-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, CApep2T0xCgloXg4iRk7aIO+a2JPOJMQ2chOZvPv0g6pwZqgUTWxaSFRR8chRq6U MQGIuKuDg9kbYHXnm6Mf0A== 0000950103-94-001925.txt : 19940322 0000950103-94-001925.hdr.sgml : 19940322 ACCESSION NUMBER: 0000950103-94-001925 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19940316 ITEM INFORMATION: 7 FILED AS OF DATE: 19940321 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FEDERAL EXPRESS CORP CENTRAL INDEX KEY: 0000230211 STANDARD INDUSTRIAL CLASSIFICATION: 4513 IRS NUMBER: 710427007 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 8-K SEC ACT: 34 SEC FILE NUMBER: 001-07806 FILM NUMBER: 94516890 BUSINESS ADDRESS: STREET 1: 2005 CORPORATE AVENUE CITY: MEMPHIS STATE: TN ZIP: 38132 BUSINESS PHONE: (901)-395-3382 MAIL ADDRESS: STREET 1: 2005 CORPORATE AVENUE CITY: MEMPHIS STATE: TN ZIP: 38132 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report : March 16, 1994 (Date of earliest event reported) --------------------------------- FEDERAL EXPRESS CORPORATION (Exact name of registrant as specified in its charter) Delaware (State of Incorporation) 1-7806 71-0427007 (Commission File Number) (IRS Employer Identification No.) 2005 Corporate Avenue, Memphis, Tennessee 38132 (Address of principal executive offices) Registrant's Telephone Number, including area code: (901) 369-3600 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS The following documents relating to the 1994 Pass Through Certificates, Series A310-A1, Series A310-A2 and Series A310-A3 are being filed in connection with, and incorporated by reference in, the Registrant's Registration Statement on Form S-3 No. 33-51623, which was declared effective February 18, 1994. Exhibit Description of Exhibit - ------- ---------------------- 1 Underwriting Agreement relating to Federal Express Corporation 1994 Pass Through Certificates Series A310-A1, Series A310-A2 and Series A310-A3. 4.a.1 Pass Through Trust Agreement dated as of March 1, 1994, between Federal Express Corporation and the Pass Through Trustee. 4.a.2 Revised form of Pass Through Certificates (included in Exhibit 4.a.3). 4.a.3 Forms of Series Supplements 1994 A310-A1, 1994 A310-A2 and 1994 A310-A3 to the Pass Through Trust Agreement between Federal Express Corporation and the Pass Through Trustee relating to the Pass Through Certificates. 4.b.1 Form of Trust Indenture and Security Agreement (Federal Express Corporation Trust [A] [B] [C] [D] [E] [F] [G] [H] [I] [J] [K] [L] [M]) between the Owner Trustee and the Indenture Trustee relating to Equipment Trust Certificates (Federal Express Corporation Trust [A] [B] [C] [D] [E] [F] [G] [H] [I] [J] [K] [L] [M]) in connection with the offering of Pass Through Certificates.* 4.b.2 Form of Equipment Trust Certificates (included in Exhibit 4.b.1). 4.c.1 Form of Participation Agreement (Federal Express Corporation Trust [A] [B] [C] [D] [E] [F] [G] [H] [I] [J] [K] [L] [M]) among Federal Express Corporation, as Lessee, the Owner Participant, the Indenture Trustee, the Owner Trustee, the LC Bank and the Pass Through Trustee relating to Equipment Trust Certificates (Federal Express Corporation Trust [A] [B] [C] [D] [E] [F] [G] [H] [I] [J] [K] [L] [M]).** 4.d Form of Trust Agreement between the Owner Participant and the Owner Trustee relating to thirteen Airbus A310-203 Aircraft. 4.e Form of Lease Agreement (Federal Express Corporation Trust [A] [B] [C] [D] [E] [F] [G] [H] [I] [J] [K] [L] [M]) between the Owner Trustee, as Lessor, and Federal Express Corporation, as Lessee, relating to Equipment Trust Certificates (Federal Express Corporation Trust [A] [B] [C] [D] [E] [F] [G] [H] [I] [J] [K] [L] [M]).** 4.f Form of Letter of Credit from the LC Bank to the Indenture Trustee relating to Equipment Trust Certificates (Federal Express Corporation Trust [A] [B] [C] [D] [E] [F] [G] [H] [I] [J] [K] [L] [M]).** 4.g Form of Collateral Agreement (Trust [A] [B] [C] [D] [E] [F] [G] [H] [I] [J] [K] [L] [M]) between the Owner Trustee and the Indenture Trustee relating to Equipment Trust Certificates (Federal Express Corporation Trust [A] [B] [C] [D] [E] [F] [G] [H] [I] [J] [K] [L] [M]) in connection with the offering of Pass Through Certificates.** 23.c Consent of Kenneth R. Masterson - ------------- * Separate Trust Indenture and Security Agreements will be entered into with respect to each Aircraft. Except for differences in designations, dollar amounts, interest rates, percentages, final distribution dates and the like, there are no material details in which the Trust Indenture and Security Agreements and related forms of Equipment Trust Certificates not filed herewith differ from the corresponding Exhibit for the form of such document. ** Separate Participation Agreements, Lease Agreements, Letters of Credit and Collateral Agreements will be entered into with respect to each Aircraft. Except for differences in the Aircraft Registration Numbers, Manufacturer's Serial Numbers for the Aircraft and the Engines, designations, dollar amounts, scheduled lease commencement dates, exchange dates, expiration dates and the like, there are no material details in which any agreement not filed herewith differs from the corresponding Exhibit for the form of such document. Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. FEDERAL EXPRESS CORPORATION By: /s/ GRAHAM R. SMITH ------------------------------ Graham R. Smith Vice President & Controller Dated: March 16, 1994 EXHIBIT INDEX Exhibit Description of Exhibit - ------- ---------------------- 1 Underwriting Agreement relating to Federal Express Corporation 1994 Pass Through Certificates Series A310- A1, Series A310-A2 and Series A310-A3. 4.a.1 Pass Through Trust Agreement dated as of March 1, 1994, between Federal Express Corporation and the Pass Through Trustee. 4.a.2 Revised form of Pass Through Certificates (included in Exhibit 4.a.3). 4.a.3 Forms of Series Supplements 1994 A310-A1, 1994 A310-A2 and 1994 A310-A3 to the Pass Through Trust Agreement between Federal Express Corporation and the Pass Through Trustee relating to the Pass Through Certificates. 4.b.1 Form of Trust Indenture and Security Agreement (Federal Express Corporation Trust [A] [B] [C] [D] [E] [F] [G] [H] [I] [J] [K] [L] [M]) between the Owner Trustee and the Indenture Trustee relating to Equipment Trust Certificates (Federal Express Corporation Trust [A] [B] [C] [D] [E] [F] [G] [H] [I] [J] [K] [L] [M]) in connection with the offering of Pass Through Certificates.* 4.b.2 Form of Equipment Trust Certificates (included in Exhibit 4.b.1). 4.c.1 Form of Participation Agreement (Federal Express Corporation Trust [A] [B] [C] [D] [E] [F] [G] [H] [I] [J] [K] [L] [M]) among Federal Express Corporation, as Lessee, the Owner Participant, the Indenture Trustee, the Owner Trustee, the LC Bank and the Pass Through Trustee relating to Equipment Trust Certificates (Federal Express Corporation Trust [A] [B] [C] [D] [E] [F] [G] [H] [I] [J] [K] [L] [M]).** 4.d Form of Trust Agreement between the Owner Participant and the Owner Trustee relating to thirteen Airbus A310- 203 Aircraft. 4.e Form of Lease Agreement (Federal Express Corporation Trust [A] [B] [C] [D] [E] [F] [G] [H] [I] [J] [K] [L] [M]) between the Owner Trustee, as Lessor, and Federal Express Corporation, as Lessee, relating to Equipment Trust Certificates (Federal Express Corporation Trust [A] [B] [C] [D] [E] [F] [G] [H] [I] [J] [K] [L] [M]).** 4.f Form of Letter of Credit from the LC Bank to the Indenture Trustee relating to Equipment Trust Certificates (Federal Express Corporation Trust [A] [B] [C] [D] [E] [F] [G] [H] [I] [J] [K] [L] [M]).** 4.g Form of Collateral Agreement (Trust [A] [B] [C] [D] [E] [F] [G] [H] [I] [J] [K] [L] [M]) between the Owner Trustee and the Indenture Trustee relating to Equipment Trust Certificates (Federal Express Corporation Trust [A] [B] [C] [D] [E] [F] [G] [H] [I] [J] [K] [L] [M]) in connection with the offering of Pass Through Certificates.** 23.c Consent of Kenneth R. Masterson - ------------- * Separate Trust Indenture and Security Agreements will be entered into with respect to each Aircraft. Except for differences in designations, dollar amounts, interest rates, percentages, final distribution dates and the like, there are no material details in which the Trust Indenture and Security Agreements and related forms of Equipment Trust Certificates not filed herewith differ from the corresponding Exhibit for the form of such document. ** Separate Participation Agreements, Lease Agreements, Letters of Credit and Collateral Agreements will be entered into with respect to each Aircraft. Except for differences in the Aircraft Registration Numbers, Manufacturer's Serial Numbers for the Aircraft and the Engines, designations, dollar amounts, scheduled lease commencement dates, exchange dates, expiration dates and the like, there are no material details in which any agreement not filed herewith differs from the corresponding Exhibit for the form of such document. EX-1 2 FEDERAL EXPRESS CORPORATION 1994 Pass Through Certificates, Series A310-A1 1994 Pass Through Certificates, Series A310-A2 1994 Pass Through Certificates, Series A310-A3 UNDERWRITING AGREEMENT March 16, 1994 Goldman, Sachs & Co. Merrill Lynch & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated c/o Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 Ladies and Gentlemen: Federal Express Corporation, a Delaware corporation (the "Company"), proposes that NationsBank of South Carolina, National Association, acting not in its individual capacity but solely as pass through trustee (the "Trustee") under the Pass Through Trust Agreement dated as of March 1, 1994 (the "Basic Agreement"), as supplemented for each series (each, a "Series") of pass through certificates (the "Pass Through Certificates") to be purchased hereunder by a Series Supplement (each, a "Series Supplement"), in each case between the Company and the Trustee (for each Series, the Basic Agreement, as supplemented by the related Series Supplement, being referred to herein as the "Pass Through Agreement"), issue and sell to the underwriters named in Schedule I hereto its Pass Through Certificates in the aggregate amounts and with the applicable interest rates and final distribution dates set forth on Exhibit A hereto (the "Offered Certificates") on the terms and conditions stated herein and in Schedule II. Each Series of Pass Through Certificates will represent interests in a separate trust (each, a "Pass Through Trust") established pursuant to the related Pass Through Agreement to fund the purchase of equipment trust certificates ("Equipment Trust Certificates") which are to be issued as nonrecourse obligations by an owner trustee, acting not in its individual capacity but solely as owner trustee (the "Owner Trustee") under the Trust Agreement, dated as of September 1, 1993, as amended and restated as of March 1, 1994, between LLG Aircraft Leasing, L.P., as owner participant (the "Owner Participant") and the Owner Trustee, in connection with thirteen separate leveraged lease transactions to be entered into by the Company, in each case to fund a portion of the payment by the Owner Trustee of the acquisition cost (including any costs of modification required prior to commencement of each Lease) of thirteen Airbus A310-203 aircraft, registration numbers D-AICA, D-AICB, D-AICC, D-AICD, D-AICF, D-AICH, D- AICK, D-AICL, D-AICM, D-AICN, D-AICP, D-AICR and D-AICS, respectively (collectively, the "Aircraft"), that are to be leased by the Company from the Owner Trustee pursuant to thirteen leases, all in accordance with the Agreement to Lease, dated as of September 1, 1993, as amended and restated as of March 1, 1994 (the "Agreement to Lease"), among the Company, the Owner Trustee and Deutsche Lufthansa Aktiengesellschaft ("Lufthansa"). Each of the thirteen series of Equipment Trust Certificates will be issued under a separate Trust Indenture and Security Agreement between NationsBank of Georgia, National Association, as Indenture Trustee (the "Indenture Trustee") and the Owner Trustee (each, an "Indenture" and, collectively, the "Indentures"). As used herein, unless the context otherwise requires, the term "Underwriters" shall mean the firm or firms named as Underwriter or Underwriters in Schedule I. The Company has filed with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-3 (No. 33-51623) for the registration of certain pass through certificates, including the Offered Certificates, under the Securities Act of 1933, as amended (the "1933 Act"), and the offering thereof from time to time in accordance with Rule 415 of the rules and regulations of the Commission under the 1933 Act (the "1933 Act Regulations"). Such registration statement, as amended by a pre-effective amendment thereto, has been declared effective by the Commission and the Basic Agreement has been qualified under the Trust Indenture Act of 1939, as amended (the "1939 Act"). The Company has, pursuant to Rule 424 under the 1933 Act, filed with, or transmitted for filing to, or shall within the required period of time hereafter file with or transmit for filing to, the Commission a prospectus supplement (the "Prospectus Supplement") specifically relating to the Offered Certificates, together with a prospectus relating to pass through certificates. The term "Registration Statement" means the above-referenced registration statement in the form in which it became effective, including the exhibits thereto and the documents incorporated by reference therein, as amended to the date hereof. The term "Basic Prospectus" means the above-referenced prospectus relating to pass through certificates. The term "Prospectus" means the Basic Prospectus supplemented by the Prospectus Supplement. The term "Preliminary Prospectus" means a preliminary prospectus supplement specifically relating to the Offered Certificates together with the Basic Prospectus. As used herein, the terms "Basic Prospectus," "Prospectus" and "Preliminary Prospectus" shall include in each case the documents, if any, incorporated by reference therein. The terms "supplement" and "amendment" or "amend" as used herein shall include all documents deemed to be incorporated by reference in the Prospectus that have been filed subsequent to the date of the Basic Prospectus by the Company with the Commission pursuant to the Securities Exchange of 1934, as amended (the "1934 Act"). Capitalized terms used but not otherwise defined in this Agreement shall have the meanings specified in or pursuant to the Pass Through Agreement or the Indenture relating to each related series of Equipment Trust Certificates. SECTION 1. Representations and Warranties. (a) The Company represents and warrants to each Underwriter, as of the date hereof, as follows: (i) Due Incorporation and Qualification. The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the state of Delaware, is a "citizen of the United States" and a "certificated air carrier" within the meaning of the Federal Aviation Act of 1958, as amended (the "Aviation Act"), has the corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus; and the Company is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise. (ii) Subsidiaries. Each subsidiary of the Company which is a significant subsidiary as defined in Rule 405 of Regulation C of the 1933 Act Regulations (each a "Significant Subsidiary") has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise; and all of the issued and outstanding capital stock of each Significant Subsidiary has been duly authorized and validly issued, is fully paid and non-assessable and, except for directors' qualifying shares (except as otherwise stated in the Registration Statement), is owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity. (iii) Registration Statement and Prospectus. At the time the Registration Statement became effective, the Registration Statement complied, and as of the date hereof does comply, in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations and the 1939 Act and the rules and regulations of the Commission promulgated thereunder. The Registration Statement, at the time it became effective, did not, and at each time thereafter at which any amendment to the Registration Statement becomes effective and any Annual Report on Form 10-K is filed by the Company with the Commission, will not, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Prospectus, as of the date hereof does not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the representations and warranties in this subsection shall not apply to statements in or omissions from the Registration Statement or Prospectus made in reliance upon and in conformity with information furnished to the Company in writing by an Underwriter expressly for use in the Registration Statement or Prospectus, to that part of the Registration Statement which constitutes the Indenture Trustee's Statement of Eligibility under the 1939 Act (Form T-1), or to those sections of the Prospectus captioned "Description of the Letters of Credit" and "Appendix B -- Westdeutsche Landesbank Girozentrale." No stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been initiated or threatened by the Commission. (iv) Incorporated Documents. The documents incorporated by reference in the Prospectus, at the time they were or hereafter are filed with the Commission, complied and will comply in all material respects with the requirements of the 1934 Act and the rules and regulations promulgated thereunder (the "1934 Act Regulations"), and, when read together and with the other information in the Prospectus, did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (v) Accountants. The accountants who certified the financial statements included or incorporated by reference in the Prospectus are independent public accountants as required by the 1933 Act and the 1933 Act Regulations. (vi) Financial Statements. The financial statements of the Company included or incorporated by reference in the Prospectus and the Registration Statement present fairly the financial position of the Company as of the dates thereof and the results of operations, changes in common stockholders' investment and cash flows of the Company, for the respective periods covered thereby, all in conformity with generally accepted accounting principles applied on a consistent basis throughout the entire period involved, except as stated in such financial statements; and the financial schedules included or incorporated by reference in the Registration Statement meet the requirements of the 1933 Act Regulations or the 1934 Act Regulations, as applicable, and accurately present the information required to be shown therein. (vii) Material Changes or Material Transactions. Except as stated in the Prospectus, subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus, the Company has not incurred any liabilities or obligations, direct or contingent, or entered into any transactions which are material to the Company, and there has not been any material change in the capital stock or short-term debt, or any material increase in long-term debt of the Company, or any material adverse change, or any development involving a prospective material adverse change, in the condition (financial or other), business, prospects, net worth or results of operations of the Company. (viii) No Defaults; Regulatory Approvals. Neither the Company nor any of its subsidiaries is in violation of its charter or in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which it is a party or by which it or any of them or their properties may be bound; and the execution and delivery by the Company of this Agreement, each Pass Through Agreement and any other Operative Agreement to which the Company is or is to be a party and the consummation of the transactions contemplated herein and therein have been duly authorized by all necessary corporate action and will not conflict with or constitute a breach of, or default under, or result in the creation or imposition of any lien (other than as will be permitted under the Leases), charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which the Company or any such subsidiary is a party or by which it or any of them may be bound or to which any of the property or assets of the Company or any such subsidiary is subject, which conflict, breach or default would have, individually or in the aggregate with any other such instances, a material adverse effect on the condition (financial or other), business, prospects, net worth or results of operations of the Company and its subsidiaries considered as one entity, nor will such action result in any violation of the provisions of the charter or by-laws of the Company or any law, administrative regulation or administrative or court order or decree currently in effect or in effect at the time of execution and delivery of this Agreement, each Pass Through Agreement and the other Operative Agreements and applicable to the Company or any of its subsidiaries; and no consent, approval, authorization, order or decree of any court or governmental agency or body is required for the consummation by the Company of the transactions contemplated by this Agreement, any Pass Through Agreement or any other Operative Agreement to which the Company is or is to be a party, except such as may be required under the 1933 Act, the 1939 Act, the 1933 Act Regulations or state securities or Blue Sky laws, the Aviation Act, and the Uniform Commercial Code as in effect in Delaware and Tennessee. (ix) Legal Proceedings; Contracts. Except for matters described in the Prospectus (as to which the Company makes no representation as to the outcome), there is no pending legal, governmental or administrative proceeding or series of related proceedings to which the Company is a party or of which any property of the Company is the subject which is reasonably likely, individually or in the aggregate to have a material adverse effect on the condition (financial or other), business, prospects, net worth or results of operations of the Company on a consolidated basis, to the best knowledge of any financial or legal officer of the Company, no such proceedings are threatened or contemplated against the Company by governmental authorities or others and no basis for any such proceedings exists; and there are no contracts or documents of the Company or any of its subsidiaries which are required to be filed as exhibits to the Registration Statement by the 1933 Act or by the 1933 Act Regulations which have not been so filed. (x) Compliance with Laws. The Company's business and operations comply in all material respects with all laws and regulations applicable thereto and there are no known, proposed or threatened changes in any laws or regulations which would have a material adverse effect on the Company or the manner in which it conducts its business; the Company possesses all valid and effective certificates, licenses and permits required to conduct its business as now conducted, except for instances which individually or in the aggregate do not, or will not, have a material adverse effect on the condition (financial or other), business, prospects, net worth or results of operations of the Company. (xi) Enforceability of Operative Agreements. Each of the Pass Through Agreements and the other Operative Agreements to which the Company is or is to be a party have been duly authorized by the Company, will each be substantially in the form heretofore supplied to the Underwriters and, when duly executed and delivered by the Company and the other parties thereto, will each constitute a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms. The Basic Agreement as executed is substantially in the form filed as an exhibit to the Registration Statement and has been duly qualified under the 1939 Act. (xii) Validity of the Offered Certificates. When executed, issued, authenticated and delivered pursuant to the provisions of the applicable Pass Through Agreement and sold and paid for as provided in this Agreement, each Series of Offered Certificates will constitute valid and legally binding obligations of the Trustee enforceable in accordance with their terms; and the Certificateholders of such Offered Certificates will be entitled to the benefits provided by such Pass Through Agreement. (xiii) Equipment Trust Certificates. The Equipment Trust Certificates to be issued under each applicable Indenture, when duly executed and delivered by the related Owner Trustee and duly authenticated by the Indenture Trustee in accordance with the terms of such Indenture, will be duly issued under such Indenture and will constitute the valid and binding obligations of such Owner Trustee, and the Holders thereof will be entitled to the benefits of such Indenture. (xiv) Due Execution. This Agreement has been duly executed and delivered by the Company. (xv) Descriptions. The Offered Certificates, Pass Through Agreements, Indentures, Participation Agreements, Leases and other Operative Agreements conform, or will upon execution conform, in all material respects to the descriptions thereof in the Prospectus. The representations and warranties made by the Company as to the enforceability of the Pass Through Agreements, the Indentures, the Offered Certificates, the Equipment Trust Certificates and any other Operative Agreement to which the Company is or is to be a party set forth in subparagraphs (xi), (xii) and (xiii) above are limited by bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting enforcement of creditors' rights or by general equity principles, and the enforceability of any Pass Through Agreement, Lease and Indenture is also limited by applicable laws which may affect the remedies provided therein but which do not affect the validity of such Pass Through Agreement, Lease or Indenture or make such remedies inadequate for the practical realization of the benefits intended to be provided thereby. (b) Lufthansa represents and warrants to each Underwriter and to the Company that those sections of the Prospectus captioned "Description of the Letters of Credit" and "Appendix B -- Westdeutsche Landesbank Girozentrale," as of the date hereof, do not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (c) Additional Certifications. Any certificate signed by any officer or general partner, as the case may be, of the Company, Lufthansa or the Owner Participant and delivered to the Underwriters or to counsel for the Underwriters in connection with an offering of the Offered Certificates shall be deemed a representation and warranty by the Company, Lufthansa or the Owner Participant, as the case may be, to each Underwriter participating in such offering as to the matters covered thereby on the date of such certificate and unless subsequently amended or supplemented subsequent thereto. SECTION 2. Purchase and Sale. (a) On the basis of the representations and warranties herein contained and subject to the terms and conditions set forth herein and in Schedule II, if any, the Company agrees to cause the Trustee to sell to each Underwriter, and each Underwriter agrees, severally and not jointly, to purchase from the Trustee, at the purchase price specified in the first column of Exhibit A hereto, the respective amounts of each Series of Offered Certificates set forth opposite the name of such Underwriter in Schedule I. It is understood that the Underwriters propose to offer the Offered Certificates for sale to the public as set forth in the Prospectus. (b) Payment of the purchase price for any Offered Certificates to be purchased by the Underwriters shall be made at Sullivan & Cromwell, 125 Broad Street, New York, New York 10004, or at such other place as shall be agreed upon by the Underwriters and the Company, at 10:00 A.M., New York City time, on the fifth business day (unless postponed in accordance with the provisions of Section 10) following the date hereof or at such other date, time or location specified in Schedule II, or as otherwise shall be agreed upon by the Underwriters and the Company (such time and date being referred to as a "Closing Time"). Delivery of the Offered Certificates shall be made for the account of the Underwriters as specified in Schedule II against payment by the Underwriters of the purchase price thereof to, or upon the order of, the Trustee (or such other person as the Company may direct) by wire transfer of federal or other immediately available funds or by intra-bank transfer of immediately available funds. Such Offered Certificates shall be registered in such names, and in such denominations, as the Underwriters may request in writing at least two business days prior to the Closing Time. Such Offered Certificates, which may be in temporary form, will be made available for examination and packaging by the Underwriters in New York, New York, on or before the first business day prior to the Closing Time or at such other time and place specified in Schedule II. (c) As compensation to the Underwriters for their commitments and obligations hereunder in respect of the Offered Certificates, including their undertakings to distribute Offered Certificates, the Owner Participant will pay to the Underwriters an amount equal to that percentage of the aggregate amount of each series of Offered Certificates purchased by the Underwriters as set forth in the sixth column of Exhibit A as the underwriting discounts and commissions. Such payment shall be made at the Closing Time simultaneously with the payment by the Underwriters to the Trustee of the purchase price of the Offered Certificates as specified in Section 2(b) hereof. Payment of such compensation shall be made by wire transfer of federal or other immediately available funds or by intra-bank transfer of immediately available funds. SECTION 3. Covenants of the Company. The Company covenants with each of the Underwriters as follows: (a) Prospectus Supplement. The Company has prepared a Preliminary Prospectus containing such information as the Underwriters and the Company have deemed appropriate, and immediately following the execution of this Agreement the Company will prepare a Prospectus Supplement setting forth such information as the Underwriters and the Company deem appropriate in connection with the offering of the Offered Certificates. The Company will promptly transmit copies of the Prospectus Supplement to the Commission for filing pursuant to Rule 424 of the 1933 Act Regulations. (b) Notice of Certain Events. The Company will notify the Underwriters immediately (i) of the effectiveness of any amendment to the Registration Statement, (ii) of the transmittal to the Commission for filing of any supplement to the Prospectus or any document to be filed pursuant to the 1934 Act which will be incorporated by reference in the Prospectus, (iii) of the receipt of any comments from the Commission with respect to the Registration Statement, the Prospectus or the Prospectus Supplement relating in any way to the offer and sale of the Offered Certificates, (iv) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information, and (v) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose. The Company will make every reasonable effort to prevent the issuance of any stop order and, if any stop order is issued, to obtain the lifting thereof at the earliest possible moment. (c) Notice of Certain Proposed Filings. The Company will give notice of its intention to file or prepare any amendment to the Registration Statement or any amendment or supplement to the Prospectus, whether by the filing of documents pursuant to the 1934 Act, the 1933 Act or otherwise, and will furnish the Underwriters with copies of any such amendment or supplement or other documents proposed to be filed or prepared a reasonable time in advance of such proposed filing or preparation, as the case may be. (d) Copies of the Registration Statement and the Prospectus. The Company will deliver to the Underwriters one signed copy and as many conformed copies of the Registration Statement (as originally filed) and of each amendment thereto (including exhibits filed therewith or incorporated by reference therein and documents incorporated by reference in the Prospectus) as the Underwriters may reasonably request. The Company will furnish to the Underwriters as many copies of the Prospectus (as amended or supplemented) as the Underwriters shall reasonably request so long as the Underwriters are required to deliver a Prospectus in connection with sales or solicitations of offers to purchase the Offered Certificates. (e) Revisions of Prospectus -- Material Changes. If at any time when the Prospectus is required by the 1933 Act to be delivered in connection with sales of the Offered Certificates any event shall occur or condition exist as a result of which it is necessary, in the reasonable opinion of counsel for the Underwriters or counsel for the Company, to further amend or supplement the Prospectus in order that the Prospectus will not include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, or if it shall be necessary, in the reasonable opinion of such counsel, at any such time to amend or supplement the Registration Statement or the Prospectus in order to comply with the requirements of the 1933 Act or the 1933 Act Regulations the Company will promptly prepare and file with the Commission such amendment or supplement, whether by filing documents pursuant to the 1934 Act, the 1933 Act or otherwise, as may be necessary to correct such untrue statement or omission or to make the Registration Statement and Prospectus comply with such requirements. (f) Earnings Statements. The Company will make generally available to its security holders as soon as practicable, but not later than 90 days after the close of the period covered thereby, an earnings statement (in form complying with the provisions of Rule 158 under the 1933 Act) covering each twelve-month period beginning, in each case, not later than the first day of the Company's fiscal quarter next following the "effective date" (as defined in such Rule 158) of the Registration Statement with respect to each sale of Offered Certificates. (g) Blue Sky Qualifications. The Company will endeavor, in cooperation with the Underwriters, to qualify the Offered Certificates for offering and sale under the applicable securities laws of such states and other jurisdictions of the United States as the Underwriters may designate, and will maintain such qualifications in effect for so long as may be required for the distribution of the Offered Certificates; provided, however, that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or to subject itself to taxation as doing business in any jurisdiction in which it is not otherwise required to be so qualified. The Company will file such statements and reports as may be required by the laws of each jurisdiction in which the Offered Certificates have been qualified as provided above. (h) 1934 Act Filings. The Company, during the period when the Prospectus is required to be delivered under the 1933 Act, will file promptly all documents required to be filed with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act. (i) Stand-Off Agreement. The Company will not, between the date of this Agreement and termination of any trading restrictions with respect to the Offered Certificates (as notified to the Company by the Underwriters) or the Closing Time, whichever is later, (i) without the prior written consent of the Underwriters, offer or sell, or enter into any agreement to sell, any debt securities of the Company pursuant to a public offering of securities registered under the 1933 Act (other than the Offered Certificates which are to be sold pursuant hereto and commercial paper in the ordinary course of business), (ii) offer or sell, or enter into any agreement to sell, any equipment notes, pass through certificates, equipment trust certificates or equipment purchase certificates secured by aircraft owned or leased by the Company (or rights relating thereto) unless the Company has provided the Underwriters at least three business days' notice thereof, or (iii) as may otherwise be provided in Schedule II. SECTION 4. Payment of Expenses. Except as set forth herein, the Owner Participant will pay all expenses incident to the consummation of the transactions contemplated by the Prospectus, including: (i) the preparation and filing of the Registration Statement and all amendments thereto, the Preliminary Prospectus and the Prospectus and any amendments or supplements thereto; (ii) the preparation and filing of this Agreement; (iii) the preparation, printing, issuance and delivery of the Offered Certificates; (iv) the reasonable fees and disbursements of counsel for the Trustee, the Owner Trustee and the Indenture Trustees; (v) the qualification of the Offered Certificates under securities laws in accordance with the provisions of Section 3(g), including filing fees and the reasonable fees and disbursements of counsel to the Underwriters in connection therewith and in connection with the preparation of any Blue Sky Survey and any Legal Investment Survey; (vi) the printing and delivery to the Underwriters in quantities as hereinabove stated of copies of the Registration Statement and any amendments thereto, and of the Prospectus and any amendments or supplements thereto, and the delivery by the Underwriters of the Prospectus and any amendments or supplements thereto in connection with solicitations or confirmations of sales of the Offered Certificates; (vii) the preparation and delivery to the Underwriters of copies of the Pass Through Agreements and the other Operative Agreements, including all expenses incident to the performance of the Company's obligations under the Pass Through Agreements, Participation Agreements, Indentures, Leases and each of the other agreements and instruments referred to in the Indentures and Participation Agreements; (viii) any fees charged by rating agencies for the rating of the Offered Certificates; and (ix) certain fees and disbursements of counsel to the Underwriters, as heretofore agreed. The Company will pay the reasonable fees and disbursements of the Trustee, the Owner Trustee and the Indenture Trustees and the reasonable fees and disbursements of the Company's accountants and its counsel incident to the consummation of the transactions contemplated by the Prospectus, but shall not otherwise be obligated to pay any other expenses incident thereto. If this Agreement is terminated by the Underwriters in accordance with the provisions of Section 5 or clause (i) of Section 9 hereof, the Owner Participant shall reimburse upon demand the Underwriters for all of their out-of-pocket expenses, including the reasonable fees and disbursements of counsel for the Underwriters that shall have been incurred by the Underwriters in connection with the proposed purchase and sale of the Offered Certificates. SECTION 5. Conditions of Underwriters' Obligations. The several obligations of the Underwriters to purchase the Offered Certificates pursuant to this Agreement will be subject at all times to the accuracy of the representations and warranties on the part of the Company and Lufthansa herein, to the accuracy of the statements of the Company's and Lufthansa's officers made in any certificate furnished pursuant to the provisions hereof, to the performance and observance by the Company and the Owner Participant of all covenants and agreements contained herein, or in Schedule II hereto, on their part to be performed and observed and to the following additional conditions precedent: (a) Stop Order; Ratings Change; etc. At the Closing Time, (i) no stop order suspending the effectiveness of the Registration Statement shall have been issued under the 1933 Act or proceedings therefor initiated or threatened by the Commission, (ii) the rating assigned as of the date of this Agreement by any "nationally recognized statistical rating organization," as such term is defined for purposes of Rule 436(g) under the 1933 Act Regulations, to any debt securities of the Company shall not have been lowered since the execution of this Agreement nor shall any such rating organization have publicly announced that it has placed any debt securities of the Company on what is commonly termed a "watch list" for possible downgrading, and (iii) there shall not have come to the attention of the Underwriters any facts that would cause the Underwriters to believe that the Prospectus, including the Prospectus Supplement, at the time it was required to be delivered to a purchaser of the Offered Certificates, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances existing at such time, not misleading. (b) Legal Opinions. At the Closing Time, the Underwriters shall have received the following documents: (1) Opinion of Special Counsel to the Company. The opinion of Davis Polk & Wardwell, special counsel to the Company, dated as of such date, in form and substance satisfactory to the Underwriters, to the effect set forth in Exhibit B. (2) Opinion of Company Counsel. The opinion of the Senior Vice President and General Counsel of the Company or the Vice President Law - Corporate and Business Transactions, dated as of such date, in form and substance satisfactory to the Underwriters, to the effect as set forth in Exhibit C. (3) Opinion of Counsel to the Underwriters. The opinion of Sullivan & Cromwell, counsel to the Underwriters, with respect to such matters as the Underwriters may reasonably request. (c) Officer's Certificate. At the Closing Time, there shall not have been, since the respective dates as of which information is given in the Registration Statement and the Prospectus, any material adverse change in the condition (financial or otherwise) of the Company, or in the earnings, business affairs or business prospects of the Company, whether or not arising in the ordinary course of business; and the Underwriters shall have received a certificate of the Chief Executive Officer or the Executive Vice President, Worldwide Customer Operations and the Chief Financial Officer, the Treasurer or the Controller of the Company, dated as of the Closing Time, to the effect (i) that there has been no such material adverse change, (ii) that the other representations and warranties of the Company contained in Section 1 are true and correct with the same force and effect as though expressly made at and as of the date of such certificate, (iii) that the Company has made or caused to be made any required filing of the Prospectus pursuant to Rule 424(b) in the manner and within the time period required by Rule 424(b), and (iv) that the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the date of such certificate. (d) Comfort Letter. At the time of the execution of this Agreement and at the Closing Time, the Underwriters shall have received a letter from Arthur Andersen & Co. or their successors as the Company's independent accountants (the "Independent Accountants"), dated as of the date hereof and of the Closing Time, as the case may be, in form and substance satisfactory to the Underwriters, to the effect that: (i) they are independent public accountants within the meaning of the 1933 Act and the 1933 Act Regulations; (ii) in their opinion the Company's financial statements and schedules included or incorporated by reference in the Registration Statement and Prospectus and covered by their reports included or incorporated therein comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the 1933 Act Regulations or the 1934 Act and the 1934 Act Regulations, as the case may be; (iii) they have conducted a review of the unaudited interim consolidated financial information of the Company included in the Company's Quarterly Reports on Form 10-Q incorporated in the Registration Statement and Prospectus in compliance with the standards for such reviews promulgated by the American Institute of Certified Public Accountants; (iv) on the basis of the review described in clause (iii) above, or a reading of the financial statements and schedules of the Company included or incorporated in the Prospectus and the Registration Statement, and the latest available unaudited interim financial statements of the Company, inquiries of officials of the Company responsible for financial and accounting matters, a reading of the minute books of the Company, and other specified procedures and inquiries, nothing has come to their attention that caused them to believe that: (A) the unaudited financial statements of the Company included or incorporated in the Prospectus and the Registration Statement do not comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the 1933 Act Regulations or the 1934 Act and the 1934 Act Regulations thereunder, as the case may be, or that such unaudited financial statements are not presented fairly in conformity with generally accepted accounting principles applied on a basis substantially consistent with that of the audited financial statements of the Company incorporated in the Prospectus; (B) with respect to the period subsequent to the date of the most recent financial statements incorporated in the Registration Statement and the Prospectus, as of a specified date not more than five business days prior to the date of delivery of such letter, there has been any change in the common or preferred stock or long-term debt of the Company or, as of such date, there has been any decrease in assets or common stockholders' investment, in each case as compared with amounts shown in the most recent consolidated balance sheet of the Company included or incorporated in the Registration Statement and the Prospectus, except in each case for changes or decreases which the Prospectus discloses have occurred or may occur or which are described in such letter; or (C) for the period from the date of the most recent financial statements incorporated in the Registration Statement and the Prospectus to such specified date, there was any decrease in operating revenues, operating income, income before taxes or net income of the Company in each case as compared with the comparable period of the preceding year, except in each case for decreases which the Prospectus discloses have occurred or may occur or which are described in such letter; and (v) in addition to their audit referred to in their reports included or incorporated by reference in the Registration Statement and the Prospectus and the review, inquiries and procedures referred to in clauses (iii) and (iv) above, such letter shall state that Arthur Andersen & Co. has performed other specified procedures, with respect to certain numerical data and information included or incorporated in the Registration Statement and the Prospectus, as are requested by an Underwriter and specified in such letter and have found such data and information to be in agreement with the accounting records of or analyses prepared by the Company. (e) Satisfaction of Conditions Precedent in Participation Agreements. At the Closing Time, all conditions precedent specified in each Participation Agreement with respect to the issuance of the related Equipment Trust Certificates shall have been satisfied; the representations and warranties of the Company, the Owner Trustee, the Pass Through Trustee, the Indenture Trustee, the LC Bank and the Owner Participant contained in each of the Participation Agreements shall be accurate as of the Closing Time (except to the extent that they relate solely to an earlier date in which case they shall be accurate as of such earlier date) and the Underwriters shall have received certificates of the Chief Financial Officer or the Treasurer of the Company and appropriate officers of each of the Owner Trustee, Pass Through Trustee, Indenture Trustee, LC Bank and Owner Participant, dated as of the Closing Time, to such effect; and the Underwriters shall have received a copy of each opinion required to be delivered under each of the Participation Agreements dated as of the Closing Time, and addressed to the Underwriters, and of such other documents furnished in connection with the fulfillment of such conditions as the Underwriters or counsel to the Underwriters may reasonably request. (f) At the time of the execution of this Agreement, the Underwriters, the Company, Lufthansa and Westdeutsche Landesbank Girozentrale, New York Branch shall have executed and delivered the Indemnification Agreement. (g) Other Documents. At the Closing Time, counsel for the Underwriters shall have been furnished with such documents and opinions as such counsel may reasonably require for the purpose of enabling such counsel to pass upon the issuance and sale of Offered Certificates as herein contemplated and related proceedings, or in order to evidence the accuracy and completeness of any of the representations and warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Company in connection with the issuance and sale of Offered Certificates as herein contemplated shall be satisfactory in form and substance to the Underwriters and to counsel for the Underwriters. If any condition specified in this Section shall not have been fulfilled when and as required to be fulfilled, this Agreement may be terminated by the Underwriters by notice to the Company at any time at or prior to the Closing Time, and such termination shall be without liability of any party to any other party except as provided in Section 4 hereof. SECTION 6. Indemnification. (a) The Company agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of Section 15 of the 1933 Act as follows: (i) against any and all loss, liability, claim, damage and expense whatsoever, joint or several, as incurred, arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in the Prospectus (or any amendment or supplement thereto) or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (ii) against any and all loss, liability, claim, damage and expense whatsoever, joint or several, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever arising out of or based upon any such untrue statement or omission, or any such alleged untrue statement or omission, if such settlement is effected with the written consent of the Company; and (iii) against any and all expense whatsoever (including the fees and disbursements of counsel chosen by the Underwriters), joint or several, as incurred, reasonably incurred in investigating, preparing or defending against any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever arising out of or based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above; provided, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by any Underwriter expressly for use in the Registration Statement (or any amendment thereto) or the Prospectus (or any amendment or supplement thereto), made in reliance upon the Trustee's Form T-1 Statement of Eligibility under the 1939 Act filed as an exhibit to the Registration Statement or made in those sections of the Prospectus (as amended or supplemented) captioned "Description of the Letters of Credit" and "Appendix B -- Westdeutsche Landesbank Girozentrale;" and provided, further, that the foregoing indemnity agreement, with respect to any Preliminary Prospectus shall not inure to the benefit of any Underwriter from whom the person asserting any such losses, claims, damages or liabilities purchased Offered Certificates, or any person controlling such Underwriter, if a copy of the Prospectus (as then amended or supplemented if the Company shall have furnished any amendments or supplements thereto) was not sent or given by or on behalf of such Underwriter to such person, if required by law so to have been delivered by or on behalf of such Underwriter, at or prior to the written confirmation of the sale of the Offered Certificates by or on behalf of such Underwriter to such person, and if the Prospectus (as so amended or supplemented) would have cured the defect giving rise to such losses, claims, damages or liabilities. (b) Lufthansa agrees to indemnify and hold harmless each Underwriter and each person (if any) who controls any Underwriter within the meaning of Section 15 of the 1933 Act against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of this Section 6, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the sections of the Prospectus (or any amendment or supplement thereto) captioned "Description of the Letters of Credit" and "Appendix B - -- Westdeutsche Landesbank Girozentrale." (c) Each Underwriter severally agrees to indemnify and hold harmless the Company, the directors and officers of the Company, each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act and Lufthansa, the directors and officers of Lufthansa and each person, if any, who controls Lufthansa within the meaning of Section 15 of the 1933 Act against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of this Section 6, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto) or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by the Underwriters expressly for use in the Registration Statement (or any amendment thereto) or the Prospectus (or any amendment or supplement thereto). (d) Each indemnified party shall give prompt notice to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability which it may have otherwise than on account of this indemnity agreement. An indemnifying party may participate at its own expense in the defense of such action. In no event shall the indemnifying parties be liable for the fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. SECTION 7. Contribution. In order to provide for just and equitable contribution in circumstances in which the indemnity agreement provided for in Section 6 is for any reason held to be unenforceable by the indemnified parties although applicable in accordance with its terms, the Company, Lufthansa and the Underwriters of each offering of Offered Certificates shall contribute to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by said indemnity agreement incurred by the Company, Lufthansa and one or more of the Underwriters in respect of such offering, as incurred, in such proportions that the Underwriters are responsible for that portion represented by the percentage that the underwriting discount appearing on the cover page of the Prospectus in respect of such offering bears to the initial public offering price appearing thereon and the Company and Lufthansa, severally, are responsible for the balance, to the extent set forth in Section 6; provided, however, that no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations in this Section 7 to contribute are several in proportion to their respective underwriting obligations and not joint. For purposes of this Section, each person, if any, who controls an Underwriter within the meaning of Section 15 of the 1933 Act shall have the same rights to contribution as such Underwriter, each director of the Company, each officer of the Company who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act shall have the same rights to contribution as the Company and each director and officer of Lufthansa and each person, if any, who controls Lufthansa within the meaning of Section 15 of the 1933 Act shall have the same rights to contribution as Lufthansa. SECTION 8. Representations, Warranties and Agreements to Survive Delivery. All representations, warranties and agreements contained in this Agreement, or contained in certificates of officers of the Company or Lufthansa submitted pursuant hereto, shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of any party hereto, and shall survive each delivery of and payment for any of the Offered Certificates. SECTION 9. Termination of Agreement. The Underwriters may also terminate this Agreement, immediately upon notice to the Company, at any time prior to the Closing Time (i) if there has been, since the date hereof or since the respective dates as of which information is given in the Registration Statement, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company, whether or not arising in the ordinary course of business, or (ii) if there shall have occurred any material adverse change in the financial markets in the United States or any outbreak or escalation of hostilities or other national or international calamity or crisis, the effect of which shall be such as to make it, in the judgment of the Underwriters, impracticable to market the Offered Certificates or enforce contracts for the sale of the Offered Certificates, or (iii) if trading in any securities of the Company shall have been suspended by the Commission or a national securities exchange, or if trading generally on either the American Stock Exchange or the New York Stock Exchange shall have been suspended, or minimum or maximum prices for trading shall have been fixed, or maximum ranges for prices for securities shall have been required, by either of said exchanges or by order of the Commission or any other governmental authority, or if a banking moratorium shall have been declared by either federal or New York authorities. In the event of any termination of this Agreement, the covenant set forth in Section 3(f) hereof, the provisions of Section 4 hereof, the indemnity and contribution agreements set forth in Sections 6 and 7 hereof, and the provisions of Sections 8 and 13 hereof shall remain in effect. SECTION 10. Default by One or More of the Underwriters. If any Underwriter shall fail at the Closing Time to purchase the Offered Certificates which it is obligated to purchase hereunder (the "Defaulted Certificates"), then the remaining Underwriter (the "Non- Defaulting Underwriter") shall have the right, but not the obligation, within 24 hours thereafter, to arrange for another party or parties to purchase all, but not less than all, of the Defaulted Certificates upon the terms herein set forth; if, however, the Non-Defaulting Underwriter shall not have completed such arrangements for the purchase of all of the Defaulted Certificates within such 24-hour period, then this Agreement shall terminate without liability on the part of the Non-Defaulting Underwriter. No action taken pursuant to this Section 10 shall relieve any defaulting Underwriter from liability in respect of its default under this Agreement. In the event of any such default which does not result in a termination of this Agreement, either the Non-Defaulting Underwriter or the Company shall have the right to postpone the Closing Time for a period not exceeding seven days in order to effect any required changes in the Registration Statement or Prospectus or in any other documents or arrangements. With respect to the Defaulted Certificates, the term "Underwriter" as used in this Agreement shall include any person substituted under this Section 10 with like effect as if such person had originally been a party to this Agreement. SECTION 11. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed, delivered by Federal Express service or transmitted by any facsimile communication. Notices to the Underwriters shall be directed, on behalf of all of the Underwriters, to Goldman, Sachs & Co., 85 Broad Street, New York, New York 10004, Attention: Registration Department, with copies thereof directed to Sullivan & Cromwell, 125 Broad Street, New York, New York 10004, Attention: David M. Huggin. Notices to the Company shall be directed to it at 2007 Corporate Avenue, Memphis, Tennessee 38132 (if by Federal Express service) or P.O. Box 727, Memphis, Tennessee 38194 (if by mail), attention of Vice President and Treasurer, with copies thereof directed to the Legal Department of the Company at 2005 Corporate Avenue, Memphis, Tennessee 38132 (if by Federal Express service) or P.O. Box 727, Memphis, Tennessee 38194 (if by mail), attention of the Managing Director of Business Transactions. Notices to Lufthansa shall be directed to it at Deutsche Lufthansa Aktiengesellschaft, Von-Gablenz Strasse 4-6, D-50679 Koln, Germany, Attention: Managing Director, with copies thereof directed to Dewey Ballantine, 1301 Avenue of the Americas, New York, New York 10019, Attention: Junaid H. Chida. Notices to the Owner Participant shall be directed to it at LLG Aircraft Leasing, L.P., 1209 Orange Street, Wilmington, Delaware 19801, with copies thereof directed to Dewey Ballantine, 1301 Avenue of the Americas, New York, New York 10019, Attention: Junaid H. Chida. SECTION 12. Parties. This Agreement shall inure to the benefit of and be binding upon the Company, Lufthansa, the Owner Participant and each Underwriter and their respective successors. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the parties hereto and their respective successors and the controlling persons and officers and directors referred to in Sections 6 and 7 and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the parties hereto, their respective successors and said controlling persons and officers and directors and their heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Offered Certificates from any Underwriter shall be deemed to be a successor by reason merely of such purchase. SECTION 13. Governing Law. This Agreement and the rights and obligations of the parties created hereby and thereby shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed in such state. Any suit, action or proceeding brought by the Company, Lufthansa or the Owner Participant against an Underwriter in connection with, or arising under this Agreement shall be brought solely in the state or federal court of appropriate jurisdiction located in the Borough of Manhattan, The City of New York. * * * Please sign and return a counterpart hereof to each party hereto, whereupon this instrument along with all counterparts will become a binding agreement among the Underwriters, the Company, Lufthansa and the Owner Participant in accordance with its terms. Very truly yours, FEDERAL EXPRESS CORPORATION By: /s/ ROBERT D. HENNING --------------------- Robert D. Henning Managing Director, Aircraft Financing LLG AIRCRAFT LEASING, L.P. By: LLG OF DELAWARE, INC., its General Partner By: /s/ MARC M. BAMBERGER --------------------- Name: Marc M. Bamberger Title: President DEUTSCHE LUFTHANSA AKTIENGESELLSCHAFT By: /s/ JURGEN STROMEL ------------------ Name: Jurgen Stromel Title: Vice President, Finance By: /s/ CHRISTIAN REHM ------------------ Name: Christian Rehm Title: Attorney-in-Fact Accepted as of the date hereof: /s/ GOLDMAN, SACHS & CO. - ------------------------- (Goldman, Sachs & Co.) MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: /s/ ALAN M. KRAMER ------------------ Name: Alan M. Kramer Title: Director, Investment Banking Group Exhibit A FEDERAL EXPRESS CORPORATION 1994 Pass Through Certificates, Series A310-A1 1994 Pass Through Certificates, Series A310-A2 1994 Pass Through Certificates, Series A310-A3 1994 Pass Underwriting Through Applicable Final Discounts Certificates Purchase Interest Distribution Aggregate and Designation Price Rate Date Amounts Commissions - ------------- -------- ---------- ------------ --------- ------------ Series A310-A1 $125,000,000 7.53% September 23, $125,000,000 .625% 2006 Series A310-A2 174,971,000 7.89% September 23, 174,971,000 .650% 2008 Series A310-A3 77,141,000 8.40% March 23, 2010 77,141,000 .750% TOTAL $377,112,000 $377,112,000 ============ ============ Exhibit B Opinion of Davis Polk & Wardwell, Special Counsel for the Company The opinion of Davis Polk & Wardwell, special counsel for the Company, to be delivered pursuant to Section 5(b)(1) of the Underwriting Agreement shall be to the effect that: 1. The Underwriting Agreement has been duly authorized, executed and delivered by the Company. 2. The Registration Statement has become effective under the 1933 Act and the Basic Agreement has been duly qualified under the 1939 Act. 3. Although we are not aware of any judicial authority, none of the Pass Through Trusts is required to be registered under the Investment Company Act of 1940, as amended. 4. The Pass Through Trusts will not be classified as associations taxable as corporations, but, rather, will be classified as grantor trusts under subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986, as amended, and each Certificateholder will be treated as the owner of a pro rata undivided interest in each of the Equipment Trust Certificates and any other property held in the related Pass Through Trust. With respect to all other matters addressed in the Basic Prospectus under the caption "Federal Income Tax Consequences," we are also of the opinions ascribed to us therein. We have considered the matters required to be included in the Registration Statement and the Prospectus and the information contained therein. In our opinion (i) the statements in the Basic Prospectus under the captions "Description of the Pass Through Certificates" and "Description of the Equipment Trust Certificates" and in the Prospectus Supplement under the captions "Description of the Pass Through Certificates" and Description of the Equipment Trust Certificates," insofar as such statements constitute a summary of the Pass Through Agreement, the Leases, the Agreement to Lease, the Participation Agreements, the Indentures and the Collateral Agreements fairly present the information called for by the 1933 Act and the 1933 Act Regulations with respect thereto and fairly summarize the material provisions thereof and (ii) the statements in the Basic Prospectus in the ____ paragraph under the caption "Description of the Equipment Trust Certificates -- Security" and in the Prospectus Supplement in the ___ paragraph under the caption "Description of the Equipment Trust Certificates -- Remedies," insofar as such statements constitute a description of Section 1110 of the Bankruptcy Code as such Section would be applicable to the Offered Certificates, fairly summarize the material provisions of such Section as such Section would be applicable to the Equipment Trust Certificates. The Offered Certificates conform in all material respects to the summary descriptions thereof contained in the Prospectus. We have not ourselves checked the accuracy or completeness of, or otherwise verified, the information furnished with respect to other matters in the Registration Statement or the Prospectus. We have generally reviewed and discussed with certain officers and employees of the Company, its independent public accountants and your representatives and counsel the information furnished, whether or not subject to our check and verification. On the basis of such consideration, review and discussion, but without independent check or verification, except as stated, (i) we are of the opinion that the Registration Statement and the Prospectus as amended or supplemented (except for the financial statements and other financial and statistical information set forth or incorporated by reference therein and the section of the Prospectus Supplement captioned "Appendix B -- Westdeutsche Landesbank Gironzentrale," as to which we are not called upon to express any opinion) comply as to form in all material respects with the 1933 Act and the applicable 1933 Act Regulations and (ii) we have no reason to believe that the Registration Statement (except for the financial statements and other financial information set forth or incorporated by reference therein and the Statement of Eligibility (Form T-1) under the 1939 Act of NationsBank of South Carolina, National Association, as to all of which we are not called upon to express a belief) at the time the Registration Statement became effective contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that, as of its date or as of the Closing Time, the Prospectus (except for the financial statements and other financial information set forth or incorporated by reference therein and the section of the Prospectus Supplement captioned "Appendix B -- Westdeutsche Landesbank Gironzentrale," as to which we are not called upon to express a belief), contained or contains an untrue statement of a material fact or omitted or omits to state a material fact necessary to make the statements therein, in light of the circumstances in which they were made, not misleading. In expressing the foregoing opinion and belief we do not assume any responsibility for the adequacy or accuracy of the derivation or compilation from the Company's financial statements or financial records of any financial or statistical data included in the Registration Statement or Prospectus. The foregoing opinions are subject to the following qualifications: (a) We are members of the Bar of the State of New York and the foregoing opinions are limited to the laws of the State of New York, the federal laws of the United States of America and the General Corporation Laws of the State of Delaware. (b) We express no opinion as to the scope, effect or other matters arising under the Federal Aviation Act of 1958, as amended, or the rules and regulations thereunder or as to matters involving filing and recording with the Federal Aviation Administration. (c) This opinion is issued solely to you in connection with the above matter and may not be relied upon by you for any other purpose or relied upon by or furnished to any other person without our prior written consent. Exhibit C Form of Opinion of Company Counsel March __, 1994 Goldman, Sachs & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated, c/o Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 Re: Federal Express Corporation Pass Through Certificates (the "Offered Certificates") ------------------------------------------------------ Ladies and Gentlemen: This opinion is directed to the Underwriters pursuant to Section 5(b)(2) of the Underwriting Agreement dated March __, 1994 (the "Underwriting Agreement"), among the Company, LLG Aircraft Leasing, L.P., Deutsche Lufthansa Aktiengesellschaft and you, with respect to the offer and sale of the Offered Certificates. All terms defined or used in the Underwriting Agreement have the same meaning when used herein, unless otherwise noted. I am Senior Vice President and General Counsel of the Company and have acted as such in connection with the Offered Certificates and the Underwriting Agreement. I or attorneys under my supervision have made such examination and investigation as we have deemed necessary in order to give the following opinion. Based on the foregoing, it is my opinion that: (i) The Company is a corporation duly incorporated and validly existing in good standing under the laws of the State of Delaware and the Company has full corporate power and authority under such laws to own its properties and to conduct its business as described in the Prospectus; the Company is a "certificated air carrier" and a "citizen of the United States" within the meaning of the Aviation Act; the Company is duly qualified to do business and is in good standing in each jurisdiction in which it owns or leases real property or in which the conduct of its business requires such qualification, except for such instances which in the aggregate will not have a material adverse effect on the Company; (ii) Each subsidiary of the Company which is a significant subsidiary as defined in Rule 405 of Regulation C of the 1933 Act Regulations (each a "Significant Subsidiary") has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has corporate power and authority to own, lease and operate its properties and conduct its business as described in the Registration Statement, and, to the best of my knowledge, is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, except where the failure to so qualify would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise; all of the issued and outstanding capital stock of each Significant Subsidiary has been duly authorized and validly issued and is fully paid and nonassessable, and all of such capital stock, except for directors' qualifying shares, is owned by the Company, directly or through subsidiaries, free and clear of any mortgage, pledge, lien, encumbrance, claim or equity; (iii) Except for matters described in the Prospectus (as to which I express no opinion concerning the outcome), there is no pending legal, governmental or administrative proceeding or series of related proceedings to which the Company is a party or of which any property of the Company is the subject which is reasonably likely, individually or in the aggregate, to have a material adverse effect on the condition (financial or other), business, prospects, net worth or results of operations of the Company; and, to the best of my knowledge, no such proceedings are threatened or contemplated against the Company by governmental authorities or others and no basis for any such proceedings exists; (iv) Each of the Operative Agreements to which the Company is a party has been duly and validly authorized and, except for the Leases and Lease Supplements covering the Aircraft and the Tax Indemnity Agreements, has been executed and delivered by the Company. (v) The Equipment Trust Certificates are in due and proper form and have been duly and validly authorized by all necessary corporate action; (vi) The Company possesses all permits, approvals, franchises and other rights from federal aviation, aeronautical, communications, transportation and shipping authorities which are requisite for the conduct of its business as described in the Prospectus or for the actions contemplated by the Underwriting Agreement and the offering contemplated by the Prospectus; and the actions contemplated by the Underwriting Agreement and the Operative Agreements, and the offering contemplated by the Prospectus, are not in violation of any federal statute or regulation relating to aviation, aeronautics, communications, transportation or shipping; (vii) The Basic Agreement is qualified under the 1939 Act; I have reviewed or caused to be reviewed by attorneys under my supervision the Registration Statement, the Prospectus and each amendment and supplement thereto (including the documents incorporated by reference) and have no reason to believe that, as of their respective effective or issue dates, or as of the Closing Time, either the Registration Statement or the Prospectus or any such amendment or supplement (or any such documents incorporated by reference) (except for the sections of the Prospectus Supplement captioned "Description of the Letters of Credit" and "Appendix B - Westdeutsche Landesbank Girozentrale," as to which I express no opinion) contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (viii) I do not know of any statute or regulation or legal or governmental proceeding required to be described in the Prospectus which is not described as required, nor of any contract or document of a character required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement which is not described and filed as required; and the descriptions in the Registration Statement and the Prospectus of the contracts and other documents (except for the Letters of Credit, as to which I express no opinion) therein described are accurate and fairly present the information required to be shown; (ix) The execution and delivery by the Company of the Underwriting Agreement and each of the Operative Agreements to which the Company is a party, the consummation by the Company of the transactions herein and therein contemplated and compliance with the terms of the Underwriting Agreement and such Operative Agreements do not and will not conflict with or result in a breach of any of the terms of the Certificate of Incorporation or By-laws of the Company, and will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan, credit or note agreement, lease or other agreement or instrument material to the Company to which the Company is a party or by which it or any or its properties are bound, or any existing applicable law, rule, regulation, judgment, order or decree of any government, governmental instrumentality or court, having jurisdiction over the Company or any of its properties; (x) The statements in the Basic Prospectus under the captions "Description of the Pass Through Certificates" and "Description of the Equipment Trust Certificates" and in the Prospectus Supplement under the captions "Description of the Pass Through Certificates," "The Pre- Funding Periods" and "Description of the Equipment Trust Certificates," insofar as such statements constitute a summary of the Pass Through Agreements, the Offered Certificates, the Leases, the Participation Agreements, the Indentures, the Collateral Agreements and the Agreement to Lease, are accurate summaries of the material provisions thereof and fairly present the information called for by the 1933 Act and the 1933 Act Regulations with respect thereto; (xi) No authorization, approval, consent or license of any regulatory body or authority (other than under the 1933 Act, the 1939 Act and the securities or Blue Sky laws of the various states) is required for the valid authorization, issuance, sale and delivery of the Offered Certificates as herein contemplated or the valid authorization, execution, delivery and performance by the Company of the Underwriting Agreement and the Operative Agreements to which the Company is a party or the consummation by the Company of the transactions contemplated herein or therein, or, if so required, all such authorizations, approvals, consents and licenses, specifying the sale, have been obtained and are in full force and effect; (xii) The Registration Statement has become effective under the 1933 Act and, to the best of my knowledge, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the 1933 Act; the Registration Statement and the Prospectus, and each amendment or supplement thereto (except for the financial statements and schedules included therein, as to which I express no opinion) comply as to form in all material respects to the requirements of the 1933 Act and the 1933 Act Regulations and, as to documents incorporated therein, to the requirements of the 1934 Act and the 1934 Act Regulations in effect at the time such documents were filed with the Commission; and (xiii) Each of the Underwriting Agreement and the Indemnification Agreement has been duly and validly authorized, executed and delivered by the Company and constitutes a valid and binding agreement of the Company, enforceable in accordance with its terms, except as enforcement thereof is limited by bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting enforcement of creditors' rights or by general equity principles and subject to any principles of public policy limiting the right to enforce the indemnification and contribution provisions contained in Sections 6 and 7 of the Underwriting Agreement and Sections 2 and 3 of the Indemnification Agreement. In rendering the foregoing opinion, we have assumed that (i) all signatures on all documents examined by us are genuine and that where any such signature (other than a signature purporting to have been made on behalf of the Company) purports to have been made in a corporate, governmental, fiduciary or other capacity, the person who affixed such signature had the due authority to do so, (ii) certain factual matters contained in certificates of public officials are accurate, true and correct and (iii) photostatic copies of such documents, records and certificates conform to the originals. This opinion is intended solely for the benefit of the Underwriters and is not to be relied on by, and no copies of it are to be delivered to, any other person without my prior written consent, except that Underwriters' counsel may rely upon this opinion as to all matters of Tennessee law or Delaware corporate law in rendering its opinion of even date herewith. I am not assuming any professional responsibility to any other person by rendering this opinion. It is understood that this opinion speaks as of the date given, notwithstanding any delivery as contemplated above on any other date. FEDERAL EXPRESS CORPORATION _________________________________________ Kenneth R. Masterson Senior Vice President and General Counsel Schedule I to Underwriting Agreement Dated: March 16, 1994 FEDERAL EXPRESS CORPORATION 1994 Pass Through Certificates, Series A310-A1 1994 Pass Through Certificates, Series A310-A2 1994 Pass Through Certificates, Series A310-A3 Aggregate Aggregate Aggregate Amount of Amount of Amount of Total Series A310-A1 Series A310-A2 Series A310-A3 Aggregate Pass Through Pass Through Pass Through Amount to Underwriter Certificates Certificates Certificates Be Purchased - ----------- ------------ ------------ ------------ ------------ GOLDMAN, SACHS & CO. $95,625,000 $133,971,000 $59,141,000 $288,737,000 MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED 29,375,000 41,000,000 18,000,000 88,375,000 $125,000,000 $174,971,000 $77,141,000 $377,112,000 ============ ============ =========== ============ Schedule II to Underwriting Agreement Dated: March 16, 1994 FEDERAL EXPRESS CORPORATION 1994 Pass Through Certificates, Series A310-A1 1994 Pass Through Certificates, Series A310-A2 1994 Pass Through Certificates, Series A310-A3 To: Federal Express Corporation 2005 Corporate Avenue Memphis, Tennessee 38132 Deutsche Lufthansa Aktiengesellschaft Von-Gablenz Strasse 4-6 D-50679 Koln Germany LLG Aircraft Leasing, L.P. 1209 Orange Street Wilmington, Delaware 19801 Re: Underwriting Agreement dated March 16, 1994. ------------------------------------------- Title of Offered Certificates: 1994 Pass Through Certificates, Series A310-A1 1994 Pass Through Certificates, Series A310-A2 1994 Pass Through Certificates, Series A310-A3 Current ratings: BBB+/Baa2 Interest rate: Series A310-A1 ............. 7.53% Series A310-A2 ............. 7.89% Series A310-A3 ............. 8.40% Interest payable: March 23 and September 23 Public offering price: 100%, plus accrued interest from March 23, 1994 Closing date, time and location: March 23, 1994, 10:00 A.M., New York City time Sullivan & Cromwell 125 Broad Street New York, New York 10004 Location for checking Offered Certificates: Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 Listing requirement: None Other terms and conditions: The Offered Certificates will be issued in fully registered, certificated form. Exceptions, if any, to Section 3(i) of the Underwriting Agreement: None /s/ GOLDMAN, SACHS & CO. ------------------------- (Goldman, Sachs & Co.) MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: /s/ ALAN M. KRAMER ------------------- Name: Alan M. Kramer Title: Director, Investment Banking Group Accepted: FEDERAL EXPRESS CORPORATION By: /s/ ROBERT D. HENNING ---------------------- Robert D. Henning Managing Director, Aircraft Financing LLG AIRCRAFT LEASING, L.P. By: LLG OF DELAWARE, INC., its General Partner By: /s/ MARC M. BAMBERGER ---------------------- Name: Marc M. Bamberger Title: President DEUTSCHE LUFTHANSA AKTIENGESELLSCHAFT By: /s/ JURGEN STROMEL ------------------- Name: Jurgen Stromel Title: Vice President, Finance By: /s/ CHRISTIAN REHM ------------------- Name: Christian Rehm Title: Attorney-in-Fact EX-4.A.1 3 Exhibit 4.a.1 ============================================================ PASS THROUGH TRUST AGREEMENT Dated as of March 1, 1994 BETWEEN NATIONSBANK OF SOUTH CAROLINA, NATIONAL ASSOCIATION, as Pass Through Trustee, AND FEDERAL EXPRESS CORPORATION ============================================================ CROSS REFERENCE SHEET Between Provisions of the Trust Indenture Act of 1939, as amended, and the Pass Through Trust Agreement: Section of Section of the Act the Agreement 310(a)(1) and (2).............................. 10.02 310(a)(3) ..................................... 10.05 310(a)(4)...................................... (1) 310(a)(5)...................................... * 310(b)(i)-(iii)................................ 10.01,10.03 310(b)(remainder).............................. * 310(c)......................................... Inapplicable 311(a)......................................... * 311(b)......................................... * 311(c)......................................... Inapplicable 312(a)......................................... 2.12, 4.01 312(b)......................................... * 312(c)......................................... 4.02 313(a)......................................... 4.04 313(b)(1)...................................... * 313(b)(2)...................................... * 313(c)......................................... 4.04 313(d)......................................... * 314(a)......................................... 4.03 314(b)......................................... Inapplicable 314(c)(1) and (2).............................. 13.07 314(c)(3)...................................... Inapplicable 314(d)(1)...................................... * 314(d)(2)...................................... * 314(d)(3)...................................... * 314(e)......................................... 13.07 314(f)......................................... Inapplicable 315(a), (c) and (d)............................ * 315(b)......................................... 7.11 315(e)......................................... * 316(a)(1)...................................... 7.09, 7.10 316(a)(2)...................................... * 316(a)(last sentence).......................... 6.04 316(b)......................................... 7.08 316(c)......................................... 6.01(b) 317(a)......................................... 7.03, 7.05 317(b)......................................... 3.04 318(a)......................................... 13.08 (1) Intentionally deleted. TABLE OF CONTENTS Page RECITALS............................................... 1 ARTICLE I Definitions............................................ 2 ARTICLE II ISSUANCE OF PASS THROUGH CERTIFICATES; ACQUISITION OF Equipment Trust Certificates SECTION 2.01. Amount Unlimited; Issuable in Series; Series Supplements................. 10 SECTION 2.02. Acquisition of Equipment Certificates... 12 SECTION 2.03. Initial Certificateholders as Grantors........................... 12 SECTION 2.04 Limitation of Powers.................... 13 SECTION 2.05. Execution of Pass Through Certificates....................... 13 SECTION 2.06. Certificate of Authentication........... 13 SECTION 2.07. Form of Pass Through Certificates....... 14 SECTION 2.08. Registration, Transfer and Exchange..... 14 SECTION 2.09. Mutilated, Defaced, Destroyed, Lost and Stolen Pass Through Certificates....................... 15 SECTION 2.10. Cancellation of Pass Through Certificates; Destruction Thereof.. 17 SECTION 2.11. Temporary Pass Through Certificates..... 17 ARTICLE III CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS SECTION 3.01. Covenants of the Company................ 18 SECTION 3.02. Offices for Payments; Registrar......... 19 SECTION 3.03. Representations and Warranties of the Pass Through Trustee.............. 20 SECTION 3.04. Paying Agents........................... 21 SECTION 3.05. No Representations or Warranties as to Documents....................... 22 SECTION 3.06. Payments from Trust Property Only....... 22 SECTION 3.07. Limitation of the Company's Liability............................ 22 ARTICLE IV CERTIFICATEHOLDER LISTS AND REPORTS BY THE COMPANY AND THE PASS THROUGH TRUSTEE SECTION 4.01. Certificateholder Lists; Ownership of Pass Through Certificates.......... 23 SECTION 4.02. Disclosure of Certificateholder Lists................................. 23 SECTION 4.03. Reports by the Company.................. 23 SECTION 4.04. Reports by the Pass Through Trustee..... 24 ARTICLE V RECEIPT AND DISTRIBUTION OF INCOME AND PROCEEDS FROM THE TRUST PROPERTY SECTION 5.01. Certificate Account and Special Payments Account...................... 25 SECTION 5.02. Distributions from Certificate Account and Special Payments Account............................... 25 SECTION 5.03. Statements to Certificateholders........ 27 SECTION 5.04. Investment of Special Payment Moneys.... 28 SECTION 5.05. Withholding Taxes....................... 28 ARTICLE VI CONCERNING THE CERTIFICATEHOLDERS SECTION 6.01. Evidence of Action Taken by Certificateholders.................... 29 SECTION 6.02. Proof of Execution of Instruments and of Holding of Certificates........ 29 SECTION 6.03. Certificateholders to Be Treated as Owners............................. 30 SECTION 6.04. Pass Through Certificates Owned by the Company and Related Owner Trustees Deemed Not Outstanding........................... 30 SECTION 6.05. Right of Revocation of Action Taken..... 31 SECTION 6.06. ERISA Plan Prohibition.................. 32 ARTICLE VII REMEDIES OF PASS THROUGH TRUSTEE AND CERTIFICATEHOLDERS SECTION 7.01. Events of Default....................... 32 SECTION 7.02. Incidents of Sale of Equipment Certificates......................... 33 SECTION 7.03. Pass Through Trustee May Prove Debt..... 34 SECTION 7.04. Remedies Cumulative..................... 35 SECTION 7.05. Suits for Enforcement................... 35 SECTION 7.06. Discontinuance of Proceedings........... 36 SECTION 7.07. Limitations on Suits by Certificateholders................... 36 SECTION 7.08. Unconditional Right of Certificateholders to Receive Principal, Interest and Premium, and to Institute Certain Suits........... 37 SECTION 7.09. Control by Certificateholders........... 37 SECTION 7.10. Waiver of Past Events of Default........ 38 SECTION 7.11. Notice of Pass Through Defaults......... 39 ARTICLE VIII CONCERNING THE PASS THROUGH TRUSTEE SECTION 8.01. Acceptance by Pass Through Trustee............................... 40 SECTION 8.02. Pass Through Trustee's Liens............ 40 SECTION 8.03. Certain Rights of the Pass Through Trustee............................... 40 SECTION 8.04. Pass Through Trustee Not Responsible for Recitals.......................... 42 SECTION 8.05. Pass Through Trustee and Agents May Hold Pass Through Certificates; Collections........................... 42 SECTION 8.06. Moneys Held by Pass Through Trustee..... 42 SECTION 8.07. Right of Pass Through Trustee to Rely on Officers' Certificate.............. 43 SECTION 8.08. Compensation............................ 43 ARTICLE IX INDEMNIFICATION OF PASS THROUGH TRUSTEE BY THE COMPANY......................... 44 ARTICLE X SUCCESSOR TRUSTEES SECTION 10.01. Resignation and Removal of Pass Through Trustee; Appointment of Successor......................... 45 SECTION 10.02. Persons Eligible for Appointment as Pass Through Trustee.............. 46 SECTION 10.03. Acceptance of Appointment by Successor Trustee.................... 47 SECTION 10.04. Merger, Conversion, Consolidation or Succession to Business of Pass Through Trustee...................... 48 SECTION 10.05. Appointment of Separate Pass Through Trustees................ 49 ARTICLE XI SUPPLEMENTS AND AMENDMENTS TO THIS PASS THROUGH AGREEMENT AND OTHER DOCUMENTS SECTION 11.01. Supplemental Agreements Without Consent of Certificateholders........ 51 SECTION 11.02. Supplemental Agreements With Consent of Certificateholders................ 53 SECTION 11.03. Effect of Supplemental Agreements...... 55 SECTION 11.04. Documents to Be Given to Trustee.............................. 55 SECTION 11.05. Notation on Pass Through Certificates in Respect of Supplemental Agreements........... 55 SECTION 11.06. Trust Indenture Act.................... 55 SECTION 11.07. Revocation and Effect of Consents...... 56 SECTION 11.08. Amendments, Waivers, etc., of Related Indenture Documents.......... 56 ARTICLE XII TERMINATION OF PASS THROUGH TRUSTS; UNCLAIMED MONEYS SECTION 12.01. Termination of Pass Through Trusts..... 57 SECTION 12.02. Application by Pass Through Trustee of Funds Deposited for Payment of Pass Through Certificates............ 57 SECTION 12.03. Repayment of Moneys Held by Paying Agent................................ 58 SECTION 12.04. Transfer of Moneys Held by Pass Through Trustee and Paying Agent Unclaimed for Two Years and Eleven Months........................ 58 ARTICLE XIII MISCELLANEOUS SECTION 13.01. Capacity in Which Acting............... 58 SECTION 13.02. No Legal Title to Trust Property in Certificateholders................ 59 SECTION 13.03. Certificates Nonassessable and Fully Paid........................... 59 SECTION 13.04. Pass Through Agreement for the Benefit of the Company, the Pass Through Trustee and the Certificateholders................... 59 SECTION 13.05. Limitation Rights of Certificate- holders.............................. 59 SECTION 13.06. Notices................................ 60 SECTION 13.07. Officers' Certificates and Opinions of Counsel; Statements to Be Contained Therein.................... 61 SECTION 13.08. Conflict of Any Provision of Pass Through Agreement with the Trust Indenture Act........................ 62 SECTION 13.09. Severability........................... 62 SECTION 13.10. No Oral Modifications or Continuing Waivers.............................. 62 SECTION 13.11. Successors and Assigns................. 63 SECTION 13.12. Headings............................... 63 SECTION 13.13. Normal Commercial Relations............ 63 SECTION 13.14. Governing Law; Counterpart Form........ 63 SECTION 13.15. Distributions Due on Days Other than Business Days................... 63 EXHIBIT A - Form of Pass Through Certificate PASS THROUGH TRUST AGREEMENT PASS THROUGH TRUST AGREEMENT dated as of March 1, 1994, between FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Company"), and NATIONSBANK OF SOUTH CAROLINA, NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States of America, as Pass Through Trustee (the "Pass Through Trustee"). RECITALS WHEREAS, capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, from time to time the Company and the Pass Through Trustee will enter into a Series Supplement in accordance with this Pass Through Agreement pursuant to which the Pass Through Trustee will declare the creation of a separate Pass Through Trust for the benefit of the Certificateholders of the Series of Pass Through Certificates to be issued pursuant to such Pass Through Trust, and the initial Certificateholders of such Series, as the grantors of such Pass Through Trust, by their respective acceptances of such Pass Through Certificates, will join in the creation of such Pass Through Trust; WHEREAS, the Pass Through Certificates of each Series will evidence fractional undivided interests in the Pass Through Trust pursuant to which they will be issued, and will have no rights, benefits or interest in respect of any other separate Pass Through Trust or the Trust Property held in any such other Pass Through Trust; WHEREAS, for each Pass Through Trust, the Pass Through Trustee will purchase one or more issues of Equipment Trust Certificates of the same interest rate as, and final maturity dates not later than the final scheduled Regular Distribution Date of, the Series of Pass Through Certificates to be issued in respect of such Pass Through Trust and will hold such Equipment Trust Certificates in trust as Trust Property for the benefit of the Certificateholders of such Series; WHEREAS, to facilitate the sale of Equipment Trust Certificates to, and the purchase of Equipment Trust Certificates by, the Pass Through Trustee on behalf of each such Pass Through Trust, the Company has duly authorized the execution and delivery of this Pass Through Agreement and each Series Supplement as the "issuer," as such term is defined in and solely for purposes of the Securities Act, of the Pass Through Certificates to be issued in respect of each Pass Through Trust and as the "obligor," as such term is defined in and solely for purposes of the Trust Indenture Act, with respect to all such Pass Through Certificates and is undertaking to perform certain administrative and ministerial duties hereunder and is also undertaking to pay the fees and expenses of the Pass Through Trustee; WHEREAS, this Pass Through Agreement, as supplemented from time to time, is subject to the provisions of the Trust Indenture Act and shall, to the extent applicable, be governed by such provisions; IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows: ARTICLE I DEFINITIONS The following terms (except as otherwise expressly provided or unless the context otherwise clearly requires) for all purposes of this Pass Through Agreement have the respective meanings specified in this Section, as amended or supplemented by the provisions of the Series Supplement for a particular Series. All other terms used in this Pass Through Agreement that are defined in the Trust Indenture Act (as defined below) or the definitions of which in the Securities Act (as defined below) are referred to in the Trust Indenture Act (except as herein otherwise expressly provided or unless the context otherwise requires), have the meanings assigned to such terms in the Trust Indenture Act and in the Securities Act as in force at the date of this Pass Through Agreement. All accounting terms used and not expressly defined herein have the meanings given to them in accordance with generally accepted accounting principles, and the term "generally accepted accounting principles" means the accounting principles that are generally accepted at the date or time of any computation or otherwise at the date hereof. The words "herein," "hereof" and "hereunder" and other words of similar import refer to this Pass Through Agreement as a whole and not to any particular Article, Section or other subdivision. References to designated "Articles," "Sections," "subsections" and other subdivisions of this Pass Through Agreement are to the designated Articles, Sections, subsections and other subdivisions of this Pass Through Agreement as originally executed. The terms defined in this Article include the plural as well as the singular. "Affiliate" has, for any Person, the meaning specified in Rule 0-2 under the Trust Indenture Act. "Business Day" means, for any Series, any day other than Saturday, Sunday or other day on which banking institutions in the States of New York or Tennessee, or any other state in which the Pass Through Trustee or any Related Indenture Trustee or Related Owner Trustee for the Pass Through Trust for such Series maintains an office for the receipt or disbursement of funds for the transactions contemplated herein or in any Indenture Documents for the Equipment Trust Certificates that constitute Trust Property of such Pass Through Trust, are authorized or required by law to close. "Certificate Account" means, for any Pass Through Trust, the account or accounts created and maintained for such Pass Through Trust pursuant to Section 5.01(a) and the related Series Supplement. "Certificateholder" means, for any Series, the registered holder of any Pass Through Certificate as evidenced on the Register for such Series. "Code" means the Internal Revenue Code of 1986, as amended. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or if at any time after the execution and delivery of this Pass Through Agreement such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. "Company" means Federal Express Corporation, a Delaware corporation, and its permitted successors and assigns hereunder. "Corporate Trust Office" means the corporate trust office of the Pass Through Trustee located at 1301 Gervis Street, 4th Floor, Columbia, South Carolina 29201, or such other office at which the Pass Through Trustee's corporate trust business shall be administered and which the Pass Through Trustee shall have specified by notice in writing to the Company and the Certificateholders of each Series. "Distribution Date" means, for any Series, any Regular Distribution Date or Special Distribution Date or both for such Series. "Dollars" and "$" mean lawful currency of the United States of America. "Equipment Trust Certificate" means, for any Pass Through Trust, any "Equipment Trust Certificate" or "Certificate," as the case may be, as such term is defined in the related Indenture, issued by an Owner Trustee pursuant to such Indenture and described in, or on a schedule attached to, the Series Supplement for such Pass Through Trust, which is to be held by the Pass Through Trustee as part of the Trust Property of such Pass Through Trust. "Event of Default" has the meaning specified in Section 7.01 hereof. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Fractional Undivided Interest" means, for any Pass Through Certificate, the fractional undivided interest in the related Pass Through Trust that is evidenced thereby. "Government Obligations" means direct obligations of the United States of America which are not callable, redeemable or payable prior to maturity, in whole or in part, directly or indirectly, by any Person. "Indenture" means for any Equipment Trust Certificate, the trust indenture and security agreement among the Indenture Trustee and the Owner Trustee pursuant to which such Equipment Trust Certificate is issued. "Indenture Default" means, for any Indenture, any event or condition defined as a "Default" under such Indenture. "Indenture Documents" means for any Equipment Trust Certificate, the related Indenture, the related Trust Agreement, the related Lease, the related Participation Agreement and any other documents defined as such in such Indenture. "Indenture Event of Default" means, for any Indenture, any event or condition defined as an "Indenture Event of Default" in such Indenture. "Indenture Trustee" means, for any Equipment Trust Certificate, the Person defined as such in the related Indenture. "Initial Regular Distribution Date" means, for any Pass Through Trust, the first Regular Distribution Date following the Issuance Date for such Pass Through Trust. "Issuance Date" means, for any Pass Through Trust, the date of the issuance of the related Pass Through Certificates. "Lease" means, for any Equipment Trust Certificate, the agreement between the Company, as lessee, and an Owner Trustee, as lessor, that is defined as the "Lease" in the related Indenture. "Letter of Representations" means, for any Series, a letter from the Company and the Pass Through Trustee to, and accepted by, the Depository in form and substance satisfactory to the Company and the Pass Through Trustee for the purposes of the related Series Supplement, as such letter may be modified or supplemented, or any successor letter thereto. "Lien" means any mortgage, pledge, lien, charge, disposition of title, encumbrance, lease or security interest. "Majority in Interest of Certificateholders" means, for any Series at any time, Pass Through Certificates of such Series then Outstanding (or the proxy therefor) representing in the aggregate not less than a majority of the aggregate Fractional Undivided Interests of the Pass Through Certificates then Outstanding under the related Pass Through Trust. "Officers' Certificate" means a certificate signed by a Responsible Officer of the Company, any Indenture Trustee or any Owner Trustee, as the case may be, delivered to the Pass Through Trustee. Each such certificate shall include the statements provided for in Section 13.07. "Opinion of Counsel" means a written opinion of legal counsel, who in the case of counsel (a) for the Company may be (i) an attorney employed by the Company who is generally empowered to deliver such written opinions, (ii) Davis Polk & Wardwell or a successor firm or (iii) other counsel designated by the Company and reasonably satisfactory to the Pass Through Trustee and (b) for any Owner Trustee or Indenture Trustee, an attorney selected by such Person and reasonably satisfactory to the Pass Through Trustee. "Outstanding" means, when used with respect to Pass Through Certificates of any Series, as of the date of determination and subject to the provisions of Section 6.04 hereof, all Pass Through Certificates theretofore authenticated and delivered for such Series, with the exception of the following: (i) Pass Through Certificates theretofore cancelled by the Pass Through Trustee or delivered to the Pass Through Trustee for cancellation pursuant to Section 2.10; (ii) All Pass Through Certificates of such Series if money in the amount required to make the final distribution thereon in accordance with Section 12.01 has been theretofore deposited with the Pass Through Trustee in trust for the Certificateholders of such Series pending such final distribution; and (iii) Pass Through Certificates in exchange for or in lieu of which other Pass Through Certificates have been authenticated and delivered pursuant to Article II hereof. "Overdue Scheduled Payment" means, for any Pass Through Trust, any Scheduled Payment that is not received within five Business Days after the Regular Distribution Date applicable to such Scheduled Payment. "Owner Participant" means, for any Equipment Trust Certificate, the Person defined as such in the related Indenture. "Owner Trustee" means, for any Equipment Trust Certificate, the Person defined as such in the related Indenture. "Participation Agreement" means for any Equipment Trust Certificate, the agreement among the Company, the Owner Participant, the Owner Trustee, the Indenture Trustee, the Pass Through Trustee and, if applicable, each Original Loan Participant or Voting Trustee (as defined in such Participation Agreement), that is defined as the "Participation Agreement" in the related Indenture and pursuant to which the Pass Through Trustee agrees to purchase such Equipment Trust Certificate upon the issuance thereof by such Owner Trustee. "Pass Through Agreement," "this Pass Through Agreement" and other like words mean this Pass Through Trust Agreement as the same may be modified, supplemented or amended from time to time in accordance with the provisions hereof, but does not include, unless otherwise specified, any Series Supplement. "Pass Through Certificate" means, for any Series, any of the certificates executed, authenticated and delivered for such Series by the Pass Through Trustee, in accordance with this Pass Through Agreement and pursuant to the related Series Supplement. "Pass Through Default" means, for any Pass Through Trust, an Event of Default or an event or condition that, with the giving of notice or the lapse of time or both, would become an Event of Default. "Pass Through Trust" means a separate trust created in accordance with this Pass Through Agreement by a Series Supplement incorporating the provisions hereof, as such provisions may be amended or supplemented thereby, the estate of which consists of the related Trust Property. "Pass Through Trustee" means NationsBank of South Carolina, National Association, a national banking association, not in its individual capacity except as expressly stated herein, but solely in its capacity as Pass Through Trustee under this Pass Through Agreement, and its successors and assigns as Pass Through Trustee hereunder. "Paying Agent" has the meaning set forth in Section 3.04 hereof. "Permitted Investments" means any Government Obligations. