Exhibit 2.
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PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N677FE)
Dated as of June 15, 1998
Amended and Restated as of August 1, 1998
among
FEDERAL EXPRESS CORPORATION,
Lessee and Initial Owner Participant
CESSNA FINANCE CORPORATION,
Owner Participant
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
Not in Its Individual Capacity
Except as Otherwise Expressly
Set Forth Herein, but Solely as Owner Trustee,
Owner Trustee
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Indenture Trustee
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Pass Through Trustee
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Subordination Agent
______________________________
LEVERAGED LEASE OF ONE AIRBUS A300F4-605R AIRCRAFT
SERIAL NO. 791, REGISTRATION NO. N677FE
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TABLE OF CONTENTS
Page
Initial Recitals............................................................ 1
ARTICLE 1
DEFINITIONS............................................................ 3
ARTICLE 2
AMENDMENTS; ADJUSTMENTS
Section 2.01. [Reserved].............................................. 3
Section 2.02. [Reserved].............................................. 3
Section 2.03. Amendments on Delivery Date............................. 3
ARTICLE 3
PARTICIPATION IN INVESTMENT ON DELIVERY DATE;
DELIVERY OF AIRCRAFT
Section 3.01. Lessee's Notice of Delivery Date........................ 5
Section 3.02. Commitments to Participate in Purchase Price............ 5
Section 3.03. Owner Participant's Instructions to Owner Trustee....... 8
Section 3.04. Transaction Costs....................................... 8
Section 3.05. Postponement of Delivery Date........................... 9
Section 3.06. Closing................................................. 10
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent.................................... 10
Section 4.02. Opinion of Special Aviation Counsel Upon Registration... 22
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations............ 22
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties................. 23
Section 6.02. Offering by Lessee...................................... 29
Section 6.03. Certain Covenants of Lessee............................. 29
Section 6.04. Survival of Representations and Warranties. ............ 37
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in Lessor's
Estate............................................. 37
Section 7.02. Citizenship............................................. 37
Section 7.03. Representations, Warranties and Covenants of Owner
Participant........................................ 39
Section 7.04. Representations, Covenants and Warranties of SSB and the
Owner Trustee...................................... 41
Section 7.05. Representations, Warranties and Covenants of the
Indenture Trustee.................................. 44
Section 7.06. Indenture Trustee's Notice of Default................... 46
Section 7.07. Releases from Indenture................................. 46
Section 7.08. Covenant of Quiet Enjoyment............................. 46
Section 7.09. Pass Through Trustee's Representations and Warranties... 46
Section 7.10. Survival of Representations, Warranties and Covenants... 47
Section 7.11. Lessee's Assumption of the Certificates. ............... 47
Section 7.12. Indebtedness of Owner Trustee........................... 49
Section 7.13. Compliance with Trust Agreement, Etc. .................. 49
Section 7.14. Subordination Agent's Representations, Warranties and
Covenants. ........................................ 50
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes........................ 52
Section 8.02. After-Tax Basis......................................... 56
Section 8.03. Time of Payment......................................... 57
Section 8.04. Contests................................................ 57
Section 8.05. Refunds................................................. 59
Section 8.06. Lessee's Reports........................................ 60
Section 8.07. Survival of Obligations................................. 60
Section 8.08. Payment of Taxes........................................ 60
Section 8.09. Reimbursements by Indemnitees Generally................. 61
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally............................................... 61
Section 9.02. After-Tax Basis......................................... 65
Section 9.03. Subrogation............................................. 66
Section 9.04. Notice and Payment...................................... 66
Section 9.05. Refunds................................................. 66
Section 9.06. Defense of Claims. ..................................... 66
Section 9.07. Survival of Obligations................................. 67
Section 9.08. Effect of Other Indemnities............................. 67
Section 9.09. Interest................................................ 68
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs...................... 68
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee................. 71
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant................... 72
Section 12.02. Interest of Holders of Certificates.................... 72
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents................... 73
Section 13.02. Further Assurances..................................... 73
Section 13.03. Pass Through Trustee's and Subordination Agent's
Acknowledgment.................................... 73
Section 13.04. No Retroactive Application. ........................... 73
ARTICLE 14
NOTICES
Section 14.01. Notices................................................ 74
ARTICLE 15
REFINANCING
Section 15.01. Refinancing. .......................................... 75
ARTICLE 16
[RESERVED]
ARTICLE 17
MISCELLANEOUS
Section 17.01. [Reserved]............................................. 78
Section 17.02. Collateral Account..................................... 78
Section 17.03. Counterparts........................................... 80
Section 17.04. No Oral Modifications.................................. 80
Section 17.05. Captions............................................... 80
Section 17.06. Successors and Assigns. ............................... 80
Section 17.07. Concerning the Owner Trustee, Indenture Trustee and
the Pass Through Trustee.......................... 80
Section 17.08. Severability........................................... 81
Section 17.09. Public Release of Information.......................... 81
Section 17.10. Certain Limitations on Reorganization.................. 81
Section 17.11. GOVERNING LAW.......................................... 82
Section 17.12. Section 1110 Compliance................................ 82
Section 17.13. Reliance of Liquidity Providers. ...................... 82
ARTICLE 18
CONFIDENTIALITY
Section 18.01. Confidentiality........................................ 82
SCHEDULE I Owner Participant's Commitment; Debt Portion
SCHEDULE II Definitions
SCHEDULE III Permitted Country List
EXHIBIT A(1)(a) Opinion of Lessee's Counsel
EXHIBIT A(1)(b) Opinion of Lessee's Special Counsel
EXHIBIT A(2)(a) Opinion of Owner Participant's and Owner Participant
Guarantor's Special Counsel
EXHIBIT A(2)(b) Opinion of Owner Participant's and Owner Participant
Guarantor's Counsel
EXHIBIT A(3) Opinion of Indenture Trustee's Special Counsel
EXHIBIT A(4) Opinion of Owner Trustee's Special Counsel
EXHIBIT A(5) Opinion of Pass Through Trustee's and Subordination
Agent's Special Counsel
EXHIBIT A(6) Opinion of Engine Manufacturer's Counsel
EXHIBIT A(7) Opinion of Manufacturer's and AVSA's Counsel
EXHIBIT A(8) Opinion of Special Aviation Counsel
EXHIBIT B Form of Lease Agreement
EXHIBIT C Form of Indenture
EXHIBIT D Form of Trust Agreement
EXHIBIT E Form of Purchase Agreement Assignment, Consent and
Agreement, AVSA Consent and Agreement
EXHIBIT F Form of Engine Warranty Assignment and Engine Consent
PARTICIPATION AGREEMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N677FE)
PARTICIPATION AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO.
N677FE) dated as of June 15, 1998, as amended and restated as of August 1, 1998
(this "Agreement") among FEDERAL EXPRESS CORPORATION, a Delaware corporation
(herein, together with its successors and permitted assigns, the "Lessee" and
the "Initial Owner Participant"), CESSNA FINANCE CORPORATION, a Kansas
corporation (herein, together with its successors and permitted assigns, the
"Owner Participant"), STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, a national banking association, not in its individual
capacity, except as otherwise expressly stated herein, but solely as owner
trustee under the Trust Agreement referred to below (in such capacity as
trustee, together with its successors and permitted assigns, the "Owner
Trustee"), FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, not in its individual capacity, except as otherwise expressly
stated herein, but solely as indenture trustee under the Indenture referred to
below (in such capacity as trustee, together with its successors and permitted
assigns, the "Indenture Trustee"), FIRST SECURITY BANK, NATIONAL ASSOCIATION, a
national banking association, not in its individual capacity, except as
otherwise expressly stated herein, but solely as pass through trustee of three
separate Pass Through Trusts (in such capacity as trustee, together with its
successors and permitted assigns, the "Pass Through Trustee"), and FIRST
SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, except as otherwise expressly stated herein, but solely as
subordination agent (in such capacity as trustee, together with its successors
and permitted assigns, the "Subordination Agent").
W I T N E S S E T H :
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article 1 hereof.
WHEREAS, on the Certificate Closing Date, the Lessee, the Initial
Owner Participant, the Owner Trustee, the Indenture Trustee, the Pass Through
Trustee and the Subordination Agent entered into the Original Participation
Agreement (such term, and all other terms not heretofore defined, having the
meanings assigned thereto as provided in Article 1 below);
WHEREAS, immediately prior to the execution and delivery of the
Original Participation Agreement, the Initial Owner Participant entered into
the Original Trust Agreement relating to the Aircraft with SSB, pursuant to
which SSB agreed, among other things, to hold the Lessor's Estate for the
benefit of the Initial Owner Participant on the terms specified in the Trust
Agreement, subject to the Lien of the Indenture;
WHEREAS, on the Pass Through Closing Date, a closing occurred
with respect to the public offering of Pass Through Certificates issued by each
Pass Through Trust, an allocable amount of the proceeds of which offering was
used by the Pass Through Trustee to purchase for each such Pass Through Trust
the Certificates of the Series and Maturity applicable thereto;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Trustee and the Indenture Trustee
entered into the Original Indenture for the benefit of the Pass Through
Trustee, pursuant to which the Owner Trustee issued the Certificates to the
Subordination Agent on behalf of the Pass Through Trustee as evidence of the
loans made by the Pass Through Trustee to the Owner Trustee, the proceeds of
which loans were deposited by the Indenture Trustee on behalf of the Owner
Trustee in the Collateral Account;
WHEREAS, the Certificates are held by the Subordination Agent
pursuant to the Intercreditor Agreement on behalf of the Pass Through Trustee
for each of the Pass Through Trusts;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, (i) the Liquidity Provider entered into two
revolving credit agreements (each, a "Liquidity Facility"), one for the benefit
of the holders of Pass Through Certificates of each of the Pass Through Trusts
for the Series A Certificates and the Series B Certificates, with the
Subordination Agent, as agent for the Pass Through Trustee on behalf of each
such Pass Through Trust; and (ii) the Pass Through Trustee, each Liquidity
Provider and the Subordination Agent entered into the Intercreditor Agreement;
WHEREAS, any Series C Certificates outstanding after the Delivery
Date that are subject to prepayment on the Series C Prepayment Date will be
secured by the Liquid Collateral up to and including the Series C Prepayment
Date;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, the Owner Trustee and the Lessee entered into
the Original Lease relating to the Aircraft, whereby, subject to the terms and
conditions set forth in said Lease, the Owner Trustee agreed to lease the
Aircraft to the Lessee on the Delivery Date, and the Lessee agreed to lease the
Aircraft from the Owner Trustee on the Delivery Date;
WHEREAS, the Initial Owner Participant wishes to transfer its
Beneficial Interest to the Owner Participant on the Delivery Date and the Owner
Participant wishes to acquire such Beneficial Interest from the Initial Owner
Participant;
WHEREAS, pursuant to the terms of the Trust Agreement, the Owner
Trustee will be authorized and directed by the Owner Participant to purchase
the Aircraft from the Lessee on the Delivery Date subject to the terms and
conditions of this Agreement, the Engine Warranty Assignment, AVSA's FAA ▇▇▇▇
of Sale and AVSA's Warranty ▇▇▇▇ of Sale;
WHEREAS, to fund the Owner Trustee's purchase of the Aircraft on
the Delivery Date, the Indenture Trustee will, subject to the conditions
precedent set forth herein, release the amounts held in the Collateral Account;
and
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee,
the Indenture Trustee, the Pass Through Trustee and the Subordination Agent
have agreed, to the extent they are parties thereto and, subject to the terms
and conditions hereinafter provided, to amend and restate the Original
Participation Agreement, the Original Indenture, the Original Lease and the
Original Trust Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
contained in this Agreement and other good and valuable consideration, receipt
of which is hereby acknowledged, the parties hereto agree, subject to the terms
and conditions hereinafter provided, that the Original Participation Agreement
be and the same is hereby amended and restated in its entirety as follows:
ARTICLE 1
DEFINITIONS
Unless otherwise specifically provided herein, the definitions
set forth in Schedule II hereto are incorporated herein for all purposes of
this Agreement and shall be equally applicable to both the singular and the
plural forms of the terms so defined.
ARTICLE 2
AMENDMENTS; ADJUSTMENTS
Section 2.01. [Reserved].
Section 2.02. [Reserved].
Section 2.03. Amendments on Delivery Date. (a) Amendment and
Restatement of Certain Documents. Upon transfer by the Initial Owner
Participant of its Beneficial Interest on the Delivery Date (as contemplated by
Section 3.02(a) hereof), the parties hereto shall enter into amendments and
restatements of the Original Trust Agreement, the Original Lease and the
Original Indenture, which amendments and restatements shall reflect such
changes as shall have been requested by the Owner Participant, agreed to by the
Lessee and, if modified in any material respect, as to which Rating Agency
Confirmation shall have been obtained from each Rating Agency by the Lessee (to
be delivered by the Lessee to the Pass Through Trustee on or before the
Delivery Date); provided, however, that in any event such amended and restated
documents shall not vary the Mandatory Economic Terms and shall contain the
Mandatory Document Terms.
(b) Pre-Delivery Date Adjustments to Owner Participant's
Commitment, Basic Rent, Stipulated Loss Values, Termination Values, EBO Price,
Initial Amount of Series C Certificates and the Debt Amortization for Series A,
B and C Certificates. On or prior to the Delivery Date, the percentages for
Owner Participant's Commitment (+/-5%), for Basic Rent referred to in Schedule
II of the Lease and for Stipulated Loss Value and Termination Value referred to
in Schedule III and Schedule IV, respectively, of the Lease, the EBO Price, the
initial amount of the Series C Certificates and the debt amortization for the
Series A, B and C Certificates shall be adjusted (upward or downward)
(maintaining the Owner's Economic Return and the Mandatory Economic Terms),
subject to the procedures set forth in Section 3.04 of the Lease and the
minimum values established by Section 3.05 of the Lease and the definitions of
Stipulated Loss Value and Termination Value, to reflect changes in the pricing
assumptions with respect to (i) the Delivery Date being other than August 27,
1998, (ii) a different rate of interest or amortization schedule assumed by the
Owner Participant in calculating such percentages from that assumed by the
Owner Participant in originally calculating such percentages, (iii) Transaction
Costs being other than as assumed in Section 10.01 hereof, (iv) any change in
the length of the Basic Term (but in no event shall the Term exceed 25 years)
and (v) a Change in Tax Law which occurs after the date of the execution of
this Agreement but on or prior to the Delivery Date, provided that the Owner
Participant shall not be required to make any adjustment to the lease structure
unless it, in its reasonable judgment, believes such adjustment is in
compliance with such Change in Tax Law. If as a result of such adjustment, the
adjusted Net Present Value of Rents expressed as a percentage of the Purchase
Price discounted at 6.50% is increased by more than 100 basis points, the
Lessee shall have the right to terminate its commitment and will have no
further obligations other than with respect to the Transaction Costs as
described in Section 3.04 hereof.
In connection with the foregoing adjustments, (i) on the Delivery
Date the Subordination Agent, on behalf of the Pass Through Trustee, shall
submit the Certificates to the Indenture Trustee, on behalf of the Owner
Trustee, for attachment thereto of an amended Schedule I and the making of
other related amendments and (ii) the Pass Through Trustee shall mail to the
holders of Pass Through Certificates a statement pursuant to Section 5.03 of
the Pass Through Agreement setting forth the revised Pool Balance and Pool
Factors as if the Delivery Date were a Special Distribution Date.
On the Delivery Date, the Lessee, on behalf of the Owner Trustee,
shall provide written notice to the Indenture Trustee of the aggregate
principal amount of the Series C Certificates, if any, which shall, subject to
any decrease therein under Section 2.19 of the Indenture on any Adjustment
Date, be subject to prepayment on the Series C Prepayment Date pursuant to
Section 2.03(b) of the Original Participation Agreement. On any Adjustment
Date and on the Series C Prepayment Date in the event of any prepayment of such
Series C Certificates, the Owner Trustee shall deliver and the Subordination
Agent on behalf of the Pass Through Trustee of each Pass Through Trust shall
accept delivery of an amended Schedule I to each Series C Certificate
containing such changed principal installments. If any Adjustment Date occurs
later than the Delivery Date, the Lessee shall cause any required filing and
recording of the affected documents with the Aeronautics Authority to be
effected on such date.
The Owner Trustee will give not less than 2 days notice of any
such proposed amendment which is to be effected prior to or on the Delivery
Date.
The Certificates and the amendments and restatements of the
Original Lease and the Original Indenture shall each reflect the amendments
contemplated by this Section 2.03(b).
ARTICLE 3
PARTICIPATION IN INVESTMENT ON DELIVERY DATE;
DELIVERY OF AIRCRAFT
Section 3.01. Lessee's Notice of Delivery Date. The Lessee
agrees to give the Owner Participant, the Indenture Trustee, the Owner Trustee
and the Pass Through Trustee at least three (3) Business Days' written or
facsimile notice prior to the Delivery Date (which notice shall be effective
only if received not later than 10:00 a.m. (New York City time) on the date
that is at least three (3) Business Days prior to the Delivery Date), which
Delivery Notice shall specify the amount of the Purchase Price, the estimated
amount of the Owner Participant's Commitment, the estimated Debt Portion, the
Delivery Date for the Aircraft, the serial number of the Airframe and each
Engine, and the Aeronautics Authority registration number for the Aircraft.
Section 3.02. Commitments to Participate in Purchase Price. (a)
Participation in Purchase Price. Subject to the terms and conditions of this
Agreement and of the Commitment Letter, on the Delivery Date, (i) subject to
the proviso to this Section 3.02(a), the Indenture Trustee agrees to release
the Debt Portion or such lesser amount as may then be held in the Collateral
Account together with the Lessee Shortfall (as defined in clause (iii) below),
if any, to the Owner Trustee for application to the Purchase Price as provided
below, (ii) the Initial Owner Participant agrees to transfer its Beneficial
Interest to the Owner Participant in consideration for the Owner Participant's
participation in the Lessor's payment of the Purchase Price through an
investment in the Lessor's Estate in an amount equal to the amount set forth
opposite the Owner Participant's name in Schedule I hereto, (iii) subject to
the proviso to this Section 3.02(a), the Lessee agrees to pay to the Indenture
Trustee the excess, if any, of (I) the Debt Portion over (II) such amount as
may then be held in the Collateral Account (the "Lessee Shortfall") as provided
in Section 17.02(a) hereof, and (iv) pursuant to the Purchase Agreement as
assigned pursuant to the Purchase Agreement Assignment, AVSA shall sell the
Aircraft to the Owner Trustee and the Owner Trustee shall immediately
thereafter lease the Aircraft to the Lessee pursuant to the Lease. In
consideration for the assignment to the Owner Trustee by the Lessee under the
Purchase Agreement Assignment of the Lessee's right to purchase the Aircraft
for the remaining balance due under the Purchase Agreement and for the transfer
of title to the Aircraft from AVSA to the Owner Trustee, the following cash
payments will be made by wire transfer of immediately available funds on the
Delivery Date: (A) by the Owner Trustee to AVSA, an amount equal to the
remaining balance due to AVSA under the Purchase Agreement for the Aircraft, as
evidenced by the Invoice, (B) by the Owner Trustee to the Lessee, an amount
equal to the Purchase Price minus the cash payment to AVSA pursuant to clause
(A) above, and (C) by the Indenture Trustee, on behalf of the Owner Trustee, if
the Indenture Trustee is so instructed by the Lessee, to one or more
Outstanding C Accounts, the excess (or a portion of the excess) of any amounts
then held in the Collateral Account over the Debt Portion; provided, however,
that if (1) the Delivery Date has been postponed, (2) the investments
contemplated by Section 2.14(b) of the Indenture have been made, (3) such
investments do not mature on the rescheduled Delivery Date and (4) the Lessee
elects not to break such investments, then the Indenture Trustee shall not
release amounts in the Collateral Account to the Owner Trustee and the Lessee
shall accept as payment of the Purchase Price by the Owner Trustee an amount
equal to the Owner Participant's Commitment and the Indenture Trustee shall pay
to the Lessee at the end of the applicable investment period referred to in
Section 2.14(b) of the Indenture an amount equal to the Debt Portion or such
lesser amount as may then be held in the Collateral Account. After the Delivery
Date, any amounts remaining in the Collateral Account shall secure the Secured
Obligations relating to any Series C Certificates outstanding after the
Delivery Date that are subject to prepayment on the Series C Prepayment Date
pursuant to Section 6.02(a)(viii) of the Indenture.
(b) Payment of Commitment. The Owner Participant agrees with
the Lessee and only with the Lessee on behalf of the Owner Trustee, subject to
the terms and conditions of this Agreement and the Commitment Letter, to make
the amount of its Commitment available for and on account of the Owner Trustee
on the Delivery Date specified in the Delivery Notice pursuant to Section 3.01
hereof by wire transfer, initiated by 10:00 a.m. (New York City time on such
day) of such amount in immediately available funds, to the Owner Trustee for
deposit in its account at State Street Bank and Trust Company, Boston,
Massachusetts, ABA Number: ▇▇▇-▇▇▇-▇▇▇, Account Name: FedEx Equity Payments,
Account Number: HT5639, Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Re: FedEx Equity Payment
Account. The amount of the Owner Participant's Commitment shall be held for
the account of the Owner Participant by the Owner Trustee until released by the
Owner Participant or its special counsel at closing or until returned to the
Owner Participant in accordance with Section 3.02(c) hereof.
(c) No Obligation to Increase Commitments; Delayed Delivery.
(i) If the Indenture Trustee shall default in its obligation to make the amount
of its Debt Portion available pursuant hereto, the Owner Participant shall have
no obligation to make any portion of such Debt Portion available or to increase
the amount of its Commitment, but the obligations of the Owner Participant
shall nevertheless remain subject to the terms and conditions of this
Agreement.
(ii) Subject to the provisions of Section 3.05 hereof, if the
closing of the transactions contemplated by the Operative Agreements shall not
have been consummated by 2:00p.m. (New York City time), or such earlier time as
directed by the Lessee, on the Scheduled Delivery Date, the Owner Trustee
shall, if instructed in writing by the Lessee, at the risk and expense of the
Lessee, use its reasonable best efforts to cause the Owner Participant's
Commitment to be invested and reinvested to the extent practicable at the
direction received by it from the Lessee (with a copy to the Owner
Participant), at the risk of the Lessee, in Permitted Investments; provided,
however, that in the absence of instructions by 2:00 p.m. (New York City time)
the Owner Trustee shall use its reasonable best efforts to cause such amount or
the proceeds thereof to be invested and reinvested to the extent practicable in
overnight Eurodollar time deposits. Earnings on any such investments shall be
applied to the Lessee's payment obligations, if any, to the Owner Participant
pursuant to the next succeeding paragraph, and the balance, if any, of such
earnings remaining after such application shall be paid in accordance with the
Lessee's written instructions.
If for any reason (i) the Operative Agreements shall not be
executed and delivered by the respective parties thereto and/or the delayed
Delivery Date shall not occur (whether by reason of a failure to meet a
condition precedent thereto set forth in Article 4 hereof or otherwise) on or
before the third Business Day after the Scheduled Delivery Date (or earlier if
requested by the Owner Participant) or, if earlier, September 30, 1998, or (ii)
the Lessee has notified the Owner Trustee (with a copy to the Owner
Participant) prior to 2:00 p.m. (New York City time) on any date after the
Scheduled Delivery Date that it does not intend to go forward to close the
transactions contemplated hereby for such Delivery Date, the Owner Participant
may cancel any funding arrangements made to fund its Commitment on the
Scheduled Delivery Date but the Owner Participant's Commitment hereunder with
respect to the Aircraft shall not be terminated thereby until September 30,
1998, whereupon the Owner Participant's Commitment hereunder shall terminate.
On such third Business Day (or such earlier date) or September 30, 1998, as the
case may be, or the earliest practicable Business Day thereafter, the Owner
Trustee shall return the amounts held by it hereunder to the Owner Participant,
provided that the Owner Trustee shall have had a reasonable time to liquidate
any Permitted Investments it has been authorized to invest in pursuant to the
preceding paragraph and to obtain the proceeds therefrom in funds of the type
originally received, and the Lessee shall pay interest on such funds to the
Owner Participant at the full-term implicit lease rate (which rate shall not be
less than the Owner Participant's cost of funds), such interest to be payable
for the period from and including such Scheduled Delivery Date to but excluding
the date such funds are returned to the Owner Participant in accordance with
the terms hereof; provided that if any such funds are returned to the Owner
Participant after 2:00 p.m. (New York City time) on any such date, such funds
shall be deemed for purposes of this paragraph to have been returned on the
next succeeding Business Day.
The Lessee shall reimburse the Owner Trustee on demand for any
loss incurred by the Owner Trustee as a result of the investment of funds by
the Owner Trustee in accordance with the terms of this Section 3.02(c).
Further, the Lessee shall indemnify the Owner Trustee and hold it harmless from
and against any cost or expense the Owner Trustee may incur as a result of any
investment of funds or transfer of funds referred to herein in accordance with
the terms hereof. The Owner Trustee shall not be liable for failure to invest
such funds except as otherwise provided herein or for any losses incurred on
such investments except for any losses arising out of its own gross negligence
or willful misconduct.
Section 3.03. Owner Participant's Instructions to Owner Trustee.
The Owner Participant agrees that the release of its Commitment in accordance
with the terms hereof shall constitute, without further act, authorization and
direction by the Owner Participant to the Owner Trustee to take the actions
specified in Sections 1.01(a) and (c) of the Trust Agreement and confirmation
that all conditions to closing set forth in Section 4.01 hereof were either met
to the satisfaction of the Owner Participant or, if not so met, were in any
event waived by it.
Section 3.04. Transaction Costs. If the transactions
contemplated by this Article 3 are consummated, as and when any portion of
Transaction Costs becomes due and payable, the Owner Participant shall, as soon
as practicable upon receipt of bills or invoices for the amounts payable make
such payments or, if the Lessee shall have already made such payment, shall
reimburse the Lessee therefor or shall, as soon as practicable, furnish the
Owner Trustee funds sufficient to, and the Owner Trustee shall, as soon as
practicable, make payment of such portion to the Person or Persons entitled to
payment upon presentation to the Owner Trustee of bills or invoices for the
amount of such payment; provided that the Owner Participant will only be
responsible for actual Transaction Costs to the extent they do not exceed the
amount assumed in Section 10.01 hereof unless the schedules of Basic Rent,
Stipulated Loss Values, Termination Values and EBO Price have been adjusted
pursuant to Section 2.03(b) hereof, and provided further that the Owner
Participant will only be responsible for Transaction Costs that are related to
the negotiation, preparation, execution, delivery, filing and recording of the
Operative Agreements. If such transactions are not consummated, the Lessee
shall pay or cause to be paid all the Transaction Costs; provided, however that
if the failure of such transactions to be consummated is due to (i) a failure
of the Owner Participant to obtain investment approval to proceed with the
transactions contemplated hereby or (ii) a failure to comply with its
obligations under the Operative Agreements, the Lessee shall have no obligation
to pay those costs and expenses incurred directly by the Owner Participant in
connection with the transactions contemplated by this Agreement described in
Sections 10.01(a)(i) and (xi) hereof, but the Lessee shall be obligated to pay
all other Transaction Costs.
Section 3.05. Postponement of Delivery Date. (a) If the Owner
Participant shall for any reason fail or refuse to make the full amount of its
Commitment available on the Scheduled Delivery Date in accordance with the
terms of Section 3.02 hereof, the Owner Trustee will promptly give each party
confirmed facsimile notice thereof and the Lessee shall postpone the Delivery
Date to a date not later than the Cut-Off Date. If the Owner Participant shall
for any reason fail or refuse to make the full amount of its Commitment
available in accordance with the terms of Section 3.02 hereof on such postponed
Delivery Date, the Lessee shall endeavor during such period to identify another
equity investor to whom it can assign its Beneficial Interest. If the Lessee
identifies an equity investor, the Lessee shall assign its interest in the
Lessor's Estate as provided above. In case of any such conveyance (but subject
to the satisfaction of the conditions precedent specified herein), the
Indenture Trustee shall release the Debt Portion or such lesser amount as may
then be held in the Collateral Account for application to the payments
contemplated in the last sentence of Section 3.02(a) hereof, subject to the
proviso to Section 3.02(a) hereof. For the avoidance of doubt, it is
understood and agreed that if for any reason other than the failure of the
Manufacturer or AVSA to deliver the Aircraft, the Lessee does not enter into
the Lease Supplement with the Owner Trustee on or prior to the Cut-Off Date,
the Lessee, the Indenture Trustee and the Pass Through Trustee agree that the
Lessee shall purchase the Aircraft and assume all of the obligations of the
Owner Trustee under the Certificates upon satisfaction of the requirements set
forth in Section 4.01 hereof, as the same may be modified by the provisions of
Section 7.11 hereof and as otherwise necessary to reflect a full recourse
secured aircraft financing of the Lessee.
(b) Release of Obligations. If the Delivery Date has not
occurred on or prior to the Cut-Off Date (including by reason of the Aircraft
not being completed and delivered, the Owner Participant's failure to make the
full amount of its Commitment available in accordance with the terms of Section
3.02 hereof and no transferee Owner Participant having been identified pursuant
to Section 3.05(a) hereof), then, in such event, the Owner Trustee shall not
purchase the Aircraft from AVSA, and subject to the last sentence of Section
3.05(a) hereof the parties to the Operative Agreements shall have no further
obligations or liabilities under any of said Operative Agreements with respect
to the Aircraft, including the obligation of the Owner Participant to
participate in the payment of the Purchase Price, and such documents shall
terminate and have no further force or effect with respect to the Aircraft;
provided, however, that if the last sentence of Section 3.05(a) hereof does not
apply the Lessee shall provide, no later than the Cut-Off Date, notice of
prepayment to the Indenture Trustee and the Certificates shall be prepaid on
the 15th day following the Cut-Off Date as provided in Section 6.02(a)(vi) of
the Original Indenture and Section 17.02(c) hereof and provided further, that
(i) the Lessee's obligation to pay any Transaction Costs as provided in Section
3.04 hereof (to the extent such section is applicable) and to indemnify such
parties to the extent provided in such documents, shall not be diminished or
modified in any respect and (ii) the obligations of the Owner Trustee, the
Indenture Trustee and the Lessee to return funds and pay interest, costs,
expenses and other amounts thereon or in respect thereof as provided in Section
3.02 hereof shall continue.
(c) Optional Postponement. Without limiting the provisions of
Section 3.02(c) hereof, the Scheduled Delivery Date may be postponed from time
to time (but in no event shall the Delivery Date be later than the Cut-Off
Date) for any reason, other than pursuant to Section 3.05(a) hereof, if the
Lessee gives the Owner Participant, the Indenture Trustee, the Owner Trustee
and the Pass Through Trustee confirmed facsimile notice (or telephone notice
followed by written confirmation) of such postponement and notice of the date
to which the Delivery Date has been postponed, such notice of postponement to
be received by each party no later than 11:00 a.m. (New York City time) on the
Business Day preceding the Scheduled Delivery Date.
Section 3.06. Closing. The closing with respect to the purchase
and lease of the Aircraft on the Delivery Date shall take place at the offices
of ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent. Subject to the last
paragraph of this Section 4.01, the obligations of the Owner Trustee, the Owner
Participant, the Indenture Trustee, the Subordination Agent and the Pass
Through Trustee on behalf of each Pass Through Trust to participate in the
transactions contemplated hereby on the Delivery Date are subject to the
fulfillment to the satisfaction of each party (or waiver by such party), prior
to or on the Delivery Date, of the following conditions precedent (it being
understood that receipt by the Lessee of any of the following documents shall
not be a condition precedent to the obligations of any party):
(a) Notice, Etc. Each party hereto shall have received a
Delivery Notice pursuant to Section 3.01 hereof at least three (3)
Business Days prior to the Delivery Date.
(b) Legal Investment. No change shall have occurred after the
date which is two days prior to the Delivery Date in applicable laws or
regulations, or interpretations of any such laws or regulations by
applicable regulatory authorities, which, in the opinion of the Owner
Participant or its special counsel, the Pass Through Trustee, the
Subordination Agent or the Indenture Trustee or their special counsel,
would make it illegal for the Owner Participant, the Lessee, the Owner
Trustee, the Pass Through Trustee, the Subordination Agent or the
Indenture Trustee, and no change in circumstances shall have occurred
which would otherwise make it illegal or otherwise in contravention of
guidance issued by regulatory authorities for the Owner Participant, the
Lessee, the Owner Trustee, the Pass Through Trustee, the Subordination
Agent or the Indenture Trustee, to participate in the transactions to be
consummated on the Delivery Date; and no action or proceeding shall have
been instituted nor shall governmental action before any court,
governmental authority or agency be threatened which in the opinion of
counsel for the Owner Participant, the Indenture Trustee, the
Subordination Agent or the Pass Through Trustee is not frivolous, nor
shall any order have been issued or proposed to be issued by any court, or
governmental authority or agency, as of the Delivery Date, to set aside,
restrain, enjoin or prevent the consummation of any of the transactions
contemplated by this Agreement or by any of the other Operative
Agreements.
(c) Documents. The following documents shall have been duly
authorized, executed and delivered by the respective party or parties
thereto, shall each be satisfactory in form and substance to the LC Bank,
the Lessee, the Owner Trustee, the Indenture Trustee, the Pass Through
Trustee, the Subordination Agent and the Owner Participant (each acting
directly or by authorization to its special counsel) and shall each be in
full force and effect; there shall not have occurred any default
thereunder, or any event which with the lapse of time or the giving of
notice or both would be a default thereunder, and copies executed or
certified as requested by the LC Bank, the Lessee, the Owner Trustee, the
Indenture Trustee, the Pass Through Trustee or the Owner Participant, as
the case may be, of such documents shall have been delivered to the LC
Bank, the Owner Participant, the Lessee, the Indenture Trustee, the Pass
Through Trustee and the Owner Trustee (provided that the sole
chattel-paper original of the amended and restated Lease, the Lease
Supplement and the Ancillary Agreement I shall be delivered to the
Indenture Trustee):
(i) this Agreement, as amended and restated as of the date
hereof;
(ii) the Lease, as amended and restated as of the date hereof;
(iii) the Trust Agreement, as amended and restated as of the
date hereof;
(iv) the Indenture, as amended and restated as of the date
hereof;
(v) the Lease Supplement covering the Aircraft, dated the
Delivery Date;
(vi) the Indenture and Security Agreement Supplement covering
the Aircraft, dated the Delivery Date;
(vii) in the case of the Owner Participant only, the Tax
Indemnity Agreement;
(viii) the Ancillary Agreement I;
(ix) the Invoice;
(x) the Engine Warranty Assignment;
(xi) the Engine Consent;
(xii) the Purchase Agreement Assignment and the French Pledge
Agreement with respect thereto;
(xiii) AVSA's FAA ▇▇▇▇ of Sale, AVSA's Warranty ▇▇▇▇ of Sale and
the Airbus Guaranty;
(xiv) the Consent and Agreement and the AVSA Consent and
Agreement;
(xv) the GTA;
(xvi) a redacted version of the Purchase Agreement and the
Consent and Guaranty; and
(xvii) the Owner Participant Guaranty.
(d) Legal Opinions. The Owner Participant, the Owner
Participant Guarantor, the Underwriters, the Lessee, the Owner Trustee,
the Pass Through Trustee and the Indenture Trustee (acting directly or by
authorization to its special counsel) shall have received from the
following counsel their respective legal opinions in each case
satisfactory to the Owner Participant, the Owner Participant Guarantor,
the Underwriters, the Lessee, the Owner Trustee, the Pass Through Trustee
or the Indenture Trustee, as the case may be, as to scope and substance
(and covering such other matters as the recipient may reasonably request)
and dated the Delivery Date:
(i) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Senior Vice President and
General Counsel of the Lessee, in the form of Exhibit A(1)(a)
hereto and addressed to the Underwriters, the Owner Participant,
the Owner Participant Guarantor, the Owner Trustee, the Pass
Through Trustee, each Liquidity Provider and the Indenture
Trustee;
(ii) ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇, special counsel for the
Lessee, in the form of Exhibit A(1)(b) hereto and addressed to
the Underwriters, the Owner Participant, the Owner Participant
Guarantor, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee, each Liquidity Provider and the Lessee;
(iii) ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, special counsel for the
Owner Participant and the Owner Participant Guarantor, in the
form of Exhibit A(2)(a) hereto and the General Counsel's Office
of the Owner Participant and the Owner Participant Guarantor, in
the form of Exhibit A(2)(b) hereto, each addressed to the
Underwriters, the Owner Participant, the Owner Participant
Guarantor, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee, each Liquidity Provider and the Lessee;
(iv) Ray, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, special counsel for the
Indenture Trustee, in the form of Exhibit A(3) hereto and
addressed to the Underwriters, the Owner Participant, the Owner
Participant Guarantor, the Indenture Trustee, the Owner Trustee,
the Pass Through Trustee, each Liquidity Provider and the Lessee;
(v) ▇▇▇▇▇▇▇ ▇▇▇▇ LLP, special counsel for the Owner
Trustee, in the form of Exhibit A(4) hereto and addressed to the
Underwriters, the Owner Participant, the Owner Participant
Guarantor, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee, each Liquidity Provider and the Lessee;
(vi) Ray, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, special counsel for the
Pass Through Trustee and the Subordination Agent, in the form of
Exhibit A(5) hereto and addressed to the Underwriters, the Owner
Participant, the Owner Participant Guarantor, the Indenture
Trustee, the Owner Trustee, the Pass Through Trustee, each
Liquidity Provider and the Lessee;
(vii) counsel for the Engine Manufacturer, in the form
of Exhibit A(6) hereto and addressed to the Underwriters, the
Owner Participant, the Owner Participant Guarantor, the Indenture
Trustee, the Owner Trustee, the Pass Through Trustee, each
Liquidity Provider and the Lessee;
(viii) ▇▇▇▇▇▇▇▇ Chance, special counsel for AVSA and
the Manufacturer, in the form of Exhibit A(7) hereto and
addressed to the Underwriters, the Owner Participant, the Owner
Participant Guarantor, the Indenture Trustee, the Owner Trustee,
the Pass Through Trustee, each Liquidity Provider and the Lessee;
(ix) ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, special aviation
counsel, in the form of Exhibit A(8) hereto and addressed to the
Underwriters, the Owner Participant, the Owner Participant
Guarantor, the Indenture Trustee, the Owner Trustee, the Pass
Through Trustee, each Liquidity Provider and the Lessee; and
(x) in the case of the Owner Participant only,
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, special tax counsel to the Owner
Participant, addressed to the Owner Participant, with respect to
certain tax matters.
(e) Title, Airworthiness and Registration. On the Delivery
Date, the following statements shall be true, and the Owner Participant,
the Indenture Trustee, the Pass Through Trustee and the Owner Trustee
shall have received evidence from the Lessee reasonably satisfactory to
the Owner Participant, the Indenture Trustee, the Pass Through Trustee and
the Owner Trustee to the effect that:
(i) the Owner Trustee has good and marketable title
(subject to filing and recording of AVSA's FAA ▇▇▇▇ of Sale with
the Aeronautics Authority) to the Aircraft, free and clear of
Liens, except the rights of the Owner Trustee and the Lessee
under the Lease and the Lease Supplement covering the Aircraft,
the rights of the Indenture Trustee under the Indenture and the
beneficial interest of the Owner Participant created by the Trust
Agreement and the interest of the Certificate Holders created by
the Indenture and the Indenture and Security Agreement Supplement
covering the Aircraft, which evidence shall include AVSA's FAA
▇▇▇▇ of Sale, AVSA's Warranty ▇▇▇▇ of Sale and the Airbus
Guaranty;
(ii) the Aircraft has been duly certificated by the
Aeronautics Authority as to type and airworthiness in accordance
with the terms of the Operative Agreements;
(iii) AVSA's FAA ▇▇▇▇ of Sale, the amended and
restated Lease and the Lease Supplement covering the Aircraft,
the amended and restated Indenture and the Indenture and Security
Agreement Supplement covering the Aircraft and the amended and
restated Trust Agreement shall have been duly filed for
recordation (or shall be in the process of being so duly filed
for recordation) with the Aeronautics Authority pursuant to the
Transportation Code; and
(iv) application to the Aeronautics Authority for
registration of the Aircraft in the name of the Owner Trustee
shall have been duly made and the Lessee shall have temporary or
permanent authority to operate the Aircraft.
(f) Financing Statements. (i) a form UCC-1 financing statement
covering all the security interests (and other interests) created by or
pursuant to the Granting Clause of the Original Indenture shall have been
executed and delivered by the Owner Trustee, as debtor, and by the
Indenture Trustee, as secured party, for and on behalf of the Holders, and
such financing statement shall have been duly filed in the State of
Connecticut; (ii) a form UCC-3 financing statement to amend and restate
the financing statement referred to in the immediately preceding sentence
shall have been executed and delivered by the Owner Trustee, as debtor,
and by the Indenture Trustee as secured party, and a form UCC-1 financing
statement covering all the security interests (and other interests)
created by or pursuant to the Granting Clause of the Indenture shall have
been executed and delivered by the Owner Trustee, as debtor, and by the
Indenture Trustee, as secured party, for and on behalf of the Holders, and
concurrently with the transactions contemplated on the Delivery Date such
UCC-3 financing statement and UCC-1 financing statement shall have been
duly filed or duly submitted for filing in the State of Connecticut, and
all other actions shall have been taken which, in the opinion of special
counsel for the Pass Through Trustee or for the Underwriters, are
necessary or desirable to maintain the perfection of the security interest
created by or pursuant to the Granting Clause of the Indenture, and (iii)
a UCC-1 notice filing describing the Lease as a lease shall have been
executed and delivered by the Owner Trustee, as lessor, and the Lessee, as
lessee (which filing shall name the Indenture Trustee as assignee of the
Owner Trustee), and shall have been duly filed in the State of Tennessee.
(g) Payments. The Owner Participant shall have made available
its Commitment to the Owner Trustee and the other payments contemplated by
Section 3.02 hereof shall have been made.
(h) Report of Aircraft Expert. The Owner Participant shall have
received a report prepared by BK Associates, Inc. addressed to the Owner
Participant (with an abbreviated report to the Lessee) which report shall
be in form and substance satisfactory to the Owner Participant.
(i) Insurance. Each of the Indenture Trustee, the Pass Through
Trustee, the Owner Trustee and the Owner Participant shall have received
such evidence as it deems appropriate, including, without limitation, an
independent insurance broker's report, together with certificates of
insurance from such broker, in form and substance satisfactory to the
Indenture Trustee, the Pass Through Trustee, the Owner Trustee and the
Owner Participant to establish that the insurance required by Article 13
of the Lease is in effect.
(j) Payment of Taxes. (A) All taxes, fees, charges,
assessments, costs and other expenses then due and payable in connection
with the execution, delivery, recording and filing of all financing
statements and the documents and instruments referred to in subparagraphs
(e) and (f) of this Section 4.01, or in connection with the purchase of
the Aircraft by the Owner Trustee and the making by the Owner Participant
of its equity investment shall have been duly paid or caused to be paid in
full; and (B) all sales or use taxes and duties related to the
consummation of the transactions contemplated by the Operative Agreements
on the Delivery Date which are then due and payable shall have been duly
paid in full.
(k) No Indenture Event of Default. No Indenture Event of
Default or Indenture Default has occurred and is continuing.
(l) Event of Default; Default; Event of Loss. No Default or
Event of Default under the Lease (assuming, for this purpose, that the
provisions of Article 16 of the Lease had become operative on the
Certificate Closing Date and not the Delivery Date) or Event of Loss or
event, which with the passage of time or if continued unremedied or
unaltered would constitute an Event of Loss, shall have occurred or be in
existence.
(m) Governmental Compliance. All appropriate action required to
have been taken by the FAA, the SEC, or any governmental or political
agency, subdivision or instrumentality of the United States, prior to the
Delivery Date in connection with the transactions contemplated by this
Agreement shall have been taken, and all orders, permits, waivers,
authorizations, exemptions and approvals (collectively "permits") of such
entities required to be in effect on the Delivery Date in connection with
the transactions contemplated by this Agreement shall have been issued,
and all such permits shall be in full force and effect on the Delivery
Date.
(n) Corporate Documents. Except when such Person is the
delivering party, the LC Bank, the Owner Participant, the Owner Trustee,
the Pass Through Trustee, the Lessee and the Indenture Trustee (acting
directly or by authorization to its special counsel) shall have received
the following, in each case in form and substance satisfactory to it:
(i) a copy of the certificate of incorporation and by-laws
of the Lessee, certified by the Secretary or an Assistant
Secretary of the Lessee as of the Delivery Date, and a copy of
the minutes of the regular meeting of the board of directors of
the Lessee, certified as such as of the Delivery Date by such
Secretary or Assistant Secretary, duly authorizing the lease by
the Lessee of the Aircraft under the Lease and the execution,
delivery and performance by the Lessee of this Agreement, the
Lease, the Tax Indemnity Agreement, the other Operative
Agreements to which the Lessee is or is to be a party and each
other document to be executed and delivered by the Lessee in
connection with the transactions contemplated hereby;
(ii) a copy of the articles of incorporation and bylaws of
the Owner Participant and the Owner Participant Guarantor, each
certified by the Secretary or an Assistant Secretary of the Owner
Participant or the Owner Participant Guarantor as of the Delivery
Date and a copy of the resolutions of the board of directors of
the Owner Participant, certified as such as of the Delivery Date
by such Secretary or Assistant Secretary, duly authorizing the
execution and delivery by the Owner Participant of this
Agreement, the Tax Indemnity Agreement, the Trust Agreement and
the other Operative Agreements to which the Owner Participant is
or is to be a party and each other document to be executed and
delivered by the Owner Participant in connection with the
transactions contemplated hereby, and a copy of the resolutions
of the board of directors of the Owner Participant Guarantor,
certified as such as of the Delivery Date by the Secretary or an
Assistant Secretary, authorizing the execution and delivery by
the Owner Participant Guarantor of the Owner Participant Guaranty
and the other Operative Agreements to which such Owner
Participant Guarantor is or is to be a party and each other
document to be executed and delivered by the Owner Participant
Guarantor in connection with the transactions contemplated
hereby;
(iii) a copy of the articles of association and by-laws and
other instruments of the Owner Trustee, certified by the
Secretary or an Assistant Secretary of the Owner Trustee as of
the Delivery Date (or other like instruments satisfactory to the
Lessee and the Owner Participant) and evidence authorizing the
execution, delivery and performance by the Owner Trustee in its
individual capacity or as Owner Trustee, as the case may be, of
this Agreement, the Trust Agreement and each of the other
Operative Agreements to which it is or is to be a party, whether
in its individual capacity or as Owner Trustee, and each other
document to be executed and delivered by the Owner Trustee in
connection with the transactions contemplated hereby;
(iv) a copy of the articles of association and by-laws and
other instruments of the Indenture Trustee, certified by the
Secretary or an Assistant Secretary of the Indenture Trustee as
of the Delivery Date (or other like instruments satisfactory to
the Lessee and the Owner Participant) and evidence authorizing
the execution, delivery and performance by the Indenture Trustee
of each of this Agreement, the Indenture and each of the other
Operative Agreements to which it is or is to be a party, and each
other document to be executed and delivered by the Indenture
Trustee in connection with the transactions contemplated hereby;
(v) a copy of the articles of association and by-laws and
other instruments of the Pass Through Trustee, certified by the
Secretary or an Assistant Secretary of the Pass Through Trustee
as of the Delivery Date (or other like instruments satisfactory
to the Lessee and the Owner Participant) and evidence authorizing
the execution, delivery and performance by the Pass Through
Trustee of this Agreement and each of the other Operative
Agreements to which it is or is to be a party, and each other
document to be executed and delivered by the Pass Through Trustee
in connection with the transactions contemplated hereby;
(vi) a copy of the articles of association and by-laws and
other instruments of the Subordination Agent, certified by the
Secretary or an Assistant Secretary of the Subordination Agent as
of the Delivery Date (or other like instruments satisfactory to
the Lessee and the Owner Participant) and evidence authorizing
the execution, delivery and performance by the Subordination
Agent of this Agreement and each of the other Operative
Agreements to which it is or is to be a party, and each other
document to be executed and delivered by the Subordination Agent
in connection with the transactions contemplated hereby; and
(vii) such other documents, evidences, materials, and
information with respect to the Lessee, the Owner Trustee, the
Indenture Trustee, the Pass Through Trustee and the Owner
Participant as the Indenture Trustee, the Pass Through Trustee,
the Owner Participant or the LC Bank may reasonably request in
order to establish the consummation of the transactions
contemplated by this Agreement.
(o) Officer's Certificate of Lessee. On the Delivery Date, the
following statements shall be true, and the LC Bank, the Owner
Participant, the Owner Trustee, the Pass Through Trustee and the Indenture
Trustee shall have received a certificate signed by the Vice President and
Treasurer or any other duly authorized officer of the Lessee, dated the
Delivery Date, stating that:
(i) the representations and warranties of the Lessee
contained in the Operative Agreements to which it is a party
(excluding the Tax Indemnity Agreement) and in any certificate
delivered pursuant hereto or thereto are true and correct on and
as of the Delivery Date as though made on and as of such date
(except to the extent that such representations and warranties
relate solely to an earlier date, in which case such certificate
shall state that such representations and warranties were true
and correct on and as of such earlier date);
(ii) except for the matters described under "Legal
Proceedings" in the Lessee's Annual Report on Form 10-K for the
fiscal year ended May 31, 1998, as to which such officer will
make no certification concerning the liability of the Lessee (if
any), or the effect of any adverse determination upon the
consolidated financial condition, business or operations of the
Lessee, no material adverse change has occurred in the financial
condition, business or operations of the Lessee from that shown
in the audited financial statements of the Lessee as of May 31,
1998 and nothing has occurred which will, in the judgment of such
officer, materially adversely affect the ability of the Lessee to
carry on its business or to perform its obligations under this
Agreement and each other Operative Agreement to which it is or is
to be a party; and
(iii) no event has occurred and is continuing, or would
result from the purchase, sale, mortgage, or lease of the
Aircraft, which constitutes an Event of Loss (or event which with
the passage of time would become an Event of Loss) with respect
to the Airframe or any Engine, or a Default or an Event of
Default under the Lease.
