENDMENT NO. 1 TO 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 Identification No.) incorporation or organization) 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] 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. [ ] 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 APRIL 22, 1997 PROSPECTUS FEDEX LOGO EQUIPMENT TRUST CERTIFICATES _____________________ Up to $813,872,000 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 April , 1997. 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, 1996 filed August 9, 1996. 2. The Corporation's Quarterly Reports on Form 10-Q for the fiscal quarters ended August 31, 1996, November 30, 1996 and February 28, 1997 filed October 10, 1996, January 14, 1997 and April 11, 1997, respectively. 3. The Corporation's Current Reports on Form 8-K dated June 5, 1996, June 7, 1996, August 16, 1996, October 17, 1996 and March 4, 1997 filed June 10, 1996, June 21, 1996, August 28, 1996, October 22, 1996 and April 21, 1997, 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: Rebecca M. Halvorson, Managing Director -- Investor Relations, Federal Express Corporation, by mail at Box 727, Memphis, Tennessee 38194-1854 or by telephone at (901) 395-5038. 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 February February Year Ended May 31 29 28 -------------------------------- ------------------ 1992 1993 1994 1995 1996 1996 1997 ---- ---- ---- ---- ---- ---- ---- Ratio of Earnings to Fixed Charges (a) (b) 1.4x 1.7x 2.0x 1.9x 1.8x 1.9x - ---------- (a) Earnings included in the calculation of the ratio of earnings to fixed charges represent income before income taxes plus fixed charges (other than capitalized interest). Fixed charges include interest expense, capitalized interest, amortization of debt issuance costs and a portion of rent expense representative of interest. (b) Earnings were inadequate to cover fixed charges by $173.4 million for the year ended May 31, 1992. USE OF PROCEEDS The proceeds from the sale of the equipment trust certificates (the "Certificates") of each series (a "Series") offered pursuant to this Prospectus and a related Prospectus Supplement will be used to finance or refinance the debt portion and, in certain cases, to refinance some of the equity portion of a separate leveraged lease transaction entered into by the Corporation, as lessee, with respect to an aircraft (an "Aircraft") specified in such Prospectus Supplement. For each Aircraft, unless otherwise specified in the applicable Prospectus Supplement, the debt portion financed or refinanced will not exceed 80% of the purchase price for such Aircraft. The discounts and commissions relating to the offering of the Certificates of each Series will be paid by the Owner Participant (as defined below). The other expenses relating to the issuance and offering of such Certificates (other than certain expenses to be paid directly by the Corporation) will be paid by the Owner Participant as such other expenses become due or, if previously paid by the Corporation, will be reimbursed to the Corporation by the Owner Participant. OUTLINE OF LEVERAGED LEASE TRANSACTIONS Each Prospectus Supplement will specify the type and model of Aircraft relating to the Certificates offered thereby, the engines with which such Aircraft is equipped and when such Aircraft was delivered new by the manufacturer to the Corporation, 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 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 April 21, 1997, Mr. Hearn owned zero shares of the Corporation's common stock and had been granted options to purchase 41,600 shares of the Corporation's common stock. Of the options granted, 13,850 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, 1996 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, 1996, November 30, 1996 and February 28, 1997, 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 Prospectus in connection with the offering covered by this Prospectus. If given or made, such information or representation must not be relied upon as having been authorized by the Corporation or the Underwriters. This Prospectus does not constitute an offer to sell, or the solicitation of an offer to buy, the Certificates in any jurisdiction where, or to any person to whom, it is unlawful to make such offer or solicitation. Neither the delivery of this Prospectus nor any sale made hereunder shall, under any circumstances, create an implication that there has not been any change in the facts set forth in this Prospectus or in the affairs of 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 ====================================================== $813,872,000 FEDEX LOGO $813,872,000 Equipment Trust Certificates ____________________ P R O S P E C T U S ____________________ April ___, 1997 ====================================================== SUBJECT TO COMPLETION PRELIMINARY PROSPECTUS DATED APRIL 22, 1997 PROSPECTUS FEDEX LOGO PASS THROUGH TRUSTS PASS THROUGH CERTIFICATES _______________________________ Up to $813,872,000 aggregate amount of Pass Through Certificates (the "Pass Through Certificates") may be offered for sale from time to time pursuant to this Prospectus and one or more Prospectus Supplements. The Pass Through Certificates may be offered in one or more Series in amounts, at prices and on terms to be determined at the time of sale. For each Series of Pass Through Certificates offered pursuant to this Prospectus and a Prospectus Supplement, a separate Pass Through Trust will be formed pursuant to the Pass Through Trust Agreement (the "Pass Through Agreement") 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, except as may be contained in any intercreditor agreement, 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, final maturity date and ranking in respect of priority of payment. Unless otherwise specified in the applicable Prospectus Supplement, 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 ranking and 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 April __, 1997. (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. Unless otherwise specified in the applicable Prospectus Supplement, 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, 1996 filed August 9, 1996. 2. The Corporation's Quarterly Reports on Form 10-Q for the fiscal quarters ended August 31, 1996, November 30, 1996 and February 28, 1997 filed October 10, 1996, January 14, 1997 and April 11, 1997, respectively. 3. The Corporation's Current Reports on Form 8-K dated June 5, 1996, June 7, 1996, August 16, 1996, October 17, 1996 and March 4, 1997 filed June 10, 1996, June 21, 1996, August 28, 1996, October 22, 1996 and April 21, 1997, 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: Rebecca M. Halvorson, Managing Director -- Investor Relations, Federal Express Corporation, by mail at Box 727, Memphis, Tennessee 38194-1854 or by telephone at (901) 395-5038. 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 February February Year Ended May 31 29 28 -------------------------------- ------------------- 1992 1993 1994 1995 1996 1996 1997 ---- ---- ---- ---- ---- ---- ---- Ratio of Earnings to Fixed Charges (a) (b) 1.4x 1.7x 2.0x 1.9x 1.8x 1.9x - ---------- (a) Earnings included in the calculation of the ratio of earnings to fixed charges represent income before income taxes plus fixed charges (other than capitalized interest). Fixed charges include interest expense, capitalized interest, amortization of debt issuance costs and a portion of rent expense representative of interest. (b) Earnings were inadequate to cover fixed charges by $173.4 million for the year ended May 31, 1992. OUTLINE OF PASS THROUGH TRUST STRUCTURE For each Series of Pass Through Certificates (as such terms are defined below) offered pursuant to this Prospectus and a related Prospectus Supplement, a separate pass through trust (a "Pass Through Trust") will be formed pursuant to a supplemental agreement (a "Series Supplement") between the Corporation and 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 (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, final maturity dates and rankings in respect of priority of payment. 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 identical priority of payment relative to each of the other Equipment Certificates held by such Pass Through Trust. 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, or another bank or trust company, not in its individual capacity but solely as the owner trustee (the "Owner Trustee") of separate owner trusts (each, an "Owner Trust" created pursuant to a separate "Trust Agreement") for the benefit of the owner participant named therein (each, an "Owner Participant"), in connection with one or more leveraged lease transactions, in each case to finance or refinance not more than, unless otherwise specified in such Prospectus Supplement, 80% of the purchase price paid or to be paid by the Owner Trustee for a Leased Aircraft which has been or will be leased by the related Owner Trustee to the Corporation. To the extent that any proceeds from the sale of the Pass Through Certificates for any Pass Through Trust have not been applied by the Pass Through Trustee by the date specified in the applicable Prospectus Supplement to the purchase of the Equipment Certificates that were contemplated to be held in such Pass Through Trust, such proceeds will be distributed on the date specified in such Prospectus Supplement to the related Certificateholders, together with interest accrued thereon, but without premium. See "Description of the Pass Through Certificates -- Special Payment Upon Unavailability of Trust Property." Unless otherwise specified in the applicable Prospectus Supplement, 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 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, final maturity date and ranking in respect of priority of payment, 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, final maturity dates and rankings in respect of priority of payment, 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. 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 the form of 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, Participation Agreements, Leases if the Pass Through Certificates relate to Leased Aircraft, Intercreditor Agreement, if any, Liquidity Facility, if any, 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 and, if specified in the applicable Prospectus Supplement, rights under any intercreditor agreement relating to cross-subordination arrangements and monies receivable under any liquidity facility. 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: (a) 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; (b) the payment priority of such Equipment Certificates in relation to any other Equipment Certificates issued with respect to the related Aircraft; (c) any additional security or liquidity enhancements therefor; (d) any intercreditor issues between or among the holders of Equipment Certificates having different priorities issued by the same Owner Trustee; and (e) other specific terms of the Equipment Certificates during any Pre-Funding Period; (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 description of the related Lease, Trust Agreement and Collateral Agreement, if any, including (a) the names of the related Owner Trustee, (b) a description of the events of default under the related Lease, the remedies exercisable upon the occurrence of such events of default and any limitations on the exercise of such remedies with respect to such Leased Aircraft Certificates, and (c) the rights, if any, of the related Owner Trustee or Owner Participant to cure failures of the Corporation to pay rent under the related Lease; (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; (10) a description of any cross-default or cross-collateralization provisions in the related Indenture; (11) a description of any subordination provisions among the holders of Pass Through Certificates, including any cross-subordination provisions among the holders of Pass Through Certificates in separate Pass Through Trusts; (12) any additional security or liquidity facilities for the Pass Through Certificates; and (13) any other special terms pertaining to such Pass Through Certificates. (Pass Through Agreement, Article II) The Equipment Certificates issued under an Indenture may be held in more than one Pass Through Trust and one Pass Through Trust may hold Equipment Certificates issued under more than one Indenture. Unless otherwise provided in the applicable Prospectus Supplement, only Equipment Certificates having the same priority of payment (the Equipment Certificates of any such priority, a "Class") may be held in the same Pass Through Trust. 