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, nonincorporated organization or government or any agency or political subdivision thereof. "Pool Balance" means, for any Pass Through Trust, as of any date of determination the aggregate unpaid principal amount of the Equipment Trust Certificates that constitute Trust Property of such Pass Through Trust on such date plus the amount of the principal payments on such Equipment Trust Certificates held by the Pass Through Trustee and not yet distributed. The Pool Balance as of any Regular Distribution Date or Special Distribution Date shall be computed after giving effect to the payment of principal, if any, on such Equipment Trust Certificates and the distribution thereof being made on that date. "Pool Factor" means, for any Pass Through Trust, as of any date of determination the quotient (rounded to the seventh decimal place) computed by dividing (i) the Pool Balance by (ii) the aggregate original amount of the Pass Through Certificates of the related Series. The Pool Factor as of any Regular Distribution Date or Special Distribution Date shall be computed after giving effect to the payment of principal, if any, on such Equipment Trust Certificates and the distribution thereof being made on that date. "Record Date," for any Series, means, (i) for any Regular Distribution Date, the date specified in the related Series Supplement as the Record Date for such Regular Distribution Date and (ii) for any Special Distribution Date, the 15th day preceding such Special Distribution Date, in any event, whether or not such date is a Business Day. "Register" has the meaning set forth in Section 3.02 hereof. "Registrar" has the meaning set forth in Section 3.02 hereof. "Regular Distribution Date" means, for any Pass Through Trust, any date specified in the related Series Supplement for the distribution of any Scheduled Payment from such Pass Through Trust to the related Certificateholders. "Related Indenture Trustee" means, for any Pass Through Trust, any Indenture Trustee under an Indenture relating to any Equipment Trust Certificate that constitutes Trust Property thereof, and "Related Indenture Trustees" means all such Indenture Trustees for all such Equipment Trust Certificates constituting Trust Property thereof. "Related Owner Participant" means, for any Pass Through Trust, any Owner Participant under a Trust Agreement relating to any Equipment Trust Certificate that constitutes Trust Property, and "Related Owner Participants" means all such Owner Participants for all such Equipment Trust Certificates constituting Trust Property thereof. "Related Owner Trustee" means, for any Pass Through Trust, any Owner Trustee under a Trust Agreement relating to any Equipment Trust Certificate that constitutes Trust Property, and "Related Owner Trustees" means all such Owner Trustees for all such Equipment Trust Certificates constituting Trust Property thereof. "Responsible Officer" means the president or any other officer with authority of at least a vice president; or, in the case of the Pass Through Trustee, an officer or assistant officer of the Pass Through Trustee in its Corporate Trust Administration department. "Scheduled Payment" means, for any Pass Through Trust, any scheduled payment of principal of (whether by installment or redemption or otherwise) and interest on any Equipment Trust Certificate that constitutes Trust Property thereof to be made in the amounts and on the date set forth for such payment in such Equipment Trust Certificate, but does not include any Overdue Scheduled Payment. "Securities Act" means the Securities Act of 1933, as amended. "Series" means a separate series of Pass Through Certificates issued pursuant to this Pass Through Agreement and a Series Supplement. "Series Supplement" means an agreement executed and delivered by the Company and the Pass Through Trustee in accordance with this Pass Through Agreement, incorporating the provisions hereof, as amended or supplemented thereby, and creating a separate Pass Through Trust for the benefit of the Certificateholders of the Series of Pass Through Certificates to be issued under such Pass Through Trust. "Special Distribution Date" means, for any Pass Through Trust, any date on which a Special Payment is to be distributed from such Pass Through Trust to the related Certificateholders. "Special Payment" means, for any Pass Through Trust, any payment (including any Overdue Scheduled Payment) other than a Scheduled Payment on any Equipment Trust Certificate that constitutes Trust Property thereof, any proceeds from the sale of such Equipment Trust Certificate pursuant to Article VII or any payment by the Company pursuant to the last two paragraphs of Section 2.02(b). "Special Payments Account" means, for any Pass Through Trust, the account or accounts created and maintained for such Pass Through Trust pursuant to Section 5.01(b) and the related Series Supplement. "Trust Agreement" means, for any Equipment Trust Certificate, the agreement between an Owner Trustee and an Owner Participant that is defined as the "Trust Agreement" in the related Indenture. "Trust Indenture Act" means (except as otherwise provided in Sections 4.04, 11.01, 11.02 and 11.06) the Trust Indenture Act of 1939, as amended, as in force at the date as of which this Pass Through Agreement was first qualified under such Act. "Trust Property" means, for any Pass Through Trust, all money, instruments, including the related Equipment Trust Certificates, and other property held as the property of such Pass Through Trust, including all distributions thereon and proceeds thereof. ARTICLE II ISSUANCE OF PASS THROUGH CERTIFICATES; ACQUISITION OF EQUIPMENT TRUST CERTIFICATES SECTION 2.01. Amount Unlimited; Issuable in Series; Series Supplements. (a) The aggregate amount of Pass Through Certificates that may be authenticated and delivered in accordance with this Pass Through Agreement is unlimited. The Pass Through Certificates may be issued from time to time in one or more Series, each Series relating to a separate Pass Through Trust, and shall be designated generally as the "Pass Through Certificates," with further designations added or incorporated in the title for the Pass Through Certificates of any Series as specified in the related Series Supplement. Each Pass Through Certificate shall bear upon its face the designation so selected for the Series to which it belongs. All Pass Through Certificates of the same Series shall be substantially identical except as to denomination and as may otherwise be provided in the related Series Supplement. The Pass Through Certificates of each Series will evidence fractional undivided interests in the separate Pass Through Trust formed by the related Series Supplement, and will have no rights, benefits or interest in respect of any other separate Pass Through Trust or the Trust Property held in such other Pass Through Trust. All Pass Through Certificates of the same Series shall be in all respects equally and ratably entitled to the benefits of the related Pass Through Trust without preference, priority, or distinction on account of the actual time or times of authentication and delivery, all in accordance with the terms and provisions of this Pass Through Agreement and the related Series Supplement. (b) The following matters shall be established for the Pass Through Certificates of each Series in a Series Supplement executed and delivered by the Company and the Pass Through Trustee: (1) the formation of the Pass Through Trust in which the Pass Through Certificates of such Series evidence fractional undivided interests and its designation (which designation shall distinguish such Pass Through Trust from each other Pass Through Trust); (2) the specific title of the Pass Through Certificates of such Series (which title shall distinguish the Pass Through Certificates of the Series from each other Series); (3) subject to Section 2.02, any limit upon the aggregate amount of the Pass Through Certificates of such Series that may be authenticated and delivered under this Pass Through Agreement; (4) the related Regular Distribution Dates; (5) the related Special Distribution Dates; (6) if other than as provided in Section 3.02, the Registrar or the Paying Agent for such Series, including any Co-Registrar or additional Paying Agent; (7) if other than as provided in Section 2.07, the denominations in which the Pass Through Certificates of such Series are issuable; (8) a description of the Equipment Trust Certificates to be acquired by and held in the related Pass Through Trust and of the related Indenture Documents; (9) provisions with respect to the terms for which the definitions set forth in Article I hereof permit or require further specification in the related Series Supplement; and (10) any other terms of the Pass Through Certificates of such Series (which terms shall not be inconsistent with the provisions of the Trust Indenture Act or adversely affect the interest of the Certificateholders of any Series outstanding at the time), including any terms that may be required or advisable under United States laws or regulations or advisable in connection with the marketing of the Series. (c) At any time and from time to time after the execution and delivery of this Pass Through Agreement, the Company and the Pass Through Trustee may execute and deliver one or more Series Supplements, each forming a separate Pass Through Trust and establishing the terms of the Pass Through Certificates of the related Series, and pursuant to which the Pass Through Certificates of such Series shall be executed, authenticated and delivered by the Pass Through Trustee to the Person or Persons specified by the Company upon request of the Company and upon satisfaction of any conditions precedent set forth in the related Series Supplement on the Issuance Date for such Series. SECTION 2.02 Acquisition of Equipment Trust Certificates. Pass Through Certificates of a Series executed, authenticated and delivered by the Pass Through Trustee upon request of the Company in accordance with Section 2.01(c) shall equal in the aggregate the aggregate principal amount of the Equipment Trust Certificates to be purchased by the Pass Through Trustee pursuant to the related Participation Agreements and evidence the entire ownership of the related Pass Through Trust. The Pass Through Trustee shall issue and sell such Pass Through Certificates, in authorized denominations and in such Fractional Undivided Interests, so as to result in the receipt of consideration in an amount equal to the aggregate principal amount of such Equipment Trust Certificates and, concurrently therewith, the Pass Through Trustee shall purchase, pursuant to the terms and conditions of the related Participation Agreements, the Equipment Trust Certificates at a purchase price equal to the amount of such consideration so received. Except as provided in Sections 2.08 and 2.09, the Pass Through Trustee shall not execute, authenticate or deliver Pass Through Certificates of such Series in excess of the aggregate amount determined in accordance with this Section 2.02. SECTION 2.03. Initial Certificateholders as Grantors. By its payment for and acceptance of any Pass Through Certificate of any Series issued to it under the related Pass Through Trust, each initial Certificateholder of such Series as grantor of such Pass Through Trust shall join in the creation and declaration of such Pass Through Trust. SECTION 2.04. Limitation of Powers. Each Pass Through Trust shall be constituted solely for the purpose of making the investment in the Equipment Trust Certificates provided for in the related Series Supplement, and, except as set forth herein or in such Series Supplement, the Pass Through Trustee shall not be authorized or empowered to acquire any other investments or engage in any other activities and, in particular, the Pass Through Trustee shall not be authorized or empowered to do anything that would cause such Pass Through Trust to fail to qualify as a "grantor trust" for federal income tax purposes (including as subject to this restriction, acquiring any Aircraft (as defined in the respective related Indentures) by bidding such Equipment Trust Certificates or otherwise, or taking any action with respect to any such Aircraft once acquired). SECTION 2.05. Execution of Pass Through Certificates. The Pass Through Certificates of each Series shall be signed on behalf of the Pass Through Trustee by an authorized officer of the Pass Through Trustee. Such signatures may be the manual or facsimile signatures of such officer and minor errors or defects in any reproduction of any such signature shall not affect the validity or enforceability of any Pass Through Certificate which has been duly authenticated and delivered by the Pass Through Trustee. If any officer of the Pass Through Trustee who signs any of the Pass Through Certificates subsequently ceases to be such officer before the Pass Through Certificate so signed is authenticated and delivered or disposed of by the Pass Through Trustee, such Pass Through Certificate nevertheless may be authenticated and delivered or disposed of as though the person who signed such Pass Through Certificate had not ceased to be such officer of the Pass Through Trustee; and any Pass Through Certificate may be signed on behalf of the Pass Through Trustee by such person or persons as, at the actual date of the execution of such Pass Through Certificate, are the proper officers of the Pass Through Trustee, although at the date of the execution and delivery of the related Series Supplement any such person was not such officer. SECTION 2.06. Certificate of Authentication. The Pass Through Trustee shall duly authenticate and deliver Pass Through Certificates for each Series in authorized denominations equalling in the aggregate, the aggregate principal amount of the Equipment Trust Certificates to be purchased for the related Pass Through Trust by the Pass Through Trustee pursuant to the related Participation Agreements, and evidencing the entire ownership of the related Pass Through Trust. Only such Pass Through Certificates of such Series as shall bear thereon a certificate of authentication substantially in the form set forth in Exhibit A, executed by the Pass Through Trustee by manual or facsimile signature of one of its authorized officers, shall be entitled to the benefits of the related Pass Through Trust or be valid or obligatory for any purpose. Such certificate by the Pass Through Trustee upon any Pass Through Certificate for such Series executed by the Pass Through Trustee shall be conclusive evidence that the Pass Through Certificate so authenticated has been duly authenticated and delivered hereunder and that the Certificateholder, as evidenced on the Register for such Series, is entitled to the benefits of the related Pass Through Trust. SECTION 2.07. Form of Pass Through Certificates. The Pass Through Certificates of each Series shall be substantially in the form set forth in Exhibit A hereto. The Pass Through Certificates shall be issuable as registered securities without coupons and shall be numbered, lettered, or otherwise distinguished in such manner or in accordance with such plans as set forth in the related Series Supplement. The Pass Through Certificates of each Series shall be issued in denominations of $1,000 and any integral multiple thereof and shall be dated the date of their authentication. The Pass Through Certificates of any Series may be issued with appropriate insertions, omissions, substitutions and variations, and may have imprinted or otherwise reproduced thereon such legend or legends, not inconsistent with the provisions of this Pass Through Agreement or the related Series Supplement, as may be required to comply with any law or with any rules or regulations pursuant thereto, or with the rules of any securities market in which such Pass Through Certificates are admitted to trading, or to conform to general usage. SECTION 2.08. Registration, Transfer and Exchange. The Pass Through Trustee will keep at each office or agency to be maintained for any Series for the purpose as provided in Section 3.02 a Register or Registers in which, subject to such reasonable regulations as it may prescribe, it will register, and will register the transfer of, Pass Through Certificates of the related Series as provided in this Article. Such Register shall be in written form in the English language or in any other form capable of being converted into such form within a reasonable time. Upon due presentation for registration of transfer of any Pass Through Certificate of the related Series at any such office or agency, the Pass Through Trustee shall execute, authenticate and deliver in the name of the transferee or transferees a new Pass Through Certificate or Pass Through Certificates of such Series in authorized denominations and for a like aggregate Fractional Undivided Interest. Any Pass Through Certificate or Pass Through Certificates may be exchanged for a Pass Through Certificate or Pass Through Certificates in other authorized denominations and for a like aggregate Fractional Undivided Interest. Pass Through Certificates to be exchanged shall be surrendered at any office or agency to be maintained by the Pass Through Trustee for the related Series for the purpose as provided in Section 3.02, and the Pass Through Trustee shall execute, authenticate and deliver in exchange therefor the Pass Through Certificate or Pass Through Certificates which the Certificateholder making the exchange shall be entitled to receive, bearing numbers not contemporaneously or previously outstanding. All Pass Through Certificates presented for registration of transfer, exchange, redemption or payment shall (if so required by the Pass Through Trustee) be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Pass Through Trustee duly executed by, the Certificateholder or his attorney duly authorized in writing. The Pass Through Trustee may require payment from the Certificateholder of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any exchange or registration of transfer of Pass Through Certificates. No service charge to the Certificateholder shall be made for any such transaction. All Pass Through Certificates issued upon any transfer or exchange of Pass Through Certificates shall evidence ownership in the same Pass Through Trust and be entitled to the same benefits under this Pass Through Agreement and the applicable Series Supplement, as the Pass Through Certificates surrendered upon such transfer or exchange. SECTION 2.09. Mutilated, Defaced, Destroyed, Lost and Stolen Pass Through Certificates. If any temporary or definitive Pass Through Certificate becomes mutilated, defaced or is apparently destroyed, lost or stolen, the Pass Through Trustee in its discretion may execute, authenticate and deliver, a new Pass Through Certificate of like Fractional Undivided Interest in the related Pass Through Trust, bearing a number not contemporaneously or previously outstanding, in exchange and substitution for the mutilated or defaced Pass Through Certificate, or in lieu of and substitution for the Pass Through Certificate so apparently destroyed, lost or stolen. In every case the applicant for a substitute Pass Through Certificate shall furnish to the Pass Through Trustee and any agent of the Pass Through Trustee such security or indemnity as may be required by them to indemnify and defend and to save each of them harmless from any such substitution and, in every case of destruction, loss or theft, evidence to their satisfaction of the apparent destruction, loss or theft of such Pass Through Certificate and of the ownership thereof. Upon the issuance of any substitute Pass Through Certificate, the Pass Through Trustee may require payment from the Certificateholder of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses (including the reasonable fees and expenses of the Pass Through Trustee) connected therewith. If any Pass Through Certificate of a Pass Through Trust for which a notice of termination has been or is about to be given pursuant to Section 12.01 becomes mutilated or defaced or is apparently destroyed, lost or stolen, the Pass Through Trustee may, instead of issuing a substitute Pass Through Certificate, pay or authorize the payment of the same (without surrender thereof except in the case of a mutilated or defaced Pass Through Certificate), if the applicant for such payment furnishes to the Pass Through Trustee and any agent of the Pass Through Trustee such security or indemnity as any of them may require to save each of them harmless from all risks, however remote, resulting from such payment and, in every case of apparent destruction, loss or theft, the applicant shall also furnish to the Pass Through Trustee and any agent of the Pass Through Trustee evidence to their satisfaction of the apparent destruction, loss or theft of such Pass Through Certificate and of the ownership thereof. Every substitute Pass Through Certificate issued pursuant to the provisions of this Section by virtue of the fact that any Pass Through Certificate is apparently destroyed, lost or stolen will constitute conclusive evidence of the Fractional Undivided Interest in the applicable Pass Through Trust evidenced by the Pass Through Certificate that it replaces, whether or not the apparently destroyed, lost or stolen Pass Through Certificate may be enforceable at any time by anyone and will be entitled to all the benefits of (but will be subject to all the limitations of rights set forth in) the applicable Pass Through Trust equally and proportionately with any and all other Pass Through Certificates duly authenticated and delivered therefor. All Pass Through Certificates will be held and owned upon the express condition that, to the extent permitted by law, the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, defaced, or apparently destroyed, lost or stolen Pass Through Certificates and will preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender. SECTION 2.10. Cancellation of Pass Through Certificates; Destruction Thereof. All Pass Through Certificates surrendered for payment, redemption, registration of transfer or exchange, if surrendered to any agent of the Pass Through Trustee, shall be delivered to the Pass Through Trustee for cancellation or, if surrendered to the Pass Through Trustee, shall be cancelled by it; and no Pass Through Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Pass Through Agreement or the applicable Series Supplement. The Pass Through Trustee shall destroy cancelled Pass Through Certificates held by it. SECTION 2.11. Temporary Pass Through Certificates. Pending the preparation of definitive Pass Through Certificates of any Series, the Pass Through Trustee may execute, authenticate and deliver temporary Pass Through Certificates for such Series (printed, lithographed, typewritten or otherwise reproduced, in each case in form satisfactory to the executing officer of the Pass Through Trustee, as evidenced by such officer's execution thereof). Such temporary Pass Through Certificates shall be issuable as registered Pass Through Certificates without coupons, of any authorized denomination, and substantially in the form of the definitive Pass Through Certificates of such Series but with such omissions, insertions and variations as may be appropriate for temporary Pass Through Certificates, all as may be determined by the executing officer of the Pass Through Trustee, as evidenced by such officer's execution thereof. Temporary Pass Through Certificates may contain such reference to any provisions of this Pass Through Agreement or the applicable Series Supplement as may be appropriate. Every such temporary Pass Through Certificate shall be executed and authenticated by the Pass Through Trustee upon the same conditions and in substantially the same manner, and with like effect, as the definitive Pass Through Certificates of such Series. Without unreasonable delay the Company shall furnish definitive Pass Through Certificates for such Series and thereupon temporary Pass Through Certificates shall be surrendered in exchange therefor without charge at any office or agency to be maintained by the Pass Through Trustee for the purpose pursuant to Section 3.02, and the Pass Through Trustee shall execute, authenticate and deliver in exchange for such temporary Pass Through Certificates such definitive Pass Through Certificates evidencing a like aggregate Fractional Undivided Interest in the applicable Pass Through Trust in authorized denominations. Until so exchanged, temporary Pass Through Certificates shall be entitled to the same benefits under the applicable Pass Through Trust as definitive Pass Through Certificates of the applicable Series. ARTICLE III CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS SECTION 3.01. Covenants of the Company. (a) The Company will preserve and maintain its corporate existence, except as permitted by subsection (b) below. The Company will preserve and maintain all of its rights, privileges and franchises necessary in the normal conduct of its business; provided that the Company shall not be required to preserve any right, privilege or franchise if the Company shall reasonably determine that the loss thereof will not materially adversely affect the Company's ability to perform its obligations hereunder or under any Series Supplement. (b) The Company shall not (i) consolidate with or merge into any other corporation under circumstances in which the Company is not the surviving corporation or (ii) convey, transfer or lease all or substantially all of its assets as an entirety to any Person, unless the corporation formed by such consolidation or into which the Company is merged or the Person which acquired by conveyance, transfer or lease substantially all of the assets of the Company as an entirety shall be a corporation organized and existing under the laws of the United States of America or any State or the District of Columbia, and shall execute and deliver to the Pass Through Trustee an agreement reasonably satisfactory in form and substance to the Pass Through Trustee containing an effective assumption by such successor corporation of the due and punctual performance and observance of each covenant and condition to be performed or observed by the Company hereunder and under each Series Supplement. (c) Upon any consolidation or merger, or any conveyance, transfer or lease of substantially all the assets of the Company as an entirety in accordance with this Section, the successor corporation formed by such consolidation or the Person into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Agreement and each Series Supplement with the same effect as if such successor corporation or such Person, as the case may be, had been named as the Company herein and therein. No such conveyance, transfer or lease of substantially all of the assets of the Company as an entirety shall have the effect of releasing the Company or any successor corporation which shall theretofore have become such in the manner prescribed in this Section from its liability hereunder or under any Series Supplement. (d) The Pass Through Trustee shall receive an Officer's Certificate and an Opinion of Counsel of the Company as conclusive evidence that any consolidation, merger, sale, lease or conveyance, and any assumption complies with the provisions of this Section and the Pass Through Trustee shall be entitled to rely upon the same for all purposes hereof. SECTION 3.02. Offices for Payments; Registrar. So long as any Pass Through Certificates of a Series remain outstanding, the Pass Through Trustee will maintain the following for such Series: (a) an office or agency where such Pass Through Certificates may be presented for payment and (b) a facility or agency in New York, New York where such Pass Through Certificates may be presented or surrendered for registration of transfer and for exchange and for redemption as provided in this Pass Through Agreement (the "Registrar"). Written notice of the location of each such other office or agency and of any change of location thereof shall be given by the Pass Through Trustee to the Company, any Owner Trustees, the Indenture Trustees and the Certificateholders of such Series. In the event that no such office or agency shall be maintained or no such notice of location or of change of location shall be given, presentations and demands may be made and notices may be served at the Corporate Trust Office of the Pass Through Trustee. The Registrar shall keep a register (the "Register") with respect to the Pass Through Certificates of each Series and their transfer and exchange. The Pass Through Trustee may appoint one or more co-registrars ("Co-Registrars") for any Series and may terminate any such appointment at any time upon written notice. The term "Registrar" includes any Co-Registrar. Any Registrar shall be a bank or trust company organized and doing business under the laws of the United States or any state, with a combined capital and surplus of at least $100,000,000, or a direct or indirect subsidiary of such an entity, or a member of a bank holding company group, having a combined capital and surplus of at least $100,000,000 and such subsidiary or member itself having a capital and surplus of at least $10,000,000. The Pass Through Trustee shall initially act as Registrar and shall initially serve as an office where Pass Through Certificates can be presented for payment. SECTION 3.03. Representations and Warranties of the Pass Through Trustee. (a) The Pass Through Trustee, in its individual capacity (except with respect to clause (iv) below), represents, warrants and agrees that: (i) it is a validly existing national banking association duly organized 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 has the corporate power and authority to enter into and perform its obligations under this Pass Through Agreement; (ii) this Pass Through Agreement has been duly authorized by all necessary corporate action on its part, and neither the execution and delivery hereof nor its performance of any of the terms and provisions hereof will violate any Federal law or regulation relating to its banking or trust powers or contravene or result in any breach of, or constitute any default under its articles of association, or by-laws or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it or its properties may be bound or affected; (iii) the execution, delivery and performance by the Pass Through Trustee of this Pass Through Agreement will not require the authorization, consent, or approval of, the giving of notice to, the filing or registration with, or the taking of any other action in respect of, any United States or state governmental authority or agency regulating the banking and corporate trust activities of the Pass Through Trustee other than (i) the registration of the Pass Through Certificates under the Securities Act and under the securities laws of any state in which the Pass Through Certificates may be offered for sale if the laws of such state require such action and (ii) the qualification of the Pass Through Agreement under the Trust Indenture Act pursuant to an order of the Securities and Exchange Commission; (iv) this Pass Through Agreement has been duly executed and delivered by it and, assuming that this Pass Through Agreement is the legal, valid and binding obligation of the Company, is the legal, valid and binding obligation of the Pass Through Trustee, enforceable against the Pass Through Trustee in accordance with its terms except as limited by bankruptcy, insolvency, moratorium, reorganization, receivership, fraudulent conveyance or similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights and remedies generally from time to time in effect, regardless of whether such enforceability is considered in a proceeding in equity or at law; and (v) each Series Supplement will be, upon the date of execution and delivery of such Series Supplement, executed and delivered by one of its officers duly authorized to execute and deliver such Series Supplement on its behalf. (b) The representations and warranties set forth in subsection (a) above shall be deemed to be made by the Pass Through Trustee on each Issuance Date, except as otherwise provided in the applicable Series Supplement. SECTION 3.04. Paying Agents. Whenever the Pass Through Trustee in its sole discretion shall appoint a paying agent (the "Paying Agent") for any Pass Through Trust, it will cause the Paying Agent to execute and deliver an instrument in which the Paying Agent shall agree with the Pass Through Trustee, subject to the provisions of this Section, (a) that it will hold all sums received by it as such agent for distribution to the Certificateholders of the related Series (whether such sums have been paid to it by the Pass Through Trustee or the Related Owner Trustee or Indenture Trustee) in trust for the benefit of the Certificateholders of the related Series or of the Pass Through Trustee, and (b) that it will notify the Pass Through Trustee if the principal of or interest or premium on the Equipment Trust Certificates that constitute Trust Property of such Pass Through Trust is not paid when the same is due and payable. Anything in this Section to the contrary notwithstanding, the agreements to hold sums in trust as provided in this Section are subject to the provisions of Sections 12.03 and 12.04 hereof. SECTION 3.05. No Representations or Warranties as to Documents. The Pass Through Trustee neither makes nor shall be deemed to have made any representation or warranty as to the validity, legality or enforceability of this Pass Through Agreement, any Series Supplement, any related Pass Through Certificates or any related Indenture Documents or as to the correctness of any statement contained in any thereof, except for the representations and warranties of the Pass Through Trustee made in its individual capacity under this Pass Through Agreement, in any Series Supplement or in any related Participation Agreement. SECTION 3.06. Payments from Trust Property Only. For any Pass Through Trust, all payments to be made by the Pass Through Trustee under such Pass Through Trust shall be made only from the income and the proceeds from the related Trust Property and only to the extent that the Pass Through Trustee shall have sufficient income or proceeds from such Trust Property to enable the Pass Through Trustee to make distributions of the amounts due in respect of the Pass Through Certificates thereunder. Each Certificateholder of such Series by its acceptance of a related Pass Through Certificate agrees that it will look solely to the income and proceeds from the related Trust Property to the extent available for distribution to it as provided herein and in the related Series Supplement and that the Pass Through Trustee is not personally liable to such Certificateholder for any amounts payable under such Pass Through Trust except as expressly provided herein. SECTION 3.07. Limitation of the Company's Liability. The Company is a party to this Pass Through Agreement solely for purposes of meeting the requirements of the Trust Indenture Act, and therefore shall not be liable hereunder, except as otherwise expressly provided herein, or under the terms of any Series Supplement or any Pass Through Certificates, except as otherwise expressly provided therein. ARTICLE IV CERTIFICATEHOLDER LISTS AND REPORTS BY THE COMPANY AND THE PASS THROUGH TRUSTEE SECTION 4.01. Certificateholder Lists; Ownership of Pass Through Certificates. (a) For each Series, the Pass Through Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of the Certificateholders of such Series. If the Pass Through Trustee is not the Registrar for such Series, the Company shall cause the Registrar to furnish to the Pass Through Trustee semi-annually not more than 15 days after each Record Date, as of such Record Date, or at such other times as the Pass Through Trustee may request in writing, a list, in such form and as of such date as the Pass Through Trustee may reasonably require, containing all the information in the possession or control of the Registrar as to the names and addresses of the Certificateholders of such Series and the amounts of the Pass Through Certificates held by such Certificateholders. (b) For each Series, ownership of the Pass Through Certificates shall be proved by the Register for such Series kept by the Registrar. SECTION 4.02. Disclosure of Certificateholder Lists. Each and every Certificateholder, by receiving and holding such Pass Through Certificate, agrees with the Company and the Pass Through Trustee that neither the Company, the Pass Through Trustee, the Pass Through Trustee in its individual capacity nor any agent of any of the foregoing shall be held accountable by reason of the disclosure of any such information as to the names and addresses of any Certificateholders in accordance with the provisions of Section 312 of the Trust Indenture Act, regardless of the source from which such information was derived, and that the Pass Through Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 312(b) of the Trust Indenture Act. SECTION 4.03. Reports by the Company. The Company covenants: (a) to file with the Pass Through Trustee, within 30 days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents, and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Company may be required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act or, if the Company is not required to file information, documents, or reports pursuant to either of such Sections of the Exchange Act, then to file with the Pass Through Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents, and reports that would be required pursuant to Section 13 of the Exchange Act, or, in respect of a security listed and registered on a national securities exchange, as may be prescribed from time to time in such rules and regulations; (b) to file with the Pass Through Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents, and reports with respect to compliance by the Company with the conditions and covenants provided for in this Pass Through Agreement as may be required from time to time by such rules and regulations; (c) to transmit to the Certificateholders of each Series in the manner and to the extent required by Section 313(c) of the Trust Indenture Act, within 30 days after the filing thereof with the Pass Through Trustee, such summaries of any information, documents and reports required to be filed by the Company pursuant to subsections (a) and (b) of this Section 4.03 as may be required by rules and regulations prescribed from time to time by the Commission; and (d) furnish to the Pass Through Trustee, on or before each March 15, a brief certificate from the principal executive officer, principal financial officer or principal accounting officer of the Company as to his or her knowledge of such Company's compliance with all conditions and covenants under this Pass Through Agreement and each Series Supplement. For purposes of this subsection (d), such compliance shall be determined without regard to any period of grace or requirement of notice provided under this Pass Through Agreement or any Series Supplement. SECTION 4.04. Reports by the Pass Through Trustee. For each Series, on or before each May 15, the Pass Through Trustee shall transmit, in the manner and to the extent required by Section 313(c) of the Trust Indenture Act, any report required by Section 313(a) of the Trust Indenture Act to be transmitted by the Pass Through Trustee to the related Certificateholders. ARTICLE V RECEIPT AND DISTRIBUTION OF INCOME AND PROCEEDS FROM THE TRUST PROPERTY SECTION 5.01. Certificate Account and Special Payments Account. (a) The Pass Through Trustee shall establish and maintain for each Pass Through Trust, on behalf of the related Certificateholders, a Certificate Account as one or more non-interest bearing accounts. In each case, the Pass Through Trustee shall hold such Certificate Account in trust for the benefit of such Certificateholders, respectively, and shall make or permit withdrawals therefrom only as provided in this Pass Through Agreement or the related Series Supplement. Upon receipt of any Scheduled Payment, the Pass Through Trustee shall immediately deposit such Scheduled Payment in the applicable Certificate Account. (b) The Pass Through Trustee shall establish and maintain, as and when required, for each Pass Through Trust, on behalf of the related Certificateholders, a Special Payments Account as one or more accounts, which shall be non-interest bearing except as provided in Section 5.04. In each case, the Pass Through Trustee shall hold such Special Payments Account in trust for the benefit of such Certificateholders, respectively, and shall make or permit withdrawals therefrom only as provided in this Pass Through Agreement or the related Series Supplement. Upon receipt of any Special Payment, the Pass Through Trustee shall immediately deposit such Special Payment in the applicable Special Payments Account. (c) The Pass Through Trustee shall present any Equipment Trust Certificate to the applicable Related Indenture Trustee on the date of its stated final maturity, or on such earlier date as such Equipment Trust Certificate is to be redeemed or purchased in whole pursuant to the relevant Indenture. SECTION 5.02. Distributions from Certificate Account and Special Payments Account. (a) For each Pass Through Trust, on each related Regular Distribution Date, or as soon thereafter as the Pass Through Trustee has confirmed receipt of any Scheduled Payment due on the related Equipment Trust Certificates on such Regular Distribution Date, the Pass Through Trustee shall distribute out of the applicable Certificate Account the entire amount deposited therein pursuant to Section 5.01(a) by paying to each Certificateholder of the related Series of record at the close of business on the Record Date for such Regular Distribution Date (except as provided in Section 12.01 concerning the final distribution), at the address for such Certificateholder appearing in the related Register, such Certificateholder's pro rata share (based on the aggregate Fractional Undivided Interest in the related Pass Through Trust held by such Certificateholder) of the aggregate amount in the applicable Certificate Account. (b) For each Pass Through Trust, on each related Special Distribution Date, or as soon thereafter as the Pass Through Trustee has confirmed receipt of any Special Payment due on the related Equipment Trust Certificates or realized upon the sale of any such Equipment Trust Certificates, the Pass Through Trustee shall distribute out of the applicable Special Payments Account the entire amount of such Special Payment deposited therein pursuant to Section 5.01(b) by paying to each Certificateholder of the related Series of record at the close of business on the Record Date for such Special Distribution Date (except as provided in Section 12.01 concerning the final distribution), at the address for such Certificateholder appearing in the related Register, such Certificateholder's pro rata share (based on the aggregate Fractional Undivided Interest in the related Pass Through Trust held by such Certificateholder) of the aggregate amount in the applicable Special Payments Account on account of such Special Payment. (c) For each Pass Through Trust, the Pass Through Trustee shall at the expense of the Company notify each Certificateholder of the related Series by mail at its address as it appears in the related Register of each related Special Payment for such Series. If the related Equipment Trust Certificates are to be redeemed or purchased in whole prior to their respective maturities, or if a Special Payment is to be made pursuant to either of the last two paragraphs of Section 2.02(b), such notice shall be mailed not less than 20 days prior to the date any such Special Payment is scheduled to be distributed. For any other Special Payment, such notice shall be mailed as soon as practicable after the Pass Through Trustee has received funds for such Special Payment. Such notices of Special Payments shall set forth: (i) the Special Distribution Date and the Record Date therefor (except as otherwise provided in Section 12.01); (ii) the amount of the Special Payment for each $1,000 face amount Pass Through Certificate and the amount thereof constituting principal, premium, if any, and interest on the related Equipment Trust Certificates; (iii) the reason for the Special Payment; and (iv) if the Special Distribution Date is the same date as a Regular Distribution Date for such Series, the total amount to be received on such date for each $1,000 face amount Pass Through Certificate. If the amount of premium, if any, payable upon the redemption or purchase in whole of an Equipment Trust Certificate has not been calculated at the time that the Pass Through Trustee mails the notice of the related Special Payment, it shall be sufficient if the notice sets forth the other amounts to be distributed and states that any premium received will also be distributed. If, for any Pass Through Trust, any cancellable redemption of the related Equipment Trust Certificates is cancelled, the Pass Through Trustee, as soon as possible after learning thereof, shall notify by mail each Certificateholder of the related Series at its address as it appears on the related Register. (d) For each Pass Through Trust, any Scheduled Payment or Special Payment to be distributed pursuant to this Article shall be payable at the Corporate Trust Office of the Pass Through Trustee or at any office or agency maintained for such purpose for the related Series pursuant to Section 3.02, provided that any Scheduled Payment or Special Payment may be payable at the option of the Pass Through Trustee or its Paying Agent for the related Series by mailing checks for such Scheduled Payment or Special Payment payable to or upon the written order of the related Certificateholders entitled thereto as they appear on the related Register. SECTION 5.03. Statements to Certificateholders (a) On each Regular Distribution Date and Special Distribution Date, the Pass Through Trustee shall include with each distribution to Certificateholders of the related Series a statement, giving effect to such distribution to be made on such Regular Distribution Date or Special Distribution Date, as the case may be, setting forth the following information (as to (i) and (ii) below, for each $1,000 face amount Pass Through Certificate): (i) The amount of such distribution allocable to principal and the amount allocable to premium, if any, on the related Equipment Trust Certificates; (ii) The amount of such distribution allocable to interest on the related Equipment Trust Certificates; and (iii) The Pool Balance and the Pool Factor of the related Pass Through Trust. (b) For each Series, within a reasonable period of time after the end of each calendar year but not later than the latest date permitted by law, the Pass Through Trustee shall furnish to each Person who at any time during such calendar year was a Certificateholder of such Series a statement containing the sum of the amounts determined pursuant to clauses (a)(i) and (a)(ii) of this Section for the related Pass Through Trust for such calendar year or, in the event such Person was a Certificateholder of such Series during a portion of such calendar year, for the applicable portion of such year. SECTION 5.04. Investment of Special Payment Moneys. Any money received by the Pass Through Trustee pursuant to Section 5.01(b) representing a Special Payment that is not to be promptly distributed shall, to the extent practicable, be invested by the Pass Through Trustee in Permitted Investments selected by the Company pending distribution of such Special Payment pursuant to Section 5.02. Any investment made pursuant to this Section 5.04 shall be in such Permitted Investments having maturities not later than the date that such moneys are required to be used to make the payment required under Section 5.02 on the applicable Special Distribution Date and the Pass Through Trustee shall hold any such Permitted Investments until maturity. The proceeds upon maturity of any Permitted Investment shall not be reinvested pending distribution. The Pass Through Trustee shall have no liability with respect to any investment made pursuant to this Section, other than by reason of the willful misconduct or gross negligence of the Pass Through Trustee. All income and earnings from such investments shall be distributed on such Special Distribution Date as part of such Special Payment. SECTION 5.05. Withholding Taxes. The Pass Through Trustee shall withhold any taxes required to be withheld on payments to any Certificateholder, except to the extent that such Certificateholder has furnished evidence reasonably satisfactory to the Pass Through Trustee of any exemption from withholding claimed by such Certificateholder, and under no circumstances shall the failure of any such Certificateholder to receive any amounts so withheld constitute an Event of Default. Notwithstanding any provision to the contrary herein, if the Company is required to pay any withholding tax or any interest or penalty thereon, the Pass Through Trustee shall be entitled to retain any payments otherwise distributable to such Certificateholder that was subject to such withholding until such amounts shall have been recovered in full by the Pass Through Trustee. ARTICLE VI CONCERNING THE CERTIFICATEHOLDERS SECTION 6.01. Evidence of Action Taken by Certificateholders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Pass Through Agreement to be given or taken by Certificateholders of any Series may be embodied in and evidenced by one or more substantially similar instruments signed by such Certificateholders in person or by an agent duly appointed in writing, and, except as otherwise expressly provided herein, such action shall become effective when such instrument or instruments are delivered to the Pass Through Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Pass Through Agreement and (subject to Sections 8.02 and 8.03) conclusive in favor of the Pass Through Trustee, if made in the manner provided in this Article. (b) For the purpose of determining the Certificateholders of any Series entitled to vote or consent to any direction, waiver or other action of such Certificateholders under Section 7.10 or 7.11, the Company may set a record date for such vote or consent by specifying such record date in an Officer's Certificate delivered to the Pass Through Trustee. Notwithstanding Section 316(c) of the Trust Indenture Act, such record date shall be a date not more than 15 days prior to the first solicitation of such vote or consent. SECTION 6.02. Proof of Execution of Instruments and of Holding of Certificates. Subject to Sections 8.02 and 8.03, the execution of any instrument by a Certificateholder or his agent or proxy may be proved in accordance with such reasonable rules and regulations as may be prescribed by the Pass Through Trustee. The holding of Pass Through Certificates shall be proved by the Register or by a certificate of the Registrar. SECTION 6.03. Certificateholders to Be Treated as Owners. Prior to due presentment for registration of transfer of any Pass Through Certificate, each related Indenture Trustee, the Pass Through Trustee, any agent of any such related Indenture Trustee or the Pass Through Trustee, the Paying Agent, if any, the Registrar and the Company may deem and treat the Person in whose name such Pass Through Certificate shall be registered upon the Register as the absolute owner of such Pass Through Certificate (whether or not such Pass Through Certificate shall be overdue and notwithstanding any notation of ownership or other writing thereon) for the purpose of receiving payment on account of the principal payable with respect to and, subject to the provisions of this Pass Through Agreement, interest payable with respect to such Pass Through Certificate and for all other purposes; and neither any such related Indenture Trustee nor the Pass Through Trustee (nor any agent of any such related Indenture Trustee or the Pass Through Trustee) nor the Paying Agent, if any, nor the Registrar nor the Company shall be affected by any notice to the contrary. All such payments so made to any such person, or upon his order, shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Pass Through Certificate. SECTION 6.04. Pass Through Certificates Owned by the Company and Related Owner Trustees Deemed Not Outstanding. In determining whether the Certificateholders of the requisite aggregate Fractional Undivided Interest of Pass Through Certificates of any Series have concurred in any direction, consent or waiver under this Pass Through Agreement, Pass Through Certificates of such Series that are owned by the Company, any Related Owner Trustee or Related Owner Participant or any obligor on such Pass Through Certificates or by any Affiliate of the Company, any such Related Owner Trustee or Related Owner Participant or any obligor on such Pass Through Certificates shall be disregarded and deemed not to be Outstanding for the purpose of any such determination; provided that for the purpose of determining whether the Pass Through Trustee shall be protected in relying on any such direction, consent or waiver, only if a Responsible Officer of the Pass Through Trustee has actual knowledge that certain Pass Through Certificates are so owned shall such Pass Through Certificates be so disregarded; and provided further that if all Pass Through Certificates of such Series that would be deemed Outstanding in the absence of the foregoing provision are owned by the Company, any Related Owner Trustee or Related Owner Participant or any obligor on such Pass Through Certificates or by any Affiliate of the Company, any such Related Owner Trustee or Related Owner Participant or any obligor on such Pass Through Certificates, then such Pass Through Certificates shall be deemed Outstanding for the purpose of any such determination. Pass Through Certificates so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Pass Through Trustee the pledgee's right so to act with respect to such Pass Through Certificates and that the pledgee is not the Company, any Related Owner Trustee or Related Owner Participant or any obligor upon the Pass Through Certificates or any Affiliate of the Company, any Related Owner Trustee or Related Owner Participant or any obligor on such Pass Through Certificates. In case of a dispute as to such right, the advice of counsel shall be full protection in respect of any decision made by the Pass Through Trustee in accordance with such advice. For any Series, upon request of the Pass Through Trustee, the Company, the Related Owner Trustees and the Related Owner Participants shall furnish to the Pass Through Trustee promptly an Officers' Certificate listing and identifying all Pass Through Certificates of such Series, if any, known by the Company or any such Related Owner Trustee or Related Owner Participant to be owned or held by or for the account of any of the above-described persons; and the Pass Through Trustee shall be entitled to accept such Officers' Certificates as conclusive evidence of the facts set forth therein and of the fact that all Pass Through Certificates of such Series not listed therein are Outstanding for the purpose of any such determination. For the purpose of determining whether Pass Through Certificates of a Series are Outstanding as described in this Section, an "obligor" on such Pass Through Certificates shall include any obligor or any Affiliate of any such obligor on any Equipment Trust Certificates that constitute Trust Property of the related Pass Through Trust. SECTION 6.05. Right of Revocation of Action Taken. For any Series, at any time prior to (but not after) the evidencing to the Pass Through Trustee, as provided in Section 6.01, of any action taken by the related Certificateholders of the percentage in aggregate of Fractional Undivided Interests in the related Pass Through Trust specified in this Pass Through Agreement in connection with such action, any Certificateholder of a Pass Through Certificate of such Series, the serial number of which is shown by the evidence to be included among the serial numbers of the Pass Through Certificates of such Series, the Certificateholders of which have consented to such action, may, by filing written notice at the Corporate Trust Office and upon proof of holding as provided in this Article, revoke such action so far as concerns such Pass Through Certificate. Except as aforesaid, any such action taken shall be conclusive and binding upon such Certificateholder for such Pass Through Certificate and upon all future Certificateholders and owners of such Pass Through Certificate and of any Pass Through Certificates issued in exchange or substitution therefor, irrespective of whether or not any notation in regard thereto is made upon any such Pass Through Certificate or otherwise. Any action taken by such Certificateholders of the percentage in aggregate of Fractional Undivided Interests in the related Pass Through Trust specified in this Pass Through Agreement in connection with such action shall be conclusively binding upon the Pass Through Trustee and all the Certificateholders of such Series. SECTION 6.06. ERISA Plan Prohibition. Unless otherwise specified in the applicable Series Supplement, no employee benefit plan subject to Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or individual retirement account or plan subject to Section 4975 of the Code (hereinafter collectively referred to as an "ERISA Plan"), may acquire or hold any of the Pass Through Certificates. The purchase by any person of any Pass Through Certificate constitutes a representation by such person to the Company, the Related Owner Participants, the Related Owner Trustees, the Related Indenture Trustees and the Pass Through Trustee that such person is not an ERISA Plan and that such person is not acquiring, and has not acquired, such Pass Through Certificate with assets of an ERISA Plan. ARTICLE VII REMEDIES OF PASS THROUGH TRUSTEE AND CERTIFICATEHOLDERS SECTION 7.01. Events of Default. If, for any Pass Through Trust, an Indenture Event of Default under an Indenture relating to any Equipment Trust Certificate that constitutes Trust Property of such Pass Through Trust (an "Event of Default") shall occur and be continuing, then, and in each and every case, the Pass Through Trustee may vote all of the Equipment Trust Certificates under such Indenture held by such Pass Through Trust, and upon the direction of the Majority In Interest of Certificateholders of the related Series, the Pass Through Trustee shall vote a corresponding majority of such Equipment Trust Certificates in favor of directing the applicable Related Indenture Trustee to declare the unpaid principal of such Equipment Trust Certificates then outstanding, together with interest accrued but unpaid thereon and all other amounts due under such Equipment Trust Certificates and the related Indenture, to be due and payable under, and in accordance with the provisions of, such Indenture. In addition, if such Event of Default shall have occurred and be continuing, the Pass Through Trustee may in accordance with such related Indenture vote such Equipment Trust Certificates to direct the applicable Related Indenture Trustee regarding the exercise of remedies provided in such Indenture. If, for any Pass Through Trust, an Event of Default shall have occurred and be continuing, the Pass Through Trustee also may in its discretion, and upon the direction of the Majority In Interest of Certificateholders of the related Series shall, by such officer or agent as it may appoint, sell, convey, transfer and deliver any Equipment Trust Certificates held in such Pass Through Trust that are subject to the corresponding Indenture Event of Default, without recourse to or warranty by the Pass Through Trustee or any Certificateholder of such Series, to any Person. In any such case, the Pass Through Trustee shall sell, assign, contract to sell or otherwise dispose of and deliver any such Equipment Trust Certificates in one or more parcels at public or private sale or sales, at any location or locations at the option of the Pass Through Trustee, all upon such terms and conditions as it may reasonably deem advisable and at such prices as it may reasonably deem advisable, for cash. If the Pass Through Trustee so decides or is required to sell or otherwise dispose of any Equipment Trust Certificates pursuant to this Section, the Pass Through Trustee shall take such of the actions described above as it may reasonably deem most effective to complete the sale or other disposition of such Equipment Trust Certificates, so as to provide for the payment in full of all amounts due on such Equipment Trust Certificates with respect to the related Series. Notwithstanding the foregoing, any action taken by the Pass Through Trustee under this Section shall not, in the reasonable judgment of the Pass Through Trustee, be adverse to the best interests of the Certificateholders of such Series. SECTION 7.02. Incidents of Sale of Equipment Trust Certificates. Upon any sale of all or any part of the Equipment Trust Certificates held in any Pass Through Trust made either under the power of sale given under this Pass Through Agreement or the related Series Supplement or otherwise for the enforcement of this Pass Through Agreement and the related Series Supplement, the following shall be applicable: (1) Any Certificateholder of the related Series, the Pass Through Trustee in its individual or any other capacity or any other Person may bid for and purchase any of such Equipment Trust Certificates, and upon compliance with the terms of sale, may hold, retain, possess and dispose of such Equipment Trust Certificates in its or their own absolute right without further accountability. (2) The receipt of the Pass Through Trustee or of the officer making such sale shall be a sufficient discharge to any purchaser for his purchase money, and, after paying such purchase money and receiving such receipt, such purchaser or its personal representative or assigns shall not be obliged to see to the application of such purchase money, or be in any way answerable for any loss, misapplication or non-application thereof. (3) Any moneys collected by the Pass Through Trustee upon any sale made either under the power of sale given by this Pass Through Agreement or the related Series Supplement or otherwise for the enforcement of the related Pass Through Trust, shall be deposited and distributed as a Special Payment as provided in Article V. SECTION 7.03. Pass Through Trustee May Prove Debt. If any amount payable under any Equipment Trust Certificate held by any Pass Through Trust is not paid when due and payable, the Pass Through Trustee, in its own name and as trustee of an express trust, as holder of such Equipment Trust Certificate shall be, to the extent permitted by and in accordance with the terms of the related Indenture Documents, entitled and empowered to institute any action or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceedings to judgment or final decree, and may enforce any such judgment or final decree against the applicable Owner Trustee or other obligor upon such Equipment Trust Certificate and collect in the manner provided by law out of the property of such Owner Trustee or such other obligor upon such Equipment Trust Certificate, as the case may be, wherever situated, the moneys adjudged or decreed to be payable. All rights of action and of asserting claims under this Pass Through Agreement, or under any of the Pass Through Certificates, may be prosecuted and enforced by the Pass Through Trustee without the possession of any of such Pass Through Certificates or the production thereof in any trial or other proceedings relative thereto, and any such action or proceedings instituted by the Pass Through Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Pass Through Trustee, each predecessor Pass Through Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Certificateholders of the related Series. In any proceedings brought by the Pass Through Trustee (and also any proceedings involving the interpretation of any provision of this Pass Through Agreement or any Series Supplement to which the Pass Through Trustee shall be a party) the Pass Through Trustee shall be held to represent all the Certificateholders of the related Series, and it shall not be necessary to make any such Certificateholders parties to any such proceedings. SECTION 7.04. Remedies Cumulative. Each and every right, power and remedy given to the Pass Through Trustee specifically or otherwise under any Pass Through Trust shall be cumulative and shall be in addition to every other right, power and remedy specifically given thereunder or now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy whether specifically given thereunder or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by the Pass Through Trustee or the Certificateholders of the related Series, and the exercise or the beginning of the exercise of any power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy. No delay or omission by the Pass Through Trustee or of any such Certificateholder in the exercise of any right, remedy or power or in the pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the applicable Owner Trustee, or to be an acquiescence therein. SECTION 7.05. Suits for Enforcement. If an Indenture Event of Default has occurred, has not been waived and is continuing, the Pass Through Trustee may in its discretion and subject to its rights of appropriate indemnification under Sections 7.07 and 8.03 and Article IX hereof, to the extent permitted by and in accordance with the Indenture Documents, proceed to protect and enforce its rights and rights of the Certificateholders of the related Series by such appropriate judicial proceedings as the Pass Through Trustee shall deem most effectual to protect and enforce any of such rights, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement under the related Pass Through Trust or in aid of the exercise of any power granted thereunder or to enforce any other legal or equitable right vested in the Pass Through Trustee or the Certificateholders under such Pass Through Trust or by law; provided that any sale of any portion of the related Trust Property shall be done in accordance with Section 7.02. SECTION 7.06. Discontinuance of Proceedings. If the Pass Through Trustee or any Certificateholder of any Series institutes any proceeding to enforce any right, power or remedy under the related Pass Through Trust, and such proceeding is discontinued or abandoned for any reason or is determined adversely to the Pass Through Trustee or such Certificateholder, then and in every such case the applicable Owner Trustee, and the applicable Indenture Trustee, the Pass Through Trustee, the Certificateholders of such Series and the Company shall, subject to any determination in such proceeding, be restored to their former positions and rights under such Pass Through Trust with respect to the Trust Property and all rights, remedies and powers of the Pass Through Trustee and such Certificateholders shall continue as if no such proceeding had been instituted. SECTION 7.07. Limitations on Suits by Certificateholders. No Certificateholder of any Series shall have any right by virtue or by availing of any provision of the related Pass Through Trust to institute any action or proceeding at law or in equity or in bankruptcy or otherwise upon or under or with respect to such Pass Through Trust, or for the appointment of a trustee, receiver, liquidator, custodian or other similar official or for any other remedy thereunder, unless such Certificateholder previously has notified the Pass Through Trustee in writing of an Event of Default under such Pass Through Trust and of the continuance thereof, as provided herein, and the Certificateholders of the related Pass Through Certificates then Outstanding (or the proxy therefor) representing in the aggregate not less than 25% of the Fractional Undivided Interests of Pass Through Certificates then Outstanding under such Pass Through Trust have requested in writing that the Pass Through Trustee institute such action or proceedings in its own name as trustee under such Pass Through Trust and have offered to the Pass Through Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby, and the Pass Through Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such action or proceedings and no direction inconsistent with such written request has been given to the Pass Through Trustee pursuant to Section 7.10; it being understood and intended, and being expressly covenanted by such Certificateholder with every other Certificateholder of such Series and the Pass Through Trustee, that no one or more Certificateholders of such Series shall have any right in any manner whatever to affect, disturb or prejudice the rights of any other Certificateholder of such Series or to obtain or seek to obtain priority over or preference to any other Certificateholder of such Series or to enforce any right under the related Pass Through Trust, except in the manner provided therein and for the equal, ratable and common benefit of all Certificateholders of such Series. For the protection and enforcement of the provisions of this Section, each and every Certificateholder of the related Series and the Pass Through Trustee shall be entitled to such relief as can be given either at law or in equity. SECTION 7.08. Unconditional Right of Certificateholders to Receive Principal, Interest and Premium, and to Institute Certain Suits. Nothwithstanding any other provision in this Pass Through Agreement, any Series Supplement or any Pass Through Certificate issued pursuant to such Series Supplement, the right of any Certificateholder of the related Series to receive distributions on such Pass Through Certificate of Scheduled Payments or Special Payments pursuant to Article V on or after the respective due dates set forth in such Series Supplement, or, subject to Section 7.07, to institute suit for the enforcement of any such distribution on or after such respective dates as provided herein or therein, shall not be impaired or affected without the consent of such Certificateholder. The purchase by any Certificateholder of any Pass Through Certificate constitutes the consent of such Certificateholder to the retention by the Pass Through Trustee of certain amounts otherwise distributable to such Certificateholder in accordance with Section 5.05. SECTION 7.09. Control by Certificateholders. A Majority In Interest of Certificateholders of any Series has the right with respect to the related Pass Through Trust to direct the Pass Through Trustee as to the time, method, and place of conducting any proceeding for any remedy available to the Pass Through Trustee, or exercising any trust or power conferred on the Pass Through Trustee under such Pass Through Trust; provided that such direction is not otherwise than in accordance with law and the provisions of such Pass Through Trust and the Pass Through Trustee has received, to the extent provided in Sections 7.07 and 8.03 and Article IX hereof, such reasonable indemnification as it may require against the costs, expenses and liabilities to be incurred by the Pass Through Trustee; and provided further that the Pass Through Trustee has the right to decline to follow any such direction if the Pass Through Trustee, being advised by counsel, determines that the action or proceeding so directed may not lawfully be taken or if the Pass Through Trustee in good faith by its board of directors, the executive committee, or a trust committee of directors or Responsible Officers of the Pass Through Trustee determines that the action or proceedings so directed would involve the Pass Through Trustee in personal liability or if the Pass Through Trustee in good faith so determines that the actions or forebearances specified in or pursuant to such direction would be unduly prejudicial to the interests of the Certificateholders of such Series not joining in the giving of said direction, it being understood that the Pass Through Trustee shall have no duty to ascertain whether or not such actions or forebearances are unduly prejudicial to such Certificateholders. Nothing in this Pass Through Agreement or any Series Supplement shall impair the right of the Pass Through Trustee in its discretion to take any action deemed proper by the Pass Through Trustee with respect to the related Pass Through Trust and which is not inconsistent with such direction by Certificateholders of the related Series. SECTION 7.10. Waiver of Past Events of Default. Upon written instructions from a Majority in Interest of Certificateholders of any Series, the Pass Through Trustee shall waive any past Event of Default under the related Pass Through Trust and its consequences and upon such waiver such Event of Default will cease to exist and any Event of Default arising therefrom will be deemed to have been cured for every purpose of such Pass Through Trust, but no such waiver will extend to any subsequent or other Event of Default thereunder or impair any right consequent thereon; provided that any such waiver will be effective to waive any such past Event of Default and its consequences as described above if, but only if, the correlative Indenture Event of Default has been waived under the related Indenture by the requisite holders of the Equipment Trust Certificates outstanding thereunder; and provided further that in the absence of written instructions from all Certificateholders of any Series (or the proxy therefor), the Pass Through Trustee shall not waive any Event of Default (i) consisting of the failure to pay any principal of, or premium (if any), or interest on, or other amounts due under, any Equipment Trust Certificate held by the related Pass Through Trust and the consequent failure to distribute any related Scheduled Payment or Special Payment pursuant to Article V on or after the respective due date therefor set forth in the related Series Supplement or (ii) in respect of a covenant or provision under any Pass Through Trust that, under Article XI hereof or the related Series Supplement, cannot be modified or amended without the consent of each Certificateholder of the related Series (or the proxy therefor). SECTION 7.11. Notice of Pass Through Defaults. The Pass Through Trustee shall, in the manner and to the extent required by Section 313(c) of the Trust Indenture Act, notify the Certificateholders of any Series of all Pass Through Defaults under the related Pass Through Trust actually known to a Responsible Officer of the Pass Through Trustee, unless such Pass Through Defaults have been cured before the giving of such notice; provided that under no circumstances shall the Pass Through Trustee give such notice until the earlier of the time at which such Pass Through Default becomes an Event of Default or the expiration of a period of 60 days from the occurrence of such Pass Through Default; and provided further that, except in the case of the failure to pay any principal of or interest on or any other amount due under any of the Equipment Trust Certificates held by any Pass Through Trust and the consequent failure to distribute any related Scheduled Payment or Special Payment pursuant to Article V on or after the respective due date therefor set forth in the related Series Supplement, the Pass Through Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trust committee of directors or trustees or Responsible Officers of the Pass Through Trustee in good faith determines that the withholding of such notice is in the interests of the Certificateholders of the related Series. ARTICLE VIII CONCERNING THE PASS THROUGH TRUSTEE SECTION 8.01. Acceptance by Pass Through Trustee. The Pass Through Trustee, upon the execution and delivery of a Series Supplement creating a Pass Through Trust and providing for the issuance of a Series of Pass Through Certificates, shall acknowledge its acceptance of all right, title and interest in and to the Equipment Trust Certificates to be acquired as Trust Property of such Pass Through Trust pursuant to the applicable Participation Agreements and Section 2.02, and shall declare that the Pass Through Trustee holds and will hold such right, title, and interest, together with all other property constituting the Trust Property of such Pass Through Trust, for the benefit of all then present and future Certificateholders of such Series, upon the trusts set forth in such Pass Through Trust. SECTION 8.02. Pass Through Trustee's Liens. The Pass Through Trustee agrees that it will, in its individual capacity and at its own cost and expense (but without any right of indemnity in respect of any such cost or expense under Article IX hereof) promptly take such action as may be necessary to duly discharge all Liens on any part of the Trust Property of any Pass Through Trust that result from claims against it in its individual capacity not related to the administration of such Trust Property or any other transaction pursuant to this Pass Through Agreement or the related Series Supplement. SECTION 8.03. Certain Rights of the Pass Through Trustee. Subject to Section 315 of the Trust Indenture Act: (a) the Pass Through Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, Officers' Certificate or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, note, coupon, security or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request of any Related Indenture Trustee or Related Owner Trustee in connection with any Pass Through Trust shall be sufficiently evidenced by an Officers' Certificate (unless other evidence in respect thereof is specifically prescribed herein) upon which the Pass Through Trustee may rely to prove or establish a matter set forth therein; (c) the Pass Through Trustee may consult with counsel and any advice or Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in good faith and in accordance with such advice or Opinion of Counsel; (d) the Pass Through Trustee shall not be obligated to exercise any of the trusts or powers vested in it under any Pass Through Trust at the request, order or direction of the Certificateholders of the related Series in accordance with the provisions thereof, unless such Certificateholders have offered to the Pass Through Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred therein or thereby; (e) the Pass Through Trustee shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion, rights or powers conferred upon it under any Pass Through Trust; (f) prior to the occurrence of an Event of Default under any Pass Through Trust and after the curing or waiving of all Events of Default thereunder, the Pass Through Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, note, coupon, security, or other paper or document unless requested in writing to do so by the Majority in Interest of Certificateholders of the related Series; provided that if the payment within a reasonable time to the Pass Through Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Pass Through Trustee, not reasonably assured to the Pass Through Trustee by the security afforded to it by the terms of such Pass Through Trust, the Pass Through Trustee may require reasonable indemnity against such expenses or liabilities as a condition to proceeding; the reasonable expenses of every such examination shall be paid by the Company or, if paid by the Pass Through Trustee or any predecessor trustee, shall be repaid by the Company upon demand; (g) the Pass Through Trustee may execute any of the trusts or powers under any Pass Through Trust or perform any duties thereunder either directly or by or through agents or attorneys not regularly in its employ and the Pass Through Trustee shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed by it with due care; and (h) the Pass Through Trustee shall not be required to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers under any Pass Through Trust, if the Pass Through Trustee has determined in good faith that the repayment of such funds or adequate indemnity against such liability is not reasonably assured to it. SECTION 8.04. Pass Through Trustee Not Responsible for Recitals. The Pass Through Trustee assumes no responsibility for the correctness of the recitals contained herein or in any Pass Through Certificates, except for the execution and authentication of such Pass Through Certificates by the Pass Through Trustee in accordance with Section 2.05 and 2.06, respectively. SECTION 8.05. Pass Through Trustee and Agents May Hold Pass Through Certificates; Collections. The Pass Through Trustee and any agent of the Pass Through Trustee, in its individual or any other capacity, may become the owner or pledgee of Pass Through Certificates with the same rights it would have if it were not the Pass Through Trustee or such agent and, subject to the applicable provisions of the Trust Indenture Act, may otherwise deal with the Company, any Related Indenture Trustee or Related Owner Trustee and receive, collect, hold and retain collections therefrom with the same rights it would have if it were not the Pass Through Trustee or such agent. SECTION 8.06. Moneys Held by Pass Through Trustee. Subject to Sections 5.04 and 12.04 hereof, all moneys received by the Pass Through Trustee shall, until used or applied as provided herein, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by mandatory provisions of law. Subject to Section 5.04, neither the Pass Through Trustee nor any agent thereof shall be under any liability for interest on any moneys received by it hereunder. SECTION 8.07. Right of Pass Through Trustee to Rely on Officers' Certificate. Subject to Section 8.03, whenever in the administration of any Pass Through Trust the Pass Through Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting any action thereunder, such matter (unless other evidence in respect thereof is specifically prescribed herein) may, in the absence of bad faith on the part of the Pass Through Trustee, be deemed to be conclusively proved and established by an Officers' Certificate delivered to the Pass Through Trustee by the Company, any Related Indenture Trustee or any Related Owner Trustee, as the case may be, and such certificate, in the absence of bad faith on the part of the Pass Through Trustee, shall be full warrant to the Pass Through Trustee for any action taken, suffered or omitted by it under the provisions of this Pass Through Agreement upon the faith thereof. SECTION 8.08. Compensation. The Company covenants and agrees to pay, and the Pass Through Trustee shall be entitled to receive, reasonable compensation and payment or reimbursement for its reasonable advances, expenses and disbursements (including the reasonable compensation and expenses and disbursements of its counsel, agents and other persons not regularly in its employ) in connection with its services rendered hereunder or in any way relating to or arising out of the administration of any Pass Through Trust or the related Trust Property, except any such advance, expense or disbursement attributable to the Pass Through Trustee's negligence, willful misconduct or bad faith or incurred as a result of the breach of its representation and covenant set forth in Section 8.02, and shall have a priority claim on such Trust Property for the payment of such compensation, advances, expenses and disbursements to the extent that such compensation, advances, expenses and disbursements shall not be paid by the Company. In addition, the Pass Through Trustee shall be entitled to reimbursement from, and shall have a priority claim on, all property and funds held or collected by the Pass Through Trustee with respect to any Series or the related Pass Through Trust in its capacity as Pass Through Trustee for any tax incurred without negligence, bad faith or willful misconduct on its part, arising out of or in connection with the acceptance or administration of such Pass Through Trust (other than any tax attributable to the Pass Through Trustee's compensation for serving as such), including any costs and expenses incurred in contesting the imposition of any such tax. If the Pass Through Trustee reimburses itself from the Trust Property of such Pass Through Trust for any such tax it shall within 30 days mail a brief report setting forth the circumstances thereof to all Certificateholders of the related Series as their names and addresses appear in the related Register. ARTICLE IX INDEMNIFICATION OF PASS THROUGH TRUSTEE BY THE COMPANY The Company hereby agrees, whether or not any of the transactions contemplated hereby shall be consummated, to assume liability for, and does hereby indemnify, protect, save and keep harmless the Pass Through Trustee, in its individual capacity, and its successors, assigns, agents and servants, with respect to the claims of the Pass Through Trustee for payment or reimbursement under Section 8.08 and from and against any and all liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes payable by the Pass Through Trustee on or measured by any compensation received by the Pass Through Trustee for its services under this Pass Through Agreement, claims, actions, suits, costs, expenses or disbursements (including legal fees and expenses) of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Pass Through Trustee in its individual capacity (whether or not also agreed to be indemnified against by any other Person under any other document) in any way relating to or arising out of this Pass Through Agreement, or any Series Supplement or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the administration of any Pass Through Trust or the related Trust Property or the action or inaction of the Pass Through Trustee hereunder, except only (i) in the case of negligence, willful misconduct or bad faith of the Pass Through Trustee in the performance of its duties hereunder or under any Series Supplement, (ii) as may result from the inaccuracy of any representation or warranty of the Pass Through Trustee herein or in any Participation Agreement or (iii) as otherwise provided in Section 8.02 hereof. The Pass Through Trustee in its individual capacity shall be entitled to indemnification, from the related Trust Property, for any liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this Article IX to the extent not reimbursed by the Company or others, but without releasing any of them from their respective agreements of reimbursement; and to secure the same, the Pass Through Trustee shall have a prior Lien on such Trust Property. The indemnities contained in this Article IX shall survive the termination of this Pass Through Agreement or any Pass Through Trust and the resignation or removal of the Pass Through Trustee hereunder or thereunder. ARTICLE X SUCCESSOR TRUSTEES SECTION 10.01. Resignation and Removal of Pass Through Trustee; Appointment of Successor. (a) The Pass Through Trustee may resign at any time as trustee of any Pass Through Trust without cause by giving at least 30 days prior written notice to the Company, the Related Indenture Trustees and the Related Owner Trustees, such resignation to be effective upon the acceptance of the trusteeship by a successor Pass Through Trustee. In addition, a Majority in Interest of Certificateholders of any Series may at any time remove the related Pass Through Trustee without cause by an instrument in writing delivered to the Company, the Related Owner Trustees, the Related Indenture Trustees and the Pass Through Trustee, and the Pass Through Trustee shall promptly notify each Certificateholder of such Series of such removal in writing, such removal to be effective upon the acceptance of the trusteeship by a successor Pass Through Trustee. In the case of the resignation or removal of the Pass Through Trustee, a Majority in Interest of Certificateholders of the related Series may appoint a successor Pass Through Trustee by an instrument signed by such Certificateholders. If a successor Pass Through Trustee shall not have been appointed within 90 days after such notice of resignation or removal, the Pass Through Trustee, the Company or any Certificateholder of the related Series may apply to any court of competent jurisdiction to appoint a successor Pass Through Trustee to act until such time, if any, as a successor shall have been appointed as provided above. The successor Pass Through Trustee so appointed by such court shall immediately and without further act be superseded by any successor Pass Through Trustee appointed as provided above within one year from the date of the appointment by such court. (b) If at any time any of the following occurs with respect to any Pass Through Trust: (i) the Pass Through Trustee fails to comply with the requirements of Section 310 of the Trust Indenture Act after written request for such compliance by any Certificateholder of the related Series who has been a bona fide Certificateholder of such Series for at least six months; or (ii) the Pass Through Trustee ceases to be eligible in accordance with the provisions of Section 10.02 to act as trustee for such Pass Through Trust and fails to resign after written request for such resignation by the Company or by any such bona fide Certificateholder; or (iii) the Pass Through Trustee becomes incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver or liquidator of the Pass Through Trustee or of its property shall be appointed, or any public officer takes charge or control of the Pass Through Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; then the Company may remove the Pass Through Trustee and appoint a successor trustee by written instrument, in duplicate, executed by a Responsible Officer of the Company, one copy of which instrument shall be delivered to the Pass Through Trustee so removed and one copy to the successor trustee, or, subject to the provisions of Section 315(e) of the Trust Indenture Act, any Certificateholder of the related Series who has been a bona fide Certificateholder of such Series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Pass Through Trustee and the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Pass Through Trustee and appoint a successor trustee, which removal and appointment shall become effective upon acceptance of appointment by the successor trustee as provided in Section 10.03. The successor Pass Through Trustee so appointed by such court shall immediately and without further act be superseded by any successor Pass Through Trustee appointed by the Certificateholders of the related Series as provided in subsection (a) above within one year from the date of appointment by such court. SECTION 10.02. Persons Eligible for Appointment as Pass Through Trustee. Each Pass Through Trust shall at all times have a Pass Through Trustee which shall be a Person eligible to act as trustee under Section 310(a) of the Trust Indenture Act and shall be a corporation organized and doing business under the laws of the United States of America or of any State or the District of Columbia having a combined capital and surplus of at least $100,000,000, or a direct or indirect subsidiary of such a corporation, or a member of a bank holding company group, having a combined capital and surplus of at least $100,000,000 and such subsidiary or member itself having a capital and surplus of at least $10,000,000, which corporate trustee shall be a citizen of the United States as defined in Section 101(16) of the Federal Aviation Act of 1958, as amended, and which is authorized under such laws to exercise corporate trust powers and is subject to supervision of examination by Federal, State or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Pass Through Trustee ceases to be eligible in accordance with the provisions of this Section to act as trustee for any Pass Through Trust, the Pass Through Trustee shall resign immediately as Pass Through Trustee for such Pass Through Trust in the manner and with the effect specified in Section 10.01. SECTION 10.03. Acceptance of Appointment by Successor Trustee. Any successor trustee appointed as provided in Section 10.01 for any Pass Through Trust shall execute and deliver to the Company and to its predecessor trustee an instrument accepting such appointment with respect to such Pass Through Trust, and thereupon the resignation or removal of the predecessor trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all rights, powers, duties and obligations of its predecessor with respect to such Pass Through Trust, as if such successor trustee was originally named as trustee of such Pass Through Trust. Notwithstanding the foregoing, on the written request of the Company or the successor trustee, the trustee ceasing to act shall, upon payment of its charges then unpaid and subject to Section 12.04, pay over to the successor trustee all moneys at the time held by it with respect to such Pass Through Trust and shall execute and deliver an instrument transferring to such successor trustee all such rights, powers, duties and obligations. Upon request of any such successor trustee, the Company shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers. Any trustee ceasing to act shall, nevertheless, retain a prior claim upon all property or funds held or collected by such trustee with respect to such Pass Through Trust to secure any amounts then due it pursuant to the provisions of Article IX. If a successor trustee is appointed with respect to all the Pass Through Trusts created pursuant to this Pass Through Agreement, a supplement to this Pass Through Agreement executed and delivered by the Company, the predecessor trustee and the successor trustee shall be sufficient with respect to each such Pass Through Trust to effect the removal of the predecessor trustee and to vest the successor trustee all rights, powers, duties and obligations of its predecessor under each such Pass Through Trust, as if such successor trustee was originally named as Pass Through Trustee hereunder and thereunder. No successor trustee shall accept appointment as provided in this Section unless at the time of such acceptance such successor trustee shall be eligible under the provisions of Section 10.02 to act as trustee of the relevant Pass Through Trust. Upon acceptance of appointment by a successor trustee as provided in this Section, the successor trustee shall notify the Certificateholders of the related Series of such appointment by first-class mail at their last addresses as they shall appear in the Register, and shall mail a copy of such notice to the Company, the Related Indenture Trustees and the Related Owner Trustees, if any. If the acceptance of appointment is substantially contemporaneous with the resignation, then the notice called for by the preceding sentence may be combined with the notice called for by Section 10.01. SECTION 10.04. Merger, Conversion, Consolidation or Succession to Business of Pass Through Trustee. Any corporation into which the Pass Through Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Pass Through Trustee is a party, or any corporation succeeding to the corporate trust business of the Pass Through Trustee, shall be the successor to the Pass Through Trustee hereunder, provided that, anything herein to the contrary notwithstanding, such corporation shall be eligible under the provisions of Section 10.02 to act as trustee hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto. If, with respect to any Pass Through Trusts at the time of such succession to the Pass Through Trustee, any of the Pass Through Certificates of the related Series have been authenticated but not delivered, such successor may adopt the certificate of authentication of any such predecessor Pass Through Trustee and deliver such Pass Through Certificates so authenticated; and, if at that time any of such Pass Through Certificates have not been authenticated, such successor may authenticate such Pass Through Certificates either in the name of any of its predecessor or in its own name as the successor Pass Through Trustee; and in all such cases such certificate of authentication shall have the full force of the certificate of authentication of the Pass Through Trustee set forth in Section 2.01; provided that the right to adopt the certificate of authentication of any predecessor Pass Through Trustee or to authenticate Pass Through Certificates in the name of any predecessor Pass Through Trustee shall apply only to its successor or successors by merger, conversion or consolidation. SECTION 10.05. Appointment of Separate Pass Through Trustees. (a) At any time or times, for the purpose of meeting any legal requirements of any jurisdiction in which any part of the Trust Property of any Pass Through Trust may at the time be located or in which any action of the Pass Through Trustee may be required to be performed or taken, the Pass Through Trustee, by an instrument in writing signed by it, may appoint one or more individuals or corporations to act as separate trustee or separate trustees or co-trustee, acting jointly with the Pass Through Trustee, of all or any part of such Trust Property, to the full extent that local law makes it necessary for such separate trustee or separate trustees or co-trustee, acting jointly with the Pass Through Trustee, to act. (b) The Pass Through Trustee and, at the request of the Pass Through Trustee, the Company, shall execute, acknowledge and deliver all such instruments as may be required by the legal requirements of any jurisdiction or by any such separate trustee or separate trustees or co-trustee for the purpose of more fully confirming such title, rights or duties to such separate trustee or separate trustees or co-trustee. Upon the acceptance in writing of such appointment by any such separate trustee or separate trustees or co-trustee, it, he, she or they shall be vested with such title to such Trust Property or any part thereof, and with such rights, powers, duties and obligations, as shall be specified in the instrument of appointment, and such rights, powers, duties and obligations shall be conferred or imposed upon and exercised or performed by the Pass Through Trustee, or the Pass Through Trustee and such separate trustee or separate trustees or co-trustee jointly with the Pass Through Trustee subject to all the terms of this Pass Through Agreement, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed the Pass Through Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations shall be exercised and performed by such separate trustee or separate trustees or co-trustee, as the case may be. Any separate trustee or separate trustees or co-trustee may, at any time by an instrument in writing, constitute the Pass Through Trustee its, her or his attorney-in-fact and agent with full power and authority to do all acts and things and to exercise all discretion on its, her or his behalf and in its, her or his name. In case any such separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, the title to any Trust Property and all assets, property, rights, powers, duties and obligations of such separate trustee or co-trustee shall, so far as permitted by law, vest in and be exercised by the Pass Through Trustee, without the appointment of a successor to such separate trustee or co-trustee unless and until a successor is appointed. (c) All provisions of this Pass Through Agreement which are for the benefit of the Pass Through Trustee (including without limitation Article IX hereof) shall extend to and apply to each separate trustee or co-trustee appointed pursuant to the foregoing provisions of this Section 10.06. (d) For any Pass Through Trust, every additional trustee and separate trustee hereunder shall, to the extent permitted by law, be appointed and act and the Pass Through Trustee shall act, subject to the following provisions and conditions: (i) all powers, duties, obligations and rights conferred upon the Pass Through Trustee in respect of the receipt, custody, investment and payment of moneys shall be exercised solely by the Pass Through Trustee; (ii) all other rights, powers, duties and obligations conferred or imposed upon the Pass Through Trustee shall be conferred or imposed and exercised or performed by the Pass Through Trustee and such additional trustee or trustees and separate trustee or trustees jointly except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed, the Pass Through Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust Property in any such jurisdiction) shall be exercised and performed by such additional trustee or trustees or separate trustee or trustees; (iii) no power hereby given to, or exercisable by, any such additional trustee or separate trustee shall be exercised hereunder by such additional trustee or separate trustee except jointly with, or with the consent of, the Pass Through Trustee; and (iv) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder. If at any time the Pass Through Trustee shall deem it no longer necessary or prudent in order to conform to any such law, the Pass Through Trustee shall execute and deliver all instruments and agreements necessary or proper to remove any additional trustee or separate trustee. (e) Any request, approval or consent in writing by the Pass Through Trustee to any additional trustee or separate trustee shall be sufficient warrant to such additional trustee or separate trustee, as the case may be, to take such action as may be so requested, approved or consented to. (f) Notwithstanding any other provision of this Section 10.06, the powers of any additional trustee or separate trustee shall not exceed those of the Pass Through Trustee hereunder. ARTICLE XI SUPPLEMENTS AND AMENDMENTS TO THIS PASS THROUGH AGREEMENT AND OTHER DOCUMENTS SECTION 11.01. Supplemental Agreements Without Consent of Certificateholders. The Company and the Pass Through Trustee may enter into an agreement or agreements supplemental hereto for one or more of the following purposes: (a) to provide for the formation of any Pass Through Trust, the issuance of the related Series and the other matters contemplated by Section 2.01(b); (b) to evidence the succession of another corporation to the Company, or successive successions, and the assumption by the successor corporation of the covenants, agreements and obligations of the Company herein and in each Series Supplement; (c) to add to the covenants of the Company such further covenants, restrictions, conditions or provisions as the Pass Through Trustee shall consider to be for the protection of the Certificateholders of any Series; (d) to surrender any right or power conferred upon the Company herein or in any Series Supplement; (e) to cure any ambiguity or to correct or supplement any provision contained herein or in any Series Supplement that may be defective or inconsistent with any other provision contained herein or in such Series Supplement; or to make such other provisions in regard to matters or questions arising under this Pass Through Agreement or under any Series Supplement as the Company may deem necessary or desirable and that will not adversely affect the interests of the related Certificateholders; (f) to correct or amplify the description of any property at any time that constitutes Trust Property or better to assure, convey and confirm unto the Pass Through Trustee any such property to be included in any such Trust Property; (g) to evidence and provide for the acceptance and appointment hereunder or under one or more Pass Through Trusts of a successor trustee and to add to or change any of the provisions hereof as may be necessary to provide for or facilitate the administration of one or more Pass Through Trusts by more than one trustee, pursuant to the requirements of Section 10.03; (h) to modify, eliminate or add to the provisions of this Pass Through Agreement or any Series Supplement to the extent necessary to continue the qualification of this Pass Through Agreement or such Series Supplement (including any supplemental agreement) under the Trust Indenture Act, or under any similar Federal statute enacted after the date hereof, and to add to this Pass Through Agreement or any Series Supplement such other provisions as may be expressly permitted by the Trust Indenture Act, excluding, however, the provisions referred to in Section 316(a)(2) of the Trust Indenture Act as in effect on the date hereof or any corresponding provision in any similar Federal statute enacted after the date hereof; (i) to make any other amendments or modifications to this Pass Through Agreement, provided such amendments or modifications shall only apply to one or more Series to be issued after the date of such amendment or modification; or (j) to add, eliminate or change any provision hereunder so long as such action shall not adversely affect the interests of the Certificateholders of any Series; provided that no such supplemental agreement shall cause any Pass Through Trust to become taxable as an association within the meaning of Treasury Regulation Section 301.7701-4. The Pass Through Trustee is hereby authorized to join in the execution of any such supplemental agreement, to make any further appropriate agreements and stipulations that may be contained therein and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Pass Through Trustee shall not be obligated to enter into any such supplemental agreement that adversely affects the Pass Through Trustee's own rights, duties or immunities under this Pass Through Agreement, any Series Supplement or otherwise, whether in its official or individual capacity. Any supplemental agreement contemplated by this Section may be executed without the consent of the Certificateholders of the Outstanding Pass Through Certificates of any Series, notwithstanding any of the provisions of Section 11.02. SECTION 11.02. Supplemental Agreements With Consent of Certificateholders. With the consent (evidenced as provided in Article VI) of the Majority in Interest of Certificateholders of any Series, the Company and the Pass Through Trustee may, from time to time and at any time, enter into an agreement or agreements supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Pass Through Agreement or of the related Series Supplement or of modifying in any manner the rights of the related Certificateholders; provided, that no such supplemental agreement shall cause any Pass Through Trust to become taxable as an association within the meaning of Treasury Regulation Section 301.7701-4; and provided further that, without the consent of each Certificateholder of such Series (or the proxy therefor), no such amendment of or supplement to this Pass Through Agreement or such related Series Supplement, or modification of the terms of, or consent under, any thereof, shall (aa) modify any of the provisions of Section 7.10 or this Section 11.02, (bb) reduce the amount or extend the time of payment of any amount owing or payable on the related Equipment Trust Certificates or distributions to be made on any related Pass Through Certificate pursuant to Article V, or alter the currency in which any amount payable under any such Pass Through Certificate is to be paid, or impair the right of any related Pass Through Certificateholder to commence legal proceedings to enforce a right to receive payment hereunder, (cc) reduce, modify or amend any indemnities in favor of any Certificateholder (except as consented to by each such Certificateholder adversely affected thereby (or the proxy therefor)), or (dd) create or permit the creation of any Lien on the related Trust Property or any part thereof, or deprive any related Certificateholder of the benefit of the related Pass Through Trust with respect to the related Trust Property, whether by disposition of such Trust Property or otherwise, except as provided in Section 7.02 or in connection with the exercise of remedies under Article VII. Upon the request of the Company and upon the filing with the Pass Through Trustee of evidence of the consent of the applicable Certificateholders required under this Section and other documents, if any, required by Section 6.01, the Pass Through Trustee shall join with the Company in the execution of such supplemental agreement unless such supplemental agreement affects the Pass Through Trustee's own rights, duties or immunities under this Pass Through Agreement or the related Series Supplement or otherwise, in which case the Pass Through Trustee may in its discretion, but shall not be obligated to, enter into such supplemental agreement. It shall not be necessary for the consent of the Certificateholders of any Series under this Section to approve the particular form of any proposed supplemental agreement, but it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution by the Company and the Pass Through Trustee of any supplemental agreement relating to any Pass Through Trust pursuant to the provisions of this Section, the Pass Through Trustee shall mail a notice thereof by first-class mail to the related Certificateholders at their addresses as they shall appear on the related Register, setting forth in general terms the substance of such supplemental agreement. Any failure of the Pass Through Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental agreement. SECTION 11.03. Effect of Supplemental Agreements. Upon the execution of any supplemental agreement pursuant to the provisions hereof and of any applicable Series Supplement, this Pass Through Agreement and such Series Supplement shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities hereunder and under the related Pass Through Trust of the Pass Through Trustee, the Company and the related Certificateholders shall thereafter be determined, exercised and enforced hereunder and thereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental agreement shall be and be deemed to be part of the terms and conditions of this Pass Through Agreement and such Pass Through Trust for any and all purposes. SECTION 11.04. Documents to Be Given to Trustee. The Pass Through Trustee, subject to the provisions of Sections 8.02 and 8.03, may receive an Officers' Certificate and an Opinion of Counsel as conclusive evidence that any such supplemental agreement complies with the applicable provisions of this Pass Through Agreement and any applicable Series Supplement. SECTION 11.05. Notation on Pass Through Certificates in Respect of Supplemental Agreements. Pass Through Certificates of any Series authenticated and delivered after the execution of any supplemental agreement relating to such Series pursuant to the provisions of this Article may bear a notation in form approved by the Pass Through Trustee as to any matter provided for by such supplemental agreement. If the Company or the Pass Through Trustee shall so determine, new Pass Through Certificates for such Series so modified as to conform, in the opinion of the Company and the Pass Through Trustee, to any modification of this Pass Through Agreement contained in any such supplemental agreement may be provided by the Company, executed and authenticated by the Pass Through Trustee and delivered in exchange for the Outstanding Pass Through Certificates of such Series. SECTION 11.06. Trust Indenture Act. Any supplemental agreement executed pursuant to the terms of this Article shall on the date of the execution thereof conform to the provisions of the Trust Indenture Act as in force on such date. SECTION 11.07. Revocation and Effect of Consents. Until an amendment or waiver becomes effective, a consent to it by a Certificateholder is a continuing consent by such Certificateholder and every subsequent Certificateholder of the related Pass Through Certificate, even if notation of the consent is not made on such Pass Through Certificate. However, any such Certificateholder or subsequent Certificateholder may revoke the consent as to his Pass Through Certificate if the Pass Through Trustee receives the notice of revocation before the date the amendment or waiver becomes effective. After an amendment or waiver becomes effective, it shall bind every Certificateholder affected by such amendment or waiver. SECTION 11.08. Amendments, Waivers, etc., of Related Indenture Documents. If the Pass Through Trustee, as holder of any Equipment Trust Certificate in trust for the benefit of the Certificateholders of any Series, receives a request for a consent to any modification, amendment or supplement to any related Indenture or other related Indenture Document or to give any consent, waiver, authorization or approval under such related Indenture or such other related Indenture Documents, the Pass Through Trustee shall forthwith notify each Certificateholder of such Series, as shown on the related Register as of such date, of such request. Such notice shall request instructions from such Certificateholders with respect to such request. Subject to Section 7.10, the Pass Through Trustee shall, as the holder of such Equipment Trust Certificate, consent or vote with respect thereto in the same proportion as so instructed by the respective Certificateholders of the related Pass Through Certificates. Notwithstanding the foregoing, but subject to Section 7.09, if an Event of Default shall have occurred and be continuing, the Pass Through Trustee may, in its own discretion and at its own direction, consent and notify the Related Indenture Trustee of such consent to any modification, amendment, supplement or waiver under any related Indenture Document. ARTICLE XII TERMINATION OF PASS THROUGH TRUSTS; UNCLAIMED MONEYS SECTION 12.01. Termination of Pass Through Trusts. For any Pass Through Trust, such Pass Through Trust and the respective obligations and responsibilities of the Company and the Pass Through Trustee under such Pass Through Trust shall terminate upon the distribution to all Certificateholders of the related Series and the Pass Through Trustee of all amounts required to be distributed to them pursuant to this Pass Through Agreement and the related Series Supplement and the disposition of all property held as part of the Trust Property of such Pass Through Trust; provided that in no event shall such Pass Through Trust continue beyond the final expiration date determined as provided in such Series Supplement. Notice of termination of any Pass Through Trust, specifying the applicable Distribution Date upon which the Certificateholders of the related Series may surrender their Pass Through Certificates to the Pass Through Trustee for payment of the final distribution and cancellation thereof, shall be mailed promptly by the Pass Through Trustee to such Certificateholders not earlier than the 60th day and not later than the 20th day next preceding such final distribution specifying (i) the Distribution Date upon which such final distribution will be made and that such distribution will be made only upon presentation and surrender of the related Pass Through Certificates at the office or agency of the Pass Through Trustee specified therein, (ii) the amount of any such final distribution, and (iii) that the Record Date otherwise applicable to such Distribution Date is not applicable. The Pass Through Trustee shall notify the related Registrar at the time such Certificateholders are notified of such final distribution. Upon presentation and surrender of the Pass Through Certificates of such Series, the Pass Through Trustee shall distribute all amounts distributable on such Pass Through Certificates on such Distribution Date pursuant to Section 5.02. SECTION 12.02. Application by Pass Through Trustee of Funds Deposited for Payment of Pass Through Certificates. Subject to Section 12.04, all moneys deposited with the Pass Through Trustee for payment pursuant to Section 12.01 shall be held in trust and applied by it to the prompt payment, either directly or through any Paying Agent, to the Certificateholders of the particular Pass Through Certificates for the payment or redemption of which such moneys have been deposited with the Pass Through Trustee, of all sums due and to become due thereon; but such money need not be segregated from other funds except to the extent required by law. In the event that all of the Certificateholders of such Series shall not surrender their Certificates for cancellation within six months after the date specified in the above-mentioned written notice, the Pass Through Trustee shall give a second written notice to the remaining Certificateholders of such Series to surrender their Certificates for cancellation and to receive the final distribution with respect thereto. SECTION 12.03. Repayment of Moneys Held by Paying Agent. In connection with the satisfaction and discharge of any Pass Through Trust, all moneys then held by any Paying Agent for such Pass Through Trust shall, upon demand of the Pass Through Trustee, be repaid to it and thereupon such Paying Agent shall be released from all further liability with respect to such moneys. SECTION 12.04. Transfer of Moneys Held by Pass Through Trustee and Paying Agent Unclaimed for Two Years and Eleven Months. Any moneys deposited with or paid to the Pass Through Trustee or any Paying Agent to be distributed on any Pass Through Certificate and not applied but remaining unclaimed for two years and eleven months after the date upon which such amount has become due and payable, shall, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, be paid to the applicable Related Indenture Trustees by the Pass Through Trustee or such Paying Agent and the applicable Certificateholder shall, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property laws, thereafter look only to such Related Indenture Trustees for any payment which such Certificateholder may be entitled to collect, and all liability of the Pass Through Trustee, or any Paying Agent with respect to such moneys shall thereupon cease. ARTICLE XIII MISCELLANEOUS SECTION 13.01. Capacity in Which Acting. The Pass Through Trustee acts hereunder and under any Pass Through Trust not in its individual capacity but solely as trustee except as expressly provided herein or in the related Series Supplement. SECTION 13.02. No Legal Title to Trust Property in Certificateholders. No Certificateholder of any Series shall have legal title to any part of the Trust Property of the related Pass Through Trust. No transfer, by operation of law or otherwise, of any Pass Through Certificate or other right, title and interest of any Certificateholder in and to such Trust Property or under the related Pass Through Trust shall operate to terminate such Pass Through Trust or entitle such Certificateholder or any successor or transferee of such Certificateholder to an accounting or to the transfer to it of legal title to any part of such Trust Property. SECTION 13.03. Certificates Nonassessable and Fully Paid. No Certificateholder of any Series shall be personally liable for obligations of the related Pass Through Trust, the Fractional Undivided Interests represented by the Pass Through Certificates of such Series shall be nonassessable for any losses or expenses of such Pass Through Trust or for any reason whatsoever, and upon authentication of such Pass Through Certificates by the Pass Through Trustee pursuant to Section 3.02, such Pass Through Certificates will be and shall be deemed fully paid. No Certificateholder of such Series shall have any right (except as expressly provided herein) to vote or in any manner otherwise control the operation and management of the related Trust Property, the related Pass Through Trust, or the obligations of the parties hereto, nor shall anything set forth herein, in the related Series Supplement or in the related Pass Through Certificates be construed so as to constitute the Certificateholders of such Series from time to time as partners or members of an association. SECTION 13.04. Pass Through Agreement for the Benefit of the Company, the Pass Through Trustee and the Certificateholders. Nothing in this Pass Through Agreement, in any Series Supplement or in any Pass Through Certificate, whether express or implied, shall be construed to give to any person other than the Company, the Pass Through Trustee, as trustee and in its individual capacity, and the Certificateholders of the respective related Series any legal or equitable right, remedy or claim under or in respect of this Pass Through Agreement, any Pass Through Trust or any such Pass Through Certificate. SECTION 13.05. Limitation on Rights of Certificateholders. The death or incapacity of any Certificateholder of any Series shall not operate to terminate the related Pass Through Trust, nor entitle such Certificateholder's legal representatives or heirs to claim an accounting or to take any action or commence any proceeding in any court for a partition or winding up of such Pass Through Trust, nor otherwise affect the rights, obligations, and liabilities of the parties hereto or any of them. No Certificateholder of any Series shall be entitled to revoke the related Pass Through Trust. SECTION 13.06. Notices. Unless otherwise expressly specified or permitted by the terms hereof, all notices, requests, demands, authorizations, directions, consents, waivers or documents provided or permitted by this Pass Through Agreement to be made, given, furnished or filed shall be in writing, mailed by certified mail, postage prepaid, or by confirmed telecopy, and (i) if to the Pass Through Trustee, at its office at 1301 Gervis Street, 4th Floor, Columbia, South Carolina 29201 (telecopier (803) 929-5922), Attention: Corporate Trust Administration (with a copy to NationsBank of Georgia, National Association, at 600 Peachtree Street, N.E., Suite 900, Atlanta, Georgia 30308 (telecopier (404) 607-6534), Attention: Corporate Trust Administration); or (ii) if to the Company, addressed to it at its offices at 2005 Corporate Avenue, Memphis, Tennessee 38132, Attention: Senior Vice President and Chief Financial Officer; telecopier (901) 395-4758. Any party hereto may change the address to which notices to such party will be sent by giving notice of such change to the other party to this Pass Through Agreement. Where this Pass Through Agreement or any Series Supplement provides for notice to Certificateholders of any Series, such notice shall be sufficiently given (unless otherwise expressly provided herein) if in writing and mailed, first-class postage prepaid, to each such Certificateholder entitled thereto, at his last address as it appears in the related Register. In any case where notice to Certificateholders of any Series is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Certificateholder shall affect the sufficiency of such notice with respect to other Certificateholders of such Series. Where this Pass Through Agreement or any Series Supplement provides for notice in any manner, such notice may be waived in writing by the person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Certificateholders shall be filed with the Pass Through Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail notice to any Certificateholders when such notice is required to be given pursuant to any provision of this Pass Through Agreement or any related Series Supplement, then any manner of giving such notice as shall be satisfactory to the Pass Through Trustee shall be deemed to be a sufficient giving of such notice. SECTION 13.07. Officers' Certificates and Opinions of Counsel; Statements to Be Contained Therein. Upon any application or demand by the Company to the Pass Through Trustee to take any action, the Company shall furnish to the Pass Through Trustee (i) an Officers' Certificate stating that all conditions precedent, if any, provided for in this Pass Through Agreement and the applicable Series Supplement relating to the proposed action have been complied with and that the proposed action is in conformity with the requirements of this Pass Through Agreement and such Series Supplement, and (ii) an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or demand as to which the furnishing of such documents is specifically required by any provision of this Pass Through Agreement or such Series Supplement relating to such particular application or demand, no additional certificate or opinion need be furnished. Each certificate or opinion required by this Pass Through Agreement or any Series Supplement and delivered to the Pass Through Trustee with respect to compliance with a condition or covenant provided for in this Pass Through Agreement or such Series Supplement, except for the certificate required by Section 4.03(d) shall include (a) a statement that the person making such certificate or opinion has read such covenant or condition, (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based, (c) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with and (d) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. Any certificate, statement or opinion of counsel may be based, insofar as it relates to factual matters information with respect to which is in the possession of the Company, upon the certificate, statement or opinion of or representations by an officer or officers of the Company unless such counsel knows that the certificate, statement or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of an officer of the Company or of counsel thereto may be based, insofar as it relates to accounting matters, upon a certificate or opinion of or representations by an accountant or firm of accountants employed by the Company unless such officer or counsel, as the case may be, knows that the certificate or opinion or representations with respect to the accounting matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate or opinion of any independent firm of public accountants filed with the Pass Through Trustee shall contain a statement that such firm is independent. SECTION 13.08. Conflict of Any Provision of Pass Through Agreement with the Trust Indenture Act. If and to the extent that any provision of this Pass Through Agreement limits, qualifies or conflicts with another provision included in this Pass Through Agreement by operation of Sections 310 to 317, inclusive, of the Trust Indenture Act (an "incorporated provision"), such incorporated provision shall control. SECTION 13.09. Severability. Any provision of this Pass Through Agreement or any Series Supplement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or thereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 13.10. No Oral Modifications or Continuing Waivers. No terms or provisions of this Pass Through Agreement, any Series Supplement, or any Pass Through Certificates may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party or other person against whom enforcement of the change, waiver, discharge or termination is sought; and any waiver of the terms hereof or thereof shall be effective only in the specific instance and for the specific purpose given. SECTION 13.11. Successors and Assigns. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, each of the parties hereto and the successors and permitted assigns of each, all as herein provided. Any request, notice, direction, consent, waiver or other instrument or action by any Certificateholder shall bind the successors and assigns of such Certificateholder. SECTION 13.12. Headings. The headings of the various Articles and Sections herein and in the table of contents hereto are for the convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 13.13. Normal Commercial Relations. Anything contained in this Pass Through Agreement to the contrary notwithstanding, the Pass Through Trustee and any Certificateholder, or any bank or other affiliate of any such party, may conduct any banking or other financial transactions, and have banking or other commercial relationships, with the Company fully to the same extent as if this Pass Through Agreement were not in effect, including without limitation the making of loans or other extensions of credit to the Company for any purpose whatsoever, whether related to any of the transactions contemplated hereby or otherwise. SECTION 13.14. Governing Law; Counterpart Form. THIS PASS THROUGH AGREEMENT, EACH SERIES SUPPLEMENT AND EACH PASS THROUGH CERTIFICATE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Pass Through Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 13.15. Distributions Due on Days Other than Business Days. If, for any Pass Through Trust, any Distribution Date is not a Business Day, then such distribution need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the applicable Distribution Date, and no interest shall accrue for the intervening period. IN WITNESS WHEREOF, the parties hereto have caused this Pass Through Agreement to be duly executed this 16 day of March, 1994 by their respective officers or signatories thereunto duly authorized, and acknowledge that this Pass Through Agreement has been made and delivered in the City of New York, and this Pass Through Agreement shall be effective only upon such execution and delivery. NATIONSBANK OF SOUTH CAROLINA, NATIONAL ASSOCIATION not in its individual capacity, except as otherwise expressly provided herein, but solely as Pass Through Trustee By: /s/ Howard L. Shellkopf ------------------------ Title: Vice President FEDERAL EXPRESS CORPORATION By: /s/ Robert D. Henning ---------------------- Title: Managing Director - Aircraft Financing Exhibit A to Pass Through Agreement FORM OF PASS THROUGH CERTIFICATE FEDERAL EXPRESS CORPORATION PASS THROUGH TRUST, 199_-__ 199_ Pass Through Certificate, Series __ Final Scheduled Regular Distribution Date: _________, ____ evidencing a fractional undivided interest in a pass through trust, the property of which includes certain Equipment Trust Certificates. Certificate No. _______ Applicable interest rate on Equipment Trust Certificates held in Pass Through Trust, 199_-__: ____%. $___________ Fractional Undivided Interest representing __________ of the Pass Through Trust per $1,000 face amount. THIS CERTIFIES THAT ______________, for value received, is the registered owner of a $_________ (_____________ dollars) Fractional Undivided Interest in the Federal Express Corporation Pass Through Trust, 199_-__ (the "Pass Through Trust") created and declared by NationsBank of South Carolina, National Association, as pass through trustee (the "Pass Through Trustee"), pursuant to the Pass Through Trust Agreement dated as of March 1, 1994 (the "Pass Through Agreement"), as supplemented by Series Supplement 199_-__ thereto dated _________, 199_ (the "Series Supplement") between the Pass Through Trustee and Federal Express Corporation, a Delaware corporation (the "Company"), a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Pass Through Agreement and the Series Supplement. This Pass Through Certificate is one of the duly authorized Pass Through Certificates designated as "Federal Express Corporation 199_ Pass Through Certificates, Series __." This Pass Through Certificate is issued under and is subject to the terms, provisions and conditions of the Pass Through Agreement and the Series Supplement, to which the Certificateholder of this Pass Through Certificate by virtue of the acceptance hereof assents and by which such Certificateholder is bound. The property of the Pass Through Trust (the "Trust Property") includes certain Equipment Trust Certificates (the "Equipment Trust Certificates"). Each series of Equipment Trust Certificates is secured as described in the related Indenture Documents. The Pass Through Certificates represent fractional undivided interests in the Pass Through Trust and the Trust Property, and have no rights, benefits or interests in respect of any other separate trust established pursuant to the terms of the Pass Through Agreement for any other Series of Pass Through Certificates issued pursuant thereto. Subject to and in accordance with the terms of the Pass Through Agreement and the Series Supplement, from funds then available to the Pass Through Trustee, there will be distributed on each _________ and __________ (a "Regular Distribution Date"), commencing on __________, 199_, to the Person in whose name this Pass Through Certificate is registered at the close of business on the 15th day preceding the applicable Regular Distribution Date, an amount in respect of the Scheduled Payments on the Equipment Trust Certificates due on such Regular Distribution Date, equal to the product of the percentage interest in the Pass Through Trust evidenced by this Pass Through Certificate and an amount equal to the sum of such Scheduled Payments. Subject to and in accordance with the terms of the Pass Through Agreement and the Series Supplement, if Special Payments on the Equipment Trust Certificates are received by the Pass Through Trustee, from funds then available to the Pass Through Trustee, there shall be distributed on the applicable Special Distribution Date, to the Person in whose name this Pass Through Certificate is registered at the close of business on the 15th day preceding such Special Distribution Date, an amount in respect of such Special Payments on the Equipment Trust Certificates, equal to the product of the percentage interest in the Pass Through Trust evidenced by this Pass Through Certificate and an amount equal to the sum of such Special Payments so received. If a Distribution Date is not a Business Day, distribution shall be made on the immediately following Business Day with the same force and effect as if made on such Distribution Date and no interest shall accrue during the intervening period. The Special Distribution Date shall be the ________ day of the month determined as provided in the Pass Through Agreement and the Series Supplement, except in certain circumstances, in which case it will be the date of receipt of proceeds by the Pass Through Trustee as provided in the Series Supplement. The Pass Through Trustee shall mail notice of each Special Payment and the Special Distribution Date therefor to the Certificateholder of this Pass Through Certificate. Distributions on this Pass Through Certificate will be made by the Pass Through Trustee to the Person entitled thereto, without the presentation or surrender of this Pass Through Certificate or the making of any notation hereon. Except as otherwise provided in the Pass Through Agreement and notwithstanding the above, the final distribution on this Pass Through Certificate will be made after notice is mailed by the Pass Through Trustee of the pendency of such distribution and only upon presentation and surrender of this Pass Through Certificate at the office or agency of the Pass Through Trustee specified in such notice. NO EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR INDIVIDUAL RETIREMENT ACCOUNT OR PLAN SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (HEREINAFTER COLLECTIVELY REFERRED TO AS AN "ERISA PLAN"), MAY ACQUIRE OR HOLD ANY OF THE PASS THROUGH CERTIFICATES. THE PURCHASE BY ANY PERSON OF ANY PASS THROUGH CERTIFICATE CONSTITUTES A REPRESENTATION BY SUCH PERSON TO FEDERAL EXPRESS CORPORATION, THE RELATED OWNER PARTICIPANTS, THE RELATED OWNER TRUSTEES, THE RELATED INDENTURE TRUSTEES AND THE PASS THROUGH TRUSTEE OR THEIR RESPECTIVE SUCCESSORS, AS THE CASE MAY BE, THAT SUCH PERSON IS NOT AN ERISA PLAN AND THAT SUCH PERSON IS NOT ACQUIRING, AND HAS NOT ACQUIRED, SUCH PASS THROUGH CERTIFICATE WITH ASSETS OF AN ERISA PLAN. This Pass Through Certificate shall be governed by and construed in accordance with the laws of the State of New York. Reference is hereby made to the further provisions of this Pass Through Certificate set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Pass Through Trustee, by manual signature, this Pass Through Certificate shall not be entitled to any benefit under the Pass Through Trust or be valid for any purpose. IN WITNESS WHEREOF, the Pass Through Trustee has caused this Pass Through Certificate to be duly executed. FEDERAL EXPRESS CORPORATION PASS THROUGH TRUST, 199_-__ By: NATIONSBANK OF SOUTH CAROLINA, NATIONAL ASSOCIATION, as Pass Through Trustee By: _______________________________ Authorized Signatory [FORM OF THE PASS THROUGH TRUSTEE'S CERTIFICATE OF AUTHENTICATION] Dated: This is one of the Pass Through Certificates referred to in the within-mentioned Pass Through Agreement and the Series Supplement. NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, as Registrar, Paying Agent and Authenticating Agent By: _______________________ Authorized Signatory [Reverse of Pass Through Certificate]. The Pass Through Certificates do not represent a direct obligation of, or an obligation guaranteed by, or an interest in, the Company or the Pass Through Trustee or any affiliate thereof. The Pass Through Certificates are limited in right of payment, all as more specifically set forth on the face hereof and in the Pass Through Agreement and the Series Supplement. All payments or distributions made to Certificateholders under the Pass Through Agreement shall be made only from the Trust Property and only to the extent that the Pass Through Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of the Pass Through Agreement and the Series Supplement. Each Certificateholder of this Pass Through Certificate, by its acceptance hereof, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to such Certificateholder as provided in the Pass Through Agreement and the Series Supplement. In connection with withholding taxes, under certain circumstances the Pass Through Trustee may retain certain amounts otherwise distributable to a Certificateholder. The purchase by any Certificateholder of any Pass Through Certificate constitutes the consent of such Certificateholder to such retention in accordance with the terms of the Pass Through Agreement. This Pass Through Certificate does not purport to summarize the Pass Through Agreement and the Series Supplement and reference is made to the Pass Through Agreement and the Series Supplement for information with respect to the interests, rights, benefits, obligations, proceeds and duties evidenced hereby. A copy of the Pass Through Agreement and the Series Supplement may be examined by any Certificateholder upon request during normal business hours at the principal office of the Pass Through Trustee, and at such other places designated by the Pass Through Trustee. As of the date of issuance of this Pass Through Certificate, and assuming that no prepayment, purchase or default in respect of the Equipment Trust Certificates shall occur, the aggregate scheduled repayments of principal on the Equipment Trust Certificates for the Pass Through Trust and the resulting Pool Factors for the Pass Through Trust after taking into account each such repayment are set forth below: Pass Through Trust, 199_-__ Scheduled Principal Regular Payments Distribution on Equipment Trust Date Certificates Pool Factor The Pass Through Agreement and the Series Supplement permit, with certain exceptions provided therein, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Certificateholders under the Pass Through Trust at any time by the Company and the Pass Through Trustee with the consent of the Majority In Interest of Certificateholders in the Pass Through Trust. Any such consent by the Certificateholder of this Pass Through Certificate shall be conclusive and binding on such Certificateholder and upon all future Certificateholders of this Pass Through Certificate and of any Pass Through Certificate issued upon the transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent is made upon this Pass Through Certificate. The Pass Through Agreement and the Series Supplement also permit the amendment thereof, in certain limited circumstances, without the consent of the Certificateholders of any of the Pass Through Certificates. As provided in the Pass Through Agreement and the Series Supplement and subject to certain limitations set forth therein, the transfer of this Pass Through Certificate is registrable in the Register upon surrender of this Pass Through Certificate for registration of transfer to the Pass Through Trustee in its capacity as Registrar, or by any successor Registrar, duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Pass Through Trustee and the Registrar duly executed by the Certificateholder hereof or such Certificateholder's attorney duly authorized in writing, and thereupon one or more new Pass Through Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Pass Through Trust will be issued to the designated transferee or transferees. The Pass Through Certificates are issuable only as registered Pass Through Certificates without coupons in minimum denominations of $1,000 Fractional Undivided Interest and integral multiples thereof. As provided in the Pass Through Agreement and the Series Supplement and subject to certain limitations set forth therein, the Pass Through Certificates are exchangeable for new Pass Through Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Pass Through Trust, as requested by the Certificateholder surrendering the same. No service charge will be made for any such registration of transfer or exchange, but the Pass Through Trustee shall require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith. The Pass Through Trustee, the Registrar, and any agent of the Pass Through Trustee or the Registrar may treat the person in whose name this Pass Through Certificate is registered as the owner hereof for all purposes, and neither the Pass Through Trustee, the Registrar, nor any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Pass Through Agreement and the Series Supplement and the Pass Through Trust created thereby shall terminate upon the distribution to Certificateholders of all amounts required to be distributed to them pursuant to the Pass Through Agreement and the Series Supplement and the disposition of all property held as part of the Trust Property. EX-4.A.3 4 Exhibit 4.a.3 __________________________________________ SERIES SUPPLEMENT 1994-A310-A1 Dated March __, 1994 to PASS THROUGH TRUST AGREEMENT Dated as of March 1, 1994 In Each Case Between NATIONSBANK OF SOUTH CAROLINA, NATIONAL ASSOCIATION, as Pass Through Trustee, and FEDERAL EXPRESS CORPORATION $125,000,000 Federal Express Corporation Pass Through Trust, 1994-A310-A1 Federal Express Corporation 1994 Pass Through Certificates, Series A310-A1 __________________________________________ TABLE OF CONTENTS Page RECITALS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE I CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 2 ARTICLE II DESIGNATIONS; TRUST FORMATION; ISSUANCE OF PASS THROUGH CERTIFICATES SECTION 2.01 Designations; Aggregate Amount . . . . . . . . . . . . 