(p) Officer's Certificates of Owner Participant and Owner
Participant Guarantor. On the Delivery Date, the following statements
shall be true, and the LC Bank, the Lessee, the Pass Through Trustee, the
Owner Trustee and the Indenture Trustee shall have received a certificate
from (a) the Owner Participant, signed by a duly authorized officer of the
Owner Participant dated the Delivery Date, stating that:
(i) the representations and warranties of the Owner
Participant contained in this Agreement, the Trust Agreement and
any other Operative Agreement (excluding the Tax Indemnity
Agreement) to which it is a party and in any certificate
delivered pursuant hereto or thereto, are true and correct on and
as of the Delivery Date as though made on and as of such date
(except to the extent that such representations and warranties
relate solely to an earlier date, in which case such certificate
shall state that such representations and warranties were true
and correct on and as of such earlier date);
(ii) no Lessor's Liens attributable to the Owner Participant
exist; and
(iii) no event has occurred and is continuing which
constitutes or, with notice or lapse of time or both would
constitute, due to any action or omission on the part of the
Owner Participant, an Indenture Event of Default other than an
Indenture Event of Default attributable to a Lease Event of
Default;
and (b) from the Owner Participant Guarantor, signed by a duly authorized
officer of the Owner Participant Guarantor dated the Delivery Date,
stating that the representations and warranties of the Owner Participant
Guarantor contained in its Owner Participant Guaranty and in any
certificate delivered at the closing pursuant thereto are true and correct
on and as of the Delivery Date as though made on and as of such date
(except to the extent that such representations and warranties relate
solely to an earlier date, in which case such certificate shall state that
such representations and warranties were true and correct on and as of
such earlier date).
(q) Other Officer's Certificates. On the Delivery Date, the
following statements shall be true, and the LC Bank, the Owner
Participant, the Lessee, the Pass Through Trustee, the Owner Trustee, the
Subordination Agent and the Indenture Trustee shall have received a
certificate from each of SSB and the Owner Trustee (in the case of the LC
Bank, the Lessee, the Pass Through Trustee, the Owner Participant, the
Subordination Agent and the Indenture Trustee), FSB and the Indenture
Trustee (in the case of the LC Bank, the Lessee, the Pass Through Trustee,
the Owner Participant, the Subordination Agent and the Owner Trustee), FSB
and the Pass Through Trustee (in the case of the LC Bank, the Lessee, the
Indenture Trustee, the Owner Participant, the Subordination Agent and the
Owner Trustee) and FSB and the Subordination Agent (in the case of the LC
Bank, the Lessee, the Indenture Trustee, the Owner Participant, the Pass
Through Trustee and the Owner Trustee) signed by a duly authorized officer
of SSB and FSB, respectively, dated the Delivery Date, stating with
respect to SSB and the Owner Trustee, with respect to FSB and the
Indenture Trustee, with respect to FSB and the Pass Through Trustee or
with respect to FSB and the Subordination Agent, as the case may be, that:
(i) the representations and warranties of SSB in its
individual capacity and as Owner Trustee, of FSB in its
individual capacity and as Indenture Trustee, of FSB in its
individual capacity and as Pass Through Trustee or of FSB in its
individual capacity and as Subordination Agent contained in this
Agreement, the Lease, the Trust Agreement and the Indenture and
in any certificate delivered pursuant hereto or thereto are true
and correct on and as of the Delivery Date as though made on and
as of such date (except to the extent that such representations
and warranties relate solely to an earlier date, in which case
such certificate shall state that such representations and
warranties were true and correct on and as of such earlier date);
(ii) to the best of its knowledge, no event has occurred and
is continuing, which constitutes or which, but for the lapse of
time or the giving of notice, or both, would constitute, due to
any action or omission on the part of SSB in its individual
capacity or as Owner Trustee, of FSB in its individual capacity
or as Indenture Trustee, of FSB in its individual capacity or as
Pass Through Trustee, an Event of Default or an Indenture Event
of Default or of FSB in its individual capacity or as
Subordination Agent, an Event of Default or an Indenture Event of
Default; and
(iii) there are no Lessor's Liens attributable to the Owner
Trustee or SSB and no Indenture Trustee's Liens affecting the
Trust Indenture Estate or the Lessor's Estate or any part
thereof.
(r) Release of Debt Portion. Except as set forth in the proviso
to Section 3.02(a) hereof, the Indenture Trustee shall have released the
Debt Portion from (or such lesser amount as may then be held in) the
Collateral Account.
(s) Outstanding C Accounts. Any amount withdrawn by the
Indenture Trustee from the Collateral Account and not used to pay the Debt
Portion of the Purchase Price of the Aircraft shall be deposited into one
or more Outstanding C Accounts.
(t) Officer's Certificate of Lessee Regarding Mandatory Economic
Terms and Mandatory Document Terms. On the Delivery Date in connection
with the amendments contemplated by Section 2.03(a) hereof, the Lessee
shall have delivered a certificate to the Pass Through Trustee and the
Liquidity Providers signed by the Vice President and Treasurer or any
other duly authorized officer of the Lessee stating that (i) the Operative
Agreements which are amended and restated as of the Delivery Date do not
vary the Mandatory Economic Terms and contain the Mandatory Document Terms
and (ii) any substantive modification of such documents from those in
effect on the Certificate Closing Date does not materially and adversely
affect the Holders of Pass Through Certificates or any Liquidity Provider
and such certification shall be true and correct.
(u) Rating Agency Confirmation. A Rating Agency Confirmation
shall have been delivered to the Pass Through Trustee.
(v) Section 131.3 of the New York State Banking Law Filing. SSB
shall have delivered evidence of its filing made with the New York
Superintendent of Banking pursuant to Section 131.3 of the New York State
Banking Law.
(w) No Adverse Change in Tax Law. No Change in Tax Law shall
have occurred for which an adjustment to the lease structure, satisfactory
to the Owner Participant, shall not have been or cannot be made.
Notwithstanding anything else to the contrary in this Section 4.01, it shall
not be a condition precedent to the obligations of the Indenture Trustee, the
Pass Through Trustee or the Subordination Agent that the conditions in Section
4.01(o) and (p) be satisfied if the Lessee certifies that the failure to
fulfill such condition precedent is not reasonably likely to materially
adversely affect the holders of Pass Through Certificates and, in the event of
such failure, there has been delivered to the Indenture Trustee written
confirmation from both ▇▇▇▇▇'▇ and S&P of the rating on any class of Pass
Through Certificates.
Section 4.02. Opinion of Special Aviation Counsel Upon
Registration. Promptly upon the registration of the Aircraft and the filing
and, where appropriate, recordation pursuant to the Transportation Code, of
AVSA's FAA ▇▇▇▇ of Sale, the Trust Agreement, the Lease (with the Lease
Supplement covering the Aircraft, the Indenture and the Indenture and Security
Agreement Supplement covering the Aircraft attached as exhibits) and the
Indenture (with the Indenture and Security Agreement Supplement covering the
Aircraft attached as an exhibit), the Lessee shall cause Special Aviation
Counsel to deliver to the Owner Participant, the Lessee, the Owner Trustee, the
Pass Through Trustee and the Indenture Trustee an opinion as to (i) the due
registration of the Aircraft in the name of the Owner Trustee, (ii) the due
recording pursuant to the Transportation Code of AVSA's FAA ▇▇▇▇ of Sale, the
amended and restated Trust Agreement, the amended and restated Lease (with such
Lease Supplement, the amended and restated Indenture and such Indenture and
Security Agreement Supplement attached as exhibits), and the amended and
restated Indenture (with such Indenture and Security Agreement Supplement
attached as an exhibit), and (iii), subject to customary qualifications, the
lack of any intervening documents with respect to the Aircraft.
ARTICLE 5
CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS
Section 5.01. Conditions Precedent to Lessee's Obligations. The
Lessee's obligation to participate in the transactions contemplated hereby on
the Delivery Date is subject to the conditions that, on or prior to the
Delivery Date, the Lessee shall have received the documents which are referred
to in, or the opinions to be addressed to it under, as the case may be,
Sections 4.01(c), (d)(ii)-(ix), (e)(ii)-(iv), (h)(ii)-(vi), (p) and (q) hereof
and the Owner Participant shall have made its Commitment available in
accordance with the terms of Section 3.02 hereof.
ARTICLE 6
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 6.01. Lessee's Representations and Warranties. The
Lessee represents and warrants to the Owner Participant, the Owner Trustee (in
its individual capacity and as Owner Trustee), the Pass Through Trustee (in its
individual capacity and as Pass Through Trustee), each Liquidity Provider and
the Indenture Trustee (in its individual capacity and as Indenture Trustee)
that, as of the Delivery Date:
(a) the Lessee is a corporation duly organized and validly
existing and is in good standing under the laws of the State of Delaware
with its principal place of business and chief executive office (as such
terms are used in Article 9 of the UCC) in Memphis, Tennessee, and is duly
qualified to do business as a foreign corporation and is in good standing
in all jurisdictions in which it has intrastate routes, or offices or
major overhaul facilities or in which other activities of the Lessee
require such qualification;
(b) the Lessee has full power, authority and legal right to
conduct its business and operations as currently conducted and to own or
hold under lease its Properties and to enter into and perform its
obligations under this Agreement, the Original Agreements to which it is a
party, the other Operative Agreements to which it is a party, the Pass
Through Agreement and the Series Supplements (the "Lessee Documents");
(c) the Lessee is an "air carrier" within the meaning of the
Transportation Code and a holder of a certificate under Sections 41102(a)
and 41103 of the Transportation Code and a "citizen of the United States"
within the meaning of Section 40102(a)(15) of the Transportation Code
holding an "air carrier operating certificate" issued under Chapter 447 of
the Transportation Code for aircraft capable of carrying ten (10) or more
individuals or 6,000 pounds or more of cargo, and each such certificate is
in full force and effect;
(d) the Lessee possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents (collectively
"permits") which are material to the operation of the routes flown by it
and the conduct of its business and operations as currently conducted and
each such permit is in full force and effect;
(e) the execution, delivery and performance of the Lessee
Documents by the Lessee have been duly authorized by all necessary
corporate action on the part of the Lessee and do not require any
stockholder approval, or approval or consent of any trustee or holder of
any indebtedness or obligations of the Lessee, and each such document has
been duly executed and delivered by the Lessee and constitutes the legal,
valid and binding obligations of the Lessee enforceable against it in
accordance with the terms thereof except as such enforceability may be
limited by bankruptcy, insolvency, moratorium, reorganization or other
similar laws or equitable principles of general application to or
affecting the enforcement of creditors' rights generally (regardless of
whether enforceability is considered in a proceeding in equity or at law);
(f) no authorization, consent or approval of or other action by,
and no notice to or filing with, any United States federal or state
governmental authority or regulatory body (other than the SEC) is required
for the execution, delivery or performance by the Lessee of the Lessee
Documents or for the use and maintenance of the Aircraft except for such
registrations, applications and recordings referred to in the opinions of
Special Aviation Counsel delivered or to be delivered pursuant to Sections
4.01(d)(ix) and 4.02 hereof and except for the filings referred to in
Section 4.01(f) hereof, all of which shall have been duly obtained or made
and shall be in full force and effect on and as of the Delivery Date, or
as contemplated by said Sections;
(g) neither the execution, delivery or performance by the Lessee
of the Lessee Documents nor compliance with the terms and provisions
hereof or thereof, conflicts or will conflict with or results or will
result in a breach or violation of any of the terms, conditions or
provisions of, or will require any consent or approval under, any law,
governmental rule or regulation or the charter documents, as amended, or
bylaws, as amended, of the Lessee or any order, writ, injunction or decree
of any court or governmental authority against the Lessee or by which it
or any of its Properties is bound or any indenture, mortgage or contract
or other agreement or instrument to which the Lessee is a party or by
which it or any of its Properties is bound, or constitutes or will
constitute a default thereunder or results or will result in the
imposition of any Lien upon any of its Properties;
(h) there are no pending or, to the knowledge of the Lessee,
threatened actions, suits, investigations or proceedings (whether or not
purportedly on behalf of the Lessee) against or affecting the Lessee or
any of its Property before or by any court or administrative agency which
(A) involve the Aircraft, (B) except for the matters described under
"Legal Proceedings" in the Lessee's Annual Report on Form 10-K for the
fiscal year ended May 31, 1998, as to which no representation is made
concerning the Lessee's liability (if any) or the effect of any adverse
determination upon the consolidated financial condition, business or
operations of the Lessee, if adversely determined, would materially and
adversely affect the consolidated financial condition, business or
operations of the Lessee, or (C) if adversely determined would adversely
affect the ability of the Lessee to perform its obligations under the
Lessee Documents;
(i) the Lessee has filed or caused to be filed all tax returns
which are required to be filed and has paid or caused to be paid all taxes
shown to be due and payable pursuant to such returns or pursuant to any
assessment received by the Lessee (other than assessments the payment of
which is being contested in good faith by the Lessee), and the Lessee has
no knowledge of any related actual or proposed deficiency or additional
assessment which either in any case or in the aggregate would materially
adversely affect the Lessee's consolidated financial condition (other
than, in any such case, assessments, the payment of which is being
contested in good faith by the Lessee, as to which no representation is
made concerning the Lessee's liability (if any) or the effect of any
adverse determination upon the Lessee's consolidated financial condition);
(j) except for (A) the registration in the Owner Trustee's name
of the Aircraft pursuant to the Transportation Code to be accomplished by
filing with the FAA, of AVSA's FAA ▇▇▇▇ of Sale, the Trust Agreement, the
Affidavits and the Application, (B) the filing with and, where
appropriate, recordation by the FAA pursuant to the Transportation Code of
the Indenture, the Indenture and Security Agreement Supplement covering
the Aircraft, the Lease and the Lease Supplement covering the Aircraft,
(C) the filing of the financing statements referred to in Section 4.01(f)
hereof and (D) the taking of possession by the Indenture Trustee of the
original counterpart of the Lease, the Lease Supplement covering the
Aircraft and Ancillary Agreement I, no further action, including any
filing or recording of any document, is necessary or advisable in order
(i) to establish the Owner Trustee's title to and interest in the Aircraft
and the Lessor's Estate as against the Lessee and any third parties, or
(ii) to perfect the first security interest in and mortgage Lien on the
Trust Indenture Estate in favor of the Indenture Trustee;
(k) on the Delivery Date, the Owner Participant will receive
good and marketable title to the Beneficial Interest, free and clear of
all Liens, except the rights of the Indenture Trustee under the Indenture
and the Owner Trustee will receive good and marketable title to the
Aircraft, free and clear of all Liens, except the rights of the Lessee
under the Lease and the Lease Supplement, the rights of the Indenture
Trustee under the Indenture and the beneficial interest of the Owner
Participant created by the Trust Agreement;
(l) the Lessee has heretofore delivered to the Owner Participant
true and correct copies of the Lessee's Annual Report on Form 10-K for the
fiscal year ended May 31, 1998, and of the audited consolidated balance
sheet of the Lessee for the fiscal year ended May 31, 1998, and the
related consolidated statements of income, changes in common stockholders'
investment and cash flows for the fiscal year ended on such date,
accompanied by a report thereon containing opinions without qualification,
except as therein noted, by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, independent public
accountants; said financial statements have been prepared in accordance
with generally accepted accounting principles consistently applied and
present fairly the financial position of the Lessee as of such dates and
the results of its operations and cash flows for such periods and such
Annual Report and financial statements did not, as of their respective
dates of filing with the SEC, contain any untrue statement of a material
fact or omit a material fact necessary to make the statements contained
therein not misleading;
(m) with respect to ERISA:
(i) none of the Pension Plans (as defined at the end of
this Section 6.01(m)) nor their related trusts have been
terminated in a distress termination pursuant to Section 4041(c)
of ERISA or by the Pension Benefit Guaranty Corporation (together
with any successor agency or instrumentality thereto, the "PBGC")
pursuant to Section 4042 of ERISA, nor have any actions been
taken to so terminate any Pension Plan or related trust and
neither the Lessee nor any ERISA Affiliate (as defined at the end
of this Section 6.01(m)) has incurred or could reasonably be
expected to incur any material liability with respect to a
Pension Plan under Section 4062, 4063, 4064 or 4069 of ERISA;
(ii) there have been no "reportable events" (as such term is
defined in Section 4043(b) of ERISA) with respect to any Pension
Plan which have resulted or could reasonably be expected to
result in any material liability of the Lessee or any ERISA
Affiliate;
(iii) no "accumulated funding deficiency" (as such term is
defined in Section 302 of ERISA or Section 412 of the Code)
exists with respect to any Pension Plan, whether or not waived,
nor has any request for a waiver under Section 412(d) of the Code
been, or is reasonably likely to be, filed with respect to any of
the Pension Plans;
(iv) neither the Lessee nor any ERISA Affiliate has failed to
make any contribution or payment to any Pension Plan which has
resulted or could reasonably be expected to result in the
imposition of a Lien under Section 302(f) of ERISA or Section
412(n) of the Code;
(v) all Pension Plans are in compliance in all material
respects with all applicable provisions of ERISA and the Code;
(vi) neither the Lessee nor any ERISA Affiliate has incurred
or is reasonably likely to incur any material withdrawal
liability pursuant to Section 4201 or 4204 of ERISA or any
material liability under Section 515 of ERISA;
(vii) to the best of the Lessee's knowledge, neither the
Lessee nor any ERISA Affiliate has engaged in a "prohibited
transaction" (within the meaning of Section 4975 of the Code or
Section 406 of ERISA) which could reasonably be expected to
subject the Lessee to the tax or penalties on prohibited
transactions imposed by Section 4975 of the Code or Section 502
of ERISA; and
(viii) assuming the truth of the representations contained in
Section 7.03(a)(viii) hereof and compliance with Section 10.06 of
the Indenture, the execution and delivery of this Agreement and
the other Operative Agreements and the consummation of the
transactions contemplated hereby and thereby will not involve any
transaction which is prohibited by Section 406 of ERISA or in
connection with which a tax could be imposed pursuant to Section
4975 of the Code. No part of the funds to be used by the Lessee
in satisfaction of its obligations under this Agreement or any
other of the Operative Agreements to which the Lessee is a party
or to which the Lessee is bound are the assets of any employee
benefit plan subject to Title I of ERISA, or any individual
retirement account or an employee benefit plan subject to Section
4975 of the Code;
as used in this Section 6.01(m), the term "Pension Plan" means an employee
pension benefit plan as defined in Section 3(2) of ERISA (other than a
multiemployer plan as defined in Section 4001(a)(3) of ERISA) which is
covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code and which is maintained, or contributed to,
by the Lessee or any ERISA Affiliate, and the term "ERISA Affiliate" means
any entity which together with the Lessee would be treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code;
(n) the Lessee is a Citizen of the United States;
(o) except for the filings referred to in Sections 4.01(e) and
4.01(f) hereof, no governmental approval of any kind is required of the
Owner Participant or for the Owner Participant's execution of or
performance under this Agreement or any agreement contemplated hereby by
reason of any fact or circumstance of the Lessee, the nature of the
Aircraft or the Lessee's proposed operations or use of the Aircraft;
(p) on the Delivery Date, all premiums with respect to the
insurance required to be provided by the Lessee on or prior to the
Delivery Date under Article 13 of the Lease have been paid by the Lessee;
(q) on the Delivery Date, all sales or use taxes relating to the
sale of the Aircraft by AVSA to the Owner Trustee which are then or were
theretofore due shall have been paid;
(r) the Lessee is not in default under any mortgage, deed of
trust, indenture, lease or other instrument or agreement to which the
Lessee is a party or by which it or any of its Properties or assets may be
bound, or in violation of any applicable law, which default or violation
would have a material adverse effect on the financial condition, business
or operations of the Lessee or its ability to perform any of its
obligations under the Lessee Documents;
(s) no Default or Event of Default or Event of Loss or event,
which with the passage of time or if continued unremedied or unaltered
would constitute an Event of Loss, has occurred or exists;
(t) on the Delivery Date, the Aircraft will be in such condition
so as to enable the airworthiness certificate of such Aircraft to be in
good standing under the Transportation Code; the Aircraft will have been
duly certificated by the FAA as to type and airworthiness; there will be
in effect with respect to the Aircraft a current and valid airworthiness
certificate issued by the FAA pursuant to the Transportation Code; and
there is no fact known to the Lessee which materially adversely affects
the value, utility or condition of the Aircraft;
(u) on the Delivery Date, the Lessee shall not be in default in
the performance of any term or condition of the Purchase Agreement, the
Purchase Agreement Assignment, the Engine Warranty Assignment and the GTA
and the aggregate amount of loans shall not exceed the Debt Portion;
(v) neither the Lessee nor any subsidiary of the Lessee is an
"investment company" or a company "controlled by an investment company"
within the meaning of the Investment Company Act of 1940, as amended;
(w) on the Delivery Date, the Aircraft will, upon delivery, be
fully equipped to operate in commercial service and will comply with all
governmental requirements governing such service;
(x) there are no broker's or underwriter's fees payable on
behalf of the Lessee in connection with the transactions contemplated in
the Operative Agreements other than those of the Underwriters and First
Chicago Leasing Corporation referred to in Article 10 hereof; and
(y) the representations and warranties of the Lessee set forth in
the Original Agreements to which it is a party were correct on and as of
the Certificate Closing Date (except to the extent such representations
expressly related solely to a specified earlier date, in which case such
warranties and representations were correct on and as of such earlier
date).
Section 6.02. Offering by Lessee. The Lessee represents and
warrants that it has authorized no one to act on its behalf in connection with
the offer or sale of any interest in the Lessor's Estate or the Trust Agreement
other than First Chicago Leasing Corporation. Neither the Lessee nor, based on
representations of First Chicago Leasing Corporation, anyone acting on its
behalf has directly or indirectly offered any interest in the Lessor's Estate
or the Trust Agreement, or similar interests, for sale to, or solicited any
offer to acquire any of the same from, anyone other than the Owner Participant
and no more than 37 other accredited investors (as such term is defined in
Regulation D promulgated under the Securities Act of 1933, as amended).
Section 6.03. Certain Covenants of Lessee. The Lessee covenants
and agrees with the Owner Participant, the Owner Trustee (in its individual
capacity and as Owner Trustee), the Pass Through Trustee (in its individual
capacity and as Pass Through Trustee) and the Indenture Trustee (in its
individual capacity and as Indenture Trustee) as follows:
(a) The Lessee will cause to be done, executed, acknowledged and
delivered all such further acts, conveyances and assurances as the Owner
Trustee, the Indenture Trustee, the Pass Through Trustee or the Owner
Participant shall reasonably require for accomplishing the purposes of
this Agreement, the Trust Agreement, the Purchase Agreement, the Purchase
Agreement Assignment, the GTA, the Engine Warranty Assignment, the
Indenture, the Indenture and Security Agreement Supplement, the Tax
Indemnity Agreement, the Lease and the Lease Supplement and the other
Operative Agreements to which it is a party. Without limiting the
generality of this Section 6.03(a), the Lessee will take, or cause to be
taken, at the Lessee's cost and expense, such action with respect to the
recording, filing, re-recording and re-filing of the Indenture, each
Indenture and Security Agreement Supplement, the Lease, each Lease
Supplement and any financing statements or other instruments as may be
necessary, or as requested by the Indenture Trustee and appropriate, to
maintain the perfection of the first security interest and the Lien
created by the Indenture, and the Owner Trustee's title to and interest in
the Aircraft and the Lessor's Estate as against the Lessee and any third
parties, or if the Lessee cannot take, or cause to be taken, such action,
will furnish to the Indenture Trustee and the Owner Trustee timely notice
of the necessity of such action, together with such instruments, in
execution form, and such other information as may be required to enable
either of them to take such action at the Lessee's cost and expense in a
timely manner.
(b) The Lessee shall maintain the certificates referred to in
Section 7.01 of the Lease and shall cause the Aircraft to be duly
registered, and at all times to remain duly registered, in the name of the
Owner Trustee, under the Transportation Code; provided, however, that the
Owner Participant, the Owner Trustee and the Indenture Trustee agree that,
so long as no Default or Event of Default shall have occurred and be
continuing, if at any time after December 31, 2004 the Lessee has
requested their consent to the registration of the Aircraft in the name of
the Owner Trustee (or, if appropriate, in the name of the Lessee or a
sublessee as a "lessee" or a "sublessee"), at the Lessee's expense, in a
country in which a sublessee could be located under the provisions of
Section 7.02(a)(i) of the Lease with which the United States then
maintains normal and full diplomatic relations, upon receipt by the Owner
Participant, the Owner Trustee and the Indenture Trustee of the assurances
and opinion described below, none of them shall unreasonably withhold
their consent to such change in registration (it being agreed, without
limitation, that the inability of the Lessee to deliver such assurances or
such opinion shall constitute reasonable grounds to withhold such
consent).
As a condition to any change in the registration of the Aircraft,
the Owner Participant, the Owner Trustee in its individual and trust
capacities, and the Indenture Trustee shall have received:
(i) assurances satisfactory to them:
(A) to the effect that the insurance provisions of the Lease
have been and will be complied with and are and shall be in full
force and effect upon such change of registry;
(B) as to the continuation of the Lien of the Indenture as a
first priority, duly perfected Lien on the Aircraft;
(C) that the Owner Trustee's right, title and interest in
and to the Aircraft is recognized and fully enforceable in the
new jurisdiction of registry, that the rights of the Owner
Trustee in and to the Aircraft will not be impaired in such new
jurisdiction of registry and that the new jurisdiction of
registry will give effect to the title and registry of the
Aircraft therein substantially to the same extent as does the
Government;
(D) that such new country of registry (x) would provide
substantially equivalent protection for the rights of owner
participants, lessors or lenders in similar transactions as
provided under United States law (except that, in the absence of
restrictions under the laws of such country on rights and
remedies of lessors and secured parties similar to those imposed
by Sections 362 and 363 of the Bankruptcy Code, rights and
remedies similar to those available under Section 1110 of the
Bankruptcy Code shall not be required), and (y)(i) if such change
in registration is made other than in connection with a sublease,
imposes maintenance standards at least comparable to those of the
FAA, and (ii) if such change in registration is made in
connection with a sublease permitted under Section 7.02(a)(i) of
the Lease, imposes maintenance standards in conformity with those
set forth in Section 7.02(a)(i) of the Lease;
(E) that import and export certificates and any exchange
permits necessary to allow all Rent and other payments provided
for under the Lease, if required, shall have been procured at the
Lessee's own cost and expense by the Lessee;
(F) that the Lessee shall have effected or caused to be
effected at the Lessee's own cost and expense all recordings and
filings that are required to perfect the Lien of the Indenture;
(G) to the effect that the original indemnities (and any
additional indemnities for which the Lessee is then willing to
enter into a binding agreement to indemnify) in favor of the
Owner Participant, the Owner Trustee (in its individual capacity
and as trustee under the Trust Agreement), the Indenture Trustee
(in its individual capacity, and as trustee under the Indenture),
the Pass Through Trustee (in its individual capacity, and as
trustee under the Pass Through Agreement) and the other
Indemnitees under this Agreement, the Indenture, the Pass Through
Agreement and (in the case of the Owner Participant only) the Tax
Indemnity Agreement, afford each such party substantially the
same protection as provided prior to such change of registry;
(H) that such change will not result in the imposition of,
or increase in the amount of, any Tax for which the Lessee has
not agreed to indemnify the Owner Participant, the Indenture
Trustee, the Pass Through Trustee, the Owner Trustee (or any
successor, assign or Affiliate thereof) and the Trust Estate;
(I) that any value added tax, customs duty, tariff or similar
governmental charge relating to the change in jurisdiction of
registration of the Aircraft shall have been paid in full or
adequately provided for by the Lessee to the satisfaction of the
Owner Trustee, the Indenture Trustee and the Owner Participant;
(J) of the payment by the Lessee of any reasonable fees and
expenses of the Owner Participant, the Owner Trustee, the
Indenture Trustee and the Pass Through Trustee in connection with
such change of registry, including any reasonable attorneys' fees
and expenses; and
(K) that duties and tariffs, if applicable, shall have been
paid for by the Lessee;
(ii) a favorable opinion of counsel (reasonably satisfactory to
the Owner Trustee, the Indenture Trustee and the Owner Participant) in the
new jurisdiction of registry, addressed and reasonably satisfactory to
such parties in scope, form and substance, to the effect:
(A) that the terms (including, without limitation, the
governing law, service-of-process and jurisdictional-submission
provisions thereof) of the Lease and the Indenture are legal,
valid, binding and enforceable in such jurisdiction against the
Lessee, any sublessee, the Owner Trustee and the Indenture
Trustee, respectively;
(B) that it is not necessary for the Owner Participant, the
Owner Trustee, the Indenture Trustee or the Pass Through Trustee
to register or qualify to do business or meet other requirements
not already met in such jurisdiction in connection with the
registration in the new jurisdiction (and the filing and/or
recordation therein of the Indenture or the Lease) and the
exercise of any rights or remedies with respect to the Aircraft
pursuant to the Lease or the Indenture or in order to maintain
such registration and the Lien of the Indenture;
(C) that the courts of such jurisdiction would provide
substantially equivalent protection to the Lessor, the Owner
Participant, the Pass Through Trustee and the Indenture Trustee
as provided under United States law (with the exception described
in paragraph (b)(i)(D)(x) of this Section 6.03) in respect of the
transactions contemplated hereby, including, without limitation,
the remedies provided in the Indenture and the Lease;
(D) that there is no tort liability of the beneficial owner,
record owner, lessor or mortgagee of an aircraft not in
possession thereof under the laws of such jurisdiction, other
than tort liability which might have been imposed on such owner,
lessor or mortgagee under the laws of the United States or any
state thereof (it being understood that, in the event such latter
opinion cannot be given in a form satisfactory to the Owner
Participant and the Indenture Trustee, such opinion shall be
waived, if insurance reasonably satisfactory to the Owner
Participant, the Indenture Trustee and the Owner Trustee, in its
individual capacity, is provided, at the Lessee's expense, to
cover such risk and the Lessee undertakes to keep such insurance
in full force and effect);
(E) that the laws of such jurisdiction will not impair the
rights of the Lessor in and to the Aircraft and (unless the
Lessee shall have agreed to provide insurance reasonably
satisfactory to the Indenture Trustee and the Owner Participant
covering the risk of requisition of use of the Aircraft by the
government of registry of the Aircraft) require fair compensation
by the government of such jurisdiction payable in currency freely
convertible into United States dollars for the loss of use of the
Aircraft in the event of such requisition;
(F) that the Owner Trustee's title to the Aircraft is
recognized and fully enforceable in such jurisdiction, that such
jurisdiction will give effect to the title of the Aircraft
therein substantially to the same extent as does the Government,
and that the Lien of the Indenture shall continue as a first
priority, duly perfected lien on the Aircraft; and
(G) to such further effect with respect to such other
matters as the Owner Participant, the Owner Trustee, or the
Indenture Trustee may reasonably request.
If following any reregistration of the Aircraft, the Aircraft is
located outside the United States, the Lessee shall have thirty (30) days to
relocate the Aircraft within the United States and, if unable to do so, shall
pay the reasonable incremental out-of- pocket costs of the Lessor, the Owner
Participant or their authorized representatives incurred in connection with any
inspection or appraisal required or permitted under the Operative Agreements.
Such obligation shall apply only with respect to one inspection or appraisal in
any calendar year unless an Event of Default shall have occurred and be
continuing.
(c) The Lessee shall promptly file any reports, or furnish to
the Owner Trustee and the Owner Participant such information as may be
required to enable the Owner Trustee and the Owner Participant timely to
file any reports required to be filed by the Owner Trustee as the Lessor
and the Owner Participant under the Lease with any governmental authority.
(d) The Lessee will cause the Special Aviation Counsel to file,
and where appropriate record, on the Delivery Date, AVSA's FAA ▇▇▇▇ of
Sale, the Lease, the Lease Supplement, the Trust Agreement, the Indenture
and the Indenture and Security Agreement Supplement. The following
documents shall be filed and, where appropriate, recorded on the Delivery
Date with the Aeronautics Authority in the following order of priority:
first, AVSA's FAA ▇▇▇▇ of Sale, second, the Application, with the Trust
Agreement and the Affidavits, third, the Indenture with the Indenture and
Security Agreement Supplement attached thereto, and fourth, the Lease with
the Lease Supplement, the Indenture and the Indenture and Security
Agreement Supplement attached thereto.
(e) The Lessee will furnish to the Owner Participant, the Owner
Trustee and the Indenture Trustee annually after the execution of this
Agreement, by March 15 of each year, commencing with the year 1999, an
opinion, reasonably satisfactory to the Owner Participant and the
Indenture Trustee, of Special Aviation Counsel, or other counsel specified
from time to time by the Lessee acceptable to the Lessor and the Indenture
Trustee: (i) stating either (1) that in the opinion of such counsel such
action has been taken with respect to the recording, filing, re-recording
and re-filing of the Lease, the Indenture, the Trust Agreement, and any
supplements to any of them and any financing statements, continuation
statements or other instruments, and all other action has been taken, as
is necessary to maintain the Owner Trustee's title to and interest in the
Aircraft and the Lessor's Estate as against the Lessee and any third
parties and to maintain the perfection of the security interests created
by said documents and reciting the details of such action, or (2) that in
the opinion of such counsel no such action is necessary to maintain such
title or the perfection of such security interests; (ii) specifying all
other action which needs to be taken during the succeeding 14 months in
order to maintain such title and the perfection of such security interests
(which the Lessee agrees timely to take); and (iii) stating that the Owner
Trustee is the owner of legal title to the Aircraft, and the Aircraft is
free and clear of all Liens, except the security interest created by the
Indenture and such as are permitted by the Lease and the Indenture.
(f) The Lessee shall at all times maintain its corporate
existence except as permitted by Section 6.03(g) hereof and all of its
rights, privileges and franchises necessary in the normal conduct of its
business, except for any corporate right, privilege or franchise (i) that
it determines, in its reasonable, good faith business judgment, is no
longer necessary or desirable in the conduct of its business and (ii) the
loss of which will not materially adversely affect or diminish the rights
of the Holders.
(g) The Lessee shall not enter into any merger or consolidation,
or convey, transfer or lease all or substantially all of its assets as an
entirety to any Person, unless the surviving corporation or Person which
acquires by conveyance, transfer or lease all or substantially all of the
assets of the Lessee as an entirety (i) is a domestic corporation
organized and existing under the laws of the United States or a political
subdivision thereof, (ii) is a Citizen of the United States, (iii) is a
U.S. Air Carrier, (iv) expressly assumes by an instrument in writing in
form and substance satisfactory to the Indenture Trustee, the Owner
Participant and the Owner Trustee all of the Lessee's obligations
hereunder and under the other Operative Agreements, and each other
document contemplated hereby or thereby and the Lessee delivers such
instrument to the Indenture Trustee, the Owner Participant and the Owner
Trustee, (v) provides an opinion from outside counsel to the Lessee which
counsel shall be reasonably satisfactory to the Owner Participant and the
Indenture Trustee and which opinion shall be reasonably satisfactory to
the Owner Participant and the Indenture Trustee, and an officer's
certificate, each stating that such merger, consolidation, conveyance,
transfer or lease and the instrument noted in clause (iv) above comply
with this Section 6.03(g), that such instrument is a legal, valid and
binding obligation of, and is enforceable against, such survivor or
Person, and that all conditions precedent herein provided for relating to
such trans- action have been complied with, and (vi) immediately after
such merger, consolidation or conveyance, transfer or lease, as the case
may be, the surviving company is in compliance with all of the terms and
conditions of this Agreement and the Lease and each other Operative
Agreement and each other document contemplated hereby or thereby; provided
that no such merger, consolidation or conveyance, transfer or lease shall
be permitted if the same gives rise to an Event of Default.
Upon any consolidation or merger, or any conveyance, transfer or
lease of all or substantially all of the assets of the Lessee and the
satisfaction of the conditions specified in this Section 6.03(g), the
successor corporation formed by such consolidation or into which the
Lessee is merged or the Person to which such conveyance, transfer or lease
is made shall succeed to, and be substituted for, and may exercise every
right and power of, the Lessee under this Agreement and the Lease and each
other Operative Agreement and any other document contemplated hereby and
thereby to which the Lessee is a party with the same effect as if such
successor corporation had been named as the Lessee herein and therein. No
such conveyance, transfer or lease of all or substantially all of the
assets of the Lessee as an entirety shall have the effect of releasing the
Lessee or any successor corporation which shall theretofore have become
such in the manner prescribed in this Section 6.03(g) from its liability
hereunder or under the other Operative Agreements. Nothing contained
herein shall permit any lease, sublease, or other arrangement for the use,
operation or possession of the Aircraft except in compliance with the
applicable provisions of the Lease.
(h) The Lessee agrees to give prompt written notice to the Owner
Participant and the Indenture Trustee of any change in the address of its
chief executive office (as such term is used in Section 9-103(3) of the
Tennessee UCC) or of any change in its corporate name.
(i) The Lessee agrees to furnish to the Owner Participant, the
Lessor and the Indenture Trustee:
(A) as soon as available, but in any event within one
hundred twenty (120) days after the end of each fiscal year of
the Lessee, a consolidated balance sheet as of the end of such
fiscal year, and the related consolidated statements of income,
common stockholders' equity, retained earnings and cash flows of
the Lessee for the fiscal year then ended as prepared and
certified by the Lessee's independent certified public
accountants, including their opinion;
(B) within sixty (60) days after the end of the first,
second and third quarterly accounting periods in each fiscal year
of the Lessee, a consolidated balance sheet of the Lessee
prepared by it as of the close of the accounting period then
ended, together with the related consolidated statements of
income, retained earnings and cash flows for such accounting
period certified by the chief accounting officer or a financial
vice president of the Lessee;
(C) promptly upon their general transmission, copies of all
regular and periodic reports furnished by the Lessee to its
stockholders;
(D) promptly after filing with the SEC, copies of the
Lessee's Annual Reports on Form 10-K (including all corresponding
annual reports to shareholders), Quarterly Reports on Form 10-Q
and, if requested, any registration statement or prospectus filed
by the Lessee with any securities exchange or with the SEC;
(E) promptly upon (and in any event within five (5) Business
Days after) any Responsible Officer of the Lessee obtaining
actual knowledge of any condition or event which constitutes a
Default or any officer of the Lessee obtaining knowledge of any
condition or event which constitutes an Event of Default, an
officer's certificate specifying the nature and period of
existence thereof and what action the Lessee has taken or is
taking or proposes to take with respect thereto; and
(F) from time to time, such other financial information as
the Lessor, the Owner Participant or the Indenture Trustee may
reasonably request.
Concurrently with the delivery of the financial statements
referred to in clause (A) above, the Lessee shall deliver to the Lessor, the
Owner Participant, the Pass Through Trustee and the Indenture Trustee a
certificate of the Lessee, signed by any one of the President, the Chief
Financial Officer, the General Counsel, the Treasurer or the principal
accounting officer of the Lessee, stating that the signer, or an employee
reporting to same, is familiar with the relevant terms of this Agreement and
the Lease and the signer has reviewed, or has caused to be made under such
Person's supervision a review of, the activities of the Lessee and that, to the
best of his or her knowledge, there does not exist any Default or any Event of
Default or if a Default or an Event of Default exists or did exist, specifying
the nature thereof, the period of existence thereof and what action the Lessee
has taken or proposes to take with respect thereto.
Section 6.04. Survival of Representations and Warranties. The
representations and warranties of the Lessee provided in Sections 6.01 and 6.02
hereof and in any other Operative Agreement shall survive the expiration or
other termination of this Agreement and the other Operative Agreements.
ARTICLE 7
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.01. Acquisitions and Offerings of Interests in
Lessor's Estate. (a) [Reserved.]
(b) Owner Participant. The Owner Participant represents and
warrants that its interest in the Lessor's Estate and the Trust Agreement was
acquired by it for its own account and not with a view to resale or
distribution thereof; provided, however, that the disposition by the Owner
Participant of its interest in the Lessor's Estate and the Trust Agreement
shall, subject to the terms and provisions of Article 5 of the Trust Agreement,
at all times be within its control and the foregoing representation shall not
limit the Owner Participant's right to transfer or sell such interests pursuant
to the terms of this Agreement. Neither the Owner Participant nor anyone else
authorized to act on its behalf has directly or indirectly offered any interest
in the Lessor's Estate or the Trust Agreement, or in any similar security, for
sale to, or solicited any offer to acquire any of the same from, anyone. The
Owner Participant further represents and warrants that neither it nor anyone
authorized to act on its behalf has made or will make any offer, solicitation
or sale of any interest in the Lessor's Estate or the Trust Agreement in
violation of the provisions of Section 5 of the Securities Act of 1933, as
amended. No representation in this Section 7.01(b) shall include any action or
inaction of the Lessee, First Chicago Leasing Corporation, the Subordination
Agent, the Underwriters or any Affiliate of any thereof whether or not
purportedly on behalf of the Owner Trustee, the Owner Participant or any of
their Affiliates.
(c) Owner Trustee. The Owner Trustee represents and warrants,
both in its individual capacity and as trustee, that neither it nor anyone
acting on its behalf (i)has directly or indirectly offered or will directly or
indirectly offer any interest in the Lessor's Estate, or in any similar
security, for sale to, or solicited any offer to acquire any of the same from
anyone (other than the Owner Participant) and (ii) except as contemplated in
Section 8.02(a) of the Indenture, shall own Certificates.
Section 7.02. Citizenship. (a) Generally. Each of the Owner
Trustee, in its individual capacity and as Owner Trustee, and the Owner
Participant severally represents and warrants that it is or will be a Citizen
of the United States on the Delivery Date. If the Owner Participant or the
Owner Trustee in its individual capacity does not comply with the requirements
of this Section 7.02, the Owner Trustee, the Indenture Trustee and the Owner
Participant hereby agree that a Default or an Event of Default shall not be
deemed to have occurred and be continuing under the Lease due to non-compliance
by the Lessee with the registration requirements in the Lease occasioned by the
noncompliance of the Owner Participant or the Owner Trustee.
(b) Owner Trustee. The Owner Trustee, in its individual
capacity, covenants that if at any time it shall have actual knowledge that it
has ceased to be a Citizen of the United States, it will resign immediately as
the Owner Trustee if such citizenship is necessary under the Transportation
Code as in effect at such time or, if it is not necessary under the
Transportation Code as in effect at such time, if it is informed in writing by
the Lessee, the Indenture Trustee or the Owner Participant that such lack of
United States citizenship would have any adverse effect on the Lessee, the
Indenture Trustee, the Holders or the Owner Participant. The Owner Trustee, in
its individual capacity, further covenants that if at any time it appears
reasonably probable that it will cease to be a Citizen of the United States
based on information that is (i) known to a Responsible Officer or (ii)
generally known to the public, it will promptly so notify, to the extent
permitted by law, all parties to this Agreement.
(c) Owner Participant. The Owner Participant agrees, solely for
the benefit of the Lessee, the Pass Through Trustee, the Indenture Trustee and
the Owner Trustee, that if at any time when the Aircraft is registered or the
Lessee proposes to register the Aircraft in the United States (i) it shall
cease to be, or believes itself likely to cease to be, a Citizen of the United
States and (ii) the Aircraft shall or would therefore become ineligible for
registration in the name of the Owner Trustee under the Transportation Code and
regulations then applicable thereunder, then the Owner Participant shall give
notice thereof to the Lessee and the Indenture Trustee and shall (at its own
expense and without any reimbursement or indemnification from the Lessee)
immediately (and in any event within a period of 15 days) (x) effect a voting
trust or other similar arrangement, (y) transfer in accordance with the terms
of this Agreement and the Trust Agreement all its rights, title and interest in
and to such Trust Agreement, the Lessor's Estate and this Agreement, or (z)
take any other alternative action that would prevent any deregistration, or
maintain the United States registration, of the Aircraft. It is agreed that
the Owner Participant shall be liable to pay promptly on request (A) to each of
the other parties hereto and to each Holder any damages actually suffered by
any such other party or Holder as the result of the representation and warranty
of the Owner Participant in the first sentence of Section 7.02(a) hereof
proving to be untrue as of the Delivery Date; and (B) to the Lessee, the
Indenture Trustee and the Pass Through Trustee for any damages actually
incurred by the Lessee, the Indenture Trustee and the Pass Through Trustee as a
result of the Owner Participant's failure to comply with its obligations
pursuant to the first sentence of this Section 7.02(c). Each party hereto
agrees, upon the request and at the sole expense of the Owner Participant, to
cooperate with the Owner Participant in complying with its obligations under
the provisions of the first sentence of this Section 7.02(c).
Section 7.03. Representations, Warranties and Covenants of Owner
Participant. (a) Representations, Warranties and Covenants. In addition to
and without limiting its other representations and warranties provided for in
this Article 7, the Owner Participant represents and warrants as of the
Delivery Date that:
(i) it is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Kansas and it has
full power, authority and legal right to carry on its present business and
operations, to own or lease its Properties and to enter into and to carry
out the transactions contemplated by this Agreement, the Tax Indemnity
Agreement, the Trust Agreement and the other Operative Agreements to which
it is or is to be a party;
(ii) the execution, delivery and performance by it of this
Agreement, the Tax Indemnity Agreement, the Trust Agreement and the other
Operative Agreements to which it is or is to be a party have been duly
authorized by all necessary corporate action on its part and, assuming the
accuracy of the Lessee's representations in Section 6.01(o) hereof, do not
require any governmental approvals that would be required to be obtained
by the Owner Participant;
(iii) based on the representations, warranties and covenants
contained in Sections 6.01(m)(viii) and 6.02 hereof and compliance with
Section 10.06 of the Indenture, neither the execution, delivery or
performance by the Owner Participant of this Agreement, the Tax Indemnity
Agreement, the Trust Agreement and the other Operative Agreements to which
it is or is to be a party nor compliance with the terms and provisions
hereof or thereof, conflicts or will conflict with or results or will
result in a breach or violation of any of the terms, conditions or
provisions of, or will require any consent or approval under any law,
governmental rule or regulation applicable to the Owner Participant or the
charter documents, as amended, or bylaws, as amended, of the Owner
Participant or any order, writ, injunction or decree of any court or
governmental authority against the Owner Participant or by which it or any
of its Properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which the Owner Participant is a party or by
which it or any of its Properties is bound, or constitutes or will
constitute a default thereunder or results or will result in the
imposition of any Lien upon any of its Properties;
(iv) this Agreement, the Tax Indemnity Agreement, the Trust
Agreement and the other Operative Agreements to which it is or is to be a
party have been or on the Delivery Date will be duly executed and
delivered by the Owner Participant and constitute or on the Delivery Date
will constitute the legal, valid and binding obligation of the Owner
Participant enforceable against it in accordance with their terms except
as such enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganization or other similar laws or equitable principles
of general application to or affecting the enforcement of creditors'
rights (regardless of whether enforceability is considered in a proceeding
in equity or at law);
(v) to the best of its knowledge, it is not in default under
any mortgage, deed of trust, indenture, lease or other instrument or
agreement to which the Owner Participant is a party or by which it or any
of its Properties may be bound, or in violation of any applicable law,
which default or violation would have a material adverse effect on the
financial condition, business or operations of the Owner Participant or an
adverse effect on the ability of the Owner Participant to perform its
obligations under this Agreement and the other Operative Agreements to
which it is or is to be a party;
(vi) there are no pending or, to the knowledge of the Owner
Participant, threatened actions, suits, investigations or proceedings
against the Owner Participant before any court, administrative agency or
tribunal which are expected to materially adversely affect the ability of
the Owner Participant to perform its obligations under any of the
Operative Agreements to which it is or is to be a party, and the Owner
Participant knows of no pending or threatened actions or proceedings
before any court, administrative agency or tribunal involving it in
connection with the transactions contemplated by the Operative Agreements;
(vii) neither the execution and delivery by it of this
Agreement, the Tax Indemnity Agreement, the Trust Agreement or the other
Operative Agreements to which it is or is to be a party nor the
performance of its obligations hereunder or thereunder requires the
consent or approval of or the giving of notice to, the registration with,
or the taking of any other action in respect of, any governmental
authority or agency that would be required to be obtained or taken by the
Owner Participant except for filings contemplated by this Agreement;
(viii) no part of the funds to be used by it to acquire the
interests to be acquired by the Owner Participant under this Agreement
constitutes assets (within the meaning of ERISA and any applicable rules
and regulations) of any employee benefit plan subject to Title I of ERISA
or of any plan or individual retirement account subject to Section 4975 of
the Code; and
(ix) it is a "U.S. Person" as defined in Section 7701(a)(30)
of the Code and, to the best of its knowledge, is not subject to tax as a
resident of another country.
Notwithstanding the foregoing or anything else contained in this
Agreement, the Owner Participant makes no representation or warranty in this
Agreement with respect to laws, rules or regulations relating to aviation or to
the nature or use of the equipment owned by the Owner Trustee, other than such
laws, rules or regulations relating to the citizenship requirements of the
Owner Participant under applicable aviation law.
(b) Lessor's Liens. The Owner Participant further represents,
warrants and covenants that there are no Lessor's Liens attributable to it (or
an Affiliate thereof) and that there will not be any Lessor's Lien attributable
to it (or an Affiliate thereof) on the Delivery Date. The Owner Participant
agrees with and for the benefit of the Lessee, the Owner Trustee, the Indenture
Trustee and the Pass Through Trustee that the Owner Participant will, at its
own cost and expense, take such action as may be necessary (by bonding or
otherwise, so long as neither the Lessee's operation and use of the Aircraft
nor the validity and priority of the Lien of the Indenture is impaired) to duly
discharge and satisfy in full, promptly after the same first becomes known to
the Owner Participant, any Lessor's Lien attributable to the Owner Participant
(or an Affiliate thereof), provided, however, that the Owner Participant shall
not be required to discharge or satisfy such Lessor's Lien which is being
contested by the Owner Participant in good faith and by appropriate proceedings
so long as such proceedings do not involve any material danger of the sale,
forfeiture or loss of the Aircraft or the Lessor's Estate or the Trust
Indenture Estate or any interest in any thereof or otherwise materially
adversely affect the validity or priority of the Lien of the Indenture.