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. Unless otherwise specified in the applicable Prospectus Supplement, 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"). Subject to the effect of any cross-subordination provisions set forth in the applicable Prospectus Supplement, for each Pass Through Trust, the Pass Through Trustee will distribute on each Regular Distribution Date to the related Certificateholders any Scheduled Payment received by the Pass Through Trustee on such Regular Distribution Date. (Pass Through Agreement, Section 5.02) If a Scheduled Payment is not received by the Pass Through Trustee on or before a Regular Distribution Date but is received within seven Business Days 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. Subject to the effect of any cross-subordination provisions set forth in the applicable Prospectus Supplement, 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. Subject to the effect of any cross-subordination provisions set forth in the applicable Prospectus Supplement, after any prepayment of principal, any redemption or any default in respect of some or all of the Equipment Certificates held in any Pass Through Trust, any Certificateholder of such Pass Through Trust should refer to the Pool Balance and 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), (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"), except that unless otherwise specified in the applicable Prospectus Supplement payments received by the Pass Through Trustee following default in respect of the Equipment Certificates on a Regular Distribution Date as a result of a drawing under any liquidity facility specified in the applicable Prospectus Supplement, provided for the benefit of the Certificateholders, will be distributed on such Regular Distribution Date. See "Description of the Equipment Certificates -- Mandatory Prepayment During the Pre-Funding Period" for a discussion of the funding of 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. Subject to the effect of any cross-subordination provisions set forth 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 Subject to the effect of any cross-subordination provisions and any intercreditor provisions described in the applicable Prospectus Supplement, the Pass Through Trustee, as holder of the Equipment Certificates held in each Pass Through Trust, has the right to vote and give consents and waivers in respect of such Equipment Certificates under the related Indentures. The Pass Through Agreement 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) If specified in the applicable Prospectus Supplement, the right of the Pass Through Trustee to vote and give consents and waivers with respect to the Equipment Certificates held in the related Pass Through Trust may, in the circumstances set forth in an intercreditor agreement to be executed by such Pass Through Trustee, be exercisable by another person specified in such Prospectus Supplement. Events of Default and 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"). With respect to any Equipment Certificates which are supported by a liquidity facility, the Events of Default or Indenture Events of Default may include events of default under such liquidity facility. 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, unless otherwise specified in the applicable Prospectus Supplement. Consequently, unless otherwise specified in the applicable Prospectus Supplement, 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. If the applicable Prospectus Supplement contains the terms of any cross-subordination provisions among Certificateholders of separate Pass Through Trusts, payments made pursuant to a related Indenture under which no Indenture Event of Default has occurred will be distributed first to the holders of Pass Through Certificates issued under the Pass Through Trust which holds the most senior Equipment Certificates issued under all related Indentures. 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, subject to any intercreditor agreement, 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, subject to any intercreditor agreement, 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. In addition, if cross-subordination provisions are applicable to the Pass Through Certificates, the ability of the Certificateholders of any one Pass Through Trust holding Equipment Certificates issued under related Indentures to cause the Indenture Trustee to accelerate such Equipment Certificates or to direct the exercise of remedies by the Indenture Trustee under the related Indenture will depend, in part, on the Class of Equipment Certificates held in such Pass Through Trust. 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) If an intercreditor agreement applies, a Certificateholder will have certain rights, as described in the applicable Prospectus Supplement, to purchase the class of Pass Through Certificates senior to the Pass Through Certificates held by the purchasing Certificateholders. (Pass Through Agreement, Section 7.01) 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 or any intercreditor agreement at the request of such Certificateholders. (Pass Through Agreement, Section 8.03) Subject to any intercreditor agreement, 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 (x) may on behalf of all the Certificateholders of such Pass Through Trust or (y) if the Pass Through Trustee is the controlling party under an intercreditor agreement, may direct the Pass Through Trustee to instruct the applicable Indenture Trustee to, waive any past default or Event of Default with respect to such Pass Through Trust and 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, any intercreditor agreement or any Liquidity Facility, 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, any intercreditor agreement or any Liquidity Facility or modifying the rights of such Certificateholders. No such supplemental agreement may, however, without the consent of each Certificateholder so affected: (a) reduce the amount of, or delay the timing of, any receipt by the Pass Through Trustee of payments on the Equipment Certificates held in such Pass Through Trust, or distributions in respect of any Pass Through Certificate of such Pass Through Trust, or make distributions payable in a currency other than that provided for in such Pass Through Certificates, or impair the right of any such Certificateholder to institute suit for the enforcement of any payment when due; (b) reduce, modify or amend any indemnities in favor of any Certificateholder (unless consented to by each such holder adversely affected thereby); (c) create or permit the creation of any lien on the Trust Property or deprive any holder of any such Equipment Certificate of the benefit of the related Pass Through Trust with respect to the Trust Property whether by disposition or otherwise, except as provided in the Pass Through Agreement or the applicable Series Supplement; (d) reduce the percentage of the aggregate fractional undivided interests of the Pass Through Trust that is required to approve any supplemental agreement or any waiver provided for in the Pass Through Agreement or such Series Supplement; (e) waive, amend or modify the priority of distributions of any intercreditor agreement in a manner adverse to the Certificateholders; or (f) 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 and subject to any intercreditor agreement, in its own discretion consent to such amendment, modification or waiver, and may so notify the Indenture Trustee. (Pass Through Agreement, Section 11.08) Cross-Subordination Issues The Equipment Certificates issued under an Indenture may be held in more than one Pass Through Trust and one Pass Through Trust may hold Equipment Certificates issued under more than one related Indenture. Unless otherwise provided in the applicable Prospectus Supplement, only Equipment Certificates of the same Class may be held in the same Pass Through Trust. In addition, the Pass Through Trustee may enter into an intercreditor agreement which provides that payments made on account of a subordinate Class of Equipment Certificates issued under a related Indenture may, under circumstances described in the applicable Prospectus Supplement, be subordinated to the prior payment of all amounts owing to Certificateholders of a Pass Through Trust which holds senior Equipment Certificates issued under all related Indentures. The applicable Prospectus Supplement related to an issuance of Pass Through Certificates will describe any such intercreditor agreement and the cross-subordination provisions and any related terms, including the percentage of Certificateholders under any Pass Through Trust which are permitted to (i) grant waivers of defaults under any related Indenture, (ii) consent to the amendment or modification of any related Indentures or (iii) direct the exercise of remedial actions under any related Indentures. 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 Unless otherwise specified in the applicable Prospectus Supplement, 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) Liquidity Facility The applicable Prospectus Supplement may provide that one or more payments of interest on the Pass Through Certificates of one or more Series will be supported by a liquidity facility issued by an institution identified in such Prospectus Supplement (the "Liquidity Facility"). The provider of such liquidity facility will have a claim senior to the Certificateholders' as specified in the Prospectus Supplement. The Pass Through Trustee; the Indenture Trustee The Pass Through Trustee for each of the Pass Through Trusts will be 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, the Lease for Leased Aircraft 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, the Participation Agreements, the Leases, if any, 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. Unless otherwise specified in the applicable Prospectus Supplement, 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 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. Unless otherwise specified in the applicable Prospectus Supplement, there will be no cross-collateralization provisions in the Indentures and consequently, unless so specified, 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. Unless otherwise specified in the applicable Prospectus Supplement, there will be no cross-default provisions in the Indentures and consequently, unless so specified, 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 or other facility issued by a bank (within the meaning of Section 3(a)(2) of the Securities Act) whose obligations at the time of the relevant Pass Through Certificate offering carry a credit rating at least as high as 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 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 (or would not, if prior to commencement of the related Lease) give rise to a Lease Event Default under the related Lease or, in the case of an Owned Aircraft, an Indenture Event of Default under the related Owned Aircraft Indenture. Delayed Lease Commencement If the applicable Prospectus Supplement provides that a Pre-Funding Period will apply to a Leased Aircraft, then until commencement of a Lease with respect to such Leased Aircraft and the Indenture Trustee's release of funds from the related Collateral Account, which is expected to occur at the same time as the commencement of such Lease, such Leased Aircraft is referred to as a "Delayed Lease Aircraft" and the period prior to the Indenture Trustee's release of such funds is referred to as the "Pre-Funding Period." Unless otherwise specified in the applicable Prospectus Supplement, 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. Ranking of Equipment Certificates Some of the Equipment Certificates related to one or more Aircraft, as described in the applicable Prospectus Supplement, may be subordinated and junior in right of payment to other Equipment Certificates related to the same Aircraft. The terms of such subordination, if any, will be described in the applicable Prospectus Supplement. 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. Unless otherwise specified in the applicable Prospectus Supplement, there will be no cross-default provisions in the Indentures and, unless so specified, events resulting in an Indenture Event of Default under any particular Indenture will not necessarily result in an Indenture Event of Default under any other Indenture. The Leases Upon the commencement of any Lease, the following terms will be applicable: Terms and Rentals. Each Leased Aircraft will be leased separately by the related Owner Trustee to 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. Liquidity Facility The applicable Prospectus Supplement may provide that one or more payments of interest on the related Equipment Certificates of one or more Series or distributions made by the Pass Through Trustee of the related Pass Through Trust will be supported by a liquidity facility issued by an institution identified in the applicable Prospectus Supplement. Unless otherwise provided in the applicable Prospectus Supplement, the provider of the liquidity facility will have a senior claim upon the assets securing the Equipment Certificates. Intercreditor Issues Equipment Certificates may be issued in different Classes, which means that the Equipment Certificates may have different payment priorities even though issued by the same Owner Trustee and relate to the same Aircraft. In such event, the applicable Prospectus Supplement will describe the priority of distributions among such Equipment Certificates (and any liquidity facilities therefor), the ability of any Class to exercise and enforce any or all remedies with respect to the related Aircraft (and, if the Equipment Certificates are Leased Aircraft Certificates, the Lease related thereto) and certain other intercreditor terms and provisions. 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, an Owner Participant's conveyance of its interest in an Owner Trust should 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. Effect of Subordination of Subordinated Certificateholders If any Pass Through Trust with respect to a Series is subordinated with respect to other Pass Through Trusts of the same Series (such Pass Through Trusts being the "Subordinated Trusts" and the related Pass Through Certificates being the "Subordinated Certificates") receives less than the full amount of the receipts of principal or interest paid with respect to the Equipment Certificates held by it (any shortfall in such receipts being the "Shortfall Amounts") because of the subordination of the Equipment Certificates held by such Pass Through Trust under the Intercreditor Agreement, the corresponding owners of beneficial interests in the Subordinated Certificates (the "Subordinated Certificateholders") would probably be treated for federal income tax purposes as if they had (1) received as distributions their full share of such receipts, (2) paid over to the relevant preferred class of Certificateholders an amount equal to their share of such Shortfall Amount and (3) retained the right to reimbursement of such amounts to the extent of future amounts payable to such Subordinated Certificateholders with respect to such Shortfall Amount. Under this analysis, (1) Subordinated Certificateholders incurring a Shortfall Amount would be required to include as current income any interest or other income of the corresponding Subordinated Trust that was a component of the Shortfall Amount, even though such amount was in fact paid to the relevant preferred class of Certificateholders, (2) a loss would only be allowed to such Subordinated Certificateholders when their right to receive reimbursement of such Shortfall Amount became worthless (i.e., when it becomes clear that funds will not be available from any source to reimburse such loss) and (3) reimbursement of such Shortfall Amount prior to such a claim of worthlessness would not be taxable income to Subordinated Certificateholders because such amount was previously included in income. These results should not significantly affect the inclusion of income for Subordinated Certificateholders on the accrual method of accounting, but could accelerate inclusion of income to Subordinated Certificateholders on the cash method of accounting by, in effect, placing them on the accrual method. Backup Withholding Payments made on the Pass Through Certificates, and proceeds from the sale or exchange of the Pass Through Certificates to or through certain brokers, may be subject to a "backup" withholding tax of 31% unless the Certificateholder complies with certain reporting procedures or is an exempt recipient under the 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. Pre-Funding The foregoing discussion does not address the tax consequences to a Certificateholder with respect to any Pre-Funding arrangement. Such discussion will be set forth in the applicable Prospectus Supplement. 