4 SECTION 2.02 Declaration of Trust; Authorization. . . . . . . . . . 4 SECTION 2.03 Issuance of Pass Through Certificates . . . . . . . . 5 SECTION 2.04 Purchase of Equipment Trust Certificates . . . . . . . 5 SECTION 2.05 Representations and Warranties of the Company. . . . . 5 SECTION 2.06 Conditions Precedent . . . . . . . . . . . . . . . . . 5 ARTICLE III DISTRIBUTION AND RECORD DATES; CERTIFICATE AND SPECIAL PAYMENTS ACCOUNTS SECTION 3.01 Distribution Dates . . . . . . . . . . . . . . . . . . 6 SECTION 3.02 Record Dates . . . . . . . . . . . . . . . . . . . . . 6 SECTION 3.03 Certificate Account and Special Payments Account . . . 6 SECTION 3.04 Form of Pass Through Certificates. . . . . . . . . . . 6 SECTION 3.05 Appointment of Authenticating Agent; Paying Agent and Registrar. . . . . . . . . . . . . . . . . . . . . 7 ARTICLE IV MISCELLANEOUS SECTION 4.01 Governing Law; Counterpart Form. . . . . . . . . . . . 7 SECTION 4.02 Reports by the Company . . . . . . . . . . . . . . . . 8 SECTION 4.03 Modification and Ratification of Pass Through Agreement. . . . . . . . . . . . . . . . . . . . . . . 8 SECTION 4.04 Termination. . . . . . . . . . . . . . . . . . . . . . 8 EXHIBIT A Form of Pass Through Certificate SCHEDULE I Equipment Trust Certificates; Related Indenture Documents SERIES SUPPLEMENT 1994-A310-A1 SERIES SUPPLEMENT 1994-A310-A1, dated March __, 1994 (this "Series Supplement"), to the Pass Through Trust Agreement, dated as of March 1, 1994 (the "Pass Through Agreement"), in each case between FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Company") and NATIONSBANK OF SOUTH CAROLINA, NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States of America, as Pass Through Trustee (the "Pass Through Trustee"). RECITALS WHEREAS, capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, Section 2.01 of the Pass Through Agreement provides, among other things, that the Company and the Pass Through Trustee may execute and deliver one or more series supplements, each for the purpose of forming a separate pass through trust for the benefit of the certificateholders of the series of pass through certificates to be issued pursuant to such pass through trust, establishing certain terms of such pass through certificates, and pursuant to which the pass through certificates of such series shall be executed and authenticated by the Pass Through Trustee and delivered as directed by the Company; WHEREAS, pursuant to the Participation Agreements, the Company has agreed to cause the Equipment Trust Certificates to be issued and sold to the Pass Through Trustee, and the Pass Through Trustee has agreed to purchase the Equipment Trust Certificates, which will be held in trust as Trust Property for the benefit of the Certificateholders; WHEREAS, in order to facilitate such sale, the Company has agreed, pursuant to the Underwriting Agreement, to cause the Pass Through Trustee to issue and sell the Pass Through Certificates to the Underwriters; WHEREAS, pursuant to the Pass Through Agreement and the terms of this Series Supplement, the Pass Through Trustee will execute, authenticate and deliver the Pass Through Certificates to the Underwriters upon receipt by the Pass Through Trustee of the purchase price therefor, which will be applied in accordance with this Series Supplement to purchase the Equipment Trust Certificates; WHEREAS, the Pass Through Trustee hereby declares the creation of this Pass Through Trust for the benefit of the Certificateholders, and the initial Certificateholders of such Pass Through Certificates, as the grantors of such Pass Through Trust, by their respective acceptances of such Pass Through Certificates, join in the creation of such Pass Through Trust; WHEREAS, to facilitate the sale of the Equipment Trust Certificates to, and the purchase of the Equipment Trust Certificates by, the Pass Through Trustee on behalf of this Pass Through Trust, the Company has duly authorized the execution and delivery of this Series Supplement as the "issuer," as such term is defined in and solely for purposes of the Securities Act, of the Pass Through Certificates and as the "obligor," as such term is defined in and solely for purposes of the Trust Indenture Act, with respect to all such Pass Through Certificates; and WHEREAS, this Series Supplement is subject to the provisions of the Trust Indenture Act and shall, to the extent applicable, be governed by such provisions; IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows: ARTICLE I CERTAIN DEFINITIONS All terms used in this Series Supplement that are defined in the Pass Through Agreement, either directly or by reference therein, have the meanings assigned to them therein as supplemented by this Article I, if applicable, except to the extent the context clearly requires otherwise. Any such defined term that is defined in the Pass Through Agreement as relating to a particular Pass Through Trust or Series rather than to any Pass Through Trust or Series generally shall, when used in this Series Supplement, relate solely to the Federal Express Corporation Pass Through Trust, 1994-A310-A1, or the Federal Express Corporation 1994 Pass Through Certificates, Series A310-A1, as the case may be, whether or not expressly so stated herein. "Authenticating Agent" has the meaning set forth in Section 3.05 hereof. "Certificate Account" means the Certificate Account specified in Section 3.03 hereof. "Certificateholders" means the Certificateholders of the Series of Pass Through Certificates designated in Section 2.01 hereof. "Equipment Trust Certificates" means those Equipment Trust Certificates listed in Schedule I hereto. "Issuance Date" means the date defined as the Closing Time in the Underwriting Agreement. "Participation Agreements" means those Participation Agreements listed in Schedule I hereto. "Pass Through Certificates" means the Pass Through Certificates designated in Section 2.01 hereof. "Pass Through Trust," "this Pass Through Trust" and other like words means the Pass Through Trust designated in Section 2.01 hereof. "Paying Agent" means the Person specified as such in Section 3.05 hereof. "Record Date" means any Record Date specified in Section 3.02 hereof. "Registrar" means the Person specified as such in Section 3.05 hereof. "Regular Distribution Date" means any Regular Distribution Date specified in Section 3.01 hereof. "Special Distribution Date" means, for any Special Payment, the Special Distribution Date for such Special Payment specified in Section 3.01 hereof. "Special Payments Account" means the Special Payments Account specified in Section 3.03 hereof. "Trust Property" means all money, instruments, including the Equipment Trust Certificates that have been issued by the related Owner Trustee and delivered to and accepted by the Pass Through Trustee for the benefit of the Certificateholders, and other property held as the property of this Pass Through Trust, including all distributions thereon and proceeds thereof. "Underwriters" means the several Underwriters named in the Underwriting Agreement. "Underwriting Agreement" means the Underwriting Agreement dated March 16, 1994 among the Company, Lufthansa, the Owner Participant, Goldman, Sachs & Co. and Merrill Lynch, Pierce, Fenner & Smith Incorporated. ARTICLE II DESIGNATIONS; PASS THROUGH TRUST FORMATION; ISSUANCE OF PASS THROUGH CERTIFICATES SECTION 2.01. Designations; Aggregate Amount. The Pass Through Trust created hereby shall be designated Federal Express Corporation Pass Through Trust, 1994-A310-A1 (herein sometimes called this "Pass Through Trust"). The Pass Through Certificates evidencing Fractional Undivided Interests in such Pass Through Trust shall be designated as the Federal Express Corporation 1994 Pass Through Certificates, Series A310-A1 (herein sometimes called the "Series A310-A1 Pass Through Certificates"). The Series A310-A1 Pass Through Certificates shall be the only instruments evidencing a fractional undivided interest in such Pass Through Trust. Except as provided in Section 2.09 of the Pass Through Agreement, the aggregate amount of Series A310-A1 Pass Through Certificates that may be authenticated, delivered and outstanding under this Series Supplement is limited to $125,000,000. SECTION 2.02. Declaration of Trust; Authorization. Each initial Certificateholder, by its payment for and acceptance of any Series A310-A1 Pass Through Certificate is hereby deemed (1) as grantor, to join in the creation and declaration of this Pass Through Trust and (2) as beneficiary of such Pass Through Trust, to authorize and direct the Pass Through Trustee to execute and deliver all documents to which the Pass Through Trustee is a party that may be necessary or desirable to consummate the transactions contemplated hereby and to exercise its rights and perform its duties under the Participation Agreements, the Indentures, the Pass Through Agreement and this Series Supplement. The Pass Through Trustee hereby acknowledges and accepts this grant of trust and declares that it will hold the Trust Property as Pass Through Trustee upon this Pass Through Trust for the use and benefit of the Certificateholders. SECTION 2.03. Issuance of Pass Through Certificates. Subject to the terms set forth herein, on the Issuance Date (i) the Company shall direct the Underwriters to execute a wire transfer or intra-bank transfer to the Pass Through Trustee in the amount of the total proceeds payable by such Underwriters pursuant to the Underwriting Agreement with respect to the Series A310-A1 Pass Through Certificates and (ii) the Pass Through Trustee shall deliver the Series A310-A1 Pass Through Certificates to the Underwriters as provided in the Underwriting Agreement upon receipt by the Pass Through Trustee of such proceeds. SECTION 2.04. Purchase of Equipment Trust Certificates. On the Issuance Date, the Pass Through Trustee shall purchase, in accordance with Section 2.02 of the Pass Through Agreement, each of the Equipment Trust Certificates upon the satisfaction or waiver of the conditions for such purchase by the Pass Through Trustee set forth in the related Participation Agreements. SECTION 2.05. Representations and Warranties of the Company. All of the representations and warranties of the Company set forth or incorporated by reference in Section 1 of the Underwriting Agreement are incorporated by reference in this Series Supplement as if set forth herein and the Company represents and warrants that such representations and warranties are true and correct on the date hereof, except to the extent that such representations and warranties expressly relate solely to an earlier date or later date (in which case such representations and warranties were correct on and as of such earlier date or will be correct on and as of such later date, as the case may be). SECTION 2.06. Conditions Precedent. The obligations of the Pass Through Trustee to participate in the transactions described in Sections 2.03 and 2.04 hereof are subject to (i) receipt by the Pass Through Trustee of a certificate of the Company to the same effect as the certificate of the Company delivered to the Underwriters pursuant to Section 5(c) of the Underwriting Agreement, and (ii) satisfaction or waiver of the conditions for the purchase by the Underwriters of the Pass Through Certificates set forth in Section 5 of the Underwriting Agreement, which satisfaction or waiver for the purposes hereof shall be conclusively demonstrated by the receipt by the Pass Through Trustee of the total proceeds payable by such Underwriters pursuant to the Underwriting Agreement with respect to the Series A310-A1 Pass Through Certificates. ARTICLE III DISTRIBUTION AND RECORD DATES; CERTIFICATE AND SPECIAL PAYMENT ACCOUNTS SECTION 3.01. Distribution Dates. The Regular Distribution Dates are March 23 and September 23, commencing on September 23, 1994. The Special Distribution Date for any month in which a Special Payment is to be distributed will be the twenty-third (23rd) day of such month, except that the Special Distribution Date for any Special Payment received by the Pass Through Trustee in connection with a prepayment of any Equipment Trust Certificate pursuant to Section 6.02(a)(i) or 6.02(a)(vi) of the related Indenture will correspond to the date of the receipt of such Special Payment by the Pass Through Trustee. Notice of such Special Payment shall be mailed as soon as practicable after receipt by the Pass Through Trustee of the notice of such prepayment. SECTION 3.02. Record Dates. The Record Dates for the Regular Distribution Dates are March 8 and September 8, respectively, and the Record Date for any Special Distribution Date is the fifteenth day preceding such Special Distribution Date, in any event, whether or not such date is a Business Day. SECTION 3.03. Certificate Account and Special Payments Account. In accordance with Section 5.01(a) of the Pass Through Agreement and upon receipt of any Scheduled Payment, the Pass Through Trustee shall immediately deposit such Scheduled Payment into the Certificate Account, a separate and non-interest bearing account designated by the Pass Through Trustee to be used for such purpose. In accordance with Section 5.01(b) of the Pass Through Agreement and upon receipt of any Special Payment, the Pass Through Trustee shall immediately deposit such Special Payment into the Special Payments Account, a separate and, except as provided in Section 5.04 of the Pass Through Agreement, non-interest bearing account designated by the Pass Through Trustee to be used for such purpose. SECTION 3.04. Form of Pass Through Certificates. Subject to Section 2.07 of the Pass Through Agreement, each of the Series A310-A1 Pass Through Certificates will be substantially in the form of Exhibit A hereto. SECTION 3.05. Appointment of Authenticating Agent; Paying Agent and Registrar. (a) The Pass Through Trustee may appoint an authenticating agent (the "Authenticating Agent") with respect to the Pass Through Certificates which shall be authorized to act on behalf of the Pass Through Trustee to authenticate the Pass Through Certificates issued upon original issue and upon exchange or registration of transfer thereof or pursuant to Section 2.09 of the Pass Through Agreement. Pass Through Certificates so authenticated shall be entitled to the benefits of the Pass Through Agreement and this Series Supplement and shall be valid and obligatory for all purposes as if authenticated by the Pass Through Trustee. Whenever reference is made in the Pass Through Agreement or this Series Supplement to the authentication and delivery of Pass Through Certificates by the Pass Through Trustee or the Pass Through Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Pass Through Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Pass Through Trustee by an Authenticating Agent. (b) The Paying Agent, Registrar and Authenticating Agent for the Series A310-A1 Pass Through Certificates initially shall be NationsBank of Georgia, National Association ("NationsBank of Georgia"), 600 Peachtree Street, N.E., GA1-006-09-11, Atlanta, Georgia 30308. The Company, the Pass Through Trustee and NationsBank of Georgia have entered into a Registrar, Authenticating and Paying Agency Agreement dated the date hereof which sets forth the rights, duties and obligations of the parties thereto with respect to the appointment of NationsBank of Georgia as Paying Agent, Registrar and Authenticating Agent for the Series A310-A1 Pass Through Certificates. ARTICLE IV MISCELLANEOUS SECTION 4.01. Governing Law; Counterpart Form. AS PROVIDED IN SECTION 13.14 OF THE PASS THROUGH AGREEMENT, THIS SERIES SUPPLEMENT AND EACH SERIES A310-A1 PASS THROUGH CERTIFICATE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Series Supplement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 4.02. Reports by the Company. In addition to the reports required to be provided by the Company pursuant to Section 4.03 of the Pass Through Agreement, the Company agrees to furnish to the Pass Through Trustee from time to time, such other financial information as the Pass Through Trustee may reasonably request. SECTION 4.03. Modification and Ratification of Pass Through Agreement. The Pass Through Agreement is incorporated herein by reference in its entirety, and shall be deemed to be a part of this Series Supplement as if set forth in full herein, and is in all respects ratified and confirmed, as supplemented and modified by this Series Supplement. SECTION 4.04. Termination. In no event shall this Pass Through Trust continue beyond the expiration of 21 years after the death of the last survivor of Mario Cuomo, Governor of New York State, living on the date of this Series Supplement. IN WITNESS WHEREOF, the parties have caused their names to be signed hereto by their respective officers or signatories thereunto duly authorized, all as of the day and year first above written. FEDERAL EXPRESS CORPORATION By:___________________________ Name: Title: NATIONSBANK OF SOUTH CAROLINA, NATIONAL ASSOCIATION, as Pass Through Trustee By:___________________________ Name: Title: Exhibit A to Series Supplement FORM OF PASS THROUGH CERTIFICATE FEDERAL EXPRESS CORPORATION PASS THROUGH TRUST, 1994-A310-A1 1994 Pass Through Certificate, Series A310-A1 Final Scheduled Regular Distribution Date: September 23, 2006 evidencing a fractional undivided interest in a pass through trust, the property of which includes certain Equipment Trust Certificates. Certificate No. _______ Applicable interest rate on Equipment Trust Certificates held in Pass Through Trust, 1994-A310-A1: 7.53%. $___________ Fractional Undivided Interest representing __________ of the Pass Through Trust per $1,000 face amount. THIS CERTIFIES THAT ______________, for value received, is the registered owner of a $_________ (_____________ dollars) Fractional Undivided Interest in the Federal Express Corporation Pass Through Trust, 1994-A310-A1 (the "Pass Through Trust") created and declared by NationsBank of South Carolina, National Association, as pass through trustee (the "Pass Through Trustee"), pursuant to the Pass Through Trust Agreement dated as of March 1, 1994 (the "Pass Through Agreement"), as supplemented by Series Supplement 1994-A310-A1 thereto dated March __, 1994 (the "Series Supplement") between the Pass Through Trustee and Federal Express Corporation, a Delaware corporation (the "Company"), a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Pass Through Agreement and the Series Supplement. This Pass Through Certificate is one of the duly authorized Pass Through Certificates designated as "Federal Express Corporation 1994 Pass Through Certificates, Series A310-A1." This Pass Through Certificate is issued under and is subject to the terms, provisions and conditions of the Pass Through Agreement and the Series Supplement, to which the Certificateholder of this Pass Through Certificate by virtue of the acceptance hereof assents and by which such Certificateholder is bound. The property of the Pass Through Trust (the "Trust Property") includes certain Equipment Trust Certificates (the "Equipment Trust Certificates"). Each series of Equipment Trust Certificates is secured as described in the related Indenture Documents. The Pass Through Certificates represent fractional undivided interests in the Pass Through Trust and the Trust Property, and have no rights, benefits or interests in respect of any other separate trust established pursuant to the terms of the Pass Through Agreement for any other Series of Pass Through Certificates issued pursuant thereto. Subject to and in accordance with the terms of the Pass Through Agreement and the Series Supplement, from funds then available to the Pass Through Trustee, there will be distributed on each March 23 and September 23 (a "Regular Distribution Date"), commencing on September 23, 1994, to the Person in whose name this Pass Through Certificate is registered at the close of business on the 15th day preceding the applicable Regular Distribution Date, an amount in respect of the Scheduled Payments on the Equipment Trust Certificates due on such Regular Distribution Date, equal to the product of the percentage interest in the Pass Through Trust evidenced by this Pass Through Certificate and an amount equal to the sum of such Scheduled Payments. Subject to and in accordance with the terms of the Pass Through Agreement and the Series Supplement, if Special Payments on the Equipment Trust Certificates are received by the Pass Through Trustee, from funds then available to the Pass Through Trustee, there shall be distributed on the applicable Special Distribution Date, to the Person in whose name this Pass Through Certificate is registered at the close of business on the 15th day preceding such Special Distribution Date, an amount in respect of such Special Payments on the Equipment Trust Certificates, equal to the product of the percentage interest in the Pass Through Trust evidenced by this Pass Through Certificate and an amount equal to the sum of such Special Payments so received. If a Distribution Date is not a Business Day, distribution shall be made on the immediately following Business Day with the same force and effect as if made on such Distribution Date and no interest shall accrue during the intervening period. The Special Distribution Date shall be the twenty-third (23rd) day of the month determined as provided in the Pass Through Agreement and the Series Supplement, except in certain circumstances, in which case it will be the date of receipt of proceeds by the Pass Through Trustee as provided in the Series Supplement. The Pass Through Trustee shall mail notice of each Special Payment and the Special Distribution Date therefor to the Certificateholder of this Pass Through Certificate. Distributions on this Pass Through Certificate will be made by the Pass Through Trustee to the Person entitled thereto, without the presentation or surrender of this Pass Through Certificate or the making of any notation hereon. Except as otherwise provided in the Pass Through Agreement and notwithstanding the above, the final distribution on this Pass Through Certificate will be made after notice is mailed by the Pass Through Trustee of the pendency of such distribution and only upon presentation and surrender of this Pass Through Certificate at the office or agency of the Pass Through Trustee specified in such notice. NO EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR INDIVIDUAL RETIREMENT ACCOUNT OR PLAN SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (HEREINAFTER COLLECTIVELY REFERRED TO AS AN "ERISA PLAN"), MAY ACQUIRE OR HOLD ANY OF THE PASS THROUGH CERTIFICATES. THE PURCHASE BY ANY PERSON OF ANY PASS THROUGH CERTIFICATE CONSTITUTES A REPRESENTATION BY SUCH PERSON TO FEDERAL EXPRESS CORPORATION, THE RELATED OWNER PARTICIPANTS, THE RELATED OWNER TRUSTEES, THE RELATED INDENTURE TRUSTEES AND THE PASS THROUGH TRUSTEE OR THEIR RESPECTIVE SUCCESSORS, AS THE CASE MAY BE, THAT SUCH PERSON IS NOT AN ERISA PLAN AND THAT SUCH PERSON IS NOT ACQUIRING, AND HAS NOT ACQUIRED, SUCH PASS THROUGH CERTIFICATE WITH ASSETS OF AN ERISA PLAN. This Pass Through Certificate shall be governed by and construed in accordance with the laws of the State of New York. Reference is hereby made to the further provisions of this Pass Through Certificate set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Pass Through Trustee, by manual signature, this Pass Through Certificate shall not be entitled to any benefit under the Pass Through Trust or be valid for any purpose. IN WITNESS WHEREOF, the Pass Through Trustee has caused this Pass Through Certificate to be duly executed. FEDERAL EXPRESS CORPORATION PASS THROUGH TRUST, 1994-A310-A1 By: NATIONSBANK OF SOUTH CAROLINA, NATIONAL ASSOCIATION, as Pass Through Trustee By: _______________________________ Authorized Signatory [FORM OF THE PASS THROUGH TRUSTEE'S CERTIFICATE OF AUTHENTICATION] Dated: This is one of the Pass Through Certificates referred to in the within-mentioned Pass Through Agreement and the Series Supplement. NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, as Registrar, Paying Agent and Authenticating Agent By: _______________________ Authorized Signatory [Reverse of Pass Through Certificate]. The Pass Through Certificates do not represent a direct obligation of, or an obligation guaranteed by, or an interest in, the Company or the Pass Through Trustee or any affiliate thereof. The Pass Through Certificates are limited in right of payment, all as more specifically set forth on the face hereof and in the Pass Through Agreement and the Series Supplement. All payments or distributions made to Certificateholders under the Pass Through Agreement shall be made only from the Trust Property and only to the extent that the Pass Through Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of the Pass Through Agreement and the Series Supplement. Each Certificateholder of this Pass Through Certificate, by its acceptance hereof, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to such Certificateholder as provided in the Pass Through Agreement and the Series Supplement. In connection with withholding taxes, under certain circumstances the Pass Through Trustee may retain certain amounts otherwise distributable to a Certificateholder. The purchase by any Certificateholder of any Pass Through Certificate constitutes the consent of such Certificateholder to such retention in accordance with the terms of the Pass Through Agreement. This Pass Through Certificate does not purport to summarize the Pass Through Agreement and the Series Supplement and reference is made to the Pass Through Agreement and the Series Supplement for information with respect to the interests, rights, benefits, obligations, proceeds and duties evidenced hereby. A copy of the Pass Through Agreement and the Series Supplement may be examined by any Certificateholder upon request during normal business hours at the principal office of the Pass Through Trustee, and at such other places designated by the Pass Through Trustee. As of the date of issuance of this Pass Through Certificate, and assuming that no prepayment, purchase or default in respect of the Equipment Trust Certificates shall occur, the aggregate scheduled repayments of principal on the Equipment Trust Certificates for the Pass Through Trust and the resulting Pool Factors for the Pass Through Trust after taking into account each such repayment are set forth below: Pass Through Trust, 1994-A310-A1 Scheduled Principal Regular Payments Distribution on Equipment Trust Date Certificates Pool Factor ---- ------------ ----------- March 23, 1995 $ 2,051,710 0.9835863 September 23, 1995 4,938,803 0.9440759 March 23, 1996 7,282,492 0.8858160 September 23, 1996 7,556,678 0.8253625 March 23, 1997 7,841,189 0.7626330 September 23, 1997 8,136,408 0.6975418 March 23, 1998 8,442,722 0.6300000 September 23, 1998 0 0.6300000 March 23, 1999 0 0.6300000 September 23, 1999 0 0.6300000 March 23, 2000 963,237 0.6222941 September 23, 2000 2,260,216 0.6042124 March 23, 2001 3,878,515 0.5731842 September 23, 2001 5,726,656 0.5273710 March 23, 2002 5,942,266 0.4798329 September 23, 2002 6,247,325 0.4298543 March 23, 2003 10,132,161 0.3487970 September 23, 2003 8,615,570 0.2798724 March 23, 2004 8,383,932 0.2128010 September 23, 2004 8,151,434 0.1475895 March 23, 2005 6,253,712 0.0975598 September 23, 2005 6,337,194 0.0468622 March 23, 2006 4,516,005 0.0107342 September 23, 2006 1,341,775 0.0000000 The Pass Through Agreement and the Series Supplement permit, with certain exceptions provided therein, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Certificateholders under the Pass Through Trust at any time by the Company and the Pass Through Trustee with the consent of the Majority In Interest of Certificateholders in the Pass Through Trust. Any such consent by the Certificateholder of this Pass Through Certificate shall be conclusive and binding on such Certificateholder and upon all future Certificateholders of this Pass Through Certificate and of any Pass Through Certificate issued upon the transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent is made upon this Pass Through Certificate. The Pass Through Agreement and the Series Supplement also permit the amendment thereof, in certain limited circumstances, without the consent of the Certificateholders of any of the Pass Through Certificates. As provided in the Pass Through Agreement and the Series Supplement and subject to certain limitations set forth therein, the transfer of this Pass Through Certificate is registrable in the Register upon surrender of this Pass Through Certificate for registration of transfer to the Pass Through Trustee in its capacity as Registrar, or by any successor Registrar, duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Pass Through Trustee and the Registrar duly executed by the Certificateholder hereof or such Certificateholder's attorney duly authorized in writing, and thereupon one or more new Pass Through Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Pass Through Trust will be issued to the designated transferee or transferees. The Pass Through Certificates are issuable only as registered Pass Through Certificates without coupons in minimum denominations of $1,000 Fractional Undivided Interest and integral multiples thereof. As provided in the Pass Through Agreement and the Series Supplement and subject to certain limitations set forth therein, the Pass Through Certificates are exchangeable for new Pass Through Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Pass Through Trust, as requested by the Certificateholder surrendering the same. No service charge will be made for any such registration of transfer or exchange, but the Pass Through Trustee shall require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith. The Pass Through Trustee, the Registrar, and any agent of the Pass Through Trustee or the Registrar may treat the person in whose name this Pass Through Certificate is registered as the owner hereof for all purposes, and neither the Pass Through Trustee, the Registrar, nor any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Pass Through Agreement and the Series Supplement and the Pass Through Trust created thereby shall terminate upon the distribution to Certificateholders of all amounts required to be distributed to them pursuant to the Pass Through Agreement and the Series Supplement and the disposition of all property held as part of the Trust Property. Schedule I to Series Supplement Federal Express Corporation Pass Through Trust, 1994-A310-A1 Equipment Trust Certificates; Related Indenture Documents 1. Equipment Trust Certificates (Federal Express Corporation Trust A) Interest Rate: 7.53% Maturity: March 23, 1998 Principal Amount: $4,166,194 2. Equipment Trust Certificates (Federal Express Corporation Trust B) Interest Rate: 7.53% Maturity: March 23, 2003 Principal Amount: $5,202,323 3. Equipment Trust Certificates (Federal Express Corporation Trust C) Interest Rate: 7.53% Maturity: March 23, 2003 Principal Amount: $5,459,459 4. Equipment Trust Certificates (Federal Express Corporation Trust D) Interest Rate: 7.53% Maturity: March 23, 1998 Principal Amount: $4,097,109 5. Equipment Trust Certificates (Federal Express Corporation Trust E) Interest Rate: 7.53% Maturity: March 23, 2004 Principal Amount: $6,508,237 6. Equipment Trust Certificates (Federal Express Corporation Trust F) Interest Rate: 7.53% Maturity: September 23, 2004 Principal Amount: $10,778,919 7. Equipment Trust Certificates (Federal Express Corporation Trust G) Interest Rate: 7.53% Maturity: September 23, 2004 Principal Amount: $9,697,934 8. Equipment Trust Certificates (Federal Express Corporation Trust H) Interest Rate: 7.53% Maturity: March 23, 2006 Principal Amount: $9,850,146 9. Equipment Trust Certificates (Federal Express Corporation Trust I) Interest Rate: 7.53% Maturity: September 23, 2005 Principal Amount: $12,207,788 10. Equipment Trust Certificates (Federal Express Corporation Trust J) Interest Rate: 7.53% Maturity: March 23, 2006 Principal Amount: $12,620,316 11. Equipment Trust Certificates (Federal Express Corporation Trust K) Interest Rate: 7.53% Maturity: March 23, 2006 Principal Amount: $15,005,244 12. Equipment Trust Certificates (Federal Express Corporation Trust L) Interest Rate: 7.53% Maturity: September 23, 2006 Principal Amount: $14,790,634 13. Equipment Trust Certificates (Federal Express Corporation Trust M) Interest Rate: 7.53% Maturity: September 23, 2006 Principal Amount: $14,615,697 Related Indenture Documents: Trust Indenture and Security Agreement (Federal Express Corporation Trust A through M), dated as of March 1, 1994, between First Security Bank of Utah, National Association, as Owner Trustee and NationsBank of Georgia, National Association, as Indenture Trustee.* Trust Agreement dated as of September 1, 1993, as amended and restated as of March 1, 1994, between LLG Aircraft Leasing, L.P., as Trustor, and First Security Bank of Utah, National Association, as Owner Trustee. Participation Agreement (Federal Express Corporation Trust A through M), dated as of March 1, 1994, among Federal Express Corporation, as Lessee, LLG Aircraft Leasing, L.P., as Owner Participant, NationsBank of South Carolina, National Association, as Pass Through Trustee, First Security Bank of Utah, National Association, as Owner Trustee, NationsBank of Georgia, National Association, as Indenture Trustee and Westdeutsche Landesbank Girozentrale, New York Branch, as LC Bank.** Collateral Agreement (Trust A through M), dated as of March 1, 1994, between First Security Bank of Utah, National Association, as Owner Trustee, and NationsBank of Georgia, National Association, as Indenture Trustee.*** Letter of Credit to be dated the Closing Date referred to in the related Participation Agreement, from Westdeutsche Landesbank Girozentrale, New York Branch, to NationsBank of Georgia, National Association, as Indenture Trustee;**** Lease Agreement (Federal Express Corporation Trust A through M) to be dated on or prior to the related Commencement Date referred to in the related Participation Agreement (or the form thereof prior to such Commencement Date), between First Security Bank of Utah, National Association, as Owner Trustee and Lessor and Federal Express Corporation as Lessee.***** With respect to each of Trusts A through M, the other Indenture Documents defined as such in the related Trust Indenture. * A separate Trust Indenture will be executed with respect to each of Trusts A through M. ** A separate Participation Agreement will be execution with respect to each of the Trusts A through M. *** A separate Collateral Agreement will be executed with respect to each of Trusts A through M. **** A separate Letter of Credit will be executed with respect to each of Trusts A through M. ***** A separate Lease Agreement will be executed with respect to each of Trusts A through M. Exhibit 4.a.3 __________________________________________ SERIES SUPPLEMENT 1994-A310-A2 Dated March __, 1994 to PASS THROUGH TRUST AGREEMENT Dated as of March 1, 1994 In Each Case Between NATIONSBANK OF SOUTH CAROLINA, NATIONAL ASSOCIATION, as Pass Through Trustee, and FEDERAL EXPRESS CORPORATION $174,971,000 Federal Express Corporation Pass Through Trust, 1994-A310-A2 Federal Express Corporation 1994 Pass Through Certificates, Series A310-A2 __________________________________________ TABLE OF CONTENTS Page RECITALS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE I CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 2 ARTICLE II DESIGNATIONS; TRUST FORMATION; ISSUANCE OF PASS THROUGH CERTIFICATES SECTION 2.01 Designations; Aggregate Amount . . . . . . . . . . . . 4 SECTION 2.02 Declaration of Trust; Authorization. . . . . . . . . . 4 SECTION 2.03 Issuance of Pass Through Certificates . . . . . . . . 5 SECTION 2.04 Purchase of Equipment Trust Certificates . . . . . . . 5 SECTION 2.05 Representations and Warranties of the Company. . . . . 5 SECTION 2.06 Conditions Precedent . . . . . . . . . . . . . . . . . 5 ARTICLE III DISTRIBUTION AND RECORD DATES; CERTIFICATE AND SPECIAL PAYMENTS ACCOUNTS SECTION 3.01 Distribution Dates . . . . . . . . . . . . . . . . . . 6 SECTION 3.02 Record Dates . . . . . . . . . . . . . . . . . . . . . 6 SECTION 3.03 Certificate Account and Special Payments Account . . . 6 SECTION 3.04 Form of Pass Through Certificates. . . . . . . . . . . 6 SECTION 3.05 Appointment of Authenticating Agent; Paying Agent and Registrar. . . . . . . . . . . . . . . . . . . . . 7 ARTICLE IV MISCELLANEOUS SECTION 4.01 Governing Law; Counterpart Form. . . . . . . . . . . . 7 SECTION 4.02 Reports by the Company . . . . . . . . . . . . . . . . 8 SECTION 4.03 Modification and Ratification of Pass Through Agreement. . . . . . . . . . . . . . . . . . . . . . . 8 SECTION 4.04 Termination. . . . . . . . . . . . . . . . . . . . . . 8 EXHIBIT A Form of Pass Through Certificate SCHEDULE I Equipment Trust Certificates; Related Indenture Documents SERIES SUPPLEMENT 1994-A310-A2 SERIES SUPPLEMENT 1994-A310-A2, dated March __, 1994 (this "Series Supplement"), to the Pass Through Trust Agreement, dated as of March 1, 1994 (the "Pass Through Agreement"), in each case between FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Company") and NATIONSBANK OF SOUTH CAROLINA, NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States of America, as Pass Through Trustee (the "Pass Through Trustee"). RECITALS WHEREAS, capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, Section 2.01 of the Pass Through Agreement provides, among other things, that the Company and the Pass Through Trustee may execute and deliver one or more series supplements, each for the purpose of forming a separate pass through trust for the benefit of the certificateholders of the series of pass through certificates to be issued pursuant to such pass through trust, establishing certain terms of such pass through certificates, and pursuant to which the pass through certificates of such series shall be executed and authenticated by the Pass Through Trustee and delivered as directed by the Company; WHEREAS, pursuant to the Participation Agreements, the Company has agreed to cause the Equipment Trust Certificates to be issued and sold to the Pass Through Trustee, and the Pass Through Trustee has agreed to purchase the Equipment Trust Certificates, which will be held in trust as Trust Property for the benefit of the Certificateholders; WHEREAS, in order to facilitate such sale, the Company has agreed, pursuant to the Underwriting Agreement, to cause the Pass Through Trustee to issue and sell the Pass Through Certificates to the Underwriters; WHEREAS, pursuant to the Pass Through Agreement and the terms of this Series Supplement, the Pass Through Trustee will execute, authenticate and deliver the Pass Through Certificates to the Underwriters upon receipt by the Pass Through Trustee of the purchase price therefor, which will be applied in accordance with this Series Supplement to purchase the Equipment Trust Certificates; WHEREAS, the Pass Through Trustee hereby declares the creation of this Pass Through Trust for the benefit of the Certificateholders, and the initial Certificateholders of such Pass Through Certificates, as the grantors of such Pass Through Trust, by their respective acceptances of such Pass Through Certificates, join in the creation of such Pass Through Trust; WHEREAS, to facilitate the sale of the Equipment Trust Certificates to, and the purchase of the Equipment Trust Certificates by, the Pass Through Trustee on behalf of this Pass Through Trust, the Company has duly authorized the execution and delivery of this Series Supplement as the "issuer," as such term is defined in and solely for purposes of the Securities Act, of the Pass Through Certificates and as the "obligor," as such term is defined in and solely for purposes of the Trust Indenture Act, with respect to all such Pass Through Certificates; and WHEREAS, this Series Supplement is subject to the provisions of the Trust Indenture Act and shall, to the extent applicable, be governed by such provisions; IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows: ARTICLE I CERTAIN DEFINITIONS All terms used in this Series Supplement that are defined in the Pass Through Agreement, either directly or by reference therein, have the meanings assigned to them therein as supplemented by this Article I, if applicable, except to the extent the context clearly requires otherwise. Any such defined term that is defined in the Pass Through Agreement as relating to a particular Pass Through Trust or Series rather than to any Pass Through Trust or Series generally shall, when used in this Series Supplement, relate solely to the Federal Express Corporation Pass Through Trust, 1994-A310-A2, or the Federal Express Corporation 1994 Pass Through Certificates, Series A310-A2, as the case may be, whether or not expressly so stated herein. "Authenticating Agent" has the meaning set forth in Section 3.05 hereof. "Certificate Account" means the Certificate Account specified in Section 3.03 hereof. "Certificateholders" means the Certificateholders of the Series of Pass Through Certificates designated in Section 2.01 hereof. "Equipment Trust Certificates" means those Equipment Trust Certificates listed in Schedule I hereto. "Issuance Date" means the date defined as the Closing Time in the Underwriting Agreement. "Participation Agreements" means those Participation Agreements listed in Schedule I hereto. "Pass Through Certificates" means the Pass Through Certificates designated in Section 2.01 hereof. "Pass Through Trust," "this Pass Through Trust" and other like words means the Pass Through Trust designated in Section 2.01 hereof. "Paying Agent" means the Person specified as such in Section 3.05 hereof. "Record Date" means any Record Date specified in Section 3.02 hereof. "Registrar" means the Person specified as such in Section 3.05 hereof. "Regular Distribution Date" means any Regular Distribution Date specified in Section 3.01 hereof. "Special Distribution Date" means, for any Special Payment, the Special Distribution Date for such Special Payment specified in Section 3.01 hereof. "Special Payments Account" means the Special Payments Account specified in Section 3.03 hereof. "Trust Property" means all money, instruments, including the Equipment Trust Certificates that have been issued by the related Owner Trustee and delivered to and accepted by the Pass Through Trustee for the benefit of the Certificateholders, and other property held as the property of this Pass Through Trust, including all distributions thereon and proceeds thereof. "Underwriters" means the several Underwriters named in the Underwriting Agreement. "Underwriting Agreement" means the Underwriting Agreement dated March 16, 1994 among the Company, Lufthansa, the Owner Participant, Goldman, Sachs & Co. and Merrill Lynch, Pierce, Fenner & Smith Incorporated. ARTICLE II DESIGNATIONS; PASS THROUGH TRUST FORMATION; ISSUANCE OF PASS THROUGH CERTIFICATES SECTION 2.01. Designations; Aggregate Amount. The Pass Through Trust created hereby shall be designated Federal Express Corporation Pass Through Trust, 1994-A310-A2 (herein sometimes called this "Pass Through Trust"). The Pass Through Certificates evidencing Fractional Undivided Interests in such Pass Through Trust shall be designated as the Federal Express Corporation 1994 Pass Through Certificates, Series A310-A2 (herein sometimes called the "Series A310-A2 Pass Through Certificates"). The Series A310-A2 Pass Through Certificates shall be the only instruments evidencing a fractional undivided interest in such Pass Through Trust. Except as provided in Section 2.09 of the Pass Through Agreement, the aggregate amount of Series A310-A2 Pass Through Certificates that may be authenticated, delivered and outstanding under this Series Supplement is limited to $174,971,000. SECTION 2.02. Declaration of Trust; Authorization. Each initial Certificateholder, by its payment for and acceptance of any Series A310-A2 Pass Through Certificate is hereby deemed (1) as grantor, to join in the creation and declaration of this Pass Through Trust and (2) as beneficiary of such Pass Through Trust, to authorize and direct the Pass Through Trustee to execute and deliver all documents to which the Pass Through Trustee is a party that may be necessary or desirable to consummate the transactions contemplated hereby and to exercise its rights and perform its duties under the Participation Agreements, the Indentures, the Pass Through Agreement and this Series Supplement. The Pass Through Trustee hereby acknowledges and accepts this grant of trust and declares that it will hold the Trust Property as Pass Through Trustee upon this Pass Through Trust for the use and benefit of the Certificateholders. SECTION 2.03. Issuance of Pass Through Certificates. Subject to the terms set forth herein, on the Issuance Date (i) the Company shall direct the Underwriters to execute a wire transfer or intra-bank transfer to the Pass Through Trustee in the amount of the total proceeds payable by such Underwriters pursuant to the Underwriting Agreement with respect to the Series A310-A2 Pass Through Certificates and (ii) the Pass Through Trustee shall deliver the Series A310-A2 Pass Through Certificates to the Underwriters as provided in the Underwriting Agreement upon receipt by the Pass Through Trustee of such proceeds. SECTION 2.04. Purchase of Equipment Trust Certificates. On the Issuance Date, the Pass Through Trustee shall purchase, in accordance with Section 2.02 of the Pass Through Agreement, each of the Equipment Trust Certificates upon the satisfaction or waiver of the conditions for such purchase by the Pass Through Trustee set forth in the related Participation Agreements. SECTION 2.05. Representations and Warranties of the Company. All of the representations and warranties of the Company set forth or incorporated by reference in Section 1 of the Underwriting Agreement are incorporated by reference in this Series Supplement as if set forth herein and the Company represents and warrants that such representations and warranties are true and correct on the date hereof, except to the extent that such representations and warranties expressly relate solely to an earlier date or later date (in which case such representations and warranties were correct on and as of such earlier date or will be correct on and as of such later date, as the case may be). SECTION 2.06. Conditions Precedent. The obligations of the Pass Through Trustee to participate in the transactions described in Sections 2.03 and 2.04 hereof are subject to (i) receipt by the Pass Through Trustee of a certificate of the Company to the same effect as the certificate of the Company delivered to the Underwriters pursuant to Section 5(c) of the Underwriting Agreement, and (ii) satisfaction or waiver of the conditions for the purchase by the Underwriters of the Pass Through Certificates set forth in Section 5 of the Underwriting Agreement, which satisfaction or waiver for the purposes hereof shall be conclusively demonstrated by the receipt by the Pass Through Trustee of the total proceeds payable by such Underwriters pursuant to the Underwriting Agreement with respect to the Series A310-A2 Pass Through Certificates. ARTICLE III DISTRIBUTION AND RECORD DATES; CERTIFICATE AND SPECIAL PAYMENT ACCOUNTS SECTION 3.01. Distribution Dates. The Regular Distribution Dates are March 23 and September 23, commencing on September 23, 1994. The Special Distribution Date for any month in which a Special Payment is to be distributed will be the twenty-third (23rd) day of such month, except that the Special Distribution Date for any Special Payment received by the Pass Through Trustee in connection with a prepayment of any Equipment Trust Certificate pursuant to Section 6.02(a)(i) or 6.02(a)(vi) of the related Indenture will correspond to the date of the receipt of such Special Payment by the Pass Through Trustee. Notice of such Special Payment shall be mailed as soon as practicable after receipt by the Pass Through Trustee of the notice of such prepayment. SECTION 3.02. Record Dates. The Record Dates for the Regular Distribution Dates are March 8 and September 8, respectively, and the Record Date for any Special Distribution Date is the fifteenth day preceding such Special Distribution Date, in any event, whether or not such date is a Business Day. SECTION 3.03. Certificate Account and Special Payments Account. In accordance with Section 5.01(a) of the Pass Through Agreement and upon receipt of any Scheduled Payment, the Pass Through Trustee shall immediately deposit such Scheduled Payment into the Certificate Account, a separate and non-interest bearing account designated by the Pass Through Trustee to be used for such purpose. In accordance with Section 5.01(b) of the Pass Through Agreement and upon receipt of any Special Payment, the Pass Through Trustee shall immediately deposit such Special Payment into the Special Payments Account, a separate and, except as provided in Section 5.04 of the Pass Through Agreement, non-interest bearing account designated by the Pass Through Trustee to be used for such purpose. SECTION 3.04. Form of Pass Through Certificates. Subject to Section 2.07 of the Pass Through Agreement, each of the Series A310-A2 Pass Through Certificates will be substantially in the form of Exhibit A hereto. SECTION 3.05. Appointment of Authenticating Agent; Paying Agent and Registrar. (a) The Pass Through Trustee may appoint an authenticating agent (the "Authenticating Agent") with respect to the Pass Through Certificates which shall be authorized to act on behalf of the Pass Through Trustee to authenticate the Pass Through Certificates issued upon original issue and upon exchange or registration of transfer thereof or pursuant to Section 2.09 of the Pass Through Agreement. Pass Through Certificates so authenticated shall be entitled to the benefits of the Pass Through Agreement and this Series Supplement and shall be valid and obligatory for all purposes as if authenticated by the Pass Through Trustee. Whenever reference is made in the Pass Through Agreement or this Series Supplement to the authentication and delivery of Pass Through Certificates by the Pass Through Trustee or the Pass Through Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Pass Through Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Pass Through Trustee by an Authenticating Agent. (b) The Paying Agent, Registrar and Authenticating Agent for the Series A310-A2 Pass Through Certificates initially shall be NationsBank of Georgia, National Association ("NationsBank of Georgia"), 600 Peachtree Street, N.E., GA1-006-09-11, Atlanta, Georgia 30308. The Company, the Pass Through Trustee and NationsBank of Georgia have entered into a Registrar, Authenticating and Paying Agency Agreement dated the date hereof which sets forth the rights, duties and obligations of the parties thereto with respect to the appointment of NationsBank of Georgia as Paying Agent, Registrar and Authenticating Agent for the Series A310-A2 Pass Through Certificates. ARTICLE IV MISCELLANEOUS SECTION 4.01. Governing Law; Counterpart Form. AS PROVIDED IN SECTION 13.14 OF THE PASS THROUGH AGREEMENT, THIS SERIES SUPPLEMENT AND EACH SERIES A310-A2 PASS THROUGH CERTIFICATE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Series Supplement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 4.02. Reports by the Company. In addition to the reports required to be provided by the Company pursuant to Section 4.03 of the Pass Through Agreement, the Company agrees to furnish to the Pass Through Trustee from time to time, such other financial information as the Pass Through Trustee may reasonably request. SECTION 4.03. Modification and Ratification of Pass Through Agreement. The Pass Through Agreement is incorporated herein by reference in its entirety, and shall be deemed to be a part of this Series Supplement as if set forth in full herein, and is in all respects ratified and confirmed, as supplemented and modified by this Series Supplement. SECTION 4.04. Termination. In no event shall this Pass Through Trust continue beyond the expiration of 21 years after the death of the last survivor of Mario Cuomo, Governor of New York State, living on the date of this Series Supplement. IN WITNESS WHEREOF, the parties have caused their names to be signed hereto by their respective officers or signatories thereunto duly authorized, all as of the day and year first above written. FEDERAL EXPRESS CORPORATION By:___________________________ Name: Title: NATIONSBANK OF SOUTH CAROLINA, NATIONAL ASSOCIATION, as Pass Through Trustee By:___________________________ Name: Title: Exhibit A to Series Supplement FORM OF PASS THROUGH CERTIFICATE FEDERAL EXPRESS CORPORATION PASS THROUGH TRUST, 1994-A310-A2 1994 Pass Through Certificate, Series A310-A2 Final Scheduled Regular Distribution Date: September 23, 2008 evidencing a fractional undivided interest in a pass through trust, the property of which includes certain Equipment Trust Certificates. Certificate No. _______ Applicable interest rate on Equipment Trust Certificates held in Pass Through Trust, 1994-A310-A2: 7.89%. $___________ Fractional Undivided Interest representing __________ of the Pass Through Trust per $1,000 face amount. THIS CERTIFIES THAT ______________, for value received, is the registered owner of a $_________ (_____________ dollars) Fractional Undivided Interest in the Federal Express Corporation Pass Through Trust, 1994-A310-A2 (the "Pass Through Trust") created and declared by NationsBank of South Carolina, National Association, as pass through trustee (the "Pass Through Trustee"), pursuant to the Pass Through Trust Agreement dated as of March 1, 1994 (the "Pass Through Agreement"), as supplemented by Series Supplement 1994-A310-A2 thereto dated March __, 1994 (the "Series Supplement") between the Pass Through Trustee and Federal Express Corporation, a Delaware corporation (the "Company"), a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Pass Through Agreement and the Series Supplement. This Pass Through Certificate is one of the duly authorized Pass Through Certificates designated as "Federal Express Corporation 1994 Pass Through Certificates, Series A310-A2." This Pass Through Certificate is issued under and is subject to the terms, provisions and conditions of the Pass Through Agreement and the Series Supplement, to which the Certificateholder of this Pass Through Certificate by virtue of the acceptance hereof assents and by which such Certificateholder is bound. The property of the Pass Through Trust (the "Trust Property") includes certain Equipment Trust Certificates (the "Equipment Trust Certificates"). Each series of Equipment Trust Certificates is secured as described in the related Indenture Documents. The Pass Through Certificates represent fractional undivided interests in the Pass Through Trust and the Trust Property, and have no rights, benefits or interests in respect of any other separate trust established pursuant to the terms of the Pass Through Agreement for any other Series of Pass Through Certificates issued pursuant thereto. Subject to and in accordance with the terms of the Pass Through Agreement and the Series Supplement, from funds then available to the Pass Through Trustee, there will be distributed on each March 23 and September 23 (a "Regular Distribution Date"), commencing on September 23, 1994, to the Person in whose name this Pass Through Certificate is registered at the close of business on the 15th day preceding the applicable Regular Distribution Date, an amount in respect of the Scheduled Payments on the Equipment Trust Certificates due on such Regular Distribution Date, equal to the product of the percentage interest in the Pass Through Trust evidenced by this Pass Through Certificate and an amount equal to the sum of such Scheduled Payments. Subject to and in accordance with the terms of the Pass Through Agreement and the Series Supplement, if Special Payments on the Equipment Trust Certificates are received by the Pass Through Trustee, from funds then available to the Pass Through Trustee, there shall be distributed on the applicable Special Distribution Date, to the Person in whose name this Pass Through Certificate is registered at the close of business on the 15th day preceding such Special Distribution Date, an amount in respect of such Special Payments on the Equipment Trust Certificates, equal to the product of the percentage interest in the Pass Through Trust evidenced by this Pass Through Certificate and an amount equal to the sum of such Special Payments so received. If a Distribution Date is not a Business Day, distribution shall be made on the immediately following Business Day with the same force and effect as if made on such Distribution Date and no interest shall accrue during the intervening period. The Special Distribution Date shall be the twenty-third (23rd) day of the month determined as provided in the Pass Through Agreement and the Series Supplement, except in certain circumstances, in which case it will be the date of receipt of proceeds by the Pass Through Trustee as provided in the Series Supplement. The Pass Through Trustee shall mail notice of each Special Payment and the Special Distribution Date therefor to the Certificateholder of this Pass Through Certificate. Distributions on this Pass Through Certificate will be made by the Pass Through Trustee to the Person entitled thereto, without the presentation or surrender of this Pass Through Certificate or the making of any notation hereon. Except as otherwise provided in the Pass Through Agreement and notwithstanding the above, the final distribution on this Pass Through Certificate will be made after notice is mailed by the Pass Through Trustee of the pendency of such distribution and only upon presentation and surrender of this Pass Through Certificate at the office or agency of the Pass Through Trustee specified in such notice. NO EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR INDIVIDUAL RETIREMENT ACCOUNT OR PLAN SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (HEREINAFTER COLLECTIVELY REFERRED TO AS AN "ERISA PLAN"), MAY ACQUIRE OR HOLD ANY OF THE PASS THROUGH CERTIFICATES. THE PURCHASE BY ANY PERSON OF ANY PASS THROUGH CERTIFICATE CONSTITUTES A REPRESENTATION BY SUCH PERSON TO FEDERAL EXPRESS CORPORATION, THE RELATED OWNER PARTICIPANTS, THE RELATED OWNER TRUSTEES, THE RELATED INDENTURE TRUSTEES AND THE PASS THROUGH TRUSTEE OR THEIR RESPECTIVE SUCCESSORS, AS THE CASE MAY BE, THAT SUCH PERSON IS NOT AN ERISA PLAN AND THAT SUCH PERSON IS NOT ACQUIRING, AND HAS NOT ACQUIRED, SUCH PASS THROUGH CERTIFICATE WITH ASSETS OF AN ERISA PLAN. This Pass Through Certificate shall be governed by and construed in accordance with the laws of the State of New York. Reference is hereby made to the further provisions of this Pass Through Certificate set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Pass Through Trustee, by manual signature, this Pass Through Certificate shall not be entitled to any benefit under the Pass Through Trust or be valid for any purpose. IN WITNESS WHEREOF, the Pass Through Trustee has caused this Pass Through Certificate to be duly executed. FEDERAL EXPRESS CORPORATION PASS THROUGH TRUST, 1994-A310-A2 By: NATIONSBANK OF SOUTH CAROLINA, NATIONAL ASSOCIATION, as Pass Through Trustee By: _______________________________ Authorized Signatory [FORM OF THE PASS THROUGH TRUSTEE'S CERTIFICATE OF AUTHENTICATION] Dated: This is one of the Pass Through Certificates referred to in the within-mentioned Pass Through Agreement and the Series Supplement. NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, as Registrar, Paying Agent and Authenticating Agent By: _______________________ Authorized Signatory [Reverse of Pass Through Certificate]. The Pass Through Certificates do not represent a direct obligation of, or an obligation guaranteed by, or an interest in, the Company or the Pass Through Trustee or any affiliate thereof. The Pass Through Certificates are limited in right of payment, all as more specifically set forth on the face hereof and in the Pass Through Agreement and the Series Supplement. All payments or distributions made to Certificateholders under the Pass Through Agreement shall be made only from the Trust Property and only to the extent that the Pass Through Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of the Pass Through Agreement and the Series Supplement. Each Certificateholder of this Pass Through Certificate, by its acceptance hereof, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to such Certificateholder as provided in the Pass Through Agreement and the Series Supplement. In connection with withholding taxes, under certain circumstances the Pass Through Trustee may retain certain amounts otherwise distributable to a Certificateholder. The purchase by any Certificateholder of any Pass Through Certificate constitutes the consent of such Certificateholder to such retention in accordance with the terms of the Pass Through Agreement. This Pass Through Certificate does not purport to summarize the Pass Through Agreement and the Series Supplement and reference is made to the Pass Through Agreement and the Series Supplement for information with respect to the interests, rights, benefits, obligations, proceeds and duties evidenced hereby. A copy of the Pass Through Agreement and the Series Supplement may be examined by any Certificateholder upon request during normal business hours at the principal office of the Pass Through Trustee, and at such other places designated by the Pass Through Trustee. As of the date of issuance of this Pass Through Certificate, and assuming that no prepayment, purchase or default in respect of the Equipment Trust Certificates shall occur, the aggregate scheduled repayments of principal on the Equipment Trust Certificates for the Pass Through Trust and the resulting Pool Factors for the Pass Through Trust after taking into account each such repayment are set forth below: Pass Through Trust, 1994-A310-A2 Scheduled Principal Regular Payments Distribution on Equipment Trust Date Certificates Pool Factor ---- ------------ ----------- September 23, 1998 $ 8,760,614 0.9499311 March 23, 1999 9,106,219 0.8978869 September 23, 1999 9,465,461 0.8437896 March 23, 2000 8,875,637 0.7930632 September 23, 2000 7,965,068 0.7475410 March 23, 2001 6,746,087 0.7089856 September 23, 2001 5,310,105 0.6786371 March 23, 2002 5,519,588 0.6470914 September 23, 2002 5,656,004 0.6147660 March 23, 2003 2,229,482 0.6020240 September 23, 2003 4,215,533 0.5779312 March 23, 2004 4,937,828 0.5497104 September 23, 2004 5,680,745 0.5172436 March 23, 2005 8,109,529 0.4708957 September 23, 2005 8,581,389 0.4218511 March 23, 2006 10,979,645 0.3590999 September 23, 2006 14,757,075 0.2747598 March 23, 2007 16,224,717 0.1820317 September 23, 2007 12,297,292 0.1117498 March 23, 2008 10,629,912 0.0509974 September 23, 2008 8,923,070 0.0000000 The Pass Through Agreement and the Series Supplement permit, with certain exceptions provided therein, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Certificateholders under the Pass Through Trust at any time by the Company and the Pass Through Trustee with the consent of the Majority In Interest of Certificateholders in the Pass Through Trust. Any such consent by the Certificateholder of this Pass Through Certificate shall be conclusive and binding on such Certificateholder and upon all future Certificateholders of this Pass Through Certificate and of any Pass Through Certificate issued upon the transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent is made upon this Pass Through Certificate. The Pass Through Agreement and the Series Supplement also permit the amendment thereof, in certain limited circumstances, without the consent of the Certificateholders of any of the Pass Through Certificates. As provided in the Pass Through Agreement and the Series Supplement and subject to certain limitations set forth therein, the transfer of this Pass Through Certificate is registrable in the Register upon surrender of this Pass Through Certificate for registration of transfer to the Pass Through Trustee in its capacity as Registrar, or by any successor Registrar, duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Pass Through Trustee and the Registrar duly executed by the Certificateholder hereof or such Certificateholder's attorney duly authorized in writing, and thereupon one or more new Pass Through Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Pass Through Trust will be issued to the designated transferee or transferees. The Pass Through Certificates are issuable only as registered Pass Through Certificates without coupons in minimum denominations of $1,000 Fractional Undivided Interest and integral multiples thereof. As provided in the Pass Through Agreement and the Series Supplement and subject to certain limitations set forth therein, the Pass Through Certificates are exchangeable for new Pass Through Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Pass Through Trust, as requested by the Certificateholder surrendering the same. No service charge will be made for any such registration of transfer or exchange, but the Pass Through Trustee shall require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith. The Pass Through Trustee, the Registrar, and any agent of the Pass Through Trustee or the Registrar may treat the person in whose name this Pass Through Certificate is registered as the owner hereof for all purposes, and neither the Pass Through Trustee, the Registrar, nor any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Pass Through Agreement and the Series Supplement and the Pass Through Trust created thereby shall terminate upon the distribution to Certificateholders of all amounts required to be distributed to them pursuant to the Pass Through Agreement and the Series Supplement and the disposition of all property held as part of the Trust Property. Schedule I to Series Supplement Federal Express Corporation Pass Through Trust, 1994-A310-A2 Equipment Trust Certificates; Related Indenture Documents 1. Equipment Trust Certificates (Federal Express Corporation Trust A) Interest Rate: 7.89% Maturity: March 23, 2007 Principal Amount: $17,268,693 2. Equipment Trust Certificates (Federal Express Corporation Trust B) Interest Rate: 7.89% Maturity: September 23, 2007 Principal Amount: $17,782,345 3. Equipment Trust Certificates (Federal Express Corporation Trust C) Interest Rate: 7.89% Maturity: September 23, 2007 Principal Amount: $18,232,902 4. Equipment Trust Certificates (Federal Express Corporation Trust D) Interest Rate: 7.89% Maturity: March 23, 2007 Principal Amount: $18,109,624 5. Equipment Trust Certificates (Federal Express Corporation Trust E) Interest Rate: 7.89% Maturity: September 23, 2007 Principal Amount: $16,860,707 6. Equipment Trust Certificates (Federal Express Corporation Trust F) Interest Rate: 7.89% Maturity: September 23, 2008 Principal Amount: $14,620,624 7. Equipment Trust Certificates (Federal Express Corporation Trust G) Interest Rate: 7.89% Maturity: March 23, 2008 Principal Amount: $12,466,618 8. Equipment Trust Certificates (Federal Express Corporation Trust H) Interest Rate: 7.89% Maturity: September 23, 2008 Principal Amount: $13,528,824 9. Equipment Trust Certificates (Federal Express Corporation Trust I) Interest Rate: 7.89% Maturity: September 23, 2008 Principal Amount: $10,954,314 10. Equipment Trust Certificates (Federal Express Corporation Trust J) Interest Rate: 7.89% Maturity: September 23, 2008 Principal Amount: $10,101,643 11. Equipment Trust Certificates (Federal Express Corporation Trust K) Interest Rate: 7.89% Maturity: September 23, 2008 Principal Amount: $9,838,871 12. Equipment Trust Certificates (Federal Express Corporation Trust L) Interest Rate: 7.89% Maturity: September 23, 2008 Principal Amount: $7,583,248 13. Equipment Trust Certificates (Federal Express Corporation Trust M) Interest Rate: 7.89% Maturity: September 23, 2008 Principal Amount: $7,622,587 Related Indenture Documents: Trust Indenture and Security Agreement (Federal Express Corporation Trust A through M), dated as of March 1, 1994, between First Security Bank of Utah, National Association, as Owner Trustee and NationsBank of Georgia, National Association, as Indenture Trustee.* Trust Agreement dated as of September 1, 1993, as amended and restated as of March 1, 1994, between LLG Aircraft Leasing, L.P., as Trustor, and First Security Bank of Utah, National Association, as Owner Trustee. Participation Agreement (Federal Express Corporation Trust A through M), dated as of March 1, 1994, among Federal Express Corporation, as Lessee, LLG Aircraft Leasing, L.P., as Owner Participant, NationsBank of South Carolina, National Association, as Pass Through Trustee, First Security Bank of Utah, National Association, as Owner Trustee, NationsBank of Georgia, National Association, as Indenture Trustee and Westdeutsche Landesbank Girozentrale, New York Branch, as LC Bank.** Collateral Agreement (Trust A through M), dated as of March 1, 1994, between First Security Bank of Utah, National Association, as Owner Trustee, and NationsBank of Georgia, National Association, as Indenture Trustee.*** Letter of Credit to be dated the Closing Date referred to in the related Participation Agreement, from Westdeutsche Landesbank Girozentrale, New York Branch, to NationsBank of Georgia, National Association, as Indenture Trustee;**** Lease Agreement (Federal Express Corporation Trust A through M) to be dated on or prior to the related Commencement Date referred to in the related Participation Agreement (or the form thereof prior to such Commencement Date), between First Security Bank of Utah, National Association, as Owner Trustee and Lessor and Federal Express Corporation as Lessee.***** With respect to each of Trusts A through M, the other Indenture Documents defined as such in the related Trust Indenture. * A separate Trust Indenture will be executed with respect to each of Trusts A through M. ** A separate Participation Agreement will be execution with respect to each of the Trusts A through M. *** A separate Collateral Agreement will be executed with respect to each of Trusts A through M. **** A separate Letter of Credit will be executed with respect to each of Trusts A through M. ***** A separate Lease Agreement will be executed with respect to each of Trusts A through M. Exhibit 4.a.3 __________________________________________ SERIES SUPPLEMENT 1994-A310-A3 Dated March __, 1994 to PASS THROUGH TRUST AGREEMENT Dated as of March 1, 1994 In Each Case Between NATIONSBANK OF SOUTH CAROLINA, NATIONAL ASSOCIATION, as Pass Through Trustee, and FEDERAL EXPRESS CORPORATION $77,141,000 Federal Express Corporation Pass Through Trust, 1994-A310-A3 Federal Express Corporation 1994 Pass Through Certificates, Series A310-A3 __________________________________________ TABLE OF CONTENTS Page RECITALS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE I CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 2 ARTICLE II DESIGNATIONS; TRUST FORMATION; ISSUANCE OF PASS THROUGH CERTIFICATES SECTION 2.01 Designations; Aggregate Amount . . . . . . . . . . . . 4 SECTION 2.02 Declaration of Trust; Authorization. . . . . . . . . . 4 SECTION 2.03 Issuance of Pass Through Certificates . . . . . . . . 5 SECTION 2.04 Purchase of Equipment Trust Certificates . . . . . . . 5 SECTION 2.05 Representations and Warranties of the Company. . . . . 5 SECTION 2.06 Conditions Precedent . . . . . . . . . . . . . . . . . 5 ARTICLE III DISTRIBUTION AND RECORD DATES; CERTIFICATE AND SPECIAL PAYMENTS ACCOUNTS SECTION 3.01 Distribution Dates . . . . . . . . . . . . . . . . . . 6 SECTION 3.02 Record Dates . . . . . . . . . . . . . . . . . . . . . 6 SECTION 3.03 Certificate Account and Special Payments Account . . . 6 SECTION 3.04 Form of Pass Through Certificates. . . . . . . . . . . 6 SECTION 3.05 Appointment of Authenticating Agent; Paying Agent and Registrar. . . . . . . . . . . . . . . . . . . . . 7 ARTICLE IV MISCELLANEOUS SECTION 4.01 Governing Law; Counterpart Form. . . . . . . . . . . . 7 SECTION 4.02 Reports by the Company . . . . . . . . . . . . . . . . 8 SECTION 4.03 Modification and Ratification of Pass Through Agreement. . . . . . . . . . . . . . . . . . . . . . . 8 SECTION 4.04 Termination. . . . . . . . . . . . . . . . . . . . . . 8 EXHIBIT A Form of Pass Through Certificate SCHEDULE I Equipment Trust Certificates; Related Indenture Documents SERIES SUPPLEMENT 1994-A310-A3 SERIES SUPPLEMENT 1994-A310-A3, dated March __, 1994 (this "Series Supplement"), to the Pass Through Trust Agreement, dated as of March 1, 1994 (the "Pass Through Agreement"), in each case between FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Company") and NATIONSBANK OF SOUTH CAROLINA, NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States of America, as Pass Through Trustee (the "Pass Through Trustee"). RECITALS WHEREAS, capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, Section 2.01 of the Pass Through Agreement provides, among other things, that the Company and the Pass Through Trustee may execute and deliver one or more series supplements, each for the purpose of forming a separate pass through trust for the benefit of the certificateholders of the series of pass through certificates to be issued pursuant to such pass through trust, establishing certain terms of such pass through certificates, and pursuant to which the pass through certificates of such series shall be executed and authenticated by the Pass Through Trustee and delivered as directed by the Company; WHEREAS, pursuant to the Participation Agreements, the Company has agreed to cause the Equipment Trust Certificates to be issued and sold to the Pass Through Trustee, and the Pass Through Trustee has agreed to purchase the Equipment Trust Certificates, which will be held in trust as Trust Property for the benefit of the Certificateholders; WHEREAS, in order to facilitate such sale, the Company has agreed, pursuant to the Underwriting Agreement, to cause the Pass Through Trustee to issue and sell the Pass Through Certificates to the Underwriters; WHEREAS, pursuant to the Pass Through Agreement and the terms of this Series Supplement, the Pass Through Trustee will execute, authenticate and deliver the Pass Through Certificates to the Underwriters upon receipt by the Pass Through Trustee of the purchase price therefor, which will be applied in accordance with this Series Supplement to purchase the Equipment Trust Certificates; WHEREAS, the Pass Through Trustee hereby declares the creation of this Pass Through Trust for the benefit of the Certificateholders, and the initial Certificateholders of such Pass Through Certificates, as the grantors of such Pass Through Trust, by their respective acceptances of such Pass Through Certificates, join in the creation of such Pass Through Trust; WHEREAS, to facilitate the sale of the Equipment Trust Certificates to, and the purchase of the Equipment Trust Certificates by, the Pass Through Trustee on behalf of this Pass Through Trust, the Company has duly authorized the execution and delivery of this Series Supplement as the "issuer," as such term is defined in and solely for purposes of the Securities Act, of the Pass Through Certificates and as the "obligor," as such term is defined in and solely for purposes of the Trust Indenture Act, with respect to all such Pass Through Certificates; and WHEREAS, this Series Supplement is subject to the provisions of the Trust Indenture Act and shall, to the extent applicable, be governed by such provisions; IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows: ARTICLE I CERTAIN DEFINITIONS All terms used in this Series Supplement that are defined in the Pass Through Agreement, either directly or by reference therein, have the meanings assigned to them therein as supplemented by this Article I, if applicable, except to the extent the context clearly requires otherwise. Any such defined term that is defined in the Pass Through Agreement as relating to a particular Pass Through Trust or Series rather than to any Pass Through Trust or Series generally shall, when used in this Series Supplement, relate solely to the Federal Express Corporation Pass Through Trust, 1994-A310-A3, or the Federal Express Corporation 1994 Pass Through Certificates, Series A310-A3, as the case may be, whether or not expressly so stated herein. "Authenticating Agent" has the meaning set forth in Section 3.05 hereof. "Certificate Account" means the Certificate Account specified in Section 3.03 hereof. "Certificateholders" means the Certificateholders of the Series of Pass Through Certificates designated in Section 2.01 hereof. "Equipment Trust Certificates" means those Equipment Trust Certificates listed in Schedule I hereto. "Issuance Date" means the date defined as the Closing Time in the Underwriting Agreement. "Participation Agreements" means those Participation Agreements listed in Schedule I hereto. "Pass Through Certificates" means the Pass Through Certificates designated in Section 2.01 hereof. "Pass Through Trust," "this Pass Through Trust" and other like words means the Pass Through Trust designated in Section 2.01 hereof. "Paying Agent" means the Person specified as such in Section 3.05 hereof. "Record Date" means any Record Date specified in Section 3.02 hereof. "Registrar" means the Person specified as such in Section 3.05 hereof. "Regular Distribution Date" means any Regular Distribution Date specified in Section 3.01 hereof. "Special Distribution Date" means, for any Special Payment, the Special Distribution Date for such Special Payment specified in Section 3.01 hereof. "Special Payments Account" means the Special Payments Account specified in Section 3.03 hereof. "Trust Property" means all money, instruments, including the Equipment Trust Certificates that have been issued by the related Owner Trustee and delivered to and accepted by the Pass Through Trustee for the benefit of the Certificateholders, and other property held as the property of this Pass Through Trust, including all distributions thereon and proceeds thereof. "Underwriters" means the several Underwriters named in the Underwriting Agreement. "Underwriting Agreement" means the Underwriting Agreement dated March 16, 1994 among the Company, Lufthansa, the Owner Participant, Goldman, Sachs & Co. and Merrill Lynch, Pierce, Fenner & Smith Incorporated. ARTICLE II DESIGNATIONS; PASS THROUGH TRUST FORMATION; ISSUANCE OF PASS THROUGH CERTIFICATES SECTION 2.01. Designations; Aggregate Amount. The Pass Through Trust created hereby shall be designated Federal Express Corporation Pass Through Trust, 1994-A310-A3 (herein sometimes called this "Pass Through Trust"). The Pass Through Certificates evidencing Fractional Undivided Interests in such Pass Through Trust shall be designated as the Federal Express Corporation 1994 Pass Through Certificates, Series A310-A3 (herein sometimes called the "Series A310-A3 Pass Through Certificates"). The Series A310-A3 Pass Through Certificates shall be the only instruments evidencing a fractional undivided interest in such Pass Through Trust. Except as provided in Section 2.09 of the Pass Through Agreement, the aggregate amount of Series A310-A3 Pass Through Certificates that may be authenticated, delivered and outstanding under this Series Supplement is limited to $77,141,000. SECTION 2.02. Declaration of Trust; Authorization. Each initial Certificateholder, by its payment for and acceptance of any Series A310-A3 Pass Through Certificate is hereby deemed (1) as grantor, to join in the creation and declaration of this Pass Through Trust and (2) as beneficiary of such Pass Through Trust, to authorize and direct the Pass Through Trustee to execute and deliver all documents to which the Pass Through Trustee is a party that may be necessary or desirable to consummate the transactions contemplated hereby and to exercise its rights and perform its duties under the Participation Agreements, the Indentures, the Pass Through Agreement and this Series Supplement. The Pass Through Trustee hereby acknowledges and accepts this grant of trust and declares that it will hold the Trust Property as Pass Through Trustee upon this Pass Through Trust for the use and benefit of the Certificateholders. SECTION 2.03. Issuance of Pass Through Certificates. Subject to the terms set forth herein, on the Issuance Date (i) the Company shall direct the Underwriters to execute a wire transfer or intra-bank transfer to the Pass Through Trustee in the amount of the total proceeds payable by such Underwriters pursuant to the Underwriting Agreement with respect to the Series A310-A3 Pass Through Certificates and (ii) the Pass Through Trustee shall deliver the Series A310-A3 Pass Through Certificates to the Underwriters as provided in the Underwriting Agreement upon receipt by the Pass Through Trustee of such proceeds. SECTION 2.04. Purchase of Equipment Trust Certificates. On the Issuance Date, the Pass Through Trustee shall purchase, in accordance with Section 2.02 of the Pass Through Agreement, each of the Equipment Trust Certificates upon the satisfaction or waiver of the conditions for such purchase by the Pass Through Trustee set forth in the related Participation Agreements. SECTION 2.05. Representations and Warranties of the Company. All of the representations and warranties of the Company set forth or incorporated by reference in Section 1 of the Underwriting Agreement are incorporated by reference in this Series Supplement as if set forth herein and the Company represents and warrants that such representations and warranties are true and correct on the date hereof, except to the extent that such representations and warranties expressly relate solely to an earlier date or later date (in which case such representations and warranties were correct on and as of such earlier date or will be correct on and as of such later date, as the case may be). SECTION 2.06. Conditions Precedent. The obligations of the Pass Through Trustee to participate in the transactions described in Sections 2.03 and 2.04 hereof are subject to (i) receipt by the Pass Through Trustee of a certificate of the Company to the same effect as the certificate of the Company delivered to the Underwriters pursuant to Section 5(c) of the Underwriting Agreement, and (ii) satisfaction or waiver of the conditions for the purchase by the Underwriters of the Pass Through Certificates set forth in Section 5 of the Underwriting Agreement, which satisfaction or waiver for the purposes hereof shall be conclusively demonstrated by the receipt by the Pass Through Trustee of the total proceeds payable by such Underwriters pursuant to the Underwriting Agreement with respect to the Series A310-A3 Pass Through Certificates. ARTICLE III DISTRIBUTION AND RECORD DATES; CERTIFICATE AND SPECIAL PAYMENT ACCOUNTS SECTION 3.01. Distribution Dates. The Regular Distribution Dates are March 23 and September 23, commencing on September 23, 1994. The Special Distribution Date for any month in which a Special Payment is to be distributed will be the twenty-third (23rd) day of such month, except that the Special Distribution Date for any Special Payment received by the Pass Through Trustee in connection with a prepayment of any Equipment Trust Certificate pursuant to Section 6.02(a)(i) or 6.02(a)(vi) of the related Indenture will correspond to the date of the receipt of such Special Payment by the Pass Through Trustee. Notice of such Special Payment shall be mailed as soon as practicable after receipt by the Pass Through Trustee of the notice of such prepayment. SECTION 3.02. Record Dates. The Record Dates for the Regular Distribution Dates are March 8 and September 8, respectively, and the Record Date for any Special Distribution Date is the fifteenth day preceding such Special Distribution Date, in any event, whether or not such date is a Business Day. SECTION 3.03. Certificate Account and Special Payments Account. In accordance with Section 5.01(a) of the Pass Through Agreement and upon receipt of any Scheduled Payment, the Pass Through Trustee shall immediately deposit such Scheduled Payment into the Certificate Account, a separate and non-interest bearing account designated by the Pass Through Trustee to be used for such purpose. In accordance with Section 5.01(b) of the Pass Through Agreement and upon receipt of any Special Payment, the Pass Through Trustee shall immediately deposit such Special Payment into the Special Payments Account, a separate and, except as provided in Section 5.04 of the Pass Through Agreement, non-interest bearing account designated by the Pass Through Trustee to be used for such purpose. SECTION 3.04. Form of Pass Through Certificates. Subject to Section 2.07 of the Pass Through Agreement, each of the Series A310-A3 Pass Through Certificates will be substantially in the form of Exhibit A hereto. SECTION 3.05. Appointment of Authenticating Agent; Paying Agent and Registrar. (a) The Pass Through Trustee may appoint an authenticating agent (the "Authenticating Agent") with respect to the Pass Through Certificates which shall be authorized to act on behalf of the Pass Through Trustee to authenticate the Pass Through Certificates issued upon original issue and upon exchange or registration of transfer thereof or pursuant to Section 2.09 of the Pass Through Agreement. Pass Through Certificates so authenticated shall be entitled to the benefits of the Pass Through Agreement and this Series Supplement and shall be valid and obligatory for all purposes as if authenticated by the Pass Through Trustee. Whenever reference is made in the Pass Through Agreement or this Series Supplement to the authentication and delivery of Pass Through Certificates by the Pass Through Trustee or the Pass Through Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Pass Through Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Pass Through Trustee by an Authenticating Agent. (b) The Paying Agent, Registrar and Authenticating Agent for the Series A310-A3 Pass Through Certificates initially shall be NationsBank of Georgia, National Association ("NationsBank of Georgia"), 600 Peachtree Street, N.E., GA1-006-09-11, Atlanta, Georgia 30308. The Company, the Pass Through Trustee and NationsBank of Georgia have entered into a Registrar, Authenticating and Paying Agency Agreement dated the date hereof which sets forth the rights, duties and obligations of the parties thereto with respect to the appointment of NationsBank of Georgia as Paying Agent, Registrar and Authenticating Agent for the Series A310-A3 Pass Through Certificates. ARTICLE IV MISCELLANEOUS SECTION 4.01. Governing Law; Counterpart Form. AS PROVIDED IN SECTION 13.14 OF THE PASS THROUGH AGREEMENT, THIS SERIES SUPPLEMENT AND EACH SERIES A310-A3 PASS THROUGH CERTIFICATE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Series Supplement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 4.02. Reports by the Company. In addition to the reports required to be provided by the Company pursuant to Section 4.03 of the Pass Through Agreement, the Company agrees to furnish to the Pass Through Trustee from time to time, such other financial information as the Pass Through Trustee may reasonably request. SECTION 4.03. Modification and Ratification of Pass Through Agreement. The Pass Through Agreement is incorporated herein by reference in its entirety, and shall be deemed to be a part of this Series Supplement as if set forth in full herein, and is in all respects ratified and confirmed, as supplemented and modified by this Series Supplement. SECTION 4.04. Termination. In no event shall this Pass Through Trust continue beyond the expiration of 21 years after the death of the last survivor of Mario Cuomo, Governor of New York State, living on the date of this Series Supplement. IN WITNESS WHEREOF, the parties have caused their names to be signed hereto by their respective officers or signatories thereunto duly authorized, all as of the day and year first above written. FEDERAL EXPRESS CORPORATION By:___________________________ Name: Title: NATIONSBANK OF SOUTH CAROLINA, NATIONAL ASSOCIATION, as Pass Through Trustee By:___________________________ Name: Title: Exhibit A to Series Supplement FORM OF PASS THROUGH CERTIFICATE FEDERAL EXPRESS CORPORATION PASS THROUGH TRUST, 1994-A310-A3 1994 Pass Through Certificate, Series A310-A3 Final Scheduled Regular Distribution Date: March 23, 2010 evidencing a fractional undivided interest in a pass through trust, the property of which includes certain Equipment Trust Certificates. Certificate No. _______ Applicable interest rate on Equipment Trust Certificates held in Pass Through Trust, 1994-A310-A3: 8.40%. $___________ Fractional Undivided Interest representing __________ of the Pass Through Trust per $1,000 face amount. THIS CERTIFIES THAT ______________, for value received, is the registered owner of a $_________ (_____________ dollars) Fractional Undivided Interest in the Federal Express Corporation Pass Through Trust, 1994-A310-A3 (the "Pass Through Trust") created and declared by NationsBank of South Carolina, National Association, as pass through trustee (the "Pass Through Trustee"), pursuant to the Pass Through Trust Agreement dated as of March 1, 1994 (the "Pass Through Agreement"), as supplemented by Series Supplement 1994-A310-A3 thereto dated March __, 1994 (the "Series Supplement") between the Pass Through Trustee and Federal Express Corporation, a Delaware corporation (the "Company"), a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Pass Through Agreement and the Series Supplement. This Pass Through Certificate is one of the duly authorized Pass Through Certificates designated as "Federal Express Corporation 1994 Pass Through Certificates, Series A310-A3." This Pass Through Certificate is issued under and is subject to the terms, provisions and conditions of the Pass Through Agreement and the Series Supplement, to which the Certificateholder of this Pass Through Certificate by virtue of the acceptance hereof assents and by which such Certificateholder is bound. The property of the Pass Through Trust (the "Trust Property") includes certain Equipment Trust Certificates (the "Equipment Trust Certificates"). Each series of Equipment Trust Certificates is secured as described in the related Indenture Documents. The Pass Through Certificates represent fractional undivided interests in the Pass Through Trust and the Trust Property, and have no rights, benefits or interests in respect of any other separate trust established pursuant to the terms of the Pass Through Agreement for any other Series of Pass Through Certificates issued pursuant thereto. Subject to and in accordance with the terms of the Pass Through Agreement and the Series Supplement, from funds then available to the Pass Through Trustee, there will be distributed on each March 23 and September 23 (a "Regular Distribution Date"), commencing on September 23, 1994, to the Person in whose name this Pass Through Certificate is registered at the close of business on the 15th day preceding the applicable Regular Distribution Date, an amount in respect of the Scheduled Payments on the Equipment Trust Certificates due on such Regular Distribution Date, equal to the product of the percentage interest in the Pass Through Trust evidenced by this Pass Through Certificate and an amount equal to the sum of such Scheduled Payments. Subject to and in accordance with the terms of the Pass Through Agreement and the Series Supplement, if Special Payments on the Equipment Trust Certificates are received by the Pass Through Trustee, from funds then available to the Pass Through Trustee, there shall be distributed on the applicable Special Distribution Date, to the Person in whose name this Pass Through Certificate is registered at the close of business on the 15th day preceding such Special Distribution Date, an amount in respect of such Special Payments on the Equipment Trust Certificates, equal to the product of the percentage interest in the Pass Through Trust evidenced by this Pass Through Certificate and an amount equal to the sum of such Special Payments so received. If a Distribution Date is not a Business Day, distribution shall be made on the immediately following Business Day with the same force and effect as if made on such Distribution Date and no interest shall accrue during the intervening period. The Special Distribution Date shall be the twenty-third (23rd) day of the month determined as provided in the Pass Through Agreement and the Series Supplement, except in certain circumstances, in which case it will be the date of receipt of proceeds by the Pass Through Trustee as provided in the Series Supplement. The Pass Through Trustee shall mail notice of each Special Payment and the Special Distribution Date therefor to the Certificateholder of this Pass Through Certificate. Distributions on this Pass Through Certificate will be made by the Pass Through Trustee to the Person entitled thereto, without the presentation or surrender of this Pass Through Certificate or the making of any notation hereon. Except as otherwise provided in the Pass Through Agreement and notwithstanding the above, the final distribution on this Pass Through Certificate will be made after notice is mailed by the Pass Through Trustee of the pendency of such distribution and only upon presentation and surrender of this Pass Through Certificate at the office or agency of the Pass Through Trustee specified in such notice. NO EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR INDIVIDUAL RETIREMENT ACCOUNT OR PLAN SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (HEREINAFTER COLLECTIVELY REFERRED TO AS AN "ERISA PLAN"), MAY ACQUIRE OR HOLD ANY OF THE PASS THROUGH CERTIFICATES. THE PURCHASE BY ANY PERSON OF ANY PASS THROUGH CERTIFICATE CONSTITUTES A REPRESENTATION BY SUCH PERSON TO FEDERAL EXPRESS CORPORATION, THE RELATED OWNER PARTICIPANTS, THE RELATED OWNER TRUSTEES, THE RELATED INDENTURE TRUSTEES AND THE PASS THROUGH TRUSTEE OR THEIR RESPECTIVE SUCCESSORS, AS THE CASE MAY BE, THAT SUCH PERSON IS NOT AN ERISA PLAN AND THAT SUCH PERSON IS NOT ACQUIRING, AND HAS NOT ACQUIRED, SUCH PASS THROUGH CERTIFICATE WITH ASSETS OF AN ERISA PLAN. This Pass Through Certificate shall be governed by and construed in accordance with the laws of the State of New York. Reference is hereby made to the further provisions of this Pass Through Certificate set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Pass Through Trustee, by manual signature, this Pass Through Certificate shall not be entitled to any benefit under the Pass Through Trust or be valid for any purpose. IN WITNESS WHEREOF, the Pass Through Trustee has caused this Pass Through Certificate to be duly executed. FEDERAL EXPRESS CORPORATION PASS THROUGH TRUST, 1994-A310-A3 By: NATIONSBANK OF SOUTH CAROLINA, NATIONAL ASSOCIATION, as Pass Through Trustee By: _______________________________ Authorized Signatory [FORM OF THE PASS THROUGH TRUSTEE'S CERTIFICATE OF AUTHENTICATION] Dated: This is one of the Pass Through Certificates referred to in the within-mentioned Pass Through Agreement and the Series Supplement. NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, as Registrar, Paying Agent and Authenticating Agent By: _______________________ Authorized Signatory [Reverse of Pass Through Certificate]. The Pass Through Certificates do not represent a direct obligation of, or an obligation guaranteed by, or an interest in, the Company or the Pass Through Trustee or any affiliate thereof. The Pass Through Certificates are limited in right of payment, all as more specifically set forth on the face hereof and in the Pass Through Agreement and the Series Supplement. All payments or distributions made to Certificateholders under the Pass Through Agreement shall be made only from the Trust Property and only to the extent that the Pass Through Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of the Pass Through Agreement and the Series Supplement. Each Certificateholder of this Pass Through Certificate, by its acceptance hereof, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to such Certificateholder as provided in the Pass Through Agreement and the Series Supplement. In connection with withholding taxes, under certain circumstances the Pass Through Trustee may retain certain amounts otherwise distributable to a Certificateholder. The purchase by any Certificateholder of any Pass Through Certificate constitutes the consent of such Certificateholder to such retention in accordance with the terms of the Pass Through Agreement. This Pass Through Certificate does not purport to summarize the Pass Through Agreement and the Series Supplement and reference is made to the Pass Through Agreement and the Series Supplement for information with respect to the interests, rights, benefits, obligations, proceeds and duties evidenced hereby. A copy of the Pass Through Agreement and the Series Supplement may be examined by any Certificateholder upon request during normal business hours at the principal office of the Pass Through Trustee, and at such other places designated by the Pass Through Trustee. As of the date of issuance of this Pass Through Certificate, and assuming that no prepayment, purchase or default in respect of the Equipment Trust Certificates shall occur, the aggregate scheduled repayments of principal on the Equipment Trust Certificates for the Pass Through Trust and the resulting Pool Factors for the Pass Through Trust after taking into account each such repayment are set forth below: Pass Through Trust, 1994-A310-A3 Scheduled Principal Regular Payments Distribution on Equipment Trust Date Certificates Pool Factor ---- ------------ ----------- March 23, 2007 $ 506,831 0.9934298 September 23, 2007 5,095,578 0.9273744 March 23, 2008 7,462,181 0.8306401 September 23, 2008 9,901,672 0.7022820 March 23, 2009 23,713,444 0.3948781 September 23, 2009 19,517,155 0.1418719 March 23, 2010 10,944,139 0.0000000 The Pass Through Agreement and the Series Supplement permit, with certain exceptions provided therein, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Certificateholders under the Pass Through Trust at any time by the Company and the Pass Through Trustee with the consent of the Majority In Interest of Certificateholders in the Pass Through Trust. Any such consent by the Certificateholder of this Pass Through Certificate shall be conclusive and binding on such Certificateholder and upon all future Certificateholders of this Pass Through Certificate and of any Pass Through Certificate issued upon the transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent is made upon this Pass Through Certificate. The Pass Through Agreement and the Series Supplement also permit the amendment thereof, in certain limited circumstances, without the consent of the Certificateholders of any of the Pass Through Certificates. As provided in the Pass Through Agreement and the Series Supplement and subject to certain limitations set forth therein, the transfer of this Pass Through Certificate is registrable in the Register upon surrender of this Pass Through Certificate for registration of transfer to the Pass Through Trustee in its capacity as Registrar, or by any successor Registrar, duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Pass Through Trustee and the Registrar duly executed by the Certificateholder hereof or such Certificateholder's attorney duly authorized in writing, and thereupon one or more new Pass Through Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Pass Through Trust will be issued to the designated transferee or transferees. The Pass Through Certificates are issuable only as registered Pass Through Certificates without coupons in minimum denominations of $1,000 Fractional Undivided Interest and integral multiples thereof. As provided in the Pass Through Agreement and the Series Supplement and subject to certain limitations set forth therein, the Pass Through Certificates are exchangeable for new Pass Through Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Pass Through Trust, as requested by the Certificateholder surrendering the same. No service charge will be made for any such registration of transfer or exchange, but the Pass Through Trustee shall require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith. The Pass Through Trustee, the Registrar, and any agent of the Pass Through Trustee or the Registrar may treat the person in whose name this Pass Through Certificate is registered as the owner hereof for all purposes, and neither the Pass Through Trustee, the Registrar, nor any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Pass Through Agreement and the Series Supplement and the Pass Through Trust created thereby shall terminate upon the distribution to Certificateholders of all amounts required to be distributed to them pursuant to the Pass Through Agreement and the Series Supplement and the disposition of all property held as part of the Trust Property. Schedule I to Series Supplement Federal Express Corporation Pass Through Trust, 1994-A310-A3 Equipment Trust Certificates; Related Indenture Documents 1. Equipment Trust Certificates (Federal Express Corporation Trust A) Interest Rate: 8.40% Maturity: March 23, 2009 Principal Amount: $7,185,793 2. Equipment Trust Certificates (Federal Express Corporation Trust B) Interest Rate: 8.40% Maturity: March 23, 2009 Principal Amount: $7,671,680 3. Equipment Trust Certificates (Federal Express Corporation Trust C) Interest Rate: 8.40% Maturity: March 23, 2009 Principal Amount: $7,229,706 4. Equipment Trust Certificates (Federal Express Corporation Trust D) Interest Rate: 8.40% Maturity: September 23, 2009 Principal Amount: $8,310,464 5. Equipment Trust Certificates (Federal Express Corporation Trust E) Interest Rate: 8.40% Maturity: September 23, 2009 Principal Amount: $6,747,347 6. Equipment Trust Certificates (Federal Express Corporation Trust F) Interest Rate: 8.40% Maturity: September 23, 2009 Principal Amount: $4,952,842 7. Equipment Trust Certificates (Federal Express Corporation Trust G) Interest Rate: 8.40% Maturity: September 23, 2009 Principal Amount: $5,349,330 8. Equipment Trust Certificates (Federal Express Corporation Trust H) Interest Rate: 8.40% Maturity: September 23, 2009 Principal Amount: $4,316,177 9. Equipment Trust Certificates (Federal Express Corporation Trust I) Interest Rate: 8.40% Maturity: March 23, 2010 Principal Amount: $4,513,303 10. Equipment Trust Certificates (Federal Express Corporation Trust J) Interest Rate: 8.40% Maturity: March 23, 2010 Principal Amount: $4,765,886 11. Equipment Trust Certificates (Federal Express Corporation Trust K) Interest Rate: 8.40% Maturity: March 23, 2010 Principal Amount: $5,497,933 12. Equipment Trust Certificates (Federal Express Corporation Trust L) Interest Rate: 8.40% Maturity: March 23, 2010 Principal Amount: $5,198,577 13. Equipment Trust Certificates (Federal Express Corporation Trust M) Interest Rate: 8.40% Maturity: March 23, 2010 Principal Amount: $5,401,962 Related Indenture Documents: Trust Indenture and Security Agreement (Federal Express Corporation Trust A through M), dated as of March 1, 1994, between First Security Bank of Utah, National Association, as Owner Trustee and NationsBank of Georgia, National Association, as Indenture Trustee.* Trust Agreement dated as of September 1, 1993, as amended and restated as of March 1, 1994, between LLG Aircraft Leasing, L.P., as Trustor, and First Security Bank of Utah, National Association, as Owner Trustee. Participation Agreement (Federal Express Corporation Trust A through M), dated as of March 1, 1994, among Federal Express Corporation, as Lessee, LLG Aircraft Leasing, L.P., as Owner Participant, NationsBank of South Carolina, National Association, as Pass Through Trustee, First Security Bank of Utah, National Association, as Owner Trustee, NationsBank of Georgia, National Association, as Indenture Trustee and Westdeutsche Landesbank Girozentrale, New York Branch, as LC Bank.** Collateral Agreement (Trust A through M), dated as of March 1, 1994, between First Security Bank of Utah, National Association, as Owner Trustee, and NationsBank of Georgia, National Association, as Indenture Trustee.*** Letter of Credit to be dated the Closing Date referred to in the related Participation Agreement, from Westdeutsche Landesbank Girozentrale, New York Branch, to NationsBank of Georgia, National Association, as Indenture Trustee;**** Lease Agreement (Federal Express Corporation Trust A through M) to be dated on or prior to the related Commencement Date referred to in the related Participation Agreement (or the form thereof prior to such Commencement Date), between First Security Bank of Utah, National Association, as Owner Trustee and Lessor and Federal Express Corporation as Lessee.***** With respect to each of Trusts A through M, the other Indenture Documents defined as such in the related Trust Indenture. * A separate Trust Indenture will be executed with respect to each of Trusts A through M. ** A separate Participation Agreement will be execution with respect to each of the Trusts A through M. *** A separate Collateral Agreement will be executed with respect to each of Trusts A through M. **** A separate Letter of Credit will be executed with respect to each of Trusts A through M. ***** A separate Lease Agreement will be executed with respect to each of Trusts A through M. EX-4.B.1 5 Exhibit 4.b.1 TRUST INDENTURE AND SECURITY AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST ____) Dated as of March 1, 1994 BETWEEN FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, Owner Trustee, AND NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, Indenture Trustee COVERING ONE AIRBUS MODEL A310-203 AIRCRAFT SERIAL NO. ___________ TABLE OF CONTENTS Page RECITALS . . . . . . . . . . . . . . . . . . . . 1 GRANTING CLAUSE . . . . . . . . . . . . . . . . . 2 HABENDUM CLAUSE . . . . . . . . . . . . . . . . . 6 Article I DEFINITIONS SECTION 1.01. Definitions . . . . . . . . . . . 9 Article II ISSUE, EXECUTION, FORM AND REGISTRATION OF CERTIFICATES SECTION 2.01. Authentication and Delivery of Certificates . . . . . . . . . . 9 SECTION 2.02. Execution of Certificates . . . . 9 SECTION 2.03. Certificate of Authentication . . 10 SECTION 2.04. Form and Terms of Certificates; Payments of Principal, Make-Whole Premium and Interest . . . . . . 10 SECTION 2.05. Payments from Trust Indenture Estate Only . . . . . . . . . . 12 SECTION 2.06. Registration, Transfer and Exchange 13 SECTION 2.07. Mutilated, Defaced, Destroyed, Lost and Stolen Certificates . . . . 14 SECTION 2.08. Cancellation of Certificates; Destruction Thereof . . . . . . 16 SECTION 2.09. Temporary Certificates . . . . . . 16 SECTION 2.10. Termination of Interest in Trust Indenture Estate . . . . . 17 SECTION 2.11. Certificates in Respect of Replacement Engines . . . . . . 17 SECTION 2.12 Assumption of Obligations Under Certificates and Other Operative Agreements . . . . . . . . . . . 17 Article III COVENANTS SECTION 3.01. Payment of Principal, Make-Whole Premium and Interest . . . . . . 17 SECTION 3.02. Offices for Payments, etc. . . . . 18 SECTION 3.03. Appointment to Fill a Vacancy in Office of Indenture Trustee . . 18 SECTION 3.04. Paying Agents . . . . . . . . . . 18 SECTION 3.05. Covenants of First Security and the Owner Trustee . . . . . 19 SECTION 3.06. Intentionally Left Blank . . . . . 20 SECTION 3.07. Disposal of Trust Indenture Estate . . . . . . . . . . . . . 20 SECTION 3.08. No Representations or Warranties as to Aircraft or Documents . . . . 20 SECTION 3.09. Further Assurances; Financing Statements . . . . . . . . . . . 21 Article IV HOLDER LISTS SECTION 4.01. Holder Lists; Ownership of Certificates . . . . . . . . 22 Article V RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 5.01. Basic Rent and Other Debt Service Distribution . . . . . . 22 SECTION 5.02. Pre-Funding Event of Loss or Event of Loss; Prepayment . . . . . . . 23 SECTION 5.03. Payment After Indenture Event of Default, etc. . . . . . . . . 24 SECTION 5.04. Certain Payments . . . . . . . . . 25 SECTION 5.05. Other Payments . . . . . . . . . . 25 SECTION 5.06. Payments to Owner Trustee . . . . 26 SECTION 5.07. Application of Payments . . . . . 26 SECTION 5.08. Investment of Amounts Held by Indenture Trustee . . . . . . . 26 SECTION 5.09. Withholding Taxes . . . . . . . . 27 Article VI PREPAYMENT OF CERTIFICATES SECTION 6.01. No Prepayment Prior to Maturity . 28 SECTION 6.02. Prepayment of Certificates . . . . 28 SECTION 6.03. Notice of Prepayment to Holders . 30 SECTION 6.04. Deposit of Prepayment Price and Sinking Fund Redemption Price . 30 SECTION 6.05. Certificates Payable on Prepayment Date . . . . . . . . 31 SECTION 6.06. Mandatory Sinking Fund Redemption . . . . . . . . . . . 31 Article VII INDENTURE EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE AND HOLDERS SECTION 7.01. Indenture Event of Default . . . 33 SECTION 7.02. Remedies . . . . . . . . . . . . 37 SECTION 7.03. Return of Trust Indenture Estate, etc. . . . . . . . . . 40 SECTION 7.04. Indenture Trustee May Prove Debt 45 SECTION 7.05. Remedies Cumulative . . . . . . . 47 SECTION 7.06. Suits for Enforcement . . . . . . 47 SECTION 7.07. Discontinuance of Proceedings . . 47 SECTION 7.08. Limitations on Suits by Holders . . . . . . . . . . . . 48 SECTION 7.09. Unconditional Right of Holders to Receive Principal, Interest and Make-Whole Premium, and to Institute Certain Suits . . . . 49 SECTION 7.10. Control by Holders . . . . . . . 49 SECTION 7.11. Waiver of Past Indenture Default 50 SECTION 7.12. Notice of Indenture Default . . . 50 SECTION 7.13. Waiver of Appraisement, etc.; Laws 50 Article VIII RIGHTS OF THE OWNER TRUSTEE AND THE OWNER PARTICIPANT SECTION 8.01. Certain Rights of Owner Trustee and Owner Participant . . . . . 51 SECTION 8.02. Owner Participant's Right to Elect to Prepay or Purchase the Certificates . . . . . . . . . . 55 SECTION 8.03. Certain Rights of Owner Participant 57 Article IX CONCERNING THE INDENTURE TRUSTEE SECTION 9.01. Acceptance of Trusts . . . . . . . 59 SECTION 9.02. Duties and Responsibilities of the Indenture Trustee; During an Indenture Event of Default; Prior to an Indenture Event of Default . . . . . . . . 59 SECTION 9.03. Certain Rights of the Indenture Trustee . . . . . . . . . . . . 62 SECTION 9.04. Indenture Trustee Not Responsible for Recitals, Disposition of Certificates or Application of Proceeds Thereof . . . . . . . . 63 SECTION 9.05. Indenture Trustee and Agents May Hold Certificates; Collections, etc. . . . . . . . . . . . . . . 63 SECTION 9.06. Moneys Held by Indenture Trustee . 64 SECTION 9.07. Right of Indenture Trustee to Rely on Officers' Certificate, etc. . 64 SECTION 9.08. Replacement Engines . . . . . . . 64 SECTION 9.09. Indenture and Security Agreement Supplement for Replacements . . 66 SECTION 9.10. Effect of Replacement . . . . . . 67 SECTION 9.11. Compensation . . . . . . . . . . . 67 Article X CONCERNING THE HOLDERS SECTION 10.01. Evidence of Action Taken by Holders . . . . . . . . . . . . 68 SECTION 10.02. Proof of Execution of Instruments and of Holding of Certificates 68 SECTION 10.03. Holders to Be Treated as Owners . 68 SECTION 10.04. Certificates Owned by Owner Trustee and the Lessee Deemed Not Outstanding . . . . . . . . 69 SECTION 10.05. Right of Revocation of Action Taken . . . . . . . . . . . . . 70 SECTION 10.06. ERISA Plan Prohibition . . . . . 70 Article XI INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE . . . . . . . . . 71 Article XII SUCCESSOR TRUSTEES SECTION 12.01. Notice of Successor Owner Trustee 72 SECTION 12.02. Resignation and Removal of Indenture Trustee; Appointment of Successor . . . . . . . . . 72 SECTION 12.03. Persons Eligible for Appointment as Indenture Trustee . . . . . 74 SECTION 12.04. Acceptance of Appointment by Successor Trustee . . . . . . . 74 SECTION 12.05. Merger, Conversion, Consolidation or Succession to Business of Indenture Trustee . . . . . . . 75 SECTION 12.06. Appointment of Separate Trustees 76 Article XIII SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE AND OTHER DOCUMENTS SECTION 13.01. Supplemental Indentures Without Consent of Holders . . . . . . 78 SECTION 13.02. Supplemental Indentures With Consent of Holders . . . . . . 80 SECTION 13.03. Effect of Supplemental Indenture 81 SECTION 13.04. Documents to Be Given to Indenture Trustee . . . . . . . . . . . . 82 SECTION 13.05. Notation on Certificates in Respect of Supplemental Indentures . . 82 SECTION 13.06. No Request Necessary for Lease Supplement or Indenture and Security Agreement Supplement . 82 Article XIV SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS SECTION 14.01. Satisfaction and Discharge of Indenture; Termination of Indenture . . . . . . . . . . . 83 SECTION 14.02. Application by Indenture Trustee of Funds Deposited for Payment of Certificates . . . . . . . . . 85 SECTION 14.03. Repayment of Moneys Held by Paying Agent . . . . . . . . . . . . . 85 SECTION 14.04. Transfer of Moneys Held by Indenture Trustee and Paying Agent Unclaimed for Two Years and Eleven Months . . . . . . . 85 Article XV MISCELLANEOUS SECTION 15.01. Capacity in Which Acting . . . . 86 SECTION 15.02. No Legal Title to Trust Indenture Estate in Holders . . . . . . . 86 SECTION 15.03. Sale of Trust Indenture Estate by Indenture Trustee is Binding . 86 SECTION 15.04. Indenture for Benefit of Owner Trustee, Indenture Trustee, Owner Participant and Holders . . . . 86 SECTION 15.05. No Action Contrary to the Lessee's Rights Under the Lease . . . . 86 SECTION 15.06. Notices . . . . . . . . . . . . . 87 SECTION 15.07. Officers' Certificates and Opinions of Counsel; Statements to Be Contained Therein . . . . . . . 