(c) Indemnity for Lessor's Liens. The Owner Participant agrees
to indemnify and hold harmless the Lessee, the Indenture Trustee and the Pass
Through Trustee from and against any loss, cost, expense or damage which may be
suffered by the Lessee, the Indenture Trustee or the Pass Through Trustee as
the result of the failure of the Owner Participant to discharge and satisfy any
Lessor's Liens attributable to the Owner Participant (or an Affiliate thereof)
and required to be discharged as described in Section 7.03(b) hereof.
(d) Assignment of Interests of Owner Participant. The Owner
Participant agrees that it will not assign, convey or otherwise transfer any of
its right, title or interest in and to the Operative Agreements or the Lessor's
Estate except in accordance with the provisions of Article 5 of the Trust
Agreement, as in effect on the date hereof or as amended in accordance with the
terms of the Operative Agreements.
(e) Actions with Respect to Lessor's Estate, Etc. The Owner
Participant agrees that it will not take any action to subject the Lessor's
Estate or the trust established by the Trust Agreement, as debtor, to the
reorganization or liquidation provisions of the Bankruptcy Code or any other
applicable bankruptcy or insolvency statute.
Section 7.04. Representations, Covenants and Warranties of SSB
and the Owner Trustee. (a) In addition to and without limiting its other
representations and warranties provided for in this Article 7, SSB represents
and warrants, in its individual capacity with respect to items (i), (ii),
(iii)(A), (iv), (v), (vi) and (vii) below, and as the Owner Trustee with
respect to items (iii)(B) and (iv) as of the Delivery Date that:
(i) it is a national banking association duly organized and
validly existing in good standing under the laws of the United States of
America with its principal place of business and chief executive office
(as such terms are used in Article 9 of the UCC) at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ Square, Hartford, Connecticut 06103, Attention: Corporate/Muni
Administration and has full corporate power and authority, in its
individual capacity or (assuming the Trust Agreement has been duly
authorized, executed and delivered by the Owner Participant) as the Owner
Trustee, as the case may be, to carry on its business as now conducted,
and to execute, deliver and perform this Agreement and the other Operative
Agreements to which it is or is to be a party;
(ii) the execution, delivery and performance by SSB, either in
its individual capacity or as the Owner Trustee, as the case may be, of
this Agreement and the Operative Agreements to which it is or is to be
party have been duly authorized by all necessary corporate action on its
part, and do not contravene its articles of association or by-laws; each
of this Agreement and the other Operative Agreements to which it is or is
to be a party has been duly authorized, executed and delivered by SSB,
either in its individual capacity or as the Owner Trustee, as the case may
be, and neither the execution and delivery thereof nor SSB's performance
of or compliance with any of the terms and provisions thereof will violate
any Federal or Connecticut law or regulation governing SSB's banking or
trust powers;
(iii) (A) assuming due authorization, execution and delivery by
each other party thereto, each of the Operative Agreements to which it is
or is to be party when duly executed and delivered will, to the extent
each such document is entered into by SSB in its individual capacity,
constitute the legal, valid and binding obligation of SSB in its
individual capacity enforceable against it in such capacity in accordance
with its respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of
creditors' rights (regardless of whether enforceability is considered in a
proceeding in equity or at law), and the performance by SSB in its
individual capacity of any of its obligations thereunder does not
contravene any lease, regulation or contractual restriction binding on SSB
in its individual capacity;
(B) assuming due authorization, execution and delivery by each
other party thereto, each of the Operative Agreements to which it is or is
to be party when duly executed and delivered will, to the extent each such
document is entered into by the Owner Trustee in its trust capacity,
constitute the legal, valid and binding obligation of the Owner Trustee
enforceable against it in such capacity in accordance with its respective
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws or equitable principles
of general application to or affecting the enforcement of creditors'
rights (regardless of whether enforceability is considered in a proceeding
in equity or at law), and the performance by the Owner Trustee of any of
its obligations thereunder does not contravene any lease, regulation or
contractual restriction binding on the Owner Trustee;
(iv) there are no pending or, to its knowledge, threatened
actions or proceedings against SSB before any court or administrative
agency which would materially and adversely affect the ability of SSB,
either in its individual capacity or as the Owner Trustee, as the case may
be, to perform its obligations under the Operative Agreements to which it
is or is to be party;
(v) it shall give the Lessee, the Indenture Trustee and the
Owner Participant at least thirty (30) days' prior written notice in the
event of any change in its chief executive office or name;
(vi) neither the execution and delivery by it, either in its
individual capacity or as the Owner Trustee, as the case may be, of any of
the Operative Agreements to which it is or is to be a party, requires on
the part of SSB in its individual capacity or any of its Affiliates the
consent or approval of or the giving of notice to, the registration with,
or the taking of any other action in respect of, any Federal or
Connecticut governmental authority or agency governing its banking or
trust powers;
(vii) on the Delivery Date the Owner Trustee shall be holding
whatever title to the Aircraft as was conveyed to it by AVSA, the Aircraft
shall be free of Lessor's Liens attributable to SSB in its individual
capacity and SSB in its individual capacity is a Citizen of the United
States; and
(viii) the representations and warranties of the Owner Trustee
set forth in the Original Agreements to which it is a party were correct
on and as of the Certificate Closing Date (except to the extent such
representations expressly related solely to a specified earlier date, in
which case such warranties and representations were correct on and as of
such earlier date).
(b) Lessor's Liens. SSB, in its individual capacity, further
represents, warrants and covenants that there are no Lessor's Liens
attributable to it in its individual capacity and that there will not be any
such Lessor's Liens on the Delivery Date. The Owner Trustee, in its trust
capacity, and at the cost and expense of the Lessee, covenants that it will in
its trust capacity promptly, and in any event within 30 days after the same
shall first become known to it, take such action as may be necessary to
discharge duly any Lessor's Liens attributable to it in its trust capacity.
SSB, in its individual capacity, covenants and agrees that it will at its own
expense take such action as may be necessary to duly discharge and satisfy in
full, promptly, and in any event within 30 days after the same shall first
become known to it, any Lessor's Liens attributable to it in its individual
capacity which may arise at any time after the date of this Agreement.
(c) Indemnity for Lessor's Liens. SSB, in its individual
capacity, agrees to indemnify and hold harmless the Lessee, the Indenture
Trustee, the Owner Participant, the Pass Through Trustee and the Owner Trustee
from and against any loss, cost, expense or damage which may be suffered by the
Lessee, the Indenture Trustee, the Owner Participant, the Pass Through Trustee
or the Owner Trustee as a result of the failure of SSB to discharge and satisfy
any Lessor's Liens attributable to it in its individual capacity, as described
in Section 7.04(b) hereof.
(d) Securities Act. None of SSB, the Owner Trustee or any
Person authorized by either of them to act on its behalf has directly or
indirectly offered or sold or will directly or indirectly offer or sell any
interest in the Lessor's Estate, or in any similar security relating to the
Lessor's Estate, or in any security the offering of which for purposes of the
Securities Act of 1933, as amended, would be deemed to be part of the same
offering as the offering of the aforementioned securities to, or solicited any
offer to acquire any of the same from, any Person.
(e) Actions With Respect to Lessor's Estate, Etc. Neither SSB,
in its individual capacity, nor the Owner Trustee will take any action to
subject the Lessor's Estate or the trust established by the Trust Agreement, as
debtor, to the reorganization or liquidation provisions of the Bankruptcy Code
or any other applicable bankruptcy or insolvency statute.
Section 7.05. Representations, Warranties and Covenants of the
Indenture Trustee. (a) The Indenture Trustee in its individual capacity (other
than as the Pass Through Trustee) represents as of the Delivery Date as
follows:
(i) it is a national banking association duly organized and
validly existing in good standing under the laws of the United States of
America and has the power and authority to enter into and perform its
obligations under the Indenture, this Agreement and the other Operative
Agreements to which it is a party and to authenticate the Certificates
delivered on the Certificate Closing Date;
(ii) the Indenture and this Agreement and the other Operative
Agreements to which it is or is to be a party, and the authentication of
the Certificates delivered on the Certificate Closing Date, have been duly
authorized by all necessary corporate action on its part, and neither the
execution and delivery thereof nor its performance of any of the terms and
provisions thereof will violate any Federal or Utah law or regulation
relating to its banking or trust powers or contravene or result in any
breach of, or constitute any default under, its articles of association or
by-laws;
(iii) each of the Indenture and this Agreement, and the other
Operative Agreements to which it is or is to be a party, has been duly
executed and delivered by it and, assuming that each such agreement is the
legal, valid and binding obligation of each other party thereto, is (or
will be, as the case may be), the legal, valid and binding obligation of
the Indenture Trustee, enforceable against the Indenture Trustee in
accordance with its terms except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of
creditors' rights (regardless of whether enforceability is considered in a
proceeding in equity or at law);
(iv) neither the execution and delivery by it of the Indenture
and this Agreement and the other Operative Agreements to which it is or is
to be a party, nor the performance by it of any of the transactions
contemplated hereby or thereby, requires the consent or approval of, the
giving of notice to, the registration with, or the taking of any other
action in respect of, any Federal or state governmental authority or
agency governing its banking and trust powers;
(v) on the Delivery Date, the Indenture Trustee will hold the
original counterparts of the Lease, the Lease Supplement and the Ancillary
Agreement I; and
(vi) the representations and warranties of the Indenture Trustee
set forth in the Original Agreements to which it is a party were correct
on and as of the Certificate Closing Date (except to the extent such
representations expressly related solely to a specified earlier date, in
which case such warranties and representations were correct on and as of
such earlier date).
(b) Indenture Trustee's Liens. The Indenture Trustee, in its
individual capacity, further represents, warrants and covenants that there are
no Indenture Trustee's Liens attributable to it in its individual capacity and
that there will not be any Indenture Trustee's Liens as at and following the
Delivery Date, the Aircraft. The Indenture Trustee, in its individual capacity,
covenants and agrees that it will at its own expense take such action as may be
necessary to duly discharge and satisfy in full, promptly, and in any event
within 30 days, after the same shall first become known to it, any Indenture
Trustee's Liens.
(c) Indemnity for Indenture Trustee's Liens. The Indenture
Trustee, in its individual capacity, agrees to indemnify and hold harmless the
Lessee, the Owner Participant, the Owner Trustee and the Pass Through Trustee
from and against any loss, cost, expense or damage which may be suffered by the
Lessee, the Indenture Trustee, the Owner Participant, the Owner Trustee or the
Pass Through Trustee as a result of the failure of the Indenture Trustee to
discharge and satisfy any Indenture Trustee's Liens attributable to it in its
individual capacity, as described in Section 7.05(b) hereof.
Section 7.06. Indenture Trustee's Notice of Default. The
Indenture Trustee agrees to give the Owner Participant notice of any Default
promptly upon a Responsible Officer of the Indenture Trustee having actual
knowledge thereof.
Section 7.07. Releases from Indenture. The Indenture Trustee
covenants and agrees, for the benefit of the Lessee and the Owner Participant,
to execute and deliver the instruments of release from the Lien of the
Indenture which it is required to execute and deliver in accordance with the
provisions of Article XIV of the Indenture, and the Owner Participant agrees,
for the benefit of the Lessee, to cause the Owner Trustee to request the
Indenture Trustee to execute and deliver such instruments of release.
Section 7.08. Covenant of Quiet Enjoyment. Each of the Owner
Participant, the Indenture Trustee, the Pass Through Trustee and the Owner
Trustee covenants and agrees as to itself only that, so long as no Event of
Default under the Lease has occurred and is continuing, neither the Owner
Participant (or the Owner Trustee, the Indenture Trustee or the Pass Through
Trustee, as the case may be) nor any Person lawfully claiming through the Owner
Participant (or the Owner Trustee, the Indenture Trustee or the Pass Through
Trustee, as the case may be) shall interfere with the Lessee's right quietly to
enjoy the Aircraft during the Term without hindrance or disturbance by the
Owner Participant (or the Owner Trustee, the Indenture Trustee or the Pass
Through Trustee as the case may be), provided, however, that the Lessor shall
not be liable for any act or omission of the Indenture Trustee or any other
Person claiming through the Indenture Trustee.
Section 7.09. Pass Through Trustee's Representations and
Warranties. The Pass Through Trustee, in its individual capacity (except with
respect to clause (iii) below), represents and warrants as of the Delivery Date
that:
(i) it is a national banking association duly organized and
validly existing in good standing under the laws of the United States of
America and has the power and authority to enter into and perform its
obligations under this Agreement;
(ii) the execution, delivery and performance of this Agreement
and the performance of its obligations hereunder have been fully
authorized by all necessary corporate action on its part, and neither the
execution and delivery hereof nor its performance of any of the terms and
provisions hereof will violate any Federal or Utah law or regulation
relating to its banking or trust powers or contravene or result in any
breach of, or constitute any default under its articles of association, or
bylaws or the provisions of any indenture, mortgage, contract or other
agreement to which it is a party or by which it or its properties may be
bound or affected;
(iii) this Agreement has been duly executed and delivered by it
(in its individual and trust capacities) and, assuming that this Agreement
is the legal, valid and binding obligation of each other party thereto, is
or will be, as the case may be, the legal, valid and binding obligation of
the Pass Through Trustee (in its individual and trust capacities),
enforceable in accordance with its respective terms except as limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
or equitable principles of general application to or affecting the
enforcement of creditors' rights generally (regardless of whether such
enforceability is considered in a proceeding in equity or at law); and
(iv) the representations and warranties of the Pass Through
Trustee set forth in the Original Agreements to which it is a party were
correct on and as of the Certificate Closing Date (except to the extent
such representations expressly related solely to a specified earlier date,
in which case such warranties and representations were correct on and as
of such earlier date).
Section 7.10. Survival of Representations, Warranties and
Covenants. The representations, warranties and covenants of the Owner
Participant, the Owner Trustee (in its individual or trust capacity), the Pass
Through Trustee (in its individual or trust capacity), the Subordination Agent
(in its individual capacity or trust capacity) and the Indenture Trustee (in
its individual or trust capacity) provided for in this Article 7, and their
respective obligations under any and all of them, shall survive the delivery of
the Aircraft and the expiration or other termination of this Agreement, and the
other Operative Agreements.
Section 7.11. Lessee's Assumption of the Certificates. (a)
Subject to compliance by the Lessee with all of its obligations under the
Operative Agreements, each of the Owner Participant, the Owner Trustee, the
Indenture Trustee, the Pass Through Trustee and the Lessee covenants and agrees
that if the Lessee elects to terminate the Lease and to purchase the Aircraft
pursuant to Section 4.02(a)(A), (D), (E) or (F) of the Lease, and so long as no
Event of Default shall have occurred and be continuing then, upon compliance
with the applicable provisions of said Section 4.02(a) of the Lease, the Owner
Trustee will transfer to the Lessee, without recourse or warranty (except as to
the absence of Lessor's Liens) but subject to the Lien of the Indenture, all of
the Owner Trustee's right, title and interest in and to the Aircraft, and if
the Lessee, in connection with such purchase, elects pursuant to Section
4.02(a)(A), (D), (E) or (F) of the Lease to assume the obligations of the Owner
Trustee to the Indenture Trustee and the Holders under the Indenture, the
Certificates and hereunder, each of the parties shall execute and deliver
appropriate documentation permitting the Lessee to assume such obligations on
the basis of full recourse to the Lessee, maintaining for the benefit of the
Holders the security interest in the Aircraft created by the Indenture, and
upon compliance with the provisions of this Section7.11 releasing the Owner
Participant and the Owner Trustee from all obligations in respect of the
Certificates, the Indenture and all other Operative Agreements except any
obligations which shall have arisen (or with respect to events which shall have
occurred) prior to such assumption and take all such other actions as are
reasonably necessary to permit such assumption by the Lessee.
(b) In connection with such assumption:
(i) the Lessee shall execute and deliver an instrument
satisfactory in form and substance to the Indenture Trustee (A) pursuant
to which the Lessee irrevocably and unconditionally assumes and
undertakes, with full recourse to the Lessee, to pay, satisfy and
discharge when and as due (at the stated maturity thereof, by acceleration
or otherwise) the principal of, Make-Whole Premium, if any, interest and
all other sums owing on all Outstanding Certificates (or on the Lessee's
substituted obligations) in accordance with their terms and to punctually
perform and observe all of the covenants and obligations hereunder and
under the Indenture and the Certificates (as the same may be amended in
connection with such assumption) to be performed or observed by the Owner
Trustee and (B)which contains amendments to the Indenture, in form and
substance satisfactory to the Indenture Trustee and the Holders, that
incorporate therein such provisions from the Lease and this Agreement as
may be appropriate, including, without limitation, events of default
substantially identical in scope and effect to those set forth in the
Lease and covenants substantially identical to the covenants of the Lessee
hereunder and under the Lease;
(ii) the instrument referred to in paragraph (i) of this
Section 7.11(b), any UCC financing statements relating thereto, and any
other documents which shall be necessary (or reasonably requested by the
Indenture Trustee) to establish the Lessee's title to and interest in the
Aircraft or to reflect the substitution of the Lessee for the Owner
Trustee under the Operative Agreements or to continue the perfection of
the security interests in the Aircraft and the other rights, Property and
interests included in the Trust Indenture Estate for the benefit of the
Holders (or the Lessee's substituted obligations) shall be filed in such
form, manner and places as are necessary or, in the reasonable opinion of
the Indenture Trustee, advisable for such purpose;
(iii) the Indenture Trustee shall have received an insurance
report dated the effective date of such assumption of an independent
insurance broker and certificates of insurance, each in form and substance
satisfactory to the Indenture Trustee, as to the due compliance as of the
effective date of such assumption with the terms of Article 13 of the
Lease (as it relates to the Indenture Trustee) relating to the insurance
with respect to the Aircraft;
(iv) the Indenture Trustee shall have received evidence that as
of the effectiveness of the assignment on the date of such assumption the
Aircraft is free and clear of all Liens other than the Lien of the
Indenture and other Permitted Liens;
(v) the Indenture Trustee shall have received a certificate
from the Lessee that no Event of Default shall have occurred and be
continuing as of the effective date of such assumption; and
(vi) the Indenture Trustee shall have received (A) from counsel
for the Lessee (who may be the Lessee's General Counsel) a legal opinion,
in form and substance satisfactory to the Indenture Trustee (w) with
respect to the compliance of the assumption contemplated hereby with the
terms, provisions and conditions hereof, (x) with respect to the due
authorization, execution, delivery, validity and enforceability of the
instrument referred to in paragraph (i) of this Section 7.11(b), (y) with
respect to the continued perfection of the first and prior Lien and
security interest in the Aircraft for the benefit of the Holders of the
Certificates (or the Lessee's substituted obligations) referred to in
paragraph (ii) of this Section 7.11(b) and (z) with respect to the
continued availability of the benefits of Section 1110 of the Bankruptcy
Code to the Indenture Trustee for the benefit of the Holders with respect
to the Aircraft after giving effect to such assumption, (B) from counsel
to the Indenture Trustee and Special Aviation Counsel, a legal opinion
comparable to the respective opinions delivered on the Delivery Date with
such changes therein as may be appropriate in light of such assumption,
and (C) in the case of each opinion described in clause (A) or (B) above,
covering such additional matters as the Indenture Trustee shall reasonably
request.
(c) The Lessee shall pay all reasonable expenses (including
reasonable fees and expenses of counsel) of the Owner Participant, the Owner
Trustee and the Indenture Trustee in connection with such assumption.
Section 7.12. Indebtedness of Owner Trustee. So long as the
Indenture is in effect, the Owner Trustee, not in its individual capacity, but
solely as trustee under the Trust Agreement, shall not incur any indebtedness
for borrowed money except as expressly contemplated herein or in any other
Operative Agreement (excluding the Tax Indemnity Agreement) and shall not
engage in any business or other activity other than the transactions
contemplated herein or in any other Operative Agreement (excluding the Tax
Indemnity Agreement) and all necessary or appropriate activity related thereto.
Section 7.13. Compliance with Trust Agreement, Etc. Each of the
Owner Participant, SSB and the Owner Trustee agrees with the Lessee, the
Indenture Trustee and the Pass Through Trustee that so long as the Lien of the
Indenture shall be in effect it will (i)comply with all of the terms of the
Trust Agreement applicable to it in its respective capacity, the noncompliance
with which would materially adversely affect any such party and (ii)not take
any action, or cause any action to be taken, to amend, modify or supplement any
provision of the Trust Agreement in a manner that would adversely affect any
such party without the prior written consent of such party. The Owner Trustee
confirms for the benefit of the Lessee, the Indenture Trustee and the Pass
Through Trustee that it will comply with the provisions of Article 2 of the
Trust Agreement. Notwithstanding anything else to the contrary in the Trust
Agreement, so long as the Lease remains in effect, the Owner Participant agrees
not to terminate or revoke the trust created by the Trust Agreement without the
consent of the Lessee and (so long as the Indenture shall not have been
discharged) the Indenture Trustee.
Section 7.14. Subordination Agent's Representations, Warranties
and Covenants. (a) Representations and Warranties. The Subordination Agent
represents and warrants as of the Delivery Date that:
(i) it is a national banking association duly organized and
validly existing in good standing under the laws of the United States of
America and has the corporate power and authority to enter into and
perform its obligations under this Agreement;
(ii) the execution, delivery and performance of this Agreement
and the performance of its obligations hereunder have been fully
authorized by all necessary corporate action on its part, and, neither the
execution and delivery thereof nor its performance of any of the terms and
provisions thereof will violate any Federal or Utah law or regulation
relating to its banking or trust powers or contravene or result in any
breach of, or constitute any default under its articles of association, or
bylaws or the provisions of any indenture, mortgage, contract or other
agreement to which it is a party or by which it or its properties may be
bound or affected;
(iii) this Agreement has been duly executed and delivered by it
and, assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is or will be, as the case may be,
the legal, valid and binding obligation of the Subordination Agent,
enforceable in accordance with its respective terms except as limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
or equitable principles of general application to or affecting the
enforcement of creditors' rights generally (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(iv) there are no Taxes payable by the Subordination Agent
imposed by the State of Utah or any political subdivision or taxing
authority thereof in connection with the execution, delivery and
performance by the Subordination Agent of this Agreement, any of the
Liquidity Facilities or the Intercreditor Agreement (other than franchise
or other taxes based on or measured by any fees or compensation received
by the Subordination Agent for services rendered in connection with the
transactions contemplated by the Intercreditor Agreement or any of the
Liquidity Facilities), and there are no Taxes payable by the Subordination
Agent imposed by the State of Utah or any political subdivision thereof in
connection with the acquisition, possession or ownership by the
Subordination Agent of any of the Certificates other than franchise or
other taxes based on or measured by any fees or compensation received by
the Subordination Agent for services rendered in connection with the
transactions contemplated by the Intercreditor Agreement or any of the
Liquidity Facilities);
(v) there are no pending or threatened actions or proceedings
against the Subordination Agent before any court or administrative agency
which individually or in the aggregate, if determined adversely to it,
would materially adversely affect the ability of the Subordination Agent
to perform its obligations under this Agreement, the Intercreditor
Agreement or any Liquidity Facility;
(vi) the Subordination Agent has not directly or indirectly
offered any Certificate for sale to any Person or solicited any offer to
acquire any Certificates from any Person, nor has the Subordination Agent
authorized anyone to act on its behalf to offer directly or indirectly any
Certificate for sale to any Person, or to solicit any offer to acquire any
Certificate from any Person; and the Subordination Agent is not in default
under any Liquidity Facility;
(vii) the Subordination Agent is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter or the Lessee; and
(viii) the representations and warranties of the Subordination
Agent set forth in the Original Agreements to which it is a party were
correct on and as of the Certificate Closing Date (except to the extent
such representations expressly related solely to a specified earlier date,
in which case such warranties and representations were correct on and as
of such earlier date).
(b) Covenants. (i) The Subordination Agent agrees not to amend
any Liquidity Facility without the consent of the Lessee (so long as no Event
of Default shall have occurred and be continuing) and of the Owner Participant
(such consents not to be unreasonably withheld).
(ii) In connection with the deposit in the applicable Cash
Account of amounts drawn pursuant to any Downgrade Drawing under a Liquidity
Facility, the Subordination Agent agrees, so long as no Event of Default shall
have occurred and be continuing, to pay to the Lessee promptly following each
Regular Distribution Date any Investment Earnings on the amount so deposited
which remain after application of such Investment Earnings pursuant to Section
2.06 of such Liquidity Facility to the interest payable on such Downgrade
Drawing under Section 3.07 of such Liquidity Facility. Capitalized terms used
in this Section shall have the meanings specified in the Intercreditor
Agreement.
ARTICLE 8
TAXES
Section 8.01. Lessee's Obligation to Pay Taxes. (a) Generally.
The Lessee agrees promptly to pay when due, and to indemnify and hold each
Indemnitee harmless from all license, recording, documentary, registration and
other fees and all taxes (including, without limitation, income, gross
receipts, sales, rental, use, value added, property (tangible and intangible),
ad valorem, excise and stamp taxes), fees, levies, imposts, recording duties,
charges, assessments or withholdings of any nature whatsoever, together with
any assessments, penalties, fines, additions to tax or interest thereon
(individually, a "Tax," and collectively called "Taxes"), however imposed
(whether imposed upon any Indemnitee, the Lessee, all or any part of the
Aircraft, Airframe, any Engine or any Part, the Lessor's Estate, the Trust
Indenture Estate, Rent or otherwise), by any Federal, state or local government
or taxing authority in the United States, or by any government or taxing
authority of a foreign country or of any political subdivision or taxing
authority thereof or by a territory or possession of the United States or an
international taxing authority, upon or with respect to, based upon or measured
by:
(i) the Aircraft, the Airframe, any Engine or any Part;
(ii) the location, replacement, conditioning, refinancing,
control, purchase, registration, reregistration, repossession,
improvement, maintenance, redelivery, manufacture, acquisition, purchase,
financing, mortgaging, ownership, acceptance, rejection, delivery,
non-delivery, leasing, subleasing, transport, insuring, inspection,
registration, assembly, abandonment, preparation, installment, possession,
use, operation, return, presence, storage, repair, transfer of title,
modification, rebuilding, import, export, alteration, addition,
replacement, assignment, overhaul, transfer of registration or
registration, imposition of any lien, sale or other disposition of the
Aircraft, Airframe, any Engine or any Part thereof or interest therein;
(iii) the rentals (including Basic Rent and Supplemental Rent),
receipts or earnings arising from the Operative Agreements or from the
purchase, financing, ownership, delivery, leasing, possession, use,
operation, return, storage, transfer of title, sale or other disposition
of the Aircraft, the Airframe or any part thereof or interest therein;
(iv) any or all of the Operative Agreements;
(v) the Property, or the income or other proceeds received
with respect to the Property, held by the Owner Trustee under the Trust
Agreement or after an Event of Default under the Lease, or by the
Indenture Trustee under the Indenture;
(vi) otherwise with respect to or by reason of the
transactions described in or contemplated by the Operative Agreements;
(vii) the payment of the principal or interest or other amounts
payable with respect to the Certificates;
(viii) the Certificates or the Pass Through Certificates or the
issuance, acquisition, or refinancing thereof or the beneficial interests
in the Lessor's Estate or the creation thereof under the Trust Agreement;
or
(ix) any assumption by the Lessee pursuant to Section 7.11 of
this Agreement and Section 2.12 of the Indenture.
(b) Exceptions. The indemnity provided for in Section 8.01(a)
shall not extend to any of the following:
(i) With respect to an Indemnitee, Taxes based upon, measured
by or with respect to the net or gross income, items of tax preference or
minimum tax or excess profits, receipts, value added (but only to the
extent such value added tax is in the nature of an income tax), capital,
franchise, net worth or conduct of business or other similarly-based Taxes
of such Indemnitee (other than any Taxes in the nature of sales, use,
transfer, excise, rental, license, ad valorem, property or other similarly
based Taxes) (the "Income Taxes"); provided, however that the provisions
of this paragraph (b)(i) shall not exclude from the indemnity described in
Section 8.01(a) hereof, any Income Taxes to the extent such Income Taxes
are imposed by any jurisdiction in which the Indemnitee would not be
subject to such type of Income Taxes but for, or would be subject to such
type of Income Taxes solely as a result of, (x) the operation,
registration, location, presence, or use of the Aircraft, Airframe, any
Engine or any Part thereof, in such jurisdiction or (y) the place of
incorporation or principal office or the activities of the Lessee or any
sublessee in such jurisdiction (it being understood that any such
indemnity would be payable only to the extent of the net harm incurred by
the Indemnitee from such Income Taxes, taking into account any incremental
current Tax benefit in another tax juris- diction resulting from payment
of such Income Taxes); provided, further, that the provisions of this
paragraph (b)(i) relating to Income Taxes shall not exclude from the
indemnity described in Section 8.01(a) hereof any Income Taxes for which
the Lessee would be required to indemnify an Indemnitee (x) so that any
payment under the Operative Agreements, otherwise required to be made on
an After-Tax Basis, is made on an After-Tax Basis or (y) pursuant to the
last sentence of Section 8.02, 8.05, 9.02 or 9.05 of this Agreement;
(ii) [Reserved];
(iii) Taxes arising out of or measured by acts, omissions,
events or periods of time (or any combination of the foregoing) which
occur after (and are not attributable to acts, omissions or events
occurring contemporaneously with or prior to) (A) the payment in full of
all amounts payable by the Lessee pursuant to and in accordance with the
Operative Agreements, or the earlier discharge in full of the Lessee's
payment obligations under and in accordance with the Lease and the
Operative Agreements (and the Certificates in the case of the Indenture
Trustee or the Trust Indenture Estate if the Lessee shall have assumed the
Certificates pursuant to Section 7.11 of this Agreement), and (B) the
earliest of (x) the expiration of the Term of the Lease and return of the
Aircraft in accordance with Article 12 of the Lease, (y) the termination
of the Lease in accordance with the applicable provisions of the Lease and
return of the Aircraft in accordance with the Lease, or (z) the
termination of the Lease in accordance with the applicable provisions of
the Lease and the transfer of all right, title and interest in the
Aircraft to the Lessee pursuant to its exercise of any of its purchase
options set forth in Section 4.02(a) of the Lease, except that,
notwithstanding anything in this Section 8.01(b) to the contrary, Taxes
incurred in connection with the exercise of any remedies pursuant to
Article 17 of the Lease following the occurrence of an Event of Default
shall not be excluded from the indemnity described in Section 8.01(a)
hereof;
(iv) As to the Owner Trustee, Taxes imposed against the Owner
Trustee upon or with respect to any fees for services rendered in its
capacity as Owner Trustee under the Trust Agreement or, as to the
Indenture Trustee, Taxes imposed against the Indenture Trustee upon or
with respect to any fees received by it for services rendered in its
capacity as Indenture Trustee under the Indenture;
(v) Taxes imposed on an Indemnitee that would not have been
imposed but for the willful misconduct or gross negligence of such
Indemnitee (other than gross negligence or willful misconduct not actually
committed by but instead imputed to such Indemnitee by reason of such
Indemnitee's participation in the transactions contemplated by the
Operative Agreements) or the breach by such Indemnitee of any
representation, warranty or covenant contained in the Operative Agreements
or any document delivered in connection therewith (unless attributable to
a breach of representation, warranty or covenant of the Lessee);
(vi) Taxes imposed on the Owner Trustee or the Owner
Participant or any successor, assign or Affiliate thereof which became
payable by reason of any voluntary or involuntary transfer or disposition
by such Indemnitee subsequent to the Delivery Date, including revocation
of the Trust, of any interest in some or all of the Aircraft, Airframe,
Engines or Parts thereof or its interest in the Lessor's Estate, other
than (A) Taxes that result from transfers or dispositions which occur
while an Event of Default under the Lease has occurred and is continuing
at the time of such transfer or disposition or (B) Taxes that result from
any transfer or disposition pursuant to the terms of the Lease;
(vii) Taxes imposed on the Owner Participant for which the
Lessee is obligated to indemnify the Owner Participant pursuant to the Tax
Indemnity Agreement;
(viii) Notwithstanding anything herein to the contrary, Taxes
imposed on a successor, assign or other transferee (including, without
limitation, a transferee which is a new lending office of an original
Indemnitee) of any entity or Person which on the Delivery Date is an
Indemnitee (for purposes of this clause (viii), an "original Indemnitee")
or such original Indemnitee to the extent that such Taxes exceed the
amount of Taxes that would have been imposed and would have been
indemnifiable pursuant to Section 8.01(a) hereof had there not been a
succession, assignment or other transfer by such original Indemnitee of
any such interest of such Indemnitee in the Aircraft or any Part thereof,
any interest in or under any Operative Agreement, or any proceeds
thereunder (it being understood that for purposes of determining the
amount of indemnification that would have been due to such original
Indemnitee with respect to a net income Tax, it shall be assumed that such
original Indemnitee would be subject to taxation on its income at the
highest marginal statutory rate applicable to it); provided, however, that
the exclusion provided by this clause (viii) shall not apply in the case
of a succession, assignment or other transfer (1) while an Event of
Default under the Lease or the Indenture has occurred and is continuing;
(2) required by any provision of the Operative Agreements (other than
pursuant to Section 7.02 hereof) or (3) in the case of the Owner
Participant, to any Tax other than an Income Tax;
(ix) [Reserved];
(x) any Taxes which have been included in the Purchase Price;
(xi) any Taxes which would not have been imposed but for a
Lessor's Lien with respect to the Owner Participant or an Indenture
Trustee's Lien with respect to the Indenture Trustee;
(xii) any Taxes imposed on the Owner Participant or any person
who is a "disqualified person", within the meaning of Section 4975(e)(2)
of the Code, or a "party in interest", within the meaning of Section 3(14)
of ERISA, by virtue of such person's relationship to the Owner Participant
as the result of any prohibited transaction, within the meaning of Section
406 of ERISA or Section 4975(c)(1) of the Code, occurring with respect to
the purchase or holding of any Pass Through Certificate (or any funded
participation therein) (i) over which purchase or holding the Owner
Participant or any Affiliate thereof has discretion or control (other than
in the capacity of a directed trustee or custodian), or (ii) by an
employee benefit plan, within the meaning of Section 3(3) of ERISA, or
individual retirement account or plan subject to Section 4975 of the Code
with respect to which the Owner Participant (or any Affiliate thereof) has
the power, directly or indirectly, to appoint or terminate, or to
negotiate the terms of the management agreement with, the person or
persons having discretion or control (other than in the capacity of a
directed trustee or custodian), over such purchase or holding; and
(xiii) Taxes imposed by any jurisdiction to the extent they
would have been imposed on the Lessor or the Owner Participant for
activities in such jurisdiction unrelated to the transactions contemplated
by the Operative Agreements.
(c) Withholding. The Pass Through Trustee shall withhold any
Taxes required to be withheld on payments to any holder of a Pass Through
Certificate who is a Non-U.S. Person except to the extent that such a holder of
a Pass Through Certificate has furnished evidence to the Pass Through Trustee
sufficient under applicable law to entitle such holder of a Pass Through
Certificate to any exemption from or reduction in the rate of withholding on
interest claimed by such holder of a Pass Through Certificate. The Indenture
Trustee shall withhold any Taxes required to be withheld on any payment to a
Holder pursuant to Section 5.09 of the Indenture. If the Indenture Trustee or
the Pass Through Trustee fails to withhold a Tax required to be withheld with
respect to any Holder of a Certificate or any holder of a Pass Through
Certificate or any claim is otherwise asserted by a taxing authority against
the Owner Trustee or the Owner Participant for any withholding tax, the Lessee
will indemnify the Owner Trustee and the Owner Participant (without regard to
the exclusions set forth in Section 8.01(b) hereof) on an After-Tax Basis
against any such Taxes required to be withheld and any interest and penalties
with respect thereto, along with any other costs (including reasonable
attorney's fees) incurred in connection with any such claim. The Indenture
Trustee or the Pass Through Trustee, as the case may be, in its individual
capacity (and without recourse to the Trust Indenture Estate), shall indemnify
the Lessee (without regard to the exclusions set forth in Section 8.01(b)
hereof) on an After-Tax Basis for any payment the Lessee shall have made
pursuant to the preceding sentence.
Section 8.02. After-Tax Basis. The amount which the Lessee
shall be required to pay with respect to any Tax indemnified against under
Section 8.01 shall be an amount sufficient to restore the Indemnitee, on an
After-Tax Basis, to the same position such party would have been in had such
Tax not been incurred. If any Indemnitee actually realizes a permanent tax
benefit by reason of the payment of any Tax paid or indemnified against by the
Lessee, such Indemnitee shall promptly pay to the Lessee to the extent such tax
benefit was not previously taken into account in computing such payment, but
not before the Lessee shall have made all payments then due to such Indemnitee
under this Agreement, the Tax Indemnity Agreement and any other Operative
Agreement, an amount equal to the lesser of (x) the sum of such permanent tax
benefit plus any other permanent tax benefit actually realized by such
Indemnitee that would not have been realized but for any payment made by such
Indemnitee pursuant to this sentence and not already paid to the Lessee, and
(y) the amount of the payment made under this Section 8.02 and Section 8.01
hereof by the Lessee to such Indemnitee plus the amount of any other payments
by the Lessee to such Indemnitee theretofore required to be made under this
Section 8.02 and Section 8.01 hereof (and the excess, if any, of the amount
described in clause (x) above over the amount described in clause (y) above
shall be carried forward and applied to reduce pro tanto any subsequent
obligations of the Lessee to make payments pursuant to Section 8.01 hereof);
provided, however, that notwithstanding the foregoing portions of this
sentence, such Indemnitee shall not be obligated to make any payment to the
Lessee pursuant to this sentence as long as an Event of Default shall have
occurred and be continuing under the Lease. The Lessee shall reimburse on an
After-Tax Basis such Indemnitee for any payment of a tax benefit pursuant to
the preceding sentence (or a tax benefit otherwise taken into account in
calculating the Lessee's indemnity obligation hereunder) to the extent that
such tax benefit is disallowed or reduced in a taxable year subsequent to the
year of such payment (including the expiration of any tax credit carryovers or
carrybacks of such Indemnitee that would not otherwise have expired).
Section 8.03. Time of Payment. Any amount payable to an
Indemnitee pursuant to this Article 8 shall be paid within 30 days after
receipt of a written demand therefor from such Indemnitee accompanied by a
written statement describing in reasonable detail the basis for such indemnity
and the computation of the amount so payable, provided that in the case of
amounts which are being contested by the Lessee in good faith or by the
Indemnitee in either case pursuant to Section 8.04 hereof, such amount shall be
payable 30 days after the time such contest is finally resolved.
Section 8.04. Contests. If a written claim is made against any
Indemnitee for Taxes with respect to which the Lessee is liable for a payment
or indemnity hereunder, such Indemnitee shall promptly give the Lessee notice
in writing of such claim and shall furnish the Lessee with copies of any
requests for information from any taxing authority relating to such Taxes with
respect to which the Lessee may be required to indemnify hereunder; provided,
however, that the failure of an Indemnitee to give such notice or furnish such
copy shall not terminate any of the rights of such Indemnitee under this
Article 8, except to the extent that the Lessee's contest rights have been
materially and adversely impaired by the failure to provide such notice. The
Indemnitee shall in good faith, with due diligence and at the Lessee's expense,
if timely requested in writing by the Lessee, contest (or, at the Indemnitee's
option, require the Lessee to contest in the name of the Lessee, if permitted
by law) the validity, applicability or amount of such Taxes by:
(i) resisting payment thereof if lawful and practicable or
not paying the same except under protest if protest is necessary and
proper in each case so long as non-payment will not result in a material
risk of the sale, forfeiture or loss of, or the creation of a Lien other
than a Lessor's Lien on the Aircraft, Airframe or any Engine or any risk
of criminal liability; or
(ii) if the payment be made, using reasonable efforts to
obtain a refund thereof in appropriate administrative and judicial
proceedings.
If the Indemnitee, after reasonable discussion with the Lessee and
consideration in good faith of any suggestion made by the Lessee as to the
method of pursuing such contest, elects to conduct the contest, such Indemnitee
shall determine the manner in which to contest such Taxes, and shall
periodically or upon the Lessee's request advise the Lessee of the progress of
such contest; provided, however, that if the Indemnitee determines in its sole
discretion that such participation will not adversely affect such Indemnitee's
contest of any Taxes not indemnified hereunder, the Lessee shall have the right
to participate in such contest, including, among other rights, the right to
attend governmental or judicial conferences (to the extent unrelated issues are
not discussed) concerning such claim and the right to review and approve all
submissions to any governmental or other authority insofar as they relate to
the Tax for which indemnification is sought. Notwithstanding the preceding
sentences of this Section 8.04, such Indemnitee shall not be required to take
or continue any action unless the Lessee shall have (i) agreed in writing to
pay and shall pay the Indemnitee on demand and on an After-Tax Basis for any
liability or reasonable expense which such Indemnitee may incur as a result of
contesting such Taxes including without limitation (y) reasonable attorneys'
and accountants' fees and (z) the amount of any interest, penalty or additions
to tax which may ultimately be payable as the result of contesting such Taxes,
(ii) delivered to the Indemnitee a written acknowledgment of the Lessee's
obligation to such Indemnitee pursuant to this Agreement to the extent that the
contest is not successful and of the inapplicability of any exclusion or
defenses thereto, provided, however, that such acknowledgement shall not
preclude the Lessee from raising defenses to liability under this Agreement if
a decision in such contest is rendered which clearly articulates the cause of
such Tax and the cause, as so articulated, is not one for which the Lessee is
responsible to pay an indemnity hereunder, (iii) made all payments and
indemnities (other than contested payments and indemnities) then due to the
Indemnitee hereunder or with respect to any of the transactions contemplated by
or under the Operative Agreements. In no event shall such Indemnitee be
required or the Lessee permitted to contest pursuant to this Section 8.04 the
imposition of any Tax for which the Lessee is obligated to indemnify any
Indemnitee hereunder unless (i) such Indemnitee shall have received an opinion
of independent tax counsel, at the Lessee's expense, selected by such
Indemnitee and reasonably satisfactory to the Lessee ("Tax Counsel") to the
effect that a reasonable basis exists for contesting such claim, (ii) such
Indemnitee shall have determined that such contest will not result in any
material risk of loss, sale or forfeiture of, or the creation of a Lien (other
than Lessor's Liens) on, the Aircraft or any part thereof or interest thereon
or in a risk of criminal liability, or adversely affect the Trust Indenture
Estate, (iii) if an Event of Default shall have occurred and be continuing, the
Lessee shall have provided security for its obligations hereunder reasonably
satisfactory to the Indemnitee, (iv) if such contest shall be conducted in a
manner requiring payment of the claim in advance, the Lessee shall have
advanced sufficient funds, on an interest free basis, to make the payment
required, and agreed to indemnify the Indemnitee against any additional net
adverse tax consequences on an After-Tax Basis to such Indemnitee of such
advance and (v) the issue shall not be the same as an issue previously
contested hereunder and decided adversely, unless the Indemnitee shall have
received, at the Lessee's sole expense, a written opinion, in form and
substance reasonably satisfactory to such Indemnitee, of Tax Counsel, to the
effect that the applicable circumstances or law has changed and, in light
thereof, there is substantial authority within the meaning of Section 6662(d)
of the Code, as interpreted by the Treasury regulations thereunder, or under
similar principles of state or foreign law (as the case may be) for contesting
such claim and (vi) the amount of the indemnity payments the Lessee would be
required to make with respect to such adjustment, when aggregated with similar
adjustments that could be raised in other taxable years of such Indemnitee is
at least $50,000.
The Indemnitee shall not appeal any judicial decision unless it
receives an opinion of independent tax counsel, at the Lessee's sole expense,
selected by such Indemnitee and reasonably satisfactory to the Lessee to the
effect that a reasonable basis continues to exist for the Indemnitee's
position.
Nothing contained in this Section 8.04 shall require any
Indemnitee to contest or continue to contest, or permit Lessee to contest, a
claim which such Indemnitee would otherwise be required to contest pursuant to
this Section 8.04, if such Indemnitee shall waive payment by Lessee of any
amount that might otherwise be payable by Lessee under this Article 8 in
connection with such claim.
Section 8.05. Refunds. Upon receipt by an Indemnitee of a
refund of all or any part of any Taxes which the Lessee shall have paid for
such Indemnitee or for which the Lessee shall have reimbursed or indemnified
such Indemnitee, and provided there shall not have occurred and be continuing
any Event of Default by the Lessee hereunder or under the Lease (in which case
payment shall not be made to the Lessee until such Event of Default shall have
been cured), such Indemnitee shall pay to the Lessee an amount equal to the
amount of such refund less (x) reasonable expenses not previously reimbursed,
(y) all payments then due to such Indemnitee under this Article 8 and (z) Taxes
imposed with respect to the accrual or receipt thereof, including interest
received attributable thereto, plus any tax benefit actually realized by such
Indemnitee as a result of any payment by such Indemnitee made pursuant to this
sentence; provided, however, that such amount shall not be payable (a) before
such time as the Lessee shall have made all payments or indemnities then due
and payable to such Indemnitee under this Article 8 and (b) to the extent that
the amount of such payment would exceed (i) the amount of all prior payments by
the Lessee to such Indemnitee pursuant to this Article 8 less (ii) the amount
of all prior payments by such Indemnitee to the Lessee pursuant to this Article
8.
Any subsequent loss of such refund or tax benefit shall be
treated as a Tax subject to indemnification under the provisions of this
Article 8 (in the case of any such tax benefit, without regard to Section
8.01(b) hereof).
Section 8.06. Lessee's Reports. In case any report or return is
required to be made with respect to any obligation of the Lessee under this
Article 8 (other than any report or return relating to Income Taxes), the
Lessee shall make such report or return if legally permitted to do so, except
for any such report or return that the Indemnitee has notified the Lessee that
it intends to file, in such manner as will show the ownership of the Aircraft
in the Owner Trustee and shall send a copy of the applicable portions of such
report or return to the Indemnitee and the Owner Trustee or will notify the
Indemnitee of such requirement and make such report or return in such manner as
shall be satisfactory to such Indemnitee and the Owner Trustee. The Lessee
will provide such information reasonably available to the Lessee as the
Indemnitee may reasonably require from the Lessee to enable the Indemnitee to
fulfill its tax filing requirements with respect to the transactions
contemplated by the Operative Agreements (without duplication of the
requirements of Section 3 of the Tax Indemnity Agreement) and any audit
information request arising from any such filing. The Indemnitee will provide
such information reasonably available to it as the Lessee may reasonably
require from such Indemnitee to enable the Lessee to fulfill its tax filing
requirements with respect to the transactions contemplated by the Operative
Agreements and any audit information request arising from such filing; provided
that in no event shall any Indemnitee be required to provide copies of any of
its tax returns. The Lessee shall hold the Indemnitee harmless from and against
any liabilities, including penalties, additions to tax, fines and interest,
imposed upon or incurred by such Indemnitee to the extent directly attributable
to any insufficiency or inaccuracy in any return, statement, or report prepared
by the Lessee or information supplied by the Lessee, or directly attributable
to the Lessee's failure to supply reasonably available information to such
Indemnitee as required by this Section 8.06.
Section 8.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 8 and the Lessee's obligations under any and all of them shall survive
the expiration or other termination of the Operative Agreements.
Section 8.08. Payment of Taxes. With respect to any Tax
otherwise indemnifiable hereunder by the Lessee and applicable to the Aircraft,
Airframe, any Engine or Parts, to the extent permitted by the applicable
federal, state, local or foreign law, the Lessee shall pay such tax directly to
the relevant Taxing authority and file any returns or reports required with
respect thereto; provided, however, that the Lessee shall not make any
statements or take any action which would indicate that the Lessee or any
Person other than the Owner Trustee or the Owner Participant are the owner of
the Aircraft, the Airframe, any Engine or any Part or which would otherwise be
inconsistent with the terms of the Lease and the position thereunder of the
Owner Trustee and the Owner Participant. Copies of such returns or reports,
together with evidence of payment of any tax due, shall be sent by the Lessee
to the Owner Participant within thirty (30) days after the date of each payment
by the Lessee of any Tax.
Section 8.09. Reimbursements by Indemnitees Generally. If, for
any reason, Lessee is required to make any payment with respect to any Taxes
imposed on any Indemnitee in respect of the transactions contemplated by the
Operative Agreements or on the Aircraft, the Airframe, the Engines, the Parts
of any part thereof, which Taxes are not the responsibility of the Lessee with
respect to such Indemnitee, then such Indemnitee shall pay to the Lessee within
30 days of the Lessee's demand therefor an amount which equals the amount
actually paid by the Lessee with respect to such Taxes.