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 April 21, 1997, Mr. Hearn owned zero shares of the Corporation's common stock and had been granted options to purchase 41,600 shares of the Corporation's common stock. Of the options granted, 13,850 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, 1996 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, 1996, November 30, 1996 and February 28, 1997, 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 Prospectus in connection with the offering covered by this Prospectus. If given or made, such information or representation must not be relied upon as having been authorized by the Corporation or the Underwriters. This Prospectus does not constitute an offer to sell, or the solicitation of an offer to buy, the Pass Through Certificates in any jurisdiction where, or to any person to whom, it is unlawful to make such offer or solicitation. Neither the delivery of this Prospectus nor any sale made hereunder shall, under any circumstances, create an implication that there has not been any change in the facts set forth in this Prospectus or in the affairs of 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............................. 23 Federal Income Tax Consequences............. 32 Certain Massachusetts Taxes................. 34 ERISA Considerations........................ 34 Plan of Distribution........................ 34 Legal Matters............................... 35 Experts..................................... 35 ======================================================== $813,872,000 FEDEX LOGO $813,872,000 Pass Through Certificates ____________________ P R O S P E C T U S ____________________ April ___, 1997 ======================================================== SUBJECT TO COMPLETION PRELIMINARY PROSPECTUS DATED APRIL 22, 1997 PROSPECTUS FEDEX LOGO DEBT SECURITIES _____________________________ Up to $813,872,000 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 April __, 1997. 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, 1996 filed August 9, 1996. 2. The Corporation's Quarterly Reports on Form 10-Q for the fiscal quarters ended August 31, 1996, November 30, 1996 and February 28, 1997 filed October 10, 1996, January 14, 1997 and April 11, 1997, respectively. 3. The Corporation's Current Reports on Form 8-K dated June 5, 1996, June 7, 1996, August 16, 1996, October 17, 1996 and March 4, 1997 filed June 10, 1996, June 21, 1996, August 28, 1996, October 22, 1996 and April 21, 1997, 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 Rebecca M. Halvorson, Managing Director -- Investor Relations, Federal Express Corporation, by mail at Box 727, Memphis, Tennessee 38194-1854 or by telephone at (901) 395-5038. 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 February February Year Ended May 31 29 28 -------------------------------- ---------------- 1992 1993 1994 1995 1996 1996 1997 ---- ---- ---- ---- ---- ---- ---- Ratio of Earnings to Fixed Charges (a) (b) 1.4x 1.7x 2.0x 1.9x 1.8x 1.9x - ---------- (a) Earnings included in the calculation of the ratio of earnings to fixed charges represent income before income taxes plus fixed charges (other than capitalized interest). Fixed charges include interest expense, capitalized interest, amortization of debt issuance costs and a portion of rent expense representative of interest. (b) Earnings were inadequate to cover fixed charges by $173.4 million for the year ended May 31, 1992. 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 has not 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 April 21, 1997, Mr. Hearn owned zero shares of the Corporation's common stock and had been granted options to purchase 41,600 shares of the Corporation's common stock. Of the options granted, 13,850 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, 1996 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, 1996, November 30, 1996 and February 28, 1997, 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 Prospectus in connection with the offering covered by this Prospectus. If given or made, such information or representation must not be relied upon as having been authorized by the Corporation or the Underwriters. This Prospectus does not constitute an offer to sell, or the solicitation of an offer to buy, the Securities in any jurisdiction where, or to any person to whom, it is unlawful to make such offer or solicitation. Neither the delivery of this Prospectus nor any sale made hereunder shall, under any circumstances, create an implication that there has not been any change in the facts set forth in this Prospectus or in the affairs of 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 ================================================ $813,872,000 FEDEX LOGO $813,872,000 Debt Securities ___________________ P R O S P E C T U S ___________________ April ___, 1997 ================================================ SUBJECT TO COMPLETION PRELIMINARY PROSPECTUS DATED APRIL 22, 1997 PROSPECTUS FEDEX 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 $813,872,000 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 April __, 1997. 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, 1996 filed August 9, 1996. 2. The Corporation's Quarterly Reports on Form 10-Q for the fiscal quarters ended August 31, 1996, November 30, 1996 and February 28, 1997 filed October 10, 1996, January 14, 1997 and April 11, 1997, respectively. 3. The Corporation's Current Reports on Form 8-K dated June 5, 1996, June 7, 1996, August 16, 1996, October 17, 1996 and March 4, 1997 filed June 10, 1996, June 21, 1996, August 28, 1996, October 22, 1996 and April 21, 1997, 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 Rebecca M. Halvorson, Managing Director -- Investor Relations, Federal Express Corporation, by mail at Box 727, Memphis, Tennessee 38194-1854 or by telephone at (901) 395-5038. 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, 1996. RATIO OF EARNINGS TO FIXED CHARGES (Unaudited) Nine Months Ended February February Year Ended May 31 29 28 -------------------------------- ------------------ 1992 1993 1994 1995 1996 1996 1997 ---- ---- ---- ---- ---- ---- ---- Ratio of Earnings to Fixed Charges (a) (b) 1.4x 1.7x 2.0x 1.9x 1.8x 1.9x * 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 April 21, 1997, 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 April 18, 1997, there were outstanding (a) 114,637,988 shares of Common Stock and (b) employee stock options to purchase an aggregate of 6,450,792 shares of Common Stock (of which options to purchase an aggregate of 2,513,634 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 April 21, 1997, Mr. Hearn owned zero shares of the Corporation's common stock and had been granted options to purchase 41,600 shares of the Corporation's common stock. Of the options granted, 13,850 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, 1996 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, 1996, November 30, 1996 and February 28, 1997, 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 Prospectus in connection with the offering covered by this Prospectus. If given or made, such information or representation must not be relied upon as having been authorized by the Corporation or the Underwriters. This Prospectus does not constitute an offer to sell, or the solicitation of an offer to buy, the Securities in any jurisdiction where, or to any person to whom, it is unlawful to make such offer or solicitation. Neither the delivery of this Prospectus nor any sale made hereunder shall, under any circumstances, create an implication that there has not been any change in the facts set forth in this Prospectus or in the affairs of 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 =========================================================== $813,872,000 FEDEX LOGO $813,872,000 Preferred Stock Common Stock ____________________ P R O S P E C T U S ____________________ April ___, 1997 =========================================================== 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: Printing and Engraving........................................... 25,000 Fees of Transfer Agent and Registrar............................. 10,000 Attorneys' Fees and Expenses..................................... 500,000 Trustees' Fees................................................... 20,000 Accounting Fees and Expenses..................................... 20,000 Blue Sky Fees and Expenses....................................... 5,000 Rating Agency Fees............................................... 125,000 New York Stock Exchange Listing Fee.............................. 25,000 Miscellaneous.................................................... 5,000 -------- Total $735,000 ======== 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(a)(3) Form of Pass Through Trust Agreement between Federal Express Corporation and the Pass Through Trustee for an offering of Pass Through Certificates 4(a)(4) Form of Pass Through Certificate (included in Exhibit 4(a)(3)) 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 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 FY97 Third Quarterly Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 15 Letters of Arthur Andersen LLP, independent public accountants (Filed as Exhibits 15.1 to Registrant's FY97 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. - ---------- +Previously filed 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 Post-Effective Amendment No. 1 to Registration Statement No. 333-07691 to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Memphis, State of Tennessee, on this 22nd day of April 1997. FEDERAL EXPRESS CORPORATION (Registrant) By: /s/ MICHAEL W. HILLARD ---------------------- Michael W. Hillard Vice President and Controller (Principal Accounting Officer) Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment No. 1 to Registration Statement No. 333-07691 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 April 22, 1997 --------------------- and Chief Financial Officer Alan B. Graf, Jr. (Principal Financial Officer) /s/ MICHAEL W. HILLARD Vice President and Controller April 22, 1997 ---------------------- (Principal Accounting Officer) Michael W. Hillard /s/ ROBERT H. ALLEN Director ------------------- Robert H. Allen /s/ HOWARD H. BAKER, JR.* Director ------------------------- Howard H. Baker, Jr. /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 ----------------- Director Paul S. Walsh /s/ PETER S. WILLMOTT* Director ---------------------- Peter S. Willmott *By: /s/ ALAN B. GRAF, JR. April 22, 1997 --------------------- Alan B. Graf, Jr. Attorney-in-Fact EXHIBIT INDEX Exhibits Exhibit Descriptions - -------- -------------------- 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(a)(3) Form of Pass Through Trust Agreement between Federal Express Corporation and the Pass Through Trustee for an offering of Pass Through Certificates 4(a)(4) Form of Pass Through Certificate (included in Exhibit 4(a)(3)) 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 FY97 Third Quarterly Report on Form 10-Q, Commission File No. 1-7806, and incorporated herein by reference.) 15 Letters of Arthur Andersen LLP, independent public accountants (Filed as Exhibits 15.1 to Registrant's FY97 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. +Previously filed APPENDIX A A diagram is included following the third paragraph of "Diagram of Payments." The diagram contains boxes representing the parties identified in the first paragraph of "Diagram of Payments," which are connected by arrows demonstrating the cash flows described in each of the second and third paragraphs. EX-4.(A)(3) 2 Exhibit 4(a)(3) PASS THROUGH TRUST AGREEMENT Dated as of __________, ____ between ______________________________________, 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 Page ---- 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....................... 14 SECTION 2.03. Initial Certificateholders as Grantors...................... 16 SECTION 2.04. Limitation of Powers. ...................................... 16 SECTION 2.05. Execution of Pass Through Certificates. .................... 16 SECTION 2.06. Certificate of Authentication. ............................. 17 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............ 25 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. .............................................. 26 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. ....................... 27 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..................................................... 28 SECTION 5.03. Statements to Certificateholders. .......................... 30 SECTION 5.04. Investment of Special Payment Moneys........................ 