88 SECTION 15.08 Severability . . . . . . . . . . 89 SECTION 15.09. No Oral Modifications or Continuing Waivers . . . . . . . . . . . . 89 SECTION 15.10. Successors and Assigns . . . . . 89 SECTION 15.11. Headings . . . . . . . . . . . . 90 SECTION 15.12. Normal Commercial Relations . . . 90 SECTION 15.13. Governing Law; Counterpart Form . 90 EXHIBIT A - Form of Indenture and Security A-1 Agreement Supplement EXHIBIT B - Form of Certificate A-2 Schedule I - Intentionally Left Blank Schedule II - Definitions Appendix A - Sinking Fund Redemption Date Information TRUST INDENTURE AND SECURITY AGREEMENT (Federal Express Corporation Trust ____) TRUST INDENTURE AND SECURITY AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST _____), dated as of March 1, 1994, between First Security Bank of Utah, National Association, a national banking association, not in its individual capacity, except as otherwise specifically set forth herein (when acting in such individual capacity, "First Security"), but solely as owner trustee (the "Owner Trustee") under the Trust Agreement, as defined herein, and NationsBank of Georgia, National Association, a national banking association, as Indenture Trustee hereunder (the "Indenture Trustee"). W I T N E S S E T H: WHEREAS, capitalized terms used herein shall have the respective meanings ascribed to them in Article I hereof; WHEREAS, the parties hereto desire to enter into this Indenture in order to provide, among other things, (i) for the issuance by the Owner Trustee of the Certificates, the proceeds of which will be used by the Owner Trustee to pay a portion of the Purchase Price, the Modification Cost and Parts Cost for the Aircraft and an allocable amount of the Pass Through Closing Expenses, and (ii) for the assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate hereunder of the Owner Trustee's right, title and interest in the Liquid Collateral, Demand Note Collateral and the Agreement to Lease, and after the Exchange Date for the assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate hereunder, of certain of the Owner Trustee's right, title and interest, present or future (so long as the Lien of this Indenture is outstanding), in and to, among other things, the Aircraft, the Lease and payments and other amounts received hereunder or thereunder in accordance with the terms hereof (other than Excepted Payments), as security for the Owner Trustee's obligations to the Holders and for the ratable benefit and security of such Holders; WHEREAS, the Owner Participant and First Security, prior to the execution and delivery of this Indenture, entered into the Trust Agreement whereby, among other things, the Owner Trustee has declared a certain trust for the use and benefit of the Owner Participant, subject, however, to the Lien of this Indenture, and pursuant to which, among other things, the Owner Trustee is authorized and directed to execute and deliver this Indenture; WHEREAS, all things have been done to make the Certificates, when executed, issued and delivered by the Owner Trustee and authenticated and delivered by the Indenture Trustee hereunder, the valid obligations of the Owner Trustee; and WHEREAS, all things necessary to make this Indenture the valid, binding and legal obligation of the Owner Trustee, enforceable in accordance with its terms, have been done and performed and have happened; GRANTING CLAUSE NOW, THEREFORE, in consideration of the mutual promises contained herein and to secure (i) the prompt payment of the principal of and Make-Whole Premium, if any, and interest on, and all other amounts due with respect to, all Certificates from time to time outstanding under this Indenture and all other amounts due hereunder or under the Collateral Agreement and (ii) the performance and observance by the Owner Trustee of all the agreements, covenants and provisions for the benefit of the Holders of the Certificates or the Indenture Trustee contained in this Indenture, in the Certificates, in the Participation Agreement, in the Collateral Agreement and in the Lease, and the prompt payment of any and all amounts from time to time owing under the Participation Agreement by the Owner Trustee or the Owner Participant to the Holders or the Indenture Trustee or by the Lessee to the Indenture Trustee, as the case may be (the obligations referred to in clauses (i) and (ii), the "Secured Obligations"), and for the uses and purposes and subject to the terms and provisions of this Indenture, and in consideration of the premises and of the covenants in this Indenture and in the Certificates and of the purchase of the Certificates by their Holders, and of the sum of $1 paid to the Owner Trustee by the Indenture Trustee at or before the delivery of this Indenture, the receipt and sufficiency of which is hereby acknowledged, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged, granted a security interest in and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and grant a security interest in and confirm to the Indenture Trustee, its successors and assigns, in trust for the equal and ratable security and benefit of the Holders from time to time of the Certificates, a first priority security interest in and first Lien on all estate, right, title and interest of the Owner Trustee in, to and under the following described property, rights and privileges other than Excepted Payments, which collectively, excluding Excepted Payments and subject to the rights granted to the Owner Trustee or the Owner Participant hereunder, including without limitation, the rights of the Owner Participant and the Owner Trustee under Sections 2.05, 7.02, 8.01, 8.02, 8.03, 13.01 and 13.02 hereof but including all property specifically subjected to the Lien of this Indenture by the terms hereof, by any Indenture and Security Agreement Supplement or any mortgage supplemental to this Indenture, are included within the Trust Indenture Estate: (1) On and after the Exchange Date, the Airframe, as the same is more particularly described in the Indenture and Security Agreement Supplement; the Engines, as the same are more particularly described in the Indenture and Security Agreement Supplement, whether or not such Engines shall be installed in or attached to the Airframe or any other airframe, and any Replacement Engine(s) therefor; and all Parts in respect of the Airframe and the Engines and all records, logs and other documents at any time maintained with respect to the foregoing property; (2) On and after the Exchange Date, the Lease and all Rent thereunder, including, without limitation, all amounts of Basic Rent and Supplemental Rent, and payments of any kind thereunder and including all rights of the Owner Trustee to execute any election or option or to give or receive any notice, consent, waiver or approval under or in respect of the Lease or to accept any surrender of the Aircraft or any part thereof as well as any rights, powers or remedies on the part of the Owner Trustee, whether arising under the Lease or by statute or at law or in equity or otherwise arising out of any Event of Default (except to the extent relating to Excepted Payments); (3) On and after the Exchange Date, rights of the Owner Trustee under the Sales Agreement (to the extent relating to the Aircraft), the Modification Agreement (to the extent relating to the Aircraft), the Parts and Services Agreement (to the extent relating to the Aircraft), the Bills of Sale, including all rights of the Owner Trustee under any such documents to execute any election or option, to make or pursue any claim, or to give or receive any notice, consent, waiver or approval thereunder or in respect thereof; (4) Rights of the Owner Trustee under the Participation Agreement (to the extent of amounts payable to the Owner Trustee thereunder), including all rights of the Owner Trustee to execute any election or option or to give or receive any notice, consent, waiver or approval under or in respect thereof; (5) Until the Commencement Date, rights of the Owner Trustee under the Agreement to Lease (to the extent relating to the Aircraft), including all rights of the Owner Trustee to execute any election or option or to give or receive any notice, consent, waiver or approval thereunder or in respect thereof (except to the extent relating to Excepted Payments); (6) All the tolls, rents, issues, profits, products, revenues and other income (including sales proceeds) of the property subjected or required to be subjected to the Lien of this Indenture, and all of the estate, right, title and interest of the Owner Trustee in and to the same and every part of said property; (7) All moneys and securities (including Permitted Investments) now or hereafter paid or deposited or required to be paid or deposited to or with the Indenture Trustee by or for the account of the Owner Trustee pursuant to any term of any Operative Agreement, except the Tax Indemnity Agreement, and held or required to be held by the Indenture Trustee hereunder; (8) On and after the Exchange Date, all requisition proceeds with respect to the Aircraft or any part thereof (to the extent of the Owner Trustee's interest therein pursuant to the terms of the Lease) and all insurance proceeds with respect to the Aircraft or any part thereof from insurance required to be maintained by the Lessee under Article 13 of the Lease, but excluding any insurance maintained by the Lessee and not required under Article 13 of the Lease; (9) On and after the Exchange Date, all amounts, subleases or other property from time to time held as security for the Lessee's obligations pursuant to the Lease; (10) All proceeds of the foregoing; and (11) The Liquid Collateral and the Demand Note Collateral. Notwithstanding the foregoing provisions: (a) there shall be excluded from the security interest granted by this Indenture all Excepted Payments; (b) (i) The Owner Trustee and the Owner Participant shall at all times retain the right, to the exclusion of the Indenture Trustee, (A) to Excepted Payments and to commence an action at law to obtain such Excepted Payments, (B) to exercise any election or option to make any decision or determination, or to give or receive any notice, consent, waiver or approval, or to take any other action in respect of, but in each case only to the extent relating to, Excepted Payments, (C) to retain the rights of the "Lessor" with respect to solicitations of bids, and the election to retain the Aircraft, pursuant to Article 10 of the Lease, (D) to retain the right of "Lessor" to determine the Fair Market Rental or Fair Market Value pursuant to Article 4 of the Lease, (E) to retain all rights with respect to insurance maintained for its own account which Section 13.05 of the Lease specifically confers on the "Lessor" and (F) to exercise, to the extent necessary to enable it to exercise its rights under Section 8.03 hereof, the rights of the "Lessor" under Section 17.04 of the Lease; (ii) At all times each of the Owner Trustee and the Indenture Trustee shall have the right, separately but not to the exclusion of the other, (A) to receive from the Lessee all notices, certificates, reports, filings, opinions of counsel, copies of all documents and all information which the Lessee is permitted or required to give or furnish to the "Lessor" pursuant to the Lease or to the Owner Trustee pursuant to any other Operative Agreement, (B) to exercise inspection rights pursuant to Section 14.01 of the Lease, (C) to maintain separate insurance pursuant to Section 13.05 of the Lease and to retain all rights with respect to such insurance maintained for its own account, (D) to give any notice of a Default or an Event of Default under Section 17.01 of the Lease, (E) to cause the Lessee to take any action and execute and deliver such documents and assurances as the "Lessor" may from time to time reasonably request pursuant to Section 19.01 of the Lease; and (F) the right to consent to changes to the list of countries on Schedule III to the Participation Agreement; (iii) So long as no Indenture Event of Default shall have occurred and be continuing (but subject to the provisions of Section 8.01 hereof), the Owner Trustee shall retain the right, to the exclusion of the Indenture Trustee, and jointly with the Indenture Trustee during the continuation of any Indenture Event of Default (the action of both being required), to exercise the following rights of the "Lessor" under the Lease: the right to approve as satisfactory any accountants, engineers, appraisers or counsel to render services for or issue appraisals, reports, certificates or opinions to the Owner Trustee pursuant to express provisions of the Operative Agreements; (c) the leasehold interest granted to the Lessee by the Lease shall not be subject to the security interest granted by this Indenture and nothing in this Indenture shall affect the rights of the Lessee under the Lease so long as no Event of Default has occurred and is continuing; and (d) as between the Owner Trustee and the Indenture Trustee, nothing contained in this Granting Clause shall, at any time on or after the Commencement Date prevent the Owner Trustee, as the "Lessor" under the Lease, from seeking specific performance of the covenants of the Lessee under the Lease relating to the protection, insurance, maintenance, possession and use of the Aircraft and from maintaining separate insurance with respect to the Aircraft to the extent permitted by Article 13 of the Lease. None of the payments and rights described in the foregoing clauses (a), (b)(i) and (d) above shall be included in the Trust Indenture Estate. HABENDUM CLAUSE TO HAVE AND TO HOLD the aforesaid property unto the Indenture Trustee, its successors and assigns, in trust for the equal and ratable benefit and security of the Holders from time to time of the Certificates, without any priority of any one Certificate over any other and for the uses and purposes and subject to the terms and conditions set forth in this Indenture. It is expressly agreed that anything contained in this Indenture to the contrary notwithstanding, the Owner Trustee shall remain liable under the Indenture Documents to perform all of the obligations assumed by it under any of those documents, all in accordance with and pursuant to the terms and provisions of those documents, and the Indenture Trustee and the Holders of the Certificates shall have no obligation or liability under the Indenture Documents by reason of or arising out of the assignment under this Indenture, nor shall the Indenture Trustee or the Holders of the Certificates be required or obligated in any manner to perform or fulfill any obligations of the Owner Trustee under or pursuant to the Indenture Documents or, except as expressly provided in this Indenture, to make any payment, or to make any inquiry as to the nature or sufficiency of any payment received by it, or present or file any claim, or take any action to collect or enforce the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. The Owner Trustee hereby constitutes the Indenture Trustee the true and lawful attorney of the Owner Trustee, irrevocably, with full power (in the name of the Owner Trustee or otherwise), subject to the terms and conditions of this Indenture, to ask, require, demand, receive, compound and give acquittance for any and all Basic Rent, Supplemental Rent payable to the Owner Trustee, Stipulated Loss Value and Termination Value payments, insurance proceeds and any and all moneys and claims for moneys due and to become due under or arising out of the Lease (subject to Section 8.01 hereof) or the other Indenture Documents (other than Excepted Payments), to endorse any checks or other instruments or orders in connection with the same and to file any claims, take any action or institute any proceeding which the Indenture Trustee may deem to be necessary or advisable in the premises. Under the Lease the Lessee will be directed to make all payments of Rent on or after the Exchange Date (other than Excepted Payments) payable to the Owner Trustee and all other amounts (other than Excepted Payments) which are required to be paid to or deposited with the Owner Trustee pursuant to the Lease directly to the Indenture Trustee at such address in the United States of America as the Indenture Trustee shall specify for application as provided in this Indenture. The Owner Trustee agrees that if, notwithstanding such provision, it shall have received any such amounts, promptly on receipt of any such payment, it will transfer to the Indenture Trustee any and all moneys from time to time received by the Owner Trustee constituting part of the Trust Indenture Estate for distribution by the Indenture Trustee pursuant to this Indenture, except that the Owner Trustee shall accept for distribution pursuant to the Trust Agreement (i) any amounts distributed to it by the Indenture Trustee under this Indenture, and (ii) any Excepted Payments. The Owner Trustee agrees that at any time and from time to time, upon the written request of the Indenture Trustee, the Owner Trustee will promptly and duly execute and deliver or cause to be duly executed and delivered any and all such further instruments and documents as the Indenture Trustee may reasonably deem desirable in obtaining the full benefits of the assignment hereunder and of the rights and powers herein granted; provided, however, that the Owner Trustee shall have no obligation to execute and deliver or cause to be executed or delivered to the Indenture Trustee any such instrument or document if such execution and delivery would result in the imposition of additional liabilities on the Owner Trustee or the Owner Participant or would result in a burden on the Owner Participant's business activities, unless the Owner Trustee or the Owner Participant, as the case may be, is indemnified to its reasonable satisfaction against any losses, liabilities and expenses incurred in connection with such execution and delivery pursuant to any Operative Agreement. The Owner Trustee does hereby warrant and represent that it has not assigned or pledged, and hereby covenants that it will not assign or pledge, so long as the assignment hereunder shall remain in effect, any of its right, title or interest hereby assigned, to anyone other than the Indenture Trustee, and that it will not, except as provided in or permitted by this Indenture, accept any payment from the Lessee, enter into an agreement amending or supplementing any of the Operative Agreements, execute any waiver or modification of, or consent under the terms of any of the Operative Agreements, settle or compromise any claim (other than claims in respect of Excepted Payments) against the Lessee arising under any of the Operative Agreements, or submit or consent to the submission of any dispute, difference or other matter arising under or in respect of any of the Operative Agreements, to arbitration thereunder. Concurrently with the delivery of this Indenture the Owner Trustee has delivered to the Indenture Trustee executed counterparts of the Trust Agreement, the Agreement to Lease and the sole original counterparts of the Demand Notes, and executed counterparts or certified copies of the Sales Agreement, the Modification Agreement and the Parts and Services Agreement. On the Commencement Date, the Owner Trustee will deliver to the Indenture Trustee executed copies of the Trust Agreement Supplement. On the Exchange Date, the Owner Trustee will deliver to the Indenture Trustee in New York the chattel paper original counterparts of the Lease and the Lease Supplement. It is hereby further covenanted and agreed by and between the parties as follows: (i) subject to the satisfaction or waiver of the conditions precedent to commencement of the Lease and to the Indenture Trustee's obligations set forth in Section 4 of the Agreement to Lease and Sections 4.02 and 4.03, as the case may be, of the Participation Agreement (such satisfaction or waiver to be confirmed by a certificate of the Owner Participant), on the Exchange Date the Indenture Trustee shall release from the Collateral Account any Demand Note Collateral then held by the Indenture Trustee, and (ii) the Indenture Trustee shall not demand any payment under the Demand Notes except as under circumstances set forth in the Collateral Agreement or as contemplated by Section 7.02 or 7.03 hereof. Article I DEFINITIONS SECTION 1.01. Definitions. Unless the context otherwise requires, capitalized terms utilized herein shall have the meanings set forth in Schedule II hereto for all purposes of this Indenture and shall be equally applicable to both the singular and plural forms of the terms defined. Article II ISSUE, EXECUTION, FORM AND REGISTRATION OF CERTIFICATES SECTION 2.01. Authentication and Delivery of Certificates. Forthwith upon the execution and delivery of this Indenture, and from time to time thereafter, Certificates in an aggregate principal amount not in excess of the amount specified in Section 2.04 hereof (except as otherwise provided in Sections 2.06 and 2.07 hereof) shall be executed by the Owner Trustee and delivered to the Indenture Trustee for authentication, and the Indenture Trustee shall thereupon authenticate and deliver said Certificates to or upon the oral or written order of the Owner Trustee, signed, if written, by an authorized officer of the Owner Trustee, without any further action by the Owner Trustee. SECTION 2.02. Execution of Certificates. The Certificates shall be signed on behalf of the Owner Trustee by an authorized officer of First Security. Such signatures may be the manual or facsimile signatures of such officer and minor errors or defects in any reproduction of any such signature shall not affect the validity or enforceability of any Certificate which has been duly authenticated and delivered by the Indenture Trustee. In case any officer of First Security who shall have signed any of the Certificates shall cease to be such officer before the Certificate so signed shall be authenticated and delivered by the Indenture Trustee or disposed of by First Security, such Certificate nevertheless may be authenticated and delivered or disposed of as though the person who signed such Certificate had not ceased to be such officer of the Owner Trustee; and any Certificate may be signed on behalf of the Owner Trustee by such person or persons as, at the actual date of the execution of such Certificate, shall be the proper officers of First Security, although at the date of the execution and delivery of this Indenture any such person was not such an officer. Certificates bearing the facsimile signatures of individuals who were authorized officers of First Security at the time such Certificates were issued shall bind the Owner Trustee, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Certificates or did not hold such offices at the respective dates of such Certificates. SECTION 2.03. Certificate of Authentication. Only such Certificates as shall bear thereon a certificate of authentication substantially in the form set forth in Exhibit B, executed by the Indenture Trustee by manual signature of one of its authorized officers, shall be entitled to the security and benefits of this Indenture or be valid or obligatory for any purpose. Such certificate by the Indenture Trustee upon any Certificate executed by the Owner Trustee shall be conclusive evidence that the Certifi- cate so authenticated has been duly authenticated and delivered hereunder and that the Holder, as evidenced on the Register, is entitled to the security and benefits of this Indenture. SECTION 2.04. Form and Terms of Certificates; Payments of Principal, Make-Whole Premium and Interest. The Certificates and the Indenture Trustee's certificate of authentication shall be substantially in the form set forth in Exhibit B hereto. Certificates may differ with respect to Maturity and as to other terms. The Certificates shall be issuable as registered securities without coupons and shall be numbered, lettered, or otherwise distinguished in such manner or in accordance with such plans as the Owner Trustee executing the same may determine with the approval of the Indenture Trustee. The aggregate principal amount of Certificates that may be authenticated and delivered under this Indenture is limited as provided in the form of Certificate attached as Exhibit B hereto. The Certificates shall be issued in registered form only and in denominations of $1,000 and any integral multiple thereof, shall be dated the Closing Date, and shall be issued in the Maturities and principal amounts, and shall bear interest at the rates per annum, specified in the form of Certificate set forth in Exhibit B. Any of the Certificates may be issued with appropriate insertions, omissions, substitutions and variations, and may have imprinted or otherwise reproduced thereon such legend or legends, not inconsistent with the provisions of this Indenture, as may be required to comply with any law or with any rules or regulations pursuant thereto, or with the rules of any securities market in which the Certificates are admitted to trading, or to conform to general usage. Each Certificate shall bear interest from the date of original issuance thereof or from the most recent date to which interest has been paid and duly provided for, as the case may be, which shall be payable on the dates specified on the face of the form of Certificate set forth in Exhibit B hereto until the principal thereof is paid. Interest shall be calculated on the basis of a 360-day year of twelve 30-day months. Notwithstanding the preceding paragraph, each Certificate shall bear interest at the Past Due Rate on any principal, interest and any other amount payable hereunder or under such Certificate, which shall not be paid in full when due (whether at stated maturity, by acceleration, by mandatory prepayment or otherwise), for the period from and including the due date thereof to but excluding the date the same is paid in full, payable from time to time on demand of the Indenture Trustee. The principal of, and Make-Whole Premium, if any, and interest on, the Certificates shall be payable at the Corporate Trust Office of the Indenture Trustee or at any office or agency maintained for such purpose pursuant to Section 3.02 hereof; provided, however, that interest may be payable at the option of the Indenture Trustee or its Paying Agent, as defined in Section 3.04, by mailing checks for such interest payable to or upon the written order of the Holders entitled thereto as they shall appear on the Register; provided further, however, that notwithstanding the foregoing to the contrary, interest payable with respect to the Certificates as to which the Pass Through Trustee is the Holder shall be sent by wire transfer of immediately available funds to an account or accounts in the United States previously specified by the Pass Through Trustee to the Indenture Trustee. The Holder at the close of business on any Record Date with respect to any Interest Payment Date shall be entitled to receive the interest if any payable on such Interest Payment Date notwithstanding any transfer or exchange of such Certificate subsequent to the Record Date and prior to such Interest Payment Date, except if and to the extent the Owner Trustee shall default in the payment of the interest due on such Interest Payment Date, in which case such defaulted interest shall be paid to the Holder at the close of business on a subsequent Record Date (which shall be not less than five (5) or more than fifteen (15) Business Days prior to the date of payment of such defaulted interest) established by notice given by mail by or on behalf of the Owner Trustee to the Holders not less than fifteen (15) days preceding such subsequent Record Date. SECTION 2.05. Payments from Trust Indenture Estate Only. All payments to be made by the Owner Trustee under this Indenture shall be made only from the income and the proceeds from the Lessor's Estate to the extent included in the Trust Indenture Estate and from any other amounts (i) of the type described in Section 5.01 hereof to the extent actually received by the Indenture Trustee and (ii) from the Letter of Credit, and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Lessor's Estate to the extent included in the Trust Indenture Estate (and such other amounts) to enable the Indenture Trustee to make distributions of the amounts due in respect of the Certificates in accordance with the terms hereof and thereof. Each Holder by its acceptance of a Certificate agrees that it will look solely to the income and proceeds from the Trust Indenture Estate (and such other amounts of the type contemplated by clause (i) and (ii) above) to the extent actually received by the Indenture Trustee and available for distribution to it as provided herein and that neither the Owner Participant, the Owner Trustee, First Security nor the Indenture Trustee is personally liable to such Holder for any amounts payable under this Indenture or such Certificate or for any amounts payable or liability under any Certificate or this Indenture, except as expressly provided herein in the case of First Security, the Owner Trustee or the Indenture Trustee, or in the case of the Owner Participant, except as expressly provided in the Participation Agreement. First Security is not personally liable to any Holder, the Lessee, the Owner Participant or the Indenture Trustee for any amounts payable under this Indenture or for any liability under this Indenture or the Certificates, except as a result of First Security's gross negligence or willful misconduct, or as otherwise expressly provided herein or in the Participation Agreement. If (1) all or any part of the Lessor's Estate becomes the property of a debtor subject to the reorganization provisions of the Bankruptcy Code, (2) pursuant to such reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the Owner Participant is required, by reason of First Security or the Owner Participant being held to have recourse liability to the Indenture Trustee or any Holder, directly or indirectly, to make payment on account of any amount payable as principal of or interest, Make-Whole Premium or other amounts payable on the Certificates and (3) the Indenture Trustee actually receives any Recourse Amount which reflects any payment by the Owner Participant on account of (2) above, then, to the extent permitted by applicable law, and subject to the receipt by the Indenture Trustee prior to its disbursement of such Recourse Amount of written notice from the Owner Participant or the Owner Trustee reasonably relating to the refund obligation in this sentence, the Indenture Trustee shall promptly refund to the Owner Participant such Recourse Amount. The Indenture Trustee hereby waives to the fullest extent permitted by law the benefit of the provisions of Section 1111(b) of the Bankruptcy Code with respect to recourse against First Security and the Owner Participant on account of any amount payable as principal of or interest, Make-Whole Premium or other amounts payable on the Certificates. Nothing contained in this paragraph shall prevent the Indenture Trustee from enforcing any personal recourse obligation (and retaining the proceeds thereof) of the Owner Participant under the Participation Agreement, this Indenture (other than referred to in clause (2) above), the Trust Agreement (and any exhibits or annexes thereto) or any other Operative Agreement, or from retaining any amount paid by the Owner Participant under Sections 5.01, 8.02 and 8.03 hereof. Nothing contained herein shall be construed as requiring any Holder to refund any amount distributed to such Holder pursuant to this Indenture. SECTION 2.06. Registration, Transfer and Exchange. The Indenture Trustee will keep, on behalf of the Owner Trustee, at each office or agency to be maintained for the purpose as provided in Section 3.02 hereof a Register or Registers on which, subject to such reasonable regulations as it may prescribe, it will register, and will register the transfer of, Certificates as provided in this Article. Such Register shall be in written form in the English language or in any other form capable of being converted into such form within a reasonable time. Upon due presentation for registration of transfer of any Certificate at any such office or agency, the Owner Trustee shall execute and the Indenture Trustee shall authenticate and deliver in the name of the transferee or transferees a new Certificate or Certificates of the same Maturity and interest rate and in authorized denominations for an equal aggregate principal amount. Any Certificate or Certificates may be exchanged for a Certificate or Certificates of the same Maturity and interest rate but in other authorized denominations, in an equal aggregate principal amount. Certificates to be exchanged shall be surrendered at any office or agency to be maintained by the Indenture Trustee for the purpose as provided in Section 3.02 hereof, and the Owner Trustee shall execute and the Indenture Trustee shall authenticate and deliver in exchange therefor the Certificate or Certificates which the Holder making the exchange shall be entitled to receive, bearing numbers not contemporaneously or previously outstanding. All Certificates presented for registration of transfer, exchange, prepayment or payment shall (if so required by the Owner Trustee or the Indenture Trustee) be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Owner Trustee and the Indenture Trustee duly executed by the Holder or its attorney duly authorized in writing and (except in the case of transfers pursuant to Section 15 of the Participation Agreement) the Indenture Trustee may require evidence satisfactory to it as to the compliance of any such transfer with the Securities Act. The Indenture Trustee may require payment from the Holder of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any exchange or registration of transfer of Certificates. No service charge shall be levied for any such transaction. The Indenture Trustee shall not be required to exchange or register a transfer of any Certificates (a) for a period of fifteen (15) days immediately preceding the first mailing of notice of prepayment of such Certificates or (b) with respect to which notice of prepayment has been given pursuant to Section 6.03 hereof and such notice has not been revoked. All Certificates issued upon any transfer or exchange of Certificates shall be valid obligations of the Owner Trustee, evidencing the same debt, and entitled to the same security and benefits under this Indenture, as the Certificates surrendered upon such transfer or exchange. SECTION 2.07. Mutilated, Defaced, Destroyed, Lost and Stolen Certificates. In case any temporary or definitive Certificate shall become mutilated, defaced or be apparently destroyed, lost or stolen, the Owner Trustee in its discretion may execute, and upon the oral or written request of any officer of First Security, the Indenture Trustee shall authenticate and deliver, a new Certificate of like Maturity, bearing a number not contemporaneously or previously outstanding, in exchange and substitution for the mutilated or defaced Certificate, or in lieu of and substitution for the Certificate so apparently destroyed, lost or stolen. In case of any Certificate so apparently destroyed, lost or stolen, the applicant for a substitute Certificate shall furnish to the Owner Trustee and to the Indenture Trustee such security or indemnity as may be reasonably required by them to indemnify and defend and to save each of them harmless from issuance of such substitute Certificate (in the case of the Pass Through Trustee, a personal agreement to indemnify shall be sufficient for this purpose) and, in any case of destruction, loss or theft, evidence to their satisfaction of the apparent destruction, loss or theft of such Certificate and of the ownership thereof. Upon the issuance of any substitute Certificate, the Owner Trustee or the Indenture Trustee may require payment from the Holder of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses connected therewith. In case any Certificate which has matured or is about to mature, or has been called for prepayment in full, shall become mutilated or defaced or be apparently destroyed, lost or stolen, the Owner Trustee may, instead of issuing a substitute Certificate, pay or authorize the payment of the same (without surrender thereof except in the case of a mutilated or defaced Certificate), if the applicant of any Certificate so apparently destroyed, lost or stolen, for such payment shall furnish to the Owner Trustee and to the Indenture Trustee such security or indemnity as any of them may require to save each of them harmless and the applicant shall also furnish to the Owner Trustee and the Indenture Trustee evidence to their satisfaction of the apparent destruction, loss or theft of such Certificate and of the ownership thereof. Every substitute Certificate issued pursuant to the provisions of this Section by virtue of the fact that any Certificate is apparently destroyed, lost or stolen shall constitute an original additional contractual obligation of the Owner Trustee, whether or not the apparently destroyed, lost or stolen Certificate shall be enforceable at any time by anyone and shall be entitled to all the security and benefits of (but shall be subject to all the limitations of rights set forth in) this Indenture equally and proportionately with any and all other Certificates duly authenticated and delivered hereunder. All Certificates shall be held and owned upon the express condition that, to the extent permitted by law, the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, defaced, or apparently destroyed, lost or stolen Certificates and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender. SECTION 2.08. Cancellation of Certificates; Destruction Thereof. All Certificates surrendered for payment, prepayment, registration of transfer or exchange, if surrendered to the Owner Trustee or any agent of the Owner Trustee or the Indenture Trustee, shall be delivered to the Indenture Trustee for cancellation or, if surrendered to the Indenture Trustee, shall be cancelled by it; and no Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture. The Indenture Trustee shall deliver the cancelled Certificates to the Owner Trustee for destruction. If the Owner Trustee shall acquire any of the Certificates, such acquisition shall not operate as a prepayment or satisfaction of the indebtedness represented by such Certificates unless and until the same are delivered to the Indenture Trustee for cancellation. SECTION 2.09. Temporary Certificates. Pending the preparation of definitive Certificates, the Owner Trustee may execute and, upon the oral or written request of an officer of the Owner Trustee, the Indenture Trustee shall authenticate and deliver temporary Certificates (printed, lithographed, typewritten or otherwise reproduced, in each case in form satisfactory to the Indenture Trustee). Temporary Certificates shall be issuable as registered Certificates without coupons, of any authorized denomination, and substantially in the form of the definitive Certificates but with such omissions, insertions and variations as may be appropriate for temporary Certificates, all as may be determined by the Owner Trustee with the concurrence of the Indenture Trustee. Temporary Certificates may contain such reference to any provisions of this Indenture as may be appropriate. Every temporary Certificate shall be executed by the Owner Trustee and, upon the oral or written request of an authorized officer of the Owner Trustee, be authenticated by the Indenture Trustee upon the same conditions and in substantially the same manner, and with like effect, as the definitive Certificates. Without unreasonable delay the Owner Trustee shall execute and shall furnish definitive Certificates and thereupon temporary Certificates shall be surrendered in exchange therefor without charge at any office or agency to be maintained by the Indenture Trustee for the purpose pursuant to Section 3.02 hereof, and, upon the oral or written request of an authorized officer of the Owner Trustee, the Indenture Trustee shall authenticate and deliver in exchange for such temporary Certificates an equal aggregate principal amount of definitive Certificates of the same Maturities and interest rates and in authorized denominations. Until so exchanged, tempo- rary Certificates shall be entitled to the same security and benefits under this Indenture as definitive Certificates. SECTION 2.10. Termination of Interest in Trust Indenture Estate. A Holder shall not, as such, have any further interest in, or other right with respect to, the Trust Indenture Estate when and if the principal amount of and Make-Whole Premium, if any, and interest on and other amounts due under all Certificates held by such Holder and all other sums payable to such Holder hereunder and under such Certificates shall have been paid in full. SECTION 2.11. Certificates in Respect of Replacement Engines. Upon the execution and delivery of an Indenture and Security Agreement Supplement covering a Replacement Engine, as provided in Section 9.09 hereof, each Certificate shall be deemed to have been issued in connection with such Replacement Engine and each Certificate issued thereafter upon a transfer or exchange of, or as a replacement for, a Certificate, shall be designated as having been issued in connection with such Replacement Engine, but without any other change therein except as provided for in this Article II. SECTION 2.12. Assumption of Obligations Under Certificates and Other Operative Agreements. If, in accordance with and subject to the satisfaction of the conditions set forth in Section 7.12 of the Participation Agreement, after the Exchange Date the Lessee shall assume all of the obligations of the Owner Trustee hereunder, under the Certificates and all other Operative Agreements, the Owner Participant and the Owner Trustee shall be released and discharged from any further obligations hereunder and under the Certificates and all other Operative Agreements (except any obligations that have accrued prior to such assumption). Article III COVENANTS SECTION 3.01. Payment of Principal, Make- Whole Premium and Interest. The Owner Trustee covenants and agrees that it will duly and punctually pay or cause to be paid the principal of, and interest and Make-Whole Premium, if any, and all other amounts due on, each of the Certificates and under this Indenture at the place or places, at the respective times and in the manner provided in this Indenture and in the Certificates. Principal and interest and other amounts due hereunder or under the Certificates shall be payable in Dollars on the due date thereof, to the Indenture Trustee at the Corporate Trust Office (or such other account at such other financial institution as the Indenture Trustee may designate for the purpose). If any amount payable under the Certificates or under this Indenture falls due on a day which is not a Business Day, then such sum shall be payable on the next succeeding Business Day, without (provided that payment is made on such next succeeding Business Day) additional interest thereon for the period of such extension. SECTION 3.02. Offices for Payments, etc. So long as any of the Certificates remain outstanding, the Indenture Trustee will maintain the following: (a) an office or agency where the Certificates may be presented for payment or prepayment and (b) a facility or agency in New York, New York where the Certificates may be presented for registration of transfer and for exchange as provided in this Indenture (the "Registrar"). The Registrar shall keep a register (the "Register") with respect to the Certificates and their transfer and exchange. The Indenture Trustee may appoint one or more co-registrars ("Co-Registrars") for the Certificates and may terminate any such appointment at any time upon written notice. The term "Registrar" includes any Co-Registrar. The Indenture Trustee shall initially act as Registrar. SECTION 3.03. Appointment to Fill a Vacancy in Office of Indenture Trustee. The Owner Trustee, whenever necessary to avoid or fill a vacancy in the office of Indenture Trustee, will, with the consent of the Lessee, appoint, in the manner provided in Section 12.02 hereof, an Indenture Trustee, so that there shall at all times be an Indenture Trustee hereunder. SECTION 3.04. Paying Agents. Whenever the Indenture Trustee in its sole discretion shall appoint a paying agent (the "Paying Agent"), it will cause the Paying Agent to execute and deliver an instrument in which the Paying Agent shall agree with the Indenture Trustee, subject to the provisions of this Section: (a) that it will hold all sums received by it as such agent for the payment of the principal of, and interest and Make-Whole Premium, if any, on the Certificates (whether such sums have been paid to it by the Indenture Trustee or the Owner Trustee) in trust for the benefit of the Holders or of the Indenture Trustee, and (b) that it will give the Indenture Trustee notice of any failure by the Owner Trustee to make any payment of the principal of or interest or Make-Whole Premium, if any, on the Certificates when the same shall be due and payable. Anything in this Section to the contrary not- withstanding, the agreements to hold sums in trust as provided in this Section are subject to the provisions of Sections 14.03 and 14.04 hereof. SECTION 3.05. Covenants of First Security and the Owner Trustee. (a) First Security hereby covenants and agrees as follows: (i) First Security will perform its covenants set forth in Sections 7.04(b) and 7.04(c) of the Participation Agreement; and (ii) First Security will not directly or indirectly create, incur, assume or suffer to exist any Lessor's Liens attributable to it or to the consolidated group of taxpayers of which it is a part. (b) The Owner Trustee hereby covenants and agrees as follows: (i) in the event a Responsible Officer of the Owner Trustee shall have actual knowledge of an Indenture Event of Default, an Indenture Default, a Pre-Funding Event of Loss or an Event of Loss, the Owner Trustee will give prompt written notice of such Indenture Event of Default, Indenture Default, Pre-Funding Event of Loss or Event of Loss to the Indenture Trustee, the Lessee and the Owner Participant; (ii) the Owner Trustee will furnish to the Indenture Trustee, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates, financial statements and other instruments furnished to the Owner Trustee under the Agreement to Lease or the Lease, including, without limitation, a copy of each report or notice received pursuant to Section 11 of the Lease, to the extent that the same shall not have been furnished to the Indenture Trustee; (iii) the Owner Trustee will not enter into any business or other activity other than the business of owning the Aircraft, the leasing thereof to the Lessee and the carrying out of the transactions contemplated hereby and by the Agreement to Lease, the Lease, the Participation Agreement, the Trust Agreement and the other Indenture Documents; and (iv) except as contemplated by the Operative Agreements, the Owner Trustee will not contract for, create, incur, assume or permit to exist any debt, and will not guarantee (directly or indirectly or by an instrument having the effect of assuring another's payment or performance on any obligation or capability of so doing, or otherwise), endorse or otherwise be or become contingently liable, directly or indirectly, in connection with the debt of any other Person. SECTION 3.06. Intentionally Left Blank. SECTION 3.07. Disposal of Trust Indenture Estate. At any time and from time to time any part of the Trust Indenture Estate may be sold or disposed of in accordance with the provisions of this Indenture and the Lease. The Indenture Trustee shall, from time to time, release any part of the Trust Indenture Estate so sold or disposed of or as to which an Event of Loss has occurred or as to which the Lease has been terminated from the Lien of this Indenture. In addition, to the extent that such property constitutes an Engine, the further requirements of Section 9.08 hereof shall be complied with. SECTION 3.08. No Representations or Warranties as to Aircraft or Documents. NEITHER THE LESSOR, THE INDENTURE TRUSTEE NOR THE OWNER PARTICIPANT MAKES, HAS MADE OR SHALL BE DEEMED TO HAVE MADE, AND EACH HAS AND WILL HAVE BEEN DEEMED TO HAVE EXPRESSLY DISCLAIMED, ANY WARRANTY OR REPRESENTATION EITHER EXPRESS OR IMPLIED, AS TO (A) THE TITLE (EXCEPT, WITH RESPECT TO THE OWNER TRUSTEE, AS EXPRESSLY SET FORTH IN SECTION 7.04(a)(vii) OF THE PARTICIPATION AGREEMENT AND SECTION 7(c)(v) OF THE AGREEMENT TO LEASE), AIRWORTHINESS (EXCEPT WITH RESPECT TO THE OWNER PARTICIPANT AS EXPRESSLY SET FORTH IN SECTION 7.03(a)(xiii) OF THE PARTICIPATION AGREEMENT, WORKMANSHIP, CONDITION, VALUE, FITNESS FOR ANY PARTICULAR USE OR PURPOSE, DESIGN, OPERATION OR MERCHANTABILITY OF THE AIRFRAME, ANY ENGINE OR ANY PART THEREOF, (B) THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, (C) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, (D) THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR (E) ANY OTHER MATTER WHATSOEVER. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THE FOREGOING, IT IS HEREBY AGREED AND UNDERSTOOD BETWEEN THE PARTIES HERETO THAT, THE LESSOR SHALL BEAR THE SOLE RESPONSIBILITY FOR ALL RISKS, COSTS, EXPENSES AND LIABILITIES ARISING OUT OF THE OWNERSHIP, USE, OPERATION, MAINTENANCE OR LEASE OF THE AIRCRAFT DURING THE PERIOD PRIOR TO THE EXECUTION OF THE LEASE SUPPLEMENT ON THE COMMENCEMENT DATE BY THE LESSEE AND THAT THE LESSEE SHALL NOT BE RESPONSIBLE FOR ANY SUCH RISKS, COSTS, EXPENSES AND LIABILITIES. FOR THE AVOIDANCE OF DOUBT, IT IS FURTHER AGREED BETWEEN THE PARTIES THAT THE LESSOR SHALL BE RESPONSIBLE FOR ANY SUCH RISKS, COSTS, EXPENSES AND LIABILITIES WHICH ARISE SUBSEQUENT TO THE EXECUTION OF SUCH LEASE SUPPLEMENT BY THE LESSEE TO THE EXTENT THEY ARISE OUT OF ANY ACT OR OMISSION PRIOR TO SUCH EXECUTION BY THE LESSEE. First Security further warrants that on the Closing Date, the Commencement Date and the Exchange Date the Aircraft shall be free and clear of Lessor's Liens attributable to First Security. Neither First Security, the Indenture Trustee nor the Owner Participant makes or shall be deemed to have made any representation or warranty as to the validity, legality or enforceability of this Indenture, the Trust Agreement, the Certificates or any Indenture Document or as to the correctness of any statement contained in any thereof, except for the representations and warranties of First Security, the Indenture Trustee and the Owner Participant made under this Indenture, in the Collateral Agreement or in the Participation Agreement. SECTION 3.09. Further Assurances; Financing Statements. At any time and from time to time, upon the request of the Indenture Trustee or the Lessee, the Owner Trustee shall promptly and duly execute and deliver any and all such further instruments and documents as may be specified in such request and as are necessary or advisable to perfect, preserve or protect the Liens and assignments created or intended to be created hereby, or to obtain for the Indenture Trustee the full benefit of the specific rights and powers granted herein, including, without limitation, the execution and delivery of Uniform Commercial Code financing statements and continuation statements with respect thereto, or similar instruments relating to the perfection of the Liens or assignments created or intended to be created hereby. Article IV HOLDER LISTS SECTION 4.01. Holder Lists; Ownership of Certificates. (a) The Indenture Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of the Holders. If the Indenture Trustee is not the Registrar, the Registrar shall furnish to the Indenture Trustee semi-annually not more than fifteen (15) days after each Record Date, as of such Record Date, or at such other times as the Indenture Trustee may request in writing, a list, in such form and as of such date as the Indenture Trustee may reasonably require, containing all the information in the possession or control of the Registrar as to the names and addresses of the Holders and the amounts and Maturities of the Certificates held by such Holders. (b) Ownership of the Certificates shall be proved by the Register kept by the Registrar. Article V RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 5.01. Basic Rent and Other Debt Service Distribution. (a) Except as otherwise provided in Section 5.03 hereof, each installment of Basic Rent, any payment of interest on overdue installments of Basic Rent and any payment received by the Indenture Trustee pursuant to Section 8.03(a) hereof shall be promptly distributed in the following order of priority: first, so much of such installment or payment as shall be required to pay in full the aggregate amount of the payment or payments of principal and interest and other amounts (as well as any interest on overdue principal and, to the extent permitted by law, on Make-Whole Premium, if any, interest and other amounts) then due under all Certificates shall be distributed to the Holders ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each such Certificate bears to the aggregate amount of the payments then due under all such Certificates, and, second, the balance if any of such installment or payment remaining thereafter shall be distributed to the Owner Trustee, or as the Owner Trustee may request, for distribution pursuant to the Trust Agreement; provided, however, that if an Indenture Default shall have occurred and be continuing, then such balance shall not be distributed as provided in this clause "second" but shall be held by the Indenture Trustee as part of the Trust Indenture Estate until whichever of the following shall first occur: (i) all Indenture Defaults shall have been cured, in which event such balance shall be distributed as provided in this clause "second", (ii) such Indenture Default shall have continued for a period of 120 days, in which event such balance shall be distributed as provided in this clause "second", or (iii) Section 5.03 hereof shall be applicable, in which event such balance shall be distributed in accordance with the provisions thereof. (b) Any amount received or withdrawn by the Indenture Trustee pursuant to Section 7(a), 7(b) or 7(d) of the Collateral Agreement shall be promptly distributed in accordance with clause "first" above. SECTION 5.02. Pre-Funding Event of Loss or Event of Loss; Prepayment. (a) Except as otherwise provided in Section 5.03 hereof, any payment received by the Indenture Trustee as the result of or in connection with (i) a Pre-Funding Event of Loss or an Event of Loss with respect to the Aircraft (ii) any Deemed Event of Loss or (iii) any event under the Lease giving rise to a prepayment pursuant to Section 6.02 hereof, shall be promptly distributed by the Indenture Trustee in the following order of priority: first, to reimburse the Indenture Trustee for any costs or expenses reasonably incurred in connection with such prepayment, second, as provided in clause "second" of Section 5.03 hereof, and third, as provided in clause "third" of Section 5.03 hereof. Any amount received or withdrawn by the Indenture Trustee pursuant to Section 7(c) of the Collateral Agreement shall be promptly distributed by the Indenture Trustee in accordance with clause "second" of this Section 5.02(a). (b) Except as otherwise provided in Section 5.03 hereof, any amounts received directly or indirectly from any governmental authority, insurer or other party pursuant to any provision of Articles 11 or 13 of the Lease as the result of loss or damage not constituting an Event of Loss with respect to the Aircraft, or as a result of such loss or damage constituting an Event of Loss if and to the extent that such amounts would at the time be required to be paid to the Lessee pursuant to said Article 11 or 13 but for the fact that a Default or an Event of Default shall have occurred and be continuing, shall be held by the Indenture Trustee as security for the obligations of the Lessee under the Lease and the Participation Agreement and shall be invested in accordance with the terms of Section 5.08 hereof and at such time as the conditions for payment to the Lessee specified in said Article 11 or 13, as the case may be, shall be fulfilled and there shall not be continuing any Default or Event of Default, such amount, and the proceeds of any investment thereof, shall, to the extent not theretofore applied, be paid to the Lessee to the extent provided in the Lease. SECTION 5.03. Payment After Indenture Event of Default, etc. Except as otherwise provided in Sec- tions 5.02(b), 5.04(b), 5.04(c) and 5.05(b) hereof, all payments received and all amounts held or realized by the Indenture Trustee (a) after an Indenture Event of Default shall have occurred and so long as such an Indenture Event of Default shall be continuing, and after the Indenture Trustee has received a request in accordance with Section 7.10 hereof, (b) after the Certificates shall have become due and payable as provided in Section 7.02(b) or (c) hereof, or (c) after the Indenture Trustee shall foreclose upon the Trust Indenture Estate shall be promptly distributed by the Indenture Trustee in the following order of priority: first, so much of such payments or amounts as shall be required to reimburse the Indenture Trustee for any tax, expense, charge or other loss (including, without limitation, all amounts to be expended at the expense of, or charged upon the tolls, rents, revenues, issues, products and profits of, the property included in the Trust Indenture Estate pursuant to Section 7.03(b) hereof) incurred by the Indenture Trustee (to the extent not previously reimbursed) (including, without limitation, the expenses of any sale, taking or other proceeding, attorneys' fees and expenses, court costs, and any other expenditures incurred or expenditures or advances made by the Indenture Trustee in the protection, exercise or enforcement of any right, power or remedy or any damages sustained by the Indenture Trustee, liquidated or otherwise, upon such Indenture Event of Default) shall be applied by the Indenture Trustee in reimbursement of such expenses; second, so much of such payments or amounts as shall be required to pay in full the aggregate unpaid principal amount of all outstanding Certificates, all accrued but unpaid interest thereon to the date of distribution and all other amounts due hereunder and thereunder (but without Make-Whole Premium, except to the extent otherwise payable pursuant to Section 6.02 hereof), shall be distributed to the Holders, and if the aggregate amount so to be distributed shall be insufficient to pay all such amounts in full as aforesaid, then such amount shall be distributed ratably, without priority of one over the other, in the proportion that the aggregate unpaid principal amount of all Certificates held by each such Holder, the accrued but unpaid interest thereon to the date of distribution and all other amounts due hereunder and thereunder (but without Make-Whole Premium, except to the extent otherwise payable pursuant to Section 6.02 hereof), bears to the aggregate unpaid principal amount of all outstanding Certificates, plus accrued but unpaid interest thereon to the date of distribution and all other amounts due hereunder and thereunder (but without Make-Whole Premium, except to the extent otherwise payable pursuant to Section 6.02 hereof); and third, the balance, if any of such payments or amounts remaining thereafter shall be distributed to the Owner Trustee for distribution pursuant to the Trust Agreement. SECTION 5.04. Certain Payments. (a) Except as otherwise provided in this Indenture, any payments received by the Indenture Trustee which are to be applied according to any provision in any other Indenture Document shall be applied thereunder in accordance therewith. (b) The Indenture Trustee will distribute, promptly upon receipt thereof, any indemnity or other payment received by it from the Owner Trustee or the Lessee pursuant to Article 8 or Article 9 of the Participation Agreement or as Supplemental Rent, directly to the Person (which may include the Indenture Trustee) entitled thereto. (c) Notwithstanding anything to the contrary contained herein, any sums received by the Indenture Trustee which constitute Excepted Payments shall be distributed promptly upon receipt by the Indenture Trustee directly to the Person or Persons entitled thereto. SECTION 5.05. Other Payments. Any payments received by the Indenture Trustee for which no provision as to the application thereof is made elsewhere in this Indenture or in any other Indenture Document shall be distributed by the Indenture Trustee (a) to the extent received or realized at any time prior to the payment in full of all obligations to the Holders secured by the Lien of this Indenture, in the order of priority specified in Section 5.01 hereof, and (b) to the extent received or realized at any time after payment in full of all obligations to the Holders secured by the Lien of this Indenture, in the following order of priority: first, in the manner provided in clause "first" of Section 5.03 hereof and second, in the manner provided in clause "third" of Section 5.03 hereof. SECTION 5.06. Payments to Owner Trustee. Any amounts distributed hereunder by the Indenture Trustee to the Owner Trustee shall be paid, subject to the proviso to Section 5.01 no later than 2:00 p.m. New York Time on the date of receipt thereof (so long as such amounts have been received by the Indenture Trustee in accordance with Section 3.03 of the Lease and the time periods specified therein), to the Owner Trustee by wire transfer of immediately available funds of the type received by the Indenture Trustee at such office and to such account or accounts of such entity or entities as shall be designated by notice from the Owner Trustee to the Indenture Trustee from time to time. The Owner Trustee hereby notifies the Indenture Trustee that unless and until the Indenture Trustee receives notice to the contrary from the Owner Trustee, all amounts to be distributed to the Owner Trustee hereunder for distribution in accordance with the Trust Agreement shall be distributed by wire transfer of immediately available funds of the type received by the Indenture Trustee to such account of the Owner Participant as may be specified pursuant to Section 2.06 of the Trust Agreement. SECTION 5.07. Application of Payments. Each payment of principal of and interest or other amounts due on each Certificate shall, except as otherwise provided herein, be applied, first, to the payment of interest on such Certificate due and payable to the date of such payment, as provided in such Certificate, as well as any interest on overdue principal and Make- Whole Premium, if any, and, to the extent permitted by law, interest and other amounts due thereunder, second, to the payment of any other amount (other than the principal of such Certificate) due hereunder to the Holder of such Certificate or under such Certificate, third, to the payment of the principal of such Certificate if then due hereunder or under such Certificate and fourth, the balance, if any remaining thereafter, to the payment of the principal of such Certificate remaining unpaid (provided that such Certificate shall not be subject to prepayment without the consent of the affected Holder except as permitted by Sections 6.02, 6.06 and 8.02 hereof). SECTION 5.08. Investment of Amounts Held by Indenture Trustee. Amounts held by the Indenture Trustee pursuant to Section 5.02(b) hereof or pursuant to any provision of any Indenture Document providing for investment of sums pursuant to Section 23.01 of the Lease or this Section 5.08 shall be invested by the Indenture Trustee from time to time in securities selected by (i) so long as no Event of Default shall have occurred and be continuing, the Lessee or (ii) so long as an Event of Default shall have occurred and be continuing, the Indenture Trustee and in each case shall be of the type listed in clauses (i) through (iv) of Section 23.01 of the Lease. Unless otherwise expressly provided in this Indenture, any income realized as a result of any such investment, net of the Indenture Trustee's reasonable fees and expenses in making such investment, shall be held and applied by the Indenture Trustee in the same manner as the principal amount of such investment is to be applied and any losses, net of earnings and such reasonable fees and expenses, shall be charged against the principal amount invested. The Lessee shall be responsible for and will promptly pay to the Indenture Trustee or the Lessor, as the case may be, on demand, the amount of any loss realized as the result of any such investment (together with any fees, commissions and other costs and expenses, if any, incurred by the Indenture Trustee or the Lessor in connection with such investment), such amount to be disposed of in accordance with the terms hereof or the Lease, as the case may be. The Indenture Trustee shall not be liable for any loss resulting from any investment made by it under this Indenture in accordance with instructions from the Lessee other than by reason of its willful misconduct or gross negligence, and any such investment may be sold (without regard to its maturity) by the Indenture Trustee without instructions whenever the Indenture Trustee reasonably believes such sale is necessary to make a distribution required by this Indenture. Unless otherwise confirmed in writing, an account statement delivered by the Indenture Trustee to the Owner Trustee (with a copy to the Lessee) shall be deemed written confirmation by the Owner Trustee that the investment transactions identified therein accurately reflect the investment directions given to the Indenture Trustee by or on behalf of the Owner Trustee, unless the Owner Trustee (or the Lessee on its behalf) notifies the Indenture Trustee in writing to the contrary within 30 days of the date of receipt of such statement. SECTION 5.09. Withholding Taxes. The Indenture Trustee shall withhold any Taxes required to be withheld, except to the extent that the Holder has furnished evidence satisfactory to the Indenture Trustee of any exemption from withholding claimed by such Holder, and under no circumstances shall the failure of any such Holder to receive any amounts so withheld constitute an Indenture Event of Default. Article VI PREPAYMENT OF CERTIFICATES SECTION 6.01. No Prepayment Prior to Maturity. Except as provided in Sections 6.02, 6.06 and 8.02 hereof, the Certificates may not be prepaid prior to their respective Maturities. SECTION 6.02. Prepayment of Certificates. (a) The outstanding Certificates shall be prepaid in full (and not in part): (i) If an Event of Loss occurs with respect to the Airframe or with respect to the Airframe and the Engines or engines then installed on the Airframe (unless such Event of Loss relates to the Engines and, pursuant to Section 11.04 of the Lease and Section 9.08 hereof, Replacement Engine(s) are substituted therefor). (ii) If the Lessee, pursuant to Section 4.02(a)(C) or 4.02(a)(D) of the Lease, gives notice of purchase of the Aircraft (and Section 2.12 hereof shall not be applicable in connection with such purchase). (iii) If the Owner Participant or the Owner Trustee on behalf of the Owner Participant gives notice of prepayment to the Indenture Trustee pursuant to Section 8.02 hereof. (iv) If the Lessee, pursuant to Section 10.01 of the Lease, gives notice of a voluntary termination for obsolescence or surplus, but subject to Section 6.02(c) below. (v) [Intentionally Omitted] (vi) If (A) a Deemed Event of Loss occurs, or (B) a Pre-Funding Event of Loss occurs. (b) In the event of a prepayment of the Certificates pursuant to Section 6.02(a)(ii) or 6.02(a)(iv) above, the Owner Trustee, having received notice from the Lessee in accordance with and subject to the terms of Section 4.02(a) or Section 10.01 of the Lease, shall give irrevocable written notice to the Indenture Trustee and to the Holders of all of the Certificates specifying the Business Day on which the Certificates shall be prepaid. In the case of a prepayment of the Certificates pursuant to Section 6.02(a)(i) above, the Certificates shall be prepaid in full on the Loss Payment Date as defined in Section 11.02 of the Lease. In the case of a prepayment of the Certificates pursuant to Section 6.02(a)(iii) above, the Certificates shall be prepaid in full on the Business Day so designated in the notice referred to in Section 8.02 hereof. In the case of a prepayment of the Certificates pursuant to Section 6.02(a)(ii) or (iv) above, the Certificates shall be prepaid in full on the Termination Date. In the case of a prepayment of the Certificates pursuant to Section 6.02(a)(vi)(A) above, the Certificates shall be prepaid on the fourth Frankfurt Business Day following the Cut-off Date. In the case of a prepayment of the Certificates pursuant to Section 6.02(a)(vi)(B) above, the Certificates shall be prepaid (i) in the case of a Pre-Funding Event of Loss, notice of which is received by the Indenture Trustee at least five Frankfurt Business Days prior to the Scheduled Commencement Date, on the Scheduled Commencement Date, or (ii) in the case of any other Pre-Funding Event of Loss on the fourth Frankfurt Business Day following the Cut-off Date. The day on which the Certificates are to be prepaid pursuant to this Section 6.02(b) is herein referred to as the "Prepayment Date". On or prior to the Prepayment Date, immediately available funds shall be deposited with the Indenture Trustee in an amount in respect of the Certificates equal to: (1) in the event of a prepayment of the Certificates pursuant to Section 6.02(a)(i), 6.02(a)(iii) (if clause (B) of Section 8.02(a) hereof is applicable), or 6.02(a)(vi) above, the sum of (A) the aggregate principal amount of Certificates then outstanding, (B) accrued interest on the Certificates to the Prepayment Date and (C) all other aggregate sums due any Holder or the Indenture Trustee hereunder or under the Participation Agreement or the Lease, or (2) in the event of a prepayment of the Certificates pursuant to Section 6.02(a)(ii), 6.02(a)(iii) (if clause (A) of Section 8.02(a) hereof is applicable), or 6.02(a)(iv) above, the sum of the amounts specified in clauses (A), (B) and (C) of the preceding clause (1) plus any Make-Whole Premium payable in respect of all Certificates (the aggregate amount required to be paid pursuant to this sentence being herein referred to as the "Prepayment Price"). (c) If, pursuant to the last sentence of Section 10.01(f) of the Lease, no Termination Date shall occur, the Owner Trustee shall give notice thereof to the Indenture Trustee, and the prepayment to be effected in respect of the Prepayment Date associated with such Termination Date shall not occur. SECTION 6.03. Notice of Prepayment to Holders. In order to effect any prepayment set forth in Section 6.02(a) hereof, the Indenture Trustee shall give prompt notice by first class mail of prepayment to each Holder of an outstanding Certificate. Such notice may be revoked by the Owner Trustee at any time on or before the Prepayment Date by prompt written notice to the Holders and Indenture Trustee except as otherwise provided in this Indenture, the Lease, or the Participation Agreement. All notices of prepayment shall state: (1) the Prepayment Date, (2) the applicable basis for determining the Prepayment Price, (3) that on the Prepayment Date, subject to the provisions hereof, the Prepayment Price will become due and payable, and that interest on the Certificates shall cease to accrue on and after such Prepayment Date, and (4) the place or places where such Certificates are to be surrendered for payment. SECTION 6.04. Deposit of Prepayment Price and Sinking Fund Redemption Price. On the Prepayment Date or the Sinking Fund Redemption Date (as defined in Section 6.06 hereof), the Owner Trustee shall, to the extent that, after the Pre-Funding Period, an amount equal to the Prepayment Price or the Sinking Fund Redemption Price (as defined in Section 6.06 hereof) as the case may be, shall not then be held in the Trust Indenture Estate, deposit with the Indenture Trustee in immediately available funds, an amount equal to the difference between (a) the amount then held in the Trust Indenture Estate and (b) the Prepayment Price or the Sinking Fund Redemption Price, as the case may be. If there shall so be on deposit and/or deposited the applicable Prepayment Price or Sinking Fund Redemption Price on or prior to a Prepayment Date or Sinking Fund Redemption Date, interest shall cease to accrue in respect of all or, in the case of a mandatory sinking fund redemption, the relevant portion being prepaid of, the outstanding Certificates on and after such Prepayment Date or such Sinking Fund Redemption Date. SECTION 6.05. Certificates Payable on Prepayment Date. On the Prepayment Date, the outstanding Certificates shall (except if the Owner Trustee has requested the Indenture Trustee to revoke such notice of prepayment in accordance with Section 6.03 hereof) become due and payable and from and after such Prepayment Date (unless there shall be a default in the payment of the Prepayment Price) such Certificates shall cease to bear interest. Upon surrender by any Holder of its Certificate for prepayment in accordance with said notice, such Holder shall be paid the principal amount of its Certificate then outstanding, accrued interest thereon to the Prepayment Date, all other sums due to such Holder hereunder, under the Participation Agreement or the Lease, plus, if a Make-Whole Premium is payable pursuant to Section 6.02(b) hereof, the Make-Whole Premium in respect of such Certificate. If any Certificate called for prepayment shall not be so paid upon surrender thereof for prepayment, the principal shall, until paid, continue to bear interest from the Prepayment Date at the interest rate applicable to such Certificate. SECTION 6.06. Mandatory Sinking Fund Redemption. The Certificates with a Maturity of September 23, 2006, the Certificates with a Maturity of September 23, 2008, and the Certificates with a Maturity of March 23, 2010 shall be subject to partial redemption, on a pro rata basis on each date specified in this Section (a "Sinking Fund Redemption Date"). The Owner Trustee shall deposit funds sufficient to pay the Sinking Fund Redemption Price with the Indenture Trustee as provided in Section 6.04 hereof. The Indenture Trustee shall pay from the amounts so deposited on each applicable Sinking Fund Redemption Date to the Holders of each Certificate then outstanding on a pro rata basis the aggregate principal amount set forth below, together with accrued interest to such Sinking Fund Redemption Date, but without Make-Whole Premium (the "Sinking Fund Redemption Price"): Principal Amount ------------------------------------ Certificates with Certificates with Certificates with Sinking Fund a Maturity of a Maturity of a Maturity of Redemption Date September 23, 2006 Sepember 23, 2008 March 23, 2010 - --------------- ------------------ ----------------- ---------------- [See Appendix A for Sinking Fund Redemption Date information for the relating thirteen (13) Aircraft] ================== ================= ================ TOTAL Article VII INDENTURE EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE AND HOLDERS SECTION 7.01. Indenture Event of Default. (a) "Indenture Event of Default" means any of the following events (whatever the reason for such Indenture Event of Default and whether it shall be voluntary or involuntary or come about or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (i) any Event of Default specified in Article 16 of the Lease (other than an Event of Default arising solely as the result of the failure to make an Excepted Payment unless the Owner Participant shall acquiesce in the treatment of such failure as an Event of Default) shall have occurred and be continuing; or (ii) any failure by the Owner Trustee to observe or perform any covenant or obligation of the Owner Trustee in this Indenture (other than any such failure arising by reason of an Event of Default or other than the failure of the Owner Trustee to provide notice pursuant to Section 3.05(b)(i) or to furnish the Indenture Trustee documents as provided under Section 3.05(b)(ii)) and the continuance of such failure for a period of thirty (30) days after written notice thereof identified as a "Notice of Indenture Event of Default" to the Owner Trustee and the Owner Participant by the Indenture Trustee or by Certificate Holders of not less than 25% in aggregate principal amount of Outstanding Certificates specifying such failure to so observe or perform and requiring it to be remedied (or if such default is curable the continuance of such failure for up to 120 days after such notice if during such 120-day period the Lessor shall be diligently attempting to cure such breach); or (iii) (A)(i) to the extent not resulting from an Event of Default, any failure by the Owner Trustee to pay principal, interest or Make-Whole Premium, if any, with respect to any Certificate when due, or (ii) any failure of the LC Bank to make any payment under the Letter of Credit when such payment is due, or (iii) any failure of Lufthansa to make (or any failure of the named Payee or any assignee with respect to a Demand Note (other than the Indenture Trustee), to the extent payment has been received by such Payee or assignee to pass on to the Indenture Trustee) any payment, when such payment is due, in accordance with any demand made under any Demand Note, in each case if such failure shall continue unremedied for a period of five (5) Business Days or (B) to the extent not resulting from an Event of Default, any failure to pay any other amounts hereunder or under the Certificates when due, if such failure shall continue for a period of thirty (30) days; or (iv) (A) any representation or warranty made by First Security, the Owner Trustee, the Owner Participant or any Person guaranteeing the obligations of the Owner Participant in Article 7 of the Participation Agreement, in Section 5.01 of the Lease or in any certificate of First Security, the Owner Trustee, the Owner Participant or any Person guaranteeing the obligations of the Owner Participant furnished to the Indenture Trustee or any Holder in connection herewith or therewith or pursuant hereto or thereto shall prove to have been incorrect when made and was and remains material in any respect to the rights and remedies of the Holders under this Indenture, the Certificates, the Collateral Agreement, the Participation Agreement, the Lease or any other Indenture Document and if such misrepresentation is capable of being corrected as of a subsequent date and if such correction is being sought diligently, such misrepresentation shall not have been corrected within 30 days following notice thereof identified as a "Notice of Indenture Event of Default" being given to First Security, the Owner Trustee and the Owner Participant by the Indenture Trustee or by Certificate Holders of not less than 25% in aggregate principal amount of Outstanding Certificates; or (B) any covenant made by First Security, the Owner Trustee, the Owner Participant, or any Person guaranteeing the obligations of the Owner Participant in Article 7 of the Participation Agreement shall be breached in any respect and was and remains material to the rights and remedies of the Holders under this Indenture, the Certificates, the Participation Agreement or the Lease and such breach shall remain unremedied for a period of thirty (30) days after there has been given to the Owner Trustee and the Owner Participant by the Indenture Trustee or by Certificate Holders of not less than 25% in aggregate principal amount of Outstanding Certificates a written notice identified as a "Notice of Indenture Event of Default" specifying such breach and requiring it to be remedied; or (v) the Owner Trustee, the Lessor's Estate, the Owner Participant or any Person guaranteeing the obligations of the Owner Participant shall (i) be unable, or admit in writing its inability, to pay its debts generally as they become due within the meaning of Title 11 of the United States Code, (ii) file any petition or answer seeking for itself or consenting to any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future bankruptcy, insolvency or similar statute, law or regulation, (iii) make an assignment for the benefit of its creditors, or (iv) take corporate or comparable action for the purpose of any of the foregoing; provided that an event referred to in this Section 7.01(v) with respect to the Owner Participant shall not constitute an Indenture Event of Default if (a) an order, judgment or decree shall be entered in a proceeding by a court or a trustee, custodian, receiver or liquidator which is either final and non- appealable, or (b) an opinion of counsel satisfactory to the Indenture Trustee shall be provided by the Owner Participant, in each case to the effect that no part of the Lessor's Estate (except for the Owner Participant's beneficial interest in the Lessor's Estate) and no right, title or interest under the Trust Indenture Estate, is or shall be included in, or subject to, any declaration or adjudication of, or proceedings with respect to, the bankruptcy, insolvency or liquidation of the Owner Participant referred to in this Section 7.01(v); or (vi) the Owner Trustee, the Lessor's Estate, the Owner Participant or any Person guaranteeing the obligations of the Owner Participant shall file any answer admitting or not contesting the material allegations of a petition filed against the Owner Trustee, the Lessor's Estate, the Owner Participant or any Person guaranteeing the obligations of the Owner Participant in any proceeding referred to in clause (vii) below or seek or consent or acquiesce in the appointment of any trustee, custodian, receiver or liquidator of the Owner Trustee, the Lessor's Estate, the Owner Participant or any Person guaranteeing the obligations of the Owner Participant or of all or any substantial part of its properties; or (vii) without the consent or acquiescence of the Owner Trustee, the Lessor's Estate, the Owner Participant or any Person guaranteeing the obligations of the Owner Participant an order shall be entered constituting an order for relief or approving a petition for relief or reorganization or any other petition seeking any reorganiza- tion, arrangement, composition, readjustment, liquidation, dissolution or other similar relief under any present or future bankruptcy, insolvency or similar statute, law or regulation, or any such petition shall be filed against the Owner Trustee, the Lessor's Estate, the Owner Participant or any Person guaranteeing the obligations of the Owner Participant and such petition shall not be dismissed within 60 days (or 90 days in the case of the Owner Participant), or, without the consent or acquiescence of the Owner Trustee, the Lessor's Estate, Owner Participant or any Person guaranteeing the obligations of the Owner Participant, an order shall be entered appointing a trustee, custodian, receiver or liquidator of the Owner Trustee, the Lessor's Estate, the Owner Participant or any Person guaranteeing the obligations of the Owner Participant, or of all or any substantial part of the properties of the Owner Trustee, the Lessor's Estate, the Owner Participant or any Person guaranteeing the obligations of the Owner Participant, and such order shall not be dismissed within 90 days; provided that an event referred to in this Section 7.01(vii) with respect to the Owner Participant shall not constitute an Indenture Event of Default if (a) an order, judgment or decree shall be entered in a proceeding by a court or a trustee, custodian, receiver or liquidator which is either final and non-appealable, or (b) an opinion of counsel satisfactory to the Indenture Trustee shall be provided by the Owner Participant, in each case to the effect that no part of the Lessor's Estate (except for the Owner Participant's beneficial interest in the Lessor's Estate) and no right, title or interest under the Trust Indenture Estate is or shall be included in, or subject to, any declaration or adjudication of, or proceedings with respect to, the bankruptcy, insolvency or liquidation of the Owner Participant referred to in this Section 7.01(vii); or (viii) at any time on or after the Exchange Date while the Aircraft is registered in the United States, the Owner Trustee, First Security, the Owner Participant or any Person guaranteeing the obligations of the Owner Participant shall do or fail to do any act expressly required by the Operative Agreements to be performed by the Owner Trustee or the Owner Participant, as the case may be, or shall meet or fail to meet any condition expressly required by the Operative Agreements to be satisfied by the Owner Trustee or the Owner Participant, or as the case may be, and as a result thereof the Lien of this Indenture shall cease to be a valid first priority perfected Lien on the Indenture Estate. SECTION 7.02. Remedies. (a) If an Indenture Event of Default shall have occurred and be continuing and so long as the same shall be continuing unremedied, then and in every such case, the Indenture Trustee may, and when required by the provisions of Article IX or Section 7.02(c) hereof, shall (i) exercise any or all of the rights and powers and pursue any and all of the remedies pursuant to this Article VII and (ii) in the event such Indenture Event of Default is an Indenture Event of Default referred to in paragraph (a) of Section 7.01 hereof, exercise any and all of the remedies pursuant to Article 17 of the Lease. The Indenture Trustee may take possession of all or any part of the properties covered or intended to be covered by the Lien and security interest created hereby or pursuant hereto and may exclude the Owner Participant, the Owner Trustee, the Lessee and any transferee of the Lessee and all persons claiming under any of them wholly or partly therefrom. In addition, the Indenture Trustee may exercise any other right or remedy in lieu of or in addition to the foregoing that may be available to it under applicable law, or proceed by appropriate court action to enforce the terms hereof, of the Lease, or both, or to terminate or rescind the Lease. Without limiting any of the foregoing, it is understood and agreed that the Indenture Trustee may exercise any right of sale of the Aircraft available to it, even though it shall not have taken possession of the Aircraft and shall not have possession thereof at the time of such sale. While an Indenture Event of Default is in existence that is also an Event of Default and no other Indenture Event of Default exists, the Indenture Trustee may only exercise remedies hereunder if the Indenture Trustee simultaneously commences the exercise of one or more remedies under clauses (i) through (vi) of Section 17.01(a) of the Lease (such as commencement of suit for overdue Basic Rent); provided, however, that such requirement to exercise one or more of such remedies under the Lease shall not apply in circumstances where the Indenture Trustee is, and has been, for a continuous period in excess of 60 days or such other period as may be specified in Section 1110(a)(1) of the Bankruptcy Code (such 60-day or other period being the "Section 1110 Period"), involuntarily stayed or prohibited by applicable law or court order from exercising such remedies under the Lease (a "Continuous Stay Period"); provided, further, however, that the requirement to exercise one or more of such remedies under the Lease shall nonetheless be applicable during a Continuous Stay Period subsequent to the expiration of the Section 1110 Period to the extent that the continuation of such Continuous Stay Period subsequent to the expiration of the Section 1110 Period (A) results from an agreement by the Lessee during the Section 1110 Period with the approval of the relevant court to perform the Lease in accordance with Section 1110(a) of the Bankruptcy Code or (B) is an extension of the Section 1110 Period with the consent of the Indenture Trustee pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from the Lessee's assumption during the Section 1110 Period with the approval of the relevant bankruptcy court of the Lease pursuant to Section 365 of the Bankruptcy Code or (D) is the consequence of the Indenture Trustee's own failure to give any requisite notice to any Person or (E) is pursuant to a judicial stay pending the resolution of litigation with respect to the applicability of Section 1110 of the Bankruptcy Code and there is either no Event of Default other than one arising solely from the Lessee's bankruptcy or any such other Event of Default has been cured; provided, further, however, that the requirement to exercise one or more of such remedies under the Lease during a Continuous Stay Period subsequent to the expiration of the Section 1110 Period based upon a judicial stay as provided in this clause (E) shall in any event cease to be applicable subsequent to the 120th day of such Continuous Stay Period; it being understood and agreed that the Indenture Trustee may take such action and commence such processes as it may determine are necessary or advisable to foreclose on the Lien of this Indenture but all such actions and processes shall, during such period, not be completed to effect a foreclosure. If the limitation upon cures of the Lessee's failure to pay Basic Rent as provided in Section 8.03(a) hereof would otherwise prohibit the Owner Participant or the Owner Trustee from making a payment to cure an Event of Default for purposes of clause (E) above, the Owner Participant or the Owner Trustee shall nonetheless be entitled to make such payment. If the Indenture Trustee shall acquire title to the Aircraft through foreclosure during a Continuous Stay Period without having exercised one or more of such remedies under the Lease by virtue of the Continuous Stay Period having continued beyond its 120th day as provided above in clause (E) and the Indenture Trustee shall have received prior to the 183rd day subsequent to its acquisition of the title to the Aircraft, the proceeds from its sale of the Aircraft, the Indenture Trustee shall, notwithstanding any other provision of this Indenture, distribute to the Owner Trustee the amount, if any, by which such proceeds (net of the Indenture Trustee's costs and expenses (including the fees and expenses of counsel and other experts and agents retained by it), commissions and other costs and expenses with respect to such foreclosure, the maintenance and preservation of the Aircraft and such sale (including amounts in respect of any thereof paid by others to whom the Indenture Trustee has a reimbursement obligation) and any other amounts to which the Indenture Trustee is entitled pursuant to Section 9.11 hereof or otherwise) exceed an amount equal to the aggregate of the principal amount of the Certificates outstanding on the date of such foreclosure, together with interest accrued thereon to such foreclosure date and an amount equal to the amount of interest that would have accrued (at the rate per annum applicable under the Certificates) on such principal amount from the date of such foreclosure to the date of the distribution by the Indenture Trustee of such proceeds for the benefit of the Holders if such principal amount had remained outstanding. References in this subsection (iii) to particular sections of the Bankruptcy Code as in effect on the date of the amendment and restatement of this Indenture shall include any substantially similar successor provisions. (b) Notwithstanding Section 7.02(c) hereof, if an Indenture Event of Default referred to in clause (v), (vi) or (vii) of Section 7.01 hereof shall have occurred, or an Event of Default referred to in clause (e), (f) or (g) of Section 16.01 of the Lease shall have occurred, then and in every such case the unpaid principal of all outstanding Certificates, together with interest accrued but unpaid thereon and all other amounts due thereunder and hereunder, but without Make-Whole Premium, shall immediately and without further act become due and payable, without present- ment, demand, protest or notice, all of which are hereby waived. (c) If any Indenture Event of Default not described in the preceding paragraph (b) shall have occurred and be continuing, then and in every such case, the Indenture Trustee may on its own accord or at the direction of Holders of not less than 25% in aggregate principal amount of Outstanding Certificates, at any time, by written notice or notices to the Owner Trustee and, if after the Commencement Date, the Lessee, declare the principal of all the Certificates to be due and payable, whereupon the unpaid principal of all outstanding Certificates, together with accrued but unpaid interest thereon and all other amounts due thereunder, but without Make-Whole Premium (except to the extent a Make-Whole Premium was theretofore payable by virtue of Section 6.02(b) hereof), shall immediately become due and payable without presentment, demand, protest or other notice, all of which are hereby waived. At any time after such declaration and prior to the sale or disposition of the Trust Indenture Estate, however, the Holders of a Majority in Interest of Certificate Holders, by notice to the Indenture Trustee, the Owner Trustee and, if after the Commencement Date, the Lessee, may rescind such declaration, whether made by the Indenture Trustee on its own accord or as directed, if (x) there has been paid or deposited with the Indenture Trustee (other than pursuant to the Collateral Agreement) a sum sufficient to pay all overdue installments of interest on all Certificates (together, to the extent permitted by law, with interest on such overdue installments of interest), the principal on any Certificates that has become due otherwise than by such declaration of acceleration, all sums paid or advanced by the Indenture Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee, its agents and counsel, or (y) all Indenture Events of Default (other than the nonpayment of principal that has become due solely because of such acceleration) have been either cured or waived as provided in Section 7.11 hereof. No such rescission shall affect any subsequent default or impair any right consequent thereon. (d) Each Holder shall be entitled at any sale to a credit against any purchase price bid at such sale by such Holder all or any part of the unpaid obligations owing to such Holder secured by the Lien of this Indenture. SECTION 7.03. Return of Trust Indenture Estate, etc. Subject to Section 7.02 hereof: (a) If an Indenture Event of Default shall have occurred and be continuing, at the request of the Indenture Trustee, the Owner Trustee shall promptly execute and deliver to the Indenture Trustee such instruments of title and other documents as the Indenture Trustee may deem necessary or advisable to enable the Indenture Trustee or an agent or representative designated by the Indenture Trustee, at such time or times and place or places as the Indenture Trustee may specify, to obtain possession of all or any part of the Trust Indenture Estate to which the Indenture Trustee shall at the time be entitled hereunder. If the Owner Trustee shall for any reason fail to execute and deliver such instruments and documents after such request by the Indenture Trustee, the Indenture Trustee may (i) obtain a judgment conferring on the Indenture Trustee the right to immediate possession and requiring the Owner Trustee to execute and deliver such instruments and documents to the Indenture Trustee, to the entry of which judgment the Owner Trustee hereby specifically consents, and (ii) pursue all or part of the Trust Indenture Estate wherever such Trust Indenture Estate may be found and may, in the name of the Owner Trustee or otherwise, enter any of the premises of the Lessee and search for and take possession of and remove the Trust Indenture Estate. All expenses of obtaining such judgment or of pursuing, searching for and taking such property shall, until paid, be secured by the Lien of this Indenture. (b) Upon every such taking of possession or title, the Indenture Trustee may, from time to time, at the expense of the Trust Indenture Estate, make all such expenditures for maintenance, insurance, repairs, replacements, alterations, additions and improvements to and of the Trust Indenture Estate, as it may deem proper. In each such case, the Indenture Trustee shall have the right to maintain, use, operate, store, lease, control or manage the Trust Indenture Estate and to carry on the business and, without limiting the express provisions of Section 8.01 hereof, to exercise all rights and powers of the Owner Participant and the Owner Trustee relating to the Trust Indenture Estate, as the Indenture Trustee shall deem necessary or appropriate, including the right to enter into any and all such agreements with respect to the maintenance, insurance, use, operation, storage, leasing, control, management or disposition of the Trust Indenture Estate or any part thereof as the Indenture Trustee may determine; and, except for Excepted Payments (other than Excepted Payments payable to the Indenture Trustee), the Indenture Trustee shall be entitled to collect and receive directly all rents (including Rent), revenues, issues, income, products and profits of the Trust Indenture Estate and every part thereof without prejudice to the right of the Indenture Trustee under any provision hereof to collect and receive all cash held by, or required to be deposited with, the Indenture Trustee hereunder. Such rents (including Rent), revenues, issues, income, products and profits shall be applied to pay the expenses of the use, operation, storage, leasing, control, management or disposition of the Trust Indenture Estate and of conducting the business thereof, and of all maintenance, repairs, replacements, alterations, additions and improvements, and to make all payments which the Indenture Trustee may be required or may elect to make, if any, for taxes, assessments, insurance or other proper charges upon the Trust Indenture Estate or any part thereof (including the employment of engineers and accountants to examine, inspect and make reports upon the properties and books and records of the Owner Trustee), and all other payments which the Indenture Trustee may be required or authorized to make under any provision of this Indenture, as well as just and reasonable compensation for the services of the Indenture Trustee, and of all persons properly engaged and employed by the Indenture Trustee. (c) If an Indenture Event of Default shall have occurred and be continuing and the Indenture Trustee shall be entitled to exercise remedies hereunder, and (other than with respect to Collateral) subject to Article VIII hereof, the Indenture Trustee, either with or without taking possession, and either before or after taking possession, and without instituting any legal proceedings whatsoever, may sell, assign, transfer and deliver the whole or, from time to time, to the extent permitted by law, any part of the Trust Indenture Estate, or any part thereof, or interest therein, at any private sale or public auction, with or without demand, advertisement or notice, except as expressly provided for below in this Section 7.03(c), for cash or credit or for other property, for immediate or future delivery, and for such price or prices and on such terms as the Indenture Trustee in its sole discretion may determine; provided, that any such action shall be at the time lawful and that all mandatory legal requirements shall be complied with. Other than with respect to Collateral, the Indenture Trustee shall, to the extent permitted by law, give the Owner Trustee, the Owner Participant and, if after the Exchange Date, the Lessee at least 30 days' notice of any public or private sale. Such notice, in the case of a public sale, shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours as the Indenture Trustee shall fix in the notice of such sale. At any such sale, the Trust Indenture Estate may be sold in one lot as an entirety or in separate lots. The Indenture Trustee shall have and may exercise with respect to the Collateral any or all of the rights and remedies of a secured party under the Uniform Commercial Code in effect in the State of New York, and as otherwise granted herein or under any other applicable law. To the extent permitted by law, and notwithstanding anything herein to the contrary, the Owner Trustee expressly waives any notice of sale or other disposition of Collateral and all other rights or remedies of the Owner Trustee or formalities prescribed by law relative to sale or disposition of Collateral or exercise of any other right or remedy of the Indenture Trustee with respect to Collateral existing after default hereunder; and to the extent any such notice is required and cannot be waived, the Owner Trustee agrees that if such notice with respect to Collateral is given at least three (3) days before the time of the sale or disposition, such notice shall be deemed reasonable and shall fully satisfy any requirement for giving of said notice. The Indenture Trustee shall not be obligated to make any sale pursuant to notice provided as contemplated above. The Indenture Trustee may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for such sale, and any such sale may be made at any time or place to which the same may be so adjourned without further notice or publication. The Indenture Trustee may exercise such right of sale without possession or production of the Certificates or proof of ownership thereof, and as representative of the Holders may exercise such right without notice to the Holders or without including the Holders as parties to any suit or proceedings relating to the foreclosure of any part of the Trust Indenture Estate. The Owner Trustee shall execute any and all such bills of sale, assignments and other documents, and perform and do all other acts and things requested by the Indenture Trustee in order to permit consummation of any sale of the Trust Indenture Estate in accordance with this Section 7.03(c) and to effectuate the transfer or conveyance referred to in the first sentence of this Section 7.03(c). Notwithstanding any other provision of this Indenture, the Indenture Trustee shall not sell the Trust Indenture Estate or any part thereof unless the Certificates shall have been accelerated. (d) To the extent permitted by applicable law, the Indenture Trustee or any Holder may be a purchaser of the Trust Indenture Estate or any part thereof or any interest therein at any sale thereof, whether pursuant to foreclosure or power of sale or otherwise. The Indenture Trustee may apply against the purchase price therefor the amount then due hereunder or under any of the Certificates secured hereby and any Holder may apply against the purchase price therefor the amount then due to it hereunder, under any other Indenture Document or under the Certificates held by such Holder to the extent that such portion of the purchase price as it would have received had it been entitled to share any distribution thereof. The Indenture Trustee or any Holder or nominee thereof shall, upon any such purchase, acquire good title to the property so purchased, free of the Lien of this Indenture and, to the extent permitted by applicable law, free of all rights of redemption in the Owner Trustee or the Owner Participant in respect of the property so purchased. (e) Subject to Article VIII hereof and if an Indenture Event of Default is continuing, the Owner Trustee hereby irrevocably appoints and constitutes the Indenture Trustee the true and lawful attorney-in-fact of the Owner Trustee in its name and stead and on its behalf, for the purpose of effectuating any sale, assignment, transfer or delivery for the enforcement of the Lien of this Indenture, whether pursuant to foreclosure or power of sale or otherwise, to execute and deliver all such bills of sale, assignments and other instruments as the Indenture Trustee may consider necessary or appropriate, with full power of substitution, and the Owner Trustee hereby ratifies and confirms all that such attorney or any substitute shall lawfully do by virtue hereof. Nevertheless, if so requested by the Indenture Trustee or any purchaser, the Owner Trustee shall ratify and confirm any such sale, assignment, transfer or delivery, by executing and delivering to the Indenture Trustee or such purchaser all bills of sale, assignments, releases and other proper instruments to effect such ratification and confirmation as may be designated in any such request. (f) The Indenture Trustee shall, as a matter of right, be entitled to the appointment of a receiver (who may be the Indenture Trustee or any successor or nominee) for all or any part of the Trust Indenture Estate, whether such receivership be incidental to a proposed sale of the Trust Indenture Estate or the taking of possession thereof or otherwise, and the Owner Trustee hereby consents to the appointment of such receiver and will not oppose any such appointment. Any receiver appointed for all or any part of the Trust Indenture Estate shall be entitled to exercise all of the rights and powers of the Indenture Trustee with respect to the Trust Indenture Estate. (g) Any sale of the Trust Indenture Estate or any part thereof or any interest therein, whether pursuant to foreclosure or power of sale or otherwise hereunder, shall be a perpetual bar against the Owner Trustee after the expiration of the period, if any, during which the Owner Trustee shall have the benefit of prepayment laws which may not be waived pursuant to Section 7.13 hereof. SECTION 7.04. Indenture Trustee May Prove Debt. If the Owner Trustee shall fail to pay any amount payable hereunder or under the Certificates, the Indenture Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any action or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceed- ings to judgment or final decree, and may enforce any such judgment or final decree against the Owner Trustee and collect in the manner provided by law out of the property of the Owner Trustee wherever situated, the moneys adjudged or decreed to be payable; provided, that any sale of any portion of the Trust Indenture Estate shall be done in accordance with Section 7.03(c) hereof. In case there shall be pending proceedings relative to the Owner Trustee or the Lessor's Estate under the Bankruptcy Code or any other applicable federal or state bankruptcy, insolvency or other similar law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Lessor's Estate or the Owner Trustee or its property, or in case of any other comparable judicial proceedings relative to the Lessor's Estate or the Owner Trustee, or to the creditors or property of the Lessor's Estate or the Owner Trustee, the Indenture Trustee, irrespective of whether the principal of the Certificates shall then be due and payable as therein or herein expressed or by declaration or otherwise and irrespective of whether the Indenture Trustee shall have made any demand pursuant to the provisions of this Section, shall be entitled and empowered, by intervention in such proceedings or otherwise: (a) to file and prove a claim or claims for the whole amount of principal, interest and other amounts owing and unpaid in respect of the Certificates or hereunder, and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee (including any claim for reasonable compensation to the Indenture Trustee and each predecessor Indenture Trustee, and their respective agents, attorneys and counsel, and for reimbursement of the Indenture Trustee and each predecessor Indenture Trustee, except as a result of negligence or bad faith) and of the Holders allowed in any judicial proceedings relative to the Owner Trustee or to the creditors or property of the Owner Trustee, (b) unless prohibited by applicable law and regulations, to vote on behalf of the Holders in any election of a trustee or a standby trustee in arrangement, reorganization, liquidation or other bankruptcy or insolvency proceedings or person performing similar functions in comparable proceedings, and (c) to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute all amounts received with respect to the claims of the Holders and of the Indenture Trustee on their behalf; and any trustee, receiver, or liquidator, custodian or other similar official is hereby authorized by each of the Holders to make payments to the Indenture Trustee, and, in the event that the Indenture Trustee shall consent to the making of payments directly to the Holders, to pay to the Indenture Trustee such amounts as shall be sufficient to cover reasonable compensation to the Indenture Trustee, each predecessor Indenture Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee except as a result of negligence or willful misconduct. Nothing contained herein shall be deemed to authorize the Indenture Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Certificates or the rights of any Holder thereof, or to authorize the Indenture Trustee to vote in respect of the claim of any Holder in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar person. All rights of action and of asserting claims under this Indenture, under any of the Certificates or under the Collateral Agreement, may be prosecuted and enforced by the Indenture Trustee without the possession of any of the Certificates or the production thereof in any trial or other proceedings relative thereto, and any such action or proceedings instituted by the Indenture Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Indenture Trustee, each predecessor Indenture Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Holders. In any proceedings brought by the Indenture Trustee (and also any proceedings involving the interpretation of any provision of this Indenture or the Collateral Agreement to which the Indenture Trustee shall be a party), the Indenture Trustee shall be held to represent all the Holders of the Certifi- cates, and it shall not be necessary to make any Holders parties to any such proceedings. SECTION 7.05. Remedies Cumulative. Each and every right, power and remedy given to the Indenture Trustee specifically or otherwise in this Indenture or the Collateral Agreement shall be cumulative and shall be in addition to every other right, power and remedy specifically given herein or in the Collateral Agreement or now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy whether specifically given herein or in the Collateral Agreement or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by the Indenture Trustee or the Holders, and the exercise or the beginning of the exercise of any power or remedy shall not constitute or be construed to be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy. No delay or omission by the Indenture Trustee or of any Holder in the exercise of any right, remedy or power or in the pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the Owner Trustee or the Lessee or to be an acquiescence therein. SECTION 7.06. Suits for Enforcement. If an Indenture Event of Default has occurred, has not been waived and is continuing, the Indenture Trustee may in its discretion and subject to its rights of appropriate indemnification under Sections 7.08 and 9.03 and Article XI hereof proceed to protect and enforce its rights and rights of the Holders by such appropriate judicial proceedings as the Indenture Trustee shall deem most effectual to protect and enforce any of such rights, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture or in the Collateral Agreement or to enforce any other legal or equitable right vested in the Indenture Trustee or the Holders by this Indenture or the Collateral Agreement or by law; provided, that any sale of any portion of the Trust Indenture Estate shall be done in accordance with Section 7.03(c) hereof. SECTION 7.07. Discontinuance of Proceedings. In case the Indenture Trustee or any Holder shall have instituted any proceeding to enforce any right, power or remedy under this Indenture or the Collateral Agreement by foreclosure, entry or otherwise, and such proceeding shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Indenture Trustee or such Holder, then and in every such case the Owner Trustee, the Indenture Trustee, the Holders and the Lessee shall, subject to any determination in such proceeding, be restored to their former positions and rights hereunder with respect to the Trust Indenture Estate, and all rights, remedies and powers of the Indenture Trustee and the Holders shall continue as if no such proceeding had been instituted. SECTION 7.08. Limitations on Suits by Holders. No Holder of any Certificate shall have any right by virtue or by availing of any provision of this Indenture or the Collateral Agreement to insti- tute any action or proceeding at law or in equity or in bankruptcy or otherwise upon or under or with respect to this Indenture or the Collateral Agreement, or for the appointment of a trustee, receiver, liquidator, custodian or other similar official or for any other remedy hereunder or under the Collateral Agreement, unless such Holder previously shall have given to the Indenture Trustee written notice of an Indenture Event of Default and of the continuance thereof, as hereinbefore provided, and the Holders of not less than 25% in aggregate principal amount of Outstanding Certificates shall have made written request upon the Indenture Trustee to institute such action or proceedings in its own name as trustee hereunder and shall have offered to the Indenture Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby and the Indenture Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such action or proceedings and no direction inconsistent with such written request shall have been given to the Indenture Trustee pursuant to Section 7.10 hereof; it being understood and intended, and being expressly covenanted by the Holder of each Certificate with every other Holder of each other Certificate and the Indenture Trustee, that no one or more Holders shall have any right in any manner whatever to affect, disturb or prejudice the rights of any other Holder or the Lien of this Indenture or any part of the Trust Indenture Estate or to obtain or seek to obtain priority over or preference to any other such Holder or to enforce any right under this Indenture or the Collateral Agreement, except in the manner provided herein or therein and for the equal, ratable and common benefit of all Holders. For the protection and enforcement of the provisions of this Section, each and every Holder and the Indenture Trustee shall be entitled to such relief as can be given either at law or in equity. SECTION 7.09. Unconditional Right of Holders to Receive Principal, Interest and Make-Whole Premium, and to Institute Certain Suits. Notwithstanding any other provision in this Indenture, in the Collateral Agreement or any Certificate, the right of any Holder to receive payment of the principal of and interest and Make-Whole Premium, if any, on such Certificate on or after the respective due dates and in the manner expressed in such Certificate, or, subject to Section 7.08 hereof, to institute suit for the enforcement of any such payment on or after such respective dates as provided herein, shall not be impaired or affected without the consent of such Holder. SECTION 7.10. Control by Holders. The Majority in Interest of Certificate Holders shall have the right to direct the Indenture Trustee as to the time, method, and place of conducting any proceeding for any remedy available to the Indenture Trustee, or exercising any trust or power conferred on the Indenture Trustee by this Indenture or the Collateral Agreement; provided that such direction shall not be otherwise than in accordance with law and the provisions of this Indenture and the Indenture Trustee shall have received, to the extent provided in Sections 7.08 and 9.03 and Article XI hereof, such reasonable indemnification as it may require against the costs, expenses and liabilities to be incurred by the Indenture Trustee; and provided further that (subject to the provisions of Section 9.02 hereof) the Indenture Trustee shall have the right to decline to follow any such direction if the Indenture Trustee, being advised by counsel, shall determine that the action or proceeding so directed may not lawfully be taken or if the Indenture Trustee in good faith by its board of directors, the executive committee, or a trust committee of directors or Responsible Officers of the Indenture Trustee shall determine that the action or proceedings so directed would involve the Indenture Trustee in personal liability or if the Indenture Trustee in good faith shall so determine that the actions or forebearances specified in or pursuant to such direction shall be unduly prejudicial to the interests of Holders not joining in the giving of said direction, it being understood that (subject to Section 9.02 hereof) the Indenture Trustee shall have no duty to ascertain whether or not such actions or forebearances are unduly prejudicial to such Holders. Nothing in this Indenture shall impair the right of the Indenture Trustee in its discretion to take any action deemed proper by the Indenture Trustee and which is not inconsistent with the direction by the Majority in Interest of Certificate Holders or this Indenture. SECTION 7.11. Waiver of Past Indenture Default. Upon written instructions from the Majority in Interest of Certificate Holders, the Indenture Trustee shall waive any past Indenture Default and its consequences and upon any such waiver such Indenture Default shall cease to exist and any Indenture Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other Indenture Default or impair any right consequent thereon; provided, however, that in the absence of written instructions from all Holders, the Indenture Trustee shall not waive any Indenture Default (a) in the payment of the principal of, or Make-Whole Premium, if any, or interest on, or other amounts due under, any Certificate then Outstanding, or (b) in respect of a covenant or provision hereof which, under Article XIII hereof, cannot be modified or amended without the consent of each Holder. SECTION 7.12. Notice of Indenture Default. The Indenture Trustee shall transmit to the Owner Trustee, the Holders and to the Owner Participant notice of all Indenture Defaults actually known to a Responsible Officer of the Indenture Trustee, such notice to be transmitted by mail to the Holders within 90 days, and to the Owner Trustee and the Owner Participant promptly after the occurrence thereof, unless such Indenture Default shall have been cured before the giving of such notice; provided that under no circumstances shall the Indenture Trustee give such notice to the Holders until the expiration of a period of 60 days from the occurrence of such Indenture Default; and provided further that, except in the case of default in the payment of the principal of or interest on or any other amount due under any of the Certificates, the Indenture Trustee shall be protected in withholding such notice to the Holders if and so long as the board of directors, the executive committee, or a trust committee of directors or trustees and/or Responsible Officers of the Indenture Trustee in good faith determines that the withholding of such notice is in the interests of the Holders. SECTION 7.13. Waiver of Appraisement, etc.; Laws. The Owner Trustee covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any appraisement, valuation, stay, extension, redemption or prepayment law wherever enacted, now or at any time hereafter in force, in order to prevent or hinder the enforcement of this Indenture or the execution of any power granted herein or therein to the Indenture Trustee, or the absolute sale of the Trust Indenture Estate, or any part thereof, or the possession thereof by any purchaser at any sale under this Article VII; and the Owner Trustee for itself and all who may claim under it, so far as it or any of them now or hereafter lawfully may, hereby waives the benefit of all such laws. The Owner Trustee for itself and all who may claim under it waives, to the extent that it lawfully may, all right to have the property in the Trust Indenture Estate marshalled upon any foreclosure hereof, and agrees that any court having jurisdiction to foreclose this Indenture may order the sale of the Trust Indenture Estate as an entirety. If any law referred to in this Section 7.13 and now in force, of which the Owner Trustee or its successors might take advantage despite this Section 7.13, shall hereafter be repealed or cease to be in force, such law shall not thereafter be deemed to