ARTICLE 9
GENERAL INDEMNITY
Section 9.01. Generally. (a) The Lessee agrees to indemnify
each Indemnitee against and agrees to protect, defend, save and keep harmless
each Indemnitee from any and all liabilities, obligations, losses, damages
(including if, as a result of an Indenture Event of Default described in
Section 7.01(a)(i) of the Indenture, the Indenture Trustee shall have sold all
or any portion of the Indenture Estate and the proceeds thereof were less than
an amount equal to accrued and unpaid Basic Rent on the date of sale plus the
Stipulated Loss Value as of such date, damages equal to such shortfall together
with interest thereon to the extent permitted by law at the Debt Rate until
such shortfall is paid in full), penalties, claims, actions, suits, costs,
disbursements and expenses (including reasonable legal fees and expenses and
all costs and expenses relating to amendments, supplements, adjustments,
consents, refinancings and waivers under the Operative Agreements except as
otherwise provided in Section 10.01(c)(i) or Article 15 hereof) of every kind
and nature (whether or not any of the transactions contemplated by this
Agreement are consummated) (individually, an "Expense," collectively,
"Expenses"), which may be imposed on, incurred or suffered by or asserted
against any Indemnitee, in any way relating to, based on or arising out of:
(i) the Original Agreements, this Agreement, the Lease, the
Indenture, the Pass Through Agreement, the Trust Agreement, the
Intercreditor Agreement, the Liquidity Facilities, AVSA's FAA ▇▇▇▇ of
Sale, AVSA's Warranty ▇▇▇▇ of Sale or any other Operative Agreement or any
other document entered into in connection herewith or any sublease or
transfer or any transactions contemplated hereby or thereby;
(ii) the operation, possession, use, non-use, maintenance,
storage, overhaul, delivery, non-delivery, control, repair or testing of
the Aircraft, Airframe, or any Engine or any engine used in connection
with the Airframe, or any part thereof by the Lessee, any sublessee or any
other Person whatsoever, whether or not such operation, possession, use,
non-use, maintenance, storage, overhaul, delivery, non-delivery, control,
repair or testing is in compliance with the terms of the Lease, including
without limitation, claims for death, personal injury or property damage
or other loss or harm to any Person whatsoever, including, without
limitation, any passengers, shippers or other Persons wherever located,
and claims relating to any laws, rules or regulations, including, without
limitation, environmental control, noise and pollution laws, rules or
regulation;
(iii) the manufacture, design, sale, return, purchase,
acceptance, rejection, delivery, non-delivery, condition, repair,
modification, servicing, rebuilding, airworthiness, registration,
reregistration, import, export, performance, non-performance, lease,
sublease, transfer, merchantability, fitness for use, alteration,
substitution or replacement of any Airframe, Engine, or Part under the
Lease, the Purchase Agreement, the Purchase Agreement Assignment, the GTA
or the Engine Warranty Assignment or other transfer of use or possession,
or other disposition of the Aircraft, the Airframe, any Engine or any Part
including, without limitation, latent and other defects, whether or not
discoverable, strict tort liability, and any claims for patent, trademark
or copyright infringement;
(iv) any breach of or failure to perform or observe, or any
other non-compliance with, any condition, covenant or agreement to be
performed, or other obligations of the Lessee under any of the Operative
Agreements or the Original Agreements, or the falsity or inaccuracy of any
representation or warranty of the Lessee in any of the Operative
Agreements or the Original Agreements (other than representations and
warranties in the Tax Indemnity Agreement);
(v) the Collateral Account and the Liquid Collateral;
(vi) the enforcement of the terms of the Operative Agreements
or the Original Agreements and the administration of the Trust Indenture
Estate; and
(vii) the offer, issuance, sale or delivery of any Certificate
or any Pass Through Certificate, or any refunding or refinancing thereof,
or interest in the Lessor's Estate or the Trust Agreement or the Original
Trust Agreement or any similar interest or in any way relating to or
arising out of the Trust Agreement or the Original Trust Agreement and the
Lessor's Estate, the Indenture or the Original Indenture or the Trust
Indenture Estate (including, without limitation, any claim arising out of
the Securities Act of 1933, as amended, the Securities Exchange Act of
1934, as amended, or any other federal or state statute, law or
regulation, or at common law or otherwise relating to securities), or the
action or inaction of the Owner Trustee or Indenture Trustee as trustees,
in the manner contemplated by this Agreement, the Original Participation
Agreement, the Indenture, the Original Indenture, the Indenture and
Security Agreement Supplement, the Trust Agreement or the Original Trust
Agreement and in the case of the Owner Participant or the Initial Owner
Participant, as the case may be, its obligations arising under Section
6.01 of the Trust Agreement or the Original Trust Agreement.
The foregoing indemnity by the Lessee is intended to include and cover, but is
not limited to, any Expense to which the Indemnitees may be subject as a result
of their respective ownership or leasing of any interest in the Aircraft,
Airframe, any Engine or Part during the Term, whether or not in the Lessee's
possession or control, insofar as such Expense relates to any activity or event
whatsoever involving such item while it is under lease to the Lessee (or after
termination of the Lease in connection with the exercise of remedies thereunder
to the extent that such Expense is attributable to the transactions
contemplated hereby and by the other Operative Agreements and the Original
Agreements), and such Expense does not fall within any of the exceptions listed
in Section 9.01(b) hereof.
(b) Exceptions. The indemnity provided for in Section 9.01(a)
shall not extend to any Expense of any Indemnitee to the extent it:
(i) would not have occurred but for the willful misconduct or
gross negligence of such Indemnitee;
(ii) is in respect of the Aircraft, and is attributable to
acts or events which occur after the Aircraft is no longer part of the
Lessor's Estate or leased under the Lease or, if the Aircraft remains a
part of the Lessor's Estate, after the expiration of the Term and any
holdover period under Section 12.05 of the Lease (other than pursuant to
Article 17 of the Lease, in which case the indemnity provided in Section
9.01(a) hereof shall survive for so long as Lessor or the Indenture
Trustee shall be entitled to exercise remedies under such Article 17), or
to acts or events which occur after return of possession of the Aircraft
by the Lessee in accordance with the provisions of the Lease but in any
such case only to the extent not fairly attributable to acts or omissions
of the Lessee prior to expiration of the Term and any holdover period
under Section 12.05 of the Lease, including without limitation the
Lessee's failure to fully discharge all of its obligations under the Lease
or the other Operative Agreements or the Original Agreements;
(iii) is a Tax, whether or not the Lessee is required to
indemnify therefor pursuant to Article 8 hereof or pursuant to the Tax
Indemnity Agreement;
(iv) is a cost or expense required to be paid by the Owner
Participant or its permitted transferees (and not by the Lessee) pursuant
to this Agreement or any other Operative Agreement (other than the Owner
Participant's obligations under Section 6.01 of the Trust Agreement) and
for which the Lessee is not otherwise obligated to reimburse the Owner
Participant, directly or indirectly;
(v) would not have been incurred by such Indemnitee if such
Indemnitee had not been in breach of its representations or warranties, or
had not defaulted in the observance and performance of the terms and
provisions required to be observed and performed by it, in this Agreement,
the Purchase Agreement Assignment, the Lease, the Indenture, the Trust
Agreement, the Original Agreements or any other Operative Agreement to
which it is a party unless such breach or default shall be a result of the
breach or default of any of the foregoing by the Lessee or another
Indemnitee;
(vi) [reserved];
(vii) in the case of the Owner Participant, Lessor's Liens to
the extent attributable to the Owner Participant; in the case of the Owner
Trustee, Lessor's Liens to the extent attributable to the Owner Trustee;
and in the case of the Indenture Trustee, Indenture Trustee's Liens;
(viii) is in the case of the Owner Participant or the Owner
Trustee, to the extent attributable to the offer or sale by such
Indemnitee after the Delivery Date of any interest in the Aircraft, the
Lessor's Estate or the Trust Agreement or any similar interest (including
an offer or sale resulting from bankruptcy or other proceedings for the
relief of debtors in which such Indemnitee is the debtor), unless in each
case such offer or sale shall occur (w) in connection with a Refinancing,
(x) as a result of exercise of remedies under Article 17 of the Lease, (y)
during a period when an Event of Loss has occurred or (z) in connection
with the termination of the Lease or action or direction of the Lessee
pursuant to the Lease; or
(ix) which is incurred by the Owner Participant or any person
who is a "disqualified person", within the meaning of Section 4975(e)(2)
of the Code, or a "party in interest", within the meaning of Section 3(14)
of ERISA, by virtue of such person's relationship to the Owner
Participant, as the result of any prohibited transaction, within the
meaning of Section 406 of ERISA or Section 4975(c)(1) of the Code,
occurring with respect to the purchase or holding of any Pass Through
Certificate (i) over which purchase or holding the Owner Participant or
any Affiliate thereof has discretion or control (other than in the
capacity of a directed trustee or custodian), or (ii) by an employee
benefit plan, within the meaning of Section 3(3) of ERISA, or individual
retirement account or plan subject to Section 4975 of the Code with
respect to which the Owner Participant (or any Affiliate thereof) has the
power, directly or indirectly, to appoint or terminate, or to negotiate
the terms of the management agreement with, the person or persons having
discretion or control (other than in the capacity of a directed trustee or
custodian), over such purchase or holding.
Section 9.02. After-Tax Basis. The amount which the Lessee
shall be required to pay with respect to any Expense indemnified against under
Section 9.01 hereof shall be an amount sufficient to restore the Indemnitee, on
an After-Tax Basis, to the same position such party would have been in had such
Expense not been incurred. If any Indemnitee actually realizes a permanent Tax
benefit by reason of the payment of such Expense paid or indemnified against by
the Lessee which was not considered in the computation thereof, such Indemnitee
shall promptly pay to the Lessee, but not before the Lessee shall have made all
payments theretofore due such Indemnitee under this Agreement, the Original
Agreements, the Tax Indemnity Agreement and any other Operative Agreement, an
amount equal to the lesser of (x) the sum of such Tax benefit plus any other
permanent Tax benefit actually realized by such Indemnitee as the result of any
payment made by such Indemnitee pursuant to this sentence and (y) the amount of
such payment pursuant to this Section 9.02 by the Lessee to such Indemnitee
plus the amount of any other payments by the Lessee to such Indemnitee
theretofore made pursuant to this Section 9.02 less the amount of any payments
by such Indemnitee to the Lessee theretofore made pursuant to this Section 9.02
(and the excess, if any, of the amount described in clause (x) above over the
amount described in clause (y) above shall be carried forward and applied to
reduce pro tanto any subsequent obligations of the Lessee to make payments
pursuant to this Section 9.02), it being intended that no Indemnitee should
realize a net Tax benefit pursuant to this Section 9.02 unless the Lessee shall
first have been made whole for any payments by it to such Indemnitee pursuant
to this Section 9.02; provided, however, that notwithstanding the foregoing
portions of this sentence, such Indemnitee shall not be obligated to make any
payment to the Lessee pursuant to this sentence so long as an Event of Default
shall have occurred and be continuing. Any Taxes that are imposed on any
Indemnitee as a result of the disallowance or reduction of such Tax benefit
referred to in the next preceding sentence in a taxable year subsequent to the
year of allowance and utilization by such Indemnitee (including the expiration
of any tax credit carryovers or carrybacks of such Indemnitee that would not
otherwise have expired) shall be indemnifiable pursuant to the provisions of
Section 8.01 hereof without regard to Section 8.01(b) hereof.
Section 9.03. Subrogation. Upon the payment in full of any
indemnity pursuant to this Article 9 by the Lessee (but not earlier), the
Lessee shall be subrogated to any right of the Indemnitee, other than with
respect to any of such Indemnitee's insurance policies or in connection with
any indemnity claim the Person indemnified may have against any other
Indemnitee in respect of the matter against which such indemnity has been made.
Section 9.04. Notice and Payment. Each Indemnitee and the
Lessee shall give prompt written notice one to the other of any liability of
which such party has knowledge for which the Lessee is, or may be, liable under
this Article 9; provided, however, that failure to give such notice shall not
terminate any of the rights of the Indemnitees under this Article 9, except
(with respect to such Indemnitee) to the extent that the Lessee has been
materially prejudiced by the failure to provide such notice. Unless otherwise
provided in the Operative Agreements, any amount payable to an Indemnitee
pursuant to this Article 9 shall be paid within 30 days after receipt of a
written demand therefor from such Indemnitee accompanied by a written statement
describing in reasonable detail the basis for such indemnity and the
computation of the amount so payable.
Section 9.05. Refunds. If any Indemnitee shall obtain a
recovery of all or any part of any amount which the Lessee shall have paid to
such Indemnitee or for which the Lessee shall have reimbursed such Indemnitee
under this Article 9, and provided there shall not have occurred a Payment
Default or an Event of Default (in which case payment shall not be made to the
Lessee until such Payment Default or Event of Default shall have been cured)
such Indemnitee shall pay to the Lessee the amount of any such recovery,
including interest received with respect to the recovery, net of any Taxes paid
or payable as a result of the receipt of the recovery and interest, plus any
net additional permanent income tax benefits actually realized by Indemnitee as
the result of any payment made pursuant to this sentence less any reasonable
costs and expense of any Indemnitee not reimbursed by the Lessee; provided,
however, that such amount shall not be payable (a) before such time as the
Lessee shall have made all payments or indemnities then due and payable to such
Indemnitee under this Article 9 or (b) to the extent that the amount of such
payment would exceed the amount of all prior payments by the Lessee to such
Indemnitee pursuant to this Article 9, less the amount of all prior payments by
such Indemnitee to the Lessee pursuant to this Article 9. Any subsequent loss
of such recovery or tax benefit shall be subject to indemnification under
Article 8 or this Article 9, as the case may be.
Section 9.06. Defense of Claims. The Lessee or its insurers
shall have the right (in each such case at the Lessee's sole expense) to
investigate or, provided that (i) the Lessee or its insurers shall not reserve
the right to dispute liability with respect to any insurance policies pursuant
to which coverage is sought, (ii) in the case of the Lessee, no Event of
Default shall have occurred and be continuing and (iii) the Lessee shall have
first acknowledged in writing to such Indemnitee the Lessee's obligation to
indemnify such Indemnitee hereunder in respect of such claim, defend any claim
covered by insurance for which indemnification is sought pursuant to this
Article 9 and each Indemnitee shall cooperate with the Lessee or its insurers
with respect thereto, and provided, further, the Lessee shall not be entitled
to assume and control the defense of any such claim if and to the extent such
Indemnitee reasonably objects to such control on the ground that an actual or
potential material conflict of interest exists where it is advisable for such
Indemnitee to be represented by separate counsel. Subject to the immediately
foregoing sentence, where the Lessee or the insurers under a policy of
insurance maintained by the Lessee undertake the defense of an Indemnitee with
respect to such a claim, no additional legal fees or expenses of such
Indemnitee in connection with the defense of such claim shall be indemnified
hereunder unless the fees or expenses were incurred at the written request of
the Lessee or such insurers. Subject to the requirement of any policy of
insurance applicable to a claim, an Indemnitee may participate at its own
expense at any judicial proceeding controlled by the Lessee or its insurers
pursuant to the preceding provisions, provided that such party's participation
does not, in the opinion of the independent counsel appointed by the Lessee or
its insurers to conduct such proceedings, interfere with such control; and such
participation shall not constitute a waiver of the indemnification provided in
this Section 9.06. No Indemnitee shall enter into any settlement or other
compromise with respect to any claim described in this Section 9.06 without the
prior written consent of the Lessee, which consent shall not unreasonably be
withheld or delayed, unless such Indemnitee waives its right to be indemnified
under this Article 9 with respect to such claim.
Section 9.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 9 and the Lessee's obligations under any and all of them shall survive
the expiration or other termination of this Agreement, the Tax Indemnity
Agreement, the Trust Agreement, the Indenture, the Purchase Agreement
Assignment, the Engine Warranty Assignment, the Lease and the other Operative
Agreements but, as to such indemnities, only with respect to losses,
liabilities, obligations, damages, penalties, claims, actions, suits, costs,
Expenses and disbursements caused by events occurring or existing (or fairly
attributable to the Lessee's acts or omissions) prior to or incurred in the
process of (i) the return or disposition of the Aircraft under Article12 or
Article17 of the Lease, or (ii) the termination of the Lease or the Indenture
or, if later, the return of the Aircraft.
Section 9.08. Effect of Other Indemnities. The Lessee's
obligations under the indemnities provided for in this Agreement shall be those
of a primary obligor whether or not the Person indemnified shall also be
indemnified with respect to the same matter under the terms of this Agreement,
the Lease, the Indenture, the Trust Agreement, or any other document or
instrument, and the Person seeking indemnification from the Lessee pursuant to
any provision of this Agreement may proceed directly against the Lessee without
first seeking to enforce any other right of indemnification.
Section 9.09. Interest. The Lessee will pay to each Indemnitee
on demand, to the extent permitted by applicable law, interest on any amount of
indemnity not paid when due pursuant to this Article 9 until the same shall be
paid, at the Past Due Rate.
ARTICLE 10
TRANSACTION COSTS
Section 10.01. Transaction Costs and Other Costs. (a)
Transaction Costs. The Owner Participant shall pay (or reimburse the Lessee if
the Lessee shall have previously made such payment) all fees and expenses of
the following persons relating to the public offering of the Pass Through
Certificates contemplated by the Underwriting Agreement and related to the
transactions contemplated hereby: (i) the fees and expenses of counsel for the
Owner Participant and the Owner Participant Guarantor; (ii) the fees and
expenses of the transaction documentation counsel for the Lessee and counsel
for the Owner Trustee, the Indenture Trustee, the Subordination Agent, the Pass
Through Trustee, each Liquidity Provider, the LC Bank and the Underwriters
(other than those fees, expenses and disbursements payable by the Underwriters
pursuant to the Underwriting Agreement); (iii) the fees and expenses of
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇; (iv) any initial fees and expenses of the Pass
Through Trustee and each Liquidity Provider and the fees and expenses of the
Owner Trustee, the Subordination Agent, the LC Bank and the Indenture Trustee
including, without limitation, in connection with the issuance of the Letter of
Credit; (v) any compensation, commissions and discounts payable to the
Underwriters pursuant to the Underwriting Agreement; (vi) the fees, if any,
incurred in printing the Pass Through Certificates; (vii) the fees and expenses
incurred in connection with printing the Registration Statement on Form S-3
bearing Registration No. 333-49411 (including any amendment thereto), printing
any Preliminary Prospectus or Prospectus (as such terms are defined in the
Underwriting Agreement) for the offering of the Pass Through Certificates;
(viii) the fees and expenses of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP; (ix) the fees and expenses
of ▇▇▇▇▇'▇ and S&P; (x) the fees and expenses (including computer time- sharing
charges) of First Chicago Leasing Corporation; (xi) the reasonable
out-of-pocket expenses of the Owner Participant and the Owner Participant
Guarantor, including, without limitation, any amounts paid in connection with
any appraisal report prepared on behalf of the Owner Participant; (xii)
reimbursement to the Owner Participant, the Owner Participant Guarantor, the
Owner Trustee, the Indenture Trustee, the Subordination Agent, each Liquidity
Provider, the LC Bank and the Pass Through Trustee for any and all fees,
expenses and disbursements of the character referred to above or otherwise
incurred in connection with the negotiation, preparation, execution and
delivery, filing and recording of the Operative Agreements and the documents
contemplated thereby, including, without limitation, travel expenses and
disbursements which shall have been paid by such party; (xiii) printing and
duplicating expenses and all fees, taxes and other charges payable in
connection with the recording or filing on or before the Delivery Date of the
instruments described in this Agreement; (xiv) initial fees, initial expenses,
initial disbursements and the initial costs of distributing the Certificates
(but not the continuing fees, expenses, disbursements and costs of
distribution) of SSB, as lessor under the Lease and as Owner Trustee under the
Trust Agreement and with respect to the administration of the Lease and the
Lessor's Estate, of the Indenture Trustee as trustee under the Indenture with
respect to the administration of the Trust Indenture Estate and of the
Subordination Agent acting under the Intercreditor Agreement; and (xv) any
other amounts approved by the Lessee and the Owner Participant. The fees and
expenses described in clauses (ii) through (x) of this paragraph shall be
allocable to the Owner Participant under this Agreement (1) to the extent
incurred specifically with respect to the Owner Participant, and (2) to the
extent such fees and expenses are incurred but are not specifically
attributable to the Owner Participant, in the proportion that the principal
amount of the Certificates bears to the total amount of the Pass Through
Certificates.
The Owner Participant, the Owner Trustee and the Lessee
acknowledge that the percentages for Basic Rent, Stipulated Loss Value and
Termination Value set forth in the Lease have been prepared assuming the
aggregate amount payable by the Owner Participant pursuant to the preceding
paragraph is 1.287% of the Purchase Price (the "Estimated Expense Amount");
provided, however, that in no event shall the sum of (i) the Owner
Participant's Commitment, (ii) the Transaction Costs to be paid by the Owner
Participant pursuant to Section 3.04 hereof, and (iii) the Transaction Costs to
be paid by the Owner Participant pursuant to Section 10.01 hereof exceed, in
the aggregate, $22,100,000, unless otherwise agreed by the Owner Participant.
To the extent that the payment by the Owner Participant of Transaction Costs
would cause the sum described in the immediately preceding sentence to exceed
$22,100,000, the Lessee shall be obligated to pay the Transaction Costs
constituting the First Chicago Leasing Corporation fee and the ▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇▇▇ fee to the extent of such excess and the Owner Participant shall have
no obligation to pay such excess.
(b) Continuing Expenses. The continuing fees, expenses and
disbursements (including reasonable counsel fees and expenses) of the entity
acting as Owner Trustee, as lessor under the Lease and as Owner Trustee under
the Trust Agreement with respect to the administration of the Lease and the
Lessor's Estate and the continuing fees, expenses and disbursements (including
reasonable counsel fees and expenses and initial fees relating to the
establishment of any replacement trustee) of the Indenture Trustee, as trustee
under the Indenture with respect to the administration of the Trust Indenture
Estate, the continuing fees, expenses and disbursements (including reasonable
counsel fees and initial fees relating to the establishment of a replacement
trustee) of the Pass Through Trustee and the Subordination Agent and the
continuing fees, expenses and disbursements (including reasonable counsel fees
and initial fees relating to the establishment of a replacement liquidity
provider) of the Liquidity Providers under each Liquidity Facility shall be
paid as Supplemental Rent by the Lessee, including without limitation any
amounts payable to the Indenture Trustee or on account of requests by the
Indenture Trustee for indemnification under Article XI of the Indenture.
(c) Amendments, Supplements and Appraisal. Without limitation
of the foregoing, the Lessee agrees:
(i) to pay as Supplemental Rent to the Owner Trustee, the Owner
Participant, the Owner Participant Guarantor, the Indenture Trustee, the
Subordination Agent, the Liquidity Providers and the Pass Through Trustee
all costs and expenses (including reasonable legal fees and expenses)
incurred by any of them in connection with (a) any Default or Event of
Default and any enforcement or collection proceedings resulting therefrom,
or (b) the enforcement of the obligations of the Lessee hereunder or under
the other Operative Agreements and the enforce- ment of this Section
10.01, including, without limitation, the entering into or giving or
withholding of any amendments or supplements or waivers or consents,
including without limitation, any amendment, supplement, waiver or consent
resulting from any work-out, restructuring or similar proceeding relating
to the performance or nonperformance by the Lessee of its obligations
under the Operative Agreements or (c) any amendment, supplement, waiver or
consent (whether or not entered into) under the Original Agreements, this
Agreement, the Lease, the Indenture, the Certificates, the Tax Indemnity
Agreement, the Purchase Agreement Assignment or any other Operative
Agreement or document or instrument delivered pursuant to any of them,
which amendment, supplement, waiver or consent is required by any
provision of any Operative Agreement or is requested by the Lessee or
necessitated by the action or inaction of the Lessee; provided, however,
that the Lessee shall not be responsible for fees and expenses incurred in
connection with the offer, sale or other transfer (whether pursuant to
Article 5 of the Trust Agreement or otherwise) by the Owner Participant or
the Owner Trustee after the Delivery Date of any interest in the Aircraft,
the Lessor's Estate or the Trust Agreement or any similar interest (and
the Owner Participant shall be responsible for all such fees and
expenses), unless such offer, sale or transfer shall occur (A) during a
period when an Event of Default has occurred and is continuing under the
Lease, (B) during a period following an Event of Loss or (C) in connection
with the termination of the Lease or action or direction of the Lessee
pursuant to Section 4.02 or Article 10 of the Lease; and
(ii) to pay the fees, costs and expenses of all appraisers
involved in an independent appraisal of the Aircraft to the extent
required under Section 4.03 of the Lease.
ARTICLE 11
SUCCESSOR OWNER TRUSTEE
Section 11.01. Appointment of Successor Owner Trustee. (a)
Resignation and Removal. The Owner Trustee or any successor Owner Trustee may
resign or may be removed by the Owner Participant, and a successor Owner
Trustee may be appointed and a Person may become Owner Trustee under the Trust
Agreement only in accordance with the provisions of Section 3.11 of the Trust
Agreement and the provisions of paragraphs (b) and (c) of this Section 11.01.
(b) Conditions to Appointment. The appointment in any manner of
a successor Owner Trustee pursuant to Section 3.11 of the Trust Agreement shall
be subject to the following conditions:
(i) Such successor Owner Trustee shall be a Citizen of the United
States;
(ii) Such successor Owner Trustee shall be a bank or a trust
company having combined capital, surplus and undivided profits of at least
$100,000,000 or a bank or trust company fully guaranteed by a direct or
indirect parent thereof having a combined capital, surplus and undivided
profits of at least $100,000,000;
(iii) Such appointment shall not violate any provisions of the
Transportation Code or any applicable rule or regulation of the applicable
regulatory agency or body of any other jurisdiction in which the Aircraft
may then be registered or create a relationship which would be in
violation of the Transportation Code or any applicable rule or regulation
of the applicable regulatory agency or body of any other jurisdiction in
which the Aircraft may then be registered;
(iv) Such successor Owner Trustee shall enter into an agreement
or agreements, in form and substance satisfactory to the Lessee, the Owner
Participant, the Pass Through Trustee and the Indenture Trustee whereby
such successor Owner Trustee confirms that it shall be deemed a party to
this Agreement, the Trust Agreement, the Lease, the Lease Supplement, the
Purchase Agreement Assignment, the Engine Warranty Assignment, the
Indenture, the Indenture Supplement and any other Operative Agreement to
which the Owner Trustee is a party and agrees to be bound by all the terms
of such documents applicable to the Owner Trustee and makes the
representations and warranties contained in Section 7.04 hereof (except
that it may be duly incorporated, validly existing and in good standing
under the laws of the United States of America or any State thereof); and
(v) All filings of UCC financing and continuation statements,
filings in accordance with the Transportation Code and amendments thereto
shall be made and all further actions taken in connection with such
appointment as may be necessary in connection with maintaining the
validity, perfection and priority of the Lien of the Indenture and the
valid and continued registration of the Aircraft in accordance with the
Transportation Code.
(c) Appointment. For so long as the Aircraft remains registered
under the Transportation Code, the Owner Participant agrees to appoint promptly
a successor Owner Trustee meeting the requirements of Section 11.01(b) hereof
in the event the Owner Participant has knowledge that the Owner Trustee at any
time shall not be a Citizen of the United States.
(d) Revocation. The Owner Participant agrees not to revoke and
terminate the Trust Agreement except in accordance with Section 4.01(a) of the
Trust Agreement, as in effect on the date hereof or as amended in accordance
with the terms of the Operative Agreements.
ARTICLE 12
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS
Section 12.01. Liabilities of the Owner Participant. The Owner
Participant shall have no obligation or duty to the Lessee or to any Holder
with respect to the transactions contemplated by this Agreement, except those
obligations or duties expressly set forth in this Agreement, the Trust
Agreement, the Tax Indemnity Agreement, AVSA's FAA ▇▇▇▇ of Sale, AVSA's
Warranty ▇▇▇▇ of Sale, the Lease or any other Operative Agreement to which the
Owner Participant is a party and the Owner Participant shall not be liable for
the performance by any party hereto of such other party's obligations or duties
hereunder. Under no circumstances shall the Owner Participant as such be
liable to the Lessee, nor shall the Owner Participant be liable to any Holder,
for any action or inaction on the part of the Owner Trustee or the Indenture
Trustee in connection with this Agreement, the Indenture, the Lease, the Trust
Agreement, the Purchase Agreement Assignment, the Engine Warranty Assignment,
any other Operative Agreement, any Original Agreement, the ownership of the
Aircraft, the administration of the Lessor's Estate or the Trust Indenture
Estate or otherwise, whether or not such action or inaction is caused by the
willful misconduct or gross negligence of the Owner Trustee or the Indenture
Trustee.
Section 12.02. Interest of Holders of Certificates. A Holder of
a Certificate shall have no further interest in, or other right with respect
to, the Trust Indenture Estate when and if the principal and interest on all
Certificates held by such Holder and all other sums payable to such Holder
under this Agreement, under the Indenture and under such Certificates shall
have been paid in full.
ARTICLE 13
OTHER DOCUMENTS
Section 13.01. Consent of Lessee to Other Documents. The Lessee
hereby consents in all respects to the execution and delivery of the Trust
Agreement, the Indenture, the Intercreditor Agreement and the Liquidity
Facilities and to all of the terms of said documents, and the Lessee
acknowledges receipt of an executed counterpart of such documents; it being
agreed that such consent shall not be construed to require the Lessee's consent
to any future supplement to, or amendment, waiver or modification of, the terms
of the Trust Agreement, the Indenture, the Intercreditor Agreement, the
Liquidity Facilities or the Certificates, except that prior to the occurrence
and continuance of an Event of Default, no section of the Indenture, the Trust
Agreement, the Intercreditor Agreement or the Liquidity Facilities shall be
amended or modified in any manner materially adverse to the Lessee without its
consent.
Section 13.02. Further Assurances. The Lessee hereby confirms
to the Owner Participant its covenants set forth in and obligations under the
Lease. The Lessee agrees that, except as otherwise provided in the Indenture,
the Owner Trustee may not enter into any amendment, modification or supplement
of, or give any waiver or consent with respect to, or approve any matter or
document as being satisfactory under the Lease without the prior consent of the
Indenture Trustee and the Owner Participant and that, except as otherwise
provided in the Indenture, upon an Indenture Event of Default, the Indenture
Trustee may act as the Lessor under the Lease to the exclusion of the Owner
Trustee. The Lessee further agrees to deliver to the Indenture Trustee and the
Owner Participant a copy of each notice, statement, request, report or other
communication given or required to be given to the Owner Trustee under the
Lease.
Section 13.03. Pass Through Trustee's and Subordination Agent's
Acknowledgment. The Pass Through Trustee and the Subordination Agent hereby
acknowledge and agree to be bound by all of the terms and conditions of the
Indenture, including without limitation, Section 8.02 thereof regarding the
rights of the Owner Participant to purchase the Certificates under
circumstances specified therein.
Section 13.04. No Retroactive Application. This Agreement, the
Lease, the Indenture and the Trust Agreement each amend and restate the
respective original agreements with no intention of retroactive application.
The applicable original agreements have been restated for the convenience of
the parties and such amendments and restatements are not intended to waive or
modify the obligations of any party which accrued or were to have been
performed on or prior to the Delivery Date under such unamended agreements (or,
in the case of this Agreement, the effective date hereof) or to deprive any
party of its rights and remedies in respect thereof and no provisions of such
Original Agreements shall in any way affect or be binding on the Owner Trustee
and the Owner Participant hereunder or under the other Operative Agreements
except to the extent restated therein with respect to periods following the
Delivery Date.
ARTICLE 14
NOTICES
Section 14.01. Notices. All notices, demands, declarations and
other communications required by this Agreement shall be in writing and shall
be deemed received (a) if given by telecopier, when transmitted and the
appropriate telephonic confirmation received if transmitted on a Business Day
and during normal business hours of the recipient, and otherwise on the next
Business Day following transmission, (b) if given by certified mail, return
receipt requested, postage prepaid five Business Days after being deposited in
the United States mail and (c) if given by FedEx service (or, if a Default or
Event of Default shall have occurred and be continuing, by other comparable
courier service), when received or personally delivered, addressed:
(a) If to the Lessee, to its office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Vice President and Treasurer with a
copy to Senior Vice President and General Counsel at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, telephone (▇▇▇) ▇▇▇-▇▇▇▇, facsimile
(▇▇▇) ▇▇▇-▇▇▇▇; or to such other address as the Lessee shall from time to
time designate in writing to the Lessor, the Indenture Trustee and the
Owner Participant;
(b) If to the Lessor or the Owner Trustee, to its office at ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Square, Hartford, Connecticut 06103, Attention:
Corporate/Muni Administration, facsimile (▇▇▇) ▇▇▇-▇▇▇▇ with a copy to
State Street Bank and Trust Company, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust Department,
telephone (▇▇▇) ▇▇▇-▇▇▇▇, facsimile (▇▇▇) ▇▇▇-▇▇▇▇; or to such other
address as the Lessor shall from time to time designate in writing to the
Lessee and the Indenture Trustee, with a copy to the Owner Participant;
(c) If to the Owner Participant, to its office at ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel, telephone (316)
▇▇▇-▇▇▇▇, facsimile (▇▇▇) ▇▇▇-▇▇▇▇, with a copy to Textron Financial
Corporation, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Vice President and Division Manager, Structured Finance
Division, telephone (▇▇▇) ▇▇▇-▇▇▇▇, facsimile (▇▇▇) ▇▇▇-▇▇▇▇; or to such
other address as the Owner Participant may from time to time designate in
writing to the Lessee and the Indenture Trustee;
(d) If to the Indenture Trustee, the Subordination Agent or the
Pass Through Trustee, to its office at ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust Department, telephone (801)
▇▇▇-▇▇▇▇, facsimile (▇▇▇) ▇▇▇-▇▇▇▇; or to such other address as the
Indenture Trustee or the Pass Through Trustee, as the case may be, shall
from time to time designate in writing to the Lessor, the Lessee and the
Owner Participant; and
(e) If to a Liquidity Provider, to its office at
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇-▇, ▇- ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, Attention:
Head of Aircraft Finance Department KIII b 3, telephone ▇▇▇-▇▇-▇▇-▇▇▇▇-▇,
facsimile 011-49-69-7431- 2944; or to such other address as a Liquidity
Provider shall from time to time designate in writing to the Lessor, the
Lessee and the Indenture Trustee.
ARTICLE 15
REFINANCING
Section 15.01. Refinancing. (a) Subject to the terms and
conditions of this Section 15.01, the Lessee may request the Owner Participant
to participate in up to three refinancings, in whole but not in part, of the
Certificates prior to the end of the Basic Term (a "Refinancing"), provided,
that, such Refinancing may not occur prior to the fifth anniversary of the
Delivery Date. Such Refinancings may be placed in either the private or public
markets and shall be denominated in United States dollars (or in any other
foreign currency so long as there is no foreign currency risk to the Owner
Participant), and shall be on terms that do not materially adversely affect the
Owner Participant. The Owner Participant agrees to negotiate promptly in good
faith to conclude an agreement with the Lessee as to the terms of any such
Refinancing transaction (including the terms of any debt to be issued in
connection with such refinancing and the documentation to be executed in
connection therewith). Without the consent of the applicable Owner
Participant, the prospectus and other offering materials relating to any
Refinancing in the form of a public offering shall not identify the Owner
Participant and shall not include any financial statements of the Owner
Participant or any Affiliate thereof. In connection with any such Refinancing
in the form of a public offering, the Lessee shall indemnify the Owner
Participant for any liabilities under federal, state or foreign securities laws
resulting from such offering. The aggregate principal amount of the new
Certificates issued in connection with each Refinancing shall be the same as
the aggregate principal amount outstanding on the Certificates being
refinanced.
(b) Notwithstanding anything herein to the contrary, no
Refinancing will be permitted unless the Owner Participant shall have received
at least 10 Business Days' prior written notice of the closing date of such
Refinancing, the Owner Participant shall have been provided such longer period
required for a reasonable opportunity to review the relevant documentation and
the Owner Participant shall have determined in good faith that neither it nor
the Owner Trustee shall suffer any loss or expense or bear any increased risk
as a result of such Refinancing (including, without limitation, any risk with
respect to taxes or other adverse consequences to the Owner Participant
including the application of Revenue Procedures 75-21 and 75-28 and Section 467
of the Code) for which it has not been or will not have been indemnified by the
Lessee in a manner reasonably satisfactory to the Owner Participant.
Prior to the consummation of any Refinancing pursuant to this
Section 15.01, the Owner Participant and the Lessee shall agree upon a schedule
setting forth each installment of Basic Rent, Stipulated Loss Values and
Termination Values payable pursuant to the Lease as a result of the Refinancing
in accordance with Section 3.04 of the Lease, and thereafter the amounts set
forth in such schedule shall become the amounts payable under the Lease. Upon
the consummation of the Refinancing, the evidence of indebtedness issued
pursuant to the Refinancing shall be considered "Certificates" for purposes of
this Agreement, the Lease and the Indenture.
(c) Notwithstanding the foregoing, the Owner Participant shall
have no obligation to proceed with any Refinancing transaction as contemplated
by this Section 15.01 unless the Lessee indemnifies the Owner Trustee and the
Owner Participant by agreement in form and substance satisfactory to each of
them, for any liability, obligation (other than the obligation to pay principal
and interest in respect of the refinanced indebtedness), cost or expense
(including, without limitation, reasonable attorneys' fees and Make-Whole
Premium and any other premiums or other amounts due under the Indenture),
including any adverse tax consequences or impact, related to or arising out of
any such Refinancing transaction, except to the extent of amounts included in
Transaction Costs and payable by the Owner Participant as provided herein.
(d) Each party agrees to take or cause to be taken all requested
action, including, without limitation, the execution and delivery of any
documents and instruments, including, without limitation, amendments or
supplements to the Lease, which may be reasonably necessary or desirable to
effect such Refinancing, including, in the case of the Owner Participant,
direction to the Owner Trustee by the Owner Participant to prepay the
Certificates then outstanding; provided, however, that such Refinancing shall
be subject to the satisfaction of each of the following conditions:
(i) Payment of principal, accrued interest, Make-Whole
Premium and breakage costs, if any, and all other sums due and owing on
the Certificates payable under the Indenture;
(ii) Payment in full of all other amounts then due and owing
by the Lessee under this Agreement, the Indenture, the Lease, the Trust
Agreement, and the Certificates then outstanding shall have been made by
the Lessee;
(iii) Such party shall have received such opinions of counsel
(including, without limitation, an opinion received by the Owner
Participant from independent tax counsel reasonably satisfactory to the
Lessee that such Refinancing shall not result in any adverse tax
consequences to the Owner Participant, unless the Lessee shall have agreed
to provide an indemnity in respect thereof reasonably satisfactory in form
and substance to the Owner Participant), certificates and other documents
as it may reasonably request, each in form and substance reasonably
satisfactory to such party;
(iv) All authorizations, approvals and consents which in the
reasonable judgment of the Owner Participant are necessary for such
Refinancing shall have been obtained;
(v) The Lessee shall have provided or agreed to provide to
the Owner Participant, as Supplemental Rent under the Lease, sufficient
funds to pay any breakage costs, Make-Whole Premium and any other amounts
due under the Indenture;
(vi) The satisfaction or waiver by each other party to this
Agreement of the conditions set forth in this Section 15.01 to such
party's obligations under this Section 15.01;
(vii) No Event of Default shall have occurred and be continuing
or would occur immediately after giving effect to such Refinancing; and
(viii) The documentation relating to such Refinancing shall
permit the Lessee to place the Refinancing loan certificates with an ERISA
Plan. The Lessee shall not indemnify the Owner Participant, or any of the
Owner Participant's Affiliates, assigns, officers, directors, employees,
agents and servants, for any Taxes, within the meaning of Article 8
hereof, or Expenses, within the meaning of Article 9 hereof, arising under
or in connection with any "prohibited transaction" within the meaning of
Section 406 of ERISA or Section 4975 of the Code, if the sole underwriter
or the manager or co-manager of the underwriting syndicate or the selling
or placement agent of the Refinancing loan certificates has an exemption
from the prohibited transaction rules under Section 406 of ERISA and
Section 4975 of the Code with respect to pass through certificates, such
as Prohibited Transaction Exemption 90-24 or any other comparable
exemption, unless such exemption is not available or is not valid with
respect to such Refinancing loan certificates. If such exemption is not
available or is not valid, then the Lessee shall indemnify the Owner
Participant pursuant to, and to the extent provided for, under Articles 8
and 9 hereof for Taxes and Expenses arising under or in connection with
any "prohibited transaction", within the meaning of Section 406 of ERISA
or Section 4975 of the Code, resulting from such placement.
ARTICLE 16
[RESERVED]
ARTICLE 17
MISCELLANEOUS
Section 17.01. [Reserved].
Section 17.02. Collateral Account. (a) The Indenture Trustee
shall notify the Owner Trustee and the Lessee of any losses incurred on the
Specified Investments in the Collateral Account promptly upon the realization
thereof, as well as any fees, commissions and other costs, Taxes (other than
income taxes) and expenses, if any, incurred by the Indenture Trustee in
connection with its administration of the Collateral Account (collectively,
"Losses"). If Series C Certificates are outstanding following the Delivery
Date and are required to be prepaid on the Series C Prepayment Date, the Lessee
shall pay to the Subordination Agent, on behalf of the Owner Trustee, promptly
upon receipt of such notification but in any event no later than the Series C
Prepayment Date, an amount equal to any unreimbursed Losses.
(b) The Lessee shall pay to the Subordination Agent, on behalf of
the Owner Trustee (A) on the first Payment Date subsequent to the Delivery
Date, interest accrued on the Certificates from and including the last Payment
Date (or, if none, the Certificate Closing Date), to, but excluding, the
Delivery Date and (B) on each Payment Date after the Delivery Date but prior to
the Series C Prepayment Date, interest accrued on the Series C Certificates, if
any, outstanding after the Delivery Date which are required to be prepaid on
such Series C Prepayment Date pursuant to Section 2.03(b) of the Original
Participation Agreement, in each case to the extent such interest due is in
excess of any earnings on investments in the Collateral Account for the period
of accrual of such interest. In addition, the Lessee will pay to the Indenture
Trustee on behalf of the Owner Trustee all amounts owed by the Owner Trustee
pursuant to clause (b) of the last paragraph of Section 2.04 of the Indenture.
(c) If any Series C Certificates outstanding after the Delivery
Date are subject to prepayment on the Series C Prepayment Date pursuant to
Section 6.02(a)(viii) of the Indenture, the Lessee agrees to pay to the
Subordination Agent, on behalf of the Owner Trustee, on the Series C Prepayment
Date the excess, if any, of the amounts payable under Section 6.02(b)(1) of the
Indenture over the amounts released from the Collateral Account under Section
2.16 of the Indenture.
(d) All amounts payable by the Lessee pursuant to this Section
17.02 shall be paid to the Indenture Trustee or the Subordination Agent, as the
case may be, at its principal office at ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇, ▇▇▇▇▇, Attention: Corporate Trust Department, or as the Indenture Trustee
or the Subordination Agent, as the case may be, may otherwise direct within the
United States, by wire transfer of immediately available funds in U.S. Dollars
no later than 10:30 a.m., New York City time, on the due date of such payment.
(e) Prior to the date on which the Lessee shall be obligated to
make any payment to the Subordination Agent pursuant to this Section 17.02, the
Subordination Agent shall deliver a written notice to the Lessee specifying the
amount of such payment with respect to each series of Certificates.
(f) In the event that (i) any portion of any payment to the
Subordination Agent, the Pass Through Trustee or any holder of any Pass Through
Certificate which is funded from a Specified Shortfall Payment (as defined
below) shall be avoided as a preference under Section 547 of the Bankruptcy
Code and the Subordination Agent, the Pass Through Trustee or any holder of any
Pass Through Certificate becomes liable for such portion or (ii) (x) the Lessee
shall be the subject of a voluntary or involuntary proceeding under Chapter 7
or Chapter 11 of the Bankruptcy Code on a date less than fifteen days prior to
the expiration date of the Letter of Credit (after giving effect to any
extensions of such expiration date) and (y) any portion of any payment to the
Subordination Agent, the Pass Through Trustee or any holder of any Pass Through
Certificate which is funded from a Specified Shortfall Payment could be avoided
as a preference under Section 547 of the Bankruptcy Code and the Subordination
Agent, the Pass Through Trustee or any holder of any Pass Through Certificate
could become liable for such portion, the Subordination Agent shall be entitled
to draw under the Letter of Credit an amount equal to the aggregate amount of
such liability up to the Maximum Stated Amount. The Letter of Credit shall
expire no earlier than the date 91 days after the later of the last Specified
Shortfall Payment payable under this Section 17.02 and the last "Specified
Shortfall Payment" payable under Section 17.02 of any Related Participation
Agreement. In the event of any drawing under the Letter of Credit pursuant to
clause (ii) of this subsection (f), the proceeds of such drawing shall be
applied in accordance with the Intercreditor Agreement. For purposes of this
subsection (f), "Specified Shortfall Payment" shall mean any payment by the
Lessee pursuant to this Section 17.02 (i) in respect of any Losses which occur
as a result of delivery of the Aircraft on a date other than August 27, 1998,
or (ii) in respect of interest accrued for any applicable period on any
Certificate in excess of any earnings on investments in the Collateral Account
for such period.
Section 17.03. Counterparts. This Agreement may be executed by
the parties in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 17.04. No Oral Modifications. Neither this Agreement
nor any of its terms may be terminated, amended, supplemented, waived or
modified orally, but only by an instrument in writing signed by the party
against which the enforcement of the termination, amendment, supplement, waiver
or modification is sought. No such written termination, amendment, supplement,
waiver or modification shall be effective unless a signed copy shall have been
delivered to the Owner Trustee and the Indenture Trustee. A copy of each such
termination, amendment, supplement, waiver or modification shall also be
delivered to each other party to this Agreement.
The consent of each of the Pass Through Trustee and the
Subordination Agent, in its capacity as a party to this Agreement and not as a
Holder, shall not be required to modify, amend or supplement this Agreement or
to give any consent, waiver, authorization or approval with respect to this
Agreement under the circumstances in which the consent of the Indenture Trustee
would not be required for such modification, amendment, supplement, consent,
waiver or approval in accordance with Section 8.01(b) of the Indenture,
provided that the Pass Through Trustee shall be entitled to receive an Opinion
of Counsel (as defined in the Pass Through Agreement) necessary, in its sole
discretion, to establish that the Indenture Trustee's consent would not be
required under such circumstances.
Section 17.05. Captions. The table of contents preceding this
Agreement and the headings of the various Articles and Sections of this
Agreement are for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions of this Agreement.
Section 17.06. Successors and Assigns. The terms of this
Agreement shall be binding upon, and shall inure to the benefit of, the Lessee
and its successors and permitted assigns, the Subordination Agent and its
successors and permitted assigns, the Owner Participant and its successors and
permitted assigns, the Owner Trustee and its successors as Owner Trustee (and
any additional owner trustee appointed), the Indenture Trustee and its
successors as Indenture Trustee (and any additional indenture trustee
appointed) under the Indenture, the Pass Through Trustee and its successors as
Pass Through Trustee (and any additional pass through trustee appointed) and
the LC Bank and its successors and assigns.
Section 17.07. Concerning the Owner Trustee, Indenture Trustee
and the Pass Through Trustee. Each of SSB and FSB is entering into this
Agreement solely in their respective capacities (except to the extent otherwise
expressly indicated), in the case of SSB, not in its individual capacity but
solely as Owner Trustee under the Trust Agreement, in the case of FSB, not in
its individual capacity but solely as Indenture Trustee under the Indenture and
as Pass Through Trustee under the Pass Through Agreement, and except as
otherwise expressly provided in this Agreement or in the Lease, the Indenture,
the Pass Through Agreement or the Trust Agreement, neither SSB, nor FSB, shall
be personally liable for or on account of its statements, representations,
warranties, covenants or obligations under this Agreement; provided, however,
that each of SSB and FSB accepts the benefits running to it under this
Agreement, and each agrees that (except as otherwise expressly provided in this
Agreement or any other Operative Agreement to which it is a party) it shall be
liable in its individual capacity for (a) its own gross negligence or willful
misconduct (whether in its capacity as trustee or in its individual capacity),
(b) any breach of representations and warranties or any breach of covenants
made in its individual capacity pursuant to or in connection with this
Agreement or the other Operative Agreements to which it is a party, (c) any
breach, in the case of the Owner Trustee, of its covenants contained in
Sections 3.05 and 3.08 of the Indenture, (d) the failure to use ordinary care
in receiving, handling and disbursing funds, (e) in the case of the Owner
Trustee, Lessor's Liens attributable to it in its individual capacity, (f) in
the case of the Indenture Trustee, Indenture Trustee's Liens and (g) taxes,
fees or other charges on, or based on, or measured by, any fees, commissions or
compensation received by it in connection with the transactions contemplated by
the Operative Agreements.
Section 17.08. Severability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 17.09. Public Release of Information. Subject to
applicable legal requirements (including, without limitation, securities laws
requirements, other regulatory requirements and other legally compelled
disclosures), so long as there shall not have occurred an Event of Default or
Indenture Event of Default, each party to this Agreement shall in each instance
obtain the prior written approval of each other party to this Agreement
concerning the exact text and timing of news releases, articles and other
information releases to the public media concerning any Operative Agreements.
Section 17.10. Certain Limitations on Reorganization. The
Indenture Trustee and the Pass Through Trustee agree that, if (i) the Owner
Trustee becomes or all or any part of the Lessor's Estate or the trust created
by the Trust Agreement becomes the property of, a debtor subject to the
reorganization provisions of the Bankruptcy Code or any other applicable
bankruptcy or insolvency statutes, (ii) pursuant to any such reorganization
provisions, the Owner Participant is held to have recourse liability to the
debtor, the Owner Trustee or the trustee of the debtor directly or indirectly
on account of any amount payable as Make-Whole Premium, principal or interest
on the Certificates, or any other amount payable on any Certificate that is
provided in the Operative Agreements to be nonrecourse to the Owner Participant
and (iii) the Indenture Trustee actually receives any Recourse Amount which
reflects any payment by the Owner Participant on account of (ii) above, then
the Indenture Trustee, as the case may be, shall promptly refund to the Owner
Participant such Recourse Amount. For purposes of this Section 17.10,
"Recourse Amount" means the amount by which the portion of such payment by the
Owner Participant on account of clause (ii) above received by the Indenture
Trustee exceeds the amount which would have been received by the Indenture
Trustee if the Owner Participant had not become subject to the recourse
liability referred to in (ii) above. Nothing contained in this Section shall
prevent the Indenture Trustee from enforcing any individual obligation (and
retaining the proceeds thereof) of the Owner Participant under this Agreement
or any other Operative Agreement to the extent herein or therein provided, for
which the Owner Participant has expressly agreed by the terms of this Agreement
to accept individual responsibility.
Section 17.11. GOVERNING LAW. THIS AGREEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS AND IS
BEING DELIVERED IN NEW YORK.
Section 17.12. Section 1110 Compliance. The parties hereto
agree that the transactions contemplated by the Operative Agreements are
expressly intended to be, shall be and should be construed so as to be entitled
to the benefits and protection of Section 1110 of the Bankruptcy Code.
Section 17.13. Reliance of Liquidity Providers. Each of the
parties hereto agrees and acknowledges that each Liquidity Provider shall be a
third party beneficiary of each of the representations and warranties made
herein by such party, and that each Liquidity Provider may rely on such
representations and warranties to the same extent as if such representations
and warranties were made to such Liquidity Provider directly. The terms of
this Agreement shall inure to the benefit of each Liquidity Provider, their
respective successors and permitted assigns.