30 SECTION 5.05. Withholding Taxes. ......................................... 31 ARTICLE VI CONCERNING THE CERTIFICATEHOLDERS SECTION 6.01. Evidence of Action Taken by Certificateholders. ............ 31 SECTION 6.02. Proof of Execution of Instruments and of Holding of Certificates. .............................................. 32 SECTION 6.03. Certificateholders to Be Treated as Owners. ................ 32 SECTION 6.04. Pass Through Certificates Owned by the Company and Related Owner Trustees Deemed Not Outstanding. ..................... 32 SECTION 6.05. Right of Revocation of Action Taken......................... 33 SECTION 6.06. ERISA....................................................... 34 ARTICLE VII REMEDIES OF PASS THROUGH TRUSTEE AND CERTIFICATEHOLDERS SECTION 7.01. Events of Default. ......................................... 34 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......................................... 37 SECTION 7.05. Suits for Enforcement....................................... 38 SECTION 7.06. Discontinuance of Proceedings. ............................. 38 SECTION 7.07. Limitations on Suits by Certificateholders. ................ 38 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............................... 39 SECTION 7.10. Waiver of Past Events of Default............................ 40 SECTION 7.11. Notice of Pass Through Defaults. ........................... 40 ARTICLE VIII CONCERNING THE PASS THROUGH TRUSTEE SECTION 8.01. Acceptance by Pass Through Trustee.......................... 41 SECTION 8.02. Pass Through Trustee's Liens. .............................. 41 SECTION 8.03. Certain Rights of the Pass Through Trustee. ................ 41 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......................... 43 SECTION 8.07. Right of Pass Through Trustee to Rely on Officer's Certificate................................................. 43 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................................... 45 SECTION 10.02. Persons Eligible for Appointment as Pass Through Trustee... 47 SECTION 10.03. Acceptance of Appointment by Successor Trustee............. 47 SECTION 10.04. Merger, Conversion, Consolidation or Succession to Business of Pass Through Trustee. .................................. 48 SECTION 10.05. Appointment of Separate Pass Through Trustees. ............ 49 SECTION 10.06. Preferential Claims. ...................................... 51 ARTICLE XI SUPPLEMENTS AND AMENDMENTS TO THIS PASS THROUGH AGREEMENT AND OTHER DOCUMENTS SECTION 11.01. Supplemental Agreements Without Consent of Certificateholders......................................... 51 SECTION 11.02. Supplemental Agreements With Consent of Certificateholders......................................... 53 SECTION 11.03. Effect of Supplemental Agreements.......................... 55 SECTION 11.04. Documents to Be Given to Trustee........................... 55 SECTION 11.05. Notation on Pass Through Certificates in Respect of Supplemental Agreements.................................... 55 SECTION 11.06. Trust Indenture Act........................................ 55 SECTION 11.07. Revocation and Effect of Consents.......................... 55 SECTION 11.08. Amendments, Waivers, etc., of Related Indenture Documents.................................................. 55 ARTICLE XII TERMINATION OF PASS THROUGH TRUSTS; UNCLAIMED MONEYS SECTION 12.01. Termination of Pass Through Trusts......................... 56 SECTION 12.02. Application by Pass Through Trustee of Funds Deposited for Payment of Pass Through Certificates....................... 57 SECTION 12.03. Repayment of Moneys Held by Paying Agent................... 57 SECTION 12.04. Transfer of Moneys Held by Pass Through Trustee and Paying Agent Unclaimed for Two Years and Eleven Months............ 57 ARTICLE XIII MISCELLANEOUS SECTION 13.01. Capacity in Which Acting................................... 57 SECTION 13.02. No Legal Title to Trust Property in Certificateholders..... 57 SECTION 13.03. Certificates Nonassessable and Fully Paid.................. 58 SECTION 13.04. Pass Through Agreement for the Benefit of the Company, the Pass Through Trustee and the Certificateholders............ 58 SECTION 13.05. Limitation on Rights of Certificateholders................. 58 SECTION 13.06. Notices.................................................... 58 SECTION 13.07. Officer's Certificate and Opinion of Counsel; Statements to Be Contained Therein......................... 59 SECTION 13.08. Conflict of Any Provision of Pass Through Agreement with the Trust Indenture Act........................................ 60 SECTION 13.09. Severability............................................... 60 SECTION 13.10. No Oral Modifications or Continuing Waivers................ 61 SECTION 13.11. Successors and Assigns..................................... 61 SECTION 13.12. Headings. ................................................. 61 SECTION 13.13. Normal Commercial Relations. .............................. 61 SECTION 13.14. Governing Law; Counterpart Form. .......................... 61 SECTION 13.15. Distributions Due on Days Other than Business Days......... 61 SECTION 13.16. Registration of Equipment Certificates in Name of Subordination Agent........................................ 61 Exhibit A Form of Pass Through Certificate Exhibit B Form of Series Supplement PASS THROUGH TRUST AGREEMENT PASS THROUGH TRUST AGREEMENT dated as of __________, ____, between FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Company"), and ___________________________________, a ___________________, as Pass Through Trustee (together with any successor hereunder or under any Pass Through Trust as herein provided, the "Pass Through Trustee"). RECITALS WHEREAS, capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, from time to time the Company will enter into a Series Supplement with the Pass Through Trustee named therein in accordance with this Pass Through Agreement pursuant to which the Pass Through Trustee will declare the creation of a separate Pass Through Trust for the benefit of the Certificateholders of the Series of Pass Through Certificates to be issued pursuant to such Pass Through Trust, and the initial Certificateholders of such Series, as the grantors of such Pass Through Trust, by their respective acceptances of such Pass Through Certificates, will join in the creation of such Pass Through Trust; WHEREAS, the Pass Through Certificates of each Series will evidence fractional undivided interests in the Pass Through Trust pursuant to which they will be issued, and will have no rights, benefits or interest in respect of any other separate Pass Through Trust or the Trust Property held in any such other Pass Through Trust subject, however, to the provisions of any Intercreditor Agreement to which one or more Pass Through Trusts may be a party; WHEREAS, for each Pass Through Trust, the Pass Through Trustee will purchase one or more issues of Equipment Certificates of the same interest rate and ranking in respect of priority of payment as, and final maturity dates not later than the final scheduled Regular Distribution Date of, the Series of Pass Through Certificates to be issued in respect of such Pass Through Trust and will hold such Equipment Certificates in trust as Trust Property for the benefit of the Certificateholders of such Series; WHEREAS, to facilitate the sale of Equipment Certificates to, and the purchase of Equipment Certificates by, the Pass Through Trustee on behalf of each such Pass Through Trust, the Company has duly authorized the execution and delivery of this Pass Through Agreement and each Series Supplement as the "issuer," as such term is defined in and solely for purposes of the Securities Act, of the Pass Through Certificates to be issued in respect of each Pass Through Trust and as the "obligor," as such term is defined in and solely for purposes of the Trust Indenture Act, with respect to all such Pass Through Certificates and is undertaking to perform certain administrative duties hereunder and to pay the fees and expenses of the Pass Through Trustee; WHEREAS, this Pass Through Agreement, as amended or supplemented from time to time, is subject to the provisions of the Trust Indenture Act and shall, to the extent applicable, be governed by such provisions; IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows: ARTICLE I DEFINITIONS The following terms (except as otherwise expressly provided or unless the context otherwise clearly requires) for all purposes of this Pass Through Agreement have the respective meanings specified in this Article I, as amended or supplemented by the provisions of the Series Supplement for a particular Series. All other terms used in this Pass Through Agreement that are defined in the Trust Indenture Act or the definitions of which in the Securities Act are referred to in the Trust Indenture Act (except as herein otherwise expressly provided or unless the context otherwise clearly requires), have the meanings assigned to such terms in the Trust Indenture Act and in the Securities Act. All accounting terms used and not expressly defined herein have the meanings given to them in accordance with generally accepted accounting principles, and the term "generally accepted accounting principles" means the accounting principles that are generally accepted at the date or time of any computation or otherwise at the date hereof. The words "herein," "hereof" and "hereunder" and other words of similar import refer to this Pass Through Agreement as a whole and not to any particular Article, Section or other subdivision. References to designated "Articles," "Sections," "subsections" and other subdivisions of this Pass Through Agreement are to the designated Articles, Sections, subsections and other subdivisions of this Pass Through Agreement. The terms defined in this Article include the plural as well as the singular. "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 _____________, 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. "Controlling Party" means the Person entitled to act as such pursuant to the terms of any Intercreditor Agreement. "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 __ 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. "Intercreditor Agreement" means any agreement by and among one or more Pass Through Trusts, one or more Liquidity Providers and a Subordination Agent providing for the distribution of payments made in respect of Equipment Certificates held by such Pass Through Trusts. "Issuance Date" means, for any Pass Through Trust, the date of the issuance of the related Pass Through Certificates. "Lease" means, for any Equipment Trust Certificate, the agreement between the Company, as lessee, and an Owner Trustee, as lessor, that is defined as the "Lease" in the related Indenture. "Letter of Representations" means, for any Series, a letter from the Company and the Pass Through Trustee to, and accepted by, the Depositary in form and substance satisfactory to the Company and the Pass Through Trustee for the purposes of the related Series Supplement, as such letter may be modified or supplemented, or any successor letter thereto. "Lien" means any mortgage, pledge, lien, charge, disposition of title, encumbrance, lease or security interest. "Liquidity Facility" means, with respect to the Pass Through Certificates of any Series, any revolving credit agreement or similar facility or letter of credit relating to the Pass Through Certificates of such series between a Liquidity Provider and a Subordination Agent, as amended, replaced, supplemented or otherwise modified from time to time in accordance with its terms and the terms of any Intercreditor Agreement. "Liquidity Provider" means, with respect to the Pass Through Certificates of any Series, a bank or other financial institution that agrees to provide Liquidity Facilities with respect to the Pass Through Certificates of such Series for the benefit of the Certificateholders. "Majority in Interest of Certificateholders" means, for any Series at any time, Pass Through Certificates of such Series then Outstanding (or the proxy therefor) representing in the aggregate not less than a majority of the aggregate Fractional Undivided Interests of the Pass Through Certificates then Outstanding under the related Pass Through Trust. "Officer's Certificate" means a certificate signed by a Responsible Officer of the Company, any Indenture Trustee or any Owner Trustee, as the case may be, delivered to the Pass Through Trustee. Each such certificate shall include the statements provided for in Section 13.07 hereof. "Opinion of Counsel" means a written opinion of legal counsel, who in the case of counsel (a) for the Company may be (i) an attorney employed by the Company who is generally empowered to deliver such written opinions, or (ii) other counsel designated by the Company and reasonably satisfactory to the Pass Through Trustee and (b) for any Owner Trustee or Indenture Trustee, an attorney selected by such Person and reasonably satisfactory to the Pass Through Trustee. "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, unless otherwise provided in the Series Supplement, for any Pass Through Trust, as of any date of determination the quotient (rounded to the seventh decimal place) computed by dividing (i) the Pool Balance by (ii) the aggregate original amount of the Pass Through Certificates of the related Series. The Pool Factor as of any Regular Distribution Date or Special Distribution Date shall be computed after giving effect to the payment of principal, if any, on such Equipment Certificates and the distribution thereof being made on that date. "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 Depositary 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. "Subordination Agent" shall have the meaning specified therefor in any Intercreditor Agreement. "Triggering Event" shall have the meaning specified therefor in any Intercreditor Agreement. "Trust Agreement" means, for any Equipment Trust Certificate, the agreement between an Owner Trustee and