constitute any part of the contract herein contained or to preclude the application of this Section 7.13. Article VIII RIGHTS OF THE OWNER TRUSTEE AND THE OWNER PARTICIPANT SECTION 8.01. Certain Rights of Owner Trustee and Owner Participant. (a) Subject to Section 13.01 hereof, without the consent of a Majority in Interest of Certificate Holders, the respective parties to the Participation Agreement, the Lease, the Modification Agreement (to the extent relating to timing or amounts of payment obligations), the Parts and Services Agreement (to the extent relating to timing or amounts of payment obligations), the Sales Agreement (to the extent relating to timing or amounts of payment obligations), and the Trust Agreement may not modify, amend or supplement any of said agreements (or the form of the Lease prior to the Commencement Date), or give any consent, waiver, authorization or approval thereunder, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions thereof or of modifying in any manner the rights of the respective parties thereunder; provided, however, that the actions specified in subsection (b) of this Section 8.01 may be taken without the consent of the Indenture Trustee or of any Holder. (b) Subject to the provisions of subsection (c) of this Section 8.01, the respective parties to the Participation Agreement, the Lease, the Trust Agreement, the Agreement to Lease, the Sales Agreement, the Modification Agreement and the Parts and Services Agreement, at any time and from time to time without the consent of the Indenture Trustee or of any Holder may: (1) so long as no Indenture Event of Default shall have occurred and be continuing, modify, amend or supplement the Lease or the form of the Lease prior to the Commencement Date, or give any consent, waiver, authorization or approval with respect thereto, except that without compliance with subsection (a) of this Section 8.01, the parties to the Lease shall not modify, amend or supplement, or give any consent, waiver, authorization or approval for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions thereof or of modifying in any manner the rights of the respective parties thereunder, with respect to the following provisions of the Lease from and after the Commencement Date or, prior to the Commencement Date, the form of Lease attached to the Participation Agreement as Exhibit B: Article 2 (provided that, if in respect of the Term, the result thereof would not be to shorten the Term of the Lease to a period shorter than the period ending with the Maturity of any Certificate), Section 3.03 (except to the extent such Section relates to amounts payable (whether directly or pursuant to this Indenture) to Persons other than Holders and the Indenture Trustee in its individual capacity, Section 5.01, Article 6, Article 10 (except that further restrictions may be imposed on the Lessee), Article 11 (except that additional requirements may be imposed on the Lessee), Article 13 (except for Section 13.05 and except that additional insurance requirements may be imposed on the Lessee), Article 14 (except in order to increase the Lessee's liabilities or enhance the Lessor's rights thereunder), Article 15 (except in the case of an assignment by the Lessor in circumstances where the Aircraft shall remain registrable under the Federal Aviation Act), Section 16.01 (except that such consent of the Holders or the Indenture Trustee shall not be required to impose additional or more stringent Events of Default), Article 17 (except to impose additional remedies, Section 19.01 (except to impose additional requirements on the Lessee), Section 20.01, Article 22, Section 23.01 and any definition of terms used in the Lease, to the extent that any modification of such definition would result in a modification of the Lease not permitted pursuant to this subsection (b); provided that in the event an Indenture Event of Default shall have occurred and be continuing, the Indenture Trustee shall have all rights of the Owner Trustee as "Lessor" under the Lease to modify, amend or supplement the Lease or give any consent, waiver, authorization or approval thereunder, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions thereof or of modifying in any manner the rights of the "Lessor" thereunder; provided further that without the prior consent of the Owner Trustee, and whether or not an Indenture Event of Default shall have occurred and be continuing, no such action shall be taken with respect to any of the provisions of Article 1 (to the extent any modification of a definition contained therein would result in a modification of the Lease not permitted by this proviso), Section 3.04, Articles 4, 5, 6 (to the extent such action would reduce the Lessee's obligations), 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 19 (insofar as it relates to Lessor), 20, 21 and 22 of the Lease, or any other Article or Section of the Lease to the extent such action shall affect the amount or timing of any amounts payable by the Lessee under the Lease whether contained in the form of Lease attached to the Participation Agreement as Exhibit B or in the Lease executed on the Commencement Date (as it may be subsequently modified with the consent of the Owner Trustee) which, absent the occurrence and continuance of an Indenture Event of Default, will be distributable to the Owner Trustee under Article 5; and provided further that the parties to the Lease may take any such action without the consent of the Indenture Trustee or any Holder to the extent such action relates to the payment of amounts constituting, or the Owner Trustee's, the Owner Participant's or the Lessee's rights or obligations with respect to, Excepted Payments; (2) modify, amend or supplement the Trust Agreement, or give any consent, waiver, authorization or approval with respect thereto, in each case only to the extent any such action shall not adversely impact the interests of the Holders; (3) modify, amend or supplement the Participation Agreement, or give any consent, waiver, authorization or approval with respect thereto, except that without compliance with subsection (a) of this Section 8.01 the parties to the Participation Agreement shall not modify, amend or supplement, or give any consent, waiver authorization or approval for the purpose of adding provisions to or changing in any manner or eliminating any of the provisions thereof or of modifying in any manner the rights of the respective parties thereunder, with respect to the following provisions of the Participation Agreement as originally executed: Articles 6, 8 and 9 (insofar as such Articles 6, 8 and 9 relate to the Indenture Trustee and the Holders); and Article 7; and any definition of terms used in the Participation Agreement, to the extent that any modification of such definition would result in a modification of the Participation Agreement not permitted pursuant to this subsection (b); (4) modify, amend or supplement the Sales Agreement, Modification Agreement or the Parts and Services Agreement or give any consent, waiver, authorization or approval with respect thereto, except to the extent relating to timing or amounts of payment obligations thereunder; and (5) modify, amend or supplement any of said agreements in order to cure any ambiguity, to correct or supplement any provisions thereof which may be defective or inconsistent with any other provision thereof or of any provision of this Indenture, or to make any other provision with respect to matters or questions arising thereunder or under this Indenture which shall not be inconsistent with the provisions of this Indenture, provided the making of any such other provision shall not adversely affect the interests of the Holders. (c) No modification, amendment, supplement, consent, waiver, authorization or approval with respect to the Lease or the Participation Agreement, whether effected pursuant to subsection (a) or pursuant to subsection (b) of this Section 8.01 and anything in such subsections or elsewhere in this Indenture to the contrary notwithstanding, shall, without the consent of the Holder of each outstanding Certificate affected thereby, (1) modify, amend or supplement the Lease in such a way as to extend the time of payment of Basic Rent, Stipulated Loss Value or any other amounts payable to the Indenture Trustee for its own account or for the account of the Holders upon the occurrence of an Event of Loss or Termination Value and any other amounts payable to the Indenture Trustee for its own account or for the account of the Holders upon termination of the Lease with respect to the Aircraft payable under, or as provided in, the Lease as originally executed, or reduce the amount of any installment of Basic Rent or Supplemental Rent so that the same is less than the payment of principal of, and interest on the Certificates and Make-Whole Premium, if any, as the case may be, to be made from such installment of Basic Rent or Supplemental Rent, or reduce the aggregate amount of Stipulated Loss Value, or any other amounts payable under, or as provided in, the Lease (or the form thereof prior to the Commencement Date) upon the occurrence of an Event of Loss so that the same is less than the accrued interest on and the principal as of the Loss Payment Date, of the Certificates at the time Outstanding or reduce the amount of Termination Value and any other amounts payable under, or as provided in, the Lease as originally executed upon termination of the Lease with respect to the Aircraft so that the same is less than the accrued interest on and principal as of the Lease Termination Date and Make-Whole Premium, if any, of Certificates at the time outstanding, or (2) modify, amend or supplement the Lease in such a way as to, or consent to any assignment of the Lease or give any consent, waiver, authorization or approval which would, release the Lessee from its obligations in respect of payment of Basic Rent or Supplemental Rent, or Stipulated Loss Value and any other amounts payable to the Indenture Trustee for its own account or the account of the Holders upon the occurrence of an Event of Loss, or Termination Value and any other amounts payable to the Indenture Trustee for its own account or the account of the Holders of the Lease with respect to the Aircraft, payable under, or as provided in, the Lease as originally executed (or the form thereof prior to the Commencement Date), except for any such assignment pursuant to Section 2.12 hereof. SECTION 8.02. Owner Participant's Right to Elect to Prepay or Purchase the Certificates. (a) In the event that (A) at any time one or more Events of Default shall have occurred and be continuing for a period of 180 days or more but less than one year (or a period of less than 180 days if any such Event of Default shall be an Event of Default under Section 16.01(a) of the Lease) and the Certificates shall not have been accelerated or (B) the Certificates shall have been accelerated pursuant to Section 7.02(b) or 7.02(c) hereof or after one or more Events of Default shall have occurred and be continuing for a period of one year or more (or a period of 180 days or more if such Event of Default shall be an Event of Default under Section 16.01(a) of the Lease), the Owner Participant (or the Owner Trustee on behalf of the Owner Participant) may, but shall be under no obligation to, do either of the following: (1) direct the Owner Trustee to cause the prepayment of all, but not less than all, of the Certificates then Outstanding by notifying the Indenture Trustee of such election, which notice in order to be effective shall state that it is irrevocable and shall designate a Prepayment Date which shall be a Rent Payment Date or monthly anniversary thereof and which shall be not less than 30 days after the date of such notice on which the Owner Trustee shall, in the manner provided for in Section 6.04 hereof, deposit the sum of amounts contemplated by paragraph "first" under Section 5.03 and the aggregate Prepayment Price of all such Certificates with the Indenture Trustee. If such payment by the Owner Trustee to the Indenture Trustee is made, the Certificates shall cease to accrue interest from and after the Prepayment Date, and after distribution of such payment to the Holders, the Indenture Trustee shall release the Trust Indenture Estate from the Lien of this Indenture; or (2) purchase all, but not less than all, of the Outstanding Certificates by notifying the Indenture Trustee of such election, which notice in order to be effective shall state that it is irrevocable and shall designate a date which shall be a Rent Payment Date or monthly anniversary thereof and which shall be not less than 30 days after the date of such notice on which the Owner Trustee shall pay to the Indenture Trustee an amount equal to the aggregate unpaid principal amount of all Outstanding Certificates, together with accrued interest on such amount to the date of purchase, the aggregate amount of any Make-Whole Premium in the case of a purchase pursuant to clause (A) above, plus all other sums due any Holder or the Indenture Trustee hereunder or under the Participation Agreement or the Lease. Upon receipt by the Indenture Trustee of such amount, each Holder will be deemed, whether or not Certificates shall have been delivered to the Indenture Trustee on such date, to have thereupon sold, assigned, transferred and conveyed (and, if such Holder is the Pass Through Trustee, shall promptly take such actions as the Owner Participant shall reasonably request to evidence such sale, assignment, transfer and conveyance) to the Owner Participant (without recourse or warranty of any kind except for its own acts), all of the right, title and interest of such Holder in and to the Trust Indenture Estate, this Indenture, and the Participation Agreement and all Certificates held by such Holder and the former Holders shall not be entitled to receive any interest on the principal amount of such Certificates after the date on which such purchase is effected (and payment of the purchase price is made), and the Owner Participant shall be deemed to have assumed (and shall promptly take such actions as any Holder shall reasonably request to evidence such assumption) all of such Holder's obligations under the Participation Agreement, the Certificates and this Indenture arising upon or subsequent to such sale. If the Owner Trustee shall so request, such Holder will comply with all the provisions of Section 2.06 of this Indenture to enable new Certificates to be issued to the Owner Participant in such authorized denominations as the Owner Participant shall request. All charges and expenses required pursuant to Section 2.06 hereof in connection with the issuance of any such new Certificates shall be borne by the Owner Participant. (b) From and after the deposit by the Owner Trustee of the applicable Prepayment Price or purchase price with the Indenture Trustee pursuant to Section 8.02(a) hereof, the Owner Trustee shall be entitled to exercise all remedies of the Indenture Trustee under Article VII hereof as well as of the Lessor under the Lease. SECTION 8.03. Certain Rights of Owner Participant. (a) If (A) there shall occur an Event of Default under the Lease as a result of the Lessee's failure to make any payment of an installment of Basic Rent, and (B) the Owner Trustee shall have paid or caused to be paid at any time prior to the day which is the later of (x) the 11th day subsequent to notice of such failure by the Indenture Trustee to the Owner Trustee or the Owner Participant and (y) the sixth day subsequent to the expiration of the grace period provided for in Section 16.01(a) of the Lease all principal and interest on the Certificates then due (as well as any interest on overdue principal and (to the extent permitted by applicable law) interest), but not including any principal or interest becoming due on account of such Event of Default, then the failure of the Lessee to make the payment of such installment of Basic Rent or of interest on account of such installment's being overdue shall not, constitute an Indenture Event of Default under Section 7.01(a) hereof and any declaration based solely on the same shall be deemed to be automatically rescinded. Nothing contained in the preceding sentence shall be deemed to entitle the Owner Trustee to declare the Lease to be in default or to exercise any rights and powers or pursue any remedies pursuant to Article 17 of the Lease or otherwise, except that the Owner Trustee or the Owner Participant may attempt to recover any amount paid by it or them under this Indenture by demanding of the Lessee payment of such amount, or by commencing an action at law against the Lessee for the payment of such amount or taking appropriate action in a pending action at law against the Lessee pursuant to Section 17.01(a)(v), but only said Section 17.01(a)(v), of the Lease. Upon curing any such Event of Default pursuant to this Section 8.03, the Owner Trustee or the Owner Participant, as the case may be, shall, so long as no Indenture Event of Default shall have occurred and be continuing, be subrogated on an unsecured basis to all the rights of the Indenture Trustee under the Lease in respect of the payment giving rise to such cured Event of Default, and any right to any interest in respect of the same, and shall be entitled to any payment of Basic Rent (or interest thereon) actually made by the Lessee in respect of such cured payment upon receipt by the Indenture Trustee; provided that no such amount shall be paid to the Owner Trustee or the Owner Participant until all amounts then due and payable to each Certificate Holder hereunder and thereunder shall have been paid in full and no Indenture Event of Default shall have occurred and be continuing. Notwithstanding anything in this Indenture or the Lease to the contrary, the Owner Participant and the Owner Trustee collectively, shall not be entitled to cure more than six (6) Events of Default (no more than three (3) of which may be consecutive) occasioned by defaults in the payment of Basic Rent. (b) If (A) there shall occur an Event of Default under the Lease for any reason other than the Lessee's failure to make any payment of an installment of Basic Rent, (B) such Event of Default is curable by the payment of money and (C) the Owner Trustee shall have taken or caused to be taken such action necessary to cure and shall have cured such Event of Default prior to the day which is the later of (x) the 11th day subsequent to notice of such failure by the Indenture Trustee to the Owner Trustee or the Owner Participant and (y) the sixth day subsequent to the expiration of the grace period, if any, provided with respect to such failure on the part of the Lessee in Section 16.01 of the Lease then the failure of the Lessee to perform such covenant, condition or agreement, the observance or performance of which was accomplished by the Owner Trustee hereunder, shall not constitute an Indenture Event of Default under Sec- tion 7.01(a)(ii) hereof and any declaration based solely on the same shall be deemed to be automatically rescinded. Nothing contained in the preceding sentence shall be deemed to entitle the Owner Trustee or the Owner Participant to declare the Lease to be in default or to exercise any rights and powers or pursue any remedies pursuant to Article 17 of the Lease or otherwise, except that the Owner Trustee or the Owner Participant may attempt to recover any amount paid by it or them in effecting such cure by demanding of the Lessee payment of such amount, or by commencing an action at law against the Lessee for the payment of such amount or taking appropriate action in a pending action at law against the Lessee pursuant to Sec- tion 17.01(a)(v), but only said Section 17.01(a)(v), of the Lease. Upon curing any such Event of Default pursuant to this Section 8.03(b), the Owner Trustee or the Owner Participant, as the case may be, shall be subrogated to all the rights of the Indenture Trustee under the Lease in respect of the payment, agreement or covenant giving rise to such Event of Default, and any right to any interest in respect of the same, and shall be entitled to any payment or other performance upon receipt by the Indenture Trustee; provided that no such amount shall be paid to the Owner Trustee or the Owner Participant until all amounts then due and payable to each Certificate Holder hereunder and thereunder shall have been paid in full and no Indenture Event of Default shall have occurred and be continuing. Article IX CONCERNING THE INDENTURE TRUSTEE SECTION 9.01. Acceptance of Trusts. The Indenture Trustee hereby accepts the trusts imposed upon it by this Indenture, and covenants and agrees to perform the same as expressed herein and agrees to receive and disburse all moneys constituting part of the Trust Indenture Estate in accordance with the terms hereof. SECTION 9.02. Duties and Responsibilities of the Indenture Trustee; During an Indenture Event of Default; Prior to an Indenture Event of Default. (a) The Indenture Trustee, prior to the occurrence of an Indenture Event of Default and after the curing or waiving of all Indenture Events of Default which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In case an Indenture Event of Default has occurred (which has not been cured or waived) the Indenture Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. No provision of this Indenture shall be construed to relieve the Indenture Trustee from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that: (i) prior to the occurrence of an Indenture Event of Default and after the curing or waiving of all Indenture Events of Default which may have occurred: (x) the duties and obligations of the Indenture Trustee shall be determined solely by the express provisions of this Indenture, and the Indenture Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read in to this Indenture against the Indenture Trustee; and (y) in the absence of bad faith on the part of the Indenture Trustee, the Indenture Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any statements, certificates or opinions furnished to the Indenture Trustee and conforming to the requirements of this Indenture; but in the case of any such statements, certificate or opinions which by any provision hereof are specifically required to be furnished to the Indenture Trustee, the Indenture Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture; (ii) the Indenture Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Indenture Trustee, unless it shall be proved that the Indenture Trustee was negligent in ascertaining the pertinent facts; and (iii) the Indenture Trustee shall not be liable with respect to any action taken or not taken by it in good faith in accordance with the direction of the Holders of not less than a majority in aggregate principal amount of Outstanding Certificates relating to the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee, or exercising any trust or power conferred upon the Indenture Trustee, under this Indenture. None of the provisions contained in this Indenture shall require the Indenture Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if the Indenture Trustee shall have determined in good faith that the repayment of such funds or adequate indemnity against such liability is not reasonably assured to it. The Indenture Trustee will execute and the Owner Trustee will file or cause to be filed such continuation statements with respect to financing statements relating to the security interest created hereunder in the Trust Indenture Estate as may be specified from time to time in written instructions of the Holders of not less than 25% in aggregate principal amount of Outstanding Certificates (which instructions may, by their terms, be operative only at a future date and which shall be accompanied by the execution form of such continuation statement so to be filed); provided that, notwithstanding the foregoing, the Indenture Trustee may execute and file or cause to be filed any financing statement which it from time to time deems appropriate. (b) If any Event of Default shall have occurred and be continuing and on request of the Holders of not less than 25% in aggregate principal amount of Outstanding Certificates and subject to indemnification, to the extent provided in Sections 7.08 and 9.03 and Article XI hereof, as it may require against the costs, expenses and liabilities to be incurred, the Indenture Trustee shall exercise such remedies under Article 17 of the Lease as shall be specified in such request. (c) The Indenture Trustee agrees that it will, in its individual capacity and at its own cost and expense (but without any right of indemnity in respect of any such cost or expense under Article XI hereof) promptly take such action as may be necessary duly to discharge all Liens on any part of the Trust Indenture Estate which result from claims against it in its individual capacity not related to the administration of the Trust Indenture Estate or any other transaction pursuant to this Indenture or any document included in the Trust Indenture Estate. (d) The Indenture Trustee will execute and deliver to the Lessee for filing in accordance with Section 18 of the Lease any properly presented document, instrument or financing or continuation statement specified in any opinion delivered pursuant to Section 6.03(e) of the Participation Agreement. The Indenture Trustee may rely on the act of presentation of any such document, instrument, financing or continuation statement as evidencing the fact that it is properly prepared and presented, provided that the Indenture Trustee shall promptly correct any error in any such document, instrument, financing or continuation statement of which a Responsible Officer of the Indenture Trustee has actual knowledge. (e) The Indenture Trustee will furnish to each Holder promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates, financial statements and other instruments furnished to the Indenture Trustee, to the extent that the same shall not have been otherwise furnished to such Holder pursuant to this Indenture or to the extent the Indenture Trustee does not reasonably believe that the same shall have been fur- nished by the Lessee directly to such Holder. SECTION 9.03. Certain Rights of the Indenture Trustee. Subject to Section 9.02 hereof: (a) the Indenture Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, officer's certificate or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, note, coupon, security or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request, direction, order or demand of the Owner Trustee mentioned herein shall be sufficiently evidenced by an officer's certificate (unless other evidence in respect thereof be herein specifically prescribed) upon which the Indenture Trustee may rely to prove or establish a matter set forth therein; (c) the Indenture Trustee may consult with counsel and any advice or opinion of counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in good faith and in accordance with such advice or opinion of counsel; (d) the Indenture Trustee shall be under no obligation to exercise any of the trusts or powers vested in it by this Indenture at the request, order or direction of any of the Holders pursuant to the provisions of this Indenture, unless such Holders shall have offered to the Indenture Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred therein or thereby; (e) the Indenture Trustee shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion, rights or powers conferred upon it by this Indenture; (f) prior to the occurrence of an Indenture Event of Default hereunder and after the curing or waiving of all Indenture Events of Default, the Indenture Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, note, coupon, security, or other paper or document unless requested in writing to do so by the Majority in Interest of Certificate Holders; provided that, if the payment within a reasonable time to the Indenture Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such inves- tigation is, in the opinion of the Indenture Trustee, not reasonably assured to the Indenture Trustee by the security afforded to it by the terms of this Indenture, the Indenture Trustee may require reasonable indemnity against such expenses or liabilities as a condition to proceeding; the reasonable expenses of every such examination shall be paid by the Owner Trustee or, if paid by the Indenture Trustee or any predecessor trustee, shall be repaid by the Owner Trustee upon demand; and (g) the Indenture Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys not regularly in its employ and the Indenture Trustee shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care by it hereunder. SECTION 9.04. Indenture Trustee Not Responsible for Recitals, Disposition of Certificates or Application of Proceeds Thereof. The Indenture Trustee assumes no responsibility for the correctness of the recitals contained herein and in the Certificates, except the Indenture Trustee's certificates of authentication. The Indenture Trustee makes no representation as to the validity or sufficiency of this Indenture or of the Certificates. The Indenture Trustee shall not be accountable for the use or application by the Owner Trustee of any of the Certificates or of the proceeds thereof. SECTION 9.05. Indenture Trustee and Agents May Hold Certificates; Collections, etc. The Indenture Trustee or any agent of the Indenture Trustee in its individual or any other capacity may become the owner or pledgee of Certificates with the same rights it would have if it were not the Indenture Trustee or such agent and may otherwise deal with the Owner Trustee and receive, collect, hold and retain collections from the Owner Trustee with the same rights it would have if it were not the Indenture Trustee or such agent. SECTION 9.06. Moneys Held by Indenture Trustee. Subject to Sections 5.08 hereof and 14.04 hereof, all moneys received by the Indenture Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by mandatory provisions of law. Neither the Owner Trustee nor, subject to Section 5.08 hereof, the Indenture Trustee nor any agent thereof shall be under any liability for interest on any moneys received by it hereunder. SECTION 9.07. Right of Indenture Trustee to Rely on Officers' Certificate, etc. Subject to Sections 9.02 and 9.03 hereof, whenever in the administration of the trusts of this Indenture the Indenture Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting any action hereunder, such matter (unless other evidence in respect thereof be specifically prescribed herein) may, in the absence of bad faith on the part of the Indenture Trustee, be deemed to be conclusively proved and established by an officer's certificate delivered to the Indenture Trustee, and such certificate, in the absence of bad faith on the part of the Indenture Trustee, shall be full warrant to the Indenture Trustee for any action taken, suffered or omitted by it under the provisions of this Indenture upon the faith thereof. SECTION 9.08. Replacement Engines. At any time and from time to time any Engine which has been subject to an Event of Loss and which may, or which is required to, be replaced under Section 10.03, or 11.04 of the Lease by a Replacement Engine, shall be replaced in accordance with the provisions of this Section 9.08 and the provisions of said Sections of the Lease, the Owner Trustee shall, from time to time, direct the Indenture Trustee to execute and deliver to or as directed in writing by the Owner Trustee an appropriate instrument releasing such Engine as appropriate from the Lien of this Indenture and the Indenture Trustee shall execute and deliver such instrument as aforesaid without recourse or warranty, but only upon receipt by or deposit with the Indenture Trustee of the following: (1) A written request from the Owner Trustee requesting such release and specifically describing the Engine(s) to be so released. (2) A certificate signed by a duly authorized officer of the Lessee stating the following: (i) a description of the Engine subject to the Event of Loss including the manufacturer's serial number; (ii) a description of the Replacement Engine including the manufacturer's name, the engine model and serial number; (iii) that on the date of the Indenture and Security Agreement Supplement relating to the Replacement Engine the Owner Trustee will be the legal owner of such Replacement Engine free and clear of all Liens except Liens permitted under Section 6.01 of the Lease, and that such Replacement Engine will on such date be in at least as good operating condition and repair as required by the terms of the Lease; (iv) that the value of the Replacement Engine as of the date of such certificate is not less than the value of the Engine to be released (assuming such Engine was in the condition and repair required to be maintained under the Lease); (v) that the release of the Engine subject to the Event of Loss will not impair the security of the Indenture in contravention of any of the provisions of this Indenture; (vi) that upon such replacement, the Lien of this Indenture will apply to the Replacement Engine; and (vii) that each of the conditions specified in Section 10.03 or 11.04 of the Lease with respect to such Replacement Engine has been satisfied. (3) The appropriate instruments (i) transferring to the Owner Trustee title to the Replacement Engine to be received as consideration for the Engine to be released and (ii) assigning to the Owner Trustee the benefit of all manufacturer's and vendor's warranties, if any, generally available with respect to such Replacement Engine, and an Indenture and Security Agreement Supplement subjecting such Replacement Engine to the Trust Agreement and to the Lien of this Indenture. (4) The opinion of Davis Polk & Wardwell, special counsel to the Lessee, or other counsel reasonably satisfactory to the Indenture Trustee, stating that: (i) the certificates, opinions and other instruments and/or property which have been or are therewith delivered to and deposited with the Indenture Trustee conform to the requirements of this Indenture and the Lease and, upon the basis of such application, the property so sold or disposed of may be properly released from the Lien of this Indenture and all conditions precedent herein provided for relating to such release have been complied with; and (ii) the Replacement Engine has been validly subjected to the Lien of this Indenture and covered by the Lease, the instruments subjecting such Replacement Engine to the Lease and to the Lien of this Indenture, as the case may be, have been duly filed for recordation pursuant to the Avia- tion Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary or advisable in order to establish and perfect the title of the Owner Trustee to, and to establish and perfect the Lien of this Indenture on, such Replacement Engine and the Indenture Trustee should be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to such Replacement Engine, provided, that such opinion need not be to the effect specified in the foregoing clause to the extent that the benefits of such Section 1110 would not have been, by reason of a change in law or governmental interpretation thereof after the date hereof, available to the Indenture Trustee with respect to the Aircraft immediately prior to such substitution had such Event of Loss not occurred. SECTION 9.09. Indenture and Security Agreement Supplement for Replacements. In the event of the substitution of a Replacement Engine as contemplated by Section 10.03 or Article 11 of the Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of the Holders and the Lessee, subject to fulfillment of the conditions precedent and compliance by the Lessee with its obligations set forth in Section 10.03 or Article 11 of the Lease, to execute and deliver an Indenture and Security Agreement Supplement as contemplated by Sec- tion 9.08(3) hereof and, provided no Event of Default shall have occurred and be continuing, execute and deliver to the Lessee an appropriate instrument releasing the Engine being replaced from the Lien of this Indenture. SECTION 9.10. Effect of Replacement. In the event of the substitution of a Replacement Engine as contemplated by Section 10.01 or Article 11 of the Lease and Section 9.08 hereof, all provisions of this Indenture relating to the Engine or Engines being replaced shall be applicable to such Replacement Engine or Engines with the same force and effect as if such Replacement Engine or Engines were the same engine or engines, as the case may be, as the Engine or Engines being replaced but for the Event of Loss with respect to the Engine being replaced. SECTION 9.11. Compensation. The Owner Trustee covenants and agrees to pay, and the Indenture Trustee shall be entitled to receive, reasonable fees, compensation and payment or reimbursement for its reasonable advances, expenses and disbursements (including the reasonable compensation and expenses and disbursements of its counsel, agents and other persons not regularly in its employ) in connection with its services rendered hereunder or in any way relating to or arising out of the administration of the Trust Indenture Estate and shall have a priority claim on the Trust Indenture Estate for the payment of such compensation, advances, expenses and disbursements to the extent that such compensation, advances, expenses and disbursements shall not be paid by the Lessee or the Owner Participant, and shall have the right to use or apply any moneys held by it hereunder in the Trust Indenture Estate toward such payments; provided that, so long as the Lease is in effect, the Indenture Trustee shall not make any claim for payment under this Section 9.11 against the Owner Trustee without first making demand on the Lessee for payment of such claim. The Indenture Trustee agrees that it shall have no right against any Holder, First Security or (except as provided in the Participation Agreement) to the Owner Participant for any fee as compensation for its services as trustee under this Indenture. Article X CONCERNING THE HOLDERS SECTION 10.01. Evidence of Action Taken by Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing, and, except as otherwise expressly provided herein, such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee and, if expressly required herein, to the Owner Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Sections 9.02 and 9.03 hereof) conclusive in favor of the Indenture Trustee and the Owner Trustee, if made in the manner provided in this Article. (b) For the purpose of determining the Holders entitled to vote or consent to any direction, waiver or other action of such Holders under Section 7.10 or 7.11 hereof, the Lessee may set a record date for such vote or consent by specifying such record date in an Officer's Certificate delivered to the Indenture Trustee. Such record date shall be a date not more than 15 days prior to the first solicitation of such vote or consent. SECTION 10.02. Proof of Execution of Instruments and of Holding of Certificates. Subject to Sections 9.02 and 9.03 hereof, the execution of any instrument by a Holder or his agent or proxy may be proved in accordance with such reasonable rules and regulations as may be prescribed by the Indenture Trustee. The holding of Certificates shall be proved by the Register or by a certificate of the Registrar. SECTION 10.03. Holders to Be Treated as Owners. Prior to due presentment for registration of transfer of any Certificate, the Owner Trustee, the Indenture Trustee, any agent of the Owner Trustee or the Indenture Trustee, the Paying Agent, if any, the Registrar and the Lessee may deem and treat the Person in whose name such Certificate shall be registered upon the Register as the absolute owner of such Certificate (whether or not such Certificate shall be overdue and notwithstanding any notation of ownership or other writing thereon) for the purpose of receiving payment of or on account of the principal of and, subject to the provisions of this Indenture, interest on such Certificate and for all other purposes; and neither the Owner Trustee nor the Indenture Trustee (nor any agent of the Owner Trustee or the Indenture Trustee) nor the Paying Agent, if any, nor the Registrar nor the Lessee shall be affected by any notice to the contrary. All such payments so made to any such person, or upon his order, shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Certificate. SECTION 10.04. Certificates Owned by Owner Trustee, Owner Participant and the Lessee Deemed Not Outstanding. In determining whether the Holders of the requisite aggregate principal amount of Certificates have concurred in any direction, consent or waiver under this Indenture, Certificates which are owned by the Owner Trustee, the Owner Participant, First Security, the Lessee or by any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Owner Trustee, the Owner Participant, First Security or the Lessee shall be disregarded and deemed not to be Outstanding for the purpose of any such determination; provided that for the purpose of determining whether the Indenture Trustee shall be protected in relying on any such direction, consent or waiver, only if a Responsible Officer of the Indenture Trustee has actual knowledge that certain Certificates are so owned by any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Owner Trustee, the Owner Participant, First Security shall such Certificates be so disregarded; and provided further that if all Certificates which would be deemed Outstanding in the absence of the foregoing provision are owned by the Owner Trustee, the Owner Participant, First Security or the Lessee or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Owner Trustee, the Owner Participant, First Security or the Lessee, then such Certificates shall be deemed Outstanding for the purpose of any such determination. Certificates so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Indenture Trustee the pledgee's right so to act with respect to such Certificates and that the pledgee is not the Owner Trustee, the Owner Participant, First Security or the Lessee or any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Owner Trustee, the Owner Participant, First Security or the Lessee. In case of a dispute as to such right, the advice of counsel shall be full protection in respect of any decision made by the Indenture Trustee in accordance with such advice, unless the Lessee, the Owner Trustee, First Security, or the Owner Participant are actually named in the Register. Upon request of the Indenture Trustee, the Owner Trustee, the Owner Participant, First Security and the Lessee shall furnish to the Indenture Trustee promptly an officer's certificate listing and identifying all Certificates, if any, known by the Owner Trustee, the Owner Participant, First Security or the Lessee to be owned or held by or for the account of any of the above-described persons; and, subject to Sections 9.02 and 9.03 hereof, the Indenture Trustee shall be entitled to accept such officer's certificate as conclusive evidence of the facts set forth therein and of the fact that all Certificates not listed therein are outstanding for the purpose of any such determination. SECTION 10.05. Right of Revocation of Action Taken. At any time prior to (but not after) the evidencing to the Indenture Trustee, as provided in Section 10.01, of the taking of any action by the Holders of the percentage in aggregate principal amount of the Certificates specified in this Indenture in connection with such action, any Holder of a Certificate, the serial number of which is shown by the evidence to be included among the serial numbers of the Certificates the Holders of which have consented to such action, may, by filing written notice at the Corporate Trust Office and upon proof of holding as provided in this Article, revoke such action so far as concerns such Certificate. Except as aforesaid, any such action taken by the Holder shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Certificate and of any Certificates issued in exchange or substitution therefor, irrespective of whether or not any notation in regard thereto is made upon any such Certificate or otherwise. Any action taken by the Holders of the percentage in aggregate principal amount of the Certificates specified in this Indenture in connection with such action shall be conclusively binding upon the Owner Trustee, the Indenture Trustee and the Holders of all the Certificates. SECTION 10.06. ERISA Plan Prohibition. No employee benefit plan subject to Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or individual retirement account or plan subject to Section 4975 of the Internal Revenue Code of 1986, as amended, or any trust established under any such plan or account (hereinafter collectively referred to as an "ERISA Plan"), may acquire or hold any of the Certificates. The purchase by any person of any Certificate constitutes a representation by such person to the Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee that such person is not an ERISA Plan and that such person is not acquiring, and has not acquired, such Certificate with assets of an ERISA Plan. Article XI INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE The Owner Trustee, not individually but solely in its capacity as Owner Trustee under the Trust Agreement, hereby agrees, whether or not any of the transactions contemplated hereby shall be consummated, to assume liability for, and does hereby indemnify, protect, save and keep harmless the Indenture Trustee, in its individual capacity, and its successors, assigns, agents and servants solely from the Lessor's Estate, with respect to the claims of the Indenture Trustee for payment or reimbursement under Section 9.11 hereof and from and against any and all liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes payable by the Indenture Trustee on or measured by any compensation received by the Indenture Trustee for its services under this Indenture), claims, actions, suits, costs, expenses or disbursements (including legal fees and expenses) of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Indenture Trustee (whether or not also agreed to be indemnified against by any other person under any other document) in any way relating to or arising out of this Indenture, or any other Indenture Documents or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, nonacceptance, rejection, ownership, delivery, lease, possession, use, operation, condition, modification, maintenance, sale, return or other disposition of the Aircraft or any Engine (including, without limitation, latent and other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Indenture Estate or the action or inaction of the Indenture Trustee hereunder, except only (a) in the case of willful misconduct or gross negligence of the Indenture Trustee in the performance of its duties hereunder, (b) as may result from the inaccuracy of any representation or warranty of the Indenture Trustee in the Participation Agreement, (c) as other- wise provided in Section 9.02(c) hereof or (d) as otherwise excluded by the terms of Article 8 or Article 9 of the Participation Agreement from the Lessee's general indemnity to the Indenture Trustee under said Section; provided that so long as the Lease is in effect, the Indenture Trustee shall not make any claim under this Article XI for any claim or expense indemnified by the Lessee under the Participation Agreement without first making demand on the Lessee for payment of such claim or expense. The Indenture Trustee shall be entitled to indemnification, from the Trust Indenture Estate, for any liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this Article XI to the extent not reimbursed by the Lessee or others, but without releasing any of them from their respective agreements of reimbursement; and to secure the same the Indenture Trustee shall have a prior Lien on the Trust Indenture Estate. The indemnities contained in this Article XI shall survive the termination of this Indenture and the resignation or removal of the Indenture Trustee. Upon payment in full by the Owner Trustee of any indemnity pursuant to this Article XI, the Owner Trustee shall, so long as no Indenture Event of Default shall have occurred and be continuing, be subrogated to the rights of the Indenture Trustee, if any, in respect of the matter as to which the indemnity was paid. Article XII SUCCESSOR TRUSTEES SECTION 12.01. Notice of Successor Owner Trustee. In the case of any appointment of a successor to the Owner Trustee pursuant to the Trust Agreement or any merger, conversion, consolidation or sale of substantially all of the corporate trust business of the Owner Trustee pursuant to the Trust Agreement, the successor Owner Trustee shall give prompt written notice thereof to the Indenture Trustee. SECTION 12.02. Resignation and Removal of Indenture Trustee; Appointment of Successor. (a) The Indenture Trustee or any successor thereto may resign at any time without cause by giving at least 30 days' prior written notice to the Owner Trustee, the Owner Participant, the Lessee and each Holder, such resignation to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In addition, the Majority in Interest of the Certificate Holders or the Owner Trustee, with the consent of the Lessee and the Majority in Interest of the Certificate Holders may at any time remove the Indenture Trustee without cause by an instrument in writing delivered to the Lessee, the Owner Trustee, the Owner Participant, and the Indenture Trustee, and the Indenture Trustee shall promptly notify each Holder thereof in writing, such removal to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In the case of the resignation or removal of the Indenture Trustee, the Majority in Interest of the Certificate Holders, or the Owner Trustee, with the consent of the Lessee and the Majority in Interest of the Certificate Holders, may appoint a successor Indenture Trustee by an instrument signed by such Holders. If a successor Indenture Trustee shall not have been appointed within 90 days after such notice of resignation or removal, the Indenture Trustee, the Owner Trustee, the Lessee, the Owner Participant, or any Holder may apply to any court of competent jurisdiction to appoint a successor Indenture Trustee to act until such time, if any, as a successor shall have been appointed as provided above. The successor Indenture Trustee so appointed by such court shall immediately and without further act be superseded by any successor Indenture Trustee appointed as provided above. (b) In case at any time any of the following shall occur: (i) the Indenture Trustee shall cease to be eligible in accordance with the provisions of Section 12.03 hereof and shall fail to resign after written request therefor by the Owner Trustee or by any such Holder; or (ii) the Indenture Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver or liquidator of the Indenture Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Indenture Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; then the Owner Trustee may remove the Indenture Trustee and, with the consent of the Lessee, appoint a successor trustee by written instrument, in duplicate, executed by a Responsible Officer of the Owner Trustee, one copy of which instrument shall be delivered to the Indenture Trustee so removed and one copy to the successor trustee, or, subject to the provisions of Section 7.13 hereof, the Pass Through Trustee (if it is a Holder) or any other Holder who has been a bona fide Holder for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Indenture Trustee and the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Indenture Trustee and appoint a successor trustee, which removal and appointment shall become effective upon acceptance of appointment by the successor trustee as provided in Section 12.04 hereof. The successor Indenture Trustee so appointed by such court shall immediately and without further act be superseded by any successor Indenture Trustee appointed as provided above within one year from the date of appointment by such court. SECTION 12.03. Persons Eligible for Appointment as Indenture Trustee. There shall at all times be an Indenture Trustee hereunder which shall be a corporation organized and doing business under the laws of the United States of America or of any State or the District of Columbia having a combined capital and surplus of at least $100,000,000, or a direct or indirect subsidiary of such a corporation, or a member of a bank holding company group, having a combined capital and surplus of at least $100,000,000 and such subsidiary or member itself having a capital and surplus, in the case of the original Indenture Trustee or an affiliate of the original Indenture Trustee, of at least $10,000,000 and in any other case of at least $75,000,000, if there is such an institution willing, able and legally qualified to perform the duties of the Indenture Trustee hereunder upon reasonable or customary terms. Such corporate trustee shall be a citizen of the United States as defined in Section 101(16) of the Aviation Act, and shall be authorized under such laws to exercise corporate trust powers and shall be subject to supervision of examination by Federal, State or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Indenture Trustee shall cease to be eligible in accordance with the provisions of this Section, the Indenture Trustee shall resign immediately in the manner and with the effect specified in Section 12.02 hereof. SECTION 12.04. Acceptance of Appointment by Successor Trustee. Any successor trustee appointed as provided in Section 12.02 hereof shall execute and deliver to the Owner Trustee, the Lessee, and to its predecessor trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all rights, powers, duties and obligations of its predecessor hereunder, with like effect as if originally named as trustee herein; but, nevertheless, on the written request of the Owner Trustee or of the successor trustee, upon payment of its charges then unpaid, the trustee ceasing to act shall, subject to Section 14.04 hereof, pay over to the successor trustee all moneys at the time held by it hereunder and shall execute and deliver an instrument transferring to such successor trustee all such rights, powers, duties and obligations. Upon request of any such successor trustee, the Owner Trustee shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers. Any trustee ceasing to act shall, nevertheless, retain a prior claim upon all property or funds held or collected by such trustee to secure any amounts then due it pursuant to the provisions of Article XI hereof. No successor trustee shall accept appointment as provided in this Section 12.04 unless at the time of such acceptance such successor trustee shall be eligible under the provisions of Section 12.03 hereof. Upon acceptance of appointment by a successor trustee as provided in this Section 12.04, the successor trustee shall mail notice thereof by first-class mail to the Holders at their last addresses as they shall appear in the Register, and shall mail a copy of such notice to the Lessee and the Owner Trustee. If the acceptance of appointment is substantially contemporaneous with the resignation, then the notice called for by the preceding sentence may be combined with the notice called for by Section 12.02 hereof. SECTION 12.05. Merger, Conversion, Consolidation or Succession to Business of Indenture Trustee. Any corporation into which the Indenture Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Indenture Trustee shall be a party, or any corporation succeeding to the corporate trust business of the Indenture Trustee, shall be the successor to the Indenture Trustee hereunder, provided that, anything herein to the contrary notwithstanding, such corporation shall be eligible under the provisions of Section 12.03 hereof, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case at the time such successor to the Indenture Trustee shall succeed to the trusts created by this Indenture any of the Certificates shall have been authenticated but not delivered, any such successor to the Indenture Trustee may adopt the certificate of authentication of any predecessor Indenture Trustee and deliver such Certificates so authenticated; and, in case at that time any of the Certificates shall not have been authenticated, any successor to the Indenture Trustee may authenticate such Certificates either in the name of any predecessor hereunder or in the name of the successor Indenture Trustee; and in all such cases such certificate shall have the full force which it is anywhere in the Certificates or in this Indenture provided that the certificate of the Indenture Trustee shall have; provided, that the right to adopt the certificate of authentication of any predecessor Indenture Trustee or to authenticate Certificates in the name of any predecessor Indenture Trustee shall apply only to its successor or successors by merger, conversion or consolidation. SECTION 12.06. Appointment of Separate Trustees. (a) At any time or times, for the purpose of meeting any legal requirements of any jurisdiction in which any part of the Trust Indenture Estate may at the time be located or in which any action of the Indenture Trustee may be required to be performed or taken, the Indenture Trustee, by an instrument in writing signed by it, may appoint one or more individuals or corporations to act as a separate trustee or separate trustees or co-trustee, acting jointly with the Indenture Trustee, of all or any part of the Trust Indenture Estate, to the full extent that local law makes it necessary for such separate trustee or separate trustees or co-trustee acting jointly with the Indenture Trustee to act. (b) The Indenture Trustee and, at the request of the Indenture Trustee, the Owner Trustee, shall execute, acknowledge and deliver all such instruments as may be required by the legal requirements of any jurisdiction or by any such separate trustee or separate trustees or co-trustee for the purpose of more fully confirming such title, rights or duties to such separate trustee or separate trustees or co-trustee. Upon the acceptance in writing of such appointment by any such separate trustee or separate trustees or co-trustee, it, he or they shall be vested with such title to the Trust Indenture Estate or any part thereof, and with such rights, powers, duties and obligations, as shall be specified in the instrument of appointment, and such rights, powers, duties and obligations shall be conferred or imposed upon and exercised or performed by the Indenture Trustee, or the Indenture Trustee and such separate trustee or separate trustees or co-trustee jointly with the Indenture Trustee subject to all the terms of this Indenture, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed the Indenture Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations shall be exercised and performed by such separate trustee or separate trustees or co-trustee, as the case may be. Any separate trustee or separate trustees or co-trustee may, at any time by an instrument in writing, constitute the Indenture Trustee its or his attorney-in-fact and agent with full power and authority to do all acts and things and to exercise all discretion on its or his behalf and in its or his name. In case any such separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, the title to the Trust Indenture Estate and all assets, property, rights, powers, duties and obligations and duties of such separate trustee or co-trustee shall, so far as permitted by law, vest in and be exercised by the Indenture Trustee, without the appointment of a successor to such separate trustee or co-trustee unless and until a successor is appointed. (c) All provisions of this Indenture which are for the benefit of the Indenture Trustee (including without limitation Article XI hereof) shall extend to and apply to each separate trustee or co-trustee appointed pursuant to the foregoing provisions of this Section 12.06. (d) Every additional trustee and separate trustee hereunder shall, to the extent permitted by law, be appointed and act and the Indenture Trustee shall act, subject to the following provisions and conditions: (i) all powers, duties, obligations and rights conferred upon the Indenture Trustee in respect of the receipt, custody, investment and payment of moneys shall be exercised solely by the Indenture Trustee; (ii) all other rights, powers, duties and obligations conferred or imposed upon the Indenture Trustee shall be conferred or imposed and exercised or performed by the Indenture Trustee and such additional trustee or trustees and separate trustee or trustees jointly except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed, the Indenture Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust Indenture Estate in any such jurisdiction) shall be exercised and performed by such additional trustee or trustees or separate trustee or trustees; (iii) no power hereby given to, or exercisable by, any such additional trustee or separate trustee shall be exercised hereunder by such additional trustee or separate trustee except jointly with, or with the consent of, the Indenture Trustee; and (iv) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder. If at any time the Indenture Trustee shall deem it no longer necessary or prudent in order to conform to any such law, the Indenture Trustee shall execute and deliver an indenture supplemental hereto and all other instruments and agreements necessary or proper to remove any additional trustee or separate trustee. (e) Any request, approval or consent in writing by the Indenture Trustee to any additional trustee or separate trustee shall be sufficient warrant to such additional trustee or separate trustee, as the case may be, to take such action as may be so requested, approved or consented to. (f) Notwithstanding any other provision of this Section 12.06, the powers of any additional trustee or separate trustee shall not exceed those of the Indenture Trustee hereunder. Article XIII SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE AND OTHER DOCUMENTS SECTION 13.01. Supplemental Indentures Without Consent of Holders. The Owner Trustee (when authorized by the Owner Participant) and the Indenture Trustee, without consent of the Holders, may enter into an indenture or indentures supplemental hereto for one or more of the following purposes: (a) to convey, transfer, assign, mortgage or pledge any property or assets to the Indenture Trustee as security for the Certificates; (b) to evidence the succession of another corporation to the Owner Trustee or successive successions, and the assumption by the successor corporation of the covenants, agreements and obligations of the Owner Trustee herein and in the Certificates; (c) to add to the covenants of the Owner Trustee such further covenants, restrictions, conditions or provisions as it and the Indenture Trustee shall consider to be for the protection of the Holders, and to make the occurrence, or the occurrence and continuance, of a default in any such additional covenants, restrictions, conditions or provisions an Indenture Event of Default permitting the enforcement of all or any of the several remedies provided herein; provided, that in respect of any such additional covenant, restriction, condition or provision such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such an Indenture Event of Default or may limit the remedies available to the Indenture Trustee upon such an Indenture Event of Default or may limit the right of not less than the Majority in Interest of Certificate Holders to waive such an Indenture Event of Default; (d) to surrender any rights or power conferred herein upon the Owner Trustee or the Owner Participant; (e) to cure any ambiguity or to correct or supplement any provision contained herein or in any supplemental indenture which may be defective or inconsistent with any other provision contained herein or in any supplemental indenture; or to make such other provisions in regard to matters or questions arising under this Indenture or under any supplemental indenture as the Owner Trustee may deem necessary or desirable and which shall not adversely affect the interests of the Holders; (f) to correct or amplify the description of any property at any time subject to the Lien of this Indenture or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subject to the Lien of this Indenture or to subject Replacement Engines to the Lien of this Indenture in accordance with the provisions hereof or with the Lease or to release from the Lien of this Indenture property that has been substituted on or removed from the Aircraft as contemplated in Section 3.07 hereof; provided that supplements to this Indenture entered into for the purpose of subjecting Replacement Engines to the Lien of this Indenture need only be executed by the Owner Trustee and the Indenture Trustee; (g) to provide for the issuance under this Indenture of Certificates in coupon form (including Certificates registrable as to principal only) and to provide for exchangeability of such Certificates with Certificates issued hereunder in fully registered form, and to make all appropriate changes for such purpose; (h) to effect the re-registration of the Aircraft pursuant to Section 6.03(b) of the Participation Agreement; and (i) to add, eliminate or change any provision hereunder so long as such action shall not adversely affect the interests of the Holders. The Indenture Trustee is hereby authorized to join in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations which may be contained therein and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Indenture Trustee shall not be obligated to enter into any such supplemental indenture which adversely affects the Indenture Trustee's own rights, duties or immunities under this Indenture or otherwise. SECTION 13.02. Supplemental Indentures With Consent of Holders. With the consent (evidenced as provided in Article X) of the Majority in Interest of Certificate Holders, the Owner Trustee (when authorized by the Owner Participant) and the Indenture Trustee may, from time to time and at any time, enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the Holders; provided, however, that, without the consent of each Holder, no such amendment of or supplement to this Indenture or any indenture supplemental hereto, or modification of the terms of, or consent under, any thereof, shall (a) modify any of the provisions of Section 7.11 hereof or this Section 13.02, (b) reduce the amount or extend the time of payment of any amount owing or payable under any Certificate or reduce the interest payable on any Certificate (except that only the consent of the Holder of a Certificate shall be required for any decrease in any amounts of or the rate of interest payable on such Certificate or any extension for the time of payment of any amount payable under such Certificate), or alter or modify the provisions of Article V hereof with respect to the order of priorities in which distributions thereunder shall be made as between the Holder and the Owner Trustee or the Owner Participant or with respect to the amount or time of payment of any such distribution, or alter or modify the circumstances under which a Make-Whole Premium shall be payable, or alter the currency in which any amount payable under any Certificate is to be paid, or impair the right of any Holder to commence legal proceedings to enforce a right to receive payment hereunder, (c) reduce, modify or amend any indemnities in favor of any Holder or in favor of or to be paid by the Owner Participant or Owner Trustee (except as consented to by each Person adversely affected thereby), or (d) create or permit the creation of any Lien on the Trust Indenture Estate or any part thereof prior to or pari passu with the Lien of this Indenture, except as expressly permitted herein (or, with respect to Collateral as defined in the Collateral Agreement or the Letter of Credit, in the Collateral Agreement), or deprive any Holder of the benefit of the Lien of this Indenture or the Collateral Agreement on the Trust Indenture Estate, except as provided in Section 7.02 hereof or in connection with the exercise of remedies under Article VII. This Section 13.02 shall not apply to any indenture or indentures supplemental hereto permitted by, and complying with the terms of, Section 13.06 hereof. Upon the request of the Owner Trustee (at the direction of the Owner Participant) and upon the filing with the Indenture Trustee of evidence of the consent of Holders and other documents, if any, required by Section 10.01, the Indenture Trustee shall join with the Owner Trustee and the Lessee in the execution of such supplemental indenture unless such supplemental indenture affects the Indenture Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Indenture Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture. It shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution by the Owner Trustee, the Indenture Trustee and the Lessee of any supplemental indenture pursuant to the provisions of this Section, the Indenture Trustee shall mail a notice thereof by first-class mail to the Holders at their addresses as they shall appear on the registry books of the Registrar, setting forth in general terms the substance of such supplemental indenture. Any failure of the Indenture Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. SECTION 13.03. Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Indenture Trustee, the Owner Trustee, the Lessee and the Holders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes. SECTION 13.04. Documents to Be Given to Indenture Trustee. The Indenture Trustee, subject to the provisions of Sections 9.02 and 9.03, may receive an officer's certificate and an opinion of counsel as conclusive evidence that any such supplemental indenture complies with the applicable provisions of this Indenture. SECTION 13.05. Notation on Certificates in Respect of Supplemental Indentures. Certificates authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article may bear a notation in form approved by the Indenture Trustee as to any matter provided for by such supplemental indenture. If the Owner Trustee or the Indenture Trustee shall so determine, new Certificates so modified as to conform, in the opinion of the Owner Trustee and the Indenture Trustee, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Owner Trustee, authenticated by the Indenture Trustee and delivered in exchange for the Outstanding Certificates. SECTION 13.06. No Request Necessary for Lease Supplement or Indenture and Security Agreement Supplement. Notwithstanding anything contained in Section 13.02 hereof, no written request or consent of the Indenture Trustee, any Holder or the Owner Participant pursuant to Section 13.02 hereof shall be required to enable the Owner Trustee to enter into any supplement to the Lease with the Lessee pursuant to the terms of the Lease to subject a Replacement Engine thereto or to execute and deliver an Indenture and Security Agreement Supplement pursuant to the terms hereof. Article XIV SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS SECTION 14.01. Satisfaction and Discharge of Indenture; Termination of Indenture. If at any time after (a) the Owner Trustee shall have paid or caused to be paid the principal of and interest and Make- Whole Premium (if any) on all the Certificates outstanding hereunder, as and when the same shall have become due and payable, or (b) the Owner Trustee shall have delivered to the Indenture Trustee for cancellation all Certificates theretofore authenticated (other than any Certificates which shall have been destroyed, lost or stolen and which shall have been replaced or paid as provided in Section 2.07 hereof) or (c) (i) all such Certificates not theretofore delivered to the Indenture Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one year or are to be called for prepayment within one year under arrangements satisfactory to the Indenture Trustee for the giving of notice of prepayment by the Indenture Trustee in the name and at the expense of the Owner Trustee, and (ii) the Owner Trustee shall have irrevocably deposited or caused to be irrevocably deposited with the Indenture Trustee as trust funds (other than pursuant to the Collateral Agreement) the entire amount in cash (other than moneys repaid by the Indenture Trustee or any paying agent to the Owner Trustee in accordance with Section 14.04 hereof) or Government obligations maturing as to principal and interest in such amounts and at such times as will insure the availability of cash sufficient to pay at maturity all such Certificates not theretofore delivered to the Indenture Trustee for cancellation, including principal and interest and Make-Whole Premium (if any) due or to become due to such date of maturity as the case may be, and if, in any such case, the Owner Trustee shall also pay or cause to be paid all other sums then payable hereunder by the Owner Trustee, then this Indenture shall cease to be of further effect (except as to (A) rights of registration of transfer and exchange, and the Owner Trustee's right of optional prepayment pursuant to Section 6.02(a)(ii) hereof, (B) substitution of mutilated, defaced, destroyed, lost or stolen Certificates, (C) rights of Holders to receive payments of principal thereof and interest thereon, upon the original stated due dates therefor (but not upon acceleration), (D) the rights, obligations, indemnities and immunities of the Indenture Trustee hereunder and (E) the rights of the Holders as beneficiaries hereof with respect to the property so deposited with the Indenture Trustee payable to all or any of them), and the Indenture Trustee, on demand of the Owner Trustee accompanied by an officer's certificate and an opinion of counsel and at the cost and expense of the Owner Trustee, shall execute proper instruments acknowledging such satisfaction of and discharging this Indenture. The Owner Trustee agrees to reimburse and indemnify the Indenture Trustee for any costs or expenses thereafter reasonably and properly incurred and to compensate the Indenture Trustee for any services thereafter reasonably and properly rendered by the Indenture Trustee in connection with this Indenture or the Certificates. Upon (or at any time after) payment in full to the Indenture Trustee, as trust funds, of the principal of and interest on and Make-Whole Premium, if any, and all other amounts due hereunder and under all Certificates and provided that there shall then be no other amounts due to the Holders and the Indenture Trustee hereunder, under the Collateral Agreement or under the Participation Agreement, or otherwise secured hereby, the Owner Trustee shall direct the Indenture Trustee to execute and deliver to or as directed in writing by the Owner Trustee an appropriate instrument releasing the Aircraft from the Lien of this Indenture and releasing the Indenture Documents from the assignment thereof hereunder, and the Indenture Trustee shall execute and deliver such instrument as aforesaid and, at the Owner Trustee's expense, will execute and deliver such other instruments or documents as may be reasonably requested by the Owner Trustee to give effect to such release; provided, however, that this Indenture and the trusts created hereby shall terminate earlier and this Indenture shall be of no further force or effect upon any sale or other final disposition by the Indenture Trustee of all property forming a part of the Trust Indenture Estate and the final distribution by the Indenture Trustee of all moneys or other property or proceeds constituting part of the Trust Indenture Estate in accordance with the terms hereof. Except as aforesaid otherwise provided, this Indenture and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. If, in connection with any purchase of the Aircraft by the Lessee pursuant to the Lease, the Lessee shall pay any Secured Obligation owed by the Owner Participant pursuant to the Participation Agreement to the Holders or the Indenture Trustee in order to release the Lien of this Indenture with respect to the Aircraft, upon payment in full to the Holders and the Indenture Trustee of all Secured Obligations, the Lessee shall be subrogated to the position of the Holders or the Indenture Trustee, as the case may be, with respect to such Person's rights to recover the amounts paid from the Owner Participant. SECTION 14.02. Application by Indenture Trustee of Funds Deposited for Payment of Certificates. Subject to Section 14.04 hereof, all moneys deposited with the Indenture Trustee pursuant to Section 14.01 hereof shall be held in trust and applied by it to the prompt payment, either directly or through any Paying Agent, to the Holders of the particular Certificates for the payment or prepayment of which such moneys have been deposited with the Indenture Trustee, of all sums due and to become due thereon for principal, interest and Make-Whole Premium, if any, but such money need not be segregated from other funds except to the extent required by law. SECTION 14.03. Repayment of Moneys Held by Paying Agent. Upon the satisfaction and discharge of this Indenture all moneys then held by any Paying Agent under the provisions of this Indenture shall, upon demand of the Owner Trustee, be repaid to it or paid to the Indenture Trustee and thereupon such Paying Agent shall be released from all further liability with respect to such moneys. SECTION 14.04. Transfer of Moneys Held by Indenture Trustee and Paying Agent Unclaimed for Two Years and Eleven Months. Any moneys deposited with or paid to the Indenture Trustee or any Paying Agent for the payment of the principal of or interest or Make- Whole Premium on any Certificate and not applied but remaining unclaimed for two years and eleven months after the date upon which such principal, interest or Make-Whole Premium shall have become due and payable, shall, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, be paid to the Owner Trustee by the Indenture Trustee or such Paying Agent and the Holder of such Certificate, as a general unsecured creditor, shall, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property laws, thereafter look only to the Owner Trustee for any payment which such Holder may be entitled to collect, and all liability of the Indenture Trustee, or any Paying Agent with respect to such moneys shall thereupon cease. ARTICLE XV MISCELLANEOUS SECTION 15.01. Capacity in Which Acting. Each of First Security (or its permitted successors or assigns) and the Indenture Trustee acts hereunder not in its individual capacity but solely as trustee except as expressly provided herein and in the other Operative Agreements, and, in the case of First Security (or its permitted successors or assigns), in the Trust Agreement. SECTION 15.02. No Legal Title to Trust Indenture Estate in Holders. No Holder shall have legal title to any part of the Trust Indenture Estate. No transfer, by operation of law or otherwise, of any Certificate or other right, title and interest of any Holder in and to the Trust Indenture Estate or hereunder shall operate to terminate this Indenture or entitle such Holder or any successor or transferee of such Holder to an accounting or to the transfer to it of legal title to any part of the Trust Indenture Estate. SECTION 15.03. Sale of Trust Indenture Estate by Indenture Trustee is Binding. Any sale or other conveyance of all or any part of the Trust Indenture Estate by the Indenture Trustee made pursuant to the terms of this Indenture or of the Lease shall bind the Lessee, the Owner Trustee, the Holders and the Owner Participant and shall be effective to transfer or convey all right, title and interest of the Indenture Trustee, the Owner Trustee, the Owner Participant and such Holders therein and thereto. No purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency or regularity of such sale or conveyance or as to the application of any sale or other proceeds with respect thereto by the Indenture Trustee. SECTION 15.04. Indenture for Benefit of Owner Trustee, Indenture Trustee, Owner Participant and Holders. Nothing in this Indenture, whether express or implied, shall be construed to give to any person other than First Security, the Owner Trustee, the Lessee, the Indenture Trustee, as trustee and in its individual capacity, the Owner Participant, and the Holders any legal or equitable right, remedy or claim under or in respect of this Indenture. SECTION 15.05. No Action Contrary to the Lessee's Rights Under the Lease. Notwithstanding any of the provisions of this Indenture or the Trust Agreement to the contrary, after the Commencement Date and so long as no Event of Default shall have occurred and be continuing, neither the Indenture Trustee nor the Owner Trustee will take any affirmative acts that interfere with the peaceful and quiet possession and enjoyment of the Aircraft by the Lessee. SECTION 15.06. Notices. Unless otherwise expressly specified or permitted by the terms hereof, all notices, requests, demands, authorizations, directions, consents, waivers or documents provided or permitted by this Indenture to be made, given, furnished or filed shall be in writing, mailed by certified mail, postage prepaid, or by confirmed telex or telecopy, and (a) if to the Owner Trustee, addressed to it at its office at 79 South Main Street, Salt Lake City, Utah 84111, Attention, Corporate Trust Department (with a copy to the Owner Participant at the address provided for notice pursuant to Section 14.01 of the Participation Agreement), (b) if personally delivered to the Indenture Trustee, addressed to it at its office at Suite 900, 600 Peachtree Street, N.E., Atlanta, Georgia 30308 (telecopier (404) 607-6362), Attention: Corporate Trust Lease Administration or (c) if to the Owner Participant or the Lessee, addressed to such party at such address as such party shall have furnished by notice to the Owner Trustee and the Indenture Trustee, or, until an address is so furnished, addressed to the address of such party if any, set forth on the signature pages of the Participation Agreement. Any party hereto may change the address to which notices to such party will be sent by giving notice of such change to the other parties to this Indenture. Where this Indenture provides for notice to Holders, such notice shall be sufficiently given (unless otherwise expressly provided herein) if in writing and mailed, first-class postage prepaid, to each Holder entitled thereto, at his last address as it appears in the Register. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Indenture Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail notice to the Owner Trustee and Holders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving of such notice. SECTION 15.07. Officer's Certificates and Opinions of Counsel; Statements to Be Contained Therein. Upon any application or demand by the Lessee or the Owner Trustee to the Indenture Trustee to take any action under any of the provisions of this Indenture, the Lessee or the Owner Trustee, as the case may be, shall furnish to the Indenture Trustee upon request (a) an officer's certificate stating that all conditions precedent provided for in this Indenture relating to the proposed action have been complied with and that the proposed action is in conformity with the requirements of this Indenture, and (b) an opinion of counsel reasonably satisfactory to the Indenture Trustee stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or demand as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or demand, no additional certificate or opinion need be furnished. Any certificate, statement or opinion of an officer of First Security may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of counsel may be based, insofar as it relates to factual matters information with respect to which is in the possession of the Lessee or First Security, upon the certificate, statement or opinion of or representations by an officer or officers of the Lessee or First Security, as the case may be, unless such counsel knows that the certificate, statement or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of an officer of the Lessee or First Security or of counsel thereto may be based, insofar as it relates to accounting matters, upon a certificate or opinion of or representations by an accountant or firm of accountants employed by the Lessee or the Owner Trustee, as the case may be, unless such officer or counsel, as the case may be, knows that the certificate or opinion or representations with respect to the accounting matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate or opinion of any independent firm of public accountants filed with the Indenture Trustee shall contain a statement that such firm is independent. SECTION 15.08. Severability. Any provision of this Indenture which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 15.09. No Oral Modifications or Continuing Waivers. No terms or provisions of this Indenture or the Certificates may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party or other person against whom enforcement of the change, waiver, discharge or termination is sought; and any waiver of the terms hereof or of any Certificate shall be effective only in the specific instance and for the specific purpose given. SECTION 15.10. Successors and Assigns. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, each of the parties hereto and the successors and permitted assigns of each, all as herein provided. Any request, notice, direction, consent, waiver or other instrument or action by any Holder shall bind the successors and assigns of such Holder. This Indenture and the Trust Indenture Estate shall not be affected by any amendment or supplement to the Trust Agreement or by any other action taken under or in respect of the Trust Agreement, except that each reference in this Indenture to the Trust Agreement shall mean the Trust Agreement as amended and supplemented from time to time to the extent permitted hereby and thereby. SECTION 15.11. Headings. The headings of the various Articles and Sections herein and in the table of contents hereto are for the convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 15.12. Normal Commercial Relations. Anything contained in this Indenture to the contrary notwithstanding, the Owner Participant, the Indenture Trustee and any Holder, or any bank or other affiliate of any such party, may conduct any banking or other financial transactions, and have banking or other commercial relationships, with the Lessee fully to the same extent as if this Indenture were not in effect, including without limitation the making of loans or other extensions of credit to the Lessee for any purpose whatsoever, whether related to any of the transactions contemplated hereby or otherwise. SECTION 15.13. Governing Law; Counterpart Form. THIS INDENTURE AND EACH CERTIFICATE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Indenture may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed this ____ day of __________, 1994 by their respective officers thereunto duly authorized and acknowledge that this Indenture has been made and delivered in The City of New York, and this Indenture shall be effective only upon such execution and delivery. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as otherwise expressly provided herein, but solely as Owner Trustee By: ________________________________ Title: NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, not in its individual capacity, except as otherwise expressly provided herein, but solely as Indenture Trustee By: ________________________________ Title: Exhibit A to Trust Indenture and Security Agreement Indenture and Security Agreement Supplement Indenture and Security Agreement Supplement (FEDERAL EXPRESS CORPORATION TRUST [______]) dated ________ __, 199_, of FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity but solely as owner trustee (herein called the "Owner Trustee") under the Trust Agreement dated as of September 1, 1993 as amended and restated as of March 1, 1994 (as at any time further amended, herein called the "Trust Agreement"), between First Security Bank of Utah, National Association and the Owner Participant named therein. W I T N E S E T H : WHEREAS, the Trust Agreement provides for the execution and delivery of this Indenture and Security Agreement Supplement which shall particularly describe the Aircraft and any replacement airframe or Replacement Engine included in the property covered by the Trust Agreement. WHEREAS, the Trust Indenture and Security Agreement (Federal Express Corporation Trust [_______]) dated as of March 1, 1994 (herein called the "Indenture") between the Owner Trustee and NationsBank of Georgia, National Association, as Indenture Trustee (herein called the "Indenture Trustee"), provides for the execution and delivery of a supplement thereto substantially in the form hereof which shall particularly describe the Aircraft (such term and other defined terms in the Indenture being used herein with the same meanings) and any Replacement Engine included in the Trust Indenture Estate, and shall specifically mortgage such Aircraft or Replacement Engine, as the case may be, to the Indenture Trustee. WHEREAS, the Indenture has been duly recorded pursuant to the Federal Aviation Act of 1958, as amended, on _______ __, 199_, as one document and has been assigned Conveyance No. ______; NOW, THEREFORE, this Supplement witnesseth, that, to secure the prompt payment of the principal of and Make-Whole Premium, if any, and interest on, and all other amounts due with respect to, all outstanding Certificates under the Indenture and all other amounts due hereunder and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions for the benefit of the Holders and the Indenture Trustee contained in the Indenture, in the Lease, in the Participation Agreement and the Certificates, and the prompt payment of any and all amounts from time to time owing under the Participation Agreement by the Owner Trustee, the Owner Participant or the Lessee to the Holders or the Indenture Trustee and for the uses and purposes and subject to the terms and provisions of the Indenture and the Certificates, and in consideration of the premises and of the covenants contained in the Indenture, and of the purchase of the Certificates by the Holders, and of the sum of $1 paid to the Owner Trustee by the Indenture Trustee at or before the delivery of the Indenture, the receipt of which is hereby acknowledged, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged, granted a security interest in, and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge, grant a security interest in, and confirm, unto the Indenture Trustee, its successors and assigns, in trust for the equal and ratable security and benefit of the Holders, in the trust created by the Indenture, a first priority security interest in and mortgage lien on all estate, right, title and interest of the Owner Trustee in, to and under the following described property: Airframe -------- One (1) Airframe identified as follows: FAA Manufacturer's Registration Serial Manufacturer Model Number Number - ------------ ----- ------------ -------------- together with all appliances, equipment, instruments and accessories (including, without limitation, radio and radar) from time to time belonging thereto, owned by the Owner Trustee and installed in or appurtenant to said aircraft. Aircraft Engines ---------------- Two (2) Engines, each such engine having 750 or more rated takeoff horsepower or the equivalent thereof, identified as follows: Manufacturer's Serial Manufacturer Model Number - ------------ ----- -------------- together with all equipment and accessories belonging thereto, by whomsoever manufactured, owned by the Owner Trustee and installed in or appurtenant to said engines. Together with all substitutions, replacements and renewals of the property described above, and all property which shall hereafter become physically attached to or incorporated in the property described above, whether the same are now owned by the Owner Trustee or shall hereafter be acquired by it. As further security for the obligations referred to above and secured by the Indenture and hereby, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors and assigns, for the security and benefit of the Holders, in the trust created by the Indenture, all of the estate, right, title and interest of the Owner Trustee in, to and under the Lease and Lease Supplement (other than Excepted Payments, if any) covering the property described above. TO HAVE AND TO HOLD all and singular the aforesaid property unto the Indenture Trustee, its successors and assigns, for the benefit and security of the Holders for the uses and purposes and subject to the terms and provisions set forth in the Indenture. This Supplement shall be construed as supplemental to the Indenture and shall form a part thereof, and the Indenture is hereby incorporated by reference herein and is hereby ratified, approved and confirmed. This Supplement is being delivered in the State of New York. AND, FURTHER, the Owner Trustee hereby acknowledges that the Aircraft/Engines referred to in this Supplement and the aforesaid Lease Supplement has been delivered to the Owner Trustee and is included in the property of the Owner Trustee and covered by all the terms and conditions of the Trust Agreement, subject to the Lien of the Indenture. IN WITNESS WHEREOF, the Owner Trustee has caused this Supplement to be duly executed as of the date first written above by one of its officers thereunto duly authorized. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee By __________________________ Title: Exhibit B to Trust Indenture and Security Agreement [Form of Certificate] THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR OFFERED FOR SALE IN CONTRAVENTION OF SAID ACT No. ______ $ _______________ EQUIPMENT TRUST CERTIFICATE (FEDERAL EXPRESS CORPORATION TRUST [_____]) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity but solely as OWNER TRUSTEE UNDER TRUST AGREEMENT DATED AS OF SEPTEMBER 1, 1993, AS AMENDED AND RESTATED AS OF MARCH 1, 1994 Interest Rate Maturity - ------------- -------- First Security Bank of Utah, National Association, not in its individual capacity but solely as Owner Trustee (herein in such capacity called the "Owner Trustee") under that certain Trust Agreement dated as of September 1, 1993, between the Owner Participant named therein and First Security Bank of Utah, National Association as amended and restated as of March 1, 1994 (herein as such Trust Agreement may be further amended or supplemented from time to time called the "Trust Agreement"), hereby promises to pay to NationsBank of South Carolina, National Association, as Pass Through Trustee, or registered assigns, the principal sum of _______________________________ Dollars, payable as set forth below for the Maturity specified above, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, and to pay interest on the principal outstanding from time to time, semiannually on each March 23 and September 23, on said principal sum in like coin or currency at the rate per annum set forth above from the March 23 or the September 23, as the case may be, next preceding the date of this Certificate to which interest on the Certificates has been paid or duly provided for, unless the date hereof is a date to which interest on the Certificates has been paid or duly provided for, in which case from the date of this Certificate. Notwithstanding the foregoing, if the date hereof is after any March 8 or September 8 and before the following March 23 or September 23, as the case may be, this Certificate shall bear interest from such March 23 and September 23; provided that, if the Owner Trustee shall default in the payment of interest due on such March 23 or September 23, then this Certificate shall bear interest from the next preceding March 23 or September 23 to which interest on this Certificate has been paid or duly provided for. The interest so payable on any March 23 or September 23 will, except as otherwise provided in the Indenture referred to below, be paid to the person in whose name this Certificate is registered at the close of business on the March 8 or September 8 preceding such March 23 or September 23, whether or not such day is a Business Day. This Certificate shall bear interest at the Past Due Rate on any principal hereof and on any other amount payable hereunder or under the Indenture which shall not be paid in full when due (whether at stated maturity, by acceleration, by mandatory prepayment or otherwise), for the period from and including the date thereof to but excluding the date the same is paid in full, payable from time to time on demand of the Indenture Trustee. Principal and interest and other amounts due hereunder shall be payable at the office or agency of NationsBank of Georgia, National Association (the "Indenture Trustee") for such purpose; provided that, at the option of the Indenture Trustee, interest may be paid by mailing a check therefor payable to the registered holder entitled thereto at his last address as it appears on the Register. If any amount payable under this Certificate, or under the Indenture, falls due on a day that is not a Business Day, then such sum shall be payable on the next succeeding Business Day, without (provided that payment is made on such next succeeding Business Day) additional interest thereon for the period of such extension. No employee benefit plan subject to Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or individual retirement account or plan subject to Section 4975 of the Internal Revenue Code of 1986, as amended, or any trust established under any such plan or account (hereinafter collectively referred to as an "ERISA Plan"), may acquire or hold any of the Certificates. The acquiring by any person of any Certificate shall be deemed to constitute a representation by such person to the Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee or their respective successors, as the case may be, that such person is not an ERISA Plan and that such person is not acquiring, and has not acquired, such Certificate with assets of an ERISA Plan. First Security and NationsBank of Georgia, National Association are not acting individually hereunder, but solely as Owner Trustee and Indenture Trustee, respectively. This Certificate is one of a duly authorized issue of Certificates issued and to be issued under the Trust Indenture and Security Agreement (Federal Express Corporation Trust [__]) dated as of March 1, 1994 (herein as amended, supplemented or modified from time to time called the "Indenture"), between the Owner Trustee and the Indenture Trustee, designated as Equipment Trust Certificates (Federal Express Corporation Trust [__]) limited in aggregate initial principal amount to $________________ consisting of the following aggregate principal amounts of Certificates with the interest rates per annum and maturities shown: Initial Aggregate Principal Maturity Amount Interest Rate - -------- --------- ------------- $ 7.53% $ 7.89% $ 8.40% Reference is made to the Indenture and all supplements and amendments thereto (a copy of which is on file with the Indenture Trustee at its principal corporate trust office) for a more complete statement of the terms and provisions thereof, including a statement of the properties conveyed, pledged and assigned thereby, the nature and extent of the security, the respective rights of the Owner Trustee, the Owner Participant, the Lessee, the Indenture Trustee and the Holders, and the terms upon which the Certificates are, and are to be, executed and delivered, to all of which terms and conditions in the Indenture each Holder hereof agrees by its acceptance of this Certificate. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Indenture. The principal amounts of the Certificates are payable as follows. The Certificates with a Maturity of September 23, 2006 are subject to redemption in part, pro rata (based on the face amount hereof) commencing on _________, ____, the Certificates with a Maturity of September 23, 2008 are subject to redemption in part, pro rata, commencing on _________, ____, and the Certificates with a Maturity of March 23, 2010 are subject to redemption in part, pro rata commencing on __________, ____ in each case through mandatory sinking fund redemptions providing for the redemption on the Sinking Fund Redemption Dates of the aggregate principal amounts set forth below, together with interest accrued thereon to the applicable Sinking Fund Redemption Date, but without Make-Whole Premium. Principal Amount ---------------- Certificates with Certificates with Certificates with Sinking Fund a Maturity of a Maturity of a Maturity of Redemption Date September 23, 2006 September 23, 2008 March 23, 2010 - --------------- ------------------ ----------------- ----------------- [See Appendix A for Sinking Fund Redemption Date information for the relating thirteen (13) Aircraft] ================== ================= ================= TOTAL Except as expressly provided in the Indenture, all payments of principal, Make-Whole Premium, if any, and interest and other amounts to be made to the Holder hereof by or at the behest of the Owner Trustee hereunder or under the Indenture shall be made only from the income and proceeds from the Lessor's Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Lessor's Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such distributions in accordance with the terms of the Indenture; provided that under the Lease, the Lessee is obligated to pay or cause to be paid, to the extent such payments are not required to be made from the assets subject to the Lien of this Indenture or the income and proceeds received by the Indenture Trustee therefrom, any net loss arising from the investment of funds held by the Indenture Trustee which but for an Event of Default would be payable to Lessee, and each Holder hereof, by its acceptance of this Certificate, agrees that it will (except as aforesaid) look solely to the income and proceeds from the Trust Indenture Estate to the extent available for distribution to the Holder hereof as provided above and that none of the Owner Participant, First Security Bank of Utah, National Association or the Indenture Trustee is personally liable to the Holder hereof for any amounts payable or any liability under this Certificate or under the Indenture, except as expressly provided in the Indenture (in the case of First Security Bank of Utah, National Association, the Owner Trustee and the Indenture Trustee) or as expressly provided in the Participation Agreement (in the case of the Owner Participant). The Certificates are subject to prepayment in the following circumstances at the price determined as set forth below. (i) If an Event of Loss occurs with respect to the Airframe or with respect to the Airframe and the Engines or engines then installed on the Airframe (unless such Event of Loss relates to the Engines and, pursuant to Section 11.04 of the Lease and Section 9.08 of the Indenture, Replacement Engine(s) are substituted therefor). (ii) If the Lessee, pursuant to Section 4.02(a)(C) or 4.02(a)(D) of the Lease, gives notice of purchase of the Aircraft (and Section 2.12 of the Indenture shall not be applicable in connection with such purchase). (iii) If the Owner Participant or the Owner Trustee on behalf of the Owner Participant, gives notice of prepayment to the Indenture Trustee pursuant to Section 8.02 of the Indenture. (iv) If the Lessee, pursuant to Section 10.01 of the Lease, gives notice of a voluntary termination for obsolescence or surplus, but subject to Section 6.02(c) of Indenture. [(v) Intentionally Omitted] (vi) If (A) a Deemed Event of Loss occurs or (B) a Pre-Funding Event of Loss occurs. In the case of a prepayment of the Certificates pursuant to clause (ii) or (iv) above, the Lessee, in accordance with and subject to the terms (including timing of notice) of Section 4.02(a) or Section 10.01 of the Lease or Section 15 of the Participation Agreement, as the case may be, shall give irrevocable written notice to the Owner Trustee and the Indenture Trustee and to the Holders of all of the Certificates specifying the Business Day on which the Owner Trustee is directed to prepay the Certificates. In the case of a prepayment pursuant to clause (i) above, the Certificates shall be prepaid on the Loss Payment Date as defined in Section 11.02 of the Lease. In the case of a prepayment pursuant to clause (iii) above, the Certificates shall be prepaid on the date designated in the notice of prepayment required by Section 8.02 of the Indenture. In the case of a prepayment of the Certificates pursuant to clauses (ii) and (iv) above, the Certificates shall be prepaid in full on the Termination Date. In the case of a prepayment of the Certificates pursuant to Section 6.02(a)(vi)(A) above, the Certificates shall be prepaid on the fourth Frankfurt Business Day after the Cut-off Date. In the case of a prepayment of the Certificates pursuant to Section 6.02(a)(vi)(B) above, the Certificates shall be prepaid (i) in the case of a Pre-Funding Event of Loss, notice of which is received by the Indenture Trustee at least five Frankfurt Business Days prior to the Scheduled Commencement Date, on the Scheduled Commencement Date, or (ii) in the case of any other Pre-Funding Event of Loss, on the fourth Frankfurt Business Day after the Cut-off Date. The day on which the Certificates are to be prepaid is herein referred to as the "Prepayment Date". On or prior to the Prepayment Date, immediately available funds shall be deposited with the Indenture Trustee in an amount in respect of the Certificates equal to: (1) in the event of a prepayment of the Certificates (1) pursuant to clause (i), clause (iii) (if clause (B) of Section 8.02(a) of the Indenture is applicable), or clause (vi) above, the sum of (i) the aggregate principal amount of such Certificates then outstanding, (ii) accrued interest on the Certificates to the Prepayment Date and (iii) all other aggregate sums due any Certificate Holder or the Indenture Trustee under the Indenture or under the Participation Agreement or the Lease, or the sum of (2) in the event of a prepayment of the Certificates pursuant to clause (ii), (iii) (if clause (A) of Section 8.02(a) of the Indenture is applicable), or (iv) above, the sum of the amounts specified in clauses (i), (ii) and (iii) of the preceding clause (1) plus the Make-Whole Premium in respect of all Certificates (the aggregate amount required to be paid pursuant to this sentence being herein referred to as the "Prepayment Price"). If, in accordance with and subject to the satisfaction of the conditions set forth in Section 7.11 of the Participation Agreement, the Lessee shall assume all of the obligations of the Owner Trustee hereunder, under the Certificates and all other Operative Agreements, the Owner Participant and the Owner Trustee shall (except for prior acts) be released and discharged from any further obligations hereunder and under the Certificates and all other Operative Agreements (except any obligations that have accrued prior to such assumption). If an Indenture Event of Default under the Indenture shall occur and be continuing, the principal of the Certificates may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture provides that in certain events such declaration and its consequences may be waived the Majority in Interest of Holders. Any such consent or waiver shall be conclusive and binding upon the Holder of this Certificate and upon all future Holders and owners of this Certificate and any Certificate that may be issued in exchange or substitution therefor, whether or not any notation thereof is made upon this Certificate or such other Certificates. Moreover, if, and only if, an Event of Default shall occur, the Indenture Trustee may declare the Lease to be in default, and may, to the exclusion of the Owner Trustee, exercise one or more of the remedies of the Owner Trustee provided in the Lease. The Owner Trustee or the Owner Participant may cure a default by the Lessee under the Lease arising from the failure of the Lessee to make any Basic Rent payments under the Lease if such failure of the Lessee to make such payment of Basic Rent shall not constitute the fourth consecutive such failure or seventh subsequent cumulative such failure. The Owner Trustee or the Owner Participant may cure any other default by the Lessee in the performance of its obligations under the Lease which can be cured by the payment of money by making such payment on behalf of the Lessee. At any time (A) one or more Events of Default shall have occurred and be continuing for a period of 180 days or more but less than one year (or a period of less than 180 days if such Event of Default shall be an Event of Default under Section 16.01 of the Lease) and the Certificates shall not have been accelerated or (B) the Certificates have been accelerated pursuant to Section 7.02(b) or 7.02(c) of the Indenture or after one or more Events of Default shall have occurred and be continuing for a period of one year or more (or a period of 180 days or more if such Event of Default shall be an Event of Default under Section 16.01 of the Lease), the Owner Participant (or the Owner Trustee on behalf of the Owner Participant) may: (1) direct the Owner Trustee to cause the prepayment of all the Certificates by notifying the Indenture Trustee of such election and depositing the sum of amounts contemplated by paragraph "first" under Section 5.03 of the Indenture and the aggregate Prepayment Price of all such Certificates with the Indenture Trustee for distribution to the Holders; or (2) purchase all of the Outstanding Certificates by paying to the Indenture Trustee an amount equal to the aggregate unpaid principal amount of all Outstanding Certificates, plus accrued interest to the date of purchase and any Make-Whole Premium (in the case of a purchase pursuant to clause (A) of Section 8.02(a) of the Indenture) plus all other sums due any Holder or the Indenture Trustee under the Indenture, the Participation Agreement or the Lease. The right of the Holder hereof to institute an action for any remedy under the Indenture is subject to certain restrictions specified in the Indenture, except that the right of the Holder of this Certificate to receive payment of the principal of and interest and Make-Whole Premium, if any, on this Certificate on or after the respective due dates, or to institute suit for the enforcement of any such payment, shall not be impaired or affected without the consent of such Holder. The Certificates are issuable only as registered Certificates without coupons in denominations of $1,000 and integral multiples thereof. So long as any of the Certificates remain Outstanding, the Indenture Trustee will maintain an office or agency where the Certificates may be presented for payment and a facility or agency in New York, New York where the Certificates may be presented for registration of transfer and for exchange as provided in the Indenture. As provided in the Indenture and subject to certain limitations therein, this Certificate is transferable, and upon surrender of this Certificate for registration of transfer at the principal corporate trust office of the Indenture Trustee, or at the office or agency maintained for such purposes, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Owner Trustee and the Indenture Trustee duly executed by, the Holder or his attorney duly authorized in writing, one or more new Certificates of the same Maturity and interest rate and of authorized denominations and for the same aggregate principal amount will be issued to the designated transferee or transferees. As provided in the Indenture and subject to certain limitations therein, the Certificates are exchangeable for an equal aggregate principal amount of Certificates of the same Maturity and interest rate and of authorized denominations, as requested by the Holder surrendering the same, upon presentation thereof for such purpose at the principal corporate trust office of the Indenture Trustee, or at an office or agency maintained for such purpose. No service charge shall be levied for any such registration of transfer or exchange, but the Indenture Trustee may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to the due presentment for registration of transfer of this Certificate, the Owner Trustee, the Indenture Trustee, any agent of the Owner Trustee or the Indenture Trustee, the Paying Agent, if any, the Registrar and the Lessee may deem and treat the person in whose name this Certificate is registered as the absolute owner hereof for all purposes whether or not this Certificate is overdue, and neither the Owner Trustee, the Indenture Trustee (nor any agent of the Owner Trustee or the Indenture Trustee), nor the Paying Agent, if any, the Registrar nor the Lessee shall be affected by notice to the contrary. As provided in the Indenture, the Indenture and the Certificates shall be construed in accordance with and governed by the laws of the State of New York. This Certificate shall not be secured by or be entitled to any benefit under the Indenture or be valid or obligatory for any purpose unless authenticated by the Indenture Trustee as evidenced by the manual signature of one of its authorized officers on the certificate below. IN WITNESS WHEREOF, the Owner Trustee has caused this Equipment Trust Certificate (Federal Express Corporation Trust [_____]) to be duly executed in its corporate name by its officer thereunto duly authorized. Dated: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee By _____________________________ Authorized Officer [FORM OF INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This is one of the Equipment Trust Certificates (Federal Express Corporation Trust [_____]) referred to in the within-mentioned Indenture. Dated: NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, not in its individual capacity but solely as Indenture Trustee By ______________________________ Authorized Signatory SCHEDULE I [Intentionally left blank.] SCHEDULE II DEFINITIONS GENERAL PROVISIONS The following terms shall have the following meanings for all purposes of each Operative Agreement which specifically incorporates this Schedule, referred to below, unless otherwise defined in such 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 such Operative Agreement, the provisions of such Operative Agreement shall control the construction of such Operative Agreement. Unless the context otherwise requires, (i) references to agreements shall be deemed to mean and include such agreements as amended and supplemented from time to time, and (ii) references to parties to agreements shall be deemed to include the successors and permitted assigns of such parties. DEFINED TERMS: Act or Federal Aviation Act. The Federal Aviation Act of 1958, as amended from time to time, and the regulations promulgated pursuant thereto. Additional Insureds. As defined in Article 13 of the Lease. Aeronautics Authority or FAA. 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. Affiliate. With respect to any Person, any partner of such Person or 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 or such partner whether through the ownership or voting securities or by contract or otherwise. After-Tax Basis. A basis such that any payment received or deemed to have been received by a Person shall be supplemented by a further payment to such Person so that the sum of the two payments, after deduction of all federal, state, local and foreign income taxes resulting from the receipt or accrual of such payments, shall be equal to the payment received or deemed to have been received. In the case of amounts payable to the Lessor, the Owner Participant or any partner of the Owner Participant, or any corporate affiliate of any partner 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. Agreement to Lease. The Original Agreement to Lease, as amended and restated as of March 1, 1994, among Lufthansa, the Lessee and the Lessor. Air Carrier. Any air carrier which is a United States "domestic air carrier" as defined in Part 121 of the Federal Aviation Regulations, and any "foreign air carrier" (as defined in the Act) as to which there is in force a permit granted under Section 402 of the Act. Aircraft. The Airframe together with the two Engines whether or not any of such Engines may from time to time be installed on such Airframe or may be installed on any other airframe or on any other aircraft. Aircraft Cost. The amount specified as the Aircraft Cost for the Aircraft on Schedule I to the Agreement to Lease (as in effect on the Closing Date). Airframe. The Airbus Model A310-203 aircraft (excluding the Engines or engines from time to time installed thereon) contemplated by the Participation Agreement to be leased on the Commencement Date by the Lessor to the Lessee pursuant to the Lease, and having the manufacturer's serial number ________________ and, on and after the Commencement Date, the United States FAA Registration Number specified in the initial Lease Supplement, including all Parts. Ancillary Agreements. Any written agreement between parties to the Agreement to Lease Operative Agreements or Operative Agreements entered into on the Closing Date or at any time thereafter in connection with the transactions contemplated by the Operative Agreements, as amended from time to time. Appraisal. The appraisal delivered pursuant to Section 4.01(l) of the Participation Agreement. 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 with the giving of notice or lapse of time or both would constitute an Event of Default. Basic Rent. The aggregate periodic rent payable throughout the Basic Term pursuant to Section 3.01 of the Lease. Basic Term. The period commencing at the beginning of the day on the Commencement Date and ending at the end of the day on the day immediately preceding the date 15 years from the Commencement Date, or such earlier date on which the Lease shall be terminated as provided therein. Beneficial Interest. The interest of the Owner Participant under the Trust Agreement. Bills of Sale. Has the meaning set forth in Section 4.02(d)(v) of the Participation Agreement. Business Day. Any day on which commercial banks are not authorized or required to close in New York City and Memphis, Tennessee, and so long as the Lien of the Indenture is in effect, in Atlanta, Georgia, and Columbia, South Carolina, and thereafter in Salt Lake City, Utah. Certificates or Equipment Trust Certificates. The Equipment Trust Certificates (Federal Express Corporation Trust ___) issued by the Owner Trustee pursuant to the Indenture and any certificate issued in exchange therefor or replacement thereof pursuant to the Indenture. Citizen of the United States. A citizen of the United States as defined in Section 101(16) of the Act, or any analogous part of any successor or substituted legislation or regulation at the time in effect. Closing Date. The Business Day on which the sale of the Pass Through Certificates to the Underwriters occurs pursuant to the Underwriting Agreement. Closings. The closing with respect to the acquisition of the Pass Through Certificates by the Underwriters and the closing with respect to the acquisition of the Certificates by the Pass Through Trusts. Code. Except as otherwise provided, references to the Code shall mean the Internal Revenue Code of 1986, as amended from time to time. Collateral. Has the meaning set forth in the Collateral Agreement. Collateral Agreement. The Collateral Agreement (Trust ______), dated as of March 1, 1994, between the Owner Trustee and the Indenture Trustee, as amended or modified from time to time. Commencement Date. The date on which the Aircraft is leased by the Lessor to the Lessee under the Lease, which date shall also be the date of the initial Lease Supplement. Commission or SEC. The Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or if at any time after the execution and delivery of the Participation Agreement such Commission is not existing and performing the duties now assigned to it under the Exchange Act, then the body performing such duties on such date. Company. Federal Express Corporation, a Delaware corporation, and its permitted successors and assigns hereunder. Corporate Base Rate. The rate announced from time to time by The Chase Manhattan Bank, N.A. or any successors thereto at its head office at New York, New York, as its Corporate Base Rate. Corporate Trust Office. The office of the Indenture Trustee 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 Trustee and the Holders. Cut-off Date. The earlier to occur of (i) the date which is 365 days after the Scheduled Commencement Date, or any earlier Business Day (but in no event earlier than the Scheduled Commencement Date) specified as the Cut-off Date by the Owner Trustee in an irrevocable written notice (including, without limitation, in any such notice contemplated by Section 12 of the Agreement to Lease) given to the Indenture Trustee not less than 30 days prior thereto and (ii) 30 days after the date of any Pre-Funding Termination Notice in accordance with Section 3 of the Agreement to Lease. DA. Deutsche Aerospace Airbus GmbH, a German corporation, its successor and permitted assigns. Debt Portion. The amount specified as such on Schedule IV to the Participation Agreement. Debt Rate. The weighted average rate of interest applicable from time to time to the Certificates, but in no event less than 8% per annum. Deemed Event of Loss. If the Exchange Date does not occur on or prior to the Cut-off Date. 