ARTICLE 18
CONFIDENTIALITY
Section 18.01. Confidentiality. Each party hereto agrees (on
behalf of itself and each of its Affiliates, agents, directors, officers,
employees and representatives) to use reasonable precautions to keep
confidential, in accordance with its customary procedures for handling
confidential information of this nature, any non-public information supplied to
it pursuant to this Agreement which is identified by the Person supplying the
same as being confidential at the time the same is delivered to such party,
provided that nothing herein shall limit the disclosure of any such information
(i)to the extent required by statute, rule, regulation or judicial process,
(ii)to counsel for any of the parties hereto, (iii)to bank examiners, auditors,
insurance regulators, accountants or similar regulatory authorities, (iv)in
connection with any litigation to which any one or more of the parties hereto
is a party relating to the transactions contemplated hereby or by any of the
Operative Agreements, (v)to a subsidiary or Affiliate of the parties hereto,
(vi)to any assignee or participant (or prospective assignee or participant) so
long as such assignee or participant (or prospective assignee or participant)
first executes and delivers to the respective party making such assignment an
agreement in writing to be bound by the provisions of this Section 18.01 or
(vii) in the case of the Owner Participant or the Owner Trustee (in its
individual or trust capacity) to the Owner Trustee (in its individual or trust
capacity) or to the Owner Participant, as the case may be.
IN WITNESS WHEREOF, the parties have caused this Participation
Agreement to be executed by their respective, duly authorized officers as of
the date first above written.
LESSEE:
FEDERAL EXPRESS CORPORATION
By:_________________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Treasurer
INITIAL OWNER PARTICIPANT:
FEDERAL EXPRESS CORPORATION
By:_________________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Treasurer
OWNER PARTICIPANT:
CESSNA FINANCE CORPORATION
By:_________________________________________
Name:
Title:
INDENTURE TRUSTEE:
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity except as
otherwise expressly provided herein,
but solely as Indenture Trustee
By:__________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
PASS THROUGH TRUSTEE:
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity except as
otherwise expressly provided herein,
but solely as Pass Through Trustee
By:__________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
SUBORDINATION AGENT:
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity except as
otherwise expressly provided herein,
but solely as Subordination Agent
By:__________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
OWNER TRUSTEE:
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity,
except as otherwise expressly provided herein,
but solely as Owner Trustee
By:__________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
SCHEDULE I
OWNER PARTICIPANT'S COMMITMENT;
DEBT PORTION
(as a percentage of Purchase Price)
Owner Participant's Commitment 24.495%
------------------------------
Debt Portion 75.505%
------------
SCHEDULE II
DEFINITIONS
(FEDERAL EXPRESS CORPORATION TRUST NO. N677FE)
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (other than the Pass Through Agreement,
the Series Supplements, the Intercreditor Agreement and the Liquidity
Facilities) referred to below, unless otherwise defined in an Operative
Agreement or the context thereof shall otherwise require. In the case of any
conflict between the provisions of this Schedule and the provisions of any
Operative Agreement, the provisions of such Operative Agreement shall control
the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to
agreements shall be deemed to mean and include such agreements as amended and
supplemented from time to time, and (ii) references to parties to agreements
shall be deemed to include the successors and permitted assigns of such
parties.
DEFINED TERMS:
Additional Insured. As defined in Section 13.01(c)(i) of the
Lease.
Adjustment Date. The date of any decrease in the principal
amount of the Series C Certificates pursuant to Section 2.19 of the Indenture.
Aeronautics Authority. As appropriate, the Federal Aviation
Administration and/or the Administrator of the Federal Aviation Administration,
any successor to the former United States Civil Aeronautics Board, or any
Person, governmental department, bureau, commission or agency located in the
United States succeeding to the functions of any of the foregoing.
Affidavits. The affidavits of citizenship of the Owner Trustee
and the Owner Participant.
Affiliate. With respect to any Person, any other Person directly
or indirectly controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract
or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an
Affiliate of the Owner Participant and SSB shall not be deemed to be an
Affiliate of any of the Owner Trustee, the Lessor or the Owner Participant.
After-Tax Basis. A basis such that any payment received or
deemed to have been received by a Person (the "Original Payment") shall be
supplemented by a further payment to such Person so that the sum of the two
payments shall be equal to the Original Payment, after taking into account (x)
all Taxes that would result from the receipt or accrual of such payments and
(y) any reduction in Taxes that would result from such increased Taxes. In the
case of amounts payable to the Lessor, the Owner Participant, or any corporate
Affiliate of the Owner Participant, it shall be presumed that such Person is at
all times subject to Federal income tax at the maximum marginal rate generally
applicable to corporations from time to time and actual state, local and
foreign income taxes.
Air Carrier. Any U.S. Air Carrier and any "foreign air carrier"
(as defined in the Transportation Code) as to which there is in force a permit
granted under Section 41302 of the Transportation Code.
Airbus Guaranty. The Guaranty to be dated the Delivery Date
executed by the Manufacturer and guaranteeing AVSA's Warranty ▇▇▇▇ of Sale.
Aircraft. The Airframe to be sold by AVSA to the Owner Trustee as
provided in the Participation Agreement and to be leased under the Lease (or
any permitted substitute airframe thereunder) together with two Engines
(whether either is an initial Engine or a Replacement Engine) whether or not
any of such initial or Replacement Engines may from time to time be installed
on such Airframe or may be installed on any other airframe or on any other
aircraft, including any aircraft substituted pursuant to Section 11.03 of the
Lease.
Airframe. The Airbus A300F4-605R aircraft (excluding the Engines
or engines from time to time installed thereon) to be leased by the Lessor to
the Lessee pursuant to the Lease and the initial Lease Supplement and having
the United States FAA Registration Number initially and manufacturer's serial
number specified in the initial Lease Supplement, including (i) all Parts in
respect thereof and (ii) any Replacement Airframe which may be substituted
pursuant to Section 11.03 of the Lease.
Ancillary Agreement. Any written agreement of the Lessee to
which the Lessor is a party or to which the Lessor has consented in writing
entered into on or prior to the Delivery Date or any date thereafter in
connection with the transactions contemplated by the Operative Agreements, as
such agreement may be amended and supplemented from time to time with the
consent of the Lessor and delivered to the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee, the Subordination Agent, each Liquidity
Provider and the Owner Participant.
Ancillary Agreement I. The Ancillary Agreement I (Federal
Express Corporation Trust No. N677FE), dated the Delivery Date, among the
Lessee, the Owner Trustee, not in its individual capacity, but solely as Owner
Trustee, the Owner Participant and the Indenture Trustee not in its individual
capacity, but solely as Indenture Trustee, as originally executed or as
amended, modified or supplemented with the consent of all the parties thereto.
Application. The application for registration of the Aircraft
with the FAA in the name of the Owner Trustee.
Appraisal. The report prepared by BK Associates, Inc. and to be
delivered to the Owner Participant (with a copy of the fair market value letter
to the Lessee) on the Delivery Date pursuant to Section 4.01(h) of the
Participation Agreement.
Average Life Date. For any Certificate, the date which follows
the prepayment date by a period equal to the Remaining Weighted Average Life of
such Certificate.
AVSA. AVSA S.A.R.L., a societe a responsabilite limitee,
organized and existing under the laws of France.
AVSA Consent and Agreement. The Consent and Agreement dated as
of August 1, 1998, executed by AVSA.
AVSA's FAA ▇▇▇▇ of Sale. The ▇▇▇▇ of sale for the Airframe on AC
Form 8050- 2, or such other form as may be approved by the Aeronautics
Authority, executed by AVSA in favor of the Owner Trustee and to be dated the
Delivery Date.
AVSA's Warranty ▇▇▇▇ of Sale. The full warranty ▇▇▇▇ of sale
covering the Aircraft (and specifically referring to each Engine) executed by
AVSA as owner of the Aircraft in favor of the Owner Trustee and to be dated the
Delivery Date.
Bankruptcy Code. The Federal Bankruptcy Code of 1978, as
amended, and any successor thereto.
Bankruptcy Default. An event specified in Section 16.01(e), (f)
or (g) of the Lease which either does or, with the giving of notice or lapse of
time or both, would constitute an Event of Default.
Basic Rent. The periodic rent payable for the Aircraft
throughout the Basic Term pursuant to Section 3.02 of the Lease, adjusted
pursuant to Article 3 of the Lease.
Basic Term. The period commencing at the beginning of the day on
the Delivery Date and ending at the end of the day on August 27, 2023, or such
earlier date on which the Lease shall be terminated as provided therein.
Beneficial Interest. The interest of the Owner Participant (or
the Initial Owner Participant, as the case may be) under the Trust Agreement.
Business Day. Any day on which commercial banks are not
authorized or required to close in New York, New York, Memphis, Tennessee and
the city in the United States in which the office or agency is maintained by
the Pass Through Trustee for the payment of the Pass Through Certificates, and
after the Lien of the Indenture is discharged, Boston, Massachusetts.
Certificate Closing Date. July 7, 1998.
Certificates. The Equipment Trust Certificates (Federal Express
Corporation Trust No. N677FE), issued by the Owner Trustee pursuant to the
Indenture and any certificate issued in exchange therefor or replacement
thereof pursuant to the Indenture.
Change in Tax Law. Any change in the Code or the Treasury
regulations promulgated thereunder or the publication of any revenue ruling,
revenue procedure or any informational release by the Internal Revenue Service
or the Department of Treasury on or before the Delivery Date, either of which
would change or would allow a change in the tax assumptions or structure upon
which the lease economics in the Commitment Letter were based; provided that
the Owner Participant or the Lessee has notified the other party of such change
in writing on or prior to the Delivery Date.
Citizen of the United States. A citizen of the United States as
defined in Section 40102(a)(15) of the Transportation Code, or any analogous
part of any successor or substituted legislation or regulation at the time in
effect.
Class A Liquidity Provider. Kreditanstalt fr Wiederaufbau, a
corporation organized under the public law of the Federal Republic of Germany
together with any Replacement Liquidity Provider (as defined in the
Intercreditor Agreement).
Class B Liquidity Provider. Kreditanstalt fr Wiederaufbau, a
corporation organized under the public law of the Federal Republic of Germany
together with any Replacement Liquidity Provider (as defined in the
Intercreditor Agreement).
Code. Except as otherwise provided, the Internal Revenue Code of
1986, as amended from time to time.
Collateral Account. The deposit account established and
maintained pursuant to Section 2.13 of the Indenture.
Collateral Agreement. The Collateral Account Control Agreement
(Federal Express Corporation Trust No. N677FE) dated as of June 15, 1998, among
State Street Bank and Trust Company, the Indenture Trustee and the Owner
Trustee.
Commitment. The amount of the Owner Participant's participation
in the Purchase Price required to be made available or paid on the Delivery
Date, as provided in Section 3.02 of the Participation Agreement and as set
forth in Schedule I of the Participation Agreement.
Commitment Letter. The Commitment Letter dated June 29, 1998 by
the Lessee to the Owner Participant.
Consent and Agreement. The Consent and Agreement dated as of
August 1, 1998 executed by the Manufacturer.
Consent and Guaranty. The Consent and Guaranty of the
Manufacturer attached to the Purchase Agreement.
Corporate Trust Administration. The Corporate Trust
Administration office of the Owner Trustee located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ Square, Hartford, Connecticut 06103, Attention: Corporation Trust
Administration, or such other office at which the Owner Trustee's corporate
trust business shall be administered which the Owner Trustee shall have
specified by notice in writing to the Lessee, the Owner Participant and the
Indenture Trustee.
Corporate Trust Department. The Corporate Trust Department
office of the Indenture Trustee located at ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust Department, or such other office
at which the Indenture Trustee's corporate trust business shall be administered
which the Indenture Trustee shall have specified by notice in writing to the
Lessee, the Owner Participant and the Owner Trustee.
CRAF Program. Has the meaning specified in Section 7.02(a)(iv)
of the Lease.
Cut-Off Date. November 24, 1998.
Debt Portion. The amount specified as such on Schedule I to the
Participation Agreement.
Debt Rate. The weighted average (based on Outstanding principal
amount) rate of interest on the Certificates issued pursuant to the Indenture.
Default. Any event or condition which, with the lapse of time or
the giving of notice, or both, would constitute an Event of Default.
Delivery Date. The date on which the Aircraft is delivered and
sold by AVSA to the Lessor and leased by the Lessor to the Lessee under the
Lease, which date shall also be the date of the initial Lease Supplement.
Delivery Notice. Notice of the Aircraft's Delivery Date, given
by the Lessee as provided in Section 3.01 of the Participation Agreement and
including any notice with respect to a postponed Delivery Date given by the
Lessee pursuant to Section 3.05(c) of the Participation Agreement.
EBO Price. Has the meaning set forth in Section 4.02(a)(F) of
the Lease.
Eligible Deposit Account. Either (a) a segregated account with
an Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution with corporate trust powers
organized under the laws of the United States or any state thereof, or the
District of Columbia, and whose deposits are insured by the Federal Deposit
Insurance Corporation, provided that such institution also has a combined
capital and surplus of at least $100,000,000 and a rating of A or better from
the Thomson Bank Watch.
Eligible Institution. A depository institution organized under
the laws of the United States or any one of the states thereof, or the District
of Columbia, or any domestic branch of a foreign bank, which in any such case
at all times (a) has either (x) a long-term unsecured debt rating of at least
Aa2 by ▇▇▇▇▇'▇ or (y) a short-term certificate of deposit rating of P-1 by
▇▇▇▇▇'▇, (b) has either (x) a long-term unsecured debt rating of a least AA by
S&P or (y) a short-term certificate of deposit rating of A- 1+ by S&P and (c)
is a member of the Federal Deposit Insurance Corporation.
Engine. Each of the two General Electric CF6-80C2-A5F engines
listed by its manufacturer's serial number in the initial Lease Supplement and
leased pursuant to the Lease, whether or not from time to time installed on the
Airframe or installed on any other airframe or on any other aircraft, and any
Replacement Engine which may from time to time be substituted for an Engine
pursuant to Section 7.02(a)(vii), 10.02(c), 10.03, 11.03, 11.04 or 12.02 of the
Lease, together with all Parts related thereto. Except as otherwise provided,
at such time as a Replacement Engine shall be so substituted and the Engine for
which the substitution is made shall be released from the Lien of the
Indenture, such replaced Engine shall cease to be an "Engine" under the Lease.
The term "Engines" means, as of any date of determination, both Engines then
leased to the Lessee pursuant to the Lease.
Engine Consent. The Engine Consent dated as of August 1, 1998,
executed by the Engine Manufacturer.
Engine Manufacturer. General Electric Company, a New York
corporation.
Engine Warranty Assignment. The Engine Warranty Assignment
(Federal Express Corporation Trust No. N677FE), dated as of August 1, 1998,
between the Lessor and the Lessee.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Plan. An employee benefit plan subject to Title I of
ERISA, or an individual retirement account or plan subject to Section 4975 of
the Code.
Estimated Expense Amount. Has the meaning specified in Section
10.01(a) of the Participation Agreement.
Event of Default. Each of the events specified in Article 16 of
the Lease.
Event of Loss. Any of the following events with respect to the
Aircraft, the Airframe or any Engine: (i) loss of such property or its use (A)
for a period in excess of 30 days due to theft or disappearance or such longer
period not to exceed 60 days from the end of such initial 30-day period if and
so long as the location of such property is known to the Lessee and the Lessee
is diligently pursuing recovery of such property, or to the end of the Term, if
less (unless such loss constitutes an Event of Loss under clause (ii) of this
definition) or (B) for a period in excess of 60 days due to the destruction,
damage beyond economic repair or rendition of such property permanently unfit
for normal use by Lessee for any reason whatsoever; (ii) any damage to such
property which results in an insurance settlement with respect to such property
on the basis of a total loss, or constructive or compromised total loss; (iii)
(1) condemnation, confiscation or seizure of, or requisition of title to such
property by the Government, any foreign government or purported government or
any agency or instrumentality thereof, or (2) condemnation, confiscation, or
seizure of, or requisition or taking of, use of such property (A) by a foreign
government or instrumentality or agency of any such foreign government, for a
period in excess of 180 days (or such shorter period ending on the earlier of
the expiration of the Term or on the date on which an insurance settlement with
respect to such property on the basis of a total loss or constructive or
compromised total loss shall occur) or (B) by the Government for a period
extending beyond the Term, provided that no Event of Loss shall be deemed to
have occurred, and the Term shall be extended automatically for a period of six
months (or the date of return of the Aircraft, if shorter, so long as the
Lessor receives at least six months notice of such date of return) beyond the
end of the Term in the event that the Aircraft, the Airframe or any Engine is
requisitioned by the Government pursuant to an activation as part of the CRAF
Program described in Section 7.02(a)(iv) of the Lease; and (iv) as a result of
any law, rule, regulation, order or other action by the Aeronautics Authority
or other governmental body having jurisdiction, the use of the Aircraft or
Airframe in the normal course of air transportation of cargo shall have been
prohibited by virtue of a condition affecting all Airbus A300-600 series
aircraft equipped with engines of the same make and model as the Engines for a
period of six (6) consecutive months, unless the Lessee, prior to the
expiration of such six (6) month period, shall be diligently carrying forward
all steps which are necessary or desirable to permit the normal use of the
Aircraft or Airframe or, in any event, if such use of the Aircraft or the
Airframe shall have been prohibited for a period of twelve (12) consecutive
months, unless the Lessee, prior to the expiration of such twelve (12) month
period shall have conformed at least one Airbus A300-600 series aircraft (but
not necessarily the Aircraft or the Airframe) to the requirements of any such
law, rule, regulation, order, or other action and shall have commenced regular
commercial use and shall be diligently carrying forward, on a
non-discriminatory basis, all steps necessary or desirable to permit the normal
use of the Aircraft by the Lessee. The date of such Event of Loss shall be (s)
the 31st day or the 91st day, as the case may be, following loss of such
property or its use due to theft or disappearance (or the end of the Term, if
earlier); (t) the 61st day following the date of any destruction, damage beyond
economic repair or rendition of such property permanently unfit for normal use;
(u) the date of any insurance settlement on the basis of a total loss or
constructive or compromised total loss; (v) the date of any condemnation,
confiscation, seizure or requisition of title of such property; (w) the 181st
day following condemnation, confiscation, seizure or requisition for use of
such property by a foreign government referred to in clause (iii)(2)(A) above
(or the end of the Term or the date of any insurance settlement described
therein, if earlier than such 181st day); (x) the last day of the Term in the
case of requisition for use of such property by the Government; (y) the last
day of the 6 month or 12 month period, referred to in clause (iv) above. An
Event of Loss with respect to the Aircraft shall be deemed to have occurred if
any Event of Loss occurs with respect to the Airframe.
Excepted Payments. Collectively, (i) indemnity or other payments
(and interest thereon to the extent provided in the Operative Agreements) paid
or payable by the Lessee in respect of the Owner Participant, the Owner Trustee
in its individual capacity or any of their respective successors, permitted
assigns, directors, officers, employees, servants and agents or Affiliates,
pursuant to the Participation Agreement or any indemnity hereafter granted to
the Owner Participant or the Owner Trustee in its individual capacity pursuant
to the Lease or the Participation Agreement, (ii) proceeds of public liability
insurance (or government indemnities in lieu thereof) in respect of the
Aircraft payable as a result of insurance claims paid for the benefit of, or
losses suffered by, the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by the Owner Participant, or their
respective successors, permitted assigns or Affiliates, (iii) proceeds of
insurance maintained with respect to the Aircraft by the Owner Participant
(whether directly or through the Owner Trustee) maintained in accordance with
the provisions of but not required under Article 13 of the Lease, (iv) payments
of Supplemental Rent by the Lessee in respect of any amounts payable under the
Tax Indemnity Agreement, (v) any amounts payable by the Lessee to the Owner
Participant or the Owner Trustee in its individual capacity, after the release
thereof from the Lien of the Indenture, (vi) the payment of incremental
out-of-pocket expenses of the Owner Trustee, the Owner Participant or their
respective authorized representatives payable by the Lessee under Section
6.03(b) of the Participation Agreement or Section 14.01 of the Lease following
any reregistration of the Aircraft and (vii) proceeds of, and any right to
demand, collect or otherwise receive and enforce the payment of any amount
described in clauses (i) through (vii) above.
Expense; Expenses. Have the meaning specified in Section 9.01(a)
of the Participation Agreement.
FAA. The United States Federal Aviation Administration and any
successor agency or agencies thereto.
Fair Market Renewal Term. A term with respect to which the
Lessee has exercised its option to renew the Lease pursuant to the second
paragraph of Section 4.01(a) thereof and with respect to which the conditions
set forth in such Section 4.01(a) are met.
Fair Market Rental. An amount determined on the basis of, and
equal in amount to, the rental which would be obtained in an arm's-length
transaction between an informed and willing lessee and an informed and willing
lessor unaffiliated with such lessee, neither being under any compulsion to
lease. In such determination, it shall be assumed that the Aircraft is in the
condition required under the Lease in the case of return of the Aircraft
pursuant to Article 12 of the Lease. Fair Market Rental shall be determined in
accordance with the provisions of Section 4.03 of the Lease.
Fair Market Value. An amount determined on the basis of, and
equal in amount to, the value which would be obtained in an arm's-length
transaction between an informed and willing purchaser under no compulsion to
buy and an informed and willing seller unaffiliated with such purchaser and
under no compulsion to sell, assuming that the Aircraft (or other property) is
unencumbered by the Lease. Unless otherwise provided in the applicable
provisions of any Operative Agreement, in such determination it shall be
assumed that the Aircraft is in the condition required under the Lease in the
case of return of the Aircraft pursuant to Article 12 of the Lease; provided
that in connection with any determination pursuant to or for the purposes of
Article 17 of the Lease, the Aircraft shall be appraised on an "as is, where
is" basis. Fair Market Value shall be determined in accordance with the
provisions of Section 4.03 of the Lease.
Federal Aviation Administration. The United States Federal
Aviation Administration and any successor agency or agencies thereto.
FedEx. Federal Express Corporation.
Final Drawing. Has the meaning specified in Section 1.01 of the
Intercreditor Agreement.
Fixed Renewal Rent. Semi-annual payments of rent during the
Fixed Renewal Term equal to the amount set forth in Ancillary Agreement I.
Fixed Renewal Term. The term with respect to which the Lessee
has exercised its option to renew the Lease pursuant to the first paragraph of
Section 4.01(a) thereof and with respect to which the conditions set forth in
such Section 4.01(a) are met.
French Pledge Agreement. The French Pledge Agreement (Federal
Express Corporation Trust No. N677FE) dated as of August 1, 1998, between the
Owner Trustee and the Indenture Trustee.
FSB. First Security Bank, National Association, a national
banking association.
Government. The United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and credit
of the United States of America.
GTA. The General Terms Agreement dated as of July 3, 1991
between the Engine Manufacturer and the Lessee related to the purchase by the
Lessee of the Engines as originally executed or as modified, amended or
supplemented in accordance with the terms thereof, but only insofar as the
General Terms Agreement relates to the Engines, to the extent assigned to the
Owner Trustee pursuant to the Engine Warranty Assignment.
Holder of a Certificate; Certificate Holder; Holder. As of any
particular time, the Person in whose name a Certificate shall be registered
(but not including the holder of any Pass Through Certificate).
Indemnitee. Each of SSB, in its individual capacity and as Owner
Trustee and Lessor, the Owner Participant, the Indenture Trustee, in its
individual capacity and as trustee, the Subordination Agent, in its individual
capacity and in its capacity as Subordination Agent, each Liquidity Provider,
the Owner Participant Guarantor, if any, and any successor (including any
trustee which may succeed to the Lessor's interest under the Lease), Affiliate,
assign, officer, director, employee, agent and servant of any of the foregoing,
the Lessor's Estate and the Trust Indenture Estate. Neither the Pass Through
Trustee nor any holder of a Pass Through Certificate shall be deemed to be an
Indemnitee.
Indenture. The Trust Indenture and Security Agreement (Federal
Express Corporation Trust No. N677FE), dated as of June 15, 1998, as amended
and restated as of August 1, 1998, between the Lessor and the Indenture
Trustee, as supplemented by the Indenture and Security Agreement Supplement.
Indenture and Security Agreement Supplement. The Indenture and
Security Agreement Supplement No. 1 (Federal Express Corporation Trust No.
N677FE) to be dated the Delivery Date, substantially in the form of Exhibit A
to the Indenture.
Indenture Default. Any event or condition which, with the lapse
of time or the giving of notice, or both, would constitute an Indenture Event
of Default.
Indenture Documents. Has the meaning specified in the Granting
Clause of the Indenture.
Indenture Event of Default. Each of the events specified in
Section 7.01 of the Indenture.
Indenture Trustee. First Security Bank, National Association, a
national banking association, not in its individual capacity but solely as
Indenture Trustee under the Indenture.
Indenture Trustee's Liens. Any Lien against, on or with respect
to the Aircraft, the Lessor's Estate or the Trust Indenture Estate or any part
thereof resulting from (i) claims against the Indenture Trustee not related to
the administration of the Trust Indenture Estate or any transactions pursuant
to the Indenture or any document included in the Trust Indenture Estate, (ii)
any act or omission of the Indenture Trustee which is not related to the
transactions contemplated by the Operative Agreements or is in violation of any
of the terms of the Operative Agreements or (iii) Taxes imposed against the
Indenture Trustee in its individual capacity against which the Lessee has not
indemnified (and is not obligated to indemnify) the Indenture Trustee in such
capacity.
Independent Investment Banker. An independent investment banking
institution of national standing appointed by the Lessee that is independent in
fact, does not have any direct financial interests, or any material indirect
financial interest, in the Lessee or any Affiliate of the Lessee, and is not
connected with the Lessee or any Affiliate of the Lessee, as an officer,
employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, that if the Indenture Trustee shall not
have received written notice of such an appointment at least 10 days prior to
the Prepayment Date, "Independent Investment Banker" shall mean such an
institution appointed by the Indenture Trustee.
Initial Owner Participant. Federal Express Corporation, a
Delaware corporation.
Intercreditor Agreement. The Intercreditor Agreement dated as of
June 15, 1998, among the Pass Through Trustee, the Class A Liquidity Provider,
the Class B Liquidity Provider and the Subordination Agent.
Interest Drawing. Has the meaning specified in Section 1.01 of
the Intercreditor Agreement.
Invoice. The invoice for the Aircraft given by AVSA to the
Lessor.
LC Bank. Kreditanstalt fr Wiederaufbau, a corporation organized
under the public law of the Federal Republic of Germany.
Last Cut-Off Date. The later of (i) the Cut-Off Date and (ii)
the "Cut-Off Date" (as defined in the relevant Related Indenture) for the last
Related Aircraft to be delivered.
Lease. The Lease Agreement (Federal Express Corporation Trust
No. N677FE) dated as of June 15, 1998, as amended and restated as of August 1,
1998, entered into by the Lessor and the Lessee concurrently with the execution
and delivery of the Indenture, including, without limitation, supplementation
by one or more Lease Supplements entered into pursuant to the applicable
provisions of the Lease.
Lease Supplement. The Lease Supplement No. 1 (Federal Express
Corporation Trust No. N677FE) to be dated the Delivery Date, substantially in
the form of Exhibit A to the Lease.
Lease Term. The period commencing on the Delivery Date and
ending at the end of the Basic Term.
Lessee. Federal Express Corporation, a Delaware corporation.
Lessee Documents. Has the meaning set forth in Section 6.01(b)
of the Participation Agreement.
Lessee Shortfall. Has the meaning set forth in Section 3.02(a)
of the Participation Agreement.
Lessor. State Street Bank and Trust Company of Connecticut,
National Association, a national banking association, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement.
Lessor's Estate. All estate, right, title and interest of the
Owner Trustee in and to the Collateral Account, the Liquid Collateral, the
Aircraft, the Lease, any Lease Supplement, the Participation Agreement, AVSA's
FAA ▇▇▇▇ of Sale, AVSA's Warranty ▇▇▇▇ of Sale, the Airbus Guaranty, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the AVSA Consent and Agreement, the Consent and Guaranty (to the
extent assigned by the Purchase Agreement Assignment), any Ancillary Agreement,
the GTA, the Engine Warranty Assignment, the Engine Consent, any warranty with
respect to the Airframe and the Engines, all amounts of Basic Rent and
Supplemental Rent, including without limitation, insurance proceeds (other than
insurance proceeds payable to or for the benefit of the Owner Trustee in its
individual capacity, the Owner Participant or the Indenture Trustee) and
requisition, indemnity or other payments of any kind for or with respect to the
Aircraft (except amounts owing to the Owner Participant, to the Indenture
Trustee, to the Owner Trustee in its individual capacity, or to any of their
respective directors, officers, employees and agents pursuant to Articles 8 and
9 of the Participation Agreement), and all other property of the Owner Trustee
purportedly subjected to the Lien of the Indenture by the Granting Clause
thereof; provided that in no event shall "Lessor's Estate" include any Excepted
Payment.
Lessor's Liens. Liens against, on or with respect to the
Aircraft, the Lessor's Estate or the Trust Indenture Estate or any part
thereof, title thereto or any interest therein arising as a result of (i)
claims against the Lessor, in its individual capacity or as Owner Trustee, or
the Owner Participant, in each case not related to the transactions
contemplated by the Operative Agreements, (ii) acts or omissions of the Lessor
in its individual capacity or as Owner Trustee, and, in the case of the Lessor
in its individual capacity, arising from its gross negligence or willful
misconduct or expressly prohibited under the Operative Agreements and any act
or omission of the Owner Participant which is in violation of any of the terms
of the Operative Agreements, (iii) Taxes or Expenses imposed against the
Lessor, in its individual capacity or as Owner Trustee, the Owner Participant,
Lessor's Estate or the trust created by the Trust Agreement which are not
required to be indemnified against by the Lessee pursuant to the Participation
Agreement by reason of Section 8.01(b) or 9.01(b) thereof or which are not
required to be indemnified against by the Lessee pursuant to the Tax Indemnity
Agreement, or (iv) claims against the Lessor or the Owner Participant arising
from the voluntary transfer by the Lessor or the Owner Participant of its
interests in the Aircraft other than a transfer of the Aircraft pursuant to
Section 4.02(a) or Article 7, 8, 9, 10 or 11 of the Lease and other than a
transfer pursuant to the exercise of the remedies set forth in Article 17 of
the Lease.
Letter of Credit. The Irrevocable Standby Letter of Credit,
dated the Certificate Closing Date, in the form of ExhibitG to the Original
Participation Agreement and with a Maximum Stated Amount equal to the amount
specified under "Letter of Credit Maximum Stated Amount" on Schedule IV to the
Original Participation Agreement, from the LC Bank to and for the benefit of
the Subordination Agent.
Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or
security interest or other similar interest.
Liquid Collateral. All amounts and securities deposited from
time to time in the Collateral Account and all the products, investments,
earnings and proceeds of the foregoing, including, but not limited to, all
proceeds of the investment or conversion thereof, voluntary or involuntary,
into cash, Specified Investments or other property, all rights to payment of
any and every kind, and other forms of obligations, and instruments and other
property which at any time constitute all or part or are included in the
proceeds of any of the foregoing.
Liquidity Facility. Has the meaning specified in Section 1.1 of
the Intercreditor Agreement.
Liquidity Provider. Kreditanstalt fr Wiederaufbau, a corporation
organized under the public law of the Federal Republic of Germany together with
any Replacement Liquidity Provider (as defined in the Intercreditor Agreement).
Losses. Has the meaning specified in Section 17.02(a) of the
Participation Agreement.
Loss Payee. Has the meaning specified in Section 13.02(b)(i) of
the Lease.
Majority in Interest of Certificate Holders. As of a particular
date of determination, the Holders of more than 50% of the aggregate unpaid
principal amount of all Certificates outstanding as of such date excluding for
purposes of this definition any Certificates held by (i) the Owner Trustee or
the Owner Participant or any interests of the Owner Participant unless all
Certificates then outstanding shall be held by the Owner Participant, (ii)the
Lessee or (iii)any Affiliate of any thereof.
Make-Whole Premium. With respect to any Certificate, the amount
(as determined by an Independent Investment Banker reasonably acceptable to the
Indenture Trustee and the Owner Participant) by which (i) the present value of
the remaining scheduled payments of principal and interest to the Maturity of
such Certificate computed by discounting such payments on a semiannual basis on
each Payment Date (assuming a 360-day year of twelve 30-day months) using a
discount rate equal to the Treasury Yield exceeds (ii) the outstanding
principal amount of such Certificate plus accrued interest.
Mandatory Document Terms. The terms set forth on Schedule V to
the Original Participation Agreement.
Mandatory Economic Terms. The terms set forth on Schedule VI to
the Original Participation Agreement.
Manufacturer. Airbus Industrie G.I.E., a groupement d'interet
economique formed under the laws of France.
Maturity. With respect to any Certificate, the date on which the
final principal amount of such Certificate is scheduled to be due and payable.
Maximum Stated Amount. The amount specified under "Letter of
Credit Maximum Stated Amount" on Schedule IV to the Original Participation
Agreement.
Moody's. ▇▇▇▇▇'▇ Investors Service, Inc.
Net Present Value of Rents. The net present value, as of the
Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted
at a rate equal to the Debt Rate per annum compounded semi-annually.
Non-U.S. Person. Any Person other than a U.S. Person.
Obsolete Parts. Parts which the Lessee in good faith determines
to be obsolete or no longer suitable or appropriate for use on the Airframe or
any Engine.
Officer's Certificate. When delivered pursuant to the Indenture,
a certificate signed by a Responsible Officer of the Lessee or the Owner
Trustee, as the case may be, and delivered to the Indenture Trustee. Each such
certificate shall include the statements provided for in Section 15.07 of the
Indenture.
Operative Agreements. The Participation Agreement, the Trust
Agreement, AVSA's FAA ▇▇▇▇ of Sale, AVSA's Warranty ▇▇▇▇ of Sale, the Airbus
Guaranty, the Purchase Agreement, the Purchase Agreement Assignment, the GTA,
the Engine Warranty Assignment, the French Pledge Agreement, the Lease, the
Lease Supplement, the Owner Participant Guaranty, the Owner Trustee Guaranty,
if any, any Ancillary Agreement entered into by or with the written consent of
the Indenture Trustee, which by its terms is an Operative Agreement, the
Certificates outstanding at the time of reference, the Indenture, the Indenture
and Security Agreement Supplement, the Consent and Agreement, the AVSA Consent
and Agreement, the Consent and Guaranty (to the extent assigned by the Purchase
Agreement Assignment), the Engine Consent, the Tax Indemnity Agreement, each
Liquidity Facility, the Intercreditor Agreement, the Collateral Agreement, the
Letter of Credit and the Reimbursement Agreement.
Opinion of Counsel. When delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the Lessee
may be (i) an attorney employed by the Lessee who is generally empowered to
deliver such written opinions, (ii) ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇ or a successor firm
or (iii) other counsel designated by the Lessee and reasonably satisfactory to
the Indenture Trustee and (b) for the Owner Trustee or the Indenture Trustee,
an attorney selected by such Person and, in the case of the Owner Trustee,
reasonably satisfactory to the Indenture Trustee.
Original Agreements. The documents and instruments delivered on
the Certificate Closing Date in connection with the transactions contemplated
by the Original Participation Agreement.
Original Indenture. The Trust Indenture and Security Agreement
(Federal Express Corporation Trust No. N677FE), dated as of June 15, 1998,
between the Owner Trustee and the Indenture Trustee originally executed and
delivered on the Certificate Closing Date.
Original Lease. The Lease Agreement (Federal Express Corporation
Trust No. N677FE), dated as of June 15, 1998, between the Owner Trustee as
lessor, and the Lessee originally executed and delivered on the Certificate
Closing Date.
Original Participation Agreement. The Participation Agreement
(Federal Express Corporation Trust No. N677FE), dated as of June 15, 1998,
among the Lessee, the Initial Owner Participant, the Indenture Trustee, the
Owner Trustee, the Pass Through Trustee and the Subordination Agent originally
executed and delivered on the Certificate Closing Date.
Original Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N677FE), dated as of June 15, 1998, between the Initial
Owner Participant and the Owner Trustee originally executed and delivered on
the Certificate Closing Date.
Outstanding. When used with respect to Certificates, as of the
date of determination and subject to the provisions of Section 10.04 of the
Indenture, all Certificates theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Certificates theretofore cancelled by the Indenture
Trustee or delivered to the Indenture Trustee for cancellation
pursuant to Section 2.08 of the Indenture or otherwise;
(ii) Certificates for which prepayment money in the necessary
amount has been theretofore deposited with the Indenture Trustee
in trust for the Holders of such Certificates pursuant to Section
14.01 of the Indenture; provided, that if such Certificates are
to be prepaid, notice of such prepayment has been duly given
pursuant to the Indenture or provision therefor satisfactory to
the Indenture Trustee has been made; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to Article
II of the Indenture.
Outstanding C Account. The collateral account established and
maintained under a Related Indenture relating to an undelivered aircraft.
Owner Participant. The Person to whom on the Delivery Date the
Initial Owner Participant shall transfer its Beneficial Interest pursuant to
Section 3.02 of the Original Participation Agreement and any successors
thereto, and any Person to which the Owner Participant transfers, in accordance
with the Trust Agreement, its right, title and interest in and to the Operative
Agreements and the Lessor's Estate.
Owner Participant Guarantor. Textron Financial Corporation, a
Delaware corporation, and any other provider of an Owner Participant Guaranty.
Owner Participant Guaranty. The Owner Participant Guaranty
(Federal Express Corporation Trust No. N677FE) dated the Delivery Date, by the
Owner Participant Guarantor in favor of the Lessee, the Owner Trustee, the
Indenture Trustee and the Pass Through Trustee, and any guaranty delivered in
compliance with Article 5 of the Trust Agreement.
Owner Trust. Federal Express Corporation Trust No. N677FE.
Owner Trustee. SSB, not in its individual capacity except as
otherwise expressly stated, but solely as Owner Trustee under the Trust
Agreement.
Owner Trustee Guarantor. The provider, if any, of an Owner
Trustee Guaranty.
Owner Trustee Guaranty. Any guaranty delivered in compliance
with Section 11.01(b)(ii) of the Participation Agreement.
Owner's Economic Return. The Owner Participant's anticipated net
after-tax book yield and aggregate after-tax cash during the Basic Term
utilizing the multiple investment sinking fund method of analysis, computed on
the basis of the same methodology and assumptions as were utilized by the Owner
Participant in determining Basic Rent, Stipulated Loss Value and Termination
Value percentages and the EBO Price, as such assumptions may be adjusted for
events which have been the basis of adjustments to Rent pursuant to Section
3.04 of the Lease.
Participation Agreement. The Participation Agreement (Federal
Express Corporation Trust No. N677FE), dated as of June 15, 1998, as amended
and restated as of August 1, 1998, among the Lessee, the Owner Trustee not in
its individual capacity except as otherwise expressly provided therein, but
solely as owner trustee, the Owner Participant, the Indenture Trustee not in
its individual capacity except as otherwise expressly provided therein, but
solely as indenture trustee, the Pass Through Trustee not in its individual
capacity except as otherwise expressly provided therein, but solely as pass
through trustee, and the Subordination Agent not in its individual capacity
except as otherwise expressly provided therein, but solely as subordination
agent.
Parts. All appliances, parts, components, instruments,
appurtenances, accessories, furnishings and other equipment of whatever nature
(other than complete Engines or engines) which may from time to time be
incorporated or installed in or attached to the Airframe or any Engine or title
to which remains vested in the Lessor pursuant to Article 8 of the Lease.
Pass Through Agreement. The Pass Through Trust Agreement dated
as of May 1, 1997, between the Lessee and the Pass Through Trustee.
Pass Through Certificates. Any of the Pass Through Certificates,
1998-1-A, the Pass Through Certificates, 1998-1-B or the Pass Through
Certificates, 1998-1-C, in each case as issued by the related Pass Through
Trust; and "Pass Through Certificates" means all of the Pass Through
Certificates issued by each of the Pass Through Trusts.
Pass Through Closing Date. July 7, 1998.
Pass Through Trust. The Federal Express Corporation 1998-1 Pass
Through Trust Class A, Federal Express Corporation 1998-1 Pass Through Trust
Class B and Federal Express Corporation 1998-1 Pass Through Trust Class C, in
each case formed pursuant to the related Series Supplement in accordance with
the Pass Through Agreement; and "Pass Through Trusts" means all of such Pass
Through Trusts.
Pass Through Trustee. First Security Bank, National Association,
a national banking association, in its capacity as Pass Through Trustee under
the Pass Through Agreement and each Pass Through Trust.
Past Due Rate. In respect of (A) any amount payable to the Owner
Participant or the Owner Trustee a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2% plus the Debt Rate and (B) any principal of or interest on
any Certificate or any other amount payable under the Indenture, any
Certificate or any other Operative Agreement that is not paid when due (whether
at Maturity, by acceleration, by optional or mandatory prepayment or otherwise)
to any Holder, the Indenture Trustee or the Pass Through Trustee, a rate per
annum during the period from and including the due date to but excluding the
date on which such amount is paid in full equal to (i) in the case of any such
amount payable to the Holder of any Certificate, 2% plus the interest rate
applicable to such Certificate and (ii) in the case of any other such amount,
2% plus the Debt Rate.
Payment Date. Each January 15 and July 15 commencing on January
15, 1999.
Payment Default. Any event specified in Section 16.01(a) or
16.01(b) of the Lease which with the giving of notice or lapse of time or both
would constitute an Event of Default.
Permitted Investments. Those investments enumerated in Section
23.01(a) (i), (ii), (iii) and (iv) of the Lease.
Person. Any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
Pool Balance. Has the meaning specified in Article I to the
Series Supplement.
Pool Factors. Has the meaning specified in Article I to the
Series Supplement.
Preliminary Notice. Has the meaning specified in Section 4.01(a)
of the Lease.
Premium Termination Date. With respect to the Series A
Certificates, the scheduled maturity date of the Series A Certificates, with
respect to the Series B Certificates, the scheduled maturity date of the Series
B Certificates and with respect to the Series C Certificates, the scheduled
maturity date of the Series C Certificates.
Prepayment Date. Has the meaning specified in Section 6.02(b) of
the Indenture.
Prepayment Price. Has the meaning specified in Section 6.02(b)
of the Indenture.
Principal Amount. With respect to a Certificate means the stated
original principal amount of such Certificate and, with respect to all
Certificates, means the aggregate stated original principal amounts of all
Certificates.
Property. Any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
Proposed Termination Date. Has the meaning specified in Section
10.01(a) of the Lease.
Purchase Agreement. The Airbus A300-600R Freighter Purchase
Agreement, dated as of July 3, 1991 between AVSA and the Lessee, including all
exhibits, appendices and letter agreements attached thereto as originally
executed or as modified, amended or supplemented in accordance with the terms
thereof, but only to the extent that the foregoing relates to the Aircraft and
to the extent assigned pursuant to the Purchase Agreement Assignment.
Purchase Agreement Assignment. The Purchase Agreement Assignment
(Federal Express Corporation Trust No. N677FE), dated as of August 1, 1998,
between the Lessor and the Lessee.
Purchase Price. Has the meaning specified in Ancillary Agreement
I.
Rating Agencies. Collectively, at any time, each nationally
recognized rating agency which shall have been requested to rate the Pass
Through Certificates and which shall then be rating the Pass Through
Certificates. The initial Rating Agencies will be Moody's and S&P.
Rating Agency Confirmation. With respect to any Operative
Agreement that is to be modified in any material respect on the Delivery Date a
written confirmation from each of the Rating Agencies that the use of such
Operative Agreement with such modifications would not result in (i) a reduction
of the rating for any Class of Pass Through Certificates below the then current
rating for such Class of Pass Through Certificates or (ii) a withdrawal or
suspension of the rating of any Class of Pass Through Certificates.
Record Date. With respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), December 31 for January 15
Payment Dates and June 30 for July 15 Payment Dates, whether or not such date
is a Business Day.
Recourse Amount. Has the meaning specified in Section 17.10 of
the Participation Agreement.
Refinancing. A non-recourse loan to the Lessor arranged pursuant
to Section 15.01 of the Participation Agreement.
Register. Has the meaning set forth in Section 3.02 of the
Indenture.
Registrar. Has the meaning set forth in Section 3.02 of the
Indenture.
Regulation D. Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
Reimbursement Agreement. The Standby Letter of Credit
Application and Agreement, dated the Pass Through Closing Date, between the
Lessee and the LC Bank.
Related Aircraft. Each of the aircraft relating to a Related
Indenture.
Related Indentures. Collectively, the Trust Indenture and
Security Agreement for each of Federal Express Corporation Trust Nos. N585FE,
N678FE, N679FE, N680FE, N681FE, N682FE, N620FE, N621FE and N623FE, each dated
as of June 15, 1998, between State Street Bank and Trust Company of
Connecticut, National Association, as owner trustee and First Security Bank,
National Association, as indenture trustee, the Trust Indenture and Security
Agreement for Federal Express Corporation Trust No. N590FE, dated as of May 1,
1998, as amended and restated as of June 15, 1998, between State Street Bank
and Trust Company of Connecticut, National Association, as owner trustee and
First Security Bank, National Association, as indenture trustee, the Trust
Indenture and Security Agreement for Federal Express Corporation Trust No.
N675FE, dated as of June 1, 1998, as amended and restated as of June 15, 1998,
between State Street Bank and Trust Company of Connecticut, National
Association, as owner trustee and First Security Bank, National Association, as
indenture trustee, and the Trust Indenture and Security Agreement for Federal
Express Corporation Trust No. N676FE, dated as of June 15, 1998, as amended and
restated as of July 15, 1998, between State Street Bank and Trust Company of
Connecticut, National Association, as owner trustee and First Security Bank,
National Association, as indenture trustee.
Related Participation Agreements. Collectively, with respect to
each Related Indenture, the "Participation Agreement" as defined therein.
Remaining Weighted Average Life. On a given date with respect to
any Certificate the number of days equal to the quotient obtained by dividing
(i) the sum of each of the products obtained by multiplying (a) the amount of
each then remaining scheduled payment of principal of such Certificate by (b)
the number of days from and including such prepayment date to but excluding the
dates on which each such payment of principal is scheduled to be made; by (ii)
the then outstanding principal amount of such Certificate.
Renewal Rent. The amount payable by the Lessee as rent in
accordance with Section 4.01 of the Lease during any Renewal Term.
Renewal Term. One or more terms with respect to which the Lessee
has exercised its option to renew the Lease pursuant to Section 4.01(a)
thereof.
Rent. All payments due from the Lessee under the Lease as Basic
Rent, Renewal Rent and Supplemental Rent, collectively.
Rent Payment Date. Each January 15 and July 15 commencing on
January 15, 1999, and the last day of the Basic Term.
Replacement Aircraft. Any aircraft substituted for the Aircraft
pursuant to Section 11.03(a) of the Lease.
Replacement Airframe. Has the meaning set forth in Section 11.03
of the Lease.
Replacement Engine. A General Electric CF6-80C2-A5F engine (or
an engine of the same or another manufacturer) of the same or of equal or
greater value, remaining useful life and utility as the Engine being replaced,
together with all Parts relating to such engine; provided, however, that if
such replacement engine is not a General Electric CF6-80C2-A5F engine, such
replacement engine must then be commonly used in the commercial aviation
industry on Airbus A300-600 airframes.
Responsible Officer. With respect to the Owner Trustee (except
for purposes of the Trust Agreement in which case the definition of Responsible
Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate
officer or (except in the case of the Owner Participant) other employee of a
party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant, agreement
or obligation of such party pursuant to any Operative Agreement, would have
responsibility for and knowledge of such matter and the requirements of any
Operative Agreement with respect thereto.
S&P. Standard & Poor's Ratings Group.
Scheduled Delivery Date. The Delivery Date specified in the
Delivery Notice pursuant to Section 3.01 of the Participation Agreement.
SEC. The Securities and Exchange Commission of the United States
and any successor agencies or authorities.
Secured Obligations. Has the meaning specified in the Granting
Clause of the Indenture.
Securities Act. The Securities Act of 1933, as amended.
Series "A" or "Series A Certificates". Certificates issued and
designated as "Series A" under the Indenture, in the Principal Amount and
maturities and bearing interest as specified in Exhibit B to the Indenture
under the heading "Series A".
Series "B" or "Series B Certificates". Certificates issued and
designated as "Series B" under the Indenture, in the Principal Amount and
maturities and bearing interest as specified in Exhibit B to the Indenture
under the heading "Series B".
Series "C" or "Series C Certificates". Certificates issued and
designated as "Series C" under the Indenture, in the Principal Amount and
maturities and bearing interest as specified in Exhibit B to the Indenture
under the heading "Series C".
Series C Prepayment Date. July 15, 1999 or any other date
designated by the Lessee, but in no event later than the fifteenth day after
the Last Cut-Off Date.
Series Supplement or Series Supplements. The Series Supplement
1998-1- A, the Series Supplement 1998-1-B or the Series Supplement 1998-1-C,
each dated the Certificate Closing Date, between the Lessee and the Pass
Through Trustee.
Sinking Fund Redemption Date. Has the meaning specified in
Section 6.06 of the Indenture.
Sinking Fund Redemption Price. Has the meaning specified in
Section 6.06 of the Indenture.
Special Aviation Counsel. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇.
Special Distribution Date. Has the meaning specified in Article
I to the Series Supplement.
Specified Investments. Shall mean (a) direct obligations of the
United States of America or obligations fully guaranteed by the United States
of America; (b) commercial paper rated A-1/P-1 by S&P and ▇▇▇▇▇'▇, respectively
or, if such ratings are unavailable, rated by any nationally recognized rating
organization in the United States equal to the highest rating assigned by such
rating organization; (c) investments in negotiable certificates of deposit,
time deposits, banker's acceptances, commercial paper or other direct
obligations of, or obligations guaranteed by, commercial banks organized under
the laws of the United States or of any political subdivision thereof (or any
U.S. branch of a foreign bank) with issuer ratings of at least B/C by Thomson
Bankwatch, having maturities no later than 90 days following the date of such
investment; (d) overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers; or (e) overnight
repurchase agreements with respect to the securities described in clause (a)
above entered into with an office of a bank or trust company which is located
in the United States of America or any bank or trust company which is organized
under the laws of the United States or any state thereof and has capital,
surplus and undivided profits aggregating at least $500 million.
SSB. State Street Bank and Trust Company of Connecticut,
National Association, a national banking association or any successor Owner
Trustee in its individual capacity.