an Owner Participant that is defined as the "Trust Agreement" in the related Indenture. "Trust Indenture Act" means (except as otherwise provided in Section 11.06) the Trust Indenture Act of 1939, as amended, as in force at the date as of which this Pass Through Agreement was first qualified under such Act. "Trust Property" means, for any Pass Through Trust, (i) all money, instruments, including the related Equipment Certificates, and other property held as the property of such Pass Through Trust, including all distributions thereon and proceeds thereof and (ii) all rights of the Pass Through Trust and the Pass Through Trustee, on behalf of the Pass Through Trust, under any Intercreditor Agreement or any Liquidity Facility, including, without limitation, all rights to receive certain payments thereunder, and all monies paid to the Pass Through Trustee on behalf of the Pass Through Trust pursuant to any Intercreditor Agreement or any Liquidity Facility. ARTICLE II ISSUANCE OF PASS THROUGH CERTIFICATES; ACQUISITION OF EQUIPMENT CERTIFICATES SECTION 2.01. Amount Unlimited; Issuable in Series; Series Supplements. (a) The aggregate amount of Pass Through Certificates that may be authenticated and delivered in accordance with this Pass Through Agreement is unlimited. The Pass Through Certificates may be issued from time to time in one or more Series, each Series relating to a separate Pass Through Trust, and shall be designated generally as the "Pass Through Certificates," with further designations added or incorporated in the title for the Pass Through Certificates of any Series as specified in the related Series Supplement. Each Pass Through Certificate shall bear upon its face the designation so selected for the Series to which it belongs. All Pass Through Certificates of the same Series shall be substantially identical except as to denomination and as may otherwise be provided in the related Series Supplement. The Pass Through Certificates of each Series will evidence fractional undivided interests in the separate Pass Through Trust formed by the related Series Supplement, and, except as may be contained in any Intercreditor Agreement, will have no rights, benefits or interest in respect of any other separate Pass Through Trust or the Trust Property held in such other Pass Through Trust. All Pass Through Certificates of the same Series shall be in all respects equally and ratably entitled to the benefits of the related Pass Through Trust without preference, priority, or distinction on account of the actual time or times of authentication and delivery, all in accordance with the terms and provisions of this Pass Through Agreement and the related Series Supplement. (b) The following matters shall be established for the Pass Through Certificates of each Series in a Series Supplement executed and delivered by the Company and the Pass Through Trustee: (1) the formation of the Pass Through Trust in which the Pass Through Certificates of such Series evidence fractional undivided interests and its designation (which designation shall distinguish such Pass Through Trust from each other Pass Through Trust); (2) the specific title of the Pass Through Certificates of such Series (which title shall distinguish the Pass Through Certificates of the Series from each other Series); (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 Depositary for the Registered Global Certificates and the Letter of Representations; (10) a description of the Equipment Certificates to be acquired by and held in the related Pass Through Trust and of the related Indenture Documents; (11) provisions with respect to the terms for which the definitions set forth in Article I hereof permit or require further specification in the related Series Supplement; (12) whether the Pass Through Certificates are eligible for purchase by ERISA Plans (as defined in Section 6.06 hereof) and, if applicable, any restrictions on purchases of Pass Through Certificates by ERISA Plans; (13) the acceptance of appointment by the institution named to act as Pass Through Trustee with respect to such Series if different from the institution executing this Pass Through Agreement or its successor; (14) whether such series will be subject to an Intercreditor Agreement and, if so, the specific designation of such Intercreditor Agreement; (15) any other terms of the Pass Through Certificates of such Series (which terms shall not be inconsistent with the provisions of the Trust Indenture Act as in effect at the time of the execution and delivery of such Series Supplement or adversely affect the interest of the Certificateholders of any Series outstanding at the time), including any terms that may be required or advisable under United States laws or regulations or advisable in connection with the marketing of the Series; (16) a description of: (a) the Equipment Certificates to be purchased by such Pass Through Trust, including the period or periods within which, the price or prices at which such Certificates may or must be repaid in whole or in part, by the Company or, with respect to leased aircraft certificates, the Related Owner Trustee, (b) the payment priority of such Equipment Certificates in relation to any other Equipment Certificates issued with respect to the related Aircraft, (c) any additional security or liquidity enhancements therefor, (d) any intercreditor issues between or among the holders of Equipment Certificates having different priorities issued by the same Owner Trustee, and (e) other specific terms of the Equipment Certificates during any pre-funding period; (17) a description of any cross-default or cross-collateralization provisions in the related Indenture; and (18) a description of any subordination provisions among the holders of Pass Through Certificates, including any cross- subordination provisions among the holders of Pass Through Certificates in separate Pass Through Trusts. (c) At any time and from time to time after the execution and delivery of this Pass Through Agreement, the Company and the Pass Through Trustee may execute and deliver one or more Series Supplements, each forming a separate Pass Through Trust and establishing the terms of the Pass Through Certificates of the related Series, and pursuant to which the Pass Through Certificates of such Series shall be executed, authenticated and delivered by the Pass Through Trustee to the Person specified by the Company upon request of the Company and upon satisfaction of any conditions precedent set forth in the related Series Supplement on the Issuance Date for such Series. SECTION 2.02. Acquisition of Equipment Certificates. (a) Pass Through Certificates of a Series executed, authenticated and delivered by the Pass Through Trustee upon request of the Company in accordance with Section 2.01(c) hereof shall equal the aggregate principal amount of the Equipment Certificates to be purchased by the Pass Through Trustee pursuant to the related Participation Agreements, and evidence the entire ownership of the related Pass Through Trust. The Pass Through Trustee shall issue and sell such Pass Through Certificates, in authorized denominations and in such Fractional Undivided Interests, so as to result in the receipt of consideration in an amount equal to the aggregate principal amount of such Equipment Certificates and, concurrently therewith, the Pass Through Trustee shall purchase, pursuant to the terms and conditions of the Participation Agreements, the Equipment Certificates (except Delayed ECs, if any) at a purchase price equal to the amount of such consideration so received. Except as provided in Sections 2.08 and 2.09 hereof, the Pass Through Trustee shall not execute, authenticate or deliver Pass Through Certificates of such Series in excess of the aggregate amount determined in accordance with this subsection (a). The provisions of this subsection (a) are subject to the provisions of subsection (b) below. (b) Unless otherwise specified in the Series Supplement, if, on or prior to an Issuance Date, the Company delivers to the Pass Through Trustee a Delayed Delivery Notice relating to one or more Delayed ECs, then (i) the Pass Through Trustee shall postpone the purchase of the specified Delayed ECs, (ii) the Company, the Pass Through Trustee and the Deposit Trustee shall form a Deposit Trust, (iii) the Pass Through Trustee shall transfer to the Company the Deposit Trust Funds relating to such Delayed ECs and (iv) the Company shall deposit such Deposit Trust Funds into the Deposit Trust Account for such Deposit Trust. The Deposit Trust Funds so deposited shall be invested pursuant to the related Deposit Trust Agreement by the Deposit Trustee at the direction and risk of, and for the benefit of, the Company in Specified Investments. The Company agrees that withdrawals shall be made from any Deposit Trust Account only as provided in the related Deposit Trust Agreement. Upon notice from the Company on one or more occasions that any Delayed ECs are available for purchase and upon the satisfaction of the closing conditions specified in the applicable Participation Agreements and the related Series Supplement on or prior to the related Cut-off Date for Pass Through Trust, the Company shall cause the related Deposit Trust Funds to be withdrawn from the related Deposit Trust Account and paid to the Pass Through Trustee, free and clear of any Lien under the Deposit Trust Agreement, and the Pass Through Trustee shall purchase the applicable Delayed ECs with such Deposit Trust Funds. The purchase price for such Delayed ECs shall equal the principal amount of such Delayed ECs. On the Initial Regular Distribution Date for any Pass Through Trust for which Delayed ECs are purchased pursuant to this subsection, the Company shall pay, in immediately available funds, to the Pass Through Trustee an amount equal to the interest that would have accrued on any Delayed ECs purchased after the related Issuance Date as if such Delayed ECs had been purchased on such Issuance Date, from such Issuance Date to, but not including, the date of the purchase of such Delayed ECs for such Pass Through Trust. If the Company notifies the Pass Through Trustee prior to any Cut-off Date for Pass Through Trust that any related Delayed ECs will not be issued on or prior to such Cut-off Date for Pass Through Trust for any reason, on the next Special Distribution Date for such Pass Through Trust occurring more than 20 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 Depositary 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 Depositary 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 Depositary or its nominee, (iii) shall be delivered by the Pass Through Trustee to the Depositary or pursuant to the Depositary'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 Depositary to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a successor Depositary selected or approved by the Company upon notice to the Pass Through Trustee or to a nominee of such successor Depositary. (c) The Depositary 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 Depositary notifies the Company that it is unwilling or unable to continue as Depositary for such Series or if at any time the Depositary for such Series shall no longer be eligible under subsection (c) above, and a successor Depositary 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 Depositary 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 Depositary 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 Depositary 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 and any Intercreditor Agreement; (ii) each of this Pass Through Agreement and any Intercreditor Agreement has been duly authorized by all necessary corporate action on its part, and neither the execution and delivery hereof or thereof nor its performance of any of the terms and provisions hereof or thereof will violate any federal law or the law of the State of the United States of America where it is located or regulation relating to its banking or trust powers or any judgment or order applicable to or binding on the Pass Through Trustee and will not contravene or result in any breach of, or constitute any default under its charter or by-laws or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it or its properties may be bound or affected; (iii) the execution, delivery and performance by the Pass Through Trustee of this Pass Through Agreement or any Intercreditor Agreement will not require the authorization, consent, or approval of, the giving of notice to, the filing or registration with, or the taking of any other action in respect of, any governmental authority or agency of the United States of America or the State of the United States of America where it is located regulating the banking and corporate trust activities of the Pass Through Trustee other than (i) the registration of the Pass Through Certificates under the Securities Act and under the securities laws of any state in which the Pass Through Certificates may be offered for sale if the laws of such state require such action and (ii) the qualification of the Pass Through Agreement under the Trust Indenture Act pursuant to an order of the Securities and Exchange Commission; (iv) each of this Pass Through Agreement and any Intercreditor Agreement has been duly executed and delivered by it and, assuming that such documents are the legal, valid and binding obligation of the other parties thereto, is the legal, valid and binding obligation of the Pass Through Trustee, enforceable against the Pass Through Trustee in accordance with its terms except as may be limited by bankruptcy, insolvency, moratorium, reorganization, receivership, fraudulent conveyance or similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights and remedies generally from time to time in effect, regardless of whether such enforceability is considered in a proceeding in equity or at law; and (v) each Series Supplement executed by such Pass Through Trustee will be, upon the date of execution and delivery of such Series Supplement, executed and delivered by one of its officers 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, any