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 Notice. Notice of the Aircraft's Commencement Date, given by the Owner Participant as provided in Section 3.01 of the Participation Agreement and including any notice with respect to a postponed Commencement Date given by the Owner Participant pursuant to Section 3.02 of the Participation Agreement. Demand Note. Each of the Promissory Notes (D-_______), dated the Closing Date, from Lufthansa in the form of Exhibit E to the Participation Agreement, and in an aggregate principal amount specified under "Demand Note Principal Amount" in Schedule IV to the Participation Agreement. Demand Note Collateral. Has the meaning set forth in the Collateral Agreement. Dollars and $. The lawful currency of the United States of America. Engine. Each of the two General Electric CF6-80A3 engines, more fully described in the initial Lease Supplement (or, prior to the Commencement Date, in Exhibit A to the Agreement to Lease opposite the Airframe), whether or not from time to time installed on the Airframe or installed on any other airframe or on any other aircraft, and any Replacement Engine which may from time to time be substituted for an Engine pursuant to Sections 7.02(a)(vii), 10.03, 11.03, 11.04 or 12.02 of the Lease, together with all Parts. 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. ERISA. The Employee Retirement Income Security Act of 1974, as amended. Event of Default. Each of the events specified in Article 16 of the Lease. Event of Loss. Event of Loss means any of the following events on or after the Commencement Date 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 120 days or to the end of the Term, if less, due to theft or disappearance, or (B) for a period in excess of 60 days or to the end of the Term, if less, 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, such Event of Loss being deemed to occur on the date of any such condemnation, confiscation, seizure or requisition of title, or (2) requisition of use of such property (A) by a foreign government or instrumentality or agency thereof, or any purported government or instrumentality or agency thereof, for a period in excess of 180 days (or 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 up to six months beyond the end of the Term in the event that the Aircraft, the Airframe or Engine is requisitioned by the Government pursuant to an activation as part of the Civil Reserve Air Fleet 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 Model A310-203 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 shall have been prohibited for a period of one (1) year, unless the Lessee, prior to the expiration of such one (1) year period shall have conformed the Aircraft to the requirements of any such law, rule, regulation, order, or other action and shall have commenced regular commercial use and shall be diligently carrying forward, on a non-discriminatory basis, all steps necessary or desirable to permit the normal use of the Aircraft by the Lessee; provided, that if there is a conflict between the operation of clause (iv) above and Section 12.05 of the Lease (by reference to Section 12.04(ix) thereof), such Section 12.05 of the Lease shall control. The date of such Event of Loss shall be the date of (i) loss of such property or its use thereof for a period in excess of 120 days, or to the end of the Term, if less due to theft or disappearance, or loss for a period in excess of 60 days, or to the end of the Term, if less due to damage beyond economic repair or loss of use of the Airframe because of requisition for use for a period in excess of 180 days (or shorter period due to insurance settlement or to the end of the Term), (ii) an insurance settlement on the basis of total loss with respect to such property, (iii) condemnation, confiscation, seizure or requisition of title, or (iv) prohibition from usage for the periods described in clause (iv) above. On or after the Commencement Date, 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. Exchange Act. The Securities Exchange Act of 1934, as amended. Exchange Date. The date, on or after the Commencement Date, on which the Indenture Trustee releases the Debt Portion pursuant to Section 7(e) of the Collateral Agreement. Excepted Payments. Collectively, (i) all right, title and interest of the Owner Participant or the Owner Trustee in, to and under the Tax Indemnity Agreement and any moneys due or to become due under the Tax Indemnity Agreement and payments of Supplemental Rent or other payments by the Lessee in either case solely in respect of the Tax Indemnity Agreement, (ii) indemnity payments and interest thereon and other amounts paid or payable by the Lessee to the Owner Participant or to the Owner Trustee in its individual capacity or any of their respective Affiliates (other than the Owner Trustee in its capacity as trustee and the trust created pursuant to the Trust Agreement), successors, assigns, directors, officers, employees, agents or servants pursuant to Articles 8, 9 or 10 of the Participation Agreement or any corresponding payment of Supplemental Rent under the Lease; (iii) proceeds of public liability insurance or governmental indemnities in lieu thereof in respect of the Aircraft payable to the Owner Participant or the Owner Trustee, in its individual capacity, or any of their Affiliates (other than the Owner Trustee in its capacity as trustee and the trust created pursuant to the Trust Agreement), successors or assigns, as a result of insurance claims made, or losses suffered, by, or amounts in respect of such indemnities paid for the benefit of, the Owner Participant or the Owner Trustee in its individual capacity or any of their Affiliates (other than the Owner Trustee in its capacity as trustee and the trust created pursuant to the Trust Agreement), successors or assigns, directors, officers, employees, agents or servants, either pursuant to the Lease (which shall include proceeds of any self-insurance by the Lessee) or maintained by the Owner Trustee or the Owner Participant and not required to be maintained under the Lease; (iv) proceeds of any insurance in respect of the Aircraft (not required by Section 13 of the Lease) which is separately acquired and paid for by the Owner Participant (directly or through the Owner Trustee) or the Lessor in accordance with Section 13.05 of the Lease); (v) indemnity payments payable by the Owner Participant to the Owner Trustee in its individual capacity pursuant to Section 6.01 of the Trust Agreement; (vi) Transaction Costs or other expenses paid or payable by the Lessee to, or for the benefit of, the Indenture Trustee, First Security or the Owner Participant pursuant to Section 10.01 of the Participation Agreement; (vii) if the Lessee has assumed the obligations of the Owner Trustee pursuant to Section 7.12 of the Participation Agreement and Section 2.12 of the Indenture, the amount payable as purchase price pursuant to Section 4.02(a), (c) or (d) of the Lease; (viii) the right to enforce, and the proceeds of any such enforcement of, any right to receive the proceeds of any of the amounts referred to in clauses (i) through (vii) above, and the right to declare an Event of Default under the Lease in respect of any of the foregoing amounts, but not including the right to exercise any remedies under the Lease except for those specifically provided for in this clause (viii); and (ix) any payments in respect of interest to the extent attributable to the payments referred to in clauses (i) through (vii) above. Expense and Expenses. Have the meanings specified in Section 9.01(a) of the Participation Agreement. FAA Bill of Sale. Has the meaning set forth in Section 4.02(d)(iv) of the Participation Agreement. 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. 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. Fair Market Value shall be determined in accordance with the provisions of Section 4.03 of the Lease. Frankfurt Business Day. A day which is a Business Day and is a day (other than a Saturday or Sunday) on which commercial banks in Frankfurt, Germany are generally open for the conduct of business. Geneva Convention. The International Convention on the Recognition of Rights in Aircraft (Geneva 1948). Government. The United States of America or an agency or instrumentality thereof. Government Obligations. Direct obligations of the United States of America which are not callable, redeemable or payable prior to maturity, in whole or in part, directly or indirectly, by any Person. Holder of a Certificate; Holder. As of any particular time, the Person in whose name a Certificate shall be registered as payee with the Indenture Trustee. Indemnification Agreement. The Indemnification Agreement, dated the date of the Underwriting Agreement, among the Lessee, Lufthansa, the LC Bank and the Underwriters. Indemnitee. Each of the Owner Trustee, in its individual capacity and as Owner Trustee and Lessor, the Owner Participant, the Indenture Trustee (after the Exchange Date), in its individual capacity and as Indenture Trustee 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 (except to the extent comprised prior to the Exchange Date of the Trust Indenture Estate) and (after the Exchange Date) the Trust Indenture Estate and the officers, directors, employees, agents and servants of Lufthansa and the General Partner of the Owner Participant. Indenture. The Trust Indenture and Security Agreement (Federal Express Corporation Trust _____) dated as of March 1, 1994, between the Owner Trustee and the Indenture Trustee, as supplemented by the Indenture and Security Agreement Supplement No. 1, and any amendment or supplement thereto entered from time to time. Indenture and Security Agreement Supplement; Indenture Supplement. A supplement to the Indenture, substantially in the form of Exhibit A to the Indenture. Indenture Default. Any event which, with the giving of notice or lapse of time, or both, would be an Indenture Event of Default. Indenture Documents. The Indenture, the Collateral Agreement, the Letter of Credit, the Demand Notes, the Sales Agreement (to the extent relating to the Aircraft), the Parts and Services Agreement (to the extent relating to the Aircraft), the Bills of Sale, the Modification Agreement (to the extent relating to the Aircraft), the Lease, the Participation Agreement, the Agreement to Lease (to the extent relating to the Aircraft), the Trust Agreement (to the extent relating to the Aircraft or the Lessor's Estate) and the Certificates. Indenture Event of Default. Each of the events specified in Section 7.01 of the Indenture. Indenture Trustee. NationsBank of Georgia, National Association, a national banking association, not in its individual capacity but solely as Indenture Trustee under the Indenture and each other Person which may from time to time be acting as successor trustee under the Indenture. Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate resulting from (i) claims against the Indenture Trustee not related to the administration of the Trust Indenture Estate or any transactions pursuant to the Indenture or any Indenture Document or (ii) any act or omission of the Indenture Trustee which is not related to the transactions contemplated by the Operative Agreements or is in violation of any of the terms of the Operative Agreements. Independent Appraisal. An appraisal conducted pursuant to Section 4.03 of the Lease. Independent Investment Banker. An independent investment banking institution of national standing appointed by the Lessee that is independent in fact, does not have any direct financial interests, or any material indirect financial interest, in the Lessee or any Affiliate of the Lessee, and is not connected with the Lessee or any Affiliate of the Lessee, as an officer, employee, promoter, underwriter, trustee, partner, director or Person performing similar functions; provided, that if the Indenture Trustee shall not have received written notice of such an appointment at least 10 days prior to the Prepayment Date (or purchase date) or if an Event of Default shall have occurred and be continuing, "Independent Investment Banker" shall mean such an institution appointed by the Indenture Trustee. Interest Payment Date. Each March 23 and September 23, commencing September 23, 1994. Issuance Date. For any Pass Through Trust, the date of the issuance of the related Pass Through Certificates. LC Bank. Westdeutsche Landesbank Girozentrale, New York Branch. Lease. The Lease Agreement (Federal Express Corporation Trust _____), in the form of Exhibit B to the Participation Agreement, dated as of the Commencement Date or prior thereto, between the Lessor and the Lessee, as said Lease may from time to time be supplemented or amended, or its terms waived or modified, to the extent permitted by, and in accordance with, the terms of the Indenture, including, without limitation, supplementation by the Lease Supplement. Lease Supplement. The Lease Supplement, substantially in the form of Exhibit A to the Lease, entered into between the Lessor and the Lessee. Lessee. Federal Express Corporation, a Delaware corporation, and any successors or permitted assigns in its capacity as lessee under the Lease. Lessee Documents. Each of the Operative Agreements and Ancillary Agreements to which the Lessee is or is to be a party; provided, however, that for purposes of Section 6.01 of the Participation Agreement, Lessee Documents shall not include the Lease or any Lease Supplement prior to the Commencement Date. Lessor. First Security Bank of Utah, National Association, a national banking association, not in its individual capacity but solely as Owner Trustee under the Trust Agreement, and its successors and permitted assigns. Lessor's Estate. All estate, right, title and interest of the Owner Trustee in and to any Additional Collateral, the Aircraft, the Lease, any Lease Supplement, the Participation Agreement and the other Indenture Documents, any warranty with respect to the Airframe and the Engines, all amounts of Basic Rent and Supplemental Rent, including without limitation, insurance proceeds (other than insurance proceeds payable to or for the benefit of the Owner Trustee, for its own account or in its individual capacity, the Owner Participant or 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). Notwithstanding the foregoing, "Lessor's Estate" shall (i) include all items of property purported to be covered by the Trust Indenture Estate and (ii) not include any Excepted Payment. Lessor's Liens. Liens on the Lessor's Estate or the Trust Indenture Estate, arising as a result of (i) claims against or liabilities of 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) any act or omission of the Lessor in its individual capacity or as Owner Trustee, and, in the case of the Lessor in its individual capacity, arising from its gross negligence or willful misconduct either not related to the transactions contemplated by or expressly prohibited under the Operative Agreements and any act or omission of the Owner Participant which is not related to the transactions contemplated by the Operative Agreements or is in violation of any of the terms of the Operative Agreements, (iii) Taxes or Expenses imposed against the Lessor, in its individual capacity or as Owner Trustee, the Owner Participant, Lessor's Estate or the trust created by the Trust Agreement which are not indemnified against by the Lessee pursuant to the Tax Indemnity Agreement or the Participation Agreement, (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 or the Lessor's Estate other than a transfer of the Aircraft or the Lessor's Estate pursuant to Section 4.02(a) or Articles 10 or 11 of the Lease and other than a transfer pursuant to the exercise of the remedies set forth in Article 17 of the Lease or (v) claims against the Lessor or the Owner Participant (or any Affiliate of either) relating to the Modification Agreement, the Agreement to Lease, the Sales Agreement, the Demand Note, the Collateral Agreement, the Sub-subcontract (as defined in the Agreement to Lease) or the Parts and Services Agreement. Letter of Credit. The Irrevocable Letter of Credit, dated the Closing Date, in the form of Exhibit G to the Participation Agreement and with a Stated Amount equal to the amount specified under "Letter of Credit Stated Amount" on Schedule IV to the Participation Agreement, from the LC Bank to the Indenture Trustee. Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or security interest or other similar interest. Liquid Collateral. Has the meaning set forth in the Collateral Agreement. Lufthansa. Deutsche Lufthansa Aktiengesellschaft. Lufthansa Side Letter. The letter, dated the Closing Date, substantially in the form of Exhibit J to the Participation Agreement, among Lufthansa, the Indenture Trustee and the Pass Through Trustee. 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 Participant unless all Certificates then outstanding shall be held by the Owner Participant, (ii) the Lessee or (iii) any Affiliate of either. Make-Whole Premium. An amount determined as of the Business Day before the applicable Prepayment Date or date of purchase, as the case may be, which an Independent Investment Banker determines to be equal to the excess of (i) the present values of all remaining scheduled payments of principal on the Certificate to be prepaid or purchased and interest thereon (excluding interest accrued from the immediately preceding Payment Date to such Prepayment Date or date of purchase, as the case may be) to the Maturity of such Certificate in accordance with generally accepted financial practices assuming a 360- day year consisting of twelve 30-day months at a discount rate equal to Treasury Yield, all as determined by the Independent Investment Banker over (ii) the unpaid principal amount of such Certificate. Maturity. With respect to any Certificate, the date on which the final principal amount of such Certificate is scheduled to be due and payable. Modification Agreement. The Original Modification Agreement, as amended by Amendment No. 1 thereto, dated as of March 1, 1994, among the Lessor, the Owner Participant, Lufthansa and DA. Modification Cost. The amount set forth in the "Total" column for the Aircraft in the Rate Schedule on Exhibit E to the Modification Agreement. Moody's. Moody's Investors Service, Inc. Net Proceeds. The amount specified as such on Schedule IV to the Participation Agreement. Non-U.S. Person. Any Person other than (i) a citizen or resident of the United States, as defined in section 7701(a)(30) of the Code (for purposes of this definition, the "United States"), (ii) a corporation, partnership or other entity created or organized in or under the laws of the United States or any political subdivision thereof or therein, or (iii) any estate or trust that is subject to United States federal income taxation regardless of the source of its income. Obsolete Parts. Parts which the Lessee in good faith determines to be obsolete or no longer suitable or appropriate for use on the Airframe or any Engine. OP Guarantee. The Guarantee, if any, by Lufthansa in the form of Exhibit I to the Participation Agreement. Operative Agreements. The Modification Agreement, the Agreement to Lease, the Participation Agreement, the Trust Agreement, the Trust Agreement Supplement, the Bills of Sale, the Lease, any Lease Supplement, any Ancillary Agreement which by its terms is an Operative Agreement, the Certificates outstanding at the time of reference, the Indenture, any Indenture and Security Agreement Supplement, the Collateral Agreement, the Demand Note, the Parts and Services Agreement, the Indemnification Agreement, the Pass Through Agreement and the Series Supplements, the Pass Through Certificates outstanding at the time of reference, the Sales Agreement, the OP Guarantee (if any) and the Tax Indemnity Agreement, each as amended from time to time. Options Agreement. The letter agreement dated September 1, 1993 between DA and the Lessee relating, inter alia, to the sale by DA to the Lessee of certain cargo conversion kits and the acknowledgement and agreement by DA of certain rights of the Lessee under the Modification Agreement. 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. Original Agreement to Lease. The Agreement to Lease, dated as of September 1, 1993 among Lufthansa, the Lessee and the Lessor. Original Agreements. The Original Agreement to Lease, the Original Modification Agreement, the Original Parts and Services Agreement, the Original Sales Agreement and the Original Trust Agreement. Original Modification Agreement. The Aircraft Modification and Maintenance Agreement, dated as of September 1, 1993, among the Lessor, Lufthansa and DA. Original Parts and Services Agreement. The Parts and Services Agreement, dated as of September 1, 1993, between the Owner Trustee and Lufthansa. Original Sales Agreement. The Sales Agreement for Aircraft, dated as of September 1, 1993, between the Owner Trustee and Lufthansa. Original Trust Agreement. The Trust Agreement, dated as of September 1, 1993, between the Owner Participant and the Owner Trustee in its individual capacity. Owner Participant. The trustor originally named in the Trust Agreement and any successor thereto, and any Person to which Owner Participant transfers, in accordance with the Trust Agreement and the Participation Agreement, its right, title and interest in and to the Operative Agreements and the Lessor's Estate. Owner Trustee. First Security Bank of Utah, National Association, a national banking association, not in its individual capacity except as otherwise expressly stated, but solely as Owner Trustee under the Trust Agreement, and its successors and permitted assigns. Participation Agreement. The Participation Agreement (Federal Express Corporation Trust _____), dated as of March 1, 1994, among the Lessee, the Owner Trustee, not in its individual capacity except as otherwise expressly stated therein, but solely as, Owner Trustee, the Owner Participant, the Pass Through Trustee, not in its individual capacity except as otherwise expressly stated therein, but solely as Pass Through Trustee, the Indenture Trustee, not in its individual capacity except as otherwise expressly stated therein but solely as Indenture Trustee and the LC Bank, as amended, modified or supplemented, or the terms thereof waived. Parts. All appliances, parts, components, instruments, appurtenances, accessories, furnishings and other equipment of whatever nature (other than complete Engines or engines) which may from time to time be incorporated or installed in or attached to the Airframe or any Engine or, so long as title thereto shall be vested in the Lessor, prior to replacement thereof in accordance with the Lease, which may be removed therefrom. Parts and Services Agreement. The Original Parts and Services Agreement, as amended by Amendment No. 1 thereto, dated as of March 1, 1994, between the Owner Trustee and Lufthansa. Parts Cost. The cost of the parts and services with respect to the Aircraft pursuant to Article 4 of the Parts and Services Agreement. Pass Through Agreement. The Pass Through Trust Agreement dated as of March 1, 1994 between the Lessee and the Pass Through Trustee, as such Pass Through Agreement may be modified, supplemented or amended from time to time in accordance with the provisions thereof. Pass Through Certificates. Any of the 1994 Pass Through Certificates, Series A310-A1, 1994 Pass Through Certificates, Series A310-A2, or 1994 Pass Through Certificates, Series A310-A3, 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 Excess Amount. The excess of the principal amount of the Certificates issued on the Closing Date over the Net Proceeds. Pass Through Trust. The Federal Express Pass Through Trust, 1994-A310-A1, Federal Express Pass Through Trust, 1994-A310-A2 or Federal Express Pass Through Trust, 1994-A310-A3, 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. NationsBank of South Carolina, National Association, a national banking association, in its capacity as Pass Through Trustee under the Pass Through Agreement and each Pass Through Trust, and its successors and permitted assigns as Pass Through Trustee thereunder. 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 2.5% 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, 2.5% plus the interest rate applicable to such Certificate and (ii) in the case of any other such amount, 2.5% plus the weighted average rate of interest from time to time payable with respect to the Certificates (or if no Certificates are then outstanding, such weighted average rate at the time immediately preceding the final payment with respect thereto). Paying Agent. Has the meaning set forth in Section 3.04 of the Indenture. Payment Date. Any Interest Payment Date or Sinking Fund Redemption Date. 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). Pre-Funding Event of Loss. Any of the following events prior to the Exchange Date 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 120 days or to the Cut-off Date, if less, due to theft or disappearance, or (B) for a period in excess of 60 days or to the Cut-off Date, if less, due to the destruction, damage beyond economic repair or rendition of such property permanently unfit for normal use by Lessee for any reason whatsoever (provided, however, that failure to properly complete any work contemplated by the Modification Agreement shall not constitute the basis for a Pre-Funding Event of Loss); (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, such Pre-Funding Event of Loss being deemed to occur on the date of any such condemnation, confiscation, seizure or requisition of title, or (2) requisition of use of such property (A) by a foreign government or instrumentality or agency thereof, or any purported government or instrumentality or agency thereof, for a period in excess of 180 days (or such shorter period ending on the earlier of the Cut-off Date 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 Cut-off Date; 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 Model A310-203 aircraft equipped with engines of the same make and model as the Engines for a period ending on or after the Cut- off Date. The date of such Pre-Funding Event of Loss shall be the date of (i) loss of such property or its use thereof for a period in excess of 120 days, or to the Cut-off Date, if less, due to theft or disappearance; or loss for a period in excess of 60 days, or to the Cut-off Date, if less, due to damage beyond economic repair; or loss of use of the Airframe because of requisition for use for a period in excess of 180 days (or shorter period due to insurance settlement or as otherwise contemplated by clause (iii)(2)(A) above), (ii) an insurance settlement on the basis of total loss with respect to such property, (iii) condemnation, confiscation, seizure or requisition of title, or (iv) prohibition from usage for the periods described in clause (iv) above. A Pre-Funding Event of Loss with respect to the Aircraft shall be deemed to have occurred if any Pre-Funding Event of Loss occurs with respect to the Airframe. Pre-Funding Prepayment Date. Has the meaning as set forth in Section 6(c) of the Collateral Agreement. Pre-Funding Termination Notice. Has the meaning set forth in Section 3 of the Agreement to Lease. 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. Proposed Termination Date. The proposed date of termination of the Lease as specified by the Lessee in its notice given pursuant to Section 10.01 thereof. Purchase Price. The amount set forth in the "Purchase Price in U.S. Dollars" column for the Aircraft on Exhibit B to the Sales Agreement. Record Date. With respect to any payment under the Indenture means the 15th calendar day prior to the date such payment is due. Recourse Amount. Has the meaning specified in Section 16.10 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. Remaining Weighted Average Life. For any Certificate, as of any determination date, the number of years obtained by dividing (a) the sum of the products obtained by multiplying (i) the amount of each then remaining mandatory sinking fund redemption payment of principal, including the payment due on the Maturity of such Certificate, by (ii) the number of years (calculated to the nearest one-twelfth) which will elapse between such determination date, and the date on which such payment is scheduled to be made, by (b) 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 term of two years 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 March 23 and September 23, commencing on the first such date after the Commencement Date, and continuing thereafter during the Term. Replacement Engine. A General Electric CF6-80A3 engine of the same or of equal or greater value and utility as the Engine being replaced, together with all Parts relating to such engine; provided, however, that such Engine shall be of the same model as other Engines then subject to the Lease. Responsible Officer. With respect to the Owner Trustee (except for purposes of the Trust Agreement) or the Indenture Trustee, any officer in its Corporate Trust Administration Department designated by such Person to perform obligations under the Operative Agreements, and with respect to any other party, any corporate officer or other employee of a party who, in the normal performance of his 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. Sales Agreement. The Original Sales Agreement as amended by Amendment No. 1 thereto, dated as of March 1, 1994, between the Owner Trustee and Lufthansa. Scheduled Commencement Date. ______________, 199_. Securities Act. The Securities Act of 1933, as amended. Secured Obligations. Has the meaning set forth in the Granting Clause of the Indenture. Series Supplement. The Series Supplement 1994-A310-A1 to be executed and delivered by the Lessee and the Pass Through Trustee, the Series Supplement 1994-A310-A2 to be executed and delivered by the Lessee and the Pass Through Trustee or the Series Supplement 1994-A310-A3 to be executed and delivered by the Lessee and the Pass Through Trustee, in each case as such Series Supplement may be modified, supplemented or amended from time to time in accordance with the provisions thereof and "Series Supplements" means all of such Series Supplements. 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. Daugherty, Fowler & Peregrin. S&P. Standard & Poor's Corporation. Stipulated Loss Value. As of any Stipulated Loss Value Determination Date during the Basic Term, the greater of (i) the amount determined by multiplying the Aircraft Cost by the percentage set forth in Schedule III to the Lease under the heading "Stipulated Loss Value Factor" opposite such date, and (ii) an amount at least sufficient to pay in full, as of the date of payment thereof, the aggregate unpaid principal amount of the Certificates outstanding on such date of payment, together with the accrued and unpaid interest thereon; and during any Renewal Term, the amount determined pursuant to Section 4.01(b) of the Lease. Stipulated Loss Value Determination Date. Each date set forth on Schedule III of the Lease under the heading "Stipulated Loss Value Factors". Supplemental Rent. All amounts, liabilities and obligations which the Lessee assumes or agrees to perform or pay under the Lease or under the Participation Agreement or Tax Indemnity Agreement or an Ancillary Agreement to the Lessor or others, including, without limitation, payment of any Make- Whole Premium payable by the Lessor under the Indenture that is required to be paid by the Lessee pursuant to Section 3.02 of the Lease, payments of Stipulated Loss Value and amounts calculated by reference to Termination Value and all amounts required to be paid by the Lessee under the agreements, covenants and indemnities contained in the Lease or in the Participation Agreement or the Tax Indemnity Agreement or other Ancillary Agreement, but excluding (i) Basic Rent and (ii) any such amounts, liabilities and obligations to the extent such amounts, liabilities or obligations arise out of or relate to the period prior to execution of the Lease Supplement with respect to the Aircraft. Tax. Has the meaning set forth in Section 8.01(a) of the Participation Agreement. Tax Attribute Period. The period commencing on the first day of the taxable year of the Owner Participant in which the Commencement Date occurs and ending on the last day of the seventh succeeding taxable year of the Owner Participant; provided, however, that if the Lessee breaches its representation set forth in Section 4(a) of the Tax Indemnity Agreement and as a result it is required to pay an indemnity pursuant to said Agreement the Tax Attribute Period shall be the period over which the Owner Participant is required to depreciate the Aircraft for purposes of calculating the indemnity payable pursuant to Section 5 of the Tax Indemnity Agreement. Tax Indemnity Agreement. The Tax Indemnity Agreement, dated as of the Commencement Date, among the Lessee, and the Owner Participant and the partners listed on the Schedule A thereto, as from time to time modified, amended or supplemented pursuant to its applicable provisions. Term. The Basic Term and, if renewed pursuant to Section 4.01 of the Lease, the Renewal Term, or the period commencing on the Commencement Date and ending on 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 the end of the Tax Attribute Period in the case of Article 10 of the Lease and in the case of Section 4.02 of the Lease, the date specified in the notice from the Lessee given pursuant to such Section. Termination Value. As of any Termination Date, the greater of (i) the amount determined by multiplying the Aircraft Cost by the percentage set forth in Schedule IV to the Lease under the heading "Termination Value Factor" opposite such Termination Date, and (ii) an amount at least sufficient to pay in full, as of the date of payment thereof, the aggregate unpaid principal amount of the Certificates outstanding on such date of payment, together with the accrued and unpaid interest thereon. Transaction Costs. Those costs and expenses set forth in Section 10.01(a) of the Participation Agreement. Treasury Yield. (i) In the case of a Certificate having a Maturity within one year after the Prepayment Date or purchase date, as the case may be, the average yield to maturity on a government bond equivalent basis of the applicable United States Treasury Bill due the week of Maturity of such Certificate, and (ii) in the case of a Certificate having a Maturity one year or more after the Prepayment Date or purchase date, as the case may be, the average yield of the most actively traded United States Treasury Note (as reported by Cantor Fitzgerald Securities Corp. on page 5 of Telerate Systems, Inc., a financial news service, or if such report is not available, a source deemed comparable by the Independent Investment Banker selected to determine the Make-Whole Premium and reasonably acceptable to the Lessee) corresponding in maturity to the Remaining Weighted Average Life of such Certificate (or, if there is no corresponding maturity, an interpolation of maturities by the Independent Investment Banker), in each case determined by the Independent Investment Banker selected to determine the Make-Whole Premium based on the average of the yields to stated maturity determined from the bid prices as of 10:00 a.m. and 2:00 p.m. New York time, on the second Business Day preceding the Prepayment Date or purchase date, as the case may be. Trust Agreement. The Original Trust Agreement, as amended and restated as of March 1, 1994, and as amended or supplemented pursuant to its applicable provisions and in accordance with the other Operative Agreements (including, without limitation, as supplemented by any Trust Agreement Supplement). Trust Agreement Supplement. The Trust Agreement Supplement (as defined in the Trust Agreement) relating to the Aircraft. Trust Indenture Act. The Trust Indenture Act of 1939, as amended. Trust Indenture Estate; Indenture Estate. The property, rights and privileges described in the Granting Clause of the Indenture, other than (A) Excepted Payments, including, without limitation all right, title and interest of the Owner Participant in, to and under the Tax Indemnity Agreement and any moneys due and to become due under the Tax Indemnity Agreement, all as provided in the Indenture, and (B) rights granted to the Owner Trustee or the Owner Participant under the Indenture, including without limitation under Section 2.05, 7.02, 8.01, 8.02, 8.03, 13.01 and 13.02 thereof, and the Letter of Credit and any rights thereunder. Underwriters. The several Underwriters named in the Underwriting Agreement. Underwriting Agreement. The Underwriting Agreement dated March 16, 1994 among the Lessee, Lufthansa, the Owner Participant, Goldman, Sachs & Co. and Merrill Lynch, Pierce, Fenner & Smith. United States or US. The United States of America. U.S. Air Carrier. Any United States air carrier as to which there is in force a certificate issued pursuant to Section 401 or Section 418 of the Federal Aviation Act, and as to which there is in force an air carrier operating certificate issued pursuant to Part 121 of the regulations under such Act, or which may operate as an air carrier by certification or otherwise under any successor or substitute provision thereof or in absence thereof. APPENDIX A SINKING FUND REDEMPTION DATE INFORMATION
Federal Express Corporation Trust A Certificates Certificates Certificates Sinking Fund with a Maturity with a Maturity with a Maturity Redemption Date of March 23, 1998 of March 23, 2007 of March 23, 2009 --------------- ----------------- ----------------- ----------------- March 23, 1995 531,256 0 0 September 23, 1995 551,258 0 0 March 23, 1996 572,013 0 0 September 23, 1996 593,549 0 0 March 23, 1997 615,897 0 0 September 23, 1997 639,085 0 0 March 23, 1998 663,136 0 0 September 23, 1998 0 688,114 0 March 23, 1999 0 715,260 0 September 23, 1999 0 743,477 0 March 23, 2000 0 772,808 0 September 23, 2000 0 803,295 0 March 23, 2001 0 834,985 0 September 23, 2001 0 867,925 0 March 23, 2002 0 902,165 0 September 23, 2002 0 937,755 0 March 23, 2003 0 974,750 0 September 23, 2003 0 1,013,204 0 March 23, 2004 0 1,053,174 0 September 23, 2004 0 1,094,722 0 March 23, 2005 0 1,137,909 0 September 23, 2005 0 1,182,799 0 March 23, 2006 0 1,229,461 0 September 23, 2006 0 1,277,963 0 March 23, 2007 0 1,038,927 289,419 September 23, 2007 0 0 1,381,521 March 23, 2008 0 0 1,439,545 September 23, 2008 0 0 1,500,006 March 23, 2009 0 0 2,575,302 September 23,2009 0 0 0 March 23, 2010 0 0 0 --------- ---------- --------- Total 4,166,194 17,268,693 7,185,793
APPENDIX A SINKING FUND REDEMPTION DATE INFORMATION
Federal Express Corporation Trust B Certificates Certificates Certificates Sinking Fund with a Maturity with a Maturity with a Maturity Redemption Date of March 23, 2003 of September 23, 2007 of March 23, 2009 --------------- ----------------- --------------------- --------------------- March 23, 1995 562,121 0 0 September 23, 1995 583,285 0 0 March 23, 1996 605,246 0 0 September 23, 1996 628,033 0 0 March 23, 1997 651,679 0 0 September 23, 1997 676,214 0 0 March 23, 1998 701,674 0 0 September 23, 1998 0 728,092 0 March 23, 1999 0 756,815 0 September 23, 1999 0 786,672 0 March 23, 2000 0 817,706 0 September 23, 2000 0 849,964 0 March 23, 2001 0 883,495 0 September 23, 2001 0 918,349 0 March 23, 2002 0 954,578 0 September 23, 2002 0 992,236 0 March 23, 2003 794,071 237,295 0 September 23, 2003 0 1,070,639 0 March 23, 2004 0 1,112,875 0 September 23, 2004 0 1,156,778 0 March 23, 2005 0 1,202,413 0 September 23, 2005 0 1,249,848 0 March 23, 2006 0 1,299,155 0 September 23, 2006 0 1,350,407 0 March 23, 2007 0 1,403,680 0 September 23, 2007 0 11,348 1,447,674 March 23, 2008 0 0 1,520,307 September 23, 2008 0 0 1,584,160 March 23, 2009 0 0 3,119,539 September 23,2009 0 0 0 March 23, 2010 0 0 0 --------- ---------- --------- Total 5,202,323 17,782,345 7,671,680
APPENDIX A SINKING FUND REDEMPTION DATE INFORMATION
Federal Express Corporation Trust C Certificates Certificates Certificates Sinking Fund with a Maturity with a Maturity with a Maturity Redemption Date of March 23, 2003 of September 23, 2007 of March 23, 2009 --------------- ----------------- --------------------- --------------------- March 23, 1995 564,171 0 0 September 23, 1995 585,413 0 0 March 23, 1996 607,453 0 0 September 23, 1996 630,324 0 0 March 23, 1997 654,056 0 0 September 23, 1997 678,681 0 0 March 23, 1998 704,233 0 0 September 23, 1998 0 730,748 0 March 23, 1999 0 759,576 0 September 23, 1999 0 789,541 0 March 23, 2000 0 820,688 0 September 23, 2000 0 853,065 0 March 23, 2001 0 886,718 0 September 23, 2001 0 921,699 0 March 23, 2002 0 958,060 0 September 23, 2002 0 995,856 0 March 23, 2003 1,035,128 0 0 September 23, 2003 0 1,074,115 0 March 23, 2004 0 1,116,489 0 September 23, 2004 0 1,160,535 0 March 23, 2005 0 1,206,318 0 September 23, 2005 0 1,253,907 0 March 23, 2006 0 1,303,374 0 September 23, 2006 0 1,354,792 0 March 23, 2007 0 1,408,238 0 September 23, 2007 0 639,183 824,576 March 23, 2008 0 0 1,523,643 September 23, 2008 0 0 1,587,636 March 23, 2009 0 0 3,293,851 September 23,2009 0 0 0 March 23, 2010 0 0 0 --------- ---------- --------- Total 5,459,459 18,232,902 7,229,706
APPENDIX A SINKING FUND REDEMPTION DATE INFORMATION
Federal Express Corporation Trust D Certificates Certificates Certificates Sinking Fund with a Maturity with a Maturity with a Maturity Redemption Date of March 23, 1998 of March 23, 2007 of September 23, 2009 --------------- ----------------- ----------------- --------------------- March 23, 1995 302,984 0 0 September 23, 1995 575,400 0 0 March 23, 1996 597,063 0 0 September 23, 1996 619,543 0 0 March 23, 1997 642,879 0 0 September 23, 1997 667,073 0 0 March 23, 1998 692,177 0 0 September 23, 1998 0 718,249 0 March 23, 1999 0 746,584 0 September 23, 1999 0 776,037 0 March 23, 2000 0 806,651 0 September 23, 2000 0 838,474 0 March 23, 2001 0 871,551 0 September 23, 2001 0 905,934 0 March 23, 2002 0 941,673 0 September 23, 2002 0 978,822 0 March 23, 2003 0 1,017,437 0 September 23, 2003 0 1,057,575 0 March 23, 2004 0 1,099,296 0 September 23, 2004 0 1,142,663 0 March 23, 2005 0 1,187,741 0 September 23, 2005 0 1,234,598 0 March 23, 2006 0 1,283,303 0 September 23, 2006 0 1,333,929 0 March 23, 2007 0 1,169,107 217,412 September 23, 2007 0 0 1,441,807 March 23, 2008 0 0 1,502,362 September 23, 2008 0 0 1,565,462 March 23, 2009 0 0 1,631,211 September 23,2009 0 0 1,952,210 March 23, 2010 0 0 0 --------- ---------- --------- Total 4,097,109 18,109,624 8,310,464
APPENDIX A SINKING FUND REDEMPTION DATE INFORMATION
Federal Express Corporation Trust E Certificates Certificates Certificates Sinking Fund with a Maturity with a Maturity with a Maturity Redemption Date of March 23, 2004 of September 23, 2007 of September 23, 2009 --------------- ----------------- --------------------- --------------------- March 23, 1995 91,178 0 0 September 23, 1995 569,564 0 0 March 23, 1996 591,008 0 0 September 23, 1996 613,260 0 0 March 23, 1997 636,349 0 0 September 23, 1997 660,308 0 0 March 23, 1998 685,168 0 0 September 23, 1998 0 710,965 0 March 23, 1999 0 739,012 0 September 23, 1999 0 768,166 0 March 23, 2000 0 798,471 0 September 23, 2000 0 829,970 0 March 23, 2001 0 862,713 0 September 23, 2001 0 896,747 0 March 23, 2002 0 932,123 0 September 23, 2002 81,332 887,563 0 March 23, 2003 1,006,972 0 0 September 23, 2003 1,044,885 0 0 March 23, 2004 528,213 555,994 0 September 23, 2004 0 1,126,047 0 March 23, 2005 0 1,170,469 0 September 23, 2005 0 1,216,644 0 March 23, 2006 0 1,264,641 0 September 23, 2006 0 1,314,531 0 March 23, 2007 0 1,366,389 0 September 23, 2007 0 1,420,262 0 March 23, 2008 0 0 1,476,324 September 23, 2008 0 0 1,538,329 March 23, 2009 0 0 1,602,939 September 23,2009 0 0 2,129,755 March 23, 2010 0 0 0 --------- ---------- --------- Total 6,508,237 16,860,707 6,747,347
APPENDIX A SINKING FUND REDEMPTION DATE INFORMATION
Federal Express Corporation Trust F Certificates Certificates Certificates Sinking Fund with a Maturity with a Maturity with a Maturity Redemption Date of September 23, 2004 of September 23, 2008 of September 23, 2009 --------------- --------------------- --------------------- --------------------- March 23, 1995 0 0 0 September 23, 1995 569,081 0 0 March 23, 1996 590,507 0 0 September 23, 1996 612,739 0 0 March 23, 1997 635,809 0 0 September 23, 1997 659,747 0 0 March 23, 1998 684,587 0 0 September 23, 1998 0 710,362 0 March 23, 1999 0 738,385 0 September 23, 1999 0 767,515 0 March 23, 2000 0 797,793 0 September 23, 2000 0 829,266 0 March 23, 2001 0 861,981 0 September 23, 2001 895,986 0 0 March 23, 2002 929,720 0 0 September 23, 2002 964,724 0 0 March 23, 2003 1,001,046 0 0 September 23, 2003 1,038,735 0 0 March 23, 2004 1,077,843 0 0 September 23, 2004 1,118,395 0 0 March 23, 2005 0 1,160,533 0 September 23, 2005 0 1,206,316 0 March 23, 2006 0 1,253,905 0 September 23, 2006 0 1,303,372 0 March 23, 2007 0 1,354,790 0 September 23, 2007 0 1,408,236 0 March 23, 2008 0 1,463,791 0 September 23, 2008 0 764,379 757,132 March 23, 2009 0 0 1,583,493 September 23,2009 0 0 2,612,217 March 23, 2010 0 0 0 --------- ---------- --------- Total 10,778,919 14,620,624 4,952,842
APPENDIX A SINKING FUND REDEMPTION DATE INFORMATION
Federal Express Corporation Trust G Certificates Certificates Certificates Sinking Fund with a Maturity with a Maturity with a Maturity Redemption Date of September 23, 2004 of March 28, 2008 of September 23, 2009 --------------- --------------------- ----------------- --------------------- March 23, 1995 0 0 0 September 23, 1995 512,009 0 0 March 23, 1996 531,287 0 0 September 23, 1996 551,290 0 0 March 23, 1997 572,046 0 0 September 23, 1997 593,583 0 0 March 23, 1998 615,932 0 0 September 23, 1998 0 639,121 0 March 23, 1999 0 664,335 0 September 23, 1999 0 690,543 0 March 23, 2000 0 717,785 0 September 23, 2000 0 746,101 0 March 23, 2001 0 775,535 0 September 23, 2001 806,130 0 0 March 23, 2002 836,481 0 0 September 23, 2002 867,974 0 0 March 23, 2003 900,654 0 0 September 23, 2003 934,563 0 0 March 23, 2004 969,750 0 0 September 23, 2004 1,006,235 0 0 March 23, 2005 0 1,044,146 0 September 23, 2005 0 1,085,338 0 March 23, 2006 0 1,128,155 0 September 23, 2006 0 1,172,660 0 March 23, 2007 0 1,218,922 0 September 23, 2007 0 1,267,008 0 March 23, 2008 0 1,316,969 0 September 23, 2008 0 0 1,368,947 March 23, 2009 0 0 1,426,443 September 23,2009 0 0 2,553,940 March 23, 2010 0 0 0 --------- ---------- --------- Total 9,697,934 12,466,618 5,349,330
APPENDIX A SINKING FUND REDEMPTION DATE INFORMATION
Federal Express Corporation Trust H Certificates Certificates Certificates Sinking Fund with a Maturity with a Maturity with a Maturity Redemption Date of March 23, 2006 of September 23, 2008 of September 23, 2009 --------------- ----------------- --------------------- --------------------- March 23, 1995 0 0 0 September 23, 1995 507,767 0 0 March 23, 1996 526,885 0 0 September 23, 1996 546,722 0 0 March 23, 1997 567,306 0 0 September 23, 1997 588,665 0 0 March 23, 1998 610,828 0 0 September 23, 1998 0 633,826 0 March 23, 1999 0 658,831 0 September 23, 1999 0 684,821 0 March 23, 2000 0 711,838 0 September 23, 2000 0 739,920 0 March 23, 2001 0 769,109 0 September 23, 2001 0 799,451 0 March 23, 2002 0 830,989 0 September 23, 2002 0 863,772 0 March 23, 2003 897,848 0 0 September 23, 2003 931,652 0 0 March 23, 2004 966,728 0 0 September 23, 2004 1,003,126 0 0 March 23, 2005 1,040,893 0 0 September 23, 2005 1,080,083 0 0 March 23, 2006 581,643 539,079 0 September 23, 2006 0 1,163,915 0 March 23, 2007 0 1,209,831 0 September 23, 2007 0 1,257,559 0 March 23, 2008 0 1,307,170 0 September 23, 2008 0 1,358,713 0 March 23, 2009 0 0 1,412,340 September 23, 2009 0 0 2,903,837 March 23, 2010 0 0 0 --------- ---------- --------- Total 9,850,146 13,528,824 4,316,177
APPENDIX A SINKING FUND REDEMPTION DATE INFORMATION
Federal Express Corporation Trust I Certificates Certificates Certificates Sinking Fund with a Maturity with a Maturity with a Maturity Redemption Date of September 23, 2005 of September 23, 2008 of March 23, 2010 --------------- --------------------- --------------------- ----------------- March 23, 1995 0 0 0 September 23, 1995 386,443 0 0 March 23, 1996 526,836 0 0 September 23, 1996 546,672 0 0 March 23, 1997 567,254 0 0 September 23, 1997 588,611 0 0 March 23, 1998 610,772 0 0 September 23, 1998 0 633,768 0 March 23, 1999 0 658,770 0 September 23, 1999 0 684,759 0 March 23, 2000 0 711,772 0 September 23, 2000 0 739,852 0 March 23, 2001 769,039 0 0 September 23, 2001 797,993 0 0 March 23, 2002 828,038 0 0 September 23, 2002 859,214 0 0 March 23, 2003 891,563 0 0 September 23, 2003 925,130 0 0 March 23, 2004 959,961 0 0 September 23, 2004 996,104 0 0 March 23, 2005 1,033,607 0 0 September 23, 2005 920,551 151,939 0 March 23, 2006 0 1,113,177 0 September 23, 2006 0 1,157,092 0 March 23, 2007 0 1,202,739 0 September 23, 2007 0 1,250,187 0 March 23, 2008 0 1,299,507 0 September 23, 2008 0 1,350,752 0 March 23, 2009 0 0 1,404,060 September 23,2009 0 0 1,463,031 March 23, 2010 0 0 1,646,212 --------- ---------- --------- Total 12,207,788 10,954,314 4,513,303
APPENDIX A SINKING FUND REDEMPTION DATE INFORMATION
Federal Express Corporation Trust J Certificates Certificates Certificates Sinking Fund with a Maturity with a Maturity with a Maturity Redemption Date of March 23, 2006 of September 23, 2008 of March 23, 2010 --------------- ------------------ --------------------- ----------------- March 23, 1995 0 0 0 September 23, 1995 98,583 0 0 March 23, 1996 523,496 0 0 September 23, 1996 543,206 0 0 March 23, 1997 563,658 0 0 September 23, 1997 584,879 0 0 March 23, 1998 606,900 0 0 September 23, 1998 0 629,750 0 March 23, 1999 0 654,593 0 September 23, 1999 0 680,417 0 March 23, 2000 0 707,260 0 September 23, 2000 0 735,161 0 March 23, 2001 764,163 0 0 September 23, 2001 792,934 0 0 March 23, 2002 822,788 0 0 September 23, 2002 853,766 0 0 March 23, 2003 885,910 0 0 September 23, 2003 919,265 0 0 March 23, 2004 953,875 0 0 September 23, 2004 989,789 0 0 March 23, 2005 1,027,054 0 0 September 23, 2005 1,065,723 0 0 March 23, 2006 624,327 481,486 0 September 23, 2006 0 1,148,349 0 March 23, 2007 0 1,193,651 0 September 23, 2007 0 1,240,741 0 March 23, 2008 0 1,289,688 0 September 23, 2008 0 1,340,547 0 March 23, 2009 0 0 1,393,452 September 23,2009 0 0 1,451,977 March 23, 2010 0 0 1,920,457 ---------- ---------- --------- Total 12,620,316 10,101,643 4,765,886
APPENDIX A SINKING FUND REDEMPTION DATE INFORMATION
Federal Express Corporation Trust K Certificates Certificates Certificates Sinking Fund with a Maturity with a Maturity with a Maturity Redemption Date of March 23, 2006 of September 23, 2008 of March 23, 2010 --------------- ----------------- --------------------- ----------------- March 23, 1995 0 0 0 September 23, 1995 0 0 0 March 23, 1996 575,706 0 0 September 23, 1996 597,381 0 0 March 23, 1997 619,873 0 0 September 23, 1997 643,211 0 0 March 23, 1998 667,428 0 0 September 23, 1998 0 692,556 0 March 23, 1999 0 719,878 0 September 23, 1999 0 748,277 0 March 23, 2000 0 777,797 0 September 23, 2000 808,481 0 0 March 23, 2001 838,920 0 0 September 23, 2001 870,505 0 0 March 23, 2002 903,280 0 0 September 23, 2002 937,288 0 0 March 23, 2003 972,577 0 0 September 23, 2003 1,009,195 0 0 March 23, 2004 1,047,191 0 0 September 23, 2004 1,086,618 0 0 March 23, 2005 1,127,529 0 0 September 23, 2005 1,169,980 0 0 March 23, 2006 1,130,081 83,909 0 September 23, 2006 0 1,259,890 0 March 23, 2007 0 1,309,592 0 September 23, 2007 0 1,361,256 0 March 23, 2008 0 1,414,957 0 September 23, 2008 0 1,470,759 0 March 23, 2009 0 0 1,528,799 September 23,2009 0 0 1,593,009 March 23, 2010 0 0 2,376,125 ---------- --------- --------- Total 15,005,244 9,838,871 5,497,933
APPENDIX A SINKING FUND REDEMPTION DATE INFORMATION
Federal Express Corporation Trust L Certificates Certificates Certificates Sinking Fund with a Maturity with a Maturity with a Maturity Redemption Date of September 23, 2006 of September 23, 2008 of March 23, 2010 --------------- --------------------- --------------------- ----------------- March 23, 1995 0 0 0 September 23, 1995 0 0 0 March 23, 1996 519,250 0 0 September 23, 1996 538,799 0 0 March 23, 1997 599,085 0 0 September 23, 1997 580,135 0 0 March 23, 1998 601,977 0 0 September 23, 1998 0 624,641 0 March 23, 1999 0 649,283 0 September 23, 1999 0 674,898 0 March 23, 2000 701,522 0 0 September 23, 2000 727,935 0 0 March 23, 2001 755,342 0 0 September 23, 2001 783,780 0 0 March 23, 2002 813,289 0 0 September 23, 2002 843,910 0 0 March 23, 2003 875,683 0 0 September 23, 2003 908,653 0 0 March 23, 2004 942,863 0 0 September 23, 2004 978,362 0 0 March 23, 2005 1,015,198 0 0 September 23, 2005 1,053,420 0 0 March 23, 2006 1,093,081 0 0 September 23, 2006 498,350 635,846 0 March 23, 2007 0 1,178,084 0 September 23, 2007 0 1,224,559 0 March 23, 2008 0 1,272,868 0 September 23, 2008 0 1,323,069 0 March 23, 2009 0 0 1,375,279 September 23,2009 0 0 1,433,040 March 23, 2010 0 0 2,390,258 ---------- --------- --------- Total 14,790,634 7,583,248 5,198,577
APPENDIX A SINKING FUND REDEMPTION DATE INFORMATION
Federal Express Corporation Trust M Certificates Certificates Certificates Sinking Fund with a Maturity with a Maturity with a Maturity Redemption Date of September 23, 2006 of September 23, 2008 of March 23, 2010 --------------- --------------------- --------------------- ----------------- March 23, 1995 0 0 0 September 23, 1995 0 0 0 March 23, 1996 515,742 0 0 September 23, 1996 535,160 0 0 March 23, 1997 555,308 0 0 September 23, 1997 576,216 0 0 March 23, 1998 597,910 0 0 September 23, 1998 0 620,422 0 March 23, 1999 0 644,897 0 September 23, 1999 0 670,338 0 March 23, 2000 261,715 435,068 0 September 23, 2000 723,800 0 0 March 23, 2001 751,051 0 0 September 23, 2001 779,328 0 0 March 23, 2002 808,670 0 0 September 23, 2002 839,117 0 0 March 23, 2003 870,709 0 0 September 23, 2003 903,492 0 0 March 23, 2004 937,508 0 0 September 23, 2004 972,805 0 0 March 23, 2005 1,009,431 0 0 September 23, 2005 1,047,437 0 0 March 23, 2006 1,086,873 0 0 September 23, 2006 843,425 284,329 0 March 23, 2007 0 1,170,767 0 September 23, 2007 0 1,216,953 0 March 23, 2008 0 1,264,962 0 September 23, 2008 0 1,314,851 0 March 23, 2009 0 0 1,366,736 September 23,2009 0 0 1,424,139 March 23, 2010 0 0 2,611,087 ---------- --------- --------- Total 14,615,697 7,622,587 5,401,962 ========== ========= =========
EX-4.C.1 6 Exhibit 4.c.1 ====================================================== PARTICIPATION AGREEMENT (Federal Express Corporation Trust ____) Dated as of March 1, 1994 among FEDERAL EXPRESS CORPORATION, Lessee LLG AIRCRAFT LEASING, L.P., Owner Participant NATIONSBANK OF SOUTH CAROLINA, NATIONAL ASSOCIATION, Pass Through Trustee FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, Owner Trustee NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, Indenture Trustee WESTDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH, LC Bank LEVERAGED LEASE OF ONE AIRBUS MODEL A310-203 AIRCRAFT SERIAL NO. ____________ ====================================================== TABLE OF CONTENTS Page Initial Recitals . . . . . . . . . . . . . . . . . . 1 ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . 3 ARTICLE 2 ISSUANCE OF PASS THROUGH CERTIFICATES; ISSUANCE AND PURCHASE OF CERTIFICATES Section 2.01. Transfer of Funds and Collateral . . . 3 Section 2.02. Transaction Costs and Fees; Pass Through Closing Costs . . . . . 5 Section 2.03 Closings . . . . . . . . . . . . . . . 5 Section 2.04 Obligation to Lease . . . . . . . . . 5 ARTICLE 3 DELIVERY OF AIRCRAFT; POSTPONEMENT Section 3.01. Notice of Commencement Date . . . . . 6 Section 3.02. Postponement of Proposed Commencement Date . . . . . . . . . . . . . . . . 6 Section 3.03 Payment on Commencement Date . . . . . 7 ARTICLE 4 CONDITIONS PRECEDENT Section 4.01. Conditions Precedent to Closings . . . 7 Section 4.01A Condition Precedent to Obligations of the LC Bank . . . . . . . . . . . 18 Section 4.02 Conditions Precedent to Lease on the Commencement Date . . . . . . . . . 18 Section 4.03 Conditions Precedent to Release of Debt Portion from the Collateral Account . . . . . . . . . . . . . . 25 Section 4.04 Opinion of Special Aviation Counsel Upon Registration . . . . . . . . . 34 ARTICLE 5 CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS Section 5.01. Conditions Precedent to Lessee's Obligations . . . . . . . . 35 ARTICLE 6 LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS Section 6.01. Lessee's Representations and Warranties . . . . . . . . . . . . . 35 Section 6.02. Certain Covenants of Lessee . . . . . 41 Section 6.03. Survival of Representations and Warranties . . . . . . . . . . . 49 ARTICLE 7 OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS Section 7.01. Acquisitions and Offerings of Interests in Lessor's Estate . . 50 Section 7.02. Citizenship . . . . . . . . . . . . . 50 Section 7.03. Representations, Warranties and Covenants of Owner Participant . . . 53 Section 7.04. Representations, Warranties and Covenants of Owner Trustee . . . . . 57 Section 7.05. Representations and Warranties of the Indenture Trustee . . . . . . 59 Section 7.06. Representations and Warranties of Pass Through Trustee and LC Bank. 61 Section 7.07. Intentionally Omitted . . . . . . . . 63 Section 7.08. Indenture Trustee's Notice of Default 63 Section 7.09. Releases from Indenture . . . . . . . 63 Section 7.10. Covenant of Quiet Enjoyment . . . . . 64 Section 7.11. Survival of Representations Warranties and Covenants . . . . . . 64 Section 7.12. Lessee's Assumption of the Certificates . . . . . . . . . . . . 64 Section 7.13. Indebtedness of Owner Trustee . . . . 67 Section 7.14. Compliance with Trust Agreement, Etc. 67 ARTICLE 8 TAXES Section 8.01. Lessee's Obligation to Pay Taxes . . . 68 Section 8.02. After-Tax Basis . . . . . . . . . . . 74 Section 8.03. Time of Payment . . . . . . . . . . . 75 Section 8.04. Contests . . . . . . . . . . . . . . . 76 Section 8.05. Refunds . . . . . . . . . . . . . . . 78 Section 8.06. Lessee's Reports . . . . . . . . . . . 78 Section 8.07. Survival of Obligations . . . . . . . 79 Section 8.08. Payment of Taxes . . . . . . . . . . . 79 Section 8.09. Reimbursements by Indemnitees Generally . . . . . . . . . . . . . 80 ARTICLE 9 GENERAL INDEMNITY Section 9.01. Generally . . . . . . . . . . . . . . 80 Section 9.02. After-Tax Basis . . . . . . . . . . . 85 Section 9.03. Subrogation . . . . . . . . . . . . . 86 Section 9.04. Notice and Payment . . . . . . . . . . 86 Section 9.05. Refunds . . . . . . . . . . . . . . . 86 Section 9.06. Defense of Claims . . . . . . . . . . 87 Section 9.07. Survival of Obligations . . . . . . . 88 Section 9.08. Effect of Other Indemnities . . . . . 88 Section 9.09. Interest . . . . . . . . . . . . . . . 89 ARTICLE 10 CERTAIN COSTS Section 10.01. Trustee Expenses and Other Costs . . 89 ARTICLE 11 SUCCESSOR OWNER TRUSTEE Section 11.01. Appointment of Successor Owner Trustee . . . . . . . . . . . . . . 90 ARTICLE 12 LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND THE PASS THROUGH TRUSTEE Section 12.01. Liabilities of the Owner Participant. 92 Section 12.02. Interest of Pass Through Trustee. . . 92 ARTICLE 13 OTHER DOCUMENTS Section 13.01. Consent of Lessee to Other Documents 92 Section 13.02. Further Assurances . . . . . . . . . 93 ARTICLE 14 NOTICES Section 14.01. Notices . . . . . . . . . . . . . . 93 ARTICLE 15 [INTENTIONALLY OMITTED] ARTICLE 16 MISCELLANEOUS Section 16.01. Owner for Federal Tax Purposes . . . 95 Section 16.02. Intentionally Omitted . . . . . . . 95 Section 16.03. Counterparts . . . . . . . . . . . . 95 Section 16.04. No Oral Modifications . . . . . . . 95 Section 16.05. Captions . . . . . . . . . . . . . . 96 Section 16.06. Successors and Assigns . . . . . . . 96 Section 16.07. Concerning the Owner Trustee, Pass Through Trustee and Indenture Trustee . . . . . . . . . . . . . . 96 Section 16.08. Severability . . . . . . . . . . . . 97 Section 16.09. Public Release of Information . . . 97 Section 16.10. Certain Limitations on Reorganization 97 Section 16.11. Governing Law . . . . . . . . . . . 98 Section 16.12. Section 1110 Compliance . . . . . . 98 ARTICLE 17 CONFIDENTIALITY Section 17.01. Confidentiality . . . . . . . . . . 99 SCHEDULE I Certificate Information SCHEDULE II Definitions SCHEDULE III Permitted Country List SCHEDULE IV Certain Amounts EXHIBIT A [Intentionally Omitted] EXHIBIT B Form of Lease Agreement EXHIBIT C Form of Indenture EXHIBIT D Form of Trust Agreement EXHIBIT E Form of Demand Note EXHIBIT F [Intentionally Omitted] EXHIBIT G Form of Letter of Credit EXHIBIT H Form of Collateral Agreement EXHIBIT I Form of OP Guarantee EXHIBIT J Form of Lufthansa Side Letter EXHIBIT K-1 Closing Date Opinion of Counsel to the Lessee EXHIBIT K-2 Commencement Date Opinion of Counsel to the Lessee EXHIBIT L-1 Closing Date Opinion of Counsel to the Owner Participant, its General Partner and Lufthansa EXHIBIT L-2 Commencement Date and Exchange Date Opinion of Counsel to the Owner Participant, its General Partner and Lufthansa EXHIBIT M-1 Closing Date Opinion of German Counsel to Lufthansa EXHIBIT M-2 Commencement Date Opinion of German Counsel to Lufthansa EXHIBIT N-1 Closing Date Opinion of Special Counsel to the Indenture Trustee EXHIBIT N-2 Exchange Date Opinion of Special Counsel to the Indenture Trustee EXHIBIT O Closing Date Opinion of Special Counsel to the Pass Through Trustee EXHIBIT P-1 Closing Date Opinion of Special Counsel to the Owner Trustee EXHIBIT P-2 Commencement Date and Exchange Date Opinion of Special Counsel to the Owner Trustee EXHIBIT Q-1 Closing Date Opinion of Special Counsel to the Lessee EXHIBIT Q-2 Commencement Date and Exchange Date Opinion of Special Counsel to the Lessee EXHIBIT R Closing Date Opinion of Counsel to the LC Bank EXHIBIT S Closing Date Opinion of Special Counsel to the LC Bank EXHIBIT T Commencement Date and Exchange Date Opinion of Daugherty, Fowler & Peregrin PARTICIPATION AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST _________) PARTICIPATION AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST _________) dated as of March 1, 1994 (this "Agreement") among FEDERAL EXPRESS CORPORATION, a Delaware corporation (herein, together with its successors and permitted assigns, "Lessee"), LLG AIRCRAFT LEASING, L.P., a Delaware limited partnership (herein, together with its successors and permitted assigns, "Owner Participant"), NATIONSBANK OF SOUTH CAROLINA, NATIONAL ASSOCIATION, a national banking association, not in its individual capacity, except as otherwise expressly stated herein, but solely as pass through trustee under the Pass Through Agreement and each Pass Through Trust (in such capacity as pass through trustee herein, together with its successors and permitted assigns, "Pass Through Trustee"), FIRST SECURITY BANK OF UTAH, 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, "Owner Trustee"), NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, a national banking association, not in its individual capacity, except as otherwise expressly stated herein, but solely as trustee under the Indenture referred to below (in such capacity as trustee herein, together with its successors and permitted assigns, "Indenture Trustee"), and WESTDEUTSCHE LANDESBANK GIROZENTRALE, a German corporation, acting through its NEW YORK BRANCH ("LC Bank"). W I T N E S S E T H : WHEREAS, the Owner Participant entered into the Original Trust Agreement with the Owner Trustee in its individual capacity, pursuant to which Original Trust Agreement the Owner Trustee agreed, among other things, to hold the Lessor's Estate for the benefit of the Owner Participant on the terms specified in the Original Trust Agreement, subject, upon execution of the Indenture, to the Lien thereof. WHEREAS, concurrently with the execution of the Original Trust Agreement (and in accordance with authorizations granted thereby), the Owner Trustee (1) entered into the Original Sales Agreement with Lufthansa, pursuant to which the Owner Trustee purchased the Aircraft from Lufthansa on November 15, 1993, (2) entered into the Original Modification Agreement with Lufthansa and DA, pursuant to which the Aircraft is to be converted from passenger configuration to cargo configuration, (3) entered into the Original Parts and Services Agreement with Lufthansa, pursuant to which Lufthansa will perform described services with respect to the Aircraft, and (4) entered into the Original Agreement to Lease with Lufthansa and the Lessee, pursuant to which, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to the Lessee, and the Lessee agreed to lease from the Owner Trustee, the Aircraft on the Commencement Date. WHEREAS, Section 13 of the Original Agreement to Lease permits a Nonrecourse Financing (as defined therein), subject to certain conditions. WHEREAS, in order to facilitate such a Nonrecourse Financing, the Lessee is concurrently entering into an Underwriting Agreement, which relates to three Series of Pass Through Certificates to be issued by the Pass Through Trusts formed to acquire, among other securities, the Certificates bearing a particular interest rate and having a particular Maturity that will be issued under the Indenture. WHEREAS, in connection with the foregoing, the Owner Trustee will enter into amendments to each of the Original Modification Agreement, the Original Sales Agreement and the Parts and Services Agreement, and the Original Agreement to Lease will be amended and restated. WHEREAS, on the Closing Date, a closing will occur with respect to the public offering of the Pass Through Certificates issued by each Pass Through Trust, the proceeds from which will be used by the Pass Through Trustee to purchase for each such Pass Through Trust the Certificates of the interest rate and Maturity applicable thereto which proceeds will in turn be applied by the Owner Trustee to pay, among other things, a portion of the Lessor's investment in the Aircraft. WHEREAS, prior to the Exchange Date, the Certificates will be secured by the Liquid Collateral and the Demand Note Collateral (as each such term is defined in the Collateral Agreement) and/or the Letter of Credit. WHEREAS, subject to the terms and conditions hereof, the Lessee proposes to lease, on the Commencement Date, the Aircraft from the Owner Trustee pursuant to the Lease. NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, the parties agree as follows: ARTICLE 1 DEFINITIONS Unless the context otherwise requires, the terms defined in Schedule II hereto are incorporated herein for all purposes of this Agreement and shall be equally applicable to both the singular and the plural forms of the terms so defined. ARTICLE 2 ISSUANCE OF PASS THROUGH CERTIFICATES; ISSUANCE AND PURCHASE OF CERTIFICATES Section 2.01. Transfer of Funds and Collateral. (a) On or before the Closing Date, the Pass Through Trustee and the Lessee shall enter into the Pass Through Agreement and the Series Supplements, and, subject to the terms and conditions set forth therein, on the Closing Date (i) the Lessee shall direct the Underwriters to execute a wire transfer or intra-bank transfer to the Pass Through Trustee in the amount of the total proceeds payable pursuant to the Underwriting Agreement with respect to the Pass Through Certificates and (ii) the Pass Through Trustee shall deliver the Pass Through Certificates to the Underwriters upon receipt by the Pass Through Trustee of such proceeds. (b) Subject to the satisfaction or waiver of the conditions set forth herein, on the Closing Date the following events shall occur in the order set forth below: (i) On behalf of each Pass Through Trust, from an allocable amount of the proceeds of the sale of the related Pass Through Certificates, the Pass Through Trustee shall purchase the Certificates specified for such Pass Through Trust on Schedule I hereto. For each Pass Through Trust, the Pass Through Trustee shall pay an amount equal to the principal amount of the Certificate of the Maturity and having the interest rate that relates to such Pass Through Trust, which amounts in the aggregate shall equal the aggregate principal amount of the Certificates as specified in the form of the Certificates as set forth in the Indenture. The aggregate amount payable by the Pass Through Trustee pursuant to this Section 2.01(b)(i) shall be payable by wire transfer or intra-bank transfer to the Indenture Trustee on behalf of the Owner Trustee. (ii) The Indenture Trustee shall, on behalf of the Owner Trustee, apply the amounts received by it pursuant to Section 2.01(b)(i) (and only such amounts) as follows: (A) an amount equal to the Net Proceeds shall be sent, by wire transfer or intra-bank transfer, for deposit in the Collateral Account (as defined in the Collateral Agreement) pursuant to the Collateral Agreement and (B) an amount equal to the Pass Through Closing Excess Amount shall be paid, on behalf of the Owner Participant, by wire transfer or intra- bank transfer, in accordance with Section 2.02(a) hereof (and, if the fees and expenses listed in Section 2.02(a) hereof exceed the Pass Through Closing Excess Amount, in the order of priority listed therein). (iii) (A) The Owner Participant shall deliver, or cause to be delivered, to the Owner Trustee one or more Demand Notes, in the aggregate principal amount set forth on Schedule IV hereto, and the Owner Trustee shall deliver the same to the Indenture Trustee, and (B) the LC Bank shall issue to the Indenture Trustee the Letter of Credit. (iv) The Owner Trustee shall cause the Certificates to be issued to the Pass Through Trustee for the applicable Pass Through Trusts in accordance with Section 2.01(c) hereof. (c) Concurrently with the purchase and payment contemplated by Section 2.01(b)(i) above, the Owner Trustee shall execute, issue and deliver to the Indenture Trustee, and the Indenture Trustee shall authenticate and deliver, upon the request of the Owner Trustee, to the Pass Through Trustee for each Pass Through Trust, the Certificate specified for such Pass Through Trust on Schedule I attached hereto, which (i) shall be issued in the principal amount and in the Maturity set forth for such Certificate in Schedule I hereto, (ii) shall bear interest at the interest rate set forth for such Certificate in Schedule I hereto, (iii) shall be issued in such form and on such terms as are specified in the Indenture, (iv) shall be dated and authenticated on the Closing Date and shall bear interest therefrom, and (v) shall be registered in the name of the Pass Through Trustee on behalf of such Pass Through Trust. Section 2.02. Transaction Costs and Fees; Pass Through Closing Excess Amount. (a) The Owner Participant shall pay all fees and expenses of the following persons relating to the public offering of the Pass Through Certificates contemplated by the Underwriting Agreement or the Indemnification Agreement and related to the transactions contemplated hereby and thereby: (i) any commissions and discounts payable to the Underwriters pursuant to the Underwriting Agreement; (ii) the fees and expenses of Moody's and S&P; (iii) the amounts contemplated by Section 4.01(m) hereof and the fees and expenses associated with the appraisal contemplated by Section 4.01(l) hereof, (iv) the fees and expenses of counsel for the Owner Trustee, the Indenture Trustee, the Pass Through Trustee and the Underwriters and any other expenses (other than those covered by Section 10.01 hereof) of the Owner Trustee, the Indenture Trustee and the Pass Through Trustee; (v) the fees of any printer of the Pass Through Certificates; (vi) the fees and expenses incurred in connection with printing the Registration Statement, the Prospectus comprising part of the Registration Statement and the Prospectus Supplement for the offering of the Pass Through Certificates; and (vii) the filing fees with respect to the filing of the Registration Statement on Form S- 3 bearing Registration No. 33-51623 (the "Registration Statement") filed by the Lessee with the SEC in connection with the public offering of the Pass Through Certificates (or the reimbursement of Lufthansa therefor). (b) The Owner Participant agrees to bear all fees and expenses of Dewey Ballantine and the Lessee agrees to pay all fees and expenses of Davis Polk & Wardwell and First Chicago Leasing Corporation, in each case in connection with the execution and delivery of this Agreement and the other Operative Agreements. Section 2.03 Closings. (a) The Closings will be at the offices of Sullivan & Cromwell at 125 Broad Street, New York, New York. (b) The closings with respect to commencement of the Lease on the Commencement Date and the release of the Debt Portion on the Exchange Date will be at the offices of Davis, Polk & Wardwell at 450 Lexington Avenue, New York, New York. (c) All payments pursuant to this Section 2 shall be made in immediately available funds. Section 2.04 Obligation to Lease. If the Closings shall fail to occur for any reason, the Owner Trustee will nevertheless be obligated to lease the Aircraft to the Lessee and the Lessee will be obligated to lease the Aircraft from the Owner Trustee upon satisfaction or waiver of the conditions precedent relating to such leasing set forth in Section 4 of the Agreement to Lease and Section 4.02 hereof in the case of the Owner Trustee, and in Section 4 of the Agreement to Lease and in Article 5 hereof in the case of the Lessee. ARTICLE 3 DELIVERY OF AIRCRAFT; POSTPONEMENT Section 3.01. Notice of Commencement Date. The Owner Participant agrees to give the Owner Trustee, the Lessee, the Pass Through Trustee and the Indenture Trustee at least four (4) Frankfurt Business Days' written or facsimile notice prior to the Commencement Date (which notice shall be effective only if received prior to 10:00 a.m. (New York City time) on the date that is at least four (4) Frankfurt Business Days prior to such Commencement Date), which Delivery Notice shall specify such Commencement Date, the serial number of the Airframe and each Engine, and the Aeronautics Authority registration number for the Aircraft. Section 3.02. Postponement of Proposed Commencement Date. (a) Postponement. The Commencement Date proposed pursuant to Section 3.01 hereof may be postponed from time to time in accordance with the Agreement to Lease. If the Commencement Date is postponed, the Owner Participant shall give the Owner Trustee, the Indenture Trustee, the Pass Through Trustee and the Lessee confirmed telex or facsimile notice (or telephone notice followed by written confirmation) of such postponement and notice of the date to which the Commencement 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 proposed Commencement Date being postponed. (b) Prepayment of Certificates. Neither (i) any prepayment of the Certificates nor (ii) any refusal or inability of the Indenture Trustee to release the Debt Portion from the Collateral Account on the Commencement Date, shall affect the obligation of the Owner Trustee to lease the Aircraft to the Lessee and the obligation of the Lessee to lease the Aircraft from the Owner Trustee when the conditions precedent to such leasing set forth in Section 4 of the Agreement to Lease, and Section 4.02 and Section 5.02 hereof are satisfied or waived. Section 3.03 Payment on Commencement Date. Subject to the terms and conditions of this Agreement, (i) the Owner Participant hereby agrees to make available to the Owner Trustee, on or prior to the Commencement Date, an amount equal to the difference between (A) the sum of the Purchase Price, Modification Cost (or such greater amount as is then payable pursuant to the Modification Agreement) and Parts Cost and (B) the Debt Portion (or such lesser amount that is actually available to be released from the Collateral Account on the Commencement Date pursuant to Section 7(e) of the Collateral Agreement), and (ii) the Owner Trustee hereby agrees to, on the Commencement Date, pay an amount equal to the Purchase Price pursuant to the Sales Agreement, an amount equal to the Modification Cost (or such greater amount as is then payable pursuant to the Modification Agreement) pursuant to the Modification Agreement and an amount equal to the Parts Cost pursuant to the Parts and Services Agreement. ARTICLE 4 CONDITIONS PRECEDENT Section 4.01. Conditions Precedent to Closings. The obligations of the Lessee, the Owner Trustee, the Owner Participant, the Indenture Trustee and the Pass Through Trustee on behalf of each Pass Through Trust to participate in the transactions contemplated hereby on the Closing Date are subject to the fulfillment to the satisfaction of such party, prior to or on the Closing Date, of the following conditions precedent; provided, however, that the conditions precedent set forth in this Section 4.01 shall not affect the Owner Trustee's obligation to lease the Aircraft to the Lessee, or the Lessee's obligation to lease the Aircraft from the Owner Trustee, on the Commencement Date, if the conditions precedent with respect to such leasing set forth in Section 4 of the Agreement to Lease and in Section 4.02 and Section 5.01 below have been satisfied or have been waived by the Owner Participant or the Lessee, as the case may be. (a) The Certificates. (i) On the Closing Date, one Certificate shall have been duly issued by the Owner Trustee and delivered to the Pass Through Trustee for each Pass Through Trust against payment for such Certificate as described in Section 2.01(b) hereof. (ii) The Pass Through Certificates shall be registered under the Securities Act, any applicable state securities laws shall have been complied with, and the Pass Through Agreement shall have been qualified under the Trust Indenture Act. (b) Legal Investment. On the Closing Date, no fact or condition shall exist under 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 Lessee or the Indenture Trustee, would make it illegal for the Owner Participant, the Lessee, the Owner Trustee, the Pass Through Trustee or the Indenture Trustee, and no change in circumstances outside the control of such party shall have occurred which would otherwise make it illegal for the Owner Participant, the Lessee, the Owner Trustee, the Pass Through Trustee or the Indenture Trustee, to participate in the transactions contemplated to be consummated on the Closing Date or Commencement 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 Lessee, the Pass Through Trustee or the Indenture Trustee, is not frivolous, nor shall any order have been issued or proposed to be issued by any court, or governmental authority or agency, as of the Closing Date, to set aside, restrain, enjoin or prevent the consummation of any of the transactions contemplated by this Agreement or by any of the other Operative Agreements. (c) Underwriters. The Underwriters shall have transferred the funds specified in Section 2.01(a) hereof and all conditions under the Underwriting Agreement shall have been satisfied or waived. (d) Other Commitments; Approvals. All approvals and consents of any trustees or holders of any indebtedness or obligations of the Lessee, which in the opinion of the Owner Participant, the Pass Through Trustee or the Indenture Trustee, are required in connection with any transaction contemplated by this Agreement, shall have been duly obtained. (e) Documents. This Agreement and the following documents shall have been duly authorized, executed and delivered by the respective party or parties thereto, shall each be satisfactory in form and substance to the Indenture Trustee, the Pass Through Trustee, the Lessee 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 Indenture Trustee, the Pass Through Trustee, the Lessee or the Owner Participant, as the case may be, of such documents shall have been delivered to the Owner Participant, the Indenture Trustee, the Pass Through Trustee, the Lessee and the Owner Trustee: (i) the Agreement to Lease; (ii) the Indenture; (iii) the Collateral Agreement; (iv) in the case of the Pass Through Trustee, the Lessee and the Indenture Trustee only, the Demand Notes, together with any other documents or instruments required by Section 4(b) of the Collateral Agreement, and the Letter of Credit (the original of each of such documents or instruments to be delivered to the Indenture Trustee only); (v) the Trust Agreement; (vi) the Sales Agreement and the full warranty bill of sale covering the Aircraft (specifically referring to each Engine) executed by Lufthansa in favor of the Owner Trustee pursuant to the Sales Agreement; (vii) the Modification Agreement; (viii) the Parts and Services Agreement; (ix) the Sub-subcontract (as defined in the Agreement to Lease); and (x) any Ancillary Agreement dated on or prior to the Closing Date (delivered to the parties thereto). (f) Financing Statements. (i) Uniform Commercial Code ("UCC") financing statements covering all the security interests (and other interests) intended to be created by or pursuant to the Indenture (whether intended to be created as of the Closing Date or on or after the Exchange Date) 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 statements shall have been duly filed or submitted for filing in the State of Utah and any other jurisdiction specified by the Indenture Trustee, Pass Through Trustee or Underwriters (or special counsel for any of them); and (ii) all other actions shall have been taken which, in the opinion of the Indenture Trustee, the Pass Through Trustee or the Underwriters (or special counsel for any of them), are necessary or advisable as of the Closing Date to perfect and maintain the perfection of the security interest intended to be created by or pursuant to the Indenture (whether intended to be created as of the Closing Date or on or after the Exchange Date). (g) Corporate Documents. Except when such Person is the delivering party, the Owner Participant, the Owner Trustee, the Indenture Trustee, the Pass Through Trustee (acting directly or by authorization to its counsel) and the Lessee shall have received the following, in each case in form and substance satisfactory to it: (i) copies, certified as of the Closing Date by the Secretary or an Assistant Secretary of the Lessee, of the certificate of incorporation and bylaws of the Lessee and of the resolutions of the Board of Directors of the Lessee duly authorizing the 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 Pass Through Agreement, the Series Supplements, 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 together with an incumbency certificate of the Lessee as to the Person or Persons authorized to execute and deliver said documents on behalf of the Lessee and the signatures of such Person or Persons; (ii) a copy of the constituent documents of the Owner Participant and of the certificate of incorporation and by-laws of the General Partner thereof, in each case certified as of the Closing Date by the Secretary or Assistant Secretary of the General Partner of the Owner Participant, and a copy of the resolutions of the board of directors of the General Partner of the Owner Participant, or other satisfactory evidence of authority, certified as such by such Secretary or Assistant Secretary, authorizing the execution, delivery and performance by such General Partner, on behalf of the Owner Participant, of the Operative Agreements to which the Owner Participant is a party and the taking of such action duly to authorize the Owner Participant's participation in the transactions contemplated hereby and by the other Operative Agreements, together with an incumbency certificate of an officer of such General Partner as to such Person's authority to execute and deliver said documents on behalf of such General Partner and the signatures of such Person; (iii) a copy of the charter and bylaws and other instruments of First Security Bank of Utah, National Association, certified as of the Closing Date by the Secretary or Assistant Secretary of First Security Bank of Utah, National Association, and a copy of the resolutions of the board of directors of First Security Bank of Utah, National Association, certified as such by such Secretary or Assistant Secretary as of the Closing Date, authorizing the execution and delivery by First Security Bank of Utah, National Association or the Owner Trustee, as the case may be, of 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, together with an incumbency certificate of First Security Bank of Utah, National Association as to the Person or Persons authorized to execute and deliver said documents on behalf of First Security Bank of Utah, National Association (either individually or as Owner Trustee) and the signatures of such Person or Persons; (iv) a copy of the articles of association and bylaws and other instruments of Nationsbank of Georgia, National Association, certified as of the Closing Date by the Secretary or Assistant Secretary of Nationsbank of Georgia, National Association which bylaws include a provision, authorizing the execution and delivery by Nationsbank of Georgia, National Association or the Indenture Trustee, as the case may be, of each of the Operative Agreements to which it is or is to be a party, together with an incumbency certificate of Nationsbank of Georgia, National Association as to the Person or Persons authorized to execute and deliver said documents on behalf of Nationsbank of Georgia, National Association (either individually or as Indenture Trustee) and the signatures of such Person or Persons; (v) a copy of the articles of association and by-laws of NationsBank of South Carolina, National Association ("NBSC") certified by the Secretary or an Assistant Secretary of NBSC as of the Closing Date, which by-laws include a provision duly authorizing the execution, delivery and performance by NBSC or the Pass Through Trustee, as the case may be, of this Agreement, the Pass Through Agreement, the Series Supplements and any other document executed or authenticated by or on behalf of the Pass Through Trustee in connection with the transactions contemplated hereby, together with an incumbency certificate as to the Person or Persons authorized to execute and deliver such documents on behalf of NBSC (either individually or as Pass Through Trustee), and the signature of such Person or Persons; (vi) a copy of the license issued to the LC Bank by the Superintendent of Banks of the State of New York, and evidence as to the Person or Persons authorized to execute and deliver the Letter of Credit on behalf of the LC Bank and the signatures of such Person or Persons; and (vii) such other documents, evidences, materials, and information with respect to the Lessee, the Owner Trustee, the Indenture Trustee, the Owner Participant and the Pass Through Trustee as the Pass Through Trustee, the Indenture Trustee, the Lessee, the LC Bank or the Owner Participant may reasonably request in order to establish the consummation of the transactions contemplated by this Agreement. (h) Officer's Certificate of the Lessee. On the Closing Date, the following statements shall be true, and the Pass Through Trustee, the Owner Participant, the LC Bank, the Owner Trustee and the Indenture Trustee shall have received a certificate signed by the Vice President and Treasurer or any other duly authorized signatory of the Lessee, dated the Closing Date, stating that: (i) the representations and warranties of the Lessee contained in the Lessee Documents (excluding the Tax Indemnity Agreement, the Lease, any Lease Supplement and any other Lessee Document that is not executed and delivered on or prior to the Closing Date) and in any certificate delivered pursuant hereto or thereto are true and correct on and as of the Closing Date as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date, in which case such certificate shall state that such representations and warranties were true and correct on and as of such earlier date); (ii) 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, 1993 (as updated by Note 7 to the financial statements included in the Lessee's Quarterly Reports on Form 10-Q for the fiscal quarters ended August 31, 1993 and November 30, 1993), 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 unaudited financial statements of the Lessee as of November 30, 1993 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. (i) Officer's Certificate of Owner Participant. On the Closing Date, the following statements shall be true, and the Pass Through Trustee, the Owner Trustee, the Indenture Trustee, the LC Bank and the Lessee shall have received a certificate from the Owner Participant, signed by a duly authorized officer of the Owner Participant, dated the Closing Date, stating that: (i) the representations and warranties of the Owner Participant and any General Partner thereof contained in this Agreement, the Trust Agreement, the Agreement to Lease or in any other Operative Agreement to which the Owner Participant is a party (excluding the Tax Indemnity Agreement and any other Operative Agreement that is not required to be executed on or prior to the Closing Date), and in any certificate delivered on or prior to the Closing Date pursuant hereto or thereto, are true and correct on and as of the Closing Date as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date, in which case such certificate shall state that such representations and warranties were true and correct on and as of such earlier date); (ii) there are no Lessor's Liens attributable to the Owner Participant; and (iii) no event has occurred and is continuing which constitutes or, with notice or lapse of time or both would constitute, a Pre-Funding Event of Loss or which constitutes or would constitute, due to any action or inaction on the part of the Owner Participant or the LC Bank, as the case may be, an Indenture Default or Indenture Event of Default. (j) Other Officer's Certificates. (i) On the Closing Date, the following statements shall be true, and the Owner Participant, the Owner Trustee, the LC Bank, the Pass Through Trustee, the Indenture Trustee and the Lessee shall have received a certificate from each of the Owner Trustee (in the case of the Lessee, the Owner Participant, the LC Bank, the Pass Through Trustee and the Indenture Trustee), the Indenture Trustee (in the case of the Lessee, Owner Participant, the LC Bank, the Pass Through Trustee and the Owner Trustee) and the Pass Through Trustee (in the case of the Owner Participant, the LC Bank, the Lessee, the Owner Trustee and the Indenture Trustee), signed by a duly authorized officer, dated the Closing Date, stating with respect to the Owner Trustee, the Pass Through Trustee and the Indenture Trustee, as the case may be, that: (A) the representations and warranties of the Owner Trustee in its individual capacity and as trustee, the Pass Through Trustee in its individual capacity and as trustee, the Indenture Trustee in its individual capacity and as trustee, and contained in this Agreement, the Collateral Agreement and the Indenture, and in any certificate delivered pursuant hereto or thereto, are true and correct on and as of the Closing Date as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date, in which case such certificate shall state that representations and warranties were true and correct on and as of such earlier date); (B) 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 an Indenture Event of Default; and (C) with respect to the Owner Trustee, there are no Lessor's Liens attributable to First Security Bank of Utah, National Association or the Owner Trustee. (ii) On the Closing Date, the representations and warranties of the LC Bank contained in this Agreement and in any certificate delivered pursuant hereto shall be true and correct on and as of the Closing Date as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date, in which case such certificate shall state that such representations and warranties were true and correct on and as of such earlier date), and the Indenture Trustee, the Pass Through Trustee and the Lessee shall have received a certificate from the LC Bank, signed by a duly authorized officer, dated the Closing Date, to that effect. (k) Legal Opinions. Each of the Owner Participant, the Owner Trustee, the Lessee, the LC Bank, the Pass Through Trustee, the Underwriters 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 dated the Closing Date and reasonably satisfactory to the recipient, as to scope and substance (and covering such other matters as any such recipient may reasonably request): (i) Kenneth Masterson, Esq., Senior Vice President and General Counsel of the Lessee, in the form of Exhibit K-1 hereto, addressed to the Owner Participant, the Owner Trustee, the Pass Through Trustee, the Underwriters and the Indenture Trustee; (ii) Dewey Ballantine, special counsel for the Owner Participant, its General Partner and Lufthansa, and Christian Rehm, German counsel to Lufthansa, in the form of Exhibit L and M-1 hereto, respectively, each addressed to the Indenture Trustee, the Owner Trustee, the LC Bank, the Pass Through Trustee, the Underwriters and the Lessee; (iii) Powell, Goldstein, Frazer & Murphy, special counsel for the Indenture Trustee, in the form of Exhibit N-1 hereto, addressed to the Owner Participant, the Indenture Trustee, the Owner Trustee, the LC Bank, the Pass Through Trustee, the Underwriters and the Lessee; (iv) Powell, Goldstein, Frazer & Murphy, special counsel for the Pass Through Trustee, in the form of Exhibit O hereto, addressed to the Pass Through Trustee, the Indenture Trustee, the LC Bank, the Lessee and the Underwriters; (v) in the case of the Owner Participant, Dewey Ballantine, tax counsel for the Owner Participant, addressed to the Owner Participant, with respect to certain tax matters; (vi) Ray, Quinney & Nebeker, special counsel for the Owner Trustee, in the form of Exhibit P-1 hereto, addressed to the Owner Participant, the Indenture Trustee, the Owner Trustee, the LC Bank, the Pass Through Trustee, the Underwriters and the Lessee; (vii) Davis Polk & Wardwell, special counsel for the Lessee, in the form of Exhibit Q-1 hereto, addressed to the Owner Participant, the Indenture Trustee, the Owner Trustee, the Pass Through Trustee, the Underwriters and the Lessee; and (viii) German counsel to the LC Bank and Milbank, Tweed, Hadley & McCloy, special counsel for the LC Bank, in the form of Exhibit R and S hereto, respectively, each addressed to the Indenture Trustee, the Pass Through Trustee, the Underwriters and the Lessee. (l) Appraisal. Each of the Owner Participant, Indenture Trustee, Pass Through Trustee and the Underwriters shall have received an appraisal in form and substance satisfactory to it from a qualified independent expert satisfactory to it to the effect that, assuming modification in accordance with the Original Statement of Work specified in the Agreement to Lease and the Modification Agreement (without regard to any Additional Services or any other optional deviations or variations), the Aircraft is reasonably estimated to have (i) on the Scheduled Commencement Date a remaining economic useful life of at least 125% of the Basic Term, (ii) a fair market value on each of the Closing Date and (without including in such value any increase or decrease for inflation or deflation) the Scheduled Commencement Date in no event less than the Aircraft Cost, and (iii) a residual value at the end of the Basic Term of at least 20% of Aircraft Cost (without considering the effects of inflation or deflation and assuming the Aircraft is in compliance with Article 12 of the Lease); in addition, the appraisal shall state that the Aircraft is not limited use property. The Lessee shall have received a copy of such appraisal. (m) Payment of Taxes. (i) 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 other documents and instruments referred to in subparagraphs (f) of this Section 4.01 and the issuance of the Certificates and Pass Through Certificates shall have been duly paid or caused to be paid in full by the Owner Participant. (ii) All taxes, fees, customs and duties then payable or requested to be paid pursuant to Section 6 of the Sales Agreement, and all sales and use taxes relating to the sale of the Aircraft to the Owner Trustee, shall have been paid. (n) No Indenture Default. No Indenture Default or Indenture Event of Default has occurred and is continuing. (o) Pre-Funding Event of Loss. No Pre- Funding Event of Loss with respect to the Aircraft or event which with the passage of time or if continued unremedied or unaltered would constitute a Pre-Funding Event of Loss with respect to the Aircraft, shall have occurred and be in existence. (p) Governmental Compliance. All appropriate action required to have been taken by the Federal Aviation Administration, or any governmental or political agency, subdivision or instrumentality of the United States, prior to the Closing 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 Closing 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 Closing Date. (q) Other Agreements. The Lessee and the Pass Through Trustee shall have entered into the Pass Through Agreement and the Series Supplements, all conditions to the effectiveness of each thereof shall have been satisfied or waived, and the Pass Through Certificates shall have been issued pursuant to the Series Supplements. The Lessee shall have entered into the Underwriting Agreement, all conditions to the effectiveness thereof shall have been satisfied or waived, and the Pass Through Certificates shall have been delivered pursuant to the Underwriting Agreement. (r) Title. The Owner Trustee shall have received from Lufthansa good and marketable title to the Aircraft, subject to no Liens other than any Liens permitted by the Sales Agreement and any Liens created by the Agreement to Lease and the Modification Agreement. Section 4.01A. Condition Precedent to Obligations of LC Bank. In addition to any applicable condition set forth in Section 4.01 hereof, the obligation of the LC Bank to deliver the Letter of Credit on the Closing Date pursuant to Section 2.01(a)(iii) hereof is subject only to its receipt, on or prior to the Closing Date, of the Indemnification Agreement executed by each of the parties thereto other than the LC Bank. Section 4.02 Conditions Precedent to Lease on the Commencement Date. The obligations of the Owner Trustee to lease the Aircraft to the Lessee on the Commencement Date pursuant to the Lease, and of the Owner Participant to (x) cause such lease by the Owner Trustee and (y) make available any amount pursuant to Section 3.03 hereof, are subject to the fulfillment to the satisfaction of such party, as of the Commencement Date, of the following conditions precedent: (a) Legal Investment. No change shall have occurred after the date of this Agreement 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 or the Lessee, would make it illegal for the Owner Participant, the Lessee or the Owner Trustee, and no change in circumstances outside the control of the Owner Participant or the Lessee, shall have occurred which would otherwise make it illegal for the Owner Participant, the Lessee or the Owner Trustee, to participate in the transaction to be consummated on the Commencement Date (other than the release of the Debt Portion as contemplated hereby and by the Collateral Agreement); 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 or the Lessee, 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 Commencement 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 (other than the release of the Debt Portion as contemplated hereby and by the Collateral Agreement). (b) Documents. Each of the agreements set forth in Section 4.01(e) and each of 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 Lessee 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 Lessee or the Owner Participant, as the case may be, of such documents shall have been delivered to the Owner Participant, the Lessee and the Owner Trustee (provided that the sole original counterpart of the Lease and the Lease Supplement shall be delivered in New York, New York, to the Indenture Trustee on the Exchange Date): (i) the Lease; (ii) the Lease Supplement covering the Aircraft, dated the Commencement Date; (iii) the Trust Agreement Supplement covering the Aircraft, dated the Commencement Date; (iv) an AC Form 8050-2 Bill of Sale covering the Aircraft (the "FAA Bill of Sale"), executed by Lufthansa in favor of the Owner Trustee and dated on or prior to the Commencement Date (the full warranty bill of sale referred to in Section 4.01(e)(vi) above, together with the FAA Bill of Sale, are collectively called the "Bills of Sale"); (v) the Aircraft Acceptance Receipt covering the Aircraft; (vi) in the case of the Owner Participant only, the Tax Indemnity Agreement; and (vii) any Ancillary Agreement not covered by Section 4.01(e)(x) hereof (delivered to the parties thereto). (c) Insurance. Each of the Owner Participant and the Owner Trustee 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, dated the Commencement Date, in form and substance satisfactory to each of the Owner Participant and the Owner Trustee to establish that the insurance required by Article 13 of the Lease is in effect. (d) Financing Statements. With respect to the Owner Participant only, a 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 as of the Exchange Date), and shall have been duly filed in the State of Tennessee and any other jurisdiction specified by the Owner Trustee or the Indenture Trustee; and all other actions shall have been taken which, in the opinion of special counsel for the Owner Participant are necessary or advisable to perfect and protect security interests and other interests intended to be created by or pursuant to the Operative Agreements. (e) Title, Airworthiness and Registration. On the Commencement Date, the following statements shall be true and the Lessee and Owner Trustee shall have received evidence from the Owner Participant (in the case of clauses (i) and (ii)), and the Owner Participant and the Owner Trustee shall have received evidence from the Lessee (in the case of clauses (iii) and (iv)), in each case reasonably satisfactory to each such Person to the effect that: (i) the Owner Trustee has good and marketable title to the Aircraft, free and clear of Liens, except for Liens (other than Lessor's Liens) permitted by Section 6.01 of the Lease; (ii) the Aircraft has been duly certified by the Aeronautics Authority as to type and airworthiness in accordance with the terms of the Operative Agreements; (iii) the Lease and the Lease Supplement covering the Aircraft and the Trust Agreement and Trust Agreement Supplement (with affidavits attached thereto) 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 Act; 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 pursuant to the Lease. (f) Corporate Documents. Except when such Person is the delivering party, the Owner Participant, the Owner Trustee (acting directly or by authorization to its counsel) and the Lessee shall have received the following, in each case in form and substance satisfactory to it: (i) copies, certified as of the Commencement Date by the Secretary or an Assistant Secretary of the Lessee, of the certificate of incorporation and bylaws of the Lessee and the resolutions of the Board of Directors of the Lessee duly authorizing the lease by the Lessee of the Aircraft under the Lease and the execution, delivery and performance by the Lessee of the Lease, the Lease Supplement covering the Aircraft, the Tax Indemnity Agreement and each other document to be executed and delivered by the Lessee in connection with the transactions contemplated hereby, and a statement that the resolutions of the Board of Directors delivered pursuant to Section 4.01(g)(i) hereof remain in full force and effect together with an incumbency certificate of the Lessee as to the Person or Persons authorized to execute and deliver said documents on behalf of the Lessee and the signatures of such Person or Persons; (ii) a copy of the constituent documents of the Owner Participant and of the certificate of incorporation and by-laws of the General Partner thereof, in each case certified as of the Commencement Date by the Secretary or Assistant Secretary of the General Partner of the Owner Participant, and a copy of the resolutions of the board of directors of the General Partner of the Owner Participant, or other satisfactory evidence of authority, certified as such by such Secretary or Assistant Secretary, authorizing the execution, delivery and performance by such General Partner, on behalf of the Owner Participant, of the Operative Agreements to which the Owner Participant is a party and the taking of such action duly to authorize the Owner Participant's participation in the transactions contemplated hereby and by the other Operative Agreements, together with an incumbency certificate as the officer of such General Partner as to such Person's authority to execute and deliver said documents on behalf of such General Partner and the signatures of such Person; (iii) a copy of the charter and bylaws and other instruments of First Security Bank of Utah, National Association, certified as of the Commencement Date by the Secretary or Assistant Secretary of First Security Bank of Utah, National Association, and a copy of the resolutions of the board of directors of First Security Bank of Utah, National Association, certified as such by such Secretary or Assistant Secretary as of the Commencement Date, authorizing the execution and delivery by First Security Bank of Utah, National Association or the Owner Trustee, as the case may be, of the Trust Agreement, the Trust Agreement Supplement covering the Aircraft 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, together with an incumbency certificate of First Security Bank of Utah, National Association as to the Person or Persons authorized to execute and deliver said documents on behalf of First Security Bank of Utah, National Association (either individually or as Owner Trustee) and the signatures of such Person or Persons; and (iv) such other documents, evidences, materials, and information with respect to the Lessee, the Owner Trustee and the Owner Participant as the Lessee, the Owner Trustee or the Owner Participant may reasonably request in order to establish the consummation of the transactions contemplated by this Agreement. (g) Officer's Certificate of Lessee. On the Commencement Date, the following statements shall be true, and the Owner Participant and the Owner Trustee shall have received a certificate signed by the Vice President and Treasurer or any other duly authorized signatory of the Lessee, dated the Commencement Date, stating that: (i) the representations and warranties of the Lessee contained in this Agreement and the other Lessee Documents (excluding the Tax Indemnity Agreement) and in any certificate delivered pursuant hereto or thereto are true and correct on and as of the Commencement 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 most recently ended fiscal year for which such Annual Report is available (as updated by Note 7 to the financial statements included in the Lessee's Quarterly Reports on Form 10-Q filed for each fiscal quarter, if any, subsequent to such Annual Report), 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 or unaudited, as the case may be, financial statements of the Lessee as of the Lessee's most recently filed Annual Report or Quarterly Report, as the case may be, 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. (iii) no event has occurred and is continuing 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 Event of Default under the Lease. (h) Officer's Certificate of Owner Participant. On the Commencement Date, the following statements shall be true, and the Pass Through Trustee, the Owner Trustee and the Lessee shall have received a certificate from the Owner Participant signed by a duly authorized officer of the Owner Participant, dated the Commencement Date, stating that: (i) the representations and warranties of the Owner Participant and any General Partner thereof contained in this Agreement, the Trust Agreement, the Agreement to Lease or in any other Operative Agreement to which the Owner Participant is a party (excluding the Tax Indemnity Agreement), and in any certificate delivered on or prior to the Commencement Date pursuant hereto or thereto, are true and correct on and as of the Commencement 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) there are no Lessor's Liens attributable to the Owner Participant; and (iii) no event has occurred and is continuing which constitutes or, with notice or lapse of time or both would constitute, an Event of Loss. (i) Other Officer's Certificates. On the Commencement Date, the following statements shall be true, and the Owner Participant and the Lessee shall have received a certificate from the Owner Trustee, signed by a duly authorized officer, dated the Commencement Date, stating with respect to the Owner Trustee that: (i) the representations and warranties of the Owner Trustee in its individual capacity and as trustee, and contained in this Agreement, the Lease, the Collateral Agreement and the Indenture, and in any certificate delivered pursuant hereto or thereto, are true and correct on and as of the Commencement 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 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, an Event of Default; and (iii) there are no Lessor's Liens attributable to it (in its individual capacity or as trustee). (j) Legal Opinions. Each of the Owner Participant, the Owner Trustee and the Lessee (acting directly or by authorization to its special counsel) shall have received from the following counsel their respective legal opinions in each case reasonably satisfactory to the recipient, as to scope and substance (and covering such other matters as any such recipient may reasonably request) and dated the Commencement Date: (i) Kenneth Masterson, Esq., Senior Vice President and General Counsel of the Lessee, in the form of Exhibit K-2 hereto, addressed to the Owner Participant and the Owner Trustee; (ii) Dewey Ballantine, special counsel for the Owner Participant and Lufthansa, in the form of Exhibit L-2 hereto, and (if an OP Guarantee is required pursuant hereto) an opinion from German counsel to Lufthansa, in the form of Exhibit M-2 hereto, each addressed to the Owner Trustee and the Lessee; (iii) Daugherty, Fowler & Peregrin, in the form of Exhibit T hereto, addressed to the Owner Participant, the Owner Trustee and the Lessee; (iv) Ray, Quinney & Nebeker, special counsel for the Owner Trustee, in the form of Exhibit P-2 hereto, addressed to the Owner Participant, the Owner Trustee and the Lessee; and (v) Davis Polk & Wardwell, special counsel for the Lessee, in the form of Exhibit Q-2 hereto, addressed to the Owner Participant, the Owner Trustee and the Lessee. (k) Event of Default, Default; Event of Loss. No Default or Event of Default shall exist upon execution of the Lease, and no 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. (l) Payment of Taxes. In the case of the Lessee only, all taxes, fees, charges, assessments, costs and other expenses then due and payable in connection with obtaining the certification referred to in Section 4.02(e)(ii) shall have been paid in full by the Owner Participant. In the case of the Owner Participant and Owner Trustee only, all taxes, fees, assessments costs and other expenses then due and payable in connection with the execution, delivery, recording and filing of all financing statements and the other documents and instruments referred to in Section 4.02(d), Section 4.02(e)(iii) and Section 4.02(e)(iv) hereof shall have been paid in full by the Lessee. (m) Other Commitments; Approvals. All approvals and consents of any trustees or holders of any indebtedness or obligations of the Lessee, which in the opinion of the Owner Participant are required in connection with any transaction contemplated by this Agreement, shall have been duly obtained. (n) Governmental Compliance. All appropriate action required to have been taken by the Federal Aviation Administration, or any governmental or political agency, subdivision or instrumentality of the United States, prior to the Commencement 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 Commencement 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 Commencement Date. Section 4.03 Conditions Precedent to Release of Debt Portion from the Collateral Account. The obligations of the Indenture Trustee to release the Debt Portion (or such lesser amount as may be in the Collateral Account) pursuant to Section 7(e) of the Collateral Agreement, are subject to the fulfillment to the satisfaction of the Indenture Trustee, as of the Exchange Date, of the following conditions precedent; provided, however, that to the extent that any of the conditions set forth below shall have been satisfied by the delivery of documents on the Commencement Date pursuant to Section 4.02 hereof, such conditions (to such extent) shall be deemed satisfied for purposes of this Section 4.03: (a) Notice and Lease Commencement. (i) The Indenture Trustee shall have received at least four (4) Frankfurt Business Days' notice of the Commencement Date in accordance with Section 3.01 hereof and (ii) all of the conditions precedent set forth in Sections 4.02 and 5.01 hereof shall have been satisfied or waived by the Owner Trustee, the Owner Participant or the Lessee, as appropriate. (b) Certificates. (i) The Certificates shall not have been prepaid or accelerated, (ii) notice of prepayment of the Certificates shall not have been given and no Deemed Event of Loss or Pre- Funding Event of Loss with respect to the Aircraft shall have occurred, (iii) the Cut-off Date shall not have occurred, (iv) no Indenture Default or Indenture Event of Default shall be continuing and (v) the Owner Participant shall have paid to the Owner Trustee the amount required pursuant to Section 3.03 hereof. (c) Legal Investment. No change shall have occurred after the date of this Agreement in applicable laws or regulations, or interpretations of any such laws or regulations by applicable regulatory authorities, which, in the opinion of the Indenture Trustee or its special counsel, would make it illegal for the Indenture Trustee, and no change in circumstances outside the control of the Indenture Trustee, shall have occurred which would otherwise make it illegal for the Indenture Trustee, to participate in the transaction to be consummated on the Exchange 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 Indenture Trustee, is not frivolous, nor shall any order have been issued or proposed to be issued by any court, or governmental authority or agency, as of the Exchange 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. (d) Documents. Each of the agreements set forth in Section 4.01(e) and each of 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 Indenture Trustee (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 Indenture Trustee of such documents shall have been delivered to the Indenture Trustee (provided that the sole original counterpart of the Lease and the Lease Supplement shall be delivered in New York, New York, to the Indenture Trustee on the Exchange Date): (i) the Lease; (ii) the Lease Supplement and the Trust Agreement Supplement covering the Aircraft, each dated the Commencement Date; (iii) the Indenture and Security Agreement Supplement covering the Aircraft, dated the Exchange Date; (iv) the FAA Bill of Sale, executed by Lufthansa in favor of the Owner Trustee and dated on or prior to the Commencement Date; (v) the Aircraft Acceptance Receipt covering the Aircraft; and (vi) any Ancillary Agreement not covered by Section 4.01(e)(x) hereof (delivered to the parties thereto). (e) Insurance. The Indenture Trustee 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, dated the Commencement Date, in form and substance satisfactory to the Indenture Trustee to establish that the insurance required by Article 13 of the Lease is in effect. (f) Financing Statements. (i) The UCC financing statements referred to in Section 4.01(f)(i) shall have been filed in accordance therewith and shall continue to be in full force and effect; and all other actions shall have been taken which, in the opinion of the Indenture Trustee (or its special counsel) are necessary or advisable to perfect and protect the security interests and other interests intended to be created by or pursuant to the Indenture (whether intended to be created as of the Closing Date or on or after the Exchange Date); and (ii) the notice filing referred to in Section 4.02(d) hereof 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 and any other jurisdiction specified by the Indenture Trustee; and (iii) all other actions shall have been taken which, in the opinion of special counsel for the Indenture Trustee are necessary or advisable to perfect and protect security interests and other interests intended to be created by or pursuant to the Operative Agreements. (g) Title, Airworthiness and Registration. On the Exchange Date, the following statements shall be true and the Indenture Trustee shall have received evidence from the Owner Participant (in the case of clauses (i) and (ii)), and from the Lessee (in the case of clauses (iii) and (iv)), in each case reasonably satisfactory to each such Person to the effect that: (i) the Owner Trustee has good and marketable title to the Aircraft, free and clear of Liens, except for Liens (other than Lessor's Liens) permitted by Section 6.01 of the Lease; (ii) the Aircraft has been duly certified by the Aeronautics Authority as to type and airworthiness in accordance with the terms of the Operative Agreements; (iii) the Lease and the Lease Supplement covering the Aircraft, the Trust Agreement and Trust Agreement Supplement covering the Aircraft (with affidavits attached thereto) and the Indenture and the Indenture and Security Agreement covering the Aircraft, 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 Act; 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 pursuant to the Lease. (h) Corporate Documents. The Owner Participant, the Owner Trustee and the Lessee shall have received the following, in each case in form and substance satisfactory to it: (i) copies, certified as of the Exchange Date by the Secretary or an Assistant Secretary of the Lessee, of the certificate of incorporation and bylaws of the Lessee and the resolutions of the Board of Directors of the Lessee duly authorizing the lease by the Lessee of the Aircraft under the Lease and the execution, delivery and performance by the Lessee of the Lease, the Lease Supplement covering the Aircraft, the Tax Indemnity Agreement and each other document to be executed and delivered by the Lessee in connection with the transactions contemplated hereby together with (A) an incumbency certificate of the Lessee as to the Person or Persons authorized to execute and deliver said documents on behalf of the Lessee and the signatures of such Person or Persons and (B) a statement that the resolutions of the Board of Directors of the Lessee delivered pursuant to Section 4.01(g)(i) hereof remain in full force and effect; (ii) a copy of the constituent documents of the Owner Participant and of the certificate of incorporation and by-laws of the General Partner thereof, in each case certified as of the Exchange Date by the Secretary or Assistant Secretary of the General Partner of the Owner Participant, and a copy of the resolutions of the board of directors of the General Partner of the Owner Participant, or other satisfactory evidence of authority, certified as such by such Secretary or Assistant Secretary, authorizing the execution, delivery and performance by such General Partner, on behalf of the Owner Participant, of the Operative Agreements to which the Owner Participant is a party and the taking of such action duly to authorize the Owner Participant's participation in the transactions contemplated hereby and by the other Operative Agreements, together with an incumbency certificate as the officer of such General Partner as to such Person's authority to execute and deliver said documents on behalf of such General Partner and the signatures of such Person; (iii) a copy of the charter and bylaws and other instruments of First Security Bank of Utah, National Association, certified as of the Exchange Date by the Secretary or Assistant Secretary of First Security Bank of Utah, National Association, and a copy of the resolutions of the board of directors of First Security Bank of Utah, National Association, certified as such by such Secretary or Assistant Secretary as of the Exchange Date, authorizing the execution and delivery by First Security Bank of Utah, National Association or the Owner Trustee, as the case may be, of 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, together with an incumbency certificate of First Security Bank of Utah, National Association as to the Person or Persons authorized to execute and deliver said documents on behalf of First Security Bank of Utah, National Association (either individually or as Owner Trustee) and the signatures of such Person or Persons; and (iv) such other documents, evidences, materials, and information with respect to the Lessee, the Owner Trustee and the Owner Participant as the Indenture Trustee may reasonably request in order to establish the consummation of the transactions contemplated by this Agreement. (i) Officer's Certificate of Lessee. On the Exchange Date, the following statements shall be true, and the Indenture Trustee shall have received a certificate signed by the Vice President and Treasurer or any other duly authorized signatory of the Lessee, dated the Commencement Date, stating that: (i) the representations and warranties of the Lessee contained in this Agreement and the other Lessee Documents (excluding the Tax Indemnity Agreement) and in any certificate delivered pursuant hereto or thereto are true and correct on and as of the Exchange 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 most recently ended fiscal year for which such Annual Report is available (as updated by Note 7 to the financial statements included in the Lessee's Quarterly Reports on Form 10-Q filed for each fiscal quarter, if any, subsequent to such Annual Report), 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 or unaudited, as the case may be, financial statements of the Lessee as of the Lessee's most recently filed Annual Report or Quarterly Report, as the case may be, 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. (iii) no event has occurred and is continuing 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 Event of Default under the Lease. (j) Officer's Certificates of Owner Participant. On the Exchange Date, the following statements shall be true, and the Indenture Trustee shall have received a certificate from the Owner Participant signed by a duly authorized officer of the Owner Participant, dated the Commencement Date, stating that: (i) the representations and warranties of the Owner Participant and any General Partner thereof contained in this Agreement, the Trust Agreement, the Agreement to Lease or in any other Operative Agreement to which the Owner Participant is a party (excluding the Tax Indemnity Agreement), and in any certificate delivered on or prior to the Exchange Date pursuant hereto or thereto, are true and correct on and as of the Exchange 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) there are no Lessor's Liens attributable to the Owner Participant; and (iii) no event has occurred and is continuing which constitutes or, with notice or lapse of time or both would constitute, an Event of Loss or which constitutes or would constitute, an Indenture Default or Indenture Event of Default attributable to the Owner Participant. (k) Other Officer's Certificates. On the Exchange Date, the following statements shall be true, and the Indenture Trustee shall have received a certificate from the Owner Trustee, signed by a duly authorized officer, dated the Exchange Date, stating with respect to the Owner Trustee, that: (i) the representations and warranties of the Owner Trustee in its individual capacity and as trustee, and contained in this Agreement, the Lease, the Indenture and the Collateral Agreement, and in any certificate delivered pursuant hereto or thereto, are true and correct on and as of the Commencement 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 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, an Event of Default or an Indenture Event of Default; and (iii) with respect to the Owner Trustee, there are no Lessor's Liens attributable to it (in its individual capacity or as trustee). (l) Legal Opinions. 