Stipulated Loss Value. As of any Stipulated Loss Value
Determination Date during the Basic Term, the amount determined by multiplying
the Purchase Price by the percentage set forth in Schedule III of the Lease
under the heading "Stipulated Loss Value Factor" opposite such date (as such
Schedule III may be adjusted from time to time as provided in Section 3.04 of
the Lease), and during any Renewal Term, the amount determined pursuant to
Section 4.01(b) of the Lease. Notwithstanding any other provisions of the
Lease or the Participation Agreement or the Indenture, each Stipulated Loss
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of Stipulated Loss Value as does not constitute an Excepted
Payment, at least sufficient to pay in full as of such date of payment the
aggregate unpaid principal amount of and accrued interest on the Certificates
outstanding on such date of payment. Subject to the immediately preceding
sentence, it is understood and agreed that the amounts set forth on Schedule
III of the Lease, for dates other than Rent Payment Dates on which arrears
Basic Rent is due, fully reflect appropriate Basic Rent accruals and credits of
unearned Basic Rent and, accordingly, no further accrual or credit shall be
required whenever Stipulated Loss Value is to be calculated with reference to
any such date.
Stipulated Loss Value Determination Date. Each date set forth on
Schedule III of the Lease.
Subordination Agent. First Security Bank, National Association,
a national banking association, not in its individual capacity but solely as
Subordination Agent.
Supplemental Rent. (a) All amounts, liabilities and obligations
which the Lessee assumes or agrees to perform or pay under the Lease or under
the Participation Agreement or Tax Indemnity Agreement or any Ancillary
Agreement or any other Operative Agreement to SSB, the Lessor, the Owner
Participant, the Indenture Trustee, the Subordination Agent, any Liquidity
Provider or others, including, without limitation, payments of Stipulated Loss
Value, EBO Price and amounts calculated by reference to Termination Value and
all amounts required to be paid by Lessee under the agreements, covenants and
indemnities contained in the Lease or in the Participation Agreement or the Tax
Indemnity Agreement or any other Operative Agreement, but excluding Basic Rent
and (b) all amounts that the Owner Trustee is obligated to pay in accordance
with clause (b) of the last paragraph of Section 2.04 of the Indenture.
Tax. Shall have the meaning set forth in Section 8.01(a) of the
Participation Agreement.
Tax Indemnity Agreement. The Tax Indemnity Agreement (Federal
Express Corporation Trust No. N677FE), dated as of August 1, 1998, between the
Lessee and the Owner Participant.
Term. The Basic Term of the lease for the Aircraft under the
Lease and, if renewed pursuant to Section 4.01 of the Lease, each Renewal Term
for the Aircraft for which the Lease is renewed, or such earlier date on which
the Lease is terminated pursuant to its terms.
Termination Date. A Rent Payment Date during the Basic Term that
is on or after December 31, 2005 in the case of Article 10 of the Lease, and in
the case of (i) Section 4.02(a)(A) of the Lease, the Rent Payment Date falling
on January 15, 2016 or July 15, 2019, as the case may be, (ii) Section
4.02(a)(D) or (E) of the Lease, a Rent Payment Date that is on or after the
eighth anniversary of the Delivery Date and (iii) Section 4.02(a)(F) of the
Lease, January 15, 2018.
Termination Value. As of any Termination Date, the amount
determined by multiplying the Purchase Price by the percentage set forth in
Schedule IV of the Lease under the heading "Termination Value Factor" opposite
such Termination Date (as such Schedule IV may be adjusted from time to time as
provided in Section 3.04 of the Lease). Notwithstanding any other provisions
of the Lease, the Participation Agreement or the Indenture, each Termination
Value shall be, under any circumstances and in any event, an amount, together
with so much of the arrears portion of Basic Rent due and owing through the
date of payment of any amount calculated by reference to Termination Value as
does not constitute an Excepted Payment, at least sufficient to pay in full as
of such date of payment the aggregate unpaid principal amount of and accrued
interest on the Certificates outstanding on such date of payment. Subject to
the immediately preceding sentence, it is understood and agreed that the
amounts set forth on Schedule IV of the Lease, for dates other than Rent
Payment Dates on which arrears Basic Rent is due, fully reflect appropriate
Basic Rent accruals and credits of unearned Basic Rent and, accordingly, no
further accrual or credit shall be required whenever Termination Value is to be
calculated with reference to any such date.
Transaction Costs. Those costs and expenses set forth in Section
10.01(a) of the Participation Agreement.
Transportation Code. Title 49 of the United States Code, as
amended and in effect on the date of the Lease or as subsequently amended, or
any successor or substituted legislation at the time in effect and applicable,
and the regulations promulgated pursuant thereto.
Treasury Yield. At the time of determination with respect to any
Certificate, the interest rate (expressed as a semi-annual equivalent and as a
decimal and, in the case of United States Treasury bills, converted to a bond
equivalent yield) determined to be the per annum rate equal to the semi-annual
yield to maturity for United States Treasury securities maturing on the Average
Life Date on such Certificate and trading in the public securities markets
either as determined by interpolation between the most recent weekly average
yield to maturity for two series of United States Treasury securities, trading
in public securities markets, (i) one maturing as close as possible to, but
earlier than, the Average Life Date of such Certificate and (ii) the other
maturing as close as possible to, but later than, the Average Life Date of such
Certificate, in each case as published in the most recent H.15(519) or, if a
weekly average yield to maturity for United States Treasury securities maturing
on the Average Life Date of such Certificate is reported on the most recent
H.15 (519), such weekly average yield to maturity as published in such
H.15(919). "H.15(519)" means the weekly statistical release designated as
such, or any successor publication, published by the Board of Governors of the
Federal Reserve System. The date of determination of a Make-Whole Premium will
be the third Business Day prior to the applicable prepayment date and the "most
recent H.15(519)" means the H.15(519) published prior to the close of business
on the third Business Day prior to the applicable prepayment date.
Trust Agreement. The Trust Agreement (Federal Express
Corporation Trust No. N677FE), dated as of June 15, 1998, as amended and
restated as of August 1, 1998, between the Owner Participant and the Owner
Trustee in its individual capacity.
Trust Estate. The Lessor's Estate.
Trust Indenture Act. The Trust Indenture Act of 1939, as
amended.
Trust Indenture Estate. All estate, right, title and interest of
the Indenture Trustee in and to any of the property, rights, interests and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of the
Owner Trustee or the Owner Participant expressly reserved to the Owner Trustee
or the Owner Participant pursuant to the Indenture, and the Letter of Credit
and any rights thereunder.
UCC. Uniform Commercial Code.
Underwriters. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, Chase
Securities Inc., Citicorp Securities, Inc., Credit Suisse First Boston
Corporation and ▇.▇. ▇▇▇▇▇▇ Securities Inc.
Underwriting Agreement. The Underwriting Agreement dated June
30, 1998, among the Lessee and the Underwriters.
United States, U.S. or US. The United States of America.
U.S. Air Carrier. Any United States air carrier as to which
there is in force a certificate issued pursuant to Section 41102(a) or Section
41103 of the Transportation Code, and as to which there is in force an air
carrier operating certificate issued pursuant to Chapter 447 of the
Transportation Code and Part 121 of the regulations under such Transportation
Code, for aircraft capable of carrying ten (10) or more individuals or 6,000
pounds or more of cargo, or which may operate as an air carrier by
certification or otherwise under any successor or substitute provision thereof
or in absence thereof.
U.S. Person. A Person described in Section 7701(a)(30) of the
Code.
SCHEDULE III
PERMITTED COUNTRY LIST
Australia Malaysia
Austria Mexico
Belgium Netherlands
Canada New Zealand
Denmark Norway
Finland Philippines
France Singapore
Germany Spain
Iceland Sweden
Ireland Switzerland
Japan United Kingdom
Luxembourg
EXHIBIT A(1)(a)
[Letterhead of Federal Express]
August ___, 1998
To the Addressees Listed on Schedule A Attached
Re: Federal Express Corporation Trust No. N677FE
--------------------------------------------
Ladies and Gentlemen:
I am the Senior Vice President and General Counsel of Federal
Express Corporation, a Delaware corporation ("Federal"), and am familiar with
the transactions contemplated by the Participation Agreement (Federal Express
Corporation Trust No. N677FE), dated as of June 15, 1998, as amended and
restated as of August 1, 1998 (the "Participation Agreement"), among Federal,
as Lessee and Initial Owner Participant, Cessna Finance Corporation, as Owner
Participant, State Street Bank and Trust Company of Connecticut, National
Association, not in its individual capacity, except as otherwise stated, but
solely as Owner Trustee, and First Security Bank, National Association, not in
its individual capacity, except as otherwise stated, but solely as Indenture
Trustee, Pass Through Trustee and Subordination Agent, relating to the
Aircraft. This opinion is being delivered pursuant to Section 4.01(d)(i) of
the Participation Agreement. Capitalized terms not otherwise defined herein
have the meanings assigned thereto in the Participation Agreement.
The Participation Agreement provides, among other things, for the
financing on the Delivery Date of a portion of the Owner Trustee's payment of
the Purchase Price of one Airbus A300F4-605R aircraft (the "Aircraft"), using
the proceeds from the public offering of the Pass Through Certificates. Three
Classes of Pass Through Certificates were issued by three Pass Through Trusts
formed to acquire, among other securities, the Certificates bearing a
particular interest rate and having a particular Maturity that were issued
under the Indenture, as supplemented by the related Indenture and Security
Agreement Supplement.
In connection with the opinions expressed below, I have examined,
or caused to be examined by attorneys under my supervision, executed
counterparts of the Operative Agreements. We have relied upon originals or
copies, certified or otherwise identified to our satisfaction, of such
corporate records, documents and other instruments as in our judgment are
relevant to rendering the opinions expressed below. As to any facts material
to the opinions expressed below (other than any thereof relating to Federal),
we have relied upon the representations and warranties made in the Operative
Agreements, the accuracy of which we have not independently investigated or
verified. In such examination, we have assumed the genuineness of all
signatures (other than the signatures of Federal) and the authenticity of all
documents submitted to us as originals and the conformity with the originals of
all documents submitted to us as copies. We have also assumed that each of the
parties to each of the Operative Agreements, other than Federal, has full
power, authority and legal right to enter into such Operative Agreements and
that each such Operative Agreement has been duly authorized, executed and
delivered by each of such parties.
Based on the foregoing, it is my opinion that:
1. Federal is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, is a
"citizen of the United States" within the meaning of Section 40102(a)(15) of
the Transportation Code, and has or had, on the date of execution thereof, the
corporate power and authority to carry on its business as currently conducted
and to enter into and perform its obligations under the Operative Agreements to
which it is a party. Federal is duly qualified to do business and is in good
standing in the State of Tennessee and each other state of the United States in
which its operations or the nature of its business requires Federal to so
qualify, except where the failure to so qualify would not have a material
adverse impact on Federal or its business.
2. Federal possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents which are material to
the operation of the routes flown by it and the conduct of its business and
operations as currently conducted, and each such certificate, franchise,
license, permit, right and concession and consent is in full force and effect.
3. Each of the Operative Agreements to which Federal is a
party has or had, on the date of execution thereof, been duly authorized,
executed and delivered by Federal and each constitutes the legal, valid and
binding obligation of Federal enforceable against Federal in accordance with
its terms.
4. Neither the execution and delivery by Federal of the
Operative Agreements to which Federal is a party, nor the consummation of any
of the transactions by Federal contemplated thereby, nor the performance of the
obligations thereunder by Federal, did at the time of execution and delivery,
or does presently (a) require any stockholder approval or violate the
certificate of incorporation or by-laws of Federal or (b) conflict with or
contravene the provisions of, or constitute a default under, or result in the
creation of any Lien (other than Liens permitted under Section 6.01(a) of the
Lease) upon the property of Federal under any law, governmental rule or
regulation, or the charter or bylaws of Federal or any order, writ, injunction
or decree of any court or governmental authority against Federal or by which
any of its properties may be bound or any indenture, mortgage, contract or
other agreement known to me to which Federal is a party or by which it may be
bound or, require the approval or consent of any trustee or the holders of any
indebtedness or obligations of Federal.
5. Neither the execution and delivery by Federal of the
Operative Agreements to which it is a party, nor the consummation of any
transactions by Federal contemplated thereby, nor the performance of the
obligations thereunder by Federal, did or does, as the case may be, (a) require
the consent or approval of, the giving of notice to, or (except as described or
contemplated in the Participation Agreement and the Lease, all of which were or
are required to be performed on or prior to the Delivery Date and which were or
shall have been accomplished on or prior to the Delivery Date) the registration
with, or the taking of any other action in respect of, the Aeronautics
Authority, the Securities and Exchange Commission or any other authority or
agency of the federal government or of the State of Tennessee other than (i)
the registration of the issuance and sale of the Pass Through Certificates
under the Securities Act, (ii) compliance with the securities laws of each
applicable state and (iii) the filings and recordings referred to in paragraph
7 below, or (b) contravene any judgment or order applicable to or binding on
Federal or any law or governmental rule or regulation of the United States or
of the State of Tennessee.
6. There is no pending or, to my knowledge, threatened
action or proceeding before any court or administrative agency which
individually (or in the aggregate in the case of any group of related lawsuits)
(i) is expected to have a material adverse effect on (A) the financial
condition of Federalexcept for the matters described under "Legal Proceedings"
in Federal's Annual Report on Form 10-K for the fiscal year ended May 31, 1998,
as to all of which I can express no opinion at this time concerning Federal's
liability (if any) or the effect of any adverse determination upon the
business, condition (financial or otherwise) or operations of Federal, or (B)
the ability of Federal to perform its obligations under the Operative
Agreements, or (ii) involves the Aircraft.
7. Except for the registration in the Owner Trustee's name
of the Aircraft pursuant to the Transportation Code, and except for the filing
and, where appropriate, recording, pursuant to the Transportation Code of (A)
AVSA's FAA ▇▇▇▇ of Sale, (B) the Trust Agreement, (C) the Lease (with the Lease
Supplement covering the Aircraft, the Indenture and the Indenture and Security
Agreement Supplement covering the Aircraft attached as exhibits) and (D) the
Indenture (with the Indenture and Security Agreement Supplement covering the
Aircraft attached as an exhibit), no further action, including any filing or
recording of any document is necessary or advisable in order to establish and
perfect the Owner Trustee's title to and interest in the Aircraft as against
Federal and any third parties, or to perfect the first mortgage lien on the
Aircraft in favor of the Indenture Trustee in each case with respect to such
portion of the Aircraft as is covered by the recording system established by
the Transportation Code.
8. Federal is a duly certificated "air carrier" within the
meaning of the Transportation Code, and a holder of a certificate under
Sections 41102(a) and 41103 of the Transportation Code, and an "air carrier
operating certificate" issued under Chapter 447 of the Transportation Code for
aircraft capable of carrying ten (10) or more individuals or 6,000 pounds or
more of cargo, and each such certificate is in full force and effect.
9. On the date hereof the Owner Trustee received good and
valid title to the Aircraft free and clear of all liens on file with the FAA,
except for Liens permitted under Section 6.01(a) of the Lease.
10. Federal's principal place of business and chief executive
office (as such term is defined in the Uniform Commercial Code in effect in the
State of Tennessee) are located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇.
11. Federal is not, and is not directly or indirectly
controlled by or acting on behalf of any Person which is, an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
The opinions expressed in paragraph 3 above as to the
enforceability of the Operative Agreements to which Federal is a party are
based upon the assumption for purposes of such opinions and without independent
analysis that, notwithstanding the respective choice of laws clauses in the
Operative Agreements, the governing law with respect to each of the Operative
Agreements is identical in all relevant respects to the law of the State of
Tennessee. Insofar as the foregoing opinion relates to the enforceability of
any instrument, such enforceability is subject to applicable bankruptcy,
insolvency and other similar laws affecting the enforcement of creditors'
rights generally (whether such enforceability is considered in a proceeding in
equity or at law). The enforceability of the remedies provided under the Lease
may also be limited by applicable laws which may affect the remedies provided
therein but which do not in my opinion affect the validity of the Lease or make
such remedies inadequate for the practical realization of the benefits intended
to be provided thereby.
I do not express any opinion as to matters governed by any law
other than the Federal laws of the United States of America, the corporation
law of the State of Delaware and the laws of the State of Tennessee.
As to the matters referred to in paragraphs 5, 7 and 9, I have
relied on the opinion of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ of even date herewith, to
the extent such matters are addressed in such counsel's opinion and subject to
the assumptions and qualifications expressed therein.
This opinion is delivered to you solely for your use in
connection with the transaction described herein, and may not be used for any
other purpose, and may not be relied upon by any other person, without my prior
written consent.
Very truly yours,
SCHEDULE A
----------
Owner Trustee
-------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
-------------------------------------------------------------
First Security Bank, National Association
Underwriters
------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
▇.▇. ▇▇▇▇▇▇ Securities Inc.
Liquidity Provider
------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
-----------------
Cessna Finance Corporation
Owner Participant Guarantor
---------------------------
Textron Financial Corporation
EXHIBIT A(1)(b)
[Letterhead of ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇]
August ___, 1998
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N677FE
--------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel for Federal Express Corporation,
a Delaware corporation ("Federal Express"), in connection with the transactions
contemplated by the Participation Agreement (Federal Express Corporation Trust
No. N677FE), dated as of June 15, 1998, as amended and restated as of August 1,
1998 (the "Participation Agreement"), among Federal Express, as Lessee and
Initial Owner Participant, Cessna Finance Corporation, as Owner Participant,
State Street Bank and Trust Company of Connecticut, National Association, not
in its individual capacity, except as otherwise stated, but solely as Owner
Trustee, and First Security Bank, National Association, not in its individual
capacity, except as otherwise stated, but solely as Indenture Trustee, Pass
Through Trustee and Subordination Agent, relating to the Aircraft. This
opinion is being delivered pursuant to Section 4.01(d)(ii) of the Participation
Agreement. Capitalized terms not otherwise defined herein have the meanings
assigned thereto in the Participation Agreement.
The Participation Agreement provides, among other things, for the
financing on the Delivery Date of the Owner Trustee's payment of a portion of
the Purchase Price of one Airbus A300F4-605R Aircraft (the "Aircraft") using
the proceeds from the public offering of the Pass Through Certificates. On the
Certificate Closing Date, three Classes of Pass Through Certificates were
issued by separate Pass Through Trusts, each formed to acquire, among other
securities, the Certificates bearing a particular interest rate and having a
particular Maturity issued under the Indenture. The Aircraft is to be leased
to Federal Express by the Owner Trustee pursuant to the Lease and subjected to
the Lien of the Indenture, and is to be delivered by the Owner Trustee to the
Lessee on this date, and in connection with the delivery of the Aircraft, the
Owner Trustee and Federal Express will execute and deliver the Lease
Supplement, and the Owner Trustee will execute and deliver the Indenture and
Security Agreement Supplement.
In connection with the opinions expressed below, we have examined
executed counterparts of the Operative Agreements. We have also examined
originals, or copies certified to our satisfaction, of such other agreements,
documents, certificates and statements of governmental officials and corporate
officers as we have deemed necessary or advisable as a basis for such opinions.
In such examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity
with the originals of all documents submitted to us as copies.
As to any facts material to our opinions expressed below, we
have, with your consent, relied on the representations and warranties made in
or pursuant to the Participation Agreement and the other documents referred to
therein, the accuracy of which we have not independently verified. In
addition, we have, when relevant facts were not independently established by
us, relied, to the extent we deemed such reliance proper, upon certificates of
public officials and certificates, telegrams and other written or telephoned
statements of officers of the parties referred to herein.
Based on the foregoing, it is our opinion that:
1. With respect to that portion, if any, of the Aircraft and
the other property included in the Lessor's Estate as may not be covered by the
recording system established by the FAA pursuant to Section 44107 of the
Transportation Code, no filing or recording of any document or other action was
or is necessary in order to establish the Owner Trustee's title thereto and
interest therein as against Federal Express and any third parties.
2. Subject to execution and delivery of the Lease Supplement
and the Indenture and Security Agreement Supplement for the Aircraft and to the
registration of the Aircraft with the FAA in the name of the Owner Trustee, the
Lease, as supplemented, will create a valid leasehold interest in the Aircraft,
the entitlement thereof to the benefits of recordation under the Transportation
Code being subject to the due and timely filing and, where appropriate,
recording of (A) AVSA's FAA ▇▇▇▇ of Sale, (B) the Trust Agreement, (C) the
Lease (with the Lease Supplement covering the Aircraft, the Indenture and the
Indenture and Security Agreement Supplement covering the Aircraft attached as
exhibits) and (D) the Indenture (with the Indenture and Security Agreement
Supplement covering the Aircraft attached as an exhibit), pursuant to the
Transportation Code, and assuming that at the time of such filing no other
documents relating to the Aircraft have been filed pursuant to the
Transportation Code.
3. Assuming (i) the due authorization, execution and
delivery of the Operative Agreements by each of the parties to each such
document (other than Federal Express), (ii) each such party has full power and
legal right to enter into and perform its respective obligations under the
Operative Agreements, (iii) that the execution, delivery and performance of
each of the Operative Agreements by each of the parties thereto will not
violate the respective parties' constituent documents, (iv) the due
authorization, execution, issuance and delivery by the Owner Trustee, and the
due authentication by the Indenture Trustee, of the Certificates issued under
the Indenture in accordance with the terms of the Indenture, and (v) that the
form of each Operative Agreement is in compliance with all applicable laws and
governmental rules and regulations (other than the laws of the United States
and the State of New York), then: (A) to the extent governed by New York law,
each Operative Agreement in form constitutes a legal, valid and binding
agreement of each party thereto enforceable against each such party in
accordance with its terms; (B) the Indenture creates, for the benefit of the
Holders, the security interest in the Trust Indenture Estate that it purports
to create; (C) the Certificates are legal, valid and binding obligations of the
Owner Trustee enforceable against the Owner Trustee in accordance with their
terms and the terms of the Indenture and are entitled to the benefits of the
Indenture, including the benefit of the security interest created thereby; and
(D) the beneficial interest of the Owner Participant under the Trust Agreement
in and to the properties which are part of the Trust Indenture Estate is
subject, to the extent provided in the Indenture, as supplemented by the
Indenture and Security Agreement Supplement, to the Lien of the Indenture in
favor of the Holders. The opinions set forth in this paragraph 3 are subject
to the due filing and, where appropriate, recording with the FAA of the
documents referred to in paragraph 2 above.
4. (a) Each of the Operative Agreements to which Federal
Express is a party has been duly authorized, executed and delivered by Federal
Express.
(b) The execution, delivery and performance by Federal Express
of each of the Operative Agreements to which Federal Express is a party do not
violate, and fully comply with, any laws and governmental rules and regulations
of the State of New York that may be applicable to Federal Express. The
opinion set forth in this paragraph 4(b) is rendered without regard to the
taking of any action or the conduct of any other business by Federal Express in
the State of New York other than the transactions contemplated by the Operative
Agreements.
5. The execution, delivery and performance of the Operative
Agreements (other than the Certificates) by the Owner Trustee in its individual
or trust capacity, as the case may be, and the issuance, execution, delivery
and performance of the Certificates by the Owner Trustee in its trust capacity
do not violate, and fully comply with, any laws and governmental rules and
regulations of the State of New York that may be applicable to the Owner
Trustee in its individual or trust capacity, as the case may be. The opinion
set forth in this paragraph 5 is rendered without regard to the effect, if any,
on such issuance (in the case of the Certificates), execution, delivery or
performance, of the taking of any action, the conduct of any business or the
exercise of any other powers by State Street Bank and Trust Company of
Connecticut, National Association in its individual or trust capacity in the
State of New York not related to the transactions contemplated by the Operative
Agreements. We have assumed that State Street Bank and Trust Company of
Connecticut, National Association has made the filings necessary to comply with
Section 131.3 of the Banking Law of the State of New York, however we express
no opinion as to whether State Street Bank and Trust Company of Connecticut,
National Association is required to comply with said Section 131.3.
6. All the properties which are part of the Trust Indenture
Estate (including all right, title and interest of the Owner Trustee pledged
and mortgaged by it pursuant to the Indenture in and to the Aircraft and the
Lease) have been pledged and mortgaged with the Indenture Trustee as part of
the Trust Indenture Estate (subject to the due filing and, where appropriate,
recording of those documents referred to in paragraph 2 above and the financing
statements referred to in Section 4.01(f) of the Participation Agreement), and
the beneficial interest of the Owner Participant under the Trust Agreement in
and to such properties is subject, to the extent provided in the Indenture, to
the Lien of the Indenture in favor of the Holders of the Certificates issued
and to be issued under the Indenture.
7. The Indenture and Security Agreement Supplement, pursuant
to the Granting Clause of the Indenture, creates, as security for the
Certificates duly issued and to be issued under the Indenture, the first
priority security interest in the Aircraft it purports to create, the
perfection and rank thereof being subject to the registration with the FAA of
the Aircraft in the name of the Owner Trustee and the due filing and, where
appropriate, recording in accordance with the Transportation Code of the
documents referred to in paragraph 2 above. We express no opinion with respect
to the status of any security interest in any portion of the Aircraft which
does not constitute an "aircraft" or "aircraft engine", as defined in
paragraphs (6) and (7) of Section 40102(a) of the Transportation Code.
8. Except for (i) the filings and recordings referred to in
paragraph 2 above, (ii) the registration of the issuance and sale of the Pass
Through Certificates under the Securities Act and (iii) compliance with the
securities laws of each applicable state, neither the execution and delivery by
Federal Express of the Participation Agreement or any other Operative Agreement
to which it is a party, nor the consummation of any of the transactions by
Federal Express contemplated thereby, requires the consent or approval of, the
giving of notice to, or the registration with, or the taking of any other
action in respect of, the Department of Transportation, the FAA, the Securities
and Exchange Commission or any other Federal or New York State governmental
authority.
9. It is not necessary, in connection with the creation of
the beneficial interest of the Owner Participant in the Trust Indenture Estate
under the circumstances contemplated by the Participation Agreement to register
such beneficial interest under the Securities Act of 1933, as amended, or to
qualify the Trust Agreement or the Indenture under the Trust Indenture Act of
1939, as amended.
10. The Indenture Trustee on behalf of the holders of the
Certificates will be entitled to the benefits of Section 1110 of the United
States Bankruptcy Code with respect to the Aircraft in the event of a case
under Chapter 11 of the United States Bankruptcy Code in which Federal Express
is a debtor. We note that a recent decision by the United States District
Court for the District of Colorado in connection with the Western Pacific
Airlines, Inc. bankruptcy suggests that the protections of Section 1110 become
unavailable to the lessor or security interest holder once the bankruptcy
trustee or debtor-in-possession, within the 60 day period following the date of
commencement of the reorganization proceedings, agrees to perform the debtors
obligations that become due on or after such date and cures outstanding
defaults, with the result, among others, that the ability of a lessor or
security interest holder to exercise remedies based on a subsequent default
would be subject to the automatic stay. We believe that this holding is
erroneous because it is inconsistent with the overriding purpose of Section
1110 to protect lessors of, and creditors secured by, qualifying aircraft
against being stayed from exercising their rights while defaults under their
leases or financing agreements remain uncured.
The foregoing opinions are subject to the following
qualifications:
(a) We have relied, with your consent, without independent
investigation and verification and subject to the assumptions and
qualifications contained therein, upon the opinions of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ &
Peregrin and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Senior Vice President and General Counsel
of Federal Express to be delivered to you and dated the date hereof, for
purposes of the matters covered thereby.
(b) We are qualified to practice law in the State of New York,
and we do not purport to be experts on, or to express any opinion herein
concerning, any laws other than the laws of the State of New York, the
laws of the United States and the General Corporation Law of the State of
Delaware. We express no opinion as to any matters involving aviation law.
(c) The opinion contained in paragraph 3(A) above as to
enforceability is subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity which
may affect the remedies provided in the agreements referred to in said
opinions, which laws and principles, however, do not in our opinion make
the remedies provided in said agreements inadequate for the practical
realization of the benefits of the security intended to be provided
thereby.
(d) This opinion is rendered solely to you at Federal Express's
request in connection with the above matter. This opinion may not be
relied upon by you for any other purpose or relied upon by any other
Person without our prior written consent.
Very truly yours,
SCHEDULE A
----------
Lessee and Initial Owner Participant
------------------------------------
Federal Express Corporation
Owner Trustee
-------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
-------------------------------------------------------------
First Security Bank, National Association
Underwriters
------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
▇.▇. ▇▇▇▇▇▇ Securities Inc.
Liquidity Provider
------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
-----------------
Cessna Finance Corporation
Owner Participant Guarantor
---------------------------
Textron Financial Corporation
EXHIBIT A(2)(a)
[Letterhead of ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP]
August ___, 1998
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N677FE
--------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Cessna Finance Corporation, a
Kansas corporation (the "Owner Participant"), and Textron Financial
Corporation, a Delaware corporation (the "Owner Participant Guarantor"), in
connection with the transactions contemplated by:
1. the Participation Agreement (Federal Express Corporation
Trust No. N677FE) dated as of June 15, 1998, as amended and restated as of
August 1, 1998 (the "Participation Agreement") among Federal Express
Corporation, a Delaware corporation (therein, together with its successors
and permitted assigns, the "Lessee" and the "Initial Owner Participant"),
the Owner Participant, State Street Bank and Trust Company of Connecticut,
National Association, a national banking association, not in its
individual capacity, except as otherwise expressly stated in the
Participation Agreement, but solely as owner trustee under the Trust
Agreement (in such capacity as trustee, together with its successors and
permitted assigns, the "Owner Trustee"), and First Security Bank, National
Association, a national banking association, not in its individual
capacity, except as otherwise expressly stated in the Participation
Agreement, but solely as (a) indenture trustee under the Indenture, (b)
pass through trustee of three separate Pass Through Trusts and (c)
subordination agent (together with its successors and permitted assigns,
the "Indenture Trustee");
2. the Trust Agreement (Federal Express Corporation Trust No.
N677FE) dated as of June 15, 1998, as amended and restated as of August 1,
1998 (the "Trust Agreement") between the Owner Trustee and the Owner
Participant;
3. the Tax Indemnity Agreement (Federal Express Corporation
Trust No. N677FE) dated as of August 1, 1998 (the "Tax Indemnity
Agreement") between the Lessee and the Owner Participant;
4. the Ancillary Agreement I (Federal Express Corporation Trust
No. N677FE) dated the date hereof (the "Ancillary Agreement") among the
Owner Participant, the Lessee, the Owner Trustee and the Indenture
Trustee; and
5. the Owner Participant Guaranty (Federal Express Corporation
Trust No. N677FE) dated the date hereof (the "Owner Participant Guaranty")
by the Owner Participant Guarantor in favor of the Lessee, the Owner
Trustee, the Indenture Trustee and the Pass Through Trustee.
(collectively, the "Agreements").
The Participation Agreement, the Trust Agreement, the Tax
Indemnity Agreement and the Ancillary Agreement together are sometimes referred
to herein as the Owner Participant Agreements (the "Owner Participant
Agreements").
The Owner Participant has requested that we deliver this opinion
to you pursuant to the Participation Agreement and we understand and agree that
you may rely on the opinions expressed herein. Capitalized terms used herein
without definition shall have the meanings set forth in Schedule II to the
Participation Agreement.
As such counsel, we have examined the Agreements and have
examined and relied upon the representations and warranties as to factual
matters contained therein and upon the originals or copies, certified to our
satisfaction, of such records, documents and other instruments as we have
deemed necessary or advisable for the purposes of rendering this opinion.
In rendering the opinions expressed below, we have assumed that
each of the Agreements has been duly authorized, executed and delivered by each
of the parties thereto, that each such party is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization and has the requisite power and authority to
execute, deliver and perform each Agreement to which it is a party, and, except
as specifically addressed herein, that such execution and delivery did not, and
such performance will not, breach, conflict with, or constitute a violation of,
the laws or governmental rules or regulations of any jurisdiction.
Based on and in reliance upon the foregoing, we are of the
opinion that:
1. The Participation Agreement, the Tax Indemnity Agreement and
the Ancillary Agreement constitute the legal, valid and binding
obligations of the Owner Participant, enforceable against the Owner
Participant in accordance with their terms, except as the enforceability
thereof may be limited by (a) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally, (b) general principles of equity whether considered
in a proceeding at law or in equity, and (c) statutory requirements with
respect to good faith, fair dealing and commercial reasonableness and by
the effect of judicial decisions that have held that certain provisions
are unenforceable where their enforcement would violate the implied
covenant of good faith and fair dealing, or would be commercially
unreasonable, or where a default is not material.
2. No approval or consent of, notice to, or filing or
registration with any United States Federal or New York regulatory body is
necessary in connection with the execution, delivery and performance by
the Owner Participant or compliance by the Owner Participant with any of
the provisions of the Owner Participant Agreements, the failure of which
to obtain would have a material adverse effect upon the ability of the
Owner Participant to enter into and perform its obligations under the
Owner Participant Agreements, except for such filings as may be required
with the Federal Aviation Administration, as to which we express no
opinion.
3. No approval or consent of, notice to, or filing or
registration with any United States Federal or New York regulatory body is
necessary in connection with the execution, delivery and performance by
the Owner Participant Guarantor or compliance by the Owner Participant
Guarantor with any of the provisions of the Owner Participant Guaranty,
the failure of which to obtain would have a material adverse effect upon
the ability of the Owner Participant Guarantor to enter into and perform
its obligations under the Owner Participant Guaranty, except for such
filings as may be required with the Federal Aviation Administration, as to
which we express no opinion.
4. Neither the execution and delivery of the Owner Participant
Agreements by the Owner Participant, nor the consummation by the Owner
Participant of any of the transactions contemplated thereby, or the
performance of its obligations thereunder, violates any law, governmental
rule or regulation of the state of New York or the Federal government of
the United States of America or any governmental subdivision of either
thereof.
5. Neither the execution and delivery of the Owner Participant
Guaranty by the Owner Participant Guarantor, nor the consummation by the
Owner Participant Guarantor of any of the transactions contemplated
thereby, or the performance of its obligations thereunder, violates any
law, governmental rule or regulation of the state of New York or the
Federal government of the United States of America or any governmental
subdivision of either thereof.
No opinion is expressed herein concerning any laws other than the
laws of the state of New York and the laws of the United States of America. No
opinion is expressed herein as to the matters governed by (i) any Federal or
state securities laws, (ii) any Federal or state banking laws, (iii) any
Federal or state tax laws, or (iv) the Federal Aviation Act, as amended, or any
other laws, statutes, rules or regulations relating to the acquisition,
ownership, registration, leasing, use or sale of the Aircraft.
This opinion is being delivered pursuant to Section 4.01(d)(iii)
of the Participation Agreement for your sole benefit, and no other person or
entity shall be entitled to rely upon this opinion without our express written
consent. This opinion is limited to the matters stated herein, and no opinion
is implied or may be inferred beyond the matters expressly stated herein.
Very truly yours,
SCHEDULE A
----------
Lessee and Initial Owner Participant
------------------------------------
Federal Express Corporation
Owner Trustee
-------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
-------------------------------------------------------------
First Security Bank, National Association
Underwriters
------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
▇.▇. ▇▇▇▇▇▇ Securities Inc.
Liquidity Provider
------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
-----------------
Cessna Finance Corporation
Owner Participant Guarantor
---------------------------
Textron Financial Corporation
EXHIBIT A(2)(b)
[Letterhead of In-House Counsel of Owner Participant and
Owner Participant Guarantor]
August ___, 1998
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N677FE
--------------------------------------------
Ladies and Gentlemen:
I am Assistant General Counsel of Textron Financial Corporation,
and in that capacity have acted as counsel to Textron Financial Corporation, a
Delaware corporation (the "Owner Participant Guarantor") and to Cessna Finance
Corporation, a Kansas corporation and a wholly-owned subsidiary of the Owner
Participant Guarantor (the "Owner Participant") in connection with the
transactions contemplated by (1) the Participation Agreement (Federal Express
Corporation Trust No. N677FE) dated as of June 15, 1998, as amended and
restated as of August 1, 1998 (the "Participation Agreement") among Federal
Express Corporation, a Delaware corporation (therein, together with its
successor and permitted assigns, the "Lessee" and the "Initial Owner
Participant"), the Owner Participant, State Street Bank and Trust Company of
Connecticut, National Association, not in its individual capacity, except as
otherwise expressly stated in the Participation Agreement, but solely as owner
trustee under the Trust Agreement (in such capacity as trustee, together with
its successors and permitted assigns, the "Owner Trustee"), First Security
Bank, National Association, not in its individual capacity, except as otherwise
expressly stated in the Participation Agreement, but solely as (a) indenture
trustee under the Indenture (in such capacity as trustee together with its
successors and permitted assigns, the "Indenture Trustee"), (b) pass through
trustee of three separate Pass Through Trusts (in such capacity as trustee
together with its successors and permitted assigns, the "Pass Through Trustee")
and (c) subordination agent (in such capacity as trustee together with its
successors and permitted assignees, the "Subordination Agent"); (2) the Trust
Agreement (Federal Express Corporation Trust No. N677FE) dated as of June 15,
1998, as amended and restated as of August 1, 1998 (the "Trust Agreement")
between the Owner Trustee and the Owner Participant; (3) the Tax Indemnity
Agreement (Federal Express Corporation Trust No. N677FE) dated as of August 1,
1998 (the "Tax Indemnity Agreement") between the Owner Participant and the
Lessee; (4) the Ancillary Agreement I (Federal Express Corporation Trust No.
N677FE) dated August 1, 1998 (the "Ancillary Agreement") among the Owner
Participant, the Lessee, the Owner Trustee and the Indenture Trustee and (5)
the Owner Participant Guaranty dated the date hereof (the "Owner Participant
Guaranty"). Unless otherwise defined herein, all capitalized terms used herein
shall have the respective defined meanings set forth in Schedule II to the
Participation Agreement.
For purposes of the opinions expressed below, I have examined
executed counterparts or copies of the Participation Agreement, the Trust
Agreement, the Tax Indemnity Agreement, the Owner Participant Guaranty and the
Ancillary Agreement (collectively, the "Owner Participant Documents"). I have
further examined and relied upon the accuracy of original, certified,
conformed, photographic or telecopied copies of such records, agreements,
certificates and other documents as I have deemed necessary or appropriate to
enable me to render the opinions expressed herein. In arriving at the opinions
expressed below, I have assumed the genuineness of signatures on original
documents and the conformity to such original documents of all copies submitted
to me as certified, conformed, photographic or telecopied copies. As to any
opinion expressed below relating to the existence, qualification and good
standing of any corporation or other entity in any jurisdiction, my opinion
relies solely upon and is limited by those certificates and telegraphic and
telephonic confirmations given by public officials and assumes the same to have
been properly given and to be accurate. As to various questions of fact
material to my opinion, I have relied solely upon the accuracy of the
statements, representations and warranties made in the Owner Participant
Documents. I have assumed, except with regard to the Owner Participant and the
Owner Participant Guarantor, that each of the Owner Participant Documents has
been duly authorized, executed and delivered by the respective parties thereto
and that they constitute the legal, valid and binding obligations of each party
thereto enforceable against each such party in accordance with their respective
terms.
Based upon the foregoing and such other information as I have
deemed necessary for purposes hereof, and subject to the assumptions,
qualifications and reliances set forth herein, I am of the opinion that as of
the date hereof:
1. Each of the Owner Participant and the Owner Participant
Guarantor are corporations duly organized, validly existing and in good
standing under the laws of Kansas and Delaware, respectively, and has the
full corporate power, authority and legal right to enter into, perform and
to carry out the transactions contemplated by the Owner Participant
Documents.
2. Each of the Owner Participant and the Owner Participant
Guarantor has duly authorized, executed and delivered the Owner
Participant Documents to which each is a respective party.
3. Neither of the execution, delivery or performance by the
Owner Participant and the Owner Participant Guarantor, as the case may be,
of the Owner Participant Documents, nor the compliance with the terms and
provisions thereof by the Owner Participant and the Owner Participant
Guarantor, as the case may be, (a) requires the consent or approval of,
the giving of notice to, the registration with, the recording or filing of
any document with or the taking or any other action with respect to any
governmental authority of their respective states of incorporation or the
federal government of the United States of America; (b) violates any law,
governmental rule or regulation of their respective states of
incorporation or the United States of America or any governmental
authority or agency thereof; (c) results in the breach of any of the
terms, conditions or provisions of the Articles of Incorporation or
By-Laws of the Owner Participant or the Owner Participant Guarantor; (d)
to my knowledge violates or constitutes a default under any indenture,
mortgage, bank credit agreement, note or bond purchase agreement,
long-term lease, license or contract or any other agreement or instrument
to which the Owner Participant or the Owner Participant Guarantor are
bound or (e) to my knowledge requires any consent or approval of its
stockholders or any approval or consent of any trustee or holder of any
indebtedness or obligation of the Owner Participant or the Owner
Participant Guarantor.
4. To my knowledge, there are no actions, suits, investigations
or proceedings pending or, to the best of my knowledge without independent
investigation, threatened against or affecting the Owner Participant or
the Owner Participant Guarantor in any court or before any administrative
agency or arbitrator, which, if adversely determined, would adversely
affect the ability of the Owner Participant or the Owner Participant
Guarantor to perform their respective obligations under the Owner
Participant Documents, and I am not aware of any pending or threatened
actions or proceedings before any court, administrative agency or tribunal
involving the Owner Participant or the Owner Participant Guarantor in
connection with the transactions contemplated by the Owner Participant
Documents.
5. The Owner Participant Guaranty constitutes a legal, valid and
binding obligation of the Owner Participant Guarantor enforceable against
the Owner Participant Guarantor in accordance with its terms.
Whenever a statement herein is qualified by the phrase "to my
knowledge," it is intended to indicate that, during the course of my
representation of the Owner Participant and the Owner Participant Guarantor, as
the case may be, including making inquiries of and obtaining certificates from
officers of the Owner Participant and the Owner Participant Guarantor, as the
case may be, no information that would give me current actual knowledge with
respect to such statement has come to my attention. I have undertaken no
independent investigation to determine the accuracy of such statement and any
limited inquiry undertaken by me during the preparation of this opinion letter
should not be regarded as such an investigation.
I am a member of the bar of the State of Rhode Island and do not
purport to express any opinion herein concerning any laws other than the laws
of the State of Rhode Island, the corporate laws of the States of Delaware and
Kansas, the latter based on inquiries of Kansas counsel, and the federal laws
of the United States of America as in effect on the date hereof. Further, I
have made no investigation and express no opinion, as to any laws, statutes,
rules or regulations applicable due to the particular nature of the equipment
subject to the Lease, and I express no opinion as to any tax or securities laws
or laws relating to the environment or public health or safety.
This opinion is furnished by me as counsel to the Owner
Participant and the Owner Participant Guarantor for your sole benefit and for
the benefit of your successors and assigns and no other person or entity shall
rely on this opinion without my express written consent. Subject to the
preceding sentence, this opinion shall not be published or reproduced in any
manner or distributed or circulated to any person without my express written
consent. My opinion is limited to the matters stated herein, and no opinion is
implied or may be inferred beyond the matters expressly stated herein. This
opinion is given to you as of the date hereof, and I assume no obligation to
advise you of any changes that may hereafter be brought to my attention.
Very truly yours,
SCHEDULE A
----------
Lessee and Initial Owner Participant
------------------------------------
Federal Express Corporation
Owner Trustee
-------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
-------------------------------------------------------------
First Security Bank, National Association
Underwriters
------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
▇.▇. ▇▇▇▇▇▇ Securities Inc.
Liquidity Provider
------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
-----------------
Cessna Finance Corporation
Owner Participant Guarantor
---------------------------
Textron Financial Corporation
EXHIBIT A(3)
[Letterhead of Ray, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇]
August ___, 1998
To the Persons Listed in Schedule A Attached Hereto
Re: Federal Express Corporation Trust No. N677FE
--------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to First Security Bank, National
Association, a national banking association ("First Security"), in connection
with the Participation Agreement (Federal Express Corporation Trust No.
N677FE), dated as of June 15, 1998, as amended and restated as of August 1,
1998 (the "Participation Agreement"), among Federal Express Corporation, as
Lessee and Initial Owner Participant, Cessna Finance Corporation, as Owner
Participant, State Street Bank and Trust Company of Connecticut, National
Association, not in its individual capacity, except as otherwise stated, but
solely as Owner Trustee, and First Security, not in its individual capacity,
except as otherwise stated, but solely as Indenture Trustee, Pass Through
Trustee and Subordination Agent. Pursuant to the Participation Agreement, one
Airbus A300F4-605R aircraft bearing U.S. Registration No. N677FE (the
"Aircraft") is being financed. This opinion is furnished pursuant to Section
4.01(d)(iv) of the Participation Agreement. Capitalized terms used herein and
not otherwise defined are used as defined in the Participation Agreement,
except that references herein to any instrument shall mean such instrument as
in effect on the date hereof.
We have examined executed counterparts or copies otherwise
identified to our satisfaction of the following documents:
(a) The Participation Agreement;
(b) The Indenture;
(c) The Ancillary Agreement I; and
(d) The French Pledge Agreement.
(Each of the documents identified in paragraphs (a) through (d) above are
collectively referred to as the "Indenture Trustee Documents".)
We have also examined originals or copies of such other
documents, corporate records, certificates and other statements of governmental
officials and corporate officers and other representatives of the corporations
or entities referred to herein and such other instruments as we have deemed
necessary or appropriate for the purposes of this opinion. Moreover, as to
certain facts material to the opinions expressed herein, we have relied upon
representations and warranties contained in the Indenture Trustee Documents.
Based upon the foregoing and upon an examination of such
questions of law as we have considered necessary or appropriate, and subject to
the assumptions, exceptions and qualifications set forth below, we advise you
that, in our opinion:
1. First Security is a national banking association duly
organized and validly existing under the laws of the United States of
America holding a valid certificate to do business as a national banking
association, with banking and trust powers, and each of First Security and
the Indenture Trustee, as the case may be, has full corporate power,
authority and legal right to execute, deliver and perform each of the
Indenture Trustee Documents to which it is or is to be a party.
2. Each of First Security and the Indenture Trustee, as the case
may be, has duly authorized, executed and delivered each Indenture Trustee
Document to which it is a party; each such document constitutes a legal,
valid and binding obligation of the Indenture Trustee (and, to the extent
set forth in the respective Indenture Trustee Document, of First Security)
enforceable against the Indenture Trustee (and, to the extent set forth in
the respective Indenture Trustee Document, against First Security) in
accordance with its terms.
3. The Certificates issued and dated the Certificate Closing
Date have been duly authenticated and delivered by the Indenture Trustee
pursuant to the terms of the Indenture.
4. Neither the authorization, execution and delivery by the
Indenture Trustee or First Security, as the case may be, of the Indenture
Trustee Documents, nor the authentication and delivery by the Indenture
Trustee of the Certificates nor the fulfillment or compliance by the
Indenture Trustee or First Security with the respective terms and
provisions thereof nor the consummation of any of the transactions by the
Indenture Trustee or First Security, as the case may be, contemplated
thereby, requires the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of, any
court or administrative or governmental authority or agency of the State
of Utah or the United States of America governing the banking or trust
powers of First Security.
5. The execution, delivery and performance by the Indenture
Trustee or First Security, as the case may be, of each of the Indenture
Trustee Documents and the authentication and delivery of the Certificates
by the Indenture Trustee are not in violation of the charter or by-laws of
First Security or of any law, governmental rule, or regulation of the
State of Utah or the United States of America governing the banking or
trust powers of First Security or, to our knowledge, of any indenture,
mortgage, bank credit agreement, note or bond purchase agreement,
long-term lease, license or other agreement or instrument to which it is a
party or by which it is bound or, to our knowledge, of any judgment or
order of the State of Utah or the United States of America relating to the
banking or trust powers of First Security.
6. There are no fees, taxes or other governmental charges
payable by the Owner Trustee, the Indenture Trustee (except taxes imposed
on fees payable to First Security) or the Certificate Holders to the State
of Utah or any political subdivision thereof in connection with the
execution, delivery or performance of any of the Operative Agreements or
in connection with the issuance and acquisition of the Certificates by the
Certificate Holders or the beneficial interests of the Certificate Holders
in the Trust Indenture Estate solely because First Security (a) has its
principal place of business in the State of Utah, (b) performs (in its
individual capacity or as Indenture Trustee) any or all of its duties
under the Indenture Trustee Documents in the State of Utah, and (c)
engages in any activities unrelated to the transactions contemplated by
the Indenture Trustee Documents in the State of Utah. Neither the
Indenture Trustee nor the trust created under the Indenture will be
subject to any fee, tax or other governmental charge (except for taxes
imposed on fees payable to First Security) under the laws of the State of
Utah or any political subdivision thereof in existence on the date hereof,
on, based on or measured by, directly or indirectly, the gross receipts,
net income or value of the Trust Indenture Estate solely because First
Security (a) has its principal place of business in the State of Utah, (b)
performs (in its individual capacity or as Indenture Trustee) any or all
of its duties under the Indenture Trustee Documents in the State of Utah,
and (c) engages in any activities unrelated to the transactions
contemplated by the Indenture Trustee Documents in the State of Utah.
There is no fee, tax or other governmental charge (except for taxes
imposed on fees payable to First Security) under the laws of the State of
Utah or any political subdivision thereof in existence on the date hereof,
on, based on or measured by any payments under the Certificates by reason
of the creation of the trust under the Indenture solely because First
Security (a) has its principal place of business in the State of Utah, (b)
performs (in its individual capacity or as Indenture Trustee) any or all
of its duties under the Indenture Trustee Documents in the State of Utah,
and (c) engages in any activities unrelated to the transactions
contemplated by the Indenture Trustee Documents in the State of Utah. We
express no opinion as to whether or not any fees, taxes or other charges
are now or hereafter may be payable by the Owner Participant to the State
of Utah or any political subdivision thereof in connection with (a) the
execution, delivery or performance by any of the Indenture, the
Participation Agreement or any of the other Operative Agreements and (b)
the making by the Owner Participant of its investment in the Aircraft.