Intercreditor Agreement or any related Indenture Documents or as to the correctness of any statement contained in any thereof, except for the representations and warranties of the Pass Through Trustee made in its individual capacity under this Pass Through Agreement, in any Series Supplement 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, the related Series Supplement or any Intercreditor Agreement. Upon receipt of any Scheduled Payment, the Pass Through Trustee shall immediately deposit such Scheduled Payment in the applicable Certificate Account. (b) The Pass Through Trustee shall establish and maintain, as and when required, for each Pass Through Trust, on behalf of the related Certificateholders of each Series, a Special Payments Account as one or more accounts, which shall be non-interest bearing except as provided in Section 5.04 hereof. In each case, the Pass Through Trustee shall hold such Special Payments Account in trust for the benefit of such Certificateholders, respectively, and shall make or permit withdrawals therefrom only as provided in this Pass Through Agreement, the related Series Supplement or any Intercreditor Agreement. Upon receipt of any Special Payment, the Pass Through Trustee shall immediately deposit such Special Payment in the applicable Special Payments Account. (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) Subject to any Intercreditor Agreement, for each Pass Through Trust, on each related Regular Distribution Date, or as soon thereafter as the Pass Through Trustee has confirmed receipt of any Scheduled Payment due on the related Equipment Certificates on such Regular Distribution Date, the Pass Through Trustee shall distribute out of the applicable Certificate Account the entire amount deposited therein pursuant to Section 5.01(a) hereof by paying to each Certificateholder of the related Series of record at the close of business on the Record Date for such Regular Distribution Date (except as provided in Section 12.01 hereof concerning the final distribution), at the address for such Certificateholder appearing in the related Register, such Certificateholder's pro rata share (based on the aggregate Fractional Undivided Interest in the related Pass Through Trust held by such Certificateholder) of the aggregate amount in the applicable Certificate Account. (b) Subject to any Intercreditor Agreement, for each Pass Through Trust, on each related Special Distribution Date, or as soon thereafter as the Pass Through Trustee has confirmed receipt of any Special Payment due on the related Equipment Certificates or realized upon the sale of any such Equipment Certificates, the Pass Through Trustee shall distribute out of the applicable Special Payments Account the entire amount of such Special Payment deposited therein pursuant to Section 5.01(b) hereof by paying to each Certificateholder of the related Series of record at the close of business on the Record Date for such Special Distribution Date (except as provided in Section 12.01 hereof concerning the final distribution), at the address for such Certificateholder appearing in the related Register, such Certificateholder's pro rata share (based on the aggregate Fractional Undivided Interest in the related Pass Through Trust held by such Certificateholder) of the aggregate amount in the applicable Special Payments Account on account of such Special Payment. (c) For each Pass Through Trust, the Pass Through Trustee shall at the expense of the Company notify each Certificateholder of the related Series by mail at its address as it appears in the related Register of each related Special Payment for such Series. If the related Equipment Certificates are to be redeemed or purchased in whole prior to their respective maturities, or if a Special Payment is to be made pursuant to either of the last two paragraphs of Section 2.02(b) hereof, 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. (a) Exercise of Remedies. If, for any Pass Through Trust, an Indenture Event of Default under an Indenture relating to any Equipment Certificate that constitutes Trust Property of such Pass Through Trust (an "Event of Default") shall occur and be continuing, then, subject to the provisions of any Intercreditor Agreement, the Pass Through Trustee may vote all of the Equipment Certificates under such Indenture held by such Pass Through Trust, and upon the direction of the Majority In Interest of Certificateholders of the related Series, the Pass Through Trustee shall vote a corresponding majority of such Equipment Certificates in favor of directing the applicable Related Indenture Trustee to declare the unpaid principal of such Equipment Certificates then outstanding, together with interest accrued but unpaid thereon and all other amounts due under such Equipment Certificates and the related Indenture, to be due and payable under, and in accordance with the provisions of, such Indenture. In addition, if such Event of Default shall have occurred and be continuing, subject to the provisions of any Intercreditor Agreement, the Pass Through Trustee may in accordance with such related Indenture vote such Equipment Certificates to direct the applicable Related Indenture Trustee regarding the exercise of remedies provided in such Indenture. If, for any Pass Through Trust, an Event of Default shall have occurred and be continuing, subject to the provisions of any Intercreditor Agreement, the Pass Through Trustee may, and upon the direction of the Majority In Interest of Certificateholders of the related Series shall, by such officer or agent as it may appoint, sell, convey, transfer and deliver any Equipment Certificates held in such Pass Through Trust that are subject to the corresponding Indenture Event of Default, without recourse to or warranty by the Pass Through Trustee or any Certificateholder of such Series, to any Person. In any such case, the Pass Through Trustee shall sell, assign, contract to sell or otherwise dispose of and deliver any such Equipment Certificates in one or more parcels at public or private sale or sales, at any location or locations at the option of the Pass Through Trustee, all upon such terms and conditions as it may reasonably deem advisable and at such prices as it may reasonably deem advisable, for cash. If the Pass Through Trustee so decides or is required to sell or otherwise dispose of any Equipment Certificates pursuant to this Section 7.01, the Pass Through Trustee shall take such of the actions described above as it may reasonably deem most effective to complete the sale or other disposition of such Equipment Certificates, so as to provide for the payment in full of all amounts due on such Equipment Certificates with respect to the related Series. Notwithstanding the foregoing, any action taken by the Pass Through Trustee under this Section 7.01 shall not, in the reasonable judgment of the Pass Through Trustee, be adverse to the best interests of the Certificateholders of such Series. If an Intercreditor Agreement is applicable and the Pass Through Trustee is the Controlling Party thereunder, the Pass Through Trustee upon the occurrence of an Indenture Event of Default may direct the exercise of remedies in connection therewith. (b) Purchase Rights of Certificateholders. If an Intercreditor Agreement is applicable, by acceptance of its Pass Through Certificate, each Certificateholder agrees that at any time after the occurrence and during the continuation of a Triggering Event, each Certificateholder of Pass Through Certificates of a Series will have certain rights, the exercise of which will be specified in the applicable Series Supplement, to purchase the class of Pass Through Certificates with senior to the Pass Through Certificates held by the purchasing Certificateholder. The purchase price with respect to the Pass Through Certificates of any series shall be equal to the Pool Balance of the Pass Through Certificates of such series, together with accrued and unpaid interest thereon to the date of such purchase, without premium, but including any other amounts then due and payable to the Certificateholders under this Agreement, any Intercreditor Agreement or any other Indenture Document or on or in respect of the Pass Through Certificate of such Series; provided, however, that no such purchase of Pass Through Certificates of such Series shall be effective unless the purchaser shall certify to the Pass Through Trustee that contemporaneously with such purchase, such purchaser is purchasing, pursuant to the terms of this Agreement and the other Agreements, if any, relating to Pass Through Certificates of a series that are subject to the same Intercreditor Agreement (such other Agreements, the "Other Agreements"), the Pass Through Certificates of each such series that is senior to the Pass Through Certificates held by such purchaser. Each payment of the purchase price of the Pass Through Certificates of any Series shall be made to an account or accounts designated by the Pass Through Trustee and each such purchase shall be subject to the terms of this Section. Each Certificateholder of any Series agrees by its acceptance of Pass Through Certificates of such Series that it will, upon payment from any such Certificateholders of Pass Through Certificates with a lower seniority of the purchase price specified herein, forthwith sell, assign, transfer and convey to the purchaser thereof (without recourse, representation or warranty of any kind except for its own acts), all of the right, title, interest and obligation of such Certificateholder in this Agreement, any Intercreditor Agreement, the Liquidity Facility, the Indenture Documents and all Pass Through Certificates of such Series held by such Certificateholder (excluding all right, title and interest under any of the foregoing to the extent such right, title or interest is with respect to an obligation not then due and payable as respects any action or inaction or state of affairs occurring prior to such sale) and the purchaser shall assume all of such Certificateholder's obligations under this Agreement, any Intercreditor Agreement, the Liquidity Facility and the Indenture Documents. The Pass Through Certificates of such Series will be deemed to be purchased on the date of payment of the purchase price is made notwithstanding the failure of the Certificateholders to delivery any Pass Through Certificates of such Series and, upon such a purchase, (i) the only rights of the Certificateholders will be to deliver the Pass Through Certificates to the purchaser and receive the purchase price for such Pass Through Certificates of such series and (ii) if the purchaser shall so request, such Certificateholder will comply with all of the provisions of Section 2.08 hereof to enable new Pass Through Certificates of such Series to be issued to the purchaser in such denominations as it shall request. All charges and expenses in connection with the issuance of any such new Pass Through Certificates shall be borne by the purchaser thereof. SECTION 7.02. Incidents of Sale of Equipment Certificates. Upon any sale of all or any part of the Equipment Certificates held in any Pass Through Trust made either under the power of sale given under this Pass Through Agreement or the related Series Supplement or otherwise for the enforcement of this Pass Through Agreement and the related Series Supplement, the following shall be applicable: (1) Certificateholders and Pass Through Trustee May Purchase Equipment Certificates. Any Certificateholder of the related Series, the Pass Through Trustee in its individual or any other capacity or any other Person may bid for and purchase any of such Equipment Certificates, and upon compliance with the terms of sale, may hold, retain, possess and dispose of such Equipment Certificates in its or their own absolute right without further accountability. (2) Receipt of Pass Through Trustee Shall Discharge Purchaser. The receipt of the Pass Through Trustee or of the officer making such sale shall be a sufficient discharge to any purchaser for 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) Application of Moneys Received upon Sale. Any moneys collected by the Pass Through Trustee upon any sale made either under the power of sale given by this Pass Through Agreement or the related Series Supplement or otherwise for the enforcement of the related Pass Through Trust, shall be deposited and distributed as a Special Payment as provided in Article V hereof. SECTION 7.03. Pass Through Trustee May Prove Debt. If any amount payable under any Equipment Certificate held by any Pass Through Trust is not paid when due and payable, the Pass Through Trustee, in its own name and as trustee of an express trust, as holder of such Equipment Certificate shall be, to the extent permitted by and in accordance with the terms of the related Indenture Documents and any Intercreditor Agreement, entitled and empowered to institute any action or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceedings to judgment or final decree, and may enforce any such judgment or final decree against the applicable Owner Trustee, in the case of an Equipment Trust Certificate, or the Company, in the case of an Equipment Purchase Certificate, or other obligor upon such Equipment Certificate and collect in the manner provided by law out of the property of such Owner Trustee, or the Company or such other obligor upon such Equipment Certificate, as the case may be, wherever situated, the moneys adjudged or decreed to be payable. All rights of action and of asserting claims under this Pass Through Agreement, or under any of the Pass Through Certificates, may be prosecuted and enforced by the Pass Through Trustee without the possession of any of such Pass Through Certificates or the production thereof in any trial or other proceedings relative thereto, and any such action or proceedings instituted by the Pass Through Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Pass Through Trustee, each predecessor Pass Through Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Certificateholders of the related Series. In any proceedings brought by the Pass Through