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 reasonably satisfactory to the recipient, as to scope and substance (and covering such other matters as any such recipient may reasonably request): (i) Kenneth Masterson, Esq., Senior Vice President and General Counsel of the Lessee, in the form of Exhibit K-2 hereto, addressed to the Indenture Trustee and dated the Commencement Date; (ii) Dewey Ballantine, special counsel for the Owner Participant and Lufthansa, in the form of Exhibit L-2 hereto, and (if an OP Guarantee is required pursuant hereto) an opinion of German counsel to Lufthansa, in the form of Exhibit M-2 hereto, each addressed to the Indenture Trustee and dated the Exchange Date. (iii) Powell, Goldstein, Frazer & Murphy, special counsel for the Indenture Trustee, in the form of Exhibit N-2 hereto, addressed to the Indenture Trustee and dated the Exchange Date; (iv) Daugherty, Fowler & Peregrin, in the form of Exhibit T hereto, addressed to the Indenture Trustee and dated the Exchange Date; (v) Ray, Quinney & Nebeker, special counsel for the Owner Trustee, in the form of Exhibit P-2 hereto, addressed to the Indenture Trustee and dated the Exchange Date; and (vi) Davis Polk & Wardwell, special counsel for the Lessee, in the form of Exhibit Q-2 hereto, addressed to the Indenture Trustee and dated the Exchange Date. Except to the extent otherwise provided in any form of opinion referred to in this Section 4.03(l), if the Exchange Date does not occur on the Commencement Date, any condition precedent requiring that an opinion referred to be dated the Exchange Date pursuant to this Section 4.03(l) shall be deemed satisfied by delivery of such opinion dated the Commencement Date. (m) Event of Default, Default; Event of Loss. No Default or Event of Default shall exist upon execution of the Lease, and no Event of Loss or event which with the passage of time or if continued unremedied or unaltered would constitute an Event of Loss, shall have occurred or be in existence. (n) Payment of Taxes. All taxes, fees, charges, assessments, costs and other expenses then due and payable (i) in connection with the execution, delivery, recording and filing of all financing statements and the other documents and instruments referred to in Section 4.01(f) hereof and in connection with obtaining the certification referred to in Section 4.02(e)(ii) shall have been paid in full by the Owner Participant; (ii) in connection with the execution, delivery, recording and filing of all financing statements and the other documents and instruments referred to in Section 4.02(d), Section 4.02(e)(iii) and Section 4.02(e)(iv) hereof shall have been paid in full by the Lessee; and (iii) in connection with the issuance of the Certificates and Pass Through Certificates shall have been duly paid or caused to be paid in full by the Owner Participant. (o) Other Commitments; Approvals. All approvals and consents of any trustees or holders of any indebtedness or obligations of the Lessee, which in the opinion of the Indenture Trustee are required in connection with any transaction contemplated by this Agreement, shall have been duly obtained. (p) Governmental Compliance. All appropriate action required to have been taken by the Federal Aviation Administration, or any governmental or political agency, subdivision or instrumentality of the United States, on or prior to the Exchange 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 Exchange 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 Exchange Date. Section 4.04. Opinion of Special Aviation Counsel Upon Registration. Promptly upon the registration of the Aircraft, the filing pursuant to the Act of the Trust Agreement and Trust Agreement Supplement and the recording pursuant to the Act of 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 and (ii) the due recording pursuant to the Act of the Lease (with such Lease Supplement, the Indenture and such Indenture and Security Agreement Supplement attached as exhibits) and the Indenture (with such Indenture and Security Agreement Supplement attached as an exhibit); provided, however, that if the Exchange Date does not occur on the Commencement Date, the opinion required by this Section 4.04, to the extent relating to the Indenture and the Indenture and Security Agreement Supplement, need not be provided until the Exchange Date. ARTICLE 5 CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS Section 5.01. Conditions Precedent to Lessee's Obligations on the Commencement Date. The Lessee's obligation to lease the Aircraft on the Commencement Date from the Owner Trustee pursuant to the Lease is subject only to satisfaction of the conditions set forth in the Agreement to Lease with respect to the Aircraft and to the satisfaction of the conditions that, prior to or on the Commencement Date, the Lessee shall have received the certificates and other documents which are referred to in, or the opinions to be addressed to it under, paragraphs (e)(i) and (ii); (f)(ii), (iii) and, except to the extent relating to documents of the Lessee, (iv); (h); (i); (j); (k) (to the extent relating to an Event of Loss); and (l) of Section 4.02 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) and the Indenture Trustee (in its individual capacity and as Indenture Trustee) that, except as otherwise specified in paragraphs (e), (o), (r) and (s) of this Section 6.01, on the date hereof and as of the Closing Date, the Commencement Date and, if the Exchange Date does not occur on the Commencement Date, the Exchange Date: (a) the Lessee is a corporation duly organized and validly existing in good standing under the laws of the State of Delaware with its principal place of business and chief executive office in Memphis, Tennessee, and is duly qualified to do business as a foreign corporation in good standing in all jurisdictions in which it has intrastate routes, or offices or major overhaul facilities or in which other activities of the Lessee require such qualification; (b) the Lessee has full power, authority and legal right to conduct its current business and operations as currently conducted and to own or hold under lease its properties and to enter into and perform its obligations under this Agreement and the other Operative Agreements to which it is or is to be a party; (c) the Lessee is an "air carrier" within the meaning of the Act and a holder of a certificate under Sections 401 and 418 of the Act and an "air carrier operating certificate" issued under Section 604 of the Act 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) (i) the execution, delivery and performance of the Lessee Documents 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; (ii) each of the Lessee Documents (excluding the Lease, the Lease Supplement and any other Lessee Document that is not required to be executed by the Lessee on or before the Closing Date) 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; (iii) in the case of the Commencement Date and Exchange Date only, each of the Lease, the Lease Supplement and each other Lessee Document not required to be executed by the Lessee on or before the Closing Date 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; (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 is required for the execution, delivery or performance by the Lessee of this Agreement or any other Operative Agreement to which it is or is to be a party 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 4.02(d)(ii) and 4.04 hereof; (g) neither the execution, delivery or performance by the Lessee of this Agreement or any of 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 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) except for the matters described under "Legal Proceedings" in the Lessee's Annual Report on Form 10-K for the most recent fiscal year for which such Annual Report is available (as updated by Note 7 to the financial statements included in the Lessee's Quarterly Reports on Form 10-Q filed for each fiscal quarter, if any, subsequent to such Annual Report), 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, 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 Agreement to Lease or the Aircraft or (B) if adversely determined would materially and adversely affect the consolidated financial condition, business or operations of the Lessee, or adversely affect the ability of the Lessee to perform its obligations under the Operative Agreements to which it is or is to be a party; (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 and other than the federal transportation excise tax assessments the protests against which are described in the Lessee's Annual Report on Form 10-K or Quarterly Report on Form 10-Q for the most recently ended fiscal period for which such Annual Report or Quarterly Report, as the case may be, is available, 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, which assessments are being contested in good faith by the Lessee); (j) the Lessee has heretofore delivered to the Owner Participant true and correct copies of the Lessee's Annual Reports on Form 10-K for the most recently ended fiscal year and Quarterly Report on Form 10-Q for the most recently ended quarter, and of the audited consolidated balance sheets of the Lessee for the most recently ended fiscal year and the unaudited consolidated balance sheet of the Lessee as of the most recent accounting period, and the related consolidated statements of income, changes in common stockholders' investment and cash flows for the fiscal years and interim reporting period ended on such dates, accompanied (except in the case of such interim reporting period) by reports thereon containing opinions without qualification, except as therein noted, by Arthur Andersen & Co., independent public accountants; said financial statements have been prepared in accordance with generally accepted accounting principles consistently applied and present fairly the financial position of the Lessee as of such dates and the results of its operations and cash flows for such periods; (k) with respect to ERISA, except as otherwise disclosed: (i) none of the Pension Plans nor their related trusts have been terminated in a distress termination pursuant to Section 4041(c) of ERISA or by the PBGC pursuant to Section 4042 of ERISA, nor have any actions been taken to so terminate any Pension Plan or related trust and neither the Lessee nor any ERISA Affiliate has incurred or could reasonably 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; (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) neither the Lessee nor any ERISA Affiliate has received notice that any Multi- employer Plan (as defined in 3(37) of ERISA) with respect to which the Lessee or any ERISA Affiliate has an obligation to contribute is in reorganization, insolvent or is terminating; (viii) 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 (ix) assuming the truth of the representa- tions contained in Sections 7.03(a)(viii) hereof and compliance with the relevant provisions 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 transac- tion 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 obligation 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 a plan subject to Section 4975 of the Code. As used in this Section 6.01(k), 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; (l) the Lessee is a Citizen of the United States; (m) no governmental approval of any kind is required of the Owner Participant for its execution of or performance under this Agreement or the other Operative Agreements 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; (n) 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 Operative Agreements to which it is or is to be a party; (o) in the case of the Commencement Date and Exchange Date only, 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; (p) 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; (q) the Lessee has not retained any broker and, except for the Underwriters, is not aware of any underwriter that has been retained in connection with the transactions contemplated by the Operative Agreements; (r) (i) in the case of the Commencement Date only, except for (A) the registration of the Aircraft in the Owner Trustee's name pursuant to the Act, (B) the filing for recordation pursuant to the Act of the Trust Agreement and Trust Agreement Supplement covering the Aircraft, and the Lease and Lease Supplement covering the Aircraft and (C) the filing of the financing statements referred to in Section 4.02(d) hereof, no further action, including any filing or recording of any document, is necessary or advisable in order 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; and (ii) in the case of the Exchange Date only, except for (A) the actions specified in clauses (i)(A) (B) and (C) above, (B) the filing for recordation pursuant to the Act of the Indenture and the Indenture and Security Agreement Supplement covering the Aircraft, (C) the filing of the financing statements referred to in Section 4.03(f) hereof and (D) the taking of possession by the Indenture Trustee of the original counterpart of the Lease and maintaining possession of the original counterpart of the Lease Supplement delivered on the Commencement Date, no further action, including any filing or recording of any document, is necessary or advisable in order 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 to perfect the first security interest in and Lien on the Trust Indenture Estate (as it exists on the Commencement Date) in favor of the Indenture Trustee; and (s) in the case of the Commencement Date and the Exchange Date only, all premiums with respect to the insurance required to be provided by the Lessee on or prior to the Commencement Date under Article 13 of the Lease shall have been paid by the Lessee. Section 6.02. 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 or the Owner Participant shall reasonably require for accomplishing the purposes of this Agreement, the Tax Indemnity Agreement, the Lease and the other Operative Agreements to which it is or is to be a party. Without limiting the generality of this Section 6.02(a), on and after the Commencement Date 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, the Trust Agreement and any financing statements or other instruments as are 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 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 it to take such action at the Lessee's cost and expense in a timely manner. (b) After the Commencement Date, the Lessee shall maintain the certificates with respect to the Aircraft referred to in Section 7.01 of the Lease and, on the Commencement Date, 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 Act, and shall furnish to the Owner Trustee such information as may be required to enable the Owner Trustee to make application for such registration; provided, however, that the Owner Participant, the Owner Trustee and the Indenture Trustee agree that if, in connection with a permitted sublease to a carrier domiciled outside the United States, upon 30 days' prior written notice, 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 listed in Schedule III hereto with which the United States then maintains normal and full diplomatic relations, the Owner Participant and the Indenture Trustee, upon receipt by the Owner Participant, the Owner Trustee and the Indenture Trustee of the assurances and opinion described below, shall not 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 capacity, and the Indenture Trustee shall have received: (i) assurances satisfactory to them: (A) to the effect that the insurance provisions of the Lease have been and will be complied with upon such change of registry; (B) that the Lessee 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; and as to the continuation of the corresponding 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) imposes aircraft maintenance standards not materially less stringent than those of the Aeronautics Authority; (E) that import and export certificates, if required, shall have been procured at the Lessee's own cost and expense by the Lessee; (F) 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 other Indemnitees under this Agreement, the Indenture and the Tax Indemnity Agreement (in the case of the Owner Participant only), and the Pass Through Trustee (in its individual capacity and as Trustee under the Pass Through Agreement), afford each such party substantially the same protection as provided prior to such change of registry; (G) that such change will not result in the imposition of, or increase in the amount of, any tax for which the Lessee is not required to indemnify the Owner Participant, the Indenture Trustee, the Owner Trustee (or any successor, assign or affiliate thereof) or the Trust Indenture Estate pursuant to Article 8 hereof; (H) 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; and (I) of the payment by the Lessee of any reasonable expenses of the Owner Participant, the Owner Trustee, the Indenture Trustee and the Pass Through Trustee in connection with such change of registry. (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 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, 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 in such jurisdiction in connection with the registration in the new jurisdiction (and the filing and/or recordation therein of the Indenture or Lease) and the exercise of any rights or remedies with respect to the Aircraft pursuant to the Lease or the Indenture; (C) that the courts of such jurisdiction would provide substantially equivalent protection to the Lessor, the Owner Participant and the Indenture Trustee as provided under United States law (with the exception described in paragraph (b)(i)(D) of this Section 6.02) 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 Lessee's expense, to cover such risk and the Lessee undertakes to keep such insurance in full force and effect); and (E) (unless the Lessee shall have agreed to provide insurance reasonably satisfactory to the Indenture Trustee and the Owner Participant covering the risk of requisition of use of the Aircraft by the government of registry of the Aircraft) that the laws of such jurisdiction require fair compensation by the government of such jurisdiction payable in currency freely convertible into United States Dollars for the loss of use of the Aircraft in the event of such requisition. (c) From and after the Commencement Date, 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 with respect to the Aircraft by the Owner Trustee as the Lessor and the Owner Participant under the Lease with any governmental authority. (d) On the Commencement Date, the Lessee will cause the Special Aviation Counsel to properly file for recording, to the extent permitted by applicable law, the Lease, the Lease Supplement, the Trust Agreement, the Trust Agreement Supplement, the Indenture and the Indenture and Security Agreement Supplement in the following order of priority: first, the application for registration in the Owner Trustee's name, second, the Indenture with the Indenture and Security Agreement Supplement, the Trust Agreement and Trust Agreement Supplement covering the Aircraft and the Lease Supplement attached thereto, and third, the Lease with the Lease Supplement, with the Indenture and the Indenture and Security Agreement Supplement attached thereto; provided, however, that if the Exchange Date does not occur on the Commencement Date, the Indenture and the Indenture and Security Agreement Supplement need not be so filed until the Exchange Date (at which time it will be filed for recording). (e) After the Commencement Date, the Lessee, at its own expense, 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 calendar year following the year in which the Aircraft was leased to the Lessee under the Lease, 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 perfection of the security interests with respect to the Aircraft created by said documents and reciting the details of such action, or (2) that in the opinion of such counsel no such action is necessary to maintain the perfection of such security interests; (ii) specifying all other action which needs to be taken during the succeeding 14 months in order to maintain the perfection of such security interests; and (iii) stating that the Owner Trustee is the owner of legal title to the Aircraft, and the Aircraft is free and clear of all Liens, except the security interest created by the Indenture and such as are permitted by the Lease and the Indenture. (f) The Lessee shall at all times maintain its corporate existence except as permitted by Section 6.02(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 certificated Air Carrier, (iv) expressly assumes by an instrument in writing in form and substance satisfactory to the Indenture Trustee 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 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 6.02(g), that such instrument is a legal, valid and binding obligation of, and is enforceable against, such survivor or Person, and that all conditions precedent herein provided for relating to such transaction have been complied with, and (vi) immediately after such merger, consolidation or conveyance, transfer or lease, as the case may be, the surviving company is in compliance with all of the terms and conditions of this Agreement and the Lease and each 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 6.02(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 6.02(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 Uniform Commercial Code) 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 any officer of the Lessee obtaining knowledge of any condition or event which constitutes an Event of Default, an officer's certificate specifying the nature and period of existence thereof and what action the Lessee has taken or is taking or proposes to take with respect thereto; and (F) from time to time, such other financial information as the Lessor, the Owner Participant or the Indenture Trustee, may reasonably request. Concurrently with the delivery of the financial statements referred to in clause (A) above, the Lessee shall deliver to the Lessor, the Owner Participant and the Indenture Trustee a certificate of the Lessee, signed by any one of the President, the Chief Financial Officer, the General Counsel, the Treasurer or the principal accounting officer of the Lessee, stating that the signer, or an officer reporting to same, is familiar with the relevant terms of this Agreement and the Lease and the signer has reviewed, or has caused to be made under such Person's supervision a review, of the activities of the Lessee and that, to the best of his or her knowledge, there does not exist an Event of Default or if 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 6.03. 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 lease of the Aircraft and 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) 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 sale 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 Section 7.03(d) hereof, 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. The Owner Participant represents and warrants that neither it nor anyone authorized to act on its behalf (including, without limitation, Lufthansa) 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 covenants that neither it nor anyone authorized to act on its behalf (including, without limitation, Lufthansa) 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. (b) Owner Trustee. The Owner Trustee represents and warrants and covenants, 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) shall own any Certificates. Section 7.02. Citizenship. (a) Generally. On the Closing Date and on the Commencement Date, the Owner Trustee, in its individual capacity and as Owner Trustee, represents and warrants that it is a Citizen of the United States. If 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 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 Act as in effect at such time or, if it is not necessary under the Act as in effect at such time, if it is informed in writing by the Lessee, the Owner Participant or the Indenture Trustee that such lack of United States citizenship would have any adverse effect on the Lessee, the Owner Participant or any Holder. 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 represents, warrants and covenants that (i) although it is not a Citizen of the United States, pursuant to the Trust Agreement it has transferred to the Owner Trustee, to the extent set forth in the Trust Agreement, the power to manage and control the Beneficial Interest of the Aircraft to ensure, as more fully set forth therein, that such Beneficial Interest will be controlled by a Citizen of the United States and that the Owner Participant shall have no power to influence or limit the exercise of the Owner Trustee's authority in respect thereof under the Trust Agreement; (ii) it will fully and faithfully comply with the provisions of the Trust Agreement as long as it remains in effect, and in furtherance thereof will maintain the Trust Agreement in effect with an Owner Trustee that is a Citizen of the United States; (iii) if the Owner Participant shall become a Citizen of the United States, its obligations to maintain Section 7 of the Trust Agreement shall cease, except that Section 7 of the Trust Agreement may not be terminated unless prior thereto the Lessee and, so long as the Indenture remains in effect, the Indenture Trustee receives such opinions of counsel (of the same scope and substance as the opinions of counsel to be delivered hereunder on the Commencement Date of the Aircraft) and such amendments of documents and such other things as they shall reasonably request in connection with maintaining the validity, perfection and priority of the Lien of the Indenture on the Aircraft and the valid and continued registration of the Aircraft pursuant to Section 501(b)(1)(A)(i) of the Act; and (iv) if the Owner Participant fails with respect to its obligations above or in Section 7 of the Trust Agreement and, as a result of such failure, the Aircraft is subject to deregistration under the Act, the Owner Participant shall promptly at its own expense comply with any of clauses (x), (y) or (z) of the next sentence. If the Owner Participant shall, at any time while the Aircraft is registered in the United States and after Section 7 of the Trust Agreement has been terminated pursuant to clause (iii) of the preceding sentence, cease to be a Citizen of the United States and the Aircraft shall or would therefore become ineligible for registration in the name of the Owner Trustee under the Act and regulations then applicable thereunder, then the Owner Participant shall give notice thereof to the Lessee and the Indenture Trustee and shall (at its own expense and without any reimbursement or indemni- fication from the Lessee) within 30 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 representations and warranties of the Owner Participant in Sections 7.02(c)(i) and (ii) proving to be untrue as of the Closing Date and the Commencement Date; and (B) to the Lessee, the Pass Through Trustee, the Indenture Trustee or any Holder for any damages which may be actually incurred by the Lessee (it being understood that the Lessee shall be obligated to mitigate such damages by using other aircraft in which the Owner Participant does not have an interest, if it can do so without undue burden on the Lessee's operations), the Pass Through Trustee, the Indenture Trustee or any Holder as a result of the Owner Participant's failure to comply with clauses (x), (y) and (z) of the preceding sentence within the 30 day period referred to therein. 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 second sentence of this Section 7.02(c). Section 7.03. Representations, Warranties and Covenants of Owner Participant. (a) Representations, Warranties and Covenants of Owner Participant. In addition to and without limiting its other representations and warranties provided for in this Article 7, the Owner Participant represents, warrants and covenants that: (i) it is a limited partnership duly organized and validly existing in good standing under the laws of Delaware and it has full partnership 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 and each of 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 and each of the other Operative Agreements to which it is or is to be a party, have been duly authorized by all necessary partnership action on its part and, assuming the accuracy of the Lessee's representations in Section 6.01(m) 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 Section 6.01(k)(ix) and 7.01(b) hereof and compliance with the relevant provisions of the Indenture, neither the execution, delivery or performance by the Owner Participant of this Agreement and each of 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 and the Trust Agreement have been duly authorized, executed and delivered by the Owner Participant; on or prior to the Closing Date, the Modification Agreement, and on or prior to the Commencement Date, the Tax Indemnity Agreement and the Trust Agreement Supplement covering the Aircraft, will have been duly authorized, executed and delivered by the Owner Participant; upon such execution and delivery, each of such agreements 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; (v) 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 or affecting the Owner Participant or any of its property before or by any court or administrative agency which (A) involve the Aircraft or (B) if adversely determined would materially adversely affect the financial condition, business or operations of the Owner Participant or adversely affect the ability of the Owner Participant to perform its obligations under this Agreement or any other Operative Agreement to which it is or is to be a party; (vii) neither the execution and delivery by it of this Agreement and 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 it 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; (ix) on the Commencement Date, it will have a consolidated tangible net worth of not less than $40,000,000 or the OP Guarantee will be executed and delivered by Lufthansa; (x) on November 15, 1993 the Owner Trustee received good and marketable title to the Aircraft, free and clear of all Liens (other than the rights of the parties under the Original Modification Agreement, the Original Trust Agreement, the Original Sales Agreement and the Original Agreement to Lease), and, assuming the accuracy of the representation set forth in Section 7.04(a)(vii) below, on the Commencement Date the Owner Trustee will have good and marketable title to the Aircraft, free and clear of all Liens, except for Liens (other than Lessor's Liens attributable to the Owner Participant) permitted by Section 6.01 of the Lease); (xi) on the Closing Date, except for the filing of the financing statements referred to in Sections 4.01(f) hereof, no further action, including any filing or recording of any document, will be necessary or advisable in order (i) to establish the Owner Trustee's title to and interest in the Lessor's Estate as against any third parties, or (ii) to perfect the first security interest in and Lien on the Trust Indenture Estate in favor of the Indenture Trustee; (xii) on the Commencement Date, all sales or use taxes relating to the sale of the Aircraft by Lufthansa to the Owner Trustee will have been paid; and (xiii) on the Commencement Date, the Aircraft shall have been duly certified by the FAA as to type and airworthiness, and there shall be in effect with respect to the Aircraft a current and valid airworthiness certificate issued by the FAA pursuant to the Act. 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. (b) Lessor's Liens. The Owner Participant further represents, warrants and covenants that there are no, and will not be any, Lessor's Lien attributable to it or any of its Affiliates against, on or with respect to the Aircraft or the Lessor's Estate or the Trust Indenture Estate. The Owner Participant agrees with and for the benefit of the Lessee, 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 the Lessee's operation and use of the Aircraft is not impaired) to duly discharge and satisfy in full, promptly after the same first becomes known to the Owner Participant, any Lessor's Lien against, on or with respect to the Aircraft or the Lessor's Estate or the Trust Indenture Estate 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. (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 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 and Section 10 of the Agreement to Lease, as in effect on the date hereof. (e) Actions with Respect to Lessor's Estate, Etc. The Owner Participant agrees that it will not voluntarily 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, Warranties and Covenants of Owner Trustee. (a) In addition to and without limiting its other representations and warranties provided for in this Article 7, the Owner Trustee represents and warrants, in its individual capacity with respect to items (i), (ii), (iv), (v), (vi) and (vii) below, and as the Owner Trustee with respect to items (iii), (iv) and (viii), in each case as of the date of execution hereof, as of the Closing Date, as of the Commencement Date and, if the Exchange Date does not occur on the Commencement Date, as of the Exchange Date, that: (i) it is a national banking association duly organized and validly existing in good standing under the federal laws of the United States with its principal place of business and chief executive office (as such terms are used in Article 9 of the Uniform Commercial Code) at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department and, assuming the Trust Agreement has been duly authorized, executed and delivered by the Owner Participant, has full corporate power and authority, in its individual capacity or as the Owner Trustee, as the case may be, to execute, deliver and perform the Operative Agreements to which it is or is to be a party; (ii) the execution, delivery and performance by the Owner Trustee, either in its individual capacity or as the Owner Trustee, as the case may be, of the 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 do not contravene its articles of association or by-laws; this Agreement and the Trust Agreement have been, on the Closing Date each of the other Operative Agreements to which it is or is to be a party (other than the Lease, the Lease Supplement, the Indenture and Security Agreement Supplement and the Trust Agreement Supplement) will have been, on the Commencement Date the Lease, the Lease Supplement and the Trust Agreement Supplement will have been, and on the Exchange Date the Indenture and Security Agreement Supplement will have been, duly authorized, executed and delivered by the Owner Trustee, either in its individual capacity or as the Owner Trustee, as the case may be; and neither the execution and delivery thereof nor the Owner Trustee's performance of or compliance with any of the terms and provisions thereof violate or will violate any federal or Utah law or regulation governing the Owner Trustee's banking or trust powers; (iii) assuming due authorization, execution and delivery by each other party thereto, upon execution thereof by the Owner Trustee, each of the Operative Agreements to which it is or is to be a party when duly executed and delivered will constitute the legal, valid and binding obligation of the Owner Trustee in its individual capacity or as Owner Trustee, as the case may be, enforceable against such party in accordance with its respective terms, except as such enforceability may be limited in bankruptcy, insolvency, moratorium, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights and the performance by the Owner Trustee in its individual capacity or as Owner Trustee, as the case may be, of any of its obligations thereunder does not and will not contravene any lease, regulation or contractual restriction binding on the Owner Trustee in its individual capacity or as Owner Trustee, as the case may be; (iv) there are no pending or, to its knowledge, threatened actions or proceedings against the Owner Trustee before any court or administrative agency which would materially and adversely affect the ability of the Owner Trustee, either in its individual capacity or as the Owner Trustee, as the case may be, to perform its obligations under the Operative Agreements to which it is or is to be a 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; (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 the Owner Trustee 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 Utah governmental authority or agency governing its banking or trust powers; (vii) on the date hereof the Owner Trustee has, and on the Closing Date, on the Commencement Date and on the Exchange Date the Owner Trustee shall have, whatever title to the Aircraft was conveyed to it by Lufthansa, the Aircraft shall be free of Lessor's Liens attributable to the Owner Trustee in its individual capacity and the Owner Trustee in its individual capacity is a Citizen of the United States; and (viii) each of the Owner Trustee's representations and warranties in the other Operative Agreements is true and correct. (b) Lessor's Liens. The Owner Trustee, in its individual capacity, further represents, warrants and covenants that there are no, and will not be, any Lessor's Liens attributable to it in its individual capacity (or to the consolidated group of taxpayers of which it (in such capacity) is a part) against, on or with respect to the Aircraft or the Lessor's Estate or the Trust Indenture Estate. The Owner Trustee, in its trust capacity, and at the cost and expense of the Lessee, covenants that it will in its trust capacity promptly take such action as may be necessary to discharge duly any Lessor's Liens attributable to it in its trust capacity. The Owner Trustee, in its individual capacity, covenants and agrees that it will at its own expense take such action as may be necessary to duly discharge and satisfy in full, promptly after the same shall first become known to it, any Lessor's Liens against, on or with respect to the Aircraft or the Lessor's Estate or the Trust Indenture Estate attributable to it in its individual capacity (or to the consolidated group of taxpayers of which it (in such capacity) is a part) which may arise at any time after the date of this Agreement. (c) Indemnity for Lessor's Liens. The Owner Trustee, in its individual capacity, agrees to indemnify and hold harmless the Lessee, the Indenture Trustee, the Owner Participant, 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 the Owner Trustee to discharge and satisfy any Lessor's Liens attributable to it in its individual capacity, as described in Section 7.04(b) hereof. Section 7.05. Representations and Warranties of the Indenture Trustee. (a) The Indenture Trustee in its individual capacity represents and warrants as follows in each case as of its execution hereof, as of the Closing Date as of the Commencement Date and, if the Exchange Date does not occur on the Commencement Date, as of the Exchange Date: (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 the Indenture, the Collateral Agreement and this Agreement and to authenticate the Certificates to be delivered on the Closing Date; (ii) the Indenture, the Collateral Agreement and this Agreement, and the authentication of the Certificates to be delivered on the 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 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) this Agreement has been, on the Closing Date each of the Indenture and the Collateral Agreement will have 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, in the case of each of the Indenture and the Collateral Agreement, will be on the Closing Date, the Commencement Date and the Exchange Date) the legal, valid and binding obligation of the Indenture Trustee, enforceable against the Indenture Trustee in accordance with its terms except as such enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights; and (iv) neither the execution and delivery by it of this Agreement, the Collateral Agreement, the Indenture and the other Operative Agreements to which it is or is to be a party, nor the performance by it of any of the transactions contemplated hereby or thereby, requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action in respect of, any federal or state governmental authority or agency governing its banking and trust powers. (b) The Indenture Trustee, in its individual capacity, further represents, warrants and covenants that there are no, and will not be, any Indenture Trustee's Liens against, on or with respect to the Aircraft or the Lessor's Estate or the Trust Indenture Estate. The Indenture Trustee, in its individual capacity, covenants and agrees that it will at its own expense take such action as may be necessary to duly discharge and satisfy in full, promptly after the same shall first become known to it, any Indenture Trustee's Liens against, on or with respect to the Aircraft or the Lessor's Estate or the Trust Indenture Estate. (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 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 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). Section 7.06. Representations and Warranties of Pass Through Trustee and LC Bank. (a) The Pass Through Trustee, in its individual capacity (except for clause (iii) hereof) represents and warrants as follows, in each case as of its execution hereof and as of the Closing Date: (i) it is a national banking association duly organized and 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 the Pass Through Agreement, each Series Supplement and this Agreement and to execute and authenticate the Pass Through Certificates to be delivered on the Closing Date; (ii) the execution, delivery and performance of this Agreement, the Pass Through Agreement and each Series Supplement and the performance of its obligations thereunder (including the execution and authentication of the Pass Through Certificates to be delivered on the Closing Date) have been duly authorized by all necessary corporate action on its part, and, subject to (A) the registration of the issuance and sale of the Pass Through Certificates under the Securities Act, (B) compliance with any applicable state securities laws and (C) the qualification of the Pass Through Agreement under the Trust Indenture Act, neither the execution and delivery thereof nor its performance of any of the terms and provisions thereof will (x) violate any federal or South Carolina law or regulation relating to its banking or trust powers or contravene or result in any breach of, (y) constitute any default under, its articles of association, or by-laws or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it or its properties may be bound or affected, or (z) require the Pass Through Trustee to obtain the consent or approval of, give notice to, or register with, or take any other action with respect to, any state or federal agency or authority; (iii) this Agreement has been, and as of the Closing Date, the Pass Through Agreement and each of the Series Supplements will have 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 Pass Through Trustee, enforceable 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; (iv) the performance by the Pass Through Trustee of its obligations under this Agreement and the Pass Through Agreement will not subject the Aircraft, the Lessor's Estate or the Trust Indenture Estate to any Lien (other than the Liens created by the Indenture); and (v) there are no pending or, to the knowledge of the Pass Through Trustee, threatened actions or proceedings against the Pass Through Trustee before any court, administrative agency or tribunal which, if determined adversely to the Pass Through Trustee, would materially adversely affect the ability of the Pass Through Trustee to perform its obligations under any of the Operative Agreements to which it is or will be a party, and the Pass Through Trustee has no actual knowledge of any pending or threatened actions or proceedings before any court, administrative agency or tribunal involving it in its capacity as Pass Through Trustee. (b) The LC Bank represents and warrants to the Indenture Trustee, the Pass Through Trustee and the Lessee as of its execution hereof and as of the Closing Date that: (i) Westdeutsche Landesbank Girozentrale is a German public law banking institution duly organized and validly existing under the laws of the Federal Republic of Germany and has been duly licensed by the Superintendent of Banks of the State of New York to maintain a branch in New York City; the LC Bank has the power and authority to enter into and perform its obligations under this Agreement and the Letter of Credit; (ii) this Agreement, the Indemnification Agreement and the Letter of Credit 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 banking law or regulation applicable to it or contravene or result in any breach of, or constitute any default under its charter or by- laws; (iii) this Agreement, the Indemnification Agreement and the Letter of Credit have been duly executed and delivered by the LC Bank, and constitute the legal, valid and binding obligation of the LC Bank, enforceable in accordance with their terms except as limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights generally from time to time in effect; and (iv) neither the Lessee nor the Owner Trustee is obligated to reimburse the LC Bank for any drawing made under the Letter of Credit. Section 7.07. [Intentionally Omitted]. Section 7.08. Indenture Trustee's Notice of Default. The Indenture Trustee agrees to give the Owner Participant notice of any Payment Default promptly upon a Responsible Officer of the Indenture Trustee having actual knowledge thereof. Section 7.09. 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 each Lien of the Indenture which it is required to execute and deliver in accordance with the provisions of Article 7 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 7.10. 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 Pass Through Trustee or the Indenture Trustee, as the case may be) nor any Person lawfully claiming through the Owner Participant (or the Owner Trustee, the Pass Through Trustee or the Indenture Trustee, as the case may be) shall interfere with the Lessee's right quietly to enjoy the Aircraft during the Term without hindrance or disturbance by the Owner Participant (or the Owner Trustee or the Indenture Trustee, as the case may be). Section 7.11. Survival of Representations, Warranties and Covenants. The representations, warranties and covenants of the Owner Participant, the Owner Trustee, the Pass Through Trustee, the Indenture Trustee and, the LC Bank provided for in this Article 7, and their respective obligations under any and all of them, shall survive the making available by the Owner Participant and the Indenture Trustee of their respective payments contemplated by Articles 2 and 3 hereof, the sale and lease of the Aircraft and the expiration or other termination of this Agreement and the other Operative Agreements. Section 7.12. Lessee's Assumption of the Certificates. (a) On or after the Commencement Date, and 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 as it relates to the Aircraft and to purchase the Aircraft pursuant to Section 4.02(a)(C) or (D) of the Lease, and so long as no Default or 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 applicable 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)(C) or (D) 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 (which assumption, notwithstanding anything to the contrary in the Lease, shall not be permitted prior to the Exchange Date), 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 Section 7.12, releasing the Owner Participant and the Owner Trustee from all obligations in respect of the Certificates except any obligations which shall have occurred prior to such assumption, the Indenture and all other Operative Agreements and 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, interest, Make-Whole Premium, if any, and all other sums owing on all Certificates then outstanding (or on the Lessee's substituted obligations) in accordance with their terms and to punctually perform and observe all of the covenants and obligations hereunder and under the Indenture 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, 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 under the Lease; (ii) the instrument referred to in paragraph (i) of this Section 7.12(b), any Uniform Commercial Code 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 and the Indenture Trustee 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 7.12(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 and the Indenture Trustee referred to in paragraph (ii) of this Section 7.12(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 Closing Date and Commencement 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 of expenses of counsel) of the Indenture Trustee, the Owner Trustee and the Owner Participant in connection with such assumption. Section 7.13. 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 the Modification 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 the Modification Agreement) and all necessary or appropriate activity related thereto. Section 7.14. Compliance with Trust Agreement, Etc. Each of the Owner Participant, First Security Bank of Utah, National Association and the Owner Trustee agrees with the Lessee, the Pass Through Trustee and the Indenture Trustee (i) to comply with all of the terms of the Trust Agreement (as the same may hereafter be amended or supplemented from time to time in accordance with the terms thereof) applicable to it in its respective capacity, the noncompliance with which would materially adversely affect any such party and (ii) not to 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 such party without the prior written consent of such party. The Owner Trustee confirms for the benefit of the Lessee, the Pass Through Trustee and the Indenture Trustee that it will comply with the provisions of Article 2 of the Trust Agreement. So long as the Lease remains in effect, the Owner Participant agrees not to terminate or revoke the trusts created by the Trust Agreement without the consent of the Lessee (except in connection with the exercise of remedies pursuant to Section 17 of the Lease) or the Indenture Trustee. The Owner Participant further agrees not to remove the institution acting as Owner Trustee, and not to replace the institution acting as Owner Trustee in the event that such institution resigns as Owner Trustee, without in either case having obtained the prior written consent of the Lessee (except in connection with the exercise of remedies pursuant to Section 17 of the Lease) and (so long as the Indenture shall not have been discharged) the Indenture Trustee. The Owner Trustee and the Owner Participant agree that no co-trustee or separate trustee shall be appointed pursuant to Section 3.14 of the Trust Agreement without the Lessee's and the Indenture Trustee's prior written consent; provided that the Lessee's consent shall not be required if an Event of Default shall have occurred and be continuing. 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 the net after tax cost of 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 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 assembly, manufacture, construction, substitution, location, replacement, conditioning, control, purchase, reregistration, repossession, improvement, maintenance, redelivery, manufacture, acquisition, purchase, financing, mortgaging, ownership, acceptance, rejection, delivery, non-delivery, leasing, subleasing, transport, insuring, inspection, registration, reregistration, assembly, abandonment, preparation, installment, possession, repossession, use, operation, return, presence, storage, repair, transfer of title, modification, rebuilding, import, export, alteration, addition, replacement, assignment, overhaul, transfer of registration, imposition of any Lien, sale or other disposition of the Aircraft, Airframe, any Engine or any Part 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, any Engine, any Part, or any part thereof; (iv) any or all of the Operative Agreements; (v) the property, or the income or other proceeds received with respect to the property, held by the Owner Trustee under the Trust Agreement or after an Event of Default under the Lease, by the Indenture Trustee under the Indenture; (vi) otherwise with respect to or by reason of the transactions described in or contemplated by the Operative Agreements; (vii) the payment of the principal or interest or other amounts payable with respect to the Certificates; (viii) the beneficial interests in the Trust Estate or the creation thereof under the Trust Agreement; or (ix) any assumption by the Lessee pursuant to Section 7.12 of this Agreement and Section 2.11 of the Indenture. (b) Exceptions. The indemnity provided for in Section 8.01(a) shall not extend to any of the following: (i) Taxes imposed on or measured by the net or gross income or excess profits, receipts, minimum tax from tax preferences, alternative minimum tax, capital, franchise, net worth or conduct of business Taxes (including any unincorporated business tax) of such Indemnitee (other than any Taxes in the nature of sales, use, transfer, excise, rental, license, ad valorem, value-added or property Taxes) (the "Income Taxes") except if such Income Tax is imposed on an Indemnitee by (I) a state or local jurisdiction in which such Indemnitee otherwise would not be subject to tax, and such tax is imposed solely as a result of (A) the operation, registration, location, presence, or use of the Aircraft, Airframe any Engine or any Part thereof, in such jurisdiction or (B) the place of incorporation, principal office, corporate domicile or the activities of the Lessee or any sublessee in such jurisdiction (each such item referenced in this (A) and (B) called an "Income Event") or (II) any foreign country or any political subdivision or taxing authority thereof in which the Indemnitee is subject to tax as a result of any Income Event, provided, however, that if the Indemnitee is a Non-U.S. Person, then clause (II) shall only apply to the extent such Indemnitee is subject to tax in such foreign jurisdiction solely as a result of an Income Event; provided, however, that the provisions of this paragraph (b)(i) relating to Income Taxes shall not exclude from the indemnity described in Section 8.01(a) (x) any Income Taxes for which the Lessee would be required to indemnify an Indemnitee 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) any Income Tax with respect to which the Lessee would be required to indemnify an Indemnitee pursuant to the last sentence of Section 8.02, 8.05, 9.02 or 9.05 of this Agreement; (ii) Taxes arising out of or measured by acts, omissions, events or periods (or portions thereof), or any combination of the foregoing which occur before the Aircraft is leased under the Lease or after (and not attributable to acts, omissions or events occurring contemporaneously with or prior to) 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 with respect to the Aircraft 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 7.12 of this Agreement), and the earliest of (x) the expiration of the Term 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); (iii) As to the Owner Trustee, Taxes imposed against the Owner Trustee upon or with respect to any fees for services rendered in its capacity as trustee under the Trust Agreement or, as to the Indenture Trustee, Taxes imposed against the Indenture Trustee upon or with respect to any fees received by it for services rendered in its capacity as trustee under the Indenture; (iv) Taxes imposed on an Indemnitee that would not have been imposed but for the willful misconduct or gross negligence of such Indemnitee (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); (v) Taxes imposed on the Owner Trustee or the Owner Participant or any successor, assign or Affiliate thereof which became payable by reason of any voluntary or involuntary transfer or disposition by such Indemnitee subsequent to the Commencement Date (it being understood that a transfer or disposition pursuant to Article 4 (other than a sale at fair market value at the end of any Renewal Term) or Sections 7, 8, 9, 10, or 11 or Sections 12.01, 12.02 and 12.03 of the Lease is not a transfer or disposition for this purpose), 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 Partnership or the Lessor's Estate other than 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; (vi) Taxes imposed on the Owner Participant or any Partner for which the Lessee is obligated to indemnify the Owner Participant or any partner thereof pursuant to the Tax Indemnity Agreement; (vii) Notwithstanding anything herein to the contrary, Taxes imposed on a successor, assign or other transferee of any entity or Person which on the Commencement Date is an Indemnitee (for purposes of this clause (vii), an original Indemnitee) or such original Indemnitee to the extent that such Taxes exceed the amount of Taxes that would have been imposed and would have been indemnifiable pursuant to Section 8.01(a) 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 imposed on corporations in the United States) and; provided, however, that the exclusion provided by this clause (vii) shall not apply in the case of a transfer or disposition as a result of the exercise of any remedies provided in the Lease or the Indenture in connection with an Event of Default under either such document; provided further, however, that the exclusion from the indemnity described in Section 8.01(a) provided by this paragraph (b)(vii) shall not apply to any Taxes to the extent such Taxes are directly attributable to the failure by the Lessee to take administrative actions as have been reasonably requested of it in writing in a timely manner (such as the filing of forms or documents) and as to which arrangements have been made to the Lessee's reasonable satisfaction such that the Lessee shall bear no cost or risk; (viii) any U.S. federal withholding or backup withholding taxes imposed on the payment or receipt of any amounts payable with respect to any Certificates of any Holder; (ix) intentionally omitted; (x) 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; (xi) taxes imposed on the Owner Participant or on 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 Certificate (i) over which purchase or holding the Owner Participant (or any Affiliate thereof, which for purposes of this clause (xi) shall also include any affiliate within the meaning of the first sentence of Part V(c)(3) of Prohibited Transaction Exemption 84-14) has discretion or control, or (ii) by an employee benefit plan, within the meaning of Section 3(3) of ERISA, or an 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 over such purchase or holding provided, however, that such exclusion shall occur only in the event that the Owner Participant or any Affiliate thereof which has the discretion or control described in subclause (i) above or which has the power described in subclause (ii) above, as the case may be, knows or reasonably should have known that such purchase, or holding of the Certificates may constitute a prohibited transaction, within the meaning of Section 4975(c)(1) of the Code. For purposes of this clause (xi) the words "reasonably should have known" shall mean that the Owner Participant or any Affiliate thereof shall take such steps as a reasonable prudent person would take acting in a like capacity to determine if such purchase, or holding of the Certificates, may constitute a prohibited transaction within the meaning of Section 4975(c)(1) of the Code; (xii) Taxes arising out of or otherwise attributable to the formation of the trust described in the Trust Agreement, or the contribution or transfer of the Aircraft or other property to such trust; (xiii) any U.S. federal withholding taxes imposed on Rent payable to any Indemnitee which is a Non-U.S. Person; (xiv) any Taxes arising out of or in connection with a Demand Note, the Letter of Credit or the Collateral Agreement; and (xv) any Taxes payable by the Owner Participant or Owner Trustee (as contemplated by Section 4.01(m) hereof or by Lufthansa pursuant to the Sales Agreement. (c) Withholding. The Pass Through Trustee shall withhold any Taxes required to be withheld on payments to any holder of a Pass Through Certificate except to the extent that such holder has furnished evidence to the Pass Through Trustee sufficient under applicable law to entitle such holder to any exemption from or reduction in the rate of withholding claimed by such holder. 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 any U.S. Federal withholding or backup withholding Tax required to be withheld with respect to any Holder of a Certificate or Pass Through Certificate, as the case may be, and a claim is asserted by a taxing authority against the Owner Trustee, the Owner Participant or any Affiliate of either with respect to such Tax, the Lessee will indemnify the Owner Trustee and the Owner Participant and any Affiliate of either thereof (without regard to the exclusion set forth in Section 8.01(b)(viii) hereof), and the Indenture Trustee or the Pass Through Trustee, as the case may be, in turn in its individual capacity (and without recourse to the Trust Indenture Estate) agrees to indemnify the Lessee, against any such Taxes required to be withheld and any interest and penalties with respect thereto. If, with respect to any Holder of a Certificate or a holder of a Pass Through Certificate, the Indenture Trustee or the Pass Through Trustee, as the case may be, fails to withhold any amount required to be withheld pursuant to Section 5.09 of the Indenture or hereunder, the Indenture Trustee or the Pass Through Trustee shall be entitled to withhold from any future payments otherwise distributable to such Holder of a Certificate or holder of a Pass Through Certificate, as the case may be, until such amounts shall have been recovered in full by the Indenture Trustee or the Pass Through Trustee, in their respective individual capacities, to the extent of any indemnity payments made, as the case may be. 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 within 30 days of filing a tax return which reflects such permanent tax benefit 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 from the Lessee 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 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 (with the amount of such benefit to be determined by assuming full utilization of such benefit); and (y) the amount of all prior payments made under Sections 8.01 and 8.02 by the Lessee to such Indemnitee less the amounts of all prior payments made by such Indemnitee to the Lessee pursuant to this Section 8.02 (and the excess, if any, of the amount described in clause (x) above over the amount described in clause (y) above shall be carried forward and applied to reduce pro tanto any subsequent obligations of the Lessee to make payments pursuant to Section 8.01); provided, however, that notwithstanding the foregoing portions of this sentence, such Indemnitee shall not be obligated to make any payment to the Lessee pursuant to this sentence as long as an Event of Default shall have occurred and be continuing under the Lease. The Lessee shall reimburse on an After-Tax Basis such Indemnitee for any payment of a tax benefit pursuant to the preceding sentence (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, 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 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 Lien permitted under Section 6.01 of the Lease on the Aircraft, Airframe or any Engine or any risk or 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. 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 acknowledgment 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 law has changed and, in light thereof, there is substantial authority within the meaning of Section 6662 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 such adjustment, when aggregated with related and correlative adjustments, is at least $25,000. The Indemnitee shall not be required to appeal any judicial decision unless it receives an opinion of Tax Counsel, at the Lessee's sole expense, to the effect that it is more likely than not that such decision will be reversed on appeal. Nothing contained in this Section 8.04 shall require any Indemnitee to contest or continue to contest, or permit the 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 the Lessee of any amount that might otherwise be payable by the 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 net 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 or (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. Section 8.06. Lessee's Reports. With respect to the Aircraft, in case any report or return is required to be made with respect to any obligation of the Lessee under this Article 8, the Lessee shall make such report or return, except for any such report or return that the Owner Trustee or the Owner Participant has notified the Lessee that it intends to file, in such manner as will show the ownership of the Aircraft in the Owner Trustee and shall send a copy of the applicable portions of such report or return to the Indemnitee and the Owner Trustee or will notify the Indemnitee of such requirement and make such report or return in such manner as shall be satisfactory to such Indemnitee and the Owner Trustee. The Lessee will provide such information reasonably available to the Lessee as the Owner Trustee or the Owner Participant may reasonably request from the Lessee to enable the Owner Trustee or the Owner Participant to fulfill its tax filing requirements with respect to the transactions contemplated by the Operative Agreements (without duplication of the requirements of Section 3 of Tax Indemnity Agreement) and any audit information request arising from any such filing. The Owner Trustee or the Owner Participant will provide such information as the Lessee may reasonably request from the Owner Participant 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. The Lessee shall hold the Owner Trustee and the Owner Participant harmless on an After-Tax Basis from and against any net after tax cost for liabilities, including penalties, additions to tax, fines and interest, imposed upon the Owner Trustee or the Owner Participant to the extent directly attributable to any insufficiency or inaccuracy in any return, statement, or report prepared by the Lessee or information supplied by the Lessee, or directly attributable to the Lessee's failure to supply reasonably available information to the Owner Trustee or Owner Participant 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 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 Trust or Owner Participant is the owner of the Aircraft, the Airframe, any Engine or any Part or would otherwise be inconsistent with the terms of the Lease and the position thereunder of the Owner Trustee and the Owner Participant. Copies of such returns or reports, together with evidence of payment of any Tax due, shall be sent by the Lessee to the Owner Participant 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, the 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 or any part thereof, which Taxes are not the responsibility of the Lessee under Section 8.01 hereof, then such Indemnitee shall pay to the Lessee an amount which equals the amount 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 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, except as otherwise provided in the Operative Agreements, reasonable legal fees and expenses and all other costs and expenses relating to amendments, supplements, adjustments, waivers and consents under the Operative Agreements, in each case requested by the Lessee unless such amendment, supplement, adjustment or waiver is made during the continuance of an Event of Default and any amounts payable under the indemnification provisions of the Indenture or the Trust Agreement and any amounts payable under the Indenture in respect of Make-Whole Premium (to the extent payable under Section 3.02 of the Lease)) whether or not any of the transactions contemplated by this Agreement are consummated (individually, an "Expense," collectively, "Expenses"), which may be imposed on, incurred or suffered by or asserted against any Indemnitee, in any way relating to, based on or arising out of: (i) this Agreement, the Lease, the Indenture, the Trust Agreement, or any other Operative Agreement (including any action or inaction of the Owner Trustee or the Indenture Trustee, in each case in their capacity as trustees) or any other document entered into in connection herewith or any sublease or any transactions contemplated hereby or thereby; (ii) the operation, possession, use, non-use, maintenance, storage, overhaul, delivery, non-delivery, control, repair or testing of the Aircraft, Airframe, or any Engine or any engine used in connection with the Airframe, or any part thereof by the Lessee any sublessee or any other Person whatsoever, whether or not such operation, possession, use, non-use, maintenance, storage, overhaul, delivery, non-delivery, control, repair or testing is in compliance with the terms of the Lease, including without limitation, claims for death, personal injury or property damage or other loss or harm to any Person whatsoever, including, without limitation, any passengers, shippers or other Persons wherever located, and claims relating to any laws, rules or regulations, including, without limitation, environmental control, noise and pollution laws, rules or regulation; (iii) the manufacture, design, return, acceptance, rejection, condition, repair, modification, servicing, rebuilding, airworthiness, registration, reregistration, performance, non-performance, sublease, merchantability, fitness for use, alteration, substitution or replacement 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 falsity or inaccuracy of any representation or warranty of the Lessee in any of the Operative Agreements (other than representations and warranties in the Tax Indemnity Agreement); (v) with respect to the Indenture Trustee, the enforcement of the terms of the Operative Agreements and the administration of the Trust Indenture Estate; and (vi) the offer, issuance, sale or delivery of any Certificate or any Pass Through Certificate, or in any way relating to or arising out of the Indenture or the Trust Indenture Estate or, with respect to the Indenture Trustee only, of any interest in the Lessor's Estate or the Trust Agreement or in any way relating to or arising out of the Trust Agreement and the Lessor's Estate and with respect to the Owner Participant and the Owner Trustee, of any interest in the Lessor's Estate or the Trust Agreement or in any way relating to or arising out of the Trust Agreement or the Lessor's Estate at a time when an Event of Default is continuing, during a period following an Event of Loss, or in connection with the termination of the Lease or action or direction of the Lessee with respect to the Aircraft pursuant to Section 4.02 (other than any sale at fair market value) or Article 10 of the Lease (including, in each such case set forth in this clause (vi), without limitation, any claim arising out of the Securities Act, the Exchange Act 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, the Pass Through Trustee or Indenture Trustee as trustees, in the manner contemplated by this Agreement, the Indenture, the Indenture and Security Agreement Supplement, the Trust Agreement, the Trust Agreement Supplement covering the Aircraft and in the case of the Owner Participant, its obligations arising under Section 6.01 of the Trust Agreement. The foregoing indemnity by the Lessee is intended to include and cover, but is not limited to, any Expense to which the Indemnitees may be subject as a result of their respective ownership or leasing of any interest in the Aircraft, Airframe, any Engine or Part during the Term, whether or not in the Lessee's possession or control, insofar as such Expense relates to any activity or event whatsoever involving such item while it is under lease to the Lessee (or after termination of the Lease in connection with the exercise of remedies thereunder to the extent that such Expense is attributable to the transactions contemplated hereby and by the other Operative Agreement), 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: (i) which would not have occurred but for the willful misconduct or gross negligence of such Indemnitee; (ii) to the extent attributable to acts or events which occur prior to the date on which the Aircraft is leased under the Lease or after the Aircraft is no longer leased under the Lease or after the expiration of the Term (other than, in each such case, 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 the Lessor 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, including without limitation the Lessee's failure to fully discharge all of its obligations under the Lease or other Operative Agreements; (iii) which 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 other than Taxes necessary to hold an Indemnitee harmless on an After-Tax Basis in accordance with Section 9.02 hereof; (iv) which is a cost, expense or payment that this Agreement or any other Operative Agreement expressly requires be paid by the Owner Participant or the Lessor or any other Person; (v) which would not have been incurred by such Indemnitee if such Indemnitee had not been in breach of its representations or warranties, or had not defaulted in the observance and performance of the terms and provisions provided to be observed and performed by it, in this Agreement, the Lease, the Indenture, the Trust Agreement or any other Operative Agreement to which it is a party unless such breach or default shall be a result of the breach or default of any of the foregoing by the Lessee or another Indemnitee; (vi) [Intentionally Omitted]; (vii) in the case of the Owner Participant, Lessor's Liens to the extent attributable to the Owner Participant; in the case of the Owner Trustee, Lessor's Liens to the extent attributable to the Owner Trustee; and in the case of the Indenture Trustee, Indenture Trustee's Liens; (viii) in the case of the Owner Participant or the Owner Trustee, to the extent attributable to the offer or sale by such Indemnitee after the Commencement 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 (x) during a period when an Event of Default has occurred and is continuing, (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 with respect to the Aircraft pursuant to Section 4.02 (other than any sale at fair market value) or Article 10 of the Lease; (ix) in the case of 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, resulting from 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 Certificate (i) over which purchase or holding the Owner Participant (or any Affiliate thereof, which for purposes of this clause (ix) shall also include any affiliate within the meaning of the first sentence of Part V(c)(3) of Prohibited Transaction Exemption 84-14) has discretion or control, or (ii) by an employee benefit plan, within the meaning of Section 3(3) of ERISA, or an 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 over such purchase or holding provided, however, that such exclusion shall occur only in the event that the Owner Participant or any Affiliate thereof which has the discretion or control described in subclause (i) above or which has the power described in subclause (ii) above, as the case may be, knows or reasonably should have known that such purchase, or holding of the Certificates may constitute a prohibited transaction, within the meaning of Section 4975(c)(1) of the Code. For purposes of this clause (ix) the words "reasonably should have known" shall mean that the Owner Participant or any Affiliate thereof shall take such steps as a reasonably prudent person would take acting in a like capacity to determine if such purchase, or holding of the Certificates, may constitute a prohibited transaction, within the meaning of Section 4975(c)(1) of the Code; (x) for (i) costs and expenses incurred in connection with Lufthansa's efforts to raise Nonrecourse Financing (as defined in the Agreement to Lease) in respect of which the Lessee is not liable under Section 13 of the Agreement to Lease and (ii) any other liability in connection with such Nonrecourse Financing for which the Lessee is not responsible under such Section 13; (xi) with respect to the Lessor, any Expense indemnified by DA under the Modification Agreement; and (xii) which is an Expense relating to (1) (A) the Collateral Agreement, (B) any Demand Note, (C) the Letter of Credit, (D) to the extent incurred prior to the Exchange Date,the Indenture or the Trust Indenture Estate, or (2) any of the transactions contemplated as occurring prior to the Exchange Date pursuant to the documents referred to in this clause (xii). (xiii) which is an Expense that, pursuant to the Indemnification Agreement or the Underwriting Agreement, is to be borne by Lufthansa. 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 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 from the Lessee 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 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), 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. 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 Indemnitees under this Article 9, except to the extent that the Lessee has been materially prejudiced by the failure to provide such notice. Unless otherwise provided in the Operative Agreements, any amount payable to an Indemnitee pursuant to this Article 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 the Lessee's 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 defense by 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 liability to such Indemnitee hereunder in respect of such claim, provided, however, that such acknowledgment shall not preclude the Lessee from raising defenses to such liability if the judgement rendered on termination of the applicable legal proceedings articulates the cause of such claim and the cause, as so articulated, is not one for which the Lessee is responsible to pay an indemnity hereunder (and either (i) the judgment is one from which no appeal is allowable or (ii) if such appeal is allowable, the applicable Indemnitee shall not have made a timely appeal), defend any claim covered by insurance for which indemnification is sought pursuant to this Article 9 and each Indemnitee with respect to the applicable Aircraft 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 (i) such Indemnitee waives its right to be indemnified under this Article 9 with respect to such claim or (ii) the Lessee has not, within 30 Business Days following receipt of notice by such Indemnitee, acknowledged in writing its liability to such Indemnitee hereunder (as provided above) in respect of 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 Lease and the other Operative Agreements but, as to such indemni- ties, only with respect to Expenses caused by events occurring or existing prior to or incurred in the process of (i) the return or disposition of the Aircraft under Article 12 or Article 17 of the Lease, or (ii) the termination of the Lease or the Indenture as it relates to the Aircraft 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 CERTAIN COSTS Section 10.01. Trustee Expenses and Other Costs. (a) Initial Fees and Continuing Expenses. The initial fees of the Owner Trustee, Indenture Trustee and Pass Through Trustee, 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 Owner Trustee, of the Indenture Trustee, and of the Pass Through Trustee, shall be paid as Supplemental Rent by the Lessee, including without limitation any amounts payable to the Indenture Trustee, the Pass Through Trustee or the Owner Trustee under the indemnification provisions of the Indenture, the Trust Agreement or the Pass Through Agreement, as the case may be. (b) 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 Indenture Trustee and the Pass Through Trustee all costs and expenses (including reasonable legal fees and expenses) incurred by any of them in connection with any Default or Event of Default and any enforcement or collection proceedings resulting therefrom or in connection with the negotiation of any restructuring or "work-out" (whether or not consummated), or the obligations of the Lessee hereunder or under the other Operative Agreements and the enforcement 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, waiver, modification or consent resulting from any work-out, restructuring or similar proceeding relating to the performance or nonperformance by the Lessee of its obligations under the Operative Agreements; with respect to this Agreement, the Lease, the Indenture, the Certificates, the Tax Indemnity Agreement, or any other Operative Agreement (other than the Collateral Agreement, any Demand Note and the Letter of Credit, with respect to which the Owner Participant shall be responsible) 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 (other than the Collateral Agreement, any Demand Note and the Letter of Credit, with respect to which the Owner Participant shall be responsible) 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 by any party 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 of any interest in the Aircraft, the Lessor's Estate or the Trust Agreement or any similar interest unless such offer, sale or transfer shall occur after the Commencement Date (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 Lessee with respect to the Aircraft pursuant to Section 4.02 (other than any sale at fair market value) or Article 7, 8, 9 or 10 of the Lease (with the Owner Participant being responsible for any such fees and expenses in the case of any other offer, sale or transfer); 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, a successor Owner Trustee may be appointed and a corporation may become Owner Trustee under the Trust Agreement only in accordance with the provisions of Section 3.11 of the Trust Agreement and the provision of paragraphs (b) and (c) of this Section 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; (iii) Such appointment shall not violate any provisions of the Act or any applicable rule or regulation of the applicable regulatory agency or body of any other jurisdiction in which the Aircraft may then be registered or create a relationship which would be in violation of the Act or any applicable rule or regulation of the applicable regulatory agency or body of any other jurisdiction in which the Aircraft may then be registered; and (iv) Such successor Owner Trustee shall enter into an agreement or agreements, in form and substance satisfactory to the Lessee, 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 Supplements, the Indenture and the Indenture and Security Agreement Supplements, and any other Operative Agreements to which the Owner Trustee is named as 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). (c) Appointment. For so long as the Aircraft remains registered under the Act, the Owner Participant agrees to appoint promptly a successor Owner Trustee meeting the requirements of Section 11.01(b) in the event the Owner Participant has knowledge that the Owner Trustee at any time shall not be a Citizen of the United States. (d) Revocation. The Owner Participant agrees not to revoke and terminate the Trust Agreement except in accordance with Section 4.01(a) of the Trust Agreement, as in effect on the date hereof. ARTICLE 12 LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND THE PASS THROUGH TRUSTEE 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 Indenture, the Trust Agreement, the Tax Indemnity Agreement, 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, any other Operative 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 Pass Through Trustee. The Pass Through Trustee shall have no further interest in, or other right with respect to, the Trust Indenture Estate when and if the principal, any Make-Whole Premium, interest on all Certificates and all other sums payable to the Pass Through Trustee under this Agreement, under the Indenture and under the 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 and the Indenture and to all of the terms of said documents, and the Lessee acknowledges receipt of an executed counterpart of the Trust Agreement, the Collateral Agreement and the Indenture; it being agreed that such consent shall not be construed to require the Lessee's consent to any future supplement to, or amendment, waiver or modification of the terms of the Trust Agreement, the Collateral Agreement, the Indenture or the Certificates, except that prior to the occurrence and continuance of an Event of Default, no section of the Indenture, the Certificates, the Collateral Agreement, any Demand Note, the Letter of Credit or the Trust Agreement shall be amended or modified in any manner (i) materially adverse to the Lessee or (ii) which increases payments or changes timing of payments by the Lessee, in either case 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; provided, however, that such covenants and obligations will not be applicable until the Commencement Date. 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 Default, the Indenture Trustee may act as the Lessor under the Lease to the exclusion of the Owner Trustee. The Lessee further agrees to deliver to the Indenture Trustee and the Owner Participant a copy of each notice, statement, request, report or other communication given or required to be given to the Owner Trustee under the Lease. ARTICLE 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 (i) if given by telecopier when transmitted and the appropriate telephonic confirmation received if transmitted on a Business Day or during normal business hours of the recipient, and otherwise on the next Business Day following transmission, provided that in such case, such notice by telecopy shall be confirmed by international certified or registered air mail promptly thereafter (ii) if given by certified international air mail or registered international air mail, upon receipt, by the addressee (iii) if given by telex, upon receipt by the party transmitting the telex of such party's callback code at the end of such telex (receipt of confirmation in writing not being necessary to the effectiveness of any telex), provided that in such case, such notice by telex shall be confirmed by international certified or registered air mail promptly thereafter and (iv) if given by Federal Express service or other means, when received or personally delivered, addressed: (a) If to the Lessee, to its office at 2005 Corporate Avenue, Memphis, Tennessee 38132, Attention: Senior Vice President and Chief Financial Officer with a copy to Senior Vice President and General Counsel; telephone (901) 395-3388, telecopier (901) 395-4758; or at such other address as the Lessee shall from time to time designate in writing to the Lessor, the Indenture Trustee, the Pass Through Trustee and the Owner Participant; (b) If to the Lessor or the Owner Trustee, to its office at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department; telephone (801) 246-5630, telecopier (801) 246-5053, or to such other address as Lessor shall from time to time designate in writing to the Lessee, the Indenture Trustee, the Pass Through Trustee, with a copy to Owner Participant at the Owner Participant's address as provided in subsection (c) below; (c) If to the Owner Participant, to its office at 1209 Orange Street, Wilmington, DE, 19801 Attention: President, (c/o Junaid Chida), telephone 212-259-6308, telecopier 212-259-6333, or to such other address as the Owner Participant may from time to time designate in writing to the Lessee, the Pass Through Trustee and the Indenture Trustee; (d) If to the Pass Through Trustee, to its office at 1301 Gervis Street, Fourth Floor, Columbia, South Carolina 29201, Attention: Corporate Trust Manager, telephone (803) 929-5905, telecopier (803) 929-5922, or to such other address as the Pass Through Trustee shall from time to time designate in writing to the Lessor, the Lessee, the Indenture Trustee, and the Owner Participant (with a copy to the Indenture Trustee at the address set forth in (e) below); (e) If to the Indenture Trustee, to its office at Suite 900, 600 Peachtree Street, N.E., Atlanta, Georgia 30308, Attention: Corporate Trust Lease Administration, telephone (404) 607-4681, telecopier (404) 607-6362, or to such other address as the Indenture Trustee shall from time to time designate in writing to the Lessor, the Lessee, the Pass Through Trustee and the Owner Participant; and (f) If to the LC Bank, to its office at 1211 Avenue of the Americas, 24th Floor, New York, New York 10036, Attention: Trade Services Group/Corporate Finance, telephone: 212-852-6000, telecopier: 212-852-6300, or to such other address as the LC Bank shall from time to time designate in writing to the Lessee, the Lessor, the Indenture Trustee, the Pass Through Trustee, and the Owner Participant or to such other address as the LC Bank shall from time to time designate in writing to the Lessee, the Lessor, the Lessee, the Indenture Trustee, the Pass Through Trustee and the Owner Participant. If any such notice is received on a day which is not a Business Day at the place of delivery, such notice shall be deemed to have been received on the immediately following Business Day at the place of delivery; provided, that if tender of any notice is refused by the addressee thereof, such notice shall be deemed to have been delivered upon such tender. ARTICLE 15 [INTENTIONALLY OMITTED] ARTICLE 16 MISCELLANEOUS Section 16.01. Owner for Federal Tax Purposes. It is hereby agreed between the Owner Participant and the Lessee (but the Lessee makes no representation to such effect) that for federal income tax purposes the Owner Participant will be the owner of the Aircraft and the Lessee will be the lessee of the Aircraft. Section 16.02. [Intentionally Omitted.] Section 16.03. 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 16.04. 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, the Indenture Trustee and the Pass Through 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 the Pass Through Trustee, 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 any Officers' Certificate (as defined in the Pass Through Agreement) or 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 16.05. 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 16.06. Successors and Assigns. The terms of this Agreement shall be binding upon, and shall inure to the benefit of, the Lessee and its successors and assigns, the Owner Participant and its successors and assigns, the Owner Trustee and its successors as Owner Trustee (and any additional trustee appointed), and the Indenture Trustee and its successors as Indenture Trustee (and any additional Indenture Trustee appointed) under the Indenture, the Pass Through Trustee and its successor as Pass Through Trustee (and any additional Pass Through Trustee appointed) and the LC Bank and its successors and assigns. Section 16.07. Concerning the Owner Trustee, Pass Through Trustee and Indenture Trustee. Each of First Security Bank of Utah, National Association, NationsBank of South Carolina, National Association, and Nationsbank of Georgia, National Association is entering into this Agreement solely in their respective capacities, in the case of First Security Bank of Utah, National Association, not in its individual capacity but solely as trustee under the Trust Agreement, in the case of NationsBank of South Carolina, National Association, not in its individual capacity but solely as pass through trustee under the Pass Through Agreement and in the case of Nationsbank of Georgia, National Association, as indenture trustee under the Indenture, and except as otherwise expressly provided in this Agreement, the Pass Through Agreement or in the Lease, the Indenture or the Trust Agreement, none of First Security Bank of Utah, National Association, NationsBank of South Carolina, National Association, or Nationsbank of Georgia, National Association, shall be personally liable for or on account of its statements, representations, warranties, covenants or obligations under this Agreement; provided, however, that each of First Security Bank of Utah, National Association, NationsBank of South Carolina, National Association, and Nationsbank of Georgia, National Association accepts the benefits running to it under this Agreement, and each agrees that (except as otherwise expressly provided in this Agreement or any other Operative Agreement to which it is a party) it shall be liable in its individual capacity for its own gross negligence or willful misconduct (whether in its capacity as trustee or in its individual capacity), and for any negligence in connection with any inaccuracy of representations and warranties or any breach of covenants (which covenants, in the case of the Indenture Trustee shall be those set forth in Sections 7.05(b) and 7.05(c) hereof and Section 5.05 of the Indenture) made in its individual capacity pursuant to or in connection with this Agreement or the other Operative Agreements to which it is a party. Section 16.08. 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 16.09. 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 shall in each instance obtain the prior written approval of each other party concerning the exact text and timing of news releases, articles and other information releases to the public media concerning any Operative Agreements. Section 16.10. Certain Limitations on Reorganization. The Indenture Trustee agrees that, if (1) all or any part of the Lessor's Estate becomes the property of a debtor subject to the reorganization provisions of the Bankruptcy Code, (2) pursuant to such reorganization provisions the Owner Participant is required, by reason of the Owner Participant being held to have recourse liability to the debtor or the trustee of the debtor, directly or indirectly, to make payment on account of any amount payable as principal of or interest, Make-Whole Premium or other amounts payable on the Certificates (other than as contemplated by the Operative Agreements), and (3) the Indenture Trustee actually receives any Recourse Amount which reflects any payment by the Owner Participant on account of (2) above, then, to the extent permitted by applicable law, and subject to the receipt by the Indenture Trustee prior to its disbursement of such Recourse Amount of written notice from the Owner Participant or the Owner Trustee reasonably relating to the refund obligation in this sentence, the Indenture Trustee shall promptly refund to the Owner Participant such Recourse Amount. For purposes of this Section 16.10, "Recourse Amount" means the amount by which the 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 paragraph shall prevent the Indenture Trustee from enforcing any personal recourse obligation (and retaining the proceeds thereof) of the Owner Participant under this Agreement, the Indenture (other than referred to in clause (2) above), any Demand Note or the Trust Agreement (and any exhibits or annexes thereto), or from retaining any amount paid by the Owner Participant under Sections 5.01, 8.02 and 8.03 of the Indenture. Nothing contained herein shall be construed as requiring any Holder to refund any amount distributed to such Holder pursuant to the Indenture. SECTION 16.11. 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 MATTERS OF CONSTRUCTION, VALIDLY AND PERFORMANCE, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS. Section 16.12. Section 1110 Compliance. Notwithstanding any provision herein or elsewhere contained to the contrary, it is understood and agreed among the parties hereto that the transactions contemplated by this Participation Agreement, the Lease, the Agreement to Lease, the Indenture and the other Operative Agreements are expressly intended to be, shall be and should be construed so as to be, entitled to the full benefits of 11 U.S.C. Section 1110 as amended form time to time and any successor provision thereto. ARTICLE 17 CONFIDENTIALITY Section 17.01. 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 who have been instructed and have agreed to hold such information confidential, (iii) to bank examiners, auditors or accountants, (iv) in the case of the Pass Through Trustee, in accordance with the provisions of the Pass Through Agreement, (v) 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, (vi) to a subsidiary or affiliate of the parties hereto, or (vii) 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 or participation an agreement in writing to be bound by the provisions of this Section 17.01. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective, duly authorized officers or signatories and this Agreement shall be effective this _____ day of March, 1994. LESSEE: FEDERAL EXPRESS CORPORATION By ___________________________ Title: OWNER PARTICIPANT: LLG AIRCRAFT LEASING, L.P., By LLG OF DELAWARE, INC. Its General Partner By ___________________________ Title: OWNER TRUSTEE: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee, By ___________________________ Title: INDENTURE TRUSTEE: NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Indenture Trustee, By ___________________________ Title: PASS THROUGH TRUSTEE: NATIONSBANK OF SOUTH CAROLINA, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Pass Through Trustee, By ___________________________ Title: LC BANK: WESTDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH By ___________________________ Title: By ___________________________ Title: SCHEDULE I CERTIFICATE INFORMATION 1. Federal Express Corporation Pass Through Trust, 1994-A310-A1 Federal Express Corporation Trust A Principal Amount: $4,166,194 Maturity: March 23, 1998 Interest Rate: 7.53% 2. Federal Express Corporation Pass Through Trust, 1994-A310-A2 Federal Express Corporation Trust A Principal Amount: $17,268,693 Maturity: March 23, 2007 Interest Rate: 7.89% 3. Federal Express Corporation Pass Through Trust, 1994-A310-A3 Federal Express Corporation Trust A Principal Amount: $7,185,793 Maturity: March 23, 2009 Interest Rate: 8.40% 1. Federal Express Corporation Pass Through Trust, 1994-A310-A1 Federal Express Corporation Trust B Principal Amount: $5,202,323 Maturity: March 23, 2003 Interest Rate: 7.53% 2. Federal Express Corporation Pass Through Trust, 1994-A310-A2 Federal Express Corporation Trust B Principal Amount: $17,782,345 Maturity: September 23, 2007 Interest Rate: 7.89% 3. Federal Express Corporation Pass Through Trust, 1994-A310-A3 Federal Express Corporation Trust B Principal Amount: $7,671,680 Maturity: March 23, 2009 Interest Rate: 8.40% 1. Federal Express Corporation Pass Through Trust, 1994-A310-A1 Federal Express Corporation Trust C Principal Amount: $5,459,459 Maturity: March 23, 2003 Interest Rate: 7.53% 2. Federal Express Corporation Pass Through Trust, 1994-A310-A2 Federal Express Corporation Trust C Principal Amount: $18,232,902 Maturity: September 23, 2007 Interest Rate: 7.89% 3. Federal Express Corporation Pass Through Trust, 1994-A310-A3 Federal Express Corporation Trust C Principal Amount: $7,229,706 Maturity: March 23, 2009 Interest Rate: 8.40% 1. Federal Express Corporation Pass Through Trust, 1994-A310-A1 Federal Express Corporation Trust D Principal Amount: $4,097,109 Maturity: March 23, 1998 Interest Rate: 7.53% 2. Federal Express Corporation Pass Through Trust, 1994-A310-A2 Federal Express Corporation Trust D Principal Amount: $18,109,624 Maturity: March 23, 2007 Interest Rate: 7.89% 3. Federal Express Corporation Pass Through Trust, 1994-A310-A3 Federal Express Corporation Trust D Principal Amount: $8,310,464 Maturity: September 23, 2009 Interest Rate: 8.40% 1. Federal Express Corporation Pass Through Trust, 1994-A310-A1 Federal Express Corporation Trust E Principal Amount: $6,508,237 Maturity: March 23, 2004 Interest Rate: 7.53% 2. Federal Express Corporation Pass Through Trust, 1994-A310-A2 Federal Express Corporation Trust E Principal Amount: $16,860,707 Maturity: September 23, 2007 Interest Rate: 7.89% 3. Federal Express Corporation Pass Through Trust, 1994-A310-A3 Federal Express Corporation Trust E Principal Amount: $6,747,347 Maturity: September 23, 2009 Interest Rate: 8.40% 1. Federal Express Corporation Pass Through Trust, 1994-A310-A1 Federal Express Corporation Trust F Principal Amount: $10,778,919 Maturity: September 23, 2004 Interest Rate: 7.53% 2. Federal Express Corporation Pass Through Trust, 1994-A310-A2 Federal Express Corporation Trust F Principal Amount: $14,620,624 Maturity: September 23, 2008 Interest Rate: 7.89% 3. Federal Express Corporation Pass Through Trust, 1994-A310-A3 Federal Express Corporation Trust F Principal Amount: $4,952,842 Maturity: September 23, 2009 Interest Rate: 8.40% 1. Federal Express Corporation Pass Through Trust, 1994-A310-A1 Federal Express Corporation Trust G Principal Amount: $9,697,934 Maturity: September 23, 2004 Interest Rate: 7.53% 2. Federal Express Corporation Pass Through Trust, 1994-A310-A2 Federal Express Corporation Trust G Principal Amount: $12,466,618 Maturity: March 23, 2008 Interest Rate: 7.89% 3. Federal Express Corporation Pass Through Trust, 1994-A310-A3 Federal Express Corporation Trust G Principal Amount: $5,349,330 Maturity: September 23, 2009 Interest Rate: 8.40% 1. Federal Express Corporation Pass Through Trust, 1994-A310-A1 Federal Express Corporation Trust H Principal Amount: $9,850,146 Maturity: March 23, 2006 Interest Rate: 7.53% 2. Federal Express Corporation Pass Through Trust, 1994-A310-A2 Federal Express Corporation Trust H Principal Amount: $13,528,824 Maturity: September 23, 2008 Interest Rate: 7.89% 3. Federal Express Corporation Pass Through Trust, 1994-A310-A3 Federal Express Corporation Trust H Principal Amount: $4,316,177 Maturity: September 23, 2009 Interest Rate: 8.40% 1. Federal Express Corporation Pass Through Trust, 1994-A310-A1 Federal Express Corporation Trust I Principal Amount: $12,207,788 Maturity: September 23, 2005 Interest Rate: 7.53% 2. Federal Express Corporation Pass Through Trust, 1994-A310-A2 Federal Express Corporation Trust I Principal Amount: $10,954,314 Maturity: September 23, 2008 Interest Rate: 7.89% 3. Federal Express Corporation Pass Through Trust, 1994-A310-A3 Federal Express Corporation Trust I Principal Amount: $4,513,303 Maturity: March 23, 2010 Interest Rate: 8.40% 1. Federal Express Corporation Pass Through Trust, 1994-A310-A1 Federal Express Corporation Trust J Principal Amount: $12,620,316 Maturity: March 23, 2006 Interest Rate: 7.53% 2. Federal Express Corporation Pass Through Trust, 1994-A310-A2 Federal Express Corporation Trust J Principal Amount: $10,101,643 Maturity: September 23, 2008 Interest Rate: 7.89% 3. Federal Express Corporation Pass Through Trust, 1994-A310-A3 Federal Express Corporation Trust J Principal Amount: $4,765,886 Maturity: March 23, 2010 Interest Rate: 8.40% 1. Federal Express Corporation Pass Through Trust, 1994-A310-A1 Federal Express Corporation Trust K Principal Amount: $15,005,244 Maturity: March 23, 2006 Interest Rate: 7.53% 2. Federal Express Corporation Pass Through Trust, 1994-A310-A2 Federal Express Corporation Trust K Principal Amount: $9,838,871 Maturity: September 23, 2008 Interest Rate: 7.89% 3. Federal Express Corporation Pass Through Trust, 1994-A310-A3 Federal Express Corporation Trust K Principal Amount: $5,497,933 Maturity: March 23, 2010 Interest Rate: 8.40% 1. Federal Express Corporation Pass Through Trust, 1994-A310-A1 Federal Express Corporation Trust L Principal Amount: $14,790,634 Maturity: September 23, 2006 Interest Rate: 7.53% 2. Federal Express Corporation Pass Through Trust, 1994-A310-A2 Federal Express Corporation Trust L Principal Amount: $7,583,248 Maturity: September 23, 2008 Interest Rate: 7.89% 3. Federal Express Corporation Pass Through Trust, 1994-A310-A3 Federal Express Corporation Trust L Principal Amount: $5,198,577 Maturity: March 23, 2010 Interest Rate: 8.40% 1. Federal Express Corporation Pass Through Trust, 1994-A310-A1 Federal Express Corporation Trust M Principal Amount: $14,615,697 Maturity: September 23, 2006 Interest Rate: 7.53% 2. Federal Express Corporation Pass Through Trust, 1994-A310-A2 Federal Express Corporation Trust M Principal Amount: $7,622,587 Maturity: September 23, 2008 Interest Rate: 7.89% 3. Federal Express Corporation Pass Through Trust, 1994-A310-A3 Federal Express Corporation Trust M Principal Amount: $5,401,962 Maturity: March 23, 2010 Interest Rate: 8.40% SCHEDULE II DEFINITIONS GENERAL PROVISIONS The following terms shall have the following meanings for all purposes of each Operative Agreement which specifically incorporates this Schedule, referred to below, unless otherwise defined in such 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 such Operative Agreement, the provisions of such Operative Agreement shall control the construction of such Operative Agreement. Unless the context otherwise requires, (i) references to agreements shall be deemed to mean and include such agreements as amended and supplemented from time to time, and (ii) references to parties to agreements shall be deemed to include the successors and permitted assigns of such parties. DEFINED TERMS: Act or Federal Aviation Act. The Federal Aviation Act of 1958, as amended from time to time, and the regulations promulgated pursuant thereto. Additional Insureds. As defined in Article 13 of the Lease. Aeronautics Authority or FAA. 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. Affiliate. With respect to any Person, any partner of such Person or 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 or such partner whether through the ownership or voting securities or by contract or otherwise. After-Tax Basis. A basis such that any payment received or deemed to have been received by a Person shall be supplemented by a further payment to such Person so that the sum of the two payments, after deduction of all federal, state, local and foreign income taxes resulting from the receipt or accrual of such payments, shall be equal to the payment received or deemed to have been received. In the case of amounts payable to the Lessor, the Owner Participant or any partner of the Owner Participant, or any corporate affiliate of any partner 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. Agreement to Lease. The Original Agreement to Lease, as amended and restated as of March 1, 1994, among Lufthansa, the Lessee and the Lessor. Air Carrier. Any air carrier which is a United States "domestic air carrier" as defined in Part 121 of the Federal Aviation Regulations, and any "foreign air carrier" (as defined in the Act) as to which there is in force a permit granted under Section 402 of the Act. Aircraft. The Airframe together with the two Engines whether or not any of such Engines may from time to time be installed on such Airframe or may be installed on any other airframe or on any other aircraft. Aircraft Cost. The amount specified as the Aircraft Cost for the Aircraft on Schedule I to the Agreement to Lease (as in effect on the Closing Date). Airframe. The Airbus Model A310-203 aircraft (excluding the Engines or engines from time to time installed thereon) contemplated by the Participation Agreement to be leased on the Commencement Date by the Lessor to the Lessee pursuant to the Lease, and having the manufacturer's serial number ________________ and, on and after the Commencement Date, the United States FAA Registration Number specified in the initial Lease Supplement, including all Parts. Ancillary Agreements. Any written agreement between parties to the Agreement to Lease Operative Agreements or Operative Agreements entered into on the Closing Date or at any time thereafter in connection with the transactions contemplated by the Operative Agreements, as amended from time to time, including, without limitation, Ancillary Agreement No. 1. Ancillary Agreement No. 1. The agreement, dated as of the Commencement Date, among the Lessee, the Owner Trustee and the Indenture Trustee. Appraisal. The appraisal delivered pursuant to Section 4.01(l) of the Participation Agreement. 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 with the giving of notice or lapse of time or both would constitute an Event of Default. Basic Rent. The aggregate periodic rent payable throughout the Basic Term pursuant to Section 3.01 of the Lease. Basic Term. The period commencing at the beginning of the day on the Commencement Date and ending at the end of the day on the day immediately preceding the date 15 years from the Commencement Date, or such earlier date on which the Lease shall be terminated as provided therein. Beneficial Interest. The interest of the Owner Participant under the Trust Agreement. Bills of Sale. Has the meaning set forth in Section 4.02(d)(v) of the Participation Agreement. Business Day. Any day on which commercial banks are not authorized or required to close in New York City and Memphis, Tennessee, and so long as the Lien of the Indenture is in effect, in Atlanta, Georgia, and Columbia, South Carolina, and thereafter in Salt Lake City, Utah. Certificates or Equipment Trust Certificates. The Equipment Trust Certificates (Federal Express Corporation Trust ___) issued by the Owner Trustee pursuant to the Indenture and any certificate issued in exchange therefor or replacement thereof pursuant to the Indenture. Citizen of the United States. A citizen of the United States as defined in Section 101(16) of the Act, or any analogous part of any successor or substituted legislation or regulation at the time in effect. Closing Date. The Business Day on which the sale of the Pass Through Certificates to the Underwriters occurs pursuant to the Underwriting Agreement. Closings. The closing with respect to the acquisition of the Pass Through Certificates by the Underwriters and the closing with respect to the acquisition of the Certificates by the Pass Through Trusts. Code. Except as otherwise provided, references to the Code shall mean the Internal Revenue Code of 1986, as amended from time to time. Collateral. Has the meaning set forth in the Collateral Agreement. Collateral Agreement. The Collateral Agreement (Trust ______), dated as of March 1, 1994, between the Owner Trustee and the Indenture Trustee, as amended or modified from time to time. Commencement Date. The date on which the Aircraft is leased by the Lessor to the Lessee under the Lease, which date shall also be the date of the initial Lease Supplement. Commission or SEC. The Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or if at any time after the execution and delivery of the Participation Agreement such Commission is not existing and performing the duties now assigned to it under the Exchange Act, then the body performing such duties on such date. Company. Federal Express Corporation, a Delaware corporation, and its permitted successors and assigns hereunder. Corporate Base Rate. The rate announced from time to time by The Chase Manhattan Bank, N.A. or any successors thereto at its head office at New York, New York, as its Corporate Base Rate. Corporate Trust Office. The office of the Indenture Trustee 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 Trustee and the Holders. Cut-off Date. The earlier to occur of (i) the date which is 365 days after the Scheduled Commencement Date, or any earlier Business Day (but in no event earlier than the Scheduled Commencement Date) specified as the Cut-off Date by the Owner Trustee in an irrevocable written notice (including, without limitation, in any such notice contemplated by Section 12 of the Agreement to Lease) given to the Indenture Trustee not less than 30 days prior thereto and (ii) 30 days after the date of any Pre-Funding Termination Notice in accordance with Section 3 of the Agreement to Lease. DA. Deutsche Aerospace Airbus GmbH, a German corporation, its successor and permitted assigns. Debt Portion. The amount specified as such on Schedule IV to the Participation Agreement. Debt Rate. The weighted average rate of interest applicable from time to time to the Certificates, but in no event less than 8% per annum. Deemed Event of Loss. If the Exchange Date does not occur on or prior to the Cut-off Date. 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 Notice. Notice of the Aircraft's Commencement Date, given by the Owner Participant as provided in Section 3.01 of the Participation Agreement and including any notice with respect to a postponed Commencement Date given by the Owner Participant pursuant to Section 3.02 of the Participation Agreement. Demand Note. Each of the Promissory Notes (D-_______), dated the Closing Date, from Lufthansa in the form of Exhibit E to the Participation Agreement, and in an aggregate principal amount specified under "Demand Note Principal Amount" in Schedule IV to the Participation Agreement. Demand Note Collateral. Has the meaning set forth in the Collateral Agreement. Dollars and $. The lawful currency of the United States of America. Engine. Each of the two General Electric CF6-80A3 engines, more fully described in the initial Lease Supplement (or, prior to the Commencement Date, in Exhibit A to the Agreement to Lease opposite the Airframe), whether or not from time to time installed on the Airframe or installed on any other airframe or on any other aircraft, and any Replacement Engine which may from time to time be substituted for an Engine pursuant to Sections 7.02(a)(vii), 10.03, 11.03, 11.04 or 12.02 of the Lease, together with all Parts. 