7. To our knowledge, there are no actions, suits, investigations
or proceedings pending or threatened against or affecting First Security
or the Indenture Trustee, as the case may be, or any of its properties in
any court or before any administrative agency or arbitrator, which, if
adversely determined, would materially adversely affect the ability of
First Security or the Indenture Trustee, as the case may be, to perform
its obligations under any of the Indenture Trustee Documents, and to our
knowledge, there are no pending or threatened actions or proceedings
before any court, administrative agency or tribunal involving First
Security or the Indenture Trustee, as the case may be, in connection with
the transactions contemplated by any of the Indenture Trustee Documents.
The foregoing opinions are subject to the following assumptions,
exceptions and qualifications:
A. We are admitted to practice law in the State of Utah and we
do not hold ourselves out as being experts on the laws of any other
jurisdiction. The foregoing opinions are limited to the laws of the State of
Utah and the federal laws of the United States of America governing the banking
and trust powers of First Security. In addition, we express no opinion with
respect to (i) federal securities laws, including the Securities Act of 1933,
as amended, the Securities Exchange Act of 1934, as amended, and the Trust
Indenture Act of 1939, as amended, (ii) Title 49 of the United States Code
Annotated (previously known as the Federal Aviation Act of 1958), as
amended and (iii) state securities or blue sky laws. Insofar as the foregoing
opinions relate to the validity and enforceability in the State of Utah of the
Certificates and the other Indenture Trustee Documents expressed to be governed
by the laws of the State of New York, we have assumed that the laws of New York
are identical to the laws of Utah in all material respects, and that the
Certificates and such Indenture Trustee Documents constitute legal, valid,
binding and enforceable documents or instruments under such laws (as to which
we express no opinion).
B. The foregoing opinions regarding enforceability of any
document or instrument, are subject to (i) applicable bankruptcy, insolvency,
moratorium, reorganization, receivership and similar laws affecting the rights
and remedies of creditors generally, and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
C. We have assumed the due authorization, execution and delivery
by each of the parties thereto, other than First Security and the Indenture
Trustee, of the Indenture Trustee Documents to which each is a party and that
each of such parties has the full power, authority and legal right to execute
and deliver each such document.
D. We have assumed that all signatures (other than those of the
Indenture Trustee or First Security) on documents and instruments examined by
us are genuine, that all documents and instruments submitted to us as originals
are authentic, and that all documents and instruments submitted to us as copies
conform with the originals, which facts we have not independently verified.
E. We have assumed that the Participation Agreement and the
transactions contemplated thereby are not within the prohibitions of Section
406 of the Employee Retirement Income Security Act of 1974.
F. We do not purport to be experts in respect of, or express any
opinion concerning laws, rules or regulations applicable to the particular
nature of the equipment involved in these transactions.
G. We have made no investigation of, and we express no opinion
concerning, the nature of the title to any part of the equipment involved in
these transactions or the priority of any mortgage or security interest.
This opinion is rendered solely for your benefit and may not be
relied upon by any other person or entity for any purpose without our prior
written consent.
Very truly yours,
SCHEDULE A
----------
Lessee and Initial Owner Participant
------------------------------------
Federal Express Corporation
Owner Trustee
-------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
-------------------------------------------------------------
First Security Bank, National Association
Underwriters
------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
▇.▇. ▇▇▇▇▇▇ Securities Inc.
Liquidity Provider
------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
-----------------
Cessna Finance Corporation
Owner Participant Guarantor
---------------------------
Textron Financial Corporation
EXHIBIT A(4)
[Letterhead of ▇▇▇▇▇▇▇ ▇▇▇▇ LLP]
August ___, 1998
To Each of the Parties Listed on Schedule A Hereto
Re: Federal Express Corporation Trust No. N677FE
--------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to State Street Bank and Trust Company
of Connecticut, National Association, a national banking association in its
individual capacity (State Street) and its capacity as Owner Trustee (the Owner
Trustee) under the Trust Agreement (Federal Express Corporation Trust No.
N677FE) dated as of June 15, 1998, as amended and restated as of August 1, 1998
between State Street and Cessna Finance Corporation, as Owner Participant
("Owner Participant") (the "Trust Agreement") in connection with the
transactions contemplated by that certain Participation Agreement (Federal
Express Corporation Trust No. N677FE) dated as of June 15, 1998, as amended and
restated as of August 1, 1998 (the "Participation Agreement") by and among
Federal Express Corporation, as Lessee (the Lessee) and the Initial Owner
Participant; the Owner Participant; the Owner Trustee; and First Security Bank,
National Association, in its individual capacity and as Indenture Trustee (the
"Indenture Trustee"), Pass Through Trustee and Subordination Agent. Except as
otherwise defined herein, all capitalized terms used herein shall have the
respective meanings set forth in, or by reference to, the Participation
Agreement.
The Owner Trustee has requested that we deliver this opinion to
you in accordance with Section 4.01(d)(v) of the Participation Agreement.
Our representation of State Street has been as special counsel
for the purposes stated above. As to all matters of fact (including factual
conclusions and characterizations and descriptions of purpose, intention or
other state of mind), we have relied entirely upon (i) the representations of
the parties set forth in the Operative Agreements and (ii) the certificates
delivered to us by the management of State Street and have assumed, without
independent inquiry, the accuracy of those representations and certificates.
We have examined each of the Operative Agreements to which State
Street or the Owner Trustee, as applicable, is a party (the Owner Trustee
Documents), the Certificate of the Comptroller of the Currency relating to
State Street and originals, or copies certified or otherwise identified to our
satisfaction, of such other corporate records, documents, certificates and
other instruments as we have deemed necessary or advisable for the purposes of
rendering this opinion.
We have assumed the genuineness of all signatures (other than
those on behalf of State Street and the Owner Trustee), the conformity to the
originals of all documents reviewed by us as copies, the authenticity and
completeness of all original documents reviewed by us in original or copy form
and the legal competence of each individual executing any document (other than
on behalf of State Street and the Owner Trustee).
When an opinion set forth below is given to the best of our
knowledge, or to our knowledge, or with reference to matters of which we are
aware or which are known to us, or with another similar qualification, the
relevant knowledge or awareness is limited to the actual knowledge or awareness
of the individual lawyer in the firm that signed this opinion, the individual
lawyers in the firm who have participated directly in the specific transactions
to which this opinion relates or in the preparation of this opinion and the
partner of the firm responsible for State Street corporate trust matters, and
without any special or additional investigation undertaken for the purposes of
this opinion.
Each opinion set forth below relating to the enforceability of
any agreement or instrument against State Street, the Owner Trustee or the
Owner Participant, as applicable, is subject to the following general
qualifications:
(i) as to any agreement to which State Street or the
Owner Trustee, as applicable, is a party, we assume that such agreement is
the legal, valid and binding obligation of each other party thereto
(except, with respect to the Trust Agreement, the Owner Participant);
(ii) except as otherwise set forth in our opinions in
paragraphs 14 and 15 below, the enforceability of any obligation of State
Street, the Owner Trustee and the Owner Participant, may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium,
marshaling or other similar laws and rules of law affecting the
enforcement generally of creditors rights and remedies (including such as
may deny giving effect to waivers of debtors' or guarantors' rights);
(iii) no opinion is given herein as to the
enforceability of any particular provision of any of the Owner Trustee
Documents relating to remedies after default or as to the availability of
any specific or equitable relief of any kind. However, we are of the
opinion that, subject to the other limitations and qualifications
contained in this opinion, the remedies provided in the Owner Trustee
Documents, taken as a whole, are adequate for the realization of the
principal benefits or security of said agreements (except for the economic
consequences of procedural or other delay); and
(iv) the enforcement of any rights and the
availability of any specific or equitable relief of any kind may in all
cases be subject to an implied duty of good faith and to general
principles of equity (regardless of whether such enforceability or relief
is considered in a proceeding at law or in equity) and, as to any of your
rights to collateral security, will be subject to a duty to act in a
commercially reasonable manner.
Subject to the limitations set forth herein, we have made such
examination of law as we have deemed necessary for the purposes of this
opinion. The opinions expressed herein are limited solely to the internal
substantive laws of the State of Connecticut and the Federal laws of the United
States of America. No opinion is expressed herein as to the application or
effect of federal securities laws or as to the securities or so-called "Blue
Sky" laws of any state or other jurisdiction. In addition, no opinion is
expressed as to matters governed by the Transportation Code, or by any other
law, statute, rule or regulation of the United States relating to the
acquisition, ownership, registration, use, operation, maintenance, repair,
replacement or sale of or the nature of the Aircraft, Airframe or the Engines.
Except as set forth in paragraph 12 below, which opinion is based
solely upon our review of Uniform Commercial Code search reports conducted with
the Secretary of the State of the State of Connecticut, we have made no
examination of, and no opinion is given herein as to the Owner Trustee's or
Owner Participant's title to or other ownership rights in, or the existence of
any liens, charges or encumbrances on, or adverse claims against, any of the
Indenture Estate. Other than as expressed in paragraph 5 below, we express no
opinion as to the creation, attachment, perfection or priority of any mortgage,
security interest or lien in any of the Indenture Estate. Nor do we express
any opinion as to the attachment or perfection of any security interest in any
of the Trust Estate excluded from, or in which the attachment or perfection of
a security interest is not governed by Article 9 of the Uniform Commercial Code
of the State of Connecticut (the "UCC"). In addition, there exist certain
limitations, resulting from the operation of Section 9-306 of the UCC, on the
perfection of the security interests in proceeds created by the Operative
Agreements.
Article 9 of the UCC requires the filing of continuation
statements within the period of six months prior to the expiration of five
years from the date of original filing of UCC financing statements to maintain
effectiveness of such financing statements and perfection of security
interests. Further, additional financing statements may be required to be
filed to maintain the perfection of a security interest if any grantor thereof
changes its name or location or the location of collateral, or makes certain
other changes, as provided in the UCC.
With your permission and without investigation, with respect to
paragraphs 2, 3 and 4 below in connection with our opinion relating to the
legality, validity and binding effect of the documents there referred to, to
the extent that the laws of the State of Connecticut do not govern such
documents, we have assumed that the laws of the jurisdictions whose laws govern
such documents are not materially different from the internal substantive laws
of the State of Connecticut.
In rendering our opinion in paragraphs 14 and 15 below, we have
assumed that the Owner Participant acquired its interest in the Trust Estate
for fair consideration and in good faith without any intention to hinder,
defraud or delay the Owner Participant's creditors.
This opinion is rendered solely for the benefit of those
institutions listed on Schedule A hereto and their respective successors and
assigns in connection with the transactions contemplated by the Operative
Agreements and may not be used or relied upon by any other person or for any
other purpose.
Based upon the foregoing, we are of the opinion that:
1. State Street is a national banking association duly
organized, validly existing and in good standing with the Comptroller of
the Currency under the laws of the United States of America, is a "citizen
of the United States" within the meaning of Section 40102(a)(15) of Title
49 of the United States Code, as amended and has or had, on the date of
execution thereof, full corporate power, authority and legal right to
execute, deliver and perform its obligations under the Trust Agreement
and, as Owner Trustee under the Trust Agreement, to execute, deliver and
perform its obligations under the other Owner Trustee Documents and to
issue, execute, deliver and perform its obligations under the
Certificates.
2. The Owner Trustee has the power and authority to accept title
to and delivery of the Aircraft, and a representative of the Owner Trustee
has been duly authorized to accept title to and delivery of the Aircraft
on behalf of the Owner Trustee.
3. State Street has or had, on the date of execution thereof,
duly authorized, executed, and delivered the Participation Agreement and
the Trust Agreement and the Participation Agreement and the Trust
Agreement constitute the legal, valid and binding obligation of State
Street, enforceable against it in its individual capacity in accordance
with the terms thereof.
4. The Owner Trustee is duly authorized under the Trust
Agreement to execute, deliver and perform each of the Owner Trustee
Documents and each such Owner Trustee Document constitutes a legal, valid
and binding obligation of the Owner Trustee enforceable against the Owner
Trustee in accordance with its terms. The Certificates have been duly
issued, executed and delivered by the Owner Trustee, pursuant to
authorization contained in the Trust Agreement, and assuming due
authentication thereof by the Indenture Trustee, constitutes the legal,
valid and binding obligation of the Owner Trustee enforceable against the
Owner Trustee in accordance with its terms and the terms of the Indenture;
and the Certificates are entitled to the benefits and security afforded by
the Indenture in accordance with its terms and the terms of the Indenture.
5. Assuming the due authorization, execution and delivery of the
Trust Agreement by the Owner Participant and that the Owner Participant
has the requisite corporate power and authority to enter into and perform
its obligations under the Trust Agreement, said Trust Agreement
constitutes the legal, valid and binding obligation of the Owner
Participant, enforceable against the Owner Participant in accordance with
the terms thereof.
6. To the extent that the UCC is applicable, except for the
Indenture Trustee's taking possession of all monies and securities
(including instruments) constituting part of the Trust Indenture Estate,
no action, including the filing or recording of any document, is necessary
(i) to create under the UCC the security interest in the Trust Indenture
Estate (including the grant and assignment unto the Indenture Trustee of
the security interest in all estate, right, title and interest of the
Owner Trustee in, to and under the Lease and the Participation Agreement)
which the Indenture by its terms purports to create in favor of the
Indenture Trustee, and (ii) to perfect in the State of Connecticut such
security interest, except for the filing of a UCC financing statement
complying with the formal requisites of Section 9- 402 of the UCC in the
office of the Division of Corporations and Commercial Code of the State of
Connecticut with respect to the security interest, which filing has been
duly effected, and the filing of continuation statements with respect
thereto required to be filed at periodic intervals under the UCC.
7. The Trust Agreement duly creates a legal and valid trust
under Connecticut law; the trust created by the Trust Agreement exists for
the benefit of the Owner Participant as provided therein and creates for
the benefit of the Owner Participant the interest in the Trust Estate
which the Trust Agreement by its terms purports to create, subject however
to the provisions of, and the Liens created by, the Indenture and the
Lease.
8. Neither the execution, delivery or performance by the Owner
Trustee, in its individual capacity or as Owner Trustee, as the case may
be, of the Certificates or the Owner Trustee Documents, the consummation
by the Owner Trustee, in its individual capacity or as Owner Trustee, as
the case may be, of any of the transactions contemplated thereby nor the
compliance by the Owner Trustee, in its individual capacity or as Owner
Trustee, as the case may be, with any of the terms and provisions thereof
(i) requires any approval of its stockholders, any consent or approval of
or the giving of notice to any trustees or holders of any indebtedness or
obligations of it known to us, or (ii) violates its charter documents or
by-laws, or contravenes or will contravene any provision of, or
constitutes a default under, or results in any breach of, or results in
the creation of any Lien (other than as permitted under the Operative
Agreements) upon property under, any indenture, mortgage, chattel
mortgage, deed of trust, conditional sales contract, bank loan or credit
agreement, license or other agreement or instrument, in each case, known
to us to which it is a party or by which it is bound or contravenes any
Connecticut or United States applicable law governing the banking or trust
powers of the Owner Trustee, or any judgment or order in each case, known
to us applicable to or binding on it.
9. To our knowledge, there are no proceedings or actions pending
or threatened against or affecting the Owner Trustee, in its individual
capacity or as Owner Trustee, before any governmental authority which,
individually or in the aggregate, if adversely determined, would
materially and adversely affect the ability of the Owner Trustee, in its
individual capacity or as Owner Trustee, as the case may be, to enter into
or to perform its obligations under the Owner Trustee Documents or the
Certificates.
10. No consent, approval, order or authorization of, giving of
notice to, or registration with, or taking of any other action in respect
of, any Connecticut or United States governmental authority regulating the
banking or trust powers of the Owner Trustee, in its individual capacity,
is required for the execution and delivery of, or the carrying out by, the
Owner Trustee in its individual capacity or as Owner Trustee, as the case
may be, of any of the transactions contemplated by the Owner Trustee
Documents, other than any such consent, approval, order, authorization,
registration, notice or action as has been duly obtained, given or taken.
11. There are no fees, taxes or other charges payable by the
Owner Trustee, the Trust Estate or the trust created by the Trust
Agreement imposed by the State of Connecticut or any political subdivision
or taxing authority thereof in connection with the execution, delivery and
performance by State Street, individually or as Owner Trustee, of the
Owner Trustee Documents (other than franchise or other taxes based on or
measured by any fees or compensation received by State Street, acting as
the Owner Trustee, for services rendered in connection with the
transactions contemplated by the Operative Agreements) and, assuming that
the trust created by the Trust Agreement will not be taxable as a
corporation, but, rather, will be characterized as a grantor trust under
subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986, as
amended, (i) such trust will not be subject to any fees, taxes or other
charges imposed by the State of Connecticut or any political subdivision
thereof based on income, receipts, value or otherwise, (ii) Holders that
are not residents of or otherwise subject to tax in Connecticut will not
be subject to any taxes imposed by the State of Connecticut or any
political subdivision thereof as a result of purchasing, holding
(including receiving payments with respect to) or selling a Certificate
and (iii) assuming the Owner Participant is not a Connecticut resident or
otherwise subject to tax in Connecticut and further assuming that the
assets of the trust created by the Trust Agreement are not deemed to be
located in Connecticut, the Owner Participant will not be subject to any
taxes imposed by the State of Connecticut or any political subdivision
thereof solely as a result of being the beneficial owner of the trust
created by the Trust Agreement.
12. The Owner Trustee has received such title to the Aircraft as
has been conveyed to it subject to the rights of the Owner Trustee and the
Lessee under the Lease and the security interest created pursuant to the
Indenture and the Lease; and to our knowledge, there exist no liens or
encumbrances affecting the right, title and interest of the Owner Trustee
in and to the Trust Estate resulting from claims against State Street not
related to the ownership of the Trust Estate or any other transaction
contemplated by the Operative Agreements.
13. All the properties which are part of the Indenture Estate
(including all right, title and interest of the Owner Trustee pledged and
mortgaged by it pursuant to the Indenture) have been pledged and mortgaged
with the Indenture Trustee as part of the Indenture Estate, and the
beneficial interest of the Owner Participant under the Trust Agreement in
and to such properties is subject, to the extent provided in the
Indenture, to the liens of the Indenture in favor of the Holders from time
to time of the Certificates.
14. Neither a Connecticut court nor a Federal court applying
federal law or Connecticut law, if properly presented with the issue and
after having properly considered such issue, would permit the Owner
Participant to terminate the Trust Agreement, except as otherwise provided
therein, until the Lien of the Indenture on the Indenture Estate has been
released and until payment in full of the principal of, and premium, if
any, and interest on, the Certificates and all other sums due the Holders
of the Certificates have been made.
15. Under the laws of the State of Connecticut, as long as the
Trust Agreement has not been terminated in accordance with its terms,
creditors of any person that is an Owner Participant, holders of a lien
against the assets of any such person and representatives of creditors of
any such person, such as trustees, receivers or liquidators (whether or
not any insolvency proceeding has been commenced) (collectively the
"Creditors") may acquire legal, valid and enforceable claims and liens, as
to the Trust Estate, only against the beneficial interest of such person
in the Trust Estate, and do not have, and may not through the enforcement
of such Creditors' rights acquire, any other legal, valid, and enforceable
claim or lien against the Trust Estate.
Very truly yours,
SCHEDULE A
----------
Lessee and Initial Owner Participant
------------------------------------
Federal Express Corporation
Owner Trustee
-------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
-------------------------------------------------------------
First Security Bank, National Association
Underwriters
------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
▇.▇. ▇▇▇▇▇▇ Securities Inc.
Liquidity Provider
------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
-----------------
Cessna Finance Corporation
Owner Participant Guarantor
---------------------------
Textron Financial Corporation
EXHIBIT A(5)
[Letterhead of Ray, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇]
August ___, 1998
To the Persons Listed in Schedule A Attached Hereto
Re: Federal Express Corporation Trust No. N677FE
--------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to First Security Bank, National
Association, a national banking association ("First Security"), in connection
with the Pass Through Trust Agreement dated as of May 1, 1997 (the "Pass
Through Trust Agreement"), as supplemented by the Series Supplements dated July
7, 1998 between Federal Express Corporation and First Security, not in its
individual capacity, except as otherwise stated, but solely as Pass Through
Trustee, designated as Series Supplement 1998-1-A, 1998-1-B and 1998-1-C,
respectively (the "Series Supplements") and the Participation Agreement
(Federal Express Corporation Trust No. N677FE), dated as of June 15, 1998, as
amended and restated as of August 1, 1998 (the "Participation Agreement"),
among Federal Express Corporation, as Lessee and Initial Owner Participant,
Cessna Finance Corporation, as Owner Participant, State Street Bank and Trust
Company of Connecticut, National Association, not in its individual capacity,
except as otherwise stated, but solely as Owner Trustee, and First Security,
not in its individual capacity, except as otherwise stated, but solely as
Indenture Trustee, Pass Through Trustee and Subordination Agent. Pursuant to
the Participation Agreement, one Airbus A300F4-605R aircraft bearing U.S.
Registration No. N677FE (the "Aircraft") is being financed. This opinion is
furnished pursuant to Section 4.01(d)(vi) of the Participation Agreement.
Capitalized terms used herein and not otherwise defined are used as defined in
the Participation Agreement, except that references herein to any instrument
shall mean such instrument as in effect on the date hereof.
We have examined executed counterparts or copies otherwise
identified to our satisfaction of the following documents:
(a) The Pass Through Trust Agreement;
(b) The Series Supplements;
(c) The Pass Through Certificates;
(d) The Participation Agreement;
(e) The Intercreditor Agreement; and
(f) Each Liquidity Facility.
(Each of the documents identified in paragraphs (a) through (e) are being
collectively referred to as the "Pass Through Trustee Documents" and each of
the documents identified in paragraphs (d) through (f) are being collectively
referred to as the "Subordination Agent Documents".)
We have also examined originals or copies of such other
documents, corporate records, certificates and other statements of governmental
officials and corporate officers and other representatives of the corporations
or entities referred to herein and such other instruments as we have deemed
necessary or appropriate for the purposes of this opinion. Moreover, as to
certain facts material to the opinions expressed herein, we have relied upon
representations and warranties contained in the Pass Through Trustee Documents
or the Subordination Agent Documents, as the case may be.
Based upon the foregoing and upon an examination of such
questions of law as we have considered necessary or appropriate, and subject to
the assumptions, exceptions and qualifications set forth below, we advise you
that, in our opinion:
With respect to the opinions set forth in paragraph 8 below, with
your permission we have relied upon, and this opinion is limited by, the
assumptions set forth in the discussion entitled "Certain Utah Taxes" in the
Prospectus Supplement to the Prospectus forming part of Registration Number No.
333-49411 (the "Registration Statement") for the registration of the Pass
Through Certificates with the Securities and Exchange Commission. We express
no opinion as to the correctness of the foregoing assumptions and we have
conducted no independent investigation in this regard.
1. First Security is a national banking association duly
organized and validly existing under the laws of the United States of
America holding a valid certificate to do business as a national banking
association, with banking and trust powers.
2. Each of First Security, the Pass Through Trustee and the
Subordination Agent, as the case may be, has or had, on the date of
execution thereof, full corporate power, authority and legal right to
execute, deliver and perform each of the Pass Through Trustee Documents
and the Subordination Agent Documents, as the case may be, and to
authenticate the Pass Through Certificates delivered on the Certificate
Closing Date.
3. Each of First Security, the Pass Through Trustee and the
Subordination Agent has duly authorized, executed and delivered each Pass
Through Trustee Document or Subordination Agent Document, as the case may
be; each such document constitutes a legal, valid and binding obligation
of the Pass Through Trustee or the Subordination Agent, as the case may be
(and, to the extent set forth in the respective Pass Through Trustee
Document or Subordination Agent Document, of First Security) enforceable
against the Pass Through Trustee or the Subordination Agent, as the case
may be (and, to the extent set forth in the respective Pass Through
Trustee Document or Subordination Agent Document, against First Security)
in accordance with its terms.
4. The Pass Through Certificates issued and dated the
Certificate Closing Date have been duly authorized and validly executed,
issued, delivered and authenticated by the Pass Through Trustee pursuant
to the Pass Through Trust Agreement and the Series Supplements; and the
Pass Through Certificates acquired by the Underwriters under the
Underwriting Agreement are enforceable against the Pass Through Trustee
and are entitled to the benefits of the related Pass Through Trust
Agreement and the related Series Supplements.
5. No order, license, consent, permit, authorization or approval
of or exemption by, and no notice to or filing with, or the taking of any
other action in respect of, any Utah or Federal governmental authority
governing the banking or trust powers of First Security, the Pass Through
Trustee or the Subordination Agent, and no filing, recording, publication
or registration in any public office is required under Utah or Federal law
pertaining to its banking or trust powers for the due execution, delivery
or performance by First Security, individually or as Pass Through Trustee
or Subordination Agent, as the case may be, of the Pass Through Trustee
Documents (other than the Pass Through Trust Agreement) or the
Subordination Agent Documents, as the case may be, and of the certificate
of authentication, as Pass Through Trustee, on the Pass Through
Certificates, or for the legality, validity, binding effect or
enforceability thereof against First Security, the Pass Through Trustee or
the Subordination Agent, as the case may be.
6. The execution, delivery and performance by the Pass Through
Trustee or First Security, as the case may be, of each of the Pass Through
Documents and the Subordination Agent or First Security, as the case may
be, of each of the Subordination Agent Documents, and the issuance,
execution, delivery and performance of the Pass Through Certificates by
the Pass Through Trustee are not or were not, on the date of execution
thereof, in violation of the charter or by-laws of First Security or of
any law, governmental rule, or regulation of the State of Utah or the
United States of America governing the banking or trust powers of First
Security or, to our knowledge, of any indenture, mortgage, bank credit
agreement, note or bond purchase agreement, long-term lease, license or
other agreement or instrument to which it is a party or by which it is
bound or, to our knowledge, of any judgment or order of the State of Utah
or the United States of America relating to the banking or trust powers of
First Security.
7. To our knowledge, there are no actions, suits, investigations
or proceedings pending or threatened against or affecting First Security,
the Pass Through Trustee or the Subordination Agent or any of its
properties in any court or before any administrative agency or arbitrator,
which, if adversely determined, would materially adversely affect the
ability of First Security, the Pass Through Trustee or the Subordination
Agent, as the case may be, to perform its obligations under any of the
Pass Through Trustee Documents or the Subordination Agent Documents, as
the case may be, and to our knowledge, there are no pending or threatened
actions or proceedings before any court, administrative agency or tribunal
involving First Security, the Pass Through Trustee or the Subordination
Agent in connection with the transactions contemplated by any of the Pass
Through Trustee Documents or the Subordination Agent Documents, as the
case may be.
8. Neither the trusts created by the Pass Through Trust
Agreement and the Series Supplements nor the Pass Through Trustee, in its
individual or trust capacity, as the case may be, nor the Owner
Participant, nor the Owner Trustee, nor their respective Affiliates,
successors or assigns, will be subject to any tax (including, without
limitation, net or gross income, tangible or intangible property, net
worth, capital, franchise or doing business tax), governmental fee or
other similar charge under the laws of the State of Utah or any political
subdivision thereof (other than taxes imposed on the fees received by
First Security for acting as Pass Through Trustee under the Series
Supplements). Certificate holders who are not residents of or otherwise
subject to tax in Utah will not be subject to any tax (including, without
limitation, net or gross income, tangible or intangible property, net
worth, capital, franchise or doing business tax), governmental fee or
other similar charge under the laws of the State of Utah or any political
subdivision thereof as a result of purchasing, owning (including receiving
payments with respect to) or selling a Pass Through Certificate. There
are no applicable taxes under the laws of the State of Utah or any
political subdivision thereof upon or with respect to (a) the
construction, mortgaging, financing, refinancing, purchase, acquisition,
acceptance, rejection, delivery, nondelivery, transport, location,
ownership, insurance, control, assembly, possession, repossession,
operation, use, condition, maintenance, repair, sale, return, abandonment,
replacement, preparation, installation, storage, redelivery, manufacture,
leasing, subleasing, modification, rebuilding, importation, transfer of
title, transfer of registration, exportation or other application or
disposition of the Aircraft or any interest in any thereof, (b) payments
of Rent or other receipts, income or earnings arising therefrom or
received with respect to the Aircraft or any interest in any thereof or
payable pursuant to the Lease, (c) any amount paid or payable pursuant to
any Operative Agreements, (d) the Aircraft or any interest therein or the
applicability of the Lease to the Aircraft or any interest in any thereof,
(e) any or all of the Operative Agreements, any or all of the Pass Through
Certificates or any interest in any or all thereof or the offering,
registration, reregistration, issuance, acquisition, modification,
assumption, reissuance, refinancing or refunding of any or all thereof,
and any other documents contemplated thereby and amendments or supplements
hereto and thereto, (f) the payment of the principal of, or interest or
premium on, or other amounts payable with respect to, any or all of the
Pass Through Certificates, whether as originally issued or pursuant to any
refinancing, refunding, assumption, modification or reissuance, or any
other obligation evidencing any loan in replacement of the loan evidenced
by any or all of the Pass Through Certificates, or (g) otherwise with
respect to or in connection with the transactions contemplated by the Pass
Through Trust Agreement, the Series Supplements, the Pass Through
Certificates and the Operative Agreements, which would not have been
imposed if the Pass Through Trustee had not had its principal place of
business in, had not performed (either in its individual capacity or as
Pass Through Trustee) any or all of its administrative duties under the
Pass Through Trust Agreement, the Series Supplements, the Pass Through
Certificates and the Operative Agreements in, and had not engaged in any
activities unrelated to the transactions contemplated by the Pass Through
Trust Agreement, the Series Supplements, the Pass Through Certificates and
the Operative Agreements in, the State of Utah.
9. Each of the Certificates to be delivered to and registered in
the name of the Subordination Agent on the date hereof pursuant to the
Participation Agreement and the Intercreditor Agreement will be held by
the Subordination Agent in trust for the Pass Through Trustee under the
applicable Pass Through Trust Agreement.
The foregoing opinions are subject to the following assumptions,
exceptions and qualifications:
A. We are admitted to practice law in the State of Utah and we
do not hold ourselves out as being experts on the laws of any other
jurisdiction. The foregoing opinions are limited to the laws of the State of
Utah and the federal laws of the United States of America governing the banking
and trust powers of First Security. In addition, we express no opinion with
respect to (i) federal securities laws, including the Securities Act of 1933,
as amended, the Securities Exchange Act of 1934, as amended, and the Trust
Indenture Act of 1939, as amended, (ii) Title 49 of the United States Code
Annotated (previously known as the Federal Aviation Act of 1958), as
amended and (iii) state securities or blue sky laws. Insofar as the foregoing
opinions relate to the validity and enforceability in the State of Utah of the
Certificates and the other Pass Through Trustee Documents expressed to be
governed by the laws of the State of New York, we have assumed that the laws of
New York are identical to the laws of Utah in all material respects, and that
the Certificates and such Pass Through Trustee Documents constitute legal,
valid, binding and enforceable documents or instruments under such laws (as to
which we express no opinion).
B. The foregoing opinions regarding enforceability of any
document or instrument, are subject to (i) applicable bankruptcy, insolvency,
moratorium, reorganization, receivership and similar laws affecting the rights
and remedies of creditors generally, and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
C. We have assumed the due authorization, execution and delivery
by each of the parties thereto, other than First Security and the Pass Through
Trustee, of the Pass Through Trustee Documents to which each is a party and
that each of such parties has the full power, authority and legal right to
execute and deliver each such document.
D. We have assumed that all signatures (other than those of the
Pass Through Trustee or First Security) on documents and instruments examined
by us are genuine, that all documents and instruments submitted to us as
originals are authentic, and that all documents and instruments submitted to us
as copies conform with the originals, which facts we have not independently
verified.
E. We have assumed that the Participation Agreement and the
transactions contemplated thereby are not within the prohibitions of Section
406 of the Employee Retirement Income Security Act of 1974.
F. We do not purport to be experts in respect of, or express any
opinion concerning laws, rules or regulations applicable to the particular
nature of the equipment involved in these transactions.
G. We have made no investigation of, and we express no opinion
concerning, the nature of the title to any part of the equipment involved in
these transactions or the priority of any mortgage or security interest.
This opinion is rendered solely for your benefit and may not be
relied upon by any other person or entity for any purpose without our prior
written consent.
Very truly yours,
SCHEDULE A
----------
Lessee and Initial Owner Participant
------------------------------------
Federal Express Corporation
Owner Trustee
-------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
-------------------------------------------------------------
First Security Bank, National Association
Underwriters
------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
▇.▇. ▇▇▇▇▇▇ Securities Inc.
Liquidity Provider
------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
-----------------
Cessna Finance Corporation
Owner Participant Guarantor
---------------------------
Textron Financial Corporation
EXHIBIT A(6)
[Letterhead of General Electric Company]
August ___, 1998
To Each of the Parties named on Schedule A Hereto
Re: Federal Express Corporation Trust No. N677FE
--------------------------------------------
Reference is made to (i) that certain Participation Agreement
(Federal Express Corporation Trust No. N677FE), dated as of June 15, 1998, as
amended and restated as of August 1, 1998 (the "Participation Agreement") by
and among Federal Express Corporation, as Lessee and Initial Owner Participant
("Fed Ex"), Cessna Finance Corporation, as Owner Participant, State Street Bank
and Trust Company of Connecticut, National Association ("SSB") (not in its
individual capacity, except as otherwise expressly set forth therein, but
solely as Owner Trustee), and First Security Bank, National Association ("FSB")
(not in its individual capacity, except as otherwise expressly set forth
therein, but solely as Indenture Trustee, Pass Through Trustee and
Subordination Agent); (ii) that certain Purchase Agreement Assignment (Federal
Express Corporation Trust No. N677FE), dated as of August 1, 1998 (the
"Purchase Agreement Assignment") between Fed Ex, as Lessee and SSB, as Lessor;
(iii) that certain Lease Agreement (Federal Express Corporation Trust No.
N677FE), dated as of June 15, 1998, as amended and restated as of August 1,
1998 (the "Lease") between SSB (not in its individual capacity, but solely as
Owner Trustee), as Lessor and Fed Ex, as Lessee; (iv) that certain Trust
Indenture and Security Agreement (Federal Express Corporation Trust No.
N677FE), dated as of June 15, 1998, as amended and restated as of August 1,
1998 (the "Trust Indenture") between SSB (not in its individual capacity), as
Owner Trustee and FSB (not in its individual capacity), as Indenture Trustee;
and (v) that certain Trust Agreement (Federal Express Corporation Trust No.
N677FE), dated as of June 15, 1998, as amended and restated as of August 1,
1998 (the "Trust Agreement") between SSB (not in its individual capacity), as
Owner Trustee and Cessna Finance Corporation, as Trustor.
I am an attorney employed by General Electric Company, a New York
corporation (the "Engine Manufacturer"), and as such have acted as counsel for
the Engine Manufacturer in connection with the execution and delivery by the
Engine Manufacturer of the Consent (the "Consent"), and the Engine Warranty
Assignment (Federal Express Corporation Trust No. N677FE) (the "Engine Warranty
Assignment"). The Consent and the Engine Warranty Assignment covers two GE
CF6-80C2-A5F series engines bearing Engine Manufacturer's serial numbers
705-266 and 705-267, respectively. In this connection, I have, or an attorney
under my supervision has, reviewed such documents as I have deemed necessary
for the purpose of this opinion, including, but without limiting the generality
of the foregoing, the General Terms Agreement No. 6-9034, dated as of July 3,
1991 between the Engine Manufacturer and Fed Ex (the "General Terms
Agreement"), the Engine Product Support Plan forming a part thereof (the
"Engine Product Support Plan"), the Participation Agreement, the Purchase
Agreement Assignment, the Lease, the Trust Indenture and the Trust Agreement.
In making such examinations, I have relied upon the accuracy of
original, certified, conformed, photocopied or telecopied copies of such
records, agreements, certificates and other documents as I have deemed
necessary or appropriate to enable me to render the opinions expressed herein.
In all such examinations, I have assumed the genuineness of signatures on
original documents and the conformity to such original documents of all copies
submitted to me as certified, conformed, photocopied or telecopied copies, and
as to certificates and telegraphic and telephonic confirmations given by public
officials, I have assumed the same to have been properly given and to be
accurate. As to various questions of fact material to such opinions, I have
relied, when such relevant facts were not independently established by me,
solely upon the accuracy of the statements, representations and warranties made
in the Participation Agreement, the Purchase Agreement Assignment, the Lease,
the Trust Indenture and the Trust Agreement.
With your consent, and for the purposes of this opinion, I have
assumed (other than with respect to the Engine Manufacturer), the accuracy of
the following matters, but I have not made any independent investigation or
inquiry with respect thereto and I render no opinion on such matters:
(a) each of the Participation Agreement, the Purchase
Agreement Assignment, the Lease, the Trust Indenture, and the Trust
Agreement have been duly and validly authorized, executed and delivered by
all parties thereto and constitutes the legal, valid and binding
obligations of each of such parties in accordance with the respective
terms thereof; and
(b) the respective parties to the Participation Agreement,
the Purchase Agreement Assignment, the Lease, the Trust Indenture, and the
Trust Agreement have obtained, and there are in full force and effect, any
and all federal, state, local or foreign governmental agencies and
authorities in connection with the transactions contemplated thereby, to
the extent necessary for the legality, validity and binding effect or
enforceability of the Consent and the Engine Warranty Assignment.
Based upon the foregoing, and subject to the specific
assumptions, qualifications and reliances herein set forth, and on the basis of
my consideration of such facts and law as I have deemed necessary for purposes
of this letter, it is my opinion that:
(1) The Engine Manufacturer has the full corporate power,
authority and the legal right to enter into and perform its obligations
under the General Terms Agreement, the Consent and the Engine Warranty
Assignment. The execution, delivery and performance by the Engine
Manufacturer of each of the General Terms Agreement, the Consent and the
Engine Warranty Assignment was duly authorized by all necessary corporate
action on the part of the Engine Manufacturer.
(2) Each of the General Terms Agreement, the Consent and
Engine Warranty Assignment has been duly authorized, executed and
delivered by and constitutes a legal, valid and binding obligation of the
Engine Manufacturer, enforceable against the Engine Manufacturer in
accordance with the respective terms thereof, except as the enforceability
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general equity principles.
(3) The Engine Product Support Plan insofar as it relates to
the Engine Warranties (as such term is defined in the Engine Warranty
Assignment), constitutes a legal, valid and binding obligation of the
Engine Manufacturer, enforceable against the Engine Manufacturer in
accordance with the terms thereof, except as the enforceability thereof
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally and
by general equity principles.
The foregoing opinions are limited to the laws of the State of
Ohio and the federal laws of the United States of America, but no opinion is
expressed as to matters governed by the Transportation Code (Title 49 of the
United States Code), as amended, or by any other law, statute, rule or
regulation of the United States relating to the acquisition, ownership,
registration, use, operation, maintenance, repair, replacement or sale of
aircraft. Further, no opinion is expressed as to title to any engines or other
property.
This opinion is furnished by me at your request for your sole
benefit and no other person or entity shall be entitled to rely on this opinion
without our express written consent. My opinion is limited to the matters
stated herein and no opinion is implied or may be inferred beyond the matters
expressly stated herein.
Very truly yours,
SCHEDULE A
----------
Lessee
------
Federal Express Corporation
Owner Trustee
-------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
-------------------------------------------------------------
First Security Bank, National Association
Underwriters
------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
▇.▇. ▇▇▇▇▇▇ Securities Inc.
Liquidity Provider
------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
-----------------
Cessna Finance Corporation
Owner Participant Guarantor
---------------------------
Textron Financial Corporation
EXHIBIT A(7)
[Letterhead of ▇▇▇▇▇▇▇▇ Chance]
August ___, 1998
To the Parties Named on Schedule A attached hereto
Re: Federal Express Corporation Trust No. N677FE
--------------------------------------------
Ladies and Gentlemen:
We are special French counsel for Airbus Industrie G.I.E.
("Airbus") and AVSA S.A.R.L. ("AVSA") and you have asked for our opinion in
connection with certain transactions contemplated in the Participation
Agreement (Federal Express Corporation Trust No. N677FE), dated as of June 15,
1998, as amended and restated as of August 1, 1998 (the "Participation
Agreement") among Federal Express Corporation, as Lessee and Initial Owner
Participant ("Federal Express"), Cessna Finance Corporation, as Owner
Participant ("Owner Participant"), State Street Bank and Trust Company of
Connecticut, National Association, not in its individual capacity, except as
otherwise expressly stated therein, but solely as Owner Trustee ("Owner
Trustee"), and First Security Bank, National Association, not in its individual
capacity, except as otherwise expressly stated therein, but solely as Indenture
Trustee (the "Indenture Trustee"), Pass Through Trustee and Subordination
Agent, and relating to the Aircraft to be operated by Federal Express.
This opinion is being delivered pursuant to Section 4.01(d)(viii)
of the Participation Agreement.
Capitalized terms used in this opinion and not otherwise defined
shall have the meaning assigned thereto in the Participation Agreement.
We have examined:
(a) a copy of an Airbus A300-600R Freighter Purchase Agreement dated
as of July 3, 1991 and made between AVSA and Federal Express with
an executed Consent and Guaranty of Airbus of same date attached
thereto, sent to us by facsimile by AINA Holdings Inc. ("AINA")
on April 27, 1994;
(b) a copy sent to us by courier by ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇ on
________________ of an executed Purchase Agreement Assignment
dated as of August 1, 1998 (the "Purchase Agreement Assignment")
made between Federal Express and the Owner Trustee;
(c) a copy sent to us by facsimile by AVSA on _________________ of an
executed Airbus Industrie Consent and Agreement to the Purchase
Agreement Assignment dated as of August 1, 1998;
(d) a copy sent to us by facsimile by AVSA on _________________ of an
executed but undated AVSA Consent and Agreement to the Purchase
Agreement Assignment dated as of August 1, 1998;
(e) a form of Warranty ▇▇▇▇ of Sale sent to us by facsimile by AVSA
on _________________, relating to the Aircraft and transferring
title therein from AVSA to the Owner Trustee ("AVSA Warranty ▇▇▇▇
of Sale"), which we assume conform to the execution version;
(f) a form of Airbus Industrie G.I.E. Warranty sent to us by
facsimile by AVSA on _________________, in favour of the
Participants (the "Airbus Warranty") warranting AVSA's Warranty
▇▇▇▇ of Sale, which we assume conform to the execution version;
(g) a copy sent to us by facsimile by AVSA on _________________ of an
undated FAA ▇▇▇▇ of Sale executed by AVSA in favour of the Owner
Trustee;
(h) a copy sent to us by courier by AVSA on June 11, 1998 of an
executed power of attorney dated April 1, 1998 appointing Messrs
X. de Rouville and ▇.▇ ▇▇▇▇▇▇▇ as attorneys-in-fact of ▇▇. ▇▇▇▇
▇▇▇▇▇▇▇, Managing Director ("Administrateur Grant") of Airbus;
and
(i) a copy sent to us by courier by AVSA on August 18, 1998 of an
executed power of attorney dated April 18, 1998 appointing ▇▇▇▇
Margail, as attorney-in-fact of ▇▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Chief
Executive Officer ("Grant") of AVSA.
The documents referred to in paragraphs (a) to (i) above shall be referred to
herein below as the "Documents".
Based on the foregoing, and such other documents, records and
other instruments as we have deemed necessary or appropriate for the purpose of
this opinion, and assuming the Documents to have been duly executed by the
parties thereto (other than Airbus and AVSA), the genuineness of all signatures
and the completeness and conformity to the originals of all documents supplied
to us as copies or as facsimiles, we are of the opinion that, subject to the
qualifications set out below:
1. Airbus is a groupement d'interet economique duly organized and
existing under the laws of the French Republic, and has the power
and authority to carry on its business as now conducted. The
present members of Airbus are (i) Arospatiale, Socit Nationale
Industrielle, (ii) Daimler-Benz Aerospace Airbus GmbH, (iii)
British Aerospace (Operations) Ltd. and (iv) Construcciones
Aeronauticas S.A., and each of such corporations is, without the
need to proceed against any collateral security for the
indebtedness of Airbus or to take any other legal action or
process (except for service on Airbus by huissier of notice to
perform and subsequent failure by Airbus to do so), jointly and
severally liable with the other members for the debts of Airbus
arising out of obligations contracted by Airbus while such
corporation is a member of Airbus.
2. AVSA is a societe a responsabilite limitee duly established and
existing under the laws of the French Republic and has the power
and authority to carry on its business as now conducted.
3. Each of Airbus and AVSA has full power and authority to enter
into and to execute, deliver and perform its obligations under
those of the Documents to which it is a party; such obligations
are legal, valid and binding upon them respectively, are
enforceable in accordance with their respective terms and rank
pari passu with the other unsecured obligations of Airbus or
AVSA, as the case may be.
4. All actions, authorizations, approvals, consents, conditions and
things required at law to be taken, fulfilled and done to
authorize the execution, delivery and performance by Airbus and
AVSA of those of the Documents to which they respectively are
party have been taken, obtained, fulfilled and done; and no
consents under any exchange control, laws, rules or regulations
of the French Republic are necessary in connection therewith.
5. Neither the execution and delivery and performance of the
Documents to which Airbus and AVSA respectively are a party, nor
the consummation of the transactions contemplated thereby,
contravenes or violates any law, governmental rule or regulation
applicable to or binding on Airbus or AVSA.
6. The choice of the laws of the State of New York to govern the
Documents (which are expressed to be so governed) is valid under
the laws of the French Republic, and a French court would uphold
such choice of law in any suit on the Documents brought in a
French court.
7. Under the laws of the French Republic, Airbus and AVSA are
subject to private commercial law and to suit, and neither Airbus
nor AVSA nor their respective properties have any immunity from
the jurisdiction of any court or any legal process (whether
through service of notice, attachment prior to notice, attachment
prior to judgment, attachment in aid of execution, execution or
otherwise), except that:
(a) to the extent that Airbus or AVSA occupies or possesses
any property by virtue of any license or grant from the
French State, such property and the title of Airbus or
AVSA thereto may be immune from suit or execution on the
grounds of sovereignty; and
(b) suit and execution against Airbus or AVSA or their
respective property may be affected by action taken by
the French public authorities in the interests of
national defence or on the occurrence of exceptional
circumstances of paramount importance to the national
interest of France, as such concept is understood under
the Constitution, laws and regulations of France.
8. No French value added tax is due upon the transfer of title of
the Aircraft from AVSA to State Street Bank and Trust Company of
Connecticut, National Association as Owner Trustee.
9. In connection with the obligations of Airbus and AVSA under the
Documents, this opinion must be read subject to the following
qualifications and observations as to French law:
(a) the remedy of specific performance may not be available
in a French court;
(b) the enforcement against Airbus of any of the Documents to
which it is a party may be limited by applicable
bankruptcy, insolvency, arrangement, moratorium or
similar laws relating to or affecting the enforcement of
creditors' rights generally, as such laws are applied to
Airbus. The enforcement against AVSA of any of the
Documents to which it is a party may be limited by such
laws, as such laws are applied to AVSA. The enforcement
against any member of Airbus of any obligation of Airbus
contained in the Documents may be limited by such laws,
as such laws are applied to such member;
(c) in respect of payment obligations, a French court has
power under Article 1244-1 of the French Civil Code to
grant time to a debtor (not in excess of two years),
taking into account the position of the debtor and the
needs of the creditor;
(d) in order to ensure the validity as against third parties
of the assignment made in the Purchase Agreement
Assignment, it is necessary that notice of such
assignment be served on Airbus and AVSA by "huissier" in
accordance with the provisions of Article 1690 of the
French Civil Code;
(e) in the event of any proceedings being brought in a French
court in respect of a monetary obligation expressed to be
payable in a currency other than French Francs, a French
court would probably give judgment expressed as an order
to pay, not such currency, but its French Franc
equivalent at the time of payment or enforcement of
judgment. With respect to a bankruptcy, insolvency,
liquidation, moratorium, reorganization, reconstruction
or similar proceedings, French law may require that all
claims or debts be converted into French Francs at an
exchange rate determined by the court at a date related
thereto, such as the date of commencement of a
winding-up;
(f) a determination or certificate as to any matter provided
for in the Documents might be held by a French court not
to be final, conclusive or binding, if such determination
or certificate could be shown to have an unreasonable,
incorrect or arbitrary basis or not to have been given or
made in good faith;
(g) claims may become barred by effluxion of time or may be
or become subject to defence of set-off or counterclaim;
(h) provisions in any Document providing that it or any other
Documents may be amended or varied or any provision
thereof waived only by an instrument in writing may not
be effective;
(i) a French court may stay proceedings if concurrent
proceedings are being brought elsewhere;
(j) we express no opinion as to whether any provision in the
Documents conferring a right of set-off or similar right
would be effective against a liquidator or a creditor;
(k) our opinion as to the enforceability of the Documents
relates only to their enforceability in France in
circumstances where the competent French court has and
accepts jurisdiction. The term "enforceability" refers
to the legal character of the obligations assumed by the
parties under the documents, i.e., that they are of a
character which French law enforces or recognizes. It
does not mean that the Documents will be enforced in all
circumstances or in foreign jurisdictions or by or
against third parties or that any particular remedy will
be available; and
(l) article 899 of the French Tax Code provides that
agreements evidencing an undertaking to pay a sum of
money are subject to stamp tax (droit de timbre) of a
nominal amount if made in the French Republic, if made in
a foreign country, such agreements are subject to a stamp
tax of a nominal amount before certain use thereof can be
made in the French Republic (Article 897 of the French
Tax Code). However non-payment of such stamp tax does not
affect the legality, validity or enforceability of the
agreements.
In rendering the foregoing opinions, we have assumed that the
Documents (expressed to be governed by New York law) constitute the legal,
valid and binding obligations of the parties under New York law.
We are qualified as French Avocats.
No opinion is expressed herein as to laws other than the laws of
the French Republic as of the date hereof. This opinion is for your use and
that of no one else, and is limited to (i) the matters specifically mentioned
herein, and (ii) the purpose set out above.
Very truly yours,
SCHEDULE A
----------
Lessee
------
Federal Express Corporation
Owner Trustee
-------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
-------------------------------------------------------------
First Security Bank, National Association
Underwriters
------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
▇.▇. ▇▇▇▇▇▇ Securities Inc.