Trustee (and also any proceedings involving the interpretation of any provision of this Pass Through Agreement, any Series Supplement or any Intercreditor Agreement to which the Pass Through Trustee shall be a party) the Pass Through Trustee shall be held to represent all the Certificateholders of the related Series, and it shall not be necessary to make any such Certificateholders parties to any such proceedings. SECTION 7.04. Remedies Cumulative. Each and every right, power and remedy given to the Pass Through Trustee or to any of the Certificateholders of any Series specifically or otherwise under any Pass Through Trust shall be cumulative and shall be in addition to every other right, power and remedy specifically given thereunder or now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy whether specifically given thereunder or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by the Pass Through Trustee or the Certificateholders of the related Series, and the exercise or the beginning of the exercise of any power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy. No delay or omission by the Pass Through Trustee or of any such Certificateholder in the exercise of any right, remedy or power or in the pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the applicable Owner Trustee, if any, or the Company, as the case may be, or to be an acquiescence therein. SECTION 7.05. Suits for Enforcement. If an Indenture Event of Default has occurred, has not been waived and is continuing, the Pass Through Trustee may in its discretion and subject to its rights of appropriate indemnification under Sections 7.07 and 8.03 and Article IX hereof, to the extent permitted by and in accordance with any Intercreditor Agreement and the Indenture Documents, proceed to protect and enforce its rights and rights of the Certificateholders of the related Series by such appropriate judicial proceedings as the Pass Through Trustee shall deem most effectual to protect and enforce any of such rights, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement under the related Pass Through Trust or in aid of the exercise of any power granted thereunder or to enforce any other legal or equitable right vested in the Pass Through Trustee or the Certificateholders under such Pass Through Trust or by law; provided that any sale of any portion of the related Trust Property shall be 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, but subject to any Intercreditor Agreement, 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. Subject to any Intercreditor Agreement, a Majority In Interest of Certificateholders of any Series has the right with respect to the related Pass Through Trust to direct the Pass Through Trustee as to the time, method, and place of conducting any proceeding for any remedy available to the Pass Through Trustee with respect to such Pass Through Trust or pursuant to the terms of any Intercreditor Agreement, or exercising any trust or power conferred on the Pass Through Trustee under this Agreement or any Intercreditor Agreement, including any right of the Pass Through Trustee as Controlling Party under any Intercreditor Agreement or as holder of the Equipment Certificates; provided that such direction is not otherwise than in accordance with law and the provisions of such Pass Through Trust and the Pass Through Trustee has received, to the extent provided in Sections 7.07 and 8.03 and Article IX hereof, such reasonable indemnification as it may require against the costs, expenses and liabilities to be incurred by the Pass Through Trustee; and provided further that the Pass Through Trustee has the right to decline to follow any such direction if the Pass Through Trustee, being advised by counsel, determines that the action or proceeding so directed may not lawfully be taken or if the Pass Through Trustee in good faith by its board of directors, the executive committee, or a trust committee of directors or Responsible Officers of the Pass Through Trustee determines that the action or proceedings so directed would involve the Pass Through Trustee in personal liability or if the Pass Through Trustee in good faith so determines that the actions or forebearances specified in or pursuant to such direction would be unduly prejudicial to the interests of the Certificateholders of such Series not joining in the giving of said direction, it being understood that the Pass Through Trustee shall have no duty to ascertain whether or not such actions or forebearances are unduly prejudicial to such Certificateholders. Nothing in this Pass Through Agreement or any Series Supplement shall impair the right of the Pass Through Trustee in its discretion to take any action deemed proper by the Pass Through Trustee with respect to the related Pass Through Trust and which is not inconsistent with such direction by Certificateholders of the related Series. SECTION 7.10. Waiver of Past Events of Default. Subject to any Intercreditor Agreement, the Majority in Interest of Certificateholders of any Series (i) may on behalf of all of the Certificateholders waive any past Event of Default under the related Pass Through Trust or the related Series Supplement and its consequences or (ii) if the Pass Through Trustee is the Controlling Party, may direct the Pass Through Trustee to instruct the applicable Indenture Trustee to waive, any past Indenture Default under any Indenture and its consequences, and thereby annul any direction given by such Certificateholders or the Pass Through Trustee to such Indenture Trustee with respect thereto. Upon such waiver such Event of Default will cease to exist and any Event of Default arising therefrom will be deemed to have been cured for every purpose of such Pass Through Trust, but no such waiver will extend to any subsequent or other Event of Default thereunder or impair any right consequent thereon; provided that any such waiver will be effective to waive any such past Event of Default and its consequences as described above if, but only if, the correlative Indenture Event of Default has been waived under the related Indenture by the requisite holders of the Equipment Certificates outstanding thereunder; and provided further that in the absence of written instructions from all Certificateholders of any Series (or the proxy therefor), the Pass Through Trustee shall not waive any Event of Default (i) consisting of the failure to pay any principal of, or premium (if any), or interest on, or other amounts due under, any Equipment Certificate held by the related Pass Through Trust and the consequent failure to distribute any related Scheduled Payment or Special Payment pursuant to Article V hereof on or after the respective due date therefor set forth in the related Series Supplement or (ii) in respect of a covenant or provision under any Pass Through Trust that, under Article XI hereof or the related Series Supplement, cannot be modified or amended without the consent of each Certificateholder of the related Series (or the proxy therefor). SECTION 7.11. Notice of Pass Through Defaults. The Pass Through Trustee shall, in the manner and to the extent required by Section 313(c) of the Trust Indenture Act, notify the Certificateholders of any Series of all Pass Through Defaults under the related Pass Through Trust known to 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) whenever in the administration of this Agreement or any Intercreditor Agreement 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 or any Intercreditor Agreement at the request, order or direction of the Certificateholders of the related Series in accordance with the provisions thereof, unless such Certificateholders have offered to the Pass Through Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred therein or thereby; (e) the Pass Through Trustee shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion, rights or powers conferred upon it under any Pass Through Trust, under this Agreement or under any Intercreditor Agreement; (f) prior to the occurrence of an Event of Default under any Pass Through Trust and after the curing or waiving of all Events of Default thereunder, the Pass Through Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, note, security, or other paper or document unless requested in writing to do so by the Majority in Interest of Certificateholders of the related Series; provided that if the payment within a reasonable time to the Pass Through Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Pass Through Trustee, not reasonably assured to the Pass Through Trustee by the security afforded to it by the terms of such Pass Through Trust, the Pass Through Trustee may require reasonable 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 any Intercreditor Agreement or perform any duties hereunder or thereunder either directly or by or through agents or attorneys not regularly in its employ and the Pass Through Trustee shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed by it with due care under this Agreement or any Intercreditor Agreement; and (h) the Pass Through Trustee shall not be required to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers under any Pass Through Trust, if the Pass Through Trustee has determined in good faith that the repayment of such funds or adequate indemnity against such liability is not reasonably assured to it. SECTION 8.04. Pass Through Trustee Not Responsible for Recitals. The Pass Through Trustee assumes no responsibility for the correctness of the recitals contained herein or in any Pass Through Certificates, except for the execution and authentication of such Pass Through Certificates by the Pass Through Trustee in accordance with Sections 2.05 and 2.06 hereof, respectively. SECTION 8.05. Pass Through Trustee and Agents May Hold Pass Through Certificates; Collections. The Pass Through Trustee and any agent of the Pass Through Trustee, in its individual or any other capacity, may become the owner or pledgee of Pass Through Certificates with the same rights it would have if it were not the Pass Through Trustee or such agent and, subject to the applicable provisions of the Trust Indenture Act, may otherwise deal with the Company, any Related Indenture Trustee or Related Owner Trustee and receive, collect, hold and retain collections therefrom with the same rights it would have if it were not the Pass Through Trustee or such agent. SECTION 8.06. Moneys Held by Pass Through Trustee. Subject to Sections 5.04 and 12.04 hereof, all moneys received by the Pass Through Trustee shall, until used or applied as provided herein, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by mandatory provisions of law. Subject to Section 5.04 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 or to any applicable Intercreditor Agreement or Liquidity Facility for one or more of the following purposes: (a) to provide for the formation of any Pass Through Trust, the issuance of the related Series and the other matters contemplated by Section 2.01(b) hereof; (b) to evidence the succession of another corporation to the Company, or successive successions, and the assumption by the successor corporation of the covenants, agreements and obligations of the Company herein and in each Series Supplement; (c) to add to the covenants of the Company such further covenants, restrictions, conditions or provisions as the Pass Through Trustee shall consider to be for the protection of the Certificateholders of any Series; (d) to surrender any right or power conferred upon the Company herein or in any Series Supplement; (e) to cure any ambiguity or to correct or supplement any provision contained herein or in any Series Supplement, any Intercreditor Agreement or any Liquidity Facility that may be defective or inconsistent with any other provision contained herein or in such Series Supplement, Intercreditor Agreement or Liquidity Facility; or to modify any other provision in regard to matters or questions arising under this Pass Through Agreement or under any Series Supplement, any Intercreditor Agreement and any Liquidity Facility as the Company may deem necessary or desirable and that will not adversely affect the interests of the related Certificateholders; (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, any Intercreditor Agreement or any Liquidity Facility or of modifying in any manner the rights of the related Certificateholders; provided, that no such supplemental agreement shall cause any Pass Through Trust to become taxable as an association 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. (e) waive, amend or modify the priority of distributions of any Intercreditor Agreement in a manner adverse to the Certificateholder. Upon the request of the Company and upon the filing with the Pass Through Trustee of evidence of the consent of the applicable Certificateholders required under this Section 11.02 and other documents, if any, required by Section 6.01, 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 or as Controlling Party, 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 and any Intercreditor Agreement, if an Event of Default shall have occurred and be continuing, the Pass Through Trustee may, in its own discretion and at its own direction, consent and notify the Related Indenture Trustee of such consent to any modification, amendment, supplement or waiver under any related Indenture Document. ARTICLE XII TERMINATION OF PASS THROUGH TRUSTS; UNCLAIMED MONEYS SECTION 12.01. Termination of Pass Through Trusts. For any Pass Through Trust created by this Pass Through Agreement as supplemented by a related Series Supplement, such Pass Through Trust and the respective obligations and responsibilities of the Company and the Pass Through Trustee under such Pass Through Trust shall terminate upon the distribution to all Certificateholders of the related Series and the Pass Through Trustee of all amounts required to be distributed to them pursuant to this Pass Through Agreement and the related Series Supplement and the disposition of all property held as part of the Trust Property of such Pass Through Trust; provided that in no event shall such Pass Through Trust continue beyond the final expiration date determined as provided in such Series Supplement. Notice of termination of any Pass Through Trust, specifying the applicable Distribution Date upon which the Certificateholders of the related Series may surrender their Pass Through Certificates to the Pass Through Trustee for payment of the final distribution and cancellation thereof, shall be mailed promptly by the Pass Through Trustee to such Certificateholders not earlier than the 60th day and not later than the 20th day next preceding such final distribution specifying (i) the Distribution Date upon which such final distribution will be made and that such distribution will be made only upon presentation and surrender of the related Pass Through Certificates at the office or agency of the Pass Through Trustee specified therein, (ii) the amount of any such final distribution, and (iii) that the Record 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 ______________________, as Pass Through Trustee, at its office at __________________________________, ________________, (fax (___) ___-____), Attention: ___________________________ 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. SECTION 13.16. Registration of Equipment Certificates in Name of Subordination Agent. If a Pass Through Trust is party to an Intercreditor Agreement, the Pass Through Trustee agrees that all Equipment Certificates to be purchased by such Pass Through Trust shall be issued in the name of the Subordination Agent under such Intercreditor Agreement or its nominee and held by such Subordination Agent in trust for the benefit of the Certificateholders, or, if not so held, such Subordination Agent or its nominee shall be reflected as the owner of such Equipment Certificates in the register of the issuer of such Equipment Certificates. IN WITNESS WHEREOF, the parties hereto have caused this Pass Through Agreement to be duly executed this _____ day of _________, ____ 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. ______________________________________, not in its individual capacity, except as otherwise expressly provided herein, but solely as Pass Through Trustee By: __________________________________________ Name: Title: FEDERAL EXPRESS CORPORATION By: __________________________________________ Name: 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.] _________ 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 Through Trust Agreement dated as of __________, _____ (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, the Series Supplement and any Intercreditor Agreement, to which the Certificateholder of this Pass Through Certificate by virtue of the acceptance hereof assents and by which such Certificateholder is bound. The property of the Pass Through Trust includes certain Equipment Certificates and all rights of the Pass Through Trust to receive any payments under any Intercreditor Agreement or Liquidity Facility (the "Trust Property"). 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 Pass Through Certificates represent fractional undivided interests in the Pass Through Trust and the Trust Property, and 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, the Series Supplement and any Intercreditor Agreement, 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, the Series Supplement and any Intercreditor Agreement, if Special Payments on the Equipment Certificates are received by the Pass Through Trustee, from funds then available to the Pass Through Trustee, there shall be distributed on the applicable Special Distribution Date, to the Person in whose name this Pass Through Certificate is registered at the close of business on the 15th day preceding such Special Distribution Date, an amount in respect of such Special Payments on the Equipment Certificates, equal to the product of the percentage interest in the Pass Through Trust evidenced by this Pass Through Certificate and an amount equal to the sum of such Special Payments so received. If a Distribution Date is not a Business Day, distribution shall be made on the immediately following Business Day with the same force and effect as if made on such Distribution Date and no interest shall accrue during the intervening period. The Special Distribution Date shall be 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.] This Pass Through Certificate shall be governed by and construed in accordance with the laws of the State of New York. _________ Subject to revision as set forth in Section 6.06 hereof. 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__-___ Regular Scheduled Principal Distribution Date Payments on 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 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 _________, ____ $__________________ Federal Express Corporation Pass Through Trust, 199__-___ Federal Express Corporation 199__ Pass Through Certificates, Series ___ __________________________________________ 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 Certifi-cates................... 5 SECTION 2.04. Purchase of Equipment Certificates. ..................... 5 SECTION 2.05. Representations and Warranties of the Company............ 5 SECTION 2.06. The Trustee. ............................................ 5 SECTION 2.07. Conditions Precedent..................................... 5 SECTION 2.08. 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. ...................... 6 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............................ 8 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 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 ________, ____ (the "Pass Through Agreement"), between the Company and ___________________________________, a ___________________________. RECITALS WHEREAS, capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, Section 2.01 of the Pass Through Agree-ment 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 certificate-holders 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. "Intercreditor Agreement" has the meaning defined in Article I of the Pass Through Agreement. "Issuance Date" means the date defined as the Closing Time in the Underwriting Agreement. "Liquidity Facility" has the meaning defined in Article I of the Pass Through Agreement. "Liquidity Provider" means _______________________________. "Participation Agreements" means those Participation Agreements listed in Schedule I hereto. "Pass Through Certificates" means the Pass Through Certificates designated in Section 2.01 hereof. "Pass Through Trust," "this Pass Through Trust" and other like words means the Pass Through Trust designated in Section 2.01 hereof. "Paying Agent" means the Person specified as such in Section 3.06 hereof. "Record Date" means any Record Date specified in Section 3.02 hereof. "Registrar" means the Person specified as such in Section 3.06 hereof. "Regular Distribution Date" means any Regular Distribution Date specified in Section 3.01 hereof. "Special Distribution Date" means, for any Special Payment, the Special Distribution Date for such Special Payment specified in Section 3.01 hereof. "Special Payments Account" means the Special Payments Account specified in Section 3.03 hereof. "Subordination Agent" shall have the meaning specified therefor in any Intercreditor Agreement. "Trust Property" means (i) all money, instruments, including the Equipment Certificates that have been issued by the related Owner Trustee and delivered to and accepted by the Pass Through Trustee for the benefit of the Certificateholders, and other property held as the property of this Pass Through Trust, including all distributions thereon and proceeds thereof and (ii) all rights of the Pass Through Trust and the Pass Through Trustee, on behalf of the Pass Through Trust, under any Intercreditor Agreement and the Liquidity Facility, including, without limitation, all rights to receive certain payments thereunder, and all monies paid to the Pass Through Trustee on behalf of the Pass Through Trust pursuant to any Intercreditor Agreement or the Liquidity Facility. "Underwriters" means the several Underwriters named in the Underwriting Agreement. "Underwriting Agreement" means the Underwriting Agreement dated _________, 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 some-times 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 Certifi-cates"). 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 Certificate-holders. SECTION 2.03. Issuance of Pass Through Certifi-cates. 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 pur-chase, 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. The Trustee. The Trustee is hereby directed to execute and deliver the Intercreditor Agreement on or prior to the Issuance Date in the form delivered to the Trustee by the Company. The Trustee represents and warrants that the Intercreditor Agreement will be duly executed and delivered by one of its officers who is duly authorized to execute and deliver such document on its behalf. SECTION 2.07. Conditions Precedent. The obliga-tions 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 certifi-cate of the Company delivered to the Underwriters pursuant to Section 5(c) of the Underwriting Agreement, and (ii) satis-faction or waiver of the conditions for the purchase by the Underwriters of the Pass Through Certificates set forth in Section 5 of the Underwriting Agreement, which satisfaction or waiver for the purposes hereof shall be conclusively demonstrated by the receipt by the Pass Through Trustee of the total proceeds payable by such Underwriters pursuant to the Underwriting Agreement with respect to the Series ___ Pass Through Certificates. SECTION 2.08. Acceptance of Appointment of Pass Through Trustee. __________________________ represents and warrants that it is qualified to serve as Pass Through Trustee and satisfies the criteria specified in Section 10.02 of the Pass Through Agreement for eligibility as a Pass Through Trustee. _______________________________ hereby agrees to serve as Pass Through Trustee for the Pass Through Certificates and acknowledges its appointment as Pass Through Trustee in accordance with the provisions of, and subject to all of the terms and conditions set forth in, the Pass Through Agreement and this related Series Supplement upon the execution and delivery of this Series Supplement. 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 Distribu-tion Date is the fifteenth day preceding such Special Distri-bution 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 substan-tially 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 authenti-cated 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 authenti-ca-tion 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 incor-porated 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 Supple-ment. 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 Through Trust Agreement dated as of _________, ____ (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, the Series Supplement and any Intercreditor Agreement, to which the Certificateholder of this Pass Through Certificate by virtue of the acceptance hereof assents and by which such Certificateholder is bound. The property of the Pass Through Trust includes certain Equipment Certificates and all rights of the Pass Through Trust to receive payments under the Intercreditor Agreement and the Liquidity Facility (the "Trust Property"). 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. Each of the Pass Through Certificates represents a Fractional Undivided Interest in the Pass Through Trust and the Trust Property, and has no rights, benefits or interests in respect of any other separate trust established pursuant to the terms of the Pass Through Agreement for any other series of Pass Through Certificates issued pursuant thereto. Subject to and in accordance with the terms of the Pass Through Agreement, the Series Supplement and any Intercreditor Agreement, 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, the Series Supplement and any Intercreditor Agreement, if Special Payments on the Equipment Certificates are received by the Pass Through Trustee, from funds then available to the Pass Through Trustee, there shall be distributed on the applicable Special Distribution Date, to the Person in whose name this Pass Through Certificate is registered at the close of business on the 15th day preceding such Special Distribution Date, an amount in respect of such Special Payments on the Equipment Certificates, equal to the product of the percentage interest in the Pass Through Trust evidenced by this Pass Through Certificate and an amount equal to the sum of such Special Payments so received. If a Distribution Date is not a Business Day, distribution shall be made on the immediately following Business Day with the same force and effect as if made on such Distribution Date and no interest shall accrue during the intervening period. The Special Distribution Date shall be 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.] 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. _________ Subject to revision as set forth in Section 6.06 of The Pass Through Agreement. 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 Supple-ment 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 Certificate-holders 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 Certificate-holder 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 Certificate-holders 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 denomina-tions 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 Certifi-cates 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-23.(E) 3 Exhibit 23(e) CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this Post-Effective Amendment No. 1 to Form S-3 registration statement of our reports dated July 1, 1996, included (or incorporated by reference) in Federal Express Corporation's Form 10-K for the year ended May 31, 1996, and to all references to our firm included in this registration statement. /s/ ARTHUR ANDERSEN LLP ------------------------ ARTHUR ANDERSEN LLP Memphis, Tennessee April 21, 1997. -----END PRIVACY-ENHANCED MESSAGE-----