Liquidity Provider
------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
-----------------
Cessna Finance Corporation
Owner Participant Guarantor
---------------------------
Textron Financial Corporation
EXHIBIT A(8)
[Letterhead of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇]
August ___, 1998
To the Parties Named on Schedule A attached hereto
Re: Federal Express Corporation Trust No. N677FE
--------------------------------------------
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 4.01(d)(ix)
of the Participation Agreement (Federal Express Corporation Trust No. N677FE),
dated as of June 15, 1998, as amended and restated as of August 1, 1998 (the
"Participation Agreement") among Federal Express Corporation, as Lessee (the
"Lessee") and Initial Owner Participant, Cessna Finance Corporation, as Owner
Participant (the "Owner Participant"), State Street Bank and Trust Company of
Connecticut, National Association, as Owner Trustee (the "Owner Trustee"),
First Security Bank, National Association, as Indenture Trustee (the "Indenture
Trustee"), First Security Bank, National Association, as Pass Through Trustee
(the "Pass Through Trustee") and First Security Bank, National Association, as
Subordination Agent (the "Subordination Agent"), with respect to that portion
of Subtitle VII of Title 49 of the United States Code relative to the
recordation of instruments and the registration of aircraft thereunder.
The capitalized terms herein shall, unless otherwise defined,
have the same meanings given them in the Participation Agreement or in Annex I
attached hereto.
We have examined and filed on this date with the Federal Aviation
Administration (the "FAA") the following described instruments at the
respective times listed below:
(a) AC Form 8050-2 Aircraft ▇▇▇▇ of Sale dated August ___,
1998 (the "FAA ▇▇▇▇ of Sale") from AVSA S.A.R.L., as
seller, conveying title to the Airframe to the Owner
Trustee, which FAA ▇▇▇▇ of Sale was filed at ____ _.m.,
C._.T.;
(b) AC Form 8050-1 Aircraft Registration Application dated
August ___, 1998 (the "Aircraft Registration
Application") by the Owner Trustee, as applicant,
covering the Airframe, which Aircraft Registration
Application was filed at ____ _.m., C._.T.;
(c) Affidavit of the Owner Trustee dated August ___, 1998
(the "Owner Trustee Affidavit") pursuant to Section
47.7(c)(2)(ii) of Part 47 of the Federal Aviation
Regulations together with Affidavit of the Owner
Participant dated August ___, 1998 (the "Owner
Participant Affidavit") attached thereto, which Owner
Trustee Affidavit with the Owner Participant Affidavit
attached was filed at ____ _.m., C._.T.;
(d) executed counterpart of Trust Agreement (Federal Express
Corporation Trust No. N677FE) dated as of June 15, 1998,
as amended and restated as of August 1, 1998 (the "Trust
Agreement") between the Owner Participant and the Owner
Trustee, which Trust Agreement was filed at ____ _.m.,
C._.T.;
(e) executed counterpart of Trust Indenture and Security
Agreement (Federal Express Corporation Trust No. N677FE)
dated as of June 15, 1998, as amended and restated as of
August 1, 1998 (the "Trust Indenture") between the Owner
Trustee and the Indenture Trustee, with executed
counterpart of Indenture and Security Agreement
Supplement No. 1 (Federal Express Corporation Trust No.
N677FE) dated August ___, 1998 (the "Trust Indenture
Supplement") by the Owner Trustee, covering the Aircraft,
attached thereto, which Trust Indenture with the Trust
Indenture Supplement attached was filed at ____ _.m.,
C._.T.; and,
(f) executed counterpart of Lease Agreement (Federal Express
Corporation Trust No. N677FE) dated as of June 15, 1998,
as amended and restated as of August 1, 1998 (the
"Lease") between the Owner Trustee, as lessor, and the
Lessee, with executed counterparts of the following
attached thereto: (i) Lease Supplement ▇▇. ▇ (▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇) dated August ___,
1998 (the "Lease Supplement") between the Owner Trustee,
as lessor, and the Lessee, covering the Aircraft; (ii)
the Trust Indenture; and (iii) the Trust Indenture
Supplement, which Lease with the foregoing attachments
(collectively, the "Lease Attachments") attached was
filed at ____ _.m., C._.T.
The Confidential Omissions were intentionally omitted from the
FAA filing counterparts of the Lease and the Trust Indenture as containing
confidential financial information.
Based upon our examination of the above described instruments and
of such records of the FAA as we deemed necessary to render this opinion, it is
our opinion that:
1. the FAA ▇▇▇▇ of Sale, the Trust Indenture with the Trust
Indenture Supplement attached and the Lease with the
Lease Attachments attached are in due form for
recordation by and have been duly filed for recordation
with the FAA pursuant to and in accordance with the
provisions of 49 U.S.C. Section 44107;
2. the Aircraft Registration Application, the Owner Trustee
Affidavit with the Owner Participant Affidavit attached
and the Trust Agreement are in due form for filing and
have been duly filed with the FAA pursuant to and in
accordance with the provisions of 49 U.S.C. Section
44103(a) and Section 47.7(c) of the Federal Aviation
Regulations;
3. the Airframe is eligible for registration under 49 U.S.C.
Section 44102 in the name of the Owner Trustee and the
filing with the FAA of the FAA ▇▇▇▇ of Sale, the Aircraft
Registration Application, the Owner Trustee Affidavit
with the Owner Participant Affidavit attached and the
Trust Agreement will cause the FAA to register the
Airframe, in due course, in the name of the Owner Trustee
and to issue to the Owner Trustee an AC Form 8050-3
Certificate of Aircraft Registration for the Airframe,
and the Airframe will be duly registered pursuant to and
in accordance with the provisions of 49 U.S.C. Section
44103(a);
4. the Owner Trustee has valid legal title to the Airframe
and the Aircraft is free and clear of all Liens, except
(i) the security interest created by the Trust Indenture,
as supplemented by the Trust Indenture Supplement, and
(ii) the rights of the parties under the Lease, as
supplemented by the Lease Supplement;
5. the rights of the Owner Trustee and the Lessee under the
Lease, as supplemented by the Lease Supplement, with
respect to the Aircraft, are perfected;
6. the Trust Indenture, as supplemented by the Trust
Indenture Supplement, constitutes a duly perfected first
priority security interest in the Aircraft and a duly
perfected first assignment of all the right, title and
interest of the Owner Trustee in, to and under the Lease
and the Lease Supplement (insofar as such assignment
affects an interest covered by the recording system
established by the FAA pursuant to 49 U.S.C. Section
44107), and no other registration of the Airframe or
filings other than filings with the FAA (which have been
duly effected) are necessary in order to perfect in any
applicable jurisdiction in the United States (A) the
Owner Trustee's title to the Airframe or (B) such
security interest and assignment (insofar as such
assignment affects an interest covered by the recording
system established by the FAA pursuant to 49 U.S.C.
Section 44107), it being understood that no opinion is
herein expressed as to the validity, priority or
enforceability of such security interest and assignment
under local law or as to the recognition of the
perfection of such security interest and assignment as
against third parties in any legal proceeding outside the
United States;
7. no authorization, approval, consent, license or order of,
or registration with, or the giving of notice to, the FAA
is required for the valid authorization, delivery and
performance of the Lease, as supplemented by the Lease
Supplement, the Trust Indenture, as supplemented by the
Trust Indenture Supplement, or the Trust Agreement except
for such filings as are referred to above; and,
8. neither the authorization, issuance and delivery of the
Certificates, the execution and delivery by the parties
thereto of the Trust Agreement, the Trust Indenture, the
Trust Indenture Supplement, the Participation Agreement,
the FAA ▇▇▇▇ of Sale, the Lease and the Lease Supplement
or the performance by the parties thereto of: (i) the
Trust Agreement; (ii) the Trust Indenture, as
supplemented by the Trust Indenture Supplement; (iii) the
Participation Agreement; and (iv) the Lease, as
supplemented by the Lease Supplement, in accordance with
the provisions thereof, nor the consummation by the
parties thereto of any of the transactions contemplated
thereby, requires the consent or approval of, or the
giving of notice to, the registration with or the taking
of any other action in respect of, the FAA except for the
filings and the recordations specified elsewhere in this
opinion.
No opinion is expressed as to the Airframe during any period or
periods of time during which it has not been subject to United States
registration.
No opinion is expressed as to laws other than Federal laws of the
United States. In rendering this opinion, we were subject to the accuracy of
the FAA, its employees and agents, in the filing, indexing and recording of
instruments filed with the FAA and in the search for encumbrance
cross-reference index cards for the Engines. Further, in rendering this
opinion we are assuming the validity and enforceability of the above described
instruments under local law. Since our examination was limited to records
maintained by the FAA, our opinion does not cover liens which are perfected
without the filing of notice thereof with the FAA, such as federal tax liens,
liens arising under Section 1368(a) of Title 29 of the United States Code,
possessory artisan's liens, or matters of which the parties have actual notice.
In rendering this opinion we are assuming that there are no documents with
respect to the Aircraft which have been filed for recording under the recording
system of the FAA but have not yet been listed in the available records of such
system as having been so filed.
In rendering this opinion we have relied upon the opinion of the
Assistant Chief Counsel of the Aeronautical Center dated _____________, a copy
of which is attached hereto.
Very truly yours,
Annex I
Certain Definitions
-------------------
Airframe, Engines and Aircraft
------------------------------
One (1) Airbus Industrie A300F4-605R aircraft bearing
manufacturer's serial number 791 and U.S. Registration No. N677FE (the
"Airframe") and two (2) General Electric CF6-80C2-A5F aircraft engines bearing
manufacturer's serial numbers 705-266 and 705-267 (the "Engines") (the Airframe
and the Engines are referred to collectively as the "Aircraft").
Confidential Omissions
----------------------
The Lease was filed with the FAA, with (i) Basic Rent (Schedule
II), (ii) the Stipulated Loss Values (Schedule III), (iii) the Termination
Values (Schedule IV) and (iv) the Purchase Option Schedule (Schedule V) omitted
from the FAA filing counterpart thereof as containing confidential financial
information; and (v) the purchase price under Section 4.02(a)(F) of the Lease
set forth in Ancillary Agreement I, which was not attached to the FAA filing
counterpart of the Lease or otherwise filed with the FAA for recordation.
The Trust Indenture was filed with the FAA, with Schedule I
(Schedule of Principal Payments) intentionally omitted from the FAA filing
counterpart thereof as containing confidential financial information.
SCHEDULE A
----------
Lessee and Initial Owner Participant
------------------------------------
Federal Express Corporation
Owner Trustee
-------------
State Street Bank and Trust Company
of Connecticut, National Association
Indenture Trustee, Pass Through Trustee & Subordination Agent
-------------------------------------------------------------
First Security Bank, National Association
Underwriters
------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
Chase Securities Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston Corporation
▇.▇. ▇▇▇▇▇▇ Securities Inc.
Liquidity Provider
------------------
Kreditanstalt fur Wiederaufbau
Owner Participant
-----------------
Cessna Finance Corporation
Owner Participant Guarantor
---------------------------
Textron Financial Corporation
EXHIBIT B
[Form of Lease Agreement - See Exhibit 4. of this Form 8K]
EXHIBIT C
[Form of Indenture - See Exhibit 1. of this Form 8K]
EXHIBIT D
[Form of Trust Agreement - See Exhibit 3. of this Form 8K]
EXHIBIT E
PURCHASE AGREEMENT ASSIGNMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N677FE)
PURCHASE AGREEMENT ASSIGNMENT (FEDERAL EXPRESS CORPORATION TRUST
NO. N677FE), dated as of August 1, 1998, between FEDERAL EXPRESS CORPORATION, a
Delaware corporation (the "Assignor" or "Lessee"), and STATE STREET BANK AND
TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking
association, not in its individual capacity but solely as Owner Trustee ("SSB"
or the "Lessor") under the Trust Agreement (Federal Express Corporation Trust
No. N677FE), dated as of June 15, 1998, as amended and restated as of August 1,
1998 (as amended, modified or supplemented from time to time, the "Trust
Agreement"), between CESSNA FINANCE CORPORATION (the "Owner Participant") and
SSB.
W I T N E S S E T H :
WHEREAS, the Assignor and AVSA (as hereinafter defined) are
parties to the Purchase Agreement (as hereinafter defined), providing, among
other things, for the delivery by AVSA to the Assignor of certain aircraft,
including the Aircraft (as hereinafter defined) covered by the Participation
Agreement (as hereinafter defined); and
WHEREAS, pursuant to the Consent and Guaranty (as hereinafter
defined), the Guarantor (as hereinafter defined) has agreed, among other
things, to unconditionally guarantee the due and punctual performance by AVSA
of all of its liabilities and obligations as set forth in the Purchase
Agreement; and
WHEREAS, pursuant to the Lease (as hereinafter defined), the
Lessor will lease the Aircraft to the Assignor; and
WHEREAS, on the terms and conditions hereof and of the Consents
and Agreements (as hereinafter defined), (a) the Assignor desires to assign to
the Lessor (i) the Assignor's right under the Purchase Agreement and the
Consent and Guaranty (insofar as it relates to the Purchase Agreement) to
purchase the Aircraft and (ii) certain of the Assignor's remaining rights,
title and interests in, to and under the Purchase Agreement and the Consent and
Guaranty (insofar as they relate to the Purchase Agreement and the Aircraft)
and (b) the Lessor desires to accept the assignments and, except as otherwise
provided herein, to assume the obligations of the "Buyer" under the Purchase
Agreement, to the extent assigned to it pursuant hereto; and
WHEREAS, pursuant to the Indenture (as hereinafter defined), the
Lessor will assign, inter alia, its rights hereunder to the Indenture Trustee
(as hereinafter defined) to the extent set forth therein; and
WHEREAS, such assignments and acceptances are intended to permit
consummation of the transactions contemplated by the Participation Agreement;
and
WHEREAS, AVSA and the Guarantor are willing to execute and
deliver their respective Consents and Agreements;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. Defined Terms. For all purposes of this Assignment,
except as otherwise expressly provided or unless the context otherwise
requires, the following terms shall have the following meanings:
"Aircraft" shall mean the Airbus A300F4-605R Freighter aircraft,
bearing manufacturer's serial number 791, delivered under the Purchase
Agreement, including the two General Electric Model CF6-80C2A5 (Fadec
equipped) engines installed on such aircraft on the date of delivery
thereof pursuant to the Purchase Agreement.
"AVSA" shall mean AVSA, S.A.R.L., a French societe a
responsabilite limitee, and its successors and assigns.
"AVSA Consent and Agreement" shall mean the Consent and Agreement
of AVSA attached hereto, as amended, modified or supplemented from time to
time.
"▇▇▇▇ of Sale" shall mean the ▇▇▇▇ of sale for the Aircraft to be
delivered by AVSA.
"Certificates" shall have the meaning ascribed thereto in the
Participation Agreement.
"Consent and Guaranty" shall mean the Consent and Guaranty of the
Guarantor attached to the Purchase Agreement, together with all
amendments, waivers, and consents heretofore entered into or heretofore
granted thereunder and delivered to the Lessor.
"Consents and Agreements" shall mean the AVSA Consent and
Agreement and the Guarantor Consent and Agreement.
"Delivery Date" shall have the meaning ascribed thereto in the
Purchase Agreement with respect to the Aircraft.
"Guarantor" shall mean Airbus Industrie G.I.E., a French
groupement d'interet economique, and its successors and assigns.
"Guarantor Consent and Agreement" shall mean the Consent and
Agreement of the Guarantor attached hereto, as amended, modified or
supplemented from time to time.
"Indenture" shall mean the Trust Indenture and Security Agreement
(Federal Express Corporation Trust No. N677FE), dated as of June 15, 1998,
as amended and restated as of August 1, 1998, between the Lessor and the
Indenture Trustee, as amended, modified or supplemented from time to time.
"Indenture Trustee" shall mean First Security Bank, National
Association, not in its individual capacity but solely as Indenture
Trustee under the Indenture and each other person which may from time to
time be acting as successor trustee under the Indenture.
"Lease" shall mean the Lease Agreement (Federal Express
Corporation Trust No. N677FE), dated as of June 15, 1998, as amended and
restated as of August 1, 1998, between the Lessor and the Assignor, as
amended, modified or supplemented from time to time.
"Participation Agreement" shall mean the Participation Agreement
(Federal Express Corporation Trust No. N677FE), dated as of June 15, 1998,
as amended and restated as of August 1, 1998, among the Assignor, the
Initial Owner Participant (as defined therein), the Owner Participant, the
Pass Through Trustee (as defined therein), the Lessor, the Indenture
Trustee and the Subordination Agent (as defined therein), as amended,
modified or supplemented from time to time.
"Purchase Agreement" shall mean the Airbus A300-600F Purchase
Agreement, dated as of July 3, 1991, between the Assignor and AVSA,
together with all exhibits, appendices and letter agreements thereto and
all amendments, waivers and consents granted thereunder.
All other terms used herein in capitalized form that are defined
in the Lease shall, when used herein, have the meanings specified in the Lease.
2. Assignment. (a) Generally. The Assignor has sold,
assigned, transferred and set over and does hereby sell, assign, transfer and
set over unto the Lessor (i) the right upon valid tender of the Aircraft by
AVSA in accordance with the Purchase Agreement to purchase the Aircraft
pursuant to the Purchase Agreement for the amount specified in the invoice in
respect thereof to be delivered by AVSA on the Delivery Date therefor
(including, without limitation, the right to accept delivery of the Aircraft
through an appointed representative which may be an employee of the Assignor)
and the right to be named the "Buyer" in the ▇▇▇▇ of Sale and the right to
enforce the same under the Consent and Guaranty, (ii) the right to take and
hold the Aircraft and (iii) all of the Assignor's other right, title and
interest in and to the Purchase Agreement and the Consent and Guaranty (insofar
as it relates to the Purchase Agreement), as and to the extent that the same
relates to the Aircraft and, except to the extent reserved below, the operation
of the Aircraft, including, without limitation, in such assignment to the
Lessor (A) all claims for damages in respect of such Aircraft arising as a
result of any default by AVSA under the Purchase Agreement, or by any vendor or
other supplier of aircraft engines or other parts or equipment installed on or
in the Aircraft, including, without limitation, all warranty, service life
policy and indemnity provisions in the Purchase Agreement in respect of the
Aircraft and all claims thereunder and under the Consent and Guaranty and (B)
any and all rights of the Assignor to compel performance of the terms of the
Purchase Agreement and the Consent and Guaranty in respect of the Aircraft,
including all warranty and indemnification provisions in the Purchase Agreement
and the Consent and Guaranty and claims thereunder with respect to the
Aircraft; reserving to the Assignor, however,
(1) all the Assignor's rights and interests in and to the Purchase
Agreement and the Consent and Guaranty as and to the extent that the
Purchase Agreement and the Consent and Guaranty relate to aircraft other
than the Aircraft and the purchase and operation of such aircraft and to
the extent that the Purchase Agreement and the Consent and Guaranty relate
to any other matters not directly pertaining to the Aircraft,
(2) all the Assignor's rights and interests in or arising out of any
payments, advance payments or deposits made by the Assignor in respect of
the Aircraft under the Purchase Agreement or amounts credited or to be
credited or paid or to be paid by the Guarantor or AVSA to the Assignor in
respect of the Aircraft or otherwise (except amounts credited with respect
to warranty claims to the extent set forth in Section 2(b) hereof) as of
the date of purchase,
(3) the rights to demand, accept and retain all rights in and to all
property (other than the Aircraft), data and service, other than data and
service provided under Clauses 12 and 13 of the Purchase Agreement, that
AVSA and the Guarantor are obligated to provide or do provide pursuant to
the Purchase Agreement and the Consent and Guaranty, respectively, with
respect to the Aircraft,
(4) all of the Assignor's right, title and interest in and to the Purchase
Agreement and the Consent and Guaranty as and to the extent that the same
relates to specification changes, performance and operation pertaining to
the Aircraft, other than sub-Clause 2.1 and Clauses 12 and 13 of the
Purchase Agreement and under the Consent and Guaranty to the extent
relating thereto,
(5) the right to obtain services, training, data and demonstration and
test flights pursuant to the Purchase Agreement,
(6) the right to maintain plant representatives at the Guarantor's plant
pursuant to the Purchase Agreement, and
(7) all rights set forth in any exhibits, appendices and letter
agreements, as at any time amended, modified or supplemented, to the
Purchase Agreement, and under the Consent and Guaranty to the extent
relating thereto; provided, however, that the reservation set forth in
this Section 2(a)(7) shall not in any way limit the rights of the Lessor
arising under Sub-clause 2.1 and Clauses 12 and 13 of the Purchase
Agreement.
(b) Assignment of Rights. If and so long as there shall not
exist and be continuing an Event of Default, the Lessor hereby authorizes the
Lessee, to the exclusion of the Lessor, to exercise in the Lessee's name all
rights and powers of the "Buyer" under the Purchase Agreement and to retain any
recovery or benefit resulting from the enforcement of any warranty or indemnity
in respect of the Aircraft, except that the Lessee may not enter into any
change order or other amendment, modification or supplement to the Purchase
Agreement without the written consent or countersignature of the Lessor if such
change order, amendment, modification or supplement would result in any
rescission, cancellation or termination of the Purchase Agreement in respect of
the Aircraft or in any way limit the rights of the Lessor arising under Clauses
12 and 13 of the Purchase Agreement or any of the other rights assigned
hereunder.
(c) Acceptance of Assignment. Subject to the terms hereof
the Lessor accepts the assignment contained in this Section 2.
(d) Requirement of Notice to AVSA. For all purposes of this
Assignment, AVSA shall not be deemed to have knowledge of and need not
recognize any Event of Default, unless and until AVSA shall have received
written notice thereof from the Lessor or the Indenture Trustee addressed to
its Chief Executive Officer, ▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ (telex 521155F) and, in acting in accordance with the terms of the
Purchase Agreement and this Assignment, AVSA may act with acquittance and
conclusively rely upon any such notice.
3. Certain Rights and Obligations of the Parties. (a)
Assignor Remains Liable. It is expressly agreed that, anything herein
contained to the contrary notwithstanding: (a) the Assignor shall at all times
remain liable to AVSA under the Purchase Agreement to perform all the duties
and obligations of the "Buyer" thereunder to the same extent as if this
Assignment had not been executed; (b) the exercise by the Lessor of any of the
rights assigned hereunder shall not release the Assignor from any of its duties
or obligations to AVSA under the Purchase Agreement except to the extent that
such exercise by the Lessor shall constitute performance of such duties and
obligations; and (c) except as provided in the next succeeding paragraph, none
of the Lessor, the Indenture Trustee nor any Participant shall have any
obligation or liability under the Purchase Agreement by reason of, or arising
out of, this Assignment or be obligated to perform any of the obligations or
duties of the Assignor under the Purchase Agreement or to make any payment or
to make any inquiry as to the sufficiency of any payment received by any of
them or to present or file any claim or to take any other action to collect or
enforce any claim for any payment assigned hereunder.
(b) Lessor Bound by Purchase Agreement. Without in any way
releasing the Assignor from any of its duties or obligations under the Purchase
Agreement, the Lessor confirms for the benefit of AVSA that, insofar as the
provisions of the Purchase Agreement relate to the Aircraft, in exercising any
rights under the Purchase Agreement, or in making any claim with respect to the
Aircraft or other goods and services delivered or to be delivered pursuant to
the Purchase Agreement, the terms and conditions of the Purchase Agreement
disclosed to the Lessor in writing shall apply to, and be binding upon, the
Lessor to the extent of its respective interests assigned hereunder to the same
extent as the Assignor.
(c) Limit of Effect of this Assignment. Nothing contained
herein shall (i) subject AVSA or the Guarantor to any liability to which it
would not otherwise be subject under the Purchase Agreement or (ii) modify in
any respect the contractual rights of AVSA or the Guarantor thereunder (except,
in each case, as provided in the attached Consents and Agreements).
(d) Appointment as Attorney-in-Fact. The Assignor does hereby
constitute, effective at any time after an Event of Default shall have occurred
and be continuing, the Lessor and its successors and assigns to be the
Assignor's true and lawful attorney, irrevocably, with full power (in the name
of the Assignor or otherwise) to ask, require, demand, receive, compound and
give acquittance for any and all monies and claims for monies due and to become
due under, or arising out of, the Purchase Agreement and the Consent and
Guaranty in respect of the Aircraft, to the extent that the same have been
assigned as provided in this Assignment and, for such period as the Lessor, its
successors and assigns may exercise rights with respect thereto under this
Assignment, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or take any action or institute (or, if
previously commenced, assume control of) any proceedings and to obtain any
recovery in connection therewith which the Lessor, its successors and assigns,
may deem to be necessary or advisable in the premises.
4. Further Assurances. The Assignor and the Lessor each
agree that, at any time and from time to time, upon the written request of any
other party hereto, it will promptly and duly execute and deliver any and all
such further instruments and documents and take such further action as the
other may reasonably request in order to obtain the full benefits of this
Assignment and of the rights and powers herein granted.
5. Assignor's Representations, Warranties and Covenants.
The Assignor does hereby represent and warrant that (a) the Purchase Agreement,
insofar as it relates to the Aircraft, is in full force and effect and is
enforceable against the Assignor in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws or equitable principles of general
application to or affecting the enforcement of creditors' rights generally, and
the Assignor is not in default thereunder, and (b) the Assignor has not
assigned or pledged, and hereby covenants that it will not assign or pledge,
the whole or any part of the rights hereby assigned or any of its rights with
respect to the Aircraft under the Purchase Agreement not assigned hereby, to
anyone other than the Lessor as herein provided.
6. No Amendment of Purchase Agreement. So long as the Lease
is in effect, the Lessor agrees that it shall not enter into any agreement that
would amend, modify, supplement, rescind, cancel or terminate the Purchase
Agreement or the Consent and Guaranty in any respect or in any way limit the
rights of the Assignor arising under Clauses 12 and 13 of the Purchase
Agreement or any of the other rights assigned hereunder (except as set forth
above when there has been an Event of Default) without the prior written
consent of the Assignor.
7. Execution of Assignment. This Assignment is executed by
the Assignor and the Lessor concurrently with the execution and delivery of the
Participation Agreement and the Lease.
8. Confidentiality. The Lessor agrees that it will not
disclose to any third party the terms of the Purchase Agreement or this
Assignment, except (a) as required by applicable law or governmental
regulation, (b) as contemplated in the Lease or the Participation Agreement
(including as set forth in Section 18.01 of the Participation Agreement) or (c)
with the consent of the Assignor, the Guarantor and AVSA.
9. Assignment as Collateral. Each party hereto consents to
the assignment and pledge by the Lessor to the Indenture Trustee, as security
for the Certificates to be issued under the Indenture and the other obligations
secured thereby as specified in the Indenture, of all of the Lessor's right,
title and interest in and to the Purchase Agreement and the Consent and
Guaranty under this Assignment.
10. Counterparts. This Assignment 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.
11. GOVERNING LAW. THIS ASSIGNMENT SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
12. Successors and Assigns. This Assignment shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns.
13. Notices. All notices with respect to the matters
contained herein shall be delivered in the manner and to the addresses provided
in Article 14 of the Participation Agreement.
14. No Oral Amendments. Neither this Assignment nor any of
the terms hereof may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by the party against whom
the enforcement of such termination, amendment, supplement, waiver or
modification is sought.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment to be duly executed as of the day and year first above written.
FEDERAL EXPRESS CORPORATION
By ________________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Treasurer
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Lessor
By ________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
AIRBUS INDUSTRIE CONSENT AND AGREEMENT
The undersigned, Airbus Industrie G.I.E., a groupement d'interet
economique established under Ordonnance No. 67-821 dated September 23, 1967 of
the Republic of France (the "Guarantor"), hereby acknowledges notice of and
consents to all of the terms of the Purchase Agreement Assignment between
Federal Express Corporation, a Delaware corporation, and State Street Bank and
Trust Company of Connecticut, National Association, a national banking
association, not in its individual capacity, but solely as Lessor, with respect
to Federal Express Corporation Trust No. N677FE, dated as of August 1, 1998
(hereinafter called the "Assignment", the defined terms therein being
hereinafter used with the same meaning), and hereby confirms to the Assignor
and the Lessor and their respective successors and assigns that:
(i) except as provided in the Assignment, all
representations, warranties, and agreements of the Guarantor under the
Consent and Guaranty with respect to the Aircraft shall inure to the
benefit of the Lessor and its respective successors and assigns, to the
same extent as if the Lessor and its successors and assigns had originally
been named the "Buyer" of the Aircraft therein;
(ii) the Guarantor will pay to the person or entity entitled
to receive the corresponding payment from AVSA under the terms of the
Assignment all amounts required to be paid by the Guarantor with respect
to the Aircraft;
(iii) the Guarantor consents to the sale of the Aircraft by
AVSA to the Lessor, the assignment of Assignor's rights and interests
under the Purchase Agreement and the Consent and Guaranty to the Lessor
pursuant to the Assignment, the assignment of the Lessor's rights and
interests in the Assignment to the Indenture Trustee pursuant to the
Indenture and the lease of the Aircraft by the Lessor to the Assignor
under the Lease; and
(iv) from and after the delivery of the Aircraft pursuant to
the Purchase Agreement and payment in full for the Aircraft as described
in the Participation Agreement, the Guarantor will not assert any lien or
claim against the Aircraft or any part thereof or against the Lessee, the
Lessor, the Owner Participant or the Indenture Trustee arising on or prior
to such delivery or in respect of any work or services performed on or
prior thereto.
The Guarantor hereby represents and warrants that:
(A) the Guarantor is a groupement d'interet economique duly
organized and existing in good standing under the laws of the Republic of
France and has the requisite power and authority to enter into and perform
its obligations under the Consent and Guaranty, the Airbus Guaranty and
this Consent and Agreement;
(B) the making and performance, in accordance with their terms
of the Consent and Guaranty, the Airbus Guaranty and this Consent and
Agreement have been duly authorized by all necessary corporate action on
the part of the Guarantor, do not require the consent or approval of the
members of the Guarantor, do not require the consent or approval of,or the
giving of notice to, or registration with, or the taking of any other
action in respect of, any French governmental authority or agency except
for those that have already been obtained and do not contravene any law
binding on the Guarantor or contravene the Guarantor's charter documents
or any indenture, credit agreement or other contractual agreement to which
the Guarantor is a party or by which it is bound;
(C) the Consent and Guaranty constituted, as of the date thereof
and at all times thereafter to and including the date of this Consent and
Agreement, and each of this Consent and Agreement and the Airbus Guaranty
constitutes, binding obligations of the Guarantor enforceable against the
Guarantor in accordance with their respective terms; and
(D) the Consent and Guaranty is in full force and effect.
THIS CONSENT AND AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.
Dated as of August 1, 1998
AIRBUS INDUSTRIE G.I.E.
By _____________________
Name:
Title:
AVSA CONSENT AND AGREEMENT
The undersigned, AVSA, S.A.R.L., a societe a responsabilite
limitee organized and existing under the laws of the Republic of France
("AVSA"), hereby acknowledges notice of and consents to all of the terms of the
Purchase Agreement Assignment between Federal Express Corporation, a Delaware
corporation, and State Street Bank and Trust Company of Connecticut, National
Association, a national banking association, not in its individual capacity,
but solely as Lessor, with respect to Federal Express Corporation Trust No.
N677FE, dated as of August 1, 1998 (hereinafter called the "Assignment", the
defined terms therein being hereinafter used with the same meaning), and hereby
confirms to the Assignor and the Lessor and their respective successors and
assigns that:
(i) except as provided in the Assignment, all
representations, warranties, indemnities and agreements of AVSA under the
Purchase Agreement with respect to the Aircraft shall inure to the benefit
of the Lessor and its respective successors and assigns to the same extent
as if the Lessor and its successors and assigns had originally been named
the "Buyer" of the Aircraft therein;
(ii) AVSA will pay to the Assignor all payments required to be
paid by it under the Purchase Agreement, unless and until AVSA shall have
received written notice from the Indenture Trustee or the Lessor (or,
after the Indenture shall have been discharged in full, the Lessor)
addressed to it at the address and in the manner set forth in the
Assignment that an Event of Default has occurred and is continuing,
whereupon AVSA will make any and all payments thereafter required to be
made by it under the Purchase Agreement, to the extent that the right to
receive such payment has been assigned under the Assignment ("AVSA
Payments"), directly to the Indenture Trustee (or, after the Indenture
shall have been discharged in full, the Lessor) if AVSA shall have
received notice as aforesaid that an Event of Default has occurred and is
continuing;
(iii) The Lessor shall not be liable for any of the obligations
or duties of the Assignor under the Purchase Agreement, nor shall the
Assignment give rise to any duties or obligations whatsoever on the part
of the Lessor owing to AVSA, except for the agreements of the Lessor set
forth in the Assignment, including, but not limited to Section 3(b) of the
Assignment;
(iv) AVSA consents to the assignment of the Lessor's rights
and interests in the Assignment to the Indenture Trustee pursuant to the
Indenture and to the lease of the Aircraft by the Lessor to the Lessee
under the Lease; and
(v) from and after the delivery of the Aircraft pursuant to
the Purchase Agreement and payment in full for the Aircraft as described
in the Participation Agreement and the Assignment, AVSA will not assert
any lien or claim against the Aircraft or any part thereof arising on or
prior to such delivery or in respect of any work or services performed on
or prior thereto.
AVSA hereby represents and warrants that:
(A) AVSA is a societe a responsabilite limitee duly organized and
existing in good standing under the laws of the Republic of France and has
the requisite power and authority to enter into and perform its
obligations under the Purchase Agreement and this Consent and Agreement;
(B) the making and performance, in accordance with their terms,
of the Purchase Agreement and this Consent and Agreement have been duly
authorized by all necessary corporate action on the part of AVSA, do not
require any approval of AVSA's shareholders, do not require the consent or
approval of, the giving notice to, or registration with, or the taking of
any other action in respect of, any French governmental authority or
agency except for those that have already been obtained and do not
contravene any law binding on AVSA or contravene AVSA's charter documents
or any indenture, credit agreement or other contractual agreement to which
AVSA is a party or by which it is bound;
(C) each of the Purchase Agreement and this Consent and
Agreement constitutes a binding obligation of AVSA enforceable against
AVSA in accordance with its terms, subject to: (i) the limitations of
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the rights of creditors generally; and (ii) general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law), which principles do not
make the remedies available at law or in equity with respect to the
Purchase Agreement and this Consent and Agreement inadequate for the
practical realization of the benefits intended to be provided thereby and
(D) the Purchase Agreement is in full force and effect as to
AVSA.
THIS CONSENT AND AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.
Dated as of August 1, 1998
AVSA, S.A.R.L.
By:_______________________
Name:
Title:
EXHIBIT F
ENGINE WARRANTY ASSIGNMENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N677FE)
Words and phrases appearing in this Engine Warranty Assignment (the
"Assignment") shall have the respective meanings as defined below:
A. General Terms Agreement means that agreement dated as of July 3,
1991, (the "GTA") by and between the Engine Manufacturer and
Federal Express Corporation ("Fed Ex"), including the Engine
Product Support Plan at Exhibit B, insofar as such Product
Support Plan relates to the Engine Warranties (the "Product
Support Plan"), but excluding any and all letter agreements
attached thereto.
B. Engine Warranties means the Engine Manufacturer's New Engine
Warranty, New Parts Warranty, Ultimate Life Warranty and Campaign
Change Warranty, as set forth in the Engine Manufacturer's
Product Support Plan which forms a part of the GTA, and as
limited by the applicable terms of such GTA and Product Support
Plan.
C. Engine means each of the CF6-80C2-A5F series engines installed on
the aircraft at the time of delivery to the Assignor, each
bearing Engine Manufacturer's serial numbers 705-266 and 705-267,
respectively.
D. Replacement Engine means each of the CF6-80C2-A5F series engines
which are not subject to this Assignment and are a replacement or
substitute for an Engine, excluding, however, any engines
obtained from the Engine Manufacturer's lease pool which are
installed on the aircraft for the limited purpose of permitting
the continued operation of the aircraft during the period
necessary to effect or complete repairs or overhaul of an Engine.
E. Lease means the Lease Agreement (Federal Express Corporation
Trust No. N677FE), dated as of June 15, 1998, as amended and
restated as of August 1, 1998 (the "Lease") between State Street
Bank and Trust Company of Connecticut, National Association (not
in its individual capacity, but solely as Owner Trustee), as
Lessor ("Lessor") and Fed Ex, as Lessee, as amended, modified or
supplemented from time to time.
All other capitalized terms used and not defined herein that are in the
Lease shall, when used herein, have the meanings specified in the Lease.
1
Fed Ex, pursuant to the terms and conditions herein, hereby sells,
assigns, transfers and sets over unto the Lessor all of its rights, claims and
interests in and under the GTA and the Product Support Plan, as such apply to
the Engines, to enforce in the Lessor's own name such rights as Fed Ex may have
with respect to the Engine Warranties, to the extent the same relate to the
Engines, and to retain any benefit resulting therefrom; provided, however, that
there is reserved to Fed Ex all of its other rights, claims and interests under
the GTA except as expressly stated above. Fed Ex shall, during the term of the
Lease (but only so long as no Event of Default shall have occurred and be
continuing), have the benefit of and shall be entitled to enforce (as it shall
deem appropriate), either in its own name or (at the cost of Fed Ex) in the
name of the Lessor for the use and benefit of Fed Ex, any and all Engine
Warranties available to the Lessor under the GTA in respect of the Engines and
each Part thereof, and the Lessor agrees (but only so long as no Event of
Default shall have occurred and be continuing) at Fed Ex's expense to do,
execute and deliver such further acts, deeds, matters or things as may be
reasonably requested by Fed Ex and necessary to enable Fed Ex to obtain
customary warranty services furnished for the Engines or any Part thereof
pursuant to the Engine Warranties. Fed Ex shall, at the Lessor's expense,
cooperate with the Lessor and take such action as the Lessor reasonably deems
necessary to enable the Lessor to enforce such rights, claims and interests as
assigned herein.
2
Notwithstanding anything in this Assignment or the Consent attached hereto
and incorporated herein to the contrary, Fed Ex and the Lessor confirm
expressly for the benefit of the Engine Manufacturer that:
A. The Lessor agrees that it will not, without the prior written
consent of the Engine Manufacturer, disclose, directly or
indirectly, to any third party, any of the terms of the Engine
Warranties disclosed to it by the Engine Manufacturer incident to
effecting the assignment herein; provided, however, that (1) the
Lessor may use, retain and disclose such information on a
confidential basis to its special counsel, independent insurance
brokers, bank examiners or similar regulatory authorities,
auditors and public accountants, (2) the Lessor may use, retain
and disclose on a confidential basis such information to the
Owner Participant, the Indenture Trustee, the Pass Through
Trustee and any Certificate Holder, as the case may be, and their
special counsel, independent insurance brokers, bank examiners or
similar regulatory authorities, auditors and public accountants,
(3) the Lessor may disclose such information as required by
applicable laws, governmental regulations, subpoena, or other
written demand under color of legal right, but it shall first, as
soon as practicable upon receipt of such demand and to the extent
permitted by applicable laws, furnish a copy thereof to Fed Ex
and to the Engine Manufacturer, and the Lessor, to the extent
permitted by applicable law, shall afford Fed Ex and the Engine
Manufacturer reasonable opportunity, at the moving party's cost
and expense, to obtain a protective order or other assurance
reasonably satisfactory to the Engine Manufacturer of
confidential treatment of the information required to be
disclosed, (4)the Lessor may disclose such information as
required to enforce its rights under the Engine Warranties
assigned to it pursuant to this Assignment, and (5) the Lessor
may disclose such information to any bona fide potential
purchaser of the Aircraft and/or Engines or any beneficial
interest therein (subject to the execution by such prospective
purchaser of a written confidentiality statement setting forth
the same or substantially similar terms as those referred to in
this paragraph).
B. Without in any way releasing Fed Ex from any of its duties or
obligations under the GTA, the Lessor agrees that, insofar as the
provisions of the GTA relate to the Engines, in exercising any
rights under such Engine Warranties or in making any claim with
respect thereto, the applicable terms and conditions of the GTA,
including Article Eight (Limitation of Liability) and the Product
Support Plan, shall apply to, and be binding upon, the Lessor to
the same extent as Fed Ex.
C. Insofar as the provisions of the GTA relate to the Engines, in
exercising any rights under the Engine Warranties or in making
any claim with respect thereto, the applicable terms and
conditions of the GTA and the Product Support Plan or the Consent
attached hereto and incorporated herein shall apply to, and be
binding upon, the Lessor to the same extent as if named "Airline"
therein. It is expressly agreed that Fed Ex shall at all times
remain liable to the Engine Manufacturer under the GTA to perform
all the duties and obligations of Fed Ex thereunder to the same
extent as if this Assignment had not been executed. The
performance by the Lessor of any of the rights assigned hereunder
shall not release Fed Ex from any of its duties or obligations to
the Engine Manufacturer under the GTA except to the extent that
such exercise by the Lessor shall constitute performance of such
duties and obligations.
D. Nothing contained in this Assignment shall subject the Engine
Manufacturer to any obligation or liability to which it would not
otherwise be subject under the GTA or modify in any respect the
Engine Manufacturer's contract rights thereunder, or subject the
Engine Manufacturer to any multiple or duplicative liability or
obligation under the GTA. The Engine Manufacturer recognizes and
it is consented to by all parties to this Assignment that the
Lessor shall collaterally assign its rights under the Lease and
this Assignment and will mortgage the Aircraft and Engines, to
First Security Bank, National Association, as Indenture Trustee
under the Trust Indenture and Security Agreement (Federal Express
Corporation Trust No. N677FE), dated as of June 15, 1998, as
amended and restated as of August 1, 1998 (on the terms set forth
therein); however, no further extension or assignment (except to
a successor indenture trustee under such agreement) of any
remaining Engine Warranties, including but not limited to
extensions or assignments for security purposes, are permitted
without the prior written consent of the Engine Manufacturer.
E. Exclusive of the assignment noted in Section 2D above, the Engine
Manufacturer shall not be deemed to have knowledge of any change
in the authority of Fed Ex or the Lessor, as the case may be, to
exercise the rights established hereunder until the Engine
Manufacturer has received written notice thereof from the
Indenture Trustee or the Lessor. Such notice shall be sent to:
Commercial Contracts Director, GE Aircraft Engines, Mail Drop
F17, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
facsimile: (▇▇▇) ▇▇▇-▇▇▇▇.
F. This Assignment shall apply only in respect to each Engine and
shall not extend to any replacement or substitute engine. If,
during the term of this Assignment and the Lease, it becomes
necessary to replace or substitute an Engine due to a Failure (as
such term is defined in the Engine Product Support Plan,
excluding normal wear, tear and deterioration which can be
restored by overhaul and repair), damage or loss, the Assignor
(or the Lessor) shall give the Engine Manufacturer written notice
of such Failure, damage or loss. The notice shall include (i) a
description of the event or circumstances which constitute a
Failure, damage or loss, and (ii) the serial numbers of the (a)
failed, damaged or lost Engine and (b) Replacement Engine and
shall be sent to: Customer Support Manager, GE Aircraft Engines,
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇. The
Engine Manufacturer shall not be deemed to have knowledge of the
need for a replacement engine until it has received the
aforementioned notice.
In the event an Engine subject to this Assignment fails, is
damaged or lost, and such Engine is replaced by a Replacement
Engine, the Assignor and the Assignee shall, prior to, or
contemporaneous with, the delivery of such Replacement Engine,
obtain the written consent of the Engine Manufacturer (which it
shall be obligated to give) that the Engine Warranties as set
forth in the Engine Product Support Plan shall apply to such
Replacement Engines. The Engine Manufacturer shall not incur any
obligation or liability for a Replacement Engine under the Engine
Warranties until the execution of the aforementioned consent.
G. At any time and upon the written request of the Engine
Manufacturer, Fed Ex and the Lessor shall promptly and duly
execute and deliver any and all such further assurances,
instruments and documents and take all such further action, at
the expense of Fed Ex, as the Engine Manufacturer may reasonably
request in order to obtain the full benefit of Fed Ex and the
Lessor's agreement as set forth in this Assignment and the
Consent attached hereto and incorporated herein.
Any performance by the Engine Manufacturer that discharges its
obligation under the Engine Warranties will satisfy the
respective interests of Fed Ex and the Lessor. So long as the
Engine Manufacturer acts in good faith in accordance with this
Assignment, the Engine Manufacturer may rely conclusively on any
notice given pursuant to this Assignment without inquiring as to
the accuracy of, or the entitlement of the party to give, such
notice.
3
The Engine Manufacturer shall reserve to Fed Ex all those rights, claims
and interests, as and to the extent such relates to the purchase and operation
of engines other than the Engines subject to the Assignment, as well as other
matters not directly pertaining to the Engines, and Fed Ex will have or retain
under the GTA such rights, claims and interest not expressly assigned to the
Lessor hereunder.
4
The Engine Manufacturer warrants each new Reverser (as such is defined in
the Engine Product Support Plan) installed on the Aircraft at the time of
delivery to Fed Ex under the terms of the New Engine Warranty; however,
administration of such New Engine Warranty, with respect to both installed and
replacement Reversers, shall be performed by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
5
If at some point in time, the Engine Manufacturer receives written
notification from the Indenture Trustee or the Lessor that the Lessor is or
becomes entitled to possession of the Engines, pursuant to an Event of Default
or otherwise, and desires to sell or lease the Engines to a party who is not
currently a party to a General Terms Agreement with the Engine Manufacturer,
the Engine Manufacturer agrees if such agreement is permissible under
applicable U.S. law, that it will offer to such purchaser or lessee, subject to
the execution of an agreement to sell or lease such Engines, a General Terms
Agreement on the Engine Manufacturer's standard terms and conditions. If,
however, such purchaser or lessee is currently a party to a General Terms
Agreement with the Engine Manufacturer, the remaining portion of the terms of
such General Terms Agreement shall be extended to and apply to such subsequent
purchase or lease; provided, however, that the written consent of the Engine
Manufacturer to such an extension is obtained prior to the transaction's
occurrence.
This Assignment shall be governed by the laws of the State of New York,
including all matters of construction, validity and performance, as applicable
to contracts between citizens of that state to be performed wholly within that
state, and without reference to conflicts of law principles.
In witness whereof, the parties hereto have caused this Engine Warranty
Assignment to be duly executed and delivered as of the date hereof.
General Electric Company
_____________________________
Name:
Title:
Federal Express Corporation
_____________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Treasurer
State Street Bank and Trust Company
of Connecticut, National Association
not in its individual capacity,
but solely as Owner Trustee
_____________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
CONSENT
(FEDERAL EXPRESS CORPORATION TRUST NO. N677FE)
The Engine Manufacturer, General Electric Company (the "Engine
Manufacturer"), a New York corporation, hereby consents to the Engine Warranty
Assignment attached hereto and acknowledges notice of (i) the Purchase
Agreement Assignment (Federal Express Corporation Trust No. N677FE), dated as
of August 1, 1998 and entered into by and between Federal Express Corporation,
as Assignor ("Fed Ex") and State Street Bank and Trust Company of Connecticut,
National Association (not in its individual capacity, but solely as Owner
Trustee) as Assignee ("Lessor"), (the "Purchase Agreement Assignment"); and
(ii) the Lease Agreement (Federal Express Corporation Trust No. N677FE), dated
as of June 15, 1998, as amended and restated as of August 1, 1998 and entered
into by and between Fed Ex, as Lessee and the Lessor, as Lessor (as in effect
from time to time, the "Lease") and (iii) the Trust Indenture and Security
Agreement (Federal Express Corporation Trust No. N677FE), dated as of June 15,
1998, as amended and restated as of August 1, 1998 (the "Indenture"), between
the Lessor and First Security Bank, National Association, as Indenture Trustee
("Indenture Trustee"). The Purchase Agreement Assignment and Lease cover two
GE CF6-80C2-A5F series engines bearing Engine Manufacturer's serial numbers
705-266 and 705-267, respectively, (the "Engines") as installed on the Airbus
A300F4-605R series aircraft bearing Manufacturer's serial number 791 (the
"Aircraft"). In connection with such Purchase Agreement Assignment and Lease,
reference is made to the General Terms Agreement No. 6-9034 dated as of July 3,
1991, between the Engine Manufacturer and Fed Ex (the "General Terms
Agreement"), under which the Engine Manufacturer agreed to support certain GE
CF6-80C2-A5F series engines, including the Engines and spare parts therefor to
be purchased by Fed Ex from the Engine Manufacturer, as installed on certain
Airbus A300F4-605R series aircraft, including the Aircraft. Recognizing that
the Lessor and Fed Ex have entered into the Lease which provides for the lease
by the Lessor to Fed Ex of the Aircraft and Engines and that the Lessorhas
granted a security interest in the Engines and assigned certain of its rights
under the Lease to the Indenture Trustee, the Engine Manufacturer agrees that
in furtherance of the Lease, it will so support such Engines and spare parts
therefor, subject to the applicable terms and conditions of the General Terms
Agreement, including Article Eight (Limitation of Liability).
The Engine Manufacturer represents and warrants that:
1. it is a corporation existing in good standing under the laws
of the State of New York;
2. the making and performance of this Consent in accordance with
its terms has been duly authorized by all necessary corporate
action on the part of the Engine Manufacturer, does not
require any shareholder approval and does not contravene its
certificate of incorporation or by-laws or any debenture,
credit agreement or other contractual agreement to which the
Engine Manufacturer is a party or by which it is bound or any
law binding on the Engine Manufacturer;
3. the making and performance of the Engine Warranties, as
defined in the Engine Warranty Assignment attached hereto
(the "Engine Warranties") in accordance with their terms have
been duly authorized by all necessary corporate action on the
part of the Engine Manufacturer, do not require any
shareholder approval and do not contravene the Engine
Manufacturer's certificate of incorporation or by-laws or any
debenture, credit agreement or other contractual agreement to
which the Engine Manufacturer is a party or by which it is
bound or any law binding on the Engine Manufacturer; and
4. the Engine Warranties constitute, as of the date on which
they were made and at all times thereafter, and this Consent
and the Engine Warranty Assignment attached hereto are,
binding obligations of the Engine Manufacturer enforceable
against the Engine Manufacturer in accordance with its terms
subject to:
(a) the limitation of applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
rights of creditors generally; and
(b) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
This Consent shall be governed by the laws of the State of New York,
including all matters of construction, validity and performance, as applicable
to contracts between citizens of that state to be performed wholly within that
state, and without reference to conflicts of law principles.
General Electric Company
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