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. ERISA. The Employee Retirement Income Security Act of 1974, as amended. Event of Default. Each of the events specified in Article 16 of the Lease. Event of Loss. Event of Loss means any of the following events on or after the Commencement Date 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 120 days or to the end of the Term, if less, due to theft or disappearance, or (B) for a period in excess of 60 days or to the end of the Term, if less, 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, such Event of Loss being deemed to occur on the date of any such condemnation, confiscation, seizure or requisition of title, or (2) requisition of use of such property (A) by a foreign government or instrumentality or agency thereof, or any purported government or instrumentality or agency thereof, for a period in excess of 180 days (or 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 up to six months beyond the end of the Term in the event that the Aircraft, the Airframe or Engine is requisitioned by the Government pursuant to an activation as part of the Civil Reserve Air Fleet 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 Model A310-203 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 shall have been prohibited for a period of one (1) year, unless the Lessee, prior to the expiration of such one (1) year period shall have conformed the Aircraft to the requirements of any such law, rule, regulation, order, or other action and shall have commenced regular commercial use and shall be diligently carrying forward, on a non-discriminatory basis, all steps necessary or desirable to permit the normal use of the Aircraft by the Lessee; provided, that if there is a conflict between the operation of clause (iv) above and Section 12.05 of the Lease (by reference to Section 12.04(ix) thereof), such Section 12.05 of the Lease shall control. The date of such Event of Loss shall be the date of (i) loss of such property or its use thereof for a period in excess of 120 days, or to the end of the Term, if less due to theft or disappearance, or loss for a period in excess of 60 days, or to the end of the Term, if less due to damage beyond economic repair or loss of use of the Airframe because of requisition for use for a period in excess of 180 days (or shorter period due to insurance settlement or to the end of the Term), (ii) an insurance settlement on the basis of total loss with respect to such property, (iii) condemnation, confiscation, seizure or requisition of title, or (iv) prohibition from usage for the periods described in clause (iv) above. On or after the Commencement Date, 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. Exchange Act. The Securities Exchange Act of 1934, as amended. Exchange Date. The date, on or after the Commencement Date, on which the Indenture Trustee releases the Debt Portion pursuant to Section 7(e) of the Collateral Agreement. Excepted Payments. Collectively, (i) all right, title and interest of the Owner Participant or the Owner Trustee in, to and under the Tax Indemnity Agreement and any moneys due or to become due under the Tax Indemnity Agreement and payments of Supplemental Rent or other payments by the Lessee in either case solely in respect of the Tax Indemnity Agreement, (ii) indemnity payments and interest thereon and other amounts paid or payable by the Lessee to the Owner Participant or to the Owner Trustee in its individual capacity or any of their respective Affiliates (other than the Owner Trustee in its capacity as trustee and the trust created pursuant to the Trust Agreement), successors, assigns, directors, officers, employees, agents or servants pursuant to Articles 8, 9 or 10 of the Participation Agreement or any corresponding payment of Supplemental Rent under the Lease; (iii) proceeds of public liability insurance or governmental indemnities in lieu thereof in respect of the Aircraft payable to the Owner Participant or the Owner Trustee, in its individual capacity, or any of their Affiliates (other than the Owner Trustee in its capacity as trustee and the trust created pursuant to the Trust Agreement), successors or assigns, as a result of insurance claims made, or losses suffered, by, or amounts in respect of such indemnities paid for the benefit of, the Owner Participant or the Owner Trustee in its individual capacity or any of their Affiliates (other than the Owner Trustee in its capacity as trustee and the trust created pursuant to the Trust Agreement), successors or assigns, directors, officers, employees, agents or servants, either pursuant to the Lease (which shall include proceeds of any self-insurance by the Lessee) or maintained by the Owner Trustee or the Owner Participant and not required to be maintained under the Lease; (iv) proceeds of any insurance in respect of the Aircraft (not required by Section 13 of the Lease) which is separately acquired and paid for by the Owner Participant (directly or through the Owner Trustee) or the Lessor in accordance with Section 13.05 of the Lease); (v) indemnity payments payable by the Owner Participant to the Owner Trustee in its individual capacity pursuant to Section 6.01 of the Trust Agreement; (vi) Transaction Costs or other expenses paid or payable by the Lessee to, or for the benefit of, the Indenture Trustee, First Security or the Owner Participant pursuant to Section 10.01 of the Participation Agreement; (vii) if the Lessee has assumed the obligations of the Owner Trustee pursuant to Section 7.12 of the Participation Agreement and Section 2.12 of the Indenture, the amount payable as purchase price pursuant to Section 4.02(a), (c) or (d) of the Lease; (viii) the right to enforce, and the proceeds of any such enforcement of, any right to receive the proceeds of any of the amounts referred to in clauses (i) through (vii) above, and the right to declare an Event of Default under the Lease in respect of any of the foregoing amounts, but not including the right to exercise any remedies under the Lease except for those specifically provided for in this clause (viii); and (ix) any payments in respect of interest to the extent attributable to the payments referred to in clauses (i) through (vii) above. Expense and Expenses. Have the meanings specified in Section 9.01(a) of the Participation Agreement. FAA Bill of Sale. Has the meaning set forth in Section 4.02(d)(iv) of the Participation Agreement. 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. 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. Fair Market Value shall be determined in accordance with the provisions of Section 4.03 of the Lease. Frankfurt Business Day. A day which is a Business Day and is a day (other than a Saturday or Sunday) on which commercial banks in Frankfurt, Germany are generally open for the conduct of business. Geneva Convention. The International Convention on the Recognition of Rights in Aircraft (Geneva 1948). Government. The United States of America or an agency or instrumentality thereof. Government Obligations. Direct obligations of the United States of America which are not callable, redeemable or payable prior to maturity, in whole or in part, directly or indirectly, by any Person. Holder of a Certificate; Holder. As of any particular time, the Person in whose name a Certificate shall be registered as payee with the Indenture Trustee. Indemnification Agreement. The Indemnification Agreement, dated the date of the Underwriting Agreement, among the Lessee, Lufthansa, the LC Bank and the Underwriters. Indemnitee. Each of the Owner Trustee, in its individual capacity and as Owner Trustee and Lessor, the Owner Participant, the Indenture Trustee (after the Exchange Date), in its individual capacity and as Indenture Trustee 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 (except to the extent comprised prior to the Exchange Date of the Trust Indenture Estate) and (after the Exchange Date) the Trust Indenture Estate and the officers, directors, employees, agents and servants of Lufthansa and the General Partner of the Owner Participant. Indenture. The Trust Indenture and Security Agreement (Federal Express Corporation Trust _____) dated as of March 1, 1994, between the Owner Trustee and the Indenture Trustee, as supplemented by the Indenture and Security Agreement Supplement No. 1, and any amendment or supplement thereto entered from time to time. Indenture and Security Agreement Supplement; Indenture Supplement. A supplement to the Indenture, substantially in the form of Exhibit A to the Indenture. Indenture Default. Any event which, with the giving of notice or lapse of time, or both, would be an Indenture Event of Default. Indenture Documents. The Indenture, the Collateral Agreement, the Letter of Credit, the Demand Notes, the Sales Agreement (to the extent relating to the Aircraft), the Parts and Services Agreement (to the extent relating to the Aircraft), the Bills of Sale, the Modification Agreement (to the extent relating to the Aircraft), the Lease, the Participation Agreement, the Agreement to Lease (to the extent relating to the Aircraft), the Trust Agreement (to the extent relating to the Aircraft or the Lessor's Estate) and the Certificates. Indenture Event of Default. Each of the events specified in Section 7.01 of the Indenture. Indenture Trustee. NationsBank of Georgia, National Association, a national banking association, not in its individual capacity but solely as Indenture Trustee under the Indenture and each other Person which may from time to time be acting as successor trustee under the Indenture. Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate resulting from (i) claims against the Indenture Trustee not related to the administration of the Trust Indenture Estate or any transactions pursuant to the Indenture or any Indenture Document or (ii) any act or omission of the Indenture Trustee which is not related to the transactions contemplated by the Operative Agreements or is in violation of any of the terms of the Operative Agreements. Independent Appraisal. An appraisal conducted pursuant to Section 4.03 of the Lease. Independent Investment Banker. An independent investment banking institution of national standing appointed by the Lessee that is independent in fact, does not have any direct financial interests, or any material indirect financial interest, in the Lessee or any Affiliate of the Lessee, and is not connected with the Lessee or any Affiliate of the Lessee, as an officer, employee, promoter, underwriter, trustee, partner, director or Person performing similar functions; provided, that if the Indenture Trustee shall not have received written notice of such an appointment at least 10 days prior to the Prepayment Date (or purchase date) or if an Event of Default shall have occurred and be continuing, "Independent Investment Banker" shall mean such an institution appointed by the Indenture Trustee. Interest Payment Date. Each March 23 and September 23, commencing September 23, 1994. Issuance Date. For any Pass Through Trust, the date of the issuance of the related Pass Through Certificates. LC Bank. Westdeutsche Landesbank Girozentrale, New York Branch. Lease. The Lease Agreement (Federal Express Corporation Trust _____), in the form of Exhibit B to the Participation Agreement, dated as of the Commencement Date or prior thereto, between the Lessor and the Lessee, as said Lease may from time to time be supplemented or amended, or its terms waived or modified, to the extent permitted by, and in accordance with, the terms of the Indenture, including, without limitation, supplementation by the Lease Supplement. Lease Supplement. The Lease Supplement, substantially in the form of Exhibit A to the Lease, entered into between the Lessor and the Lessee. Lessee. Federal Express Corporation, a Delaware corporation, and any successors or permitted assigns in its capacity as lessee under the Lease. Lessee Documents. Each of the Operative Agreements and Ancillary Agreements to which the Lessee is or is to be a party; provided, however, that for purposes of Section 6.01 of the Participation Agreement, Lessee Documents shall not include the Lease or any Lease Supplement prior to the Commencement Date. Lessor. First Security Bank of Utah, National Association, a national banking association, not in its individual capacity but solely as Owner Trustee under the Trust Agreement, and its successors and permitted assigns. Lessor's Estate. All estate, right, title and interest of the Owner Trustee in and to any Additional Collateral, the Aircraft, the Lease, any Lease Supplement, the Participation Agreement and the other Indenture Documents, any warranty with respect to the Airframe and the Engines, all amounts of Basic Rent and Supplemental Rent, including without limitation, insurance proceeds (other than insurance proceeds payable to or for the benefit of the Owner Trustee, for its own account or in its individual capacity, the Owner Participant or 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). Notwithstanding the foregoing, "Lessor's Estate" shall (i) include all items of property purported to be covered by the Trust Indenture Estate and (ii) not include any Excepted Payment. Lessor's Liens. Liens on the Lessor's Estate or the Trust Indenture Estate, arising as a result of (i) claims against or liabilities of 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) any act or omission of the Lessor in its individual capacity or as Owner Trustee, and, in the case of the Lessor in its individual capacity, arising from its gross negligence or willful misconduct either not related to the transactions contemplated by or expressly prohibited under the Operative Agreements and any act or omission of the Owner Participant which is not related to the transactions contemplated by the Operative Agreements or is in violation of any of the terms of the Operative Agreements, (iii) Taxes or Expenses imposed against the Lessor, in its individual capacity or as Owner Trustee, the Owner Participant, Lessor's Estate or the trust created by the Trust Agreement which are not indemnified against by the Lessee pursuant to the Tax Indemnity Agreement or the Participation Agreement, (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 or the Lessor's Estate other than a transfer of the Aircraft or the Lessor's Estate pursuant to Section 4.02(a) or Articles 10 or 11 of the Lease and other than a transfer pursuant to the exercise of the remedies set forth in Article 17 of the Lease or (v) claims against the Lessor or the Owner Participant (or any Affiliate of either) relating to the Modification Agreement, the Agreement to Lease, the Sales Agreement, the Demand Note, the Collateral Agreement, the Sub-subcontract (as defined in the Agreement to Lease) or the Parts and Services Agreement. Letter of Credit. The Irrevocable Letter of Credit, dated the Closing Date, in the form of Exhibit G to the Participation Agreement and with a Stated Amount equal to the amount specified under "Letter of Credit Stated Amount" on Schedule IV to the Participation Agreement, from the LC Bank to the Indenture Trustee. Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or security interest or other similar interest. Liquid Collateral. Has the meaning set forth in the Collateral Agreement. Lufthansa. Deutsche Lufthansa Aktiengesellschaft. Lufthansa Side Letter. The letter, dated the Closing Date, substantially in the form of Exhibit J to the Participation Agreement, among Lufthansa, the Indenture Trustee and the Pass Through Trustee. 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 Participant unless all Certificates then outstanding shall be held by the Owner Participant, (ii) the Lessee or (iii) any Affiliate of either. Make-Whole Premium. An amount determined as of the Business Day before the applicable Prepayment Date or date of purchase, as the case may be, which an Independent Investment Banker determines to be equal to the excess of (i) the present values of all remaining scheduled payments of principal on the Certificate to be prepaid or purchased and interest thereon (excluding interest accrued from the immediately preceding Payment Date to such Prepayment Date or date of purchase, as the case may be) to the Maturity of such Certificate in accordance with generally accepted financial practices assuming a 360- day year consisting of twelve 30-day months at a discount rate equal to Treasury Yield, all as determined by the Independent Investment Banker over (ii) the unpaid principal amount of such Certificate. Maturity. With respect to any Certificate, the date on which the final principal amount of such Certificate is scheduled to be due and payable. Modification Agreement. The Original Modification Agreement, as amended by Amendment No. 1 thereto, dated as of March 1, 1994, among the Lessor, the Owner Participant, Lufthansa and DA. Modification Cost. The amount set forth in the "Total" column for the Aircraft in the Rate Schedule on Exhibit E to the Modification Agreement. Moody's. Moody's Investors Service, Inc. Net Proceeds. The amount specified as such on Schedule IV to the Participation Agreement. Non-U.S. Person. Any Person other than (i) a citizen or resident of the United States, as defined in section 7701(a)(30) of the Code (for purposes of this definition, the "United States"), (ii) a corporation, partnership or other entity created or organized in or under the laws of the United States or any political subdivision thereof or therein, or (iii) any estate or trust that is subject to United States federal income taxation regardless of the source of its income. Obsolete Parts. Parts which the Lessee in good faith determines to be obsolete or no longer suitable or appropriate for use on the Airframe or any Engine. OP Guarantee. The Guarantee, if any, by Lufthansa in the form of Exhibit I to the Participation Agreement. Operative Agreements. The Modification Agreement, the Agreement to Lease, the Participation Agreement, the Trust Agreement, the Trust Agreement Supplement, the Bills of Sale, the Lease, any Lease Supplement, any Ancillary Agreement which by its terms is an Operative Agreement, the Certificates outstanding at the time of reference, the Indenture, any Indenture and Security Agreement Supplement, the Collateral Agreement, the Demand Note, the Parts and Services Agreement, the Indemnification Agreement, the Pass Through Agreement and the Series Supplements, the Pass Through Certificates outstanding at the time of reference, the Sales Agreement, the OP Guarantee (if any) and the Tax Indemnity Agreement, each as amended from time to time. Options Agreement. The letter agreement dated September 1, 1993 between DA and the Lessee relating, inter alia, to the sale by DA to the Lessee of certain cargo conversion kits and the acknowledgement and agreement by DA of certain rights of the Lessee under the Modification Agreement. 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. Original Agreement to Lease. The Agreement to Lease, dated as of September 1, 1993 among Lufthansa, the Lessee and the Lessor. Original Agreements. The Original Agreement to Lease, the Original Modification Agreement, the Original Parts and Services Agreement, the Original Sales Agreement and the Original Trust Agreement. Original Modification Agreement. The Aircraft Modification and Maintenance Agreement, dated as of September 1, 1993, among the Lessor, Lufthansa and DA. Original Parts and Services Agreement. The Parts and Services Agreement, dated as of September 1, 1993, between the Owner Trustee and Lufthansa. Original Sales Agreement. The Sales Agreement for Aircraft, dated as of September 1, 1993, between the Owner Trustee and Lufthansa. Original Trust Agreement. The Trust Agreement, dated as of September 1, 1993, between the Owner Participant and the Owner Trustee in its individual capacity. Owner Participant. The trustor originally named in the Trust Agreement and any successor thereto, and any Person to which Owner Participant transfers, in accordance with the Trust Agreement and the Participation Agreement, its right, title and interest in and to the Operative Agreements and the Lessor's Estate. Owner Trustee. First Security Bank of Utah, National Association, a national banking association, not in its individual capacity except as otherwise expressly stated, but solely as Owner Trustee under the Trust Agreement, and its successors and permitted assigns. Participation Agreement. The Participation Agreement (Federal Express Corporation Trust _____), dated as of March 1, 1994, among the Lessee, the Owner Trustee, not in its individual capacity except as otherwise expressly stated therein, but solely as, Owner Trustee, the Owner Participant, the Pass Through Trustee, not in its individual capacity except as otherwise expressly stated therein, but solely as Pass Through Trustee, the Indenture Trustee, not in its individual capacity except as otherwise expressly stated therein but solely as Indenture Trustee and the LC Bank, as amended, modified or supplemented, or the terms thereof waived. Parts. All appliances, parts, components, instruments, appurtenances, accessories, furnishings and other equipment of whatever nature (other than complete Engines or engines) which may from time to time be incorporated or installed in or attached to the Airframe or any Engine or, so long as title thereto shall be vested in the Lessor, prior to replacement thereof in accordance with the Lease, which may be removed therefrom. Parts and Services Agreement. The Original Parts and Services Agreement, as amended by Amendment No. 1 thereto, dated as of March 1, 1994, between the Owner Trustee and Lufthansa. Parts Cost. The cost of the parts and services with respect to the Aircraft pursuant to Article 4 of the Parts and Services Agreement. Pass Through Agreement. The Pass Through Trust Agreement dated as of March 1, 1994 between the Lessee and the Pass Through Trustee, as such Pass Through Agreement may be modified, supplemented or amended from time to time in accordance with the provisions thereof. Pass Through Certificates. Any of the 1994 Pass Through Certificates, Series A310-A1, 1994 Pass Through Certificates, Series A310-A2, or 1994 Pass Through Certificates, Series A310-A3, 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 Excess Amount. The excess of the principal amount of the Certificates issued on the Closing Date over the Net Proceeds. Pass Through Trust. The Federal Express Pass Through Trust, 1994-A310-A1, Federal Express Pass Through Trust, 1994-A310-A2 or Federal Express Pass Through Trust, 1994-A310-A3, 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. NationsBank of South Carolina, National Association, a national banking association, in its capacity as Pass Through Trustee under the Pass Through Agreement and each Pass Through Trust, and its successors and permitted assigns as Pass Through Trustee thereunder. 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 2.5% 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, 2.5% plus the interest rate applicable to such Certificate and (ii) in the case of any other such amount, 2.5% plus the weighted average rate of interest from time to time payable with respect to the Certificates (or if no Certificates are then outstanding, such weighted average rate at the time immediately preceding the final payment with respect thereto). Paying Agent. Has the meaning set forth in Section 3.04 of the Indenture. Payment Date. Any Interest Payment Date or Sinking Fund Redemption Date. 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). Pre-Funding Event of Loss. Any of the following events prior to the Exchange Date 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 120 days or to the Cut-off Date, if less, due to theft or disappearance, or (B) for a period in excess of 60 days or to the Cut-off Date, if less, due to the destruction, damage beyond economic repair or rendition of such property permanently unfit for normal use by Lessee for any reason whatsoever (provided, however, that failure to properly complete any work contemplated by the Modification Agreement shall not constitute the basis for a Pre-Funding Event of Loss); (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, such Pre-Funding Event of Loss being deemed to occur on the date of any such condemnation, confiscation, seizure or requisition of title, or (2) requisition of use of such property (A) by a foreign government or instrumentality or agency thereof, or any purported government or instrumentality or agency thereof, for a period in excess of 180 days (or such shorter period ending on the earlier of the Cut-off Date 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 Cut-off Date; 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 Model A310-203 aircraft equipped with engines of the same make and model as the Engines for a period ending on or after the Cut- off Date. The date of such Pre-Funding Event of Loss shall be the date of (i) loss of such property or its use thereof for a period in excess of 120 days, or to the Cut-off Date, if less, due to theft or disappearance; or loss for a period in excess of 60 days, or to the Cut-off Date, if less, due to damage beyond economic repair; or loss of use of the Airframe because of requisition for use for a period in excess of 180 days (or shorter period due to insurance settlement or as otherwise contemplated by clause (iii)(2)(A) above), (ii) an insurance settlement on the basis of total loss with respect to such property, (iii) condemnation, confiscation, seizure or requisition of title, or (iv) prohibition from usage for the periods described in clause (iv) above. A Pre-Funding Event of Loss with respect to the Aircraft shall be deemed to have occurred if any Pre-Funding Event of Loss occurs with respect to the Airframe. Pre-Funding Prepayment Date. Has the meaning as set forth in Section 6(c) of the Collateral Agreement. Pre-Funding Termination Notice. Has the meaning set forth in Section 3 of the Agreement to Lease. 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. Proposed Termination Date. The proposed date of termination of the Lease as specified by the Lessee in its notice given pursuant to Section 10.01 thereof. Purchase Price. The amount set forth in the "Purchase Price in U.S. Dollars" column for the Aircraft on Exhibit B to the Sales Agreement. Record Date. With respect to any payment under the Indenture means the 15th calendar day prior to the date such payment is due. Recourse Amount. Has the meaning specified in Section 16.10 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. Remaining Weighted Average Life. For any Certificate, as of any determination date, the number of years obtained by dividing (a) the sum of the products obtained by multiplying (i) the amount of each then remaining mandatory sinking fund redemption payment of principal, including the payment due on the Maturity of such Certificate, by (ii) the number of years (calculated to the nearest one-twelfth) which will elapse between such determination date, and the date on which such payment is scheduled to be made, by (b) 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 term of two years 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 March 23 and September 23, commencing on the first such date after the Commencement Date, and continuing thereafter during the Term. Replacement Engine. A General Electric CF6-80A3 engine of the same or of equal or greater value and utility as the Engine being replaced, together with all Parts relating to such engine; provided, however, that such Engine shall be of the same model as other Engines then subject to the Lease. Responsible Officer. With respect to the Owner Trustee (except for purposes of the Trust Agreement) or the Indenture Trustee, any officer in its Corporate Trust Administration Department designated by such Person to perform obligations under the Operative Agreements, and with respect to any other party, any corporate officer or other employee of a party who, in the normal performance of his 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. Sales Agreement. The Original Sales Agreement as amended by Amendment No. 1 thereto, dated as of March 1, 1994, between the Owner Trustee and Lufthansa. Scheduled Commencement Date. ______________, 199_. Securities Act. The Securities Act of 1933, as amended. Secured Obligations. Has the meaning set forth in the Granting Clause of the Indenture. Series Supplement. The Series Supplement 1994-A310-A1 to be executed and delivered by the Lessee and the Pass Through Trustee, the Series Supplement 1994-A310-A2 to be executed and delivered by the Lessee and the Pass Through Trustee or the Series Supplement 1994-A310-A3 to be executed and delivered by the Lessee and the Pass Through Trustee, in each case as such Series Supplement may be modified, supplemented or amended from time to time in accordance with the provisions thereof and "Series Supplements" means all of such Series Supplements. 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. Daugherty, Fowler & Peregrin. S&P. Standard & Poor's Corporation. Stipulated Loss Value. As of any Stipulated Loss Value Determination Date during the Basic Term, the greater of (i) the amount determined by multiplying the Aircraft Cost by the percentage set forth in Schedule III to the Lease under the heading "Stipulated Loss Value Factor" opposite such date, and (ii) an amount at least sufficient to pay in full, as of the date of payment thereof, the aggregate unpaid principal amount of the Certificates outstanding on such date of payment, together with the accrued and unpaid interest thereon; and during any Renewal Term, the amount determined pursuant to Section 4.01(b) of the Lease. Stipulated Loss Value Determination Date. Each date set forth on Schedule III of the Lease under the heading "Stipulated Loss Value Factors". Supplemental Rent. All amounts, liabilities and obligations which the Lessee assumes or agrees to perform or pay under the Lease or under the Participation Agreement or Tax Indemnity Agreement or an Ancillary Agreement to the Lessor or others, including, without limitation, payment of any Make- Whole Premium payable by the Lessor under the Indenture that is required to be paid by the Lessee pursuant to Section 3.02 of the Lease, payments of Stipulated Loss Value and amounts calculated by reference to Termination Value and all amounts required to be paid by the Lessee under the agreements, covenants and indemnities contained in the Lease or in the Participation Agreement or the Tax Indemnity Agreement or other Ancillary Agreement, but excluding (i) Basic Rent and (ii) any such amounts, liabilities and obligations to the extent such amounts, liabilities or obligations arise out of or relate to the period prior to execution of the Lease Supplement with respect to the Aircraft. Tax. Has the meaning set forth in Section 8.01(a) of the Participation Agreement. Tax Attribute Period. The period commencing on the first day of the taxable year of the Owner Participant in which the Commencement Date occurs and ending on the last day of the seventh succeeding taxable year of the Owner Participant; provided, however, that if the Lessee breaches its representation set forth in Section 4(a) of the Tax Indemnity Agreement and as a result it is required to pay an indemnity pursuant to said Agreement the Tax Attribute Period shall be the period over which the Owner Participant is required to depreciate the Aircraft for purposes of calculating the indemnity payable pursuant to Section 5 of the Tax Indemnity Agreement. Tax Indemnity Agreement. The Tax Indemnity Agreement, dated as of the Commencement Date, among the Lessee, and the Owner Participant and the partners listed on the Schedule A thereto, as from time to time modified, amended or supplemented pursuant to its applicable provisions. Term. The Basic Term and, if renewed pursuant to Section 4.01 of the Lease, the Renewal Term, or the period commencing on the Commencement Date and ending on 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 the end of the Tax Attribute Period in the case of Article 10 of the Lease and in the case of Section 4.02 of the Lease, the date specified in the notice from the Lessee given pursuant to such Section. Termination Value. As of any Termination Date, the greater of (i) the amount determined by multiplying the Aircraft Cost by the percentage set forth in Schedule IV to the Lease under the heading "Termination Value Factor" opposite such Termination Date, and (ii) an amount at least sufficient to pay in full, as of the date of payment thereof, the aggregate unpaid principal amount of the Certificates outstanding on such date of payment, together with the accrued and unpaid interest thereon. Transaction Costs. Those costs and expenses set forth in Section 10.01(a) of the Participation Agreement. Treasury Yield. (i) In the case of a Certificate having a Maturity within one year after the Prepayment Date or purchase date, as the case may be, the average yield to maturity on a government bond equivalent basis of the applicable United States Treasury Bill due the week of Maturity of such Certificate, and (ii) in the case of a Certificate having a Maturity one year or more after the Prepayment Date or purchase date, as the case may be, the average yield of the most actively traded United States Treasury Note (as reported by Cantor Fitzgerald Securities Corp. on page 5 of Telerate Systems, Inc., a financial news service, or if such report is not available, a source deemed comparable by the Independent Investment Banker selected to determine the Make-Whole Premium and reasonably acceptable to the Lessee) corresponding in maturity to the Remaining Weighted Average Life of such Certificate (or, if there is no corresponding maturity, an interpolation of maturities by the Independent Investment Banker), in each case determined by the Independent Investment Banker selected to determine the Make-Whole Premium based on the average of the yields to stated maturity determined from the bid prices as of 10:00 a.m. and 2:00 p.m. New York time, on the second Business Day preceding the Prepayment Date or purchase date, as the case may be. Trust Agreement. The Original Trust Agreement, as amended and restated as of March 1, 1994, and as amended or supplemented pursuant to its applicable provisions and in accordance with the other Operative Agreements (including, without limitation, as supplemented by any Trust Agreement Supplement). Trust Agreement Supplement. The Trust Agreement Supplement (as defined in the Trust Agreement) relating to the Aircraft. Trust Indenture Act. The Trust Indenture Act of 1939, as amended. Trust Indenture Estate; Indenture Estate. The property, rights and privileges described in the Granting Clause of the Indenture, other than (A) Excepted Payments, including, without limitation all right, title and interest of the Owner Participant in, to and under the Tax Indemnity Agreement and any moneys due and to become due under the Tax Indemnity Agreement, all as provided in the Indenture, and (B) rights granted to the Owner Trustee or the Owner Participant under the Indenture, including without limitation under Section 2.05, 7.02, 8.01, 8.02, 8.03, 13.01 and 13.02 thereof, and the Letter of Credit and any rights thereunder. Underwriters. The several Underwriters named in the Underwriting Agreement. Underwriting Agreement. The Underwriting Agreement dated March 16, 1994 among the Lessee, Lufthansa, the Owner Participant, Goldman, Sachs & Co. and Merrill Lynch, Pierce, Fenner & Smith. United States or US. The United States of America. U.S. Air Carrier. Any United States air carrier as to which there is in force a certificate issued pursuant to Section 401 or Section 418 of the Federal Aviation Act, and as to which there is in force an air carrier operating certificate issued pursuant to Part 121 of the regulations under such Act, or which may operate as an air carrier by certification or otherwise under any successor or substitute provision thereof or in absence thereof. SCHEDULE III PERMITTED COUNTRY LIST Australia Italy Austria Japan Belgium Luxembourg Canada Netherlands Denmark New Zealand Finland Norway France Spain Germany Sweden Iceland Switzerland Ireland United Kingdom SCHEDULE IV CERTAIN AMOUNTS Demand Note Letter of Debt Principal Credit Net Aircraft Trust Portion Amount Stated Amount Proceeds -------- ----- ------- ----------- ------------- ---------- 1 1994-D-AICH A $28,033,980.40 $1,146,307.12 $3,098,100 $28,223,830.74 2 1994-D-AICR B 29,778,925.95 1,222,131.29 3,432,500 30,241,968.71 3 1994-D-AICL C 29,894,112.48 1,229,640.45 3,548,400 30,505,935.36 4 1994-D-AICS D 29,545,837.57 1,222,131.30 3,619,200 30,103,085.41 5 1994-D-AICP E 29,226,512.41 1,207,039.72 3,637,100 29,707,753.01 6 1994-D-AICN F 29,286,149.48 1,207,039.72 3,730,100 29,944,702.38 7 1994-D-AICA G 26,381,631.17 1,093,111.78 3,483,100 27,129,659.93 8 1994-D-AICB H 26,344,727.50 1,093,111.78 3,586,800 27,310,455.38 9 1994-D-AICC I 26,315,423.50 1,093,111.78 3,636,100 27,291,273.47 10 1994-D-AICD J 26,256,454.46 1,093,111.78 3,696,400 27,105,158.28 11 1994-D-AICM K 28,963,763.84 1,207,039.72 4,117,700 29,934,964.74 12 1994-D-AICF L 26,162,882.15 1,093,111.78 3,806,800 27,189,162.95 13 1994-D-AICK M 26,119,489.68 1,093,111.78 3,844,700 27,256,126.64 --------------- ------------- ------------- -------------- TOTAL $362,309,890.59 $15,000,000.00 $47,237,000 $371,944,077 ============== ============= ============= ============== EXHIBIT A [INTENTIONALLY OMITTED] EXHIBIT B [FORM OF LEASE AGREEMENT] [See Exhibit 4.e] EXHIBIT C [FORM OF INDENTURE] [See Exhibit 4.b.1] EXHIBIT D [FORM OF TRUST AGREEMENT] [See Exhibit 4.d] EXHIBIT E PROMISSORY NOTE (D-AIC ) $ ___________ [Closing Date] Deutsche Lufthansa Aktiengesellschaft, a German corporation ("Lufthansa"), for value received, hereby promises to pay to the order of _______________ (the "Payee"), at the office of Lufthansa at ______________, or to such bank account as the Payee, or any assignee of the Payee, may from time to time designate, on demand from time to time, an amount in lawful money of the United States and in immediately available funds, not to exceed in the aggregate the principal sum of _______________________ Dollars Dollars ($_____________). This Note shall not bear interest. If any amount of principal evidenced by this Note becomes due and payable on a day on which banks in New York are authorized or required to close, such amount shall be due and payable on the next succeeding business day. All payments of the principal hereof shall be recorded by the Payee or its assignee, as the case may be, and, prior to any transfer hereof, shall be endorsed by the Payee or its assignee, as the case may be, on the schedule attached hereto, or on a continuation of such schedule attached to and made a part hereof. This Note shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York. DEUTSCHE LUFTHANSA AKTIENGESELLSCHAFT By: __________________________ Name: Title: By: __________________________ Name: Title: SCHEDULE PAYMENTS OF PRINCIPAL Amount of Unpaid Principal Principal Notation Date Paid Balance Made By ---- --------- --------- -------- ASSIGNMENT _______________________________, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, hereby assigns, sets over and bargains unto _____________________________, its successors and assigns, all of its right, title and interest in, to and under Promissory Note (D-AIC ), dated March __, 1994, from Deutsche Lufthansa Aktiengesellschaft. [ASSIGNOR] By __________________________ Name: Title: EXHIBIT F [INTENTIONALLY OMITTED] EXHIBIT G [FORM OF LETTER OF CREDIT] [See Exhibit 4.f] EXHIBIT H [FORM OF COLLATERAL AGREEMENT] [See Exhibit 4.g] EXHIBIT I OP GUARANTEE OP GUARANTEE, dated as of __________ __, ____, by __________, a __________ [corporation] (the "Guarantor"), to the Owner Trustee, the Indenture Trustee, the Pass Through Trustee and the Lessee referred to in the Participation Agreement described below (collectively, together with their successors and assigns, the "Beneficiaries" and, each individually, a "Beneficiary"). W I T N E S S E T H : WHEREAS, reference is hereby made to the Participation Agreement, dated as of March 1, 1994 (as amended, modified or supplemented from time to time, the "Participation Agreement"), among Federal Express Corporation, as Lessee, LLG Aircraft Leasing, L.P., as Owner Participant, First Security Bank of Utah, National Association, as Owner Trustee ("FSBU"), NationsBank of Georgia, National Association, as Indenture Trustee, NationsBank of South Carolina, National Association, as Pass Through Trustee, and Westdeutsche Landesbank Girozentrale, New York Branch; and [WHEREAS, this Guarantee is being delivered by the Guarantor with respect to the obligations of LLG Aircraft Leasing, L.P., (the "Obligor") as contemplated by Section 7.03(ix) of the Participation Agreement; and]* [WHEREAS, [LLG Aircraft Leasing, L.P.] [Insert name of subsequent transferor] (the "Transferor"), wishes to transfer to ___________ (the "Obligor"), inter alia, [all][a portion] of the Transferor's right, title and interest in and to the Participation Agreement, the Trust Agreement (as defined in the Participation Agreement) and each other Operative Agreement (as defined in the Participation Agreement) to which the Transferor is a party or by which it is bound pursuant to the Assignment and Assumption Agreement, dated as of ______________ __, 199_, between the Transferor and the Obligor; and]** - -------------- * Insert in the case of a guarantee by Lufthansa. ** Insert in the case of a guarantee in connection with a transfer. [WHEREAS, the terms of the Trust Agreement provide that the aforementioned transfer is conditioned upon the execution and delivery of this Guarantee by the Guarantor;]* NOW, THEREFORE, [in order that the Transferor may make the aforementioned transfer to the Obligor,]* the Guarantor hereby agrees with and for the benefit of the Beneficiaries as follows: 1. Definitions. As used in this Guarantee, terms defined in the Participation Agreement are used herein as therein defined, unless otherwise defined herein. 2. Guarantee. a. The Guarantor hereby unconditionally and irrevocably guarantees as primary obligor and not merely as a surety to the Beneficiaries and their respective successors, endorsees, transferees and assigns, the prompt and complete payment by the Obligor when due (whether at the stated due date thereof, by acceleration or otherwise) of, and the faithful performance of, and compliance with, all payment obligations of the Obligor under the Operative Agreements or any related documents owed to such Beneficiary, strictly in accordance with the terms thereof and the timely performance of all other obligations of the Obligor owed to such Beneficiary thereunder strictly in accordance with the terms thereof (such payment and other obligations, the "Obligations"), and the Guarantor further agrees to pay any and all expenses (including, without limitation, all reasonable fees and disbursements of counsel) that may be paid or incurred by the Beneficiaries in enforcing, or obtaining advice of counsel in respect of, any rights with respect to, or collecting, any or all of the Obligations and/or enforcing any rights with respect to, or collecting against, the Guarantor under this Guarantee. b. No payment or payments made by the Obligor, the Guarantor, any other guarantor or any other Person or received or collected by any Beneficiary from the Obligor, the Guarantor, any other guarantor or any other person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of the Guarantor hereunder until the Obligations are paid and performed in full. - -------------- * Insert in the case of a guarantee in connection with a transfer. c. If for any reason any Obligation to be performed or observed by the Obligor (whether affirmative or negative in character) shall not be observed or performed strictly in accordance with the terms thereof, or if any amount payable by the Obligor in connection with any Obligation shall not be paid promptly when due and payable, the Guarantor shall perform or observe or cause to be performed or observed each such Obligation or undertaking and shall pay such amount at the place and to the person or entity entitled thereto pursuant to the Operative Agreements regardless of whether or not any Beneficiary or anyone acting on behalf of any of them shall have instituted any suit, action or proceeding or exhausted its remedies or taken any steps to enforce any rights against the Obligor or any other person or entity to compel any such performance or to collect all or any part of such amount pursuant to the provisions of the Operative Agreements or at law or in equity, or otherwise, and regardless of any other condition or contingency. d. The Guarantor irrevocably waives promptness, diligence, demand, and all notices whatsoever as to the Obligations and covenants guaranteed hereby, and any other circumstances which might otherwise constitute a defense available to it, or a discharge of it (other than the defense of payment or performance) and agrees that it shall not be required to consent to or receive any notice of any amendment or modification of, or waiver, consent or extension with respect to, the Participation Agreement, the Trust Agreement or the other Operative Agreements to which the Obligor is a party that may be made or given as provided herein or otherwise. e. The Guarantor further agrees to pay all expenses (including, without limitation, all reasonable fees and disbursements of counsel) that may be paid or incurred by the beneficiaries hereof in enforcing any rights with respect to, or collecting, any or all of the Obligations and/or enforcing any rights with respect to, or collecting against, the Guarantor under this Guarantee. f. The Guarantor understands and agrees that its Obligations hereunder shall be construed as continuing, absolute and unconditional without regard to (a) the validity, regularity or enforceability of any Operative Agreement, any of the Obligations or any collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by any Beneficiary, (b) any defense, set-off or counterclaim (other than a defense of full payment or performance) that may at any time be available to or be asserted by the Obligor against any Beneficiary, or (c) any other circumstances whatsoever (with or without notice to or knowledge of the Obligor or the Guarantor) that constitutes, or might be construed to constitute, an equitable or legal discharge of the Obligor for the Obligations, or of the Guarantor under this Guarantee, in bankruptcy or in any other instance. g. The obligation of the Guarantor hereunder will not be discharged by: (a) any extension or renewal with respect to any obligation of the Obligor under the Operative Agreements; (b) any modification of, or amendment or supplement to, any such Operative Agreement; (c) any furnishing or acceptance of additional security or any release of any security; (d) any waiver, consent or other action or inaction or any exercise or non-exercise of any right, remedy or power with respect to the Obligor or any change in the structure of the Obligor; (e) any insolvency, bankruptcy, reorganization, arrangement, composition, liquidation, dissolution or similar proceedings with respect to the Obligor; (f) except as provided in Section 14 hereof, any change in ownership of the shares of capital stock of the Guarantor or the Obligor; or (g) any other occurrence whatsoever, except payment in full of all amounts payable by the Obligor under the Operative Agreements and performance in full of all Obligations of the Obligor in accordance with the terms and conditions of the Operative Agreements. 3. No Subrogation, Contribution, Reimbursement or Indemnity. Notwithstanding anything to the contrary in this Guarantee, the Guarantor hereby agrees not to assert any rights which may have arisen in connection with this Guarantee to be subrogated to any of the rights (whether contractual, under the Bankruptcy Code, including Section 509 thereof, under common law or otherwise) of any Beneficiary against the Obligor or against any Beneficiary for the payment of the Obligations until indefeasible payment or performance in full of the Obligations. The Guarantor hereby further agrees not to assert any contractual, common law, statutory or other rights of reimbursement, contribution, exoneration or indemnity (or any similar right) from or against the Obligor or any other Person which may have arisen in connection with this Guarantee if any payment under this Guarantee is outstanding at such time. So long as any payment under this Guarantee is outstanding, if any amount shall be paid by or on behalf of the Obligor to the Guarantor on account of any of the rights referred to above in this paragraph, such amount shall be held by the Guarantor in trust, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the applicable Beneficiary in the exact form received by the Guarantor (duly endorsed by the Guarantor to the applicable Beneficiary, if required). 4. Amendment with Respect to the Obligations; Waiver of Rights. The Guarantor shall remain fully obligated hereunder notwithstanding that, without any reservation of rights against the Guarantor and without notice to or further assent by the Guarantor, any demand for payment or performance of any of the Obligations made by any Beneficiary may be rescinded by such party and any of the Obligations continued, and the Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guaranty therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by any Beneficiary and any Operative Agreement and/or any collateral security document or other guaranty or document in connection therewith, may be amended, modified, supplemented or terminated, in whole or in part, in accordance with the provisions thereof from time to time, and any collateral security, guaranty or right of offset at any time held by any Beneficiary for the payment or performance of the Obligations may be sold, exchanged, waived, surrendered or released. No Beneficiary shall have any obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Obligations or for this Guarantee or any property subject thereto. When making any demand hereunder against the Guarantor, a Beneficiary may, but shall be under no obligation to, make a similar demand on the Obligor or any other guarantor, and any failure by a Beneficiary to make any such demand or to collect any payments from the Obligor or any such other guarantor or any release of the Obligor or such other guarantor shall not relieve the Guarantor of its obligations or liabilities hereunder, and shall not impair or affect the rights and remedies, express or implied, or as a matter of law, of any Beneficiary against the Guarantor. For the purposes hereof, "demand" shall include, but not be limited to, the commencement and continuance of any legal proceedings. [The Guarantor represents and warrants that it owns, directly or indirectly, 100% of the capital stock of the Obligor and that its obligations hereunder shall continue unimpaired, even if the Guarantor no longer owns, directly or indirectly, all or any portion of the capital stock of the Obligor.]* - -------------- * Insert in the case of a guarantee in connection with a transfer. 5. Guarantee Absolute and Unconditional. The Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by any Beneficiary upon this Guarantee or acceptance of this Guarantee; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon this Guarantee; and all dealings between the Obligor or the Guarantor and any Beneficiary shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guarantee. The Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Transferee or the Guarantor with respect to the Obligations. The Guarantor understands and agrees that this Guarantee shall be construed as a continuing, absolute and unconditional guaranty of payment and performance (and not merely of collectability) without regard to (a) the validity, regularity or enforceability of any Operative Agreement or any related agreement, any of the Obligations or any collateral security therefor or guaranty or right of offset with respect thereto at any time or from time to time held by any Beneficiary, (b) any defense, set-off or counterclaim (other than a defense of full payment or performance) that may at any time be available to or be asserted by the Obligor against any Beneficiary, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Obligor or the Guarantor) that constitutes, or might be construed to constitute, an equitable or legal discharge of the Obligor for the Obligations, or of the Guarantor under this Guarantee, in bankruptcy or in any other instance. When pursuing its rights and remedies hereunder against the Guarantor, any Beneficiary may, but shall be under no obligation to, pursue such rights and remedies as it may have against the Obligor or any other person or entity or against any collateral security or guaranty for the Obligations or any right of offset with respect thereto, and any failure by any Beneficiary to pursue such other rights or remedies or to collect any payments from the Obligor or any such other person or entity or to realize upon any such collateral security or guaranty or to exercise any such right of offset, or any release of the Obligor or any such other person or entity or any such collateral security, guaranty or right of offset, shall not relieve the Guarantor of any liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of any Beneficiary against the Guarantor. This Guarantee shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon the Guarantor and the successors and assigns thereof, and shall inure to the benefit of the Beneficiaries, and their respective successors, indorsees, transferees and assigns, until the earlier of (x) all of the Obligations and the obligations of the Guarantor under this Agreement shall have been satisfied by payment and performance in full, (y) the right, title and interest of the Obligor shall have been transferred to a Person meeting the requirements of Article 5 of the Trust Agreement, it being understood that this Guarantee shall remain in effect with respect to obligations of the Obligor arising prior to such transfer and (z) the Obligor obtaining a tangible net worth equalling or exceeding [$50,000,000 (Fifty Million Dollars)].* The Guarantor further agrees that, without limiting the generality of this Guarantee, if any Beneficiary (or any assignee thereof) shall be prevented by applicable law from exercising its remedies (or any of them) against the Obligor under any Operative Agreement such Beneficiary (or any assignee thereof) shall be entitled to receive hereunder from the Guarantor the sums that would have otherwise been due from the Obligor had such remedies been able to be exercised. 6. Reinstatement. This Guarantee shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by any Beneficiary upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Obligor or the Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Obligor or the Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made. The Guarantor shall not commence any "case" (as defined in Title 11 of the United States Code) against the Obligor. 7. Payments. The Guarantor hereby guarantees that payments hereunder shall be paid without set-off, counterclaim, deduction or withholding, and shall be made in U.S. Dollars. 8. Representations and Warranties. The Guarantor hereby represents and warrants that: a. the Guarantor is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the corporate power and authority and the legal right to own and operate its property, to lease the property it operates and to conduct the business in which it is currently engaged; - -------------- * $40,000,000 (Forty Million Dollars) if the Obligor is an Affiliate of, or one of the partners of, LLG Aircraft Leasing, L.P. b. the Guarantor has the corporate power and authority and the legal right to execute and deliver, and to perform its obligations under, this Guarantee, has taken all necessary corporate action to authorize its execution, delivery and performance of this Guarantee, and this Guarantee has been duly executed and delivered by the Guarantor and does not require any approval not already obtained of its stockholders or any approval or consent not already obtained of any trustee or holders of any of its indebtedness or obligations; c. this Guarantee constitutes a legal, valid and binding obligation of the Guarantor enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization, or other similar laws or equitable principals of general application to or affecting the enforcement of creditor's rights generally; d. neither the execution and delivery of this Guarantee nor compliance by the Guarantor with any of the terms and provisions hereof will contravene any United States Federal or state law, judgment, governmental rule, regulation or order applicable to or binding on the Guarantor (assuming, with respect to ERISA, the continuing accuracy of the representations and warranties set forth in Sections 6.01(k)(ix) and 7.01(b) of the Participation Agreement) or contravene or result in any breach of or constitute any default under, or result in the creation of any lien on any property of the Guarantor or, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which the Guarantor is a party or by which it or its properties may be bound or affected; e. no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or governmental authority and no consent of any other person (including, without limitation, any stockholder or creditor of the Guarantor) is required in connection with the execution, delivery, performance, validity or enforceability of this Guarantee; f. no litigation, investigation or proceeding of or before any arbitrator or governmental authority is pending or, to the knowledge of the Guarantor, threatened by or against the Guarantor or against any of its properties or revenues (i) with respect to this Guarantee or any of the transactions contemplated hereby or (ii) that could have a material adverse effect on the business, operations, property or financial or other condition of the Guarantor; g. the balance sheet of the Guarantor as at _______ and the related statement of income and retained earnings for the fiscal year then ended (copies of which have heretofore been furnished to each Beneficiary) have been prepared in accordance with generally accepted accounting principles applied consistently throughout the period involved, are complete and correct and present fairly the financial condition of the Guarantor as at such date and the results of its operations for such fiscal year; since such date there has been no material adverse change in the business, operations, property or financial or other condition of the Guarantor; the Guarantor has no material contingent obligation, contingent liability or liability for taxes, long-term lease or unusual forward or long-term commitment that is not reflected in the foregoing statements or in the notes thereto; and h. the Guarantor is a [bank or other financial institution with a combined capital, surplus and undivided profits of at least $50,000,000]* [corporation whose tangible net worth is at least $50,000,000]*, exclusive of goodwill, as of the proposed date of transfer, as determined in accordance with generally accepted accounting principles. 9. Severability. Any provision of this Guarantee that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 10. Section Headings. The Section headings used in this Guarantee are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. - -------------- * Replace with $40,000,000 if Obligor is an Affiliate of, or a partner of, LLG Aircraft Leasing, L.P. 11. No Waiver; Cumulative Remedies. No Beneficiary shall by any act (except by a written instrument pursuant to Section 13 hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any breach of any of the terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of any Beneficiary, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by a Beneficiary of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy that such Beneficiary would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law. 12. Integration. This Guarantee represents the entire agreement of the Guarantor with respect to the subject matter hereof and there are no promises or representations by any Beneficiary relative to the subject matter hereof not reflected herein. 13. Amendments and Waivers. None of the terms or provisions of this Guarantee may be waived, amended or supplemented or otherwise modified except by a written instrument executed by the Guarantor and each Beneficiary. 14. Transfer of Interest in the Obligor or of this Guarantee. The Guarantor may assign, convey or otherwise transfer (a) any of its interest in the Obligor or (b) its obligations hereunder, in either case to any other person (hereinafter referred to as the "the Subsequent Guarantor"); provided that the Subsequent Guarantor enters into an agreement substantially in the form of this Guarantee Agreement; and, provided, further, that, if the Subsequent Guarantor is not a bank or a lending institution with a combined capital, surplus and undivided profits of at least [$50,000,000]*, or is not a corporation with a net worth of at least [$50,000,000]*, the Guarantor shall enter into an agreement, substantially in the form of this Guarantee, guaranteeing the Obligations of the Obligor under the Operative Agreements or provide such a guarantee from such a bank, lending institution or corporation satisfactory to each Beneficiary, so that there will then be existing both such guaranty agreement as well as the guaranty agreement executed by the Subsequent Guarantee; in such event, the Beneficiaries shall have the right to enforce the obligations of the Guarantor under such guaranty agreement without first proceeding against the Subsequent Guarantor under its guaranty referred to above. - -------------- * Replace with $40,000,000 if the Obligor is an Affiliate of, or a partner of, LLG Aircraft Leasing, L.P. 15. Successors and Assigns. This Guarantee shall be binding upon the successors and permitted assigns of the Guarantor and shall inure to the benefit of the Beneficiaries and their respective successors and permitted assigns. 16. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO ANY PROVISION OF NEW YORK LAW THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER STATE. 17. Notices. All notices, requests and demands to or upon the Guarantor or any Beneficiary to be effective shall be in writing or by telegraph, facsimile or telex and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered by hand, or, in the case of mail, five days after deposit in the postal system, certified mail prepaid, or, in the case of telegraphic notice, when sent, answerback received, addressed to (a) in the case of the Guarantor [address, telex and fax information to be provided] and (b) in the case of any Beneficiary, the address, telex or telecopy number provided for such party in the Participation Agreement. IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be duly executed and delivered by its duly authorized officer as of the day and year first above written. [NAME OF GUARANTOR] By:________________________ Name: Title: By:_________________________ Name: Title: EXHIBIT J DEUTSCHE LUFTHANSA AKTIENGESELLSCHAFT [Closing Date] NationsBank of Georgia, National Association, Not individually, but solely as Indenture Trustee under the Indenture referred to in the Participation Agreement defined below, 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Attn: Corporate Trust Administration Ladies and Gentlemen: Reference is hereby made to the Participation Agreement (Federal Express Corporation Trust ______), dated as of March 1, 1994 (the "Participation Agreement"), among Federal Express Corporation, First Security Bank of Utah, National Association (not individually, except as provided therein, but solely as Owner Trustee), NationsBank of South Carolina, National Association (not individually, except as provided therein, but solely as Pass Through Trustee), LLG Aircraft Leasing, L.P., Westdeutsche Landesbank Girozentrale, New York Branch, and you. Capitalized terms used but not defined in this letter shall have the meaning set forth in the Participation Agreement. In order to induce you to enter into the transactions contemplated to occur on the Closing Date, the undersigned ("Lufthansa") hereby represents, warrants and agrees with you as follows: 1. Lufthansa represents and warrants that the representations and warranties made by it in the Agreement to Lease, the Sales Agreement, the bill of sale referred to in Section 4.01(e)(vi) of the Participation Agreement, the Modification Agreement and the Parts and Services Agreement (together, the "Lufthansa Agreements"), are true and correct as of the date hereof (except to the extent any such representation or warranty specifically relates to an earlier date, in which case such representation or warranty shall have been true and correct as of such date). 2. Lufthansa agrees to perform (i) all of its obligations under the Lufthansa Agreements in favor of the Owner Trustee or (ii) any such obligation that, if not performed by Lufthansa, would require performance by the Owner Trustee under the terms of the Lufthansa Agreements. 3. Lufthansa agrees to indemnify the Indenture Trustee for any Taxes which are excepted from the Lessee's indemnity pursuant to Section 8.01(b)(xiv) or (xv) of the Participation Agreement. Lufthansa agrees to indemnify the Indenture Trustee or the Trust Indenture Estate, as the case may be, for any expenses incurred by the Indenture Trustee or the Trust Indenture Estate which are excepted from the Lessee's indemnity pursuant to Section 9.01(b)(x) or 9.01(b)(xii) of the Participation Agreement, as the case may be. Lufthansa agrees to indemnify the Lessor's Estate and the Trust Indenture Estate with respect to any Taxes or Expenses as to which, but for the third and fourth parentheticals to the definition of "Indemnitee", the Lessee would have been required to indemnify the Lessor's Estate or the Trust Indenture Estate, as the case may be, pursuant to Article 8 or Article 9 of the Participation Agreement. This letter agreement may be executed in separate counterparts, each of which when so executed and delivered is an original, but all such counterparts shall together constitute but one and the same letter agreement. This letter shall be governed by and construed in accordance with New York law, without respect to choice of law provisions. DEUTSCHE LUFTHANSA AKTIENGESELLSCHAFT By: ____________________ Title By: ____________________ Title Accepted and agreed as of the date first above written. NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Indenture Trustee. By: ____________________ Title Letterhead of Federal Express of March 16, 1994 Exhibit K-1 Closing Date To the Addressees Listed on Schedule A Attached Re: Federal Express Corporation Trust 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 ______), dated as of March 1, 1994 (the "Participation Agree- ment"), among Federal, as Lessee, LLG Aircraft Leasing, L.P., as Owner Participant, First Security Bank of Utah, National Association, a national banking association, as Owner Trustee, NationsBank of Georgia, National Association, a national banking association, as Indenture Trustee, NationsBank of South Carolina, National Association, a national banking association, as Pass Through Trustee, and Westdeutsche Landesbank Girozentrale, New York Branch. This opinion is being delivered pursuant to Section 4.01(k)(i) of the Participation Agreement. Capitalized terms shall have the meanings assigned in the Participation Agreement. The Participation Agreement provides, among other things, for the financing of a portion of the Owner Trustee's payment of the Purchase Price, Modification Cost, Parts Cost and related expenses with respect to one Airbus Model A310-203 aircraft (the "Aircraft") using the proceeds from the public offering of Pass Through Certificates. Three Series of Pass Through Certificates will be 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 will be issued under the Trust Indenture and Security Agreement (Federal Express Corporation Trust ______), dated as of March 1, 1994 ("Indenture"), between First Security Bank of Utah, National Association, as Owner Trustee, and NationsBank of Georgia, National Association, as Indenture Trustee. In connection with the opinions expressed below, I have examined or caused to be examined by attorneys under my supervision, the Operative Agreements (or, in the case of the Lease and the Lease Supplement, the forms thereof attached as Exhibit B to the Participation Agreement). 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, 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 or had, at the time of execution thereof, full power, authority and legal right to enter into the Operative Agreements, and that each Operative Agreement has or had, at the time of execution thereof, been duly authorized by each of such parties, and that each of the Operative Agreements (other than the Lease, the Lease Supplement, the Indenture and Security Agreement Supplement and any other Operative Agreement not required to be executed on or prior to the Closing Date (the "Commencement Documents")) has been duly 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 101(16) of the Federal Aviation Act of 1958, as amended (the "Act"), 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 or is to be 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 quality 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 or is to be a party has been duly authorized by Federal. Each of such Operative Agreements to which Federal is a party, other than any Commencement Documents, has been duly executed and delivered by Federal and together constitute the legal, valid and binding obligations of Federal enforceable against Federal in accordance with its and their terms. 4. Neither the execution and delivery by Federal of the Operative Agreements to which Federal is a party (other than the Commencement Documents), 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 currently, (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 upon the property of Federal, under any law, governmental rule or regulation, or the Certificate of Incorporation or By-laws of Federal or any order, writ, injunction or decree of any court of 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 required 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 (other than the Commencement Documents), 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 are required to be performed on or prior to the Closing Date or Commencement Date, as specified in the Participation Agreement or the Lease, and which shall have been accomplished on or prior to the Closing Date or Commencement Date, as so specified) the registration with, or the taking of any other action in respect of, the FAA or any other authority or agency of the federal government or of the State of Tennessee, 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. Except for the matters described under "Legal Proceedings" in Federal's Annual Report on Form 10-K for the fiscal year ended May 31, 1993 (as updated by Note 7 to the financial statements included in Federal's Quarterly Reports on Form 10-Q for the fiscal quarters ended August 31, 1993 and November 30, 1993), as to 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, there is no pending or to my knowledge threatened action or proceeding before any court or administrative agency which individually (or in the aggregate in the case of any group of related lawsuits) is expected to have a material adverse effect on the financial condition of Federal or the ability of Federal to perform its obligations under the Operative Agreements. 7. Federal is a duly certificated "air carrier" within the meaning of the Act, and a holder of a certificate under Section 401 of the Act, an all- cargo certificate under Section 418 of the Act and an "air carrier operating certificate" issued pursuant to Section 604 of the Act, and each such certificate is in full force and effect. 8. 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 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). 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. This opinion is delivered to you solely for your use in connection with the transactions described herein, and may not be used for any other purpose, and may not be relied upon by any other person, with the exception of your successors and permitted assigns, without my prior written consent. I rendered an opinion dated September 1, 1993 (the "Agreement to Lease Opinion"), a copy of which is attached hereto. I hereby consent and agree that the addressees hereto who were not addressees to the Agreement to Lease Opinion may rely on the Agreement to Lease Opinion as fully and with the same force and effect as if such addressees were originally named therein on the date of the Agreement to Lease Opinion. Very truly yours, Kenneth R. Masterson SCHEDULE A Owner Trustee First Security Bank of Utah, National Association 79 South Main Street Salt Lake City, Utah 84111 Attention: Corporate Trust Administration Indenture Trustee NationsBank of Georgia, National Association Corporate Trust Administration GA1-006-09-11 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Pass Through Trustee NationsBank of South Carolina, National Association 1301 Gervis Street Fourth Floor Columbia, South Carolina 29201 Attention: Corporate Trust Administration Owner Participant LLG Aircraft Leasing, L.P. 1209 Orange Street Wilmington, Delaware 19801 Underwriters Goldman, Sachs & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated c/o Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 Letterhead of Federal Express of March 16, 1994 Exhibit K-2 Commencement Date To the Addressees Listed on Schedule A Attached Re: Federal Express Corporation Trust 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 ______), dated as of March 1, 1994 (the "Participation Agree- ment"), among Federal, as Lessee, LLG Aircraft Leasing, L.P., as Owner Participant, First Security Bank of Utah, National Association, a national banking association, as Owner Trustee, NationsBank of Georgia, National Association, a national banking association, as Indenture Trustee, NationsBank of South Carolina, National Association, a national banking association, as Pass Through Trustee, and Westdeutsche Landesbank Girozentrale, New York Branch. This opinion is being delivered pursuant to Section 4.02(j)(i) and 4.03(l)(i) of the Participation Agreement. Capitalized terms shall have the meanings assigned in the Participation Agreement. The Participation Agreement provides, among other things, for the financing of a portion of the Owner Trustee's payment of the Purchase Price, Modification Cost, Parts Cost and related expenses with respect to one Airbus Model A310-203 aircraft (the "Aircraft") using the proceeds from the public offering of Pass Through Certificates. Two Series of Pass Through Certificates were issued by two 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 Trust Indenture and Security Agreement (Federal Express Corporation Trust ______), dated as of March 1, 1994 ("Indenture"), between First Security Bank of Utah, National Association, as Owner Trustee, and NationsBank of Georgia, National Association, as Indenture Trustee. In connection with the opinions expressed below, I have examined or caused to be examined by attorneys under my supervision, 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, 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 or had, on the date of execution thereof, full power, authority and legal right to enter into the Operative Agreements, and that each 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 101(16) of the Federal Aviation Act of 1958, as amended (the "Act"), 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 quality 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 been duly authorized, executed and delivered by Federal and together constitute the legal, valid and binding obligations of Federal enforceable against Federal in accordance with its and their 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 currently, (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 upon the property of Federal, under any law, governmental rule or regulation, or the Certificate of Incorporation or By- laws of Federal or any order, writ, injunction or decree of any court of 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 required 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 Closing Date or Commencement Date, as specified in the Participation Agreement or the Lease, and which were or shall have been accomplished on or prior to the Closing Date or Commencement Date, so specified) the registration with, or the taking of any other action in respect of, the FAA or any other authority or agency of the federal government or of the State of Tennessee, 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. Except for the matters described under "Legal Proceedings" in Federal's Annual Report on Form 10-K for the most recent fiscal year for which such Report is available (as updated by Note 7 to the financial statements included in Federal's Quarterly Reports on Form 10-Q for any more recent fiscal quarter for which such Report is available), as to 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, there is no pending or to my knowledge threatened action or proceeding before any court or administrative agency which individually (or in the aggregate in the case of any group of related lawsuits) is expected to have a material adverse effect on the financial condition of Federal or the ability of Federal to perform its obligations under the Operative Agreements. 7. Except for the filing for recordation pursuant to the Act of the Indenture, the Indenture and Security Agreement Supplement, the Lease and the Lease Supplement, the Trust Agreement and the Trust Agreement Supplement covering the Aircraft, 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 any security interest in the Aircraft in favor of the Indenture Trustee, as assignee of the Owner Trustee, except for the filing of continuation statements at periodic intervals as required, in each case with respect to such portion of the Aircraft as is covered by the recording system established by the Act. 8. Federal is a duly certificated "air carrier" within the meaning of the Act, and a holder of a certificate under Section 401 of the Act, an all- cargo certificate under Section 418 of the Act and an "air carrier operating certificate" issued pursuant to Section 604 of the Act, and each such certificate is in full force and effect. 9. 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. 10. Federal, as Lessee, duly accepted the Aircraft under the Lease and the Lease Supplement and the Term commenced. 11. 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 2005 Corporate Avenue, Memphis, Shelby County, Tennessee. The opinions expressed in paragraph 3 above 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 certain 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 paragraph 3, I have relied on the opinion of Daugherty, Fowler & Peregrin of even date herewith, to the extent such matters are addressed in such counsel's opinion. This opinion is delivered to you solely for your use in connection with the transactions described herein, and may not be used for any other purpose, and may not be relied upon by any other person, with the exception of your successors and permitted assigns, without my prior written consent. Very truly yours, Kenneth R. Masterson SCHEDULE A Owner Trustee First Security Bank of Utah, National Association 79 South Main Street Salt Lake City, Utah 84111 Attention: Corporate Trust Administration Indenture Trustee NationsBank of Georgia, National Association Corporate Trust Administration GA1-006-09-11 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Owner Participant LLG Aircraft Leasing, L.P. 1209 Orange Street Wilmington, Delaware 19801 Exhibit L-1 Letterhead of Dewey Ballantine Closing Date To Each of the Addressees Listed in Schedule A Attached Hereto Re: Federal Express Corporation Trust Ladies and Gentlemen: We have acted as special counsel for LLG Aircraft Leasing, L.P., a Delaware limited partnership (the "Owner Participant"), LLG of Delaware, Inc., a Delaware corporation (the "General Partner") and Deutsche Lufthansa Aktiengesellschaft, a German corporation ("Lufthansa"), in connection with the transactions contemplated by (i) the Participation Agreement (Federal Express Corporation Trust ______), dated as of March 1, 1994 (the "Participation Agreement"), among Federal Express Corporation, as Lessee (the "Lessee"), the Owner Participant, First Security Bank of Utah, National Association, as Owner Trustee (the "Owner Trustee"), NationsBank of Georgia, National Association, as Indenture Trustee (the "Indenture Trustee"), NationsBank of South Carolina, National Association, as Pass Through Trustee (the "Pass Through Trustee"), and Westdeutsche Landesbank Girozentrale, New York Branch, as LC Bank, and (ii) the Agreement to Lease referred to in the Participation Agreement. This opinion is delivered pursuant to Section 4.01(k)(ii) of the Participation Agreement. Unless otherwise defined herein, all capitalized terms used herein shall have the respective meanings set forth or referred to in the Participation Agreement. In connection with our opinions expressed herein, we have examined executed counterparts of the Operative Agreements (other than the Lease, the Lease Supplement, the Trust Agreement Supplement covering the Aircraft and the Indenture and Security Agreement Supplement (the "Commencement Documents"), the forms of which we have examined). We 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 we have deemed necessary or appropriate to enable us to render the opinions expressed herein. In all such examinations, we have assumed the genuineness of signatures on original documents and the conformity to such original documents of all copies submitted to us as certified, conformed, photographic or telecopied copies, and as to certificates and telegraphic and telephonic confirmations given by public officials, we have assumed the same to have been properly given and to be accurate. As to all matters of fact material to our opinions, we have relied upon the accuracy of the statements, representations and warranties made in the Operative Agreements and certificates furnished to us, and we have made no independent investigation or verification with respect to such factual matters. We have assumed (without making any independent investigation or verification with respect thereto) the due authorization, execution and delivery of the Operative Agreements (other than the Commencement Documents) and the other documents executed in connection with the transactions contemplated by the Operative Agreements (other than the Commencement Documents) by each of the parties to each such document (other than the Owner Participant and the General Partner) and that each such document constitutes the legal, valid and binding obligation of each of such parties (other than the Owner Participant, the General Partner and Lufthansa), enforceable against each such party (other than the Owner Participant, the General Partner and Lufthansa) in accordance with its terms, that each such party (other than the Owner Participant and the General Partner) has or had, at the time of its execution thereof, the requisite power, authority and legal right to execute, deliver and perform each Operative Agreement (other than any Commencement Document) to which it is a party, and that the execution, delivery and performance thereof by each such party (other than the Owner Participant and the General Partner) do not violate its respective partnership agreement, or charter or by-laws, or any laws or governmental rules or regulations (federal, state or otherwise) that may be applicable to it, in any capacity in which it may be acting, and that the transactions provided for in the Operative Agreements are not within the prohibition of Section 406 of the Employee Retirement Income Security Act of 1974, as amended. Based upon and subject to the foregoing and the matters hereinafter set forth, we are of the opinion that: (1) The Owner Participant is a duly organized and validly existing limited partnership in good standing under the laws of the State of Delaware. The General Partner is a duly incorporated and validly existing corporation in good standing under the laws of the State of Delaware. Each of the Owner Participant and the General Partner has or had, on the respective dates of execution thereof, the requisite partnership or corporate power and authority to execute, deliver and perform its obligations under the Operative Agreements to which it is a party. (2) Each Operative Agreement to which the Owner Participant or the General Partner is a party, and each assignment of a Demand Note, has been duly authorized, executed and delivered by the Owner Participant, the General Partner or the assignor, as the case may be. (3) Each Operative Agreement to which the Owner Participant, the General Partner or Lufthansa is a party, and each assignment of a Demand Note, constitutes a legal, valid and binding obligation of the Owner Participant, the General Partner, Lufthansa or the assignor, as the case may be, enforceable against it in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights and remedies of creditors generally and public policy considerations (in the case of the indemnity provisions contained therein), and subject to general principles of equity (regardless of whether considered in a proceeding in equity or at law). (4) Assuming the due authorization, execution and delivery of the Indenture and the Collateral Agreement by each of the parties to each such document then: (A) each such document 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 Collateral that it purports to create as of the Closing Date; and (C) the beneficial interest of the Owner Participant under the Trust Agreement in and to the properties which are part of the Trust Indenture Estate is subject, to the extent provided in the Indenture, to the Lien of the Indenture in favor of the Holders. (5) Neither the execution and delivery of any of the Operative Agreements to which the Owner Participant, the General Partner or Lufthansa is a party, by the Owner Participant, the General Partner or Lufthansa, as the case may be, nor the consummation by the Owner Participant, the General Partner or Lufthansa, as the case may be, of the transactions contemplated thereby, (A) required or requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to, any governmental authority or agency of the State of New York or the federal government of the United States of America; (B) contravened or contravenes any law, governmental rule or regulation of the State of New York or the federal government of the United States of America; (C) results in the breach of any of the terms, conditions or provisions of the partnership agreement, or charter or by-laws, of the Owner Participant or the General Partner, as the case may be; or (D) is in violation of any law, judgment or order applicable to or binding upon the Owner Participant or the General Partner, as the case may be, or its properties, or, to the best of our knowledge, would violate or would subject the Lessor's Estate to any Lien 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 General Partner is a party or by which the Owner Participant or the General Partner is bound. (6) There are no actions, suits or proceedings pending or, to the best of our knowledge, threatened against or affecting the Owner Participant or the General Partner in any court or before any administrative agency or arbitrator, which, if adversely determined, would materially and adversely affect the ability of the Owner Participant or the General Partner to perform its obligations under any of the Operative Agreements to which it is a party, and we are not aware of any pending or threatened actions or proceedings before any court, administrative agency or tribunal involving the Owner Participant or the General Partner in connection with the transactions contemplated by the Operative Agreements. We express no opinions herein as to the laws of any state or jurisdiction other than the laws of the State of New York and the federal laws of the United States of America. In addition, no opinion is expressed herein as to (i) any state or federal securities laws, (ii) any state or federal tax laws, (iii) except as provided in paragraph (4) above, the perfection or priority of any security interest created by any of the Operative Agreements or the right, title or interest in or to the Lessor's Estate on the part of any Person, or (iv) matters governed by the Federal Aviation Act of 1958, as amended, or by any other aviation law or law, statute, rule or regulation of the United States of America relating to the acquisition, ownership, leasing, registration, use, operation, maintenance, repair, replacement, sale or particular nature of the Aircraft, Airframe or Engines. In rendering the opinions expressed herein, with respect to all matters of German law we have relied (without making any independent investigation with respect thereto) upon the opinion, dated today and delivered to you, of Christian Rehm, in house legal counsel of Lufthansa, and nothing has come to our attention which would cause us to believe that you and we are not justified in relying thereon. This opinion is furnished by us at the request of the Owner Participant, the General Partner and Lufthansa for your sole benefit, and we agree that you may rely on the opinions expressed herein. No other person or entity shall be entitled to rely on the opinions expressed herein without our express written consent. This opinion shall not be published or reproduced in any manner or distributed or circulated to any person or entity 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. We rendered an opinion dated September 1, 1993 (the "Agreement to Lease Opinion"), a copy of which is attached hereto. We hereby consent and agree that the addressees hereto who were not addressees to the Agreement to Lease Opinion may rely on the Agreement to Lease Opinion as fully and with the same force and effect as if such addressees were originally named therein on the date of the Agreement to Lease Opinion. Very truly yours, SCHEDULE A Lessee Federal Express Corporation 2007 Corporate Plaza Memphis, Tennessee 38132-2140 Owner Trustee First Security Bank of Utah, National Association 79 South Main Street Salt Lake City, Utah 84111 Attention: Corporate Trust Administration Indenture Trustee NationsBank of Georgia, National Association Corporate Trust Administration GA1-006-09-11 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Pass Through Trustee NationsBank of South Carolina, National Association 1301 Gervis Street Fourth Floor Columbia, South Carolina 29201 Attention: Corporate Trust Administration Owner Participant LLG Aircraft Leasing, L.P. 1209 Orange Street Wilmington, Delaware 19801 Underwriters Goldman, Sachs & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated c/o Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 LC Bank Westdeutsche Landesbank Girozentrale, New York Branch 1211 Avenue of the Americas New York, New York 10036-8701 Exhibit L-2 Letterhead of Dewey Ballantine Commencement Date (Exchange Date)* To Each of the Addressees Listed in Schedule A Attached Hereto Re: Federal Express Corporation Trust Ladies and Gentlemen: We have acted as special counsel for LLG Aircraft Leasing, L.P., a Delaware limited partnership (the "Owner Participant"), and LLG of Delaware, Inc., a Delaware corporation (the "General Partner") (and Deutsche Lufthansa Aktiengesellschaft, a German corporation ("Lufthansa"),)** in connection with the transactions contemplated by (i) the Participation Agreement (Federal Express Corporation Trust ______), dated as of March 1, 1994 (the "Participation Agreement"), among Federal Express Corporation, as Lessee (the "Lessee"), the Owner Participant, First Security Bank of Utah, National Association, as Owner Trustee (the "Owner Trustee"), NationsBank of Georgia, National Association, as Indenture Trustee (the "Indenture Trustee"), NationsBank of South Carolina, National Association, as Pass Through Trustee (the "Pass Through Trustee"), and Westdeutsche Landesbank Girozentrale, New York Branch, as LC Bank, and (ii) the Agreement to Lease referred to in the Participation Agreement. This opinion is delivered pursuant to Sections 4.02(j)(ii) and 4.03(l)(ii) of the Participation Agreement. Unless otherwise defined herein, all capitalized terms used herein shall have the respective meanings set forth or referred to in the Participation Agreement. - -------------- * If the Exchange Date does not occur on the Commencement date, a separate opinion, dated the Exchange Date, shall be provided as to all matters below, except as specifically noted. ** Insert if an OP Guarantee is required pursuant to the Participation Agreement. In connection with our opinions expressed herein, we have examined executed counterparts of the Operative Agreements ((other than the Indenture and Security Agreement Supplement, the form of which we have examined))*. We 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 we have deemed necessary or appropriate to enable us to render the opinions expressed herein. In all such examinations, we have assumed the genuineness of signatures on original documents and the conformity to such original documents of all copies submitted to us as certified, conformed, photographic or telecopied copies, and as to certificates and telegraphic and telephonic confirmations given by public officials, we have assumed the same to have been properly given and to be accurate. As to all matters of fact material to our opinions, we have relied upon the accuracy of the statements, representations and warranties made in the Operative Agreements and certificates furnished to us, and we have made no independent investigation or verification with respect to such factual matters. We have assumed (without making any independent investigation or verification with respect thereto) the due authorization, execution and delivery of the Operative Agreements ((other than the Indenture and Security Agreement Supplement))* and the other documents executed in connection with the transactions contemplated by the Operative Agreements ((other than the Indenture and Security Agreement Supplement))* by each of the parties to each such document (other than the Owner Participant and the General Partner) and that each such document constitutes the legal, valid and binding obligation of each of such parties (other than the Owner Participant and the General Partner (and Lufthansa)**), enforceable against each such party (other than the Owner Participant and the General Partner (and Lufthansa)**) in accordance with its terms, that each such party (other than the Owner - ------------- * Insert in Commencement Date opinion only if the Exchange Date does not occur on the Commencement Date. ** Insert if an OP Guarantee is required pursuant to the Participation Agreement. Participant and the General Partner) has or had, at the time of its execution thereof, the requisite power, authority and legal right to execute, deliver and perform each Operative Agreement (other than any Indenture and Security Agreement Supplement))* to which it is a party, and that the execution, delivery and performance thereof by each such party (other than the Owner Participant and the General Partner) do not violate its respective partnership agreement, or charter or by-laws, or any laws or governmental rules or regulations (federal, state or otherwise) that may be applicable to it, in any capacity in which it may be acting, and that the transactions provided for in the Operative Agreements are not within the prohibition of Section 406 of the Employee Retirement Income Security Act of 1974, as amended. Based upon and subject to the foregoing and the matters hereinafter set forth, we are of the opinion that: (1) The Owner Participant is a duly organized and validly existing limited partnership in good standing under the laws of the State of Delaware. The General Partner is a duly incorporated and validly existing corporation in good standing under the laws of the State of Delaware. Each of the Owner Participant and the General Partner has or had, on the respective dates of execution thereof, the requisite partnership or corporate power and authority to execute, deliver and perform its obligations under the Operative Agreements to which it is a party. (2) Each Operative Agreement to which the Owner Participant or the General Partner is a party has been duly authorized, executed and delivered by the Owner Participant or the General Partner, as the case may be. (3) Each Operative Agreement to which the Owner Participant or the General Partner (or Lufthansa)* is a party constitutes a legal, valid and binding obligation of the Owner Participant or the General Partner (or - ------------- * Insert if an OP Guarantee is required pursuant to the Participation Agreement. Lufthansa)*, as the case may be, enforceable against it in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights and remedies of creditors generally and public policy considerations (in the case of the indemnity provisions contained therein), and subject to general principles of equity (regardless of whether considered in a proceeding in equity or at law). (4) Lufthansa has conveyed to the Owner Trustee, good and marketable title to the Aircraft, free and clear of all Liens other than (i) the rights of the Lessee under the Lease, (ii) the rights of the Owner Participant under the Trust Agreement (and (iii) the rights of the Indenture Trustee under the Indenture)* . (5) Neither the execution and delivery of any of the Operative Agreements to which the Owner Participant or the General Partner (or Lufthansa)** is a party, by the Owner Participant or the General Partner (or Lufthansa)**, as the case may be, nor the consummation by the Owner Participant, the General Partner (or Lufthansa)**, as the case may be, of the transactions contemplated thereby, (A) required or requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to, any governmental authority or agency of the State of New York or the federal government of the United States of America; (B) contravened or contravenes any law, governmental rule or regulation of the State of New York or the federal government of the United States of America; (C) results in the breach of any of the terms, conditions or provisions of the partnership agreement, or charter or by-laws, of - ----------- * If the Exchange Date does not occur on the Commencement Date, this clause (iii) may be omitted from the Commencement Date opinion only. ** Insert if an OP Guarantee is required pursuant to the Participation Agreement. the Owner Participant or the General Partner, as the case may be; or (D) is in violation of any law, judgment or order applicable to or binding upon the Owner Participant or the General Partner, as the case may be, or its properties, or, to the best of our knowledge, would violate or would subject the Lessor's Estate to any Lien 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 General Partner is a party or by which the Owner Participant or the General Partner is bound. (6) There are no actions, suits or proceedings pending or, to the best of our knowledge, threatened against or affecting the Owner Participant or the General Partner in any court or before any administrative agency or arbitrator, which, if adversely determined, would materially and adversely affect the ability of the Owner Participant or the General Partner to perform its obligations under any of the Operative Agreements to which it is a party, and we are not aware of any pending or threatened actions or proceedings before any court, administrative agency or tribunal involving the Owner Participant or the General Partner in connection with the transactions contemplated by the Operative Agreements. We express no opinions herein as to the laws of any state or jurisdiction other than the laws of the State of New York and the federal laws of the United States of America. In addition, no opinion is expressed herein as to (i) any state or federal securities laws, (ii) any state or federal tax laws, (iii) the perfection or priority of any security interest created by any of the Operative Agreements or, except as provided in paragraph (4) above, as to the right, title or interest in or to the Lessor's Estate on the part of any Person, or (iv) except as provided in paragraph (4) above, matters governed by the Federal Aviation Act of 1958, as amended, or by any other aviation law or law, statute, rule or regulation of the United States of America relating to the acquisition, ownership, leasing, registration, use, operation, maintenance, repair, replacement, sale or particular nature of the Aircraft, Airframe or Engines. As to the matters referred to in paragraph (4), we have relied on the opinion of Daugherty, Fowler & Peregrin of even date herewith, to the extent such matters are addressed in such counsel's opinion. Insofar as our opinions expressed herein relate to the Tax Indemnity Agreement, such opinions are being rendered solely to the Lessee. (In rendering the opinions expressed herein, with respect to all matters of German law we have relied (without making any independent investigation with respect thereto) upon the opinion, dated today and delivered to you, a copy of which is attached hereto, of (_______________), counsel to Lufthansa, and nothing has come to our attention which would cause us to believe that you and we are not justified in relying thereon.)* This opinion is furnished by us at the request of the Owner Participant, the General Partner and Lufthansa for your sole benefit, and we agree that you may rely on the opinions expressed herein. No other person or entity shall be entitled to rely on the opinions expressed herein without our express written consent. This opinion shall not be published or reproduced in any manner or distributed or circulated to any person or entity 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, - ------------ (*) Insert if an OP Guarantee is required pursuant to the Participation Agreement. SCHEDULE A Lessee Federal Express Corporation 2007 Corporate Plaza Memphis, Tennessee 38132-2140 Owner Trustee First Security Bank of Utah, National Association 79 South Main Street Salt Lake City, Utah 84111 Attention: Corporate Trust Administration Indenture Trustee NationsBank of Georgia, National Association Corporate Trust Administration GA1-006-09-11 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Owner Participant LLG Aircraft Leasing, L.P. 1209 Orange Street Wilmington, Delaware 19801 Exhibit M-1 Closing Date To Each of the Persons Listed on Schedule A Attached Hereto Gentlemen: I am in-house legal counsel of Deutsche Lufthansa Aktiengesellschaft ("Lufthansa") and have acted as legal counsel for Lufthansa Leasing Projekt Nr. 7 GmbH ("LLP") and as such have reviewed Promissory Note (ED-AICA), Promissory Note (ED-AICB), Promissory Note (ED-AICC), Promissory Note (ED-AICD), Promissory Note (ED-AICF), Promissory Note (ED- AICH), Promissory Note (ED-AICK), Promissory Note (ED-AICL), Promissory Note (ED-AICM), Promissory Note (ED-AICN), Promissory Note (ED-AICP, Promissory Note (ED-AICR), and Promissory Note (ED-AICS) (each, a "Demand Note" and collectively, the "Demand Notes") as well as the assignment of LLP's right, title and interest , to and under each Demand Note (each, an "Assignment" and collectively, the "Assignments"). I have examined originals or copies of such company and corporate records of LLP and certificates of public officials and of representatives of LLP as I have deemed appropriate or necessary hereto. In connection with my opinions expressed herein, I have examined executed the Demand Notes. In my examination, I have assumed the genuineness of all signatures, the authenticity of all documents and other materials submitted to me as originals and the conformity with the originals thereof of all documents and other materials submitted to me as copies. Likewise, and for the purposes of the opinions set forth below, I have assumed that (i) each of the Demand Notes has been duly authorized and has been duly executed and delivered by Lufthansa, (ii) Lufthansa is duly organized and validly existing under the laws of its jurisdiction of incorporation or organization, and has full power, authority and legal right to make and perform its obligations under each of the Demand Notes and (iii) each of the Demand Notes is enforceable against Lufthansa. Based on and in reliance upon the foregoing, I am of the opinion that: 1. LLP is a company duly organized and validly existing under the laws of Germany and has all requisite power and authority to carry on its business as now conducted and has all requisite power and authority to enter into and perform its obligations under the Assignments. 2. Neither the execution and delivery by LLP of the Assignments nor the performance by LLP of its obligations thereunder requires the consent or approval of, the giving of notice to, or the registration or filing with, or the taking of any other action in respect of, any German government authority or agency. 3. The execution and delivery by LLP of the Assignments and the performance by LLP of its obligations thereunder have been approved and authorized by LLP and do not require any approval or consent of any stockholder of LLP. 4. Neither the execution and delivery by LLP of the Assignments nor the consummation by LLP of the transactions contemplated thereunder violates any law, governmental rule or regulation of Germany applicable to LLP. 5. The choice of New York law to govern the Lufthansa Agreemeents is valid and binding as against Lufthansa under the laws of Germany and all political subdivisions thereof, and a German court would uphold such choice of law in a legal proceeding to enforce the Agreements brough in such court. I am permitted to practice law in the Federal Republic of Germany and do not express any opinion as to any law other than the law of the Federal Republic of Germany. Very truly yours, Christian Rehm SCHEDULE A Lessee Federal Express Corporaton 2005 Corporate Avenue Memphis, Tennessee 38132 Owner Trustee First Security Bank of Utah, National Association, as Owner Trustee 79 South Main Street Salt Lake City, UT 84111 Indenture Trustee NationsBank of Utah, National Association Corporate Trust Administration GA1-006-09-11 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Pass Through Trustee NationsBank of South Carolina, National Association 1301 Gervis Street Fourth Floor Columbia, South Carolina 29201 Attention: Corporate Trust Admininstration Owner Participant LLG Aircraft Leasing, L.P. c/o Corporation Trust Company 1209 Orange Street Wilmington, Delaware 19801 Underwriters Goldman, Sachs & Co. Merrill, Lynch, Pierce, Fenner & Smith Incorporated c/o Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 LC Bank Westdeutsche Landesbank Girozentrale, New York Branch 1211 Avenue of the Americas New York, New York 10036-8701 Exhibit M-2 Commencement Date To Each of the Persons Listed on Schedule A Attached Hereto Gentlemen: I am in-house legal counsel of Deutsche Lufthansa Aktiengesellschaft ("Lufthansa") in connection with the transactions contemplated by (i) the Participation Agreement (Federal Express Corporation Trust No. ____), dated as of _______ __, 1994 (the "Participation Agreement"),among Federal Express Corporation, as Lessee (the "Lessee"), LLG Aircraft Leasing, L.P., as Owner Participant (the "Owner Participant"), First Security Bank of Utah, National Association, as Owner Trustee (the "Owner Trustee"), NationsBank of Georgia, National Association, as Indenture Trustee (the "Indenture Trustee"), NationsBank of South Carolina, National Association, as Pass Through Trustee (the "Pass Through Trustee"), and Westdeutsche Landesbank Girozentrale, New York Branch, as LC Bank (the "LC Bank"), and (ii) the Agreement to Lease referred to in the Participation Agreement. This opinion is delivered pursuant to Section 4.01(k)(ii) of the Participation Agreement. Capitalized terms used in this opinion and not otherwise defined herein shall have the respective meanings assigned thereto in the Participation Agreement (whether through incorporation by reference or otherwise). I have examined originals or copies of such company and corporate records of Lufthansa and certificates of public officials and of representatives of Lufthansa as I have deemed appropriate or necessary hereto. In connection with my opinions expressed herein, I have examined executed counterparts of the Operative Agreements other than the Lease, the Lease Supplement and the Indenture and Security Agreement Supplement (the "Commencement Documents"), the forms of which I have examined. In my examination, I have assumed the genuineness of all signatures (other than those of Lufthansa), the authenticity of all documents and other materials submitted to me as originals and the conformity with the originals thereof of all documents and other materials submitted to me as copies. Likewise, and for the purposes of the opinions set forth below, I have assumed that (i) each of the Operative Agreements has been duly authorized and has been duly executed and delivered by the parties thereto (other than Lufthansa), (ii) each party (other than Lufthansa) is duly organized and validly existing under the laws of its jurisdiction of incorporation or organization, and has full power, authority and legal right to make and perform its obligations under each of the Operative Agreements to which it is a party and (iii) each of the Operative Agreements is enforceable against each of the parties thereto (other than Lufthansa). Based on and in reliance upon the foregoing, I am of the opinion that: 1. Lufthansa is a company duly organized and validly existing under the laws of Germany and has all requisite power and authority to carry on its business as now conducted and has all requisite power and authority to enter into and perform its obligations under the Agreements. 2. Neither the execution and delivery by Lufthansa of the Modification Agreement, the Agreement to Lease, the Bills of Sale, the Demand Notes, the Parts and Services Agreement, the Sales Agreement, the OP Guarantee (if any), the Indemnification Agreement, the Underwriting Agreement or the Lufthansa Side Letter (the "Lufthansa Agreements") nor the performance by Lufthansa of its obligations thereunder requires the consent or approval of, the giving of notice to, or the registration or filing with, or the taking of any other action in respect of, any German government authority or agency. 3. The execution and delivery by Lufthansa of the Lufthansa Agreements and the performance by Lufthansa of its obligations thereunder have been approved and authorized by Lufthansa and do not require any approval or consent of any stockholder of Lufthansa. 4. Neither the execution and delivery by Lufthansa of the Lufthansa Agreements nor the consummation by Lufthansa of the transactions contemplated thereunder violates any law, governmental rule or regulation of Germany applicable to Lufthansa. 5. The choice of New York law to govern the Lufthansa Agreements is valid and binding as against Lufthansa under the laws of Germany and all political subdivisions thereof, and a German court would uphold such choice of law in a legal proceeding to enforce the Agreements brought in such court. I am permitted to practice law in the Federal Republic of Germany and do not express any opinion as to any law other than the law of the Federal Republic of Germany. Very truly yours, Christian Rehm SCHEDULE A Lessee Federal Express Corporaton 2005 Corporate Avenue Memphis, Tennessee 38132 Owner Trustee First Security Bank of Utah, National Association, as Owner Trustee 79 South Main Street Salt Lake City, UT 84111 Indenture Trustee NationsBank of Utah, National Association Corporate Trust Administration GA1-006-09-11 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Pass Through Trustee NationsBank of South Carolina, National Association 1301 Gervis Street Fourth Floor Columbia, South Carolina 29201 Attention: Corporate Trust Admininstration Owner Participant LLG Aircraft Leasing, L.P. c/o Corporation Trust Company 1209 Orange Street Wilmington, Delaware 19801 Underwriters Goldman, Sachs & Co. Merrill, Lynch, Pierce, Fenner & Smith Incorporated c/o Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 LC Bank Westdeutsche Landesbank Girozentrale, New York Branch 1211 Avenue of the Americas New York, New York 10036-8701 Exhibit N-1 Powell, Goldstein, Frazer & Murphy Letterhead Closing Date To the Persons Listed in Schedule A Attached Hereto Re: Federal Express Corporation Trust Gentlemen: We are counsel for NationsBank of Georgia, National Association, a national banking association (the "Indenture Trustee"). In such capacity, we have advised the Indenture Trustee with respect to authorization, execution and delivery by the Indenture Trustee of the Trust Indenture and Security Agreement (Federal Express Corporation Trust ______) dated as of March 1, 1994 (the "Indenture") between First Security Bank of Utah, National Association, as Owner Trustee (the "Owner Trustee"), and the Indenture Trustee, and the Participation Agreement (Federal Express Corporation Trust ______) dated as of March 1, 1994 (the "Participation Agreement"), among Federal Express Corporation ("Federal Express"), LLG Aircraft Leasing, L.P. (the "Owner Participant"), the Owner Trustee, NationsBank of South Carolina, National Association, as Pass Through Trustee, the Indenture Trustee and Westdeutsche Landesbank Girozentrale, New York Branch, as LC Bank. Further, we have advised the Indenture Trustee with respect to the authentication of one or more Equipment Trust Certificates (the "Certificates") referred to in the Indenture issued on the date hereof. This opinion is being delivered pursuant to Section 4.01(k)(iii) of the Participation Agreement. Unless otherwise defined herein, capitalized terms used herein shall have the meanings set forth or referred to in the Participation Agreement. In rendering this opinion, we have reviewed the Operative Agreements to which the Indenture Trustee is a party and such other documents as we have deemed to be appropriate and relevant as a basis for the opinions hereinafter set forth, including, without limitation, certified copies of the By-laws of the Indenture Trustee, a certificate of an officer of the Indenture Trustee as to certain matters, including the incumbency of the Officer of the Indenture Trustee who executed the Indenture, the Collateral Agreement and the Participation Agreement and who authenticated the Certificates issued in connection therewith and a certificate of the Comptroller of the Currency, Washington, D.C. dated _________, as to the Indenture Trustee's existence and authority to do business as a national banking association and to act in a fiduciary capacity. In all such examinations we have assumed the authenticity and completeness of all documents submitted to us as original documents and the conformity to original documents and completeness of all documents submitted to us as photostatic, notarial or certified copies. Based on the foregoing, it is our opinion that: 1. The Indenture Trustee is a national banking association validly existing under the laws of the United States of America holding a valid certificate to do business as a national banking association, with banking and trust powers, is a Citizen of the United States as that term is defined in the Federal Aviation Act of 1958, as amended (the "Act"), and has the corporate power and authority to execute, deliver and perform its obligations under the Indenture and the Collateral Agreement and to authenticate the Certificates delivered on the date hereof and had on the date of execution thereof the corporate power and authority to execute, deliver and perform its obligations under the Participation Agreement. 2. The Indenture Trustee, in its individual and trust capacities, has duly authorized, executed and delivered the Indenture, the Collateral Agreement and the Participation Agreement. Assuming the other parties thereto are legally bound, each of the Indenture, the Collateral Agreement and the Participation Agreement constitutes, a legal, valid and binding obligation of the Indenture Trustee in its trust capacity (and, to the extent provided in each such document, in its individual capacity) enforceable against the Indenture Trustee in its trust capacity (and, to the extent provided in each such document, in its individual capacity) in accordance with its terms, except as the provisions thereof may be limited by bank- ruptcy, reorganization, insolvency, fraudulent conveyance, moratorium or other similar laws generally affecting creditors' rights from time to time in effect. 3. The Certificates delivered on the date hereof have been duly authenticated and delivered by the Indenture Trustee in accordance with the terms of the Indenture. 4. The execution, delivery and performance by the Indenture Trustee of the Indenture, the Collateral Agreement and the Participation Agreement are not in violation of the Articles of Association or By-laws of the Indenture Trustee or any law, governmental rule or regulation of the United States or the State of Georgia governing the banking or trust powers of the Indenture Trustee or, to our knowledge, any judgment, order, 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 or its properties may be bound. 5. Neither the execution and delivery by the Indenture Trustee in its individual or trust capacity, as the case may be, of the Indenture, the Collateral Agreement and the Participation Agreement, nor the consummation by the Indenture Trustee, in its individual or trust capacity, as the case may be, of any of the transactions contemplated in any of those documents, requires or required on the date of execution thereof consent or approval of, giving of notice to, or registration with, or taking of any other action with respect to, any federal or state governmental authority or agency having jurisdiction over the Indenture Trustee. 6. (a) Subject to the assumptions and qualifications set forth herein and in sub- paragraph 6(b) below and except to the extent the Indenture Trustee forecloses on any property which constitutes the Trust Indenture Estate and any of such property is located in Georgia, or to the extent the Indenture Trustee engages in business in Georgia as a result of such foreclosure, (i) there are no fees, taxes or other charges payable by the Holders, the Owner Trustee or the Indenture Trustee (except taxes imposed on fees payable to the Indenture Trustee) to the State of Georgia or any political subdivision thereof in connection with the execution, delivery or performance of any of the Pass Through Agreement, the Series Supplements or the Operative Agreements or in connection with the issuance and acquisition of the Certificates or the beneficial interests of the Holders in the Trust Indenture Estate; (ii) neither the Indenture Trustee nor the trust created under the Indenture will be subject to any fee, tax or other governmental charge under the laws of the State of Georgia 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; and (iii) there is no fee, tax or other governmental charge under the laws of the State of Georgia or any political subdivision thereof in existence on the date hereof, on, based on or measured by any payments under the Certificates issued to the Holders by reason of the creation of the trust under the Indenture pursuant to the laws of the State of New York or the Indenture Trustee's performance of its duties under the Indenture within the State of Georgia. We express no opinion, however, 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 Georgia or any political subdivision thereof in connection with (x) the execution, delivery or performance of the Indenture, the Collateral Agreement, the Participation Agreement, the Pass Through Agreement, any Series Supplement or any of the other Operative Agreements or (y) the making by the Owner Participant of its investment in the Aircraft. (b) The opinions set forth in the immediately preceding subparagraph 6(a) are subject in relevant part to and qualified by the following assumptions, which we have made with your knowledge: (i) for purposes of taxes which might be imposed upon the Owner Trustee or the Lessor's Estate under Chapter 5, Ad Valorem Taxation of Property, or Chapter 6, Taxation of Intangibles, Title 48, Revenue and Taxation, Official Code of Georgia Annotated ("O.C.G.A."), we have assumed that (x) the Lessee will make, in a timely manner, an annual property tax return relating to the Aircraft, in accordance with Chapter 5, Article 12, Ad Valorem Taxation of Airline Companies, Title 48, Revenue and Taxation, O.C.G.A., and (y) the return will reflect that a tangible property tax is due with respect to the Aircraft; (ii) for purposes of taxes which might be imposed upon the Lessor's Estate or the Owner Trustee under Chapter 6, Taxation of Intangibles, Title 48, Revenue and Taxation, O.C.G.A., we have assumed that as of January 1 of each year there will be no undistributed funds held in either the Lessor's Estate or the Trust Indenture Estate, except such funds as shall be invested in those types of obligations or evidences of debt as are described in Section 48-6-22(1), O.C.G.A.; (iii) for purposes of taxes which might be imposed upon the Lessor's Estate or the Owner Trustee under Chapter 7, Income Taxes, Title 48, Revenue and Taxation, O.C.G.A., we have assumed that (x) the Lessor's Estate is a "Grantor Trust" for Federal income tax purposes (i.e., the Owner Participant will be treated as the owner of the Lessor's Estate under Subpart E of Part I of Subchapter J of the Internal Revenue Code) and (y) the Owner Trustee and the Owner Participant will report on that basis for Federal income tax purposes; and (iv) for purposes of taxes which might be imposed upon the Holders under Chapter 6, Taxation of Intangibles or Chapter 7, Income Taxes, Title 48, Revenue and Taxation, O.C.G.A., neither the Certificates held by such Holders nor the interest income thereon nor any interest of such Holders in and to the Trust Indenture Estate has been derived from or has been or will be acquired in the conduct of or used incident to business carried on by such Holders or property of such Certificate Holders located in the State of Georgia. We express no opinion as to the correctness of the foregoing assumptions but we are not aware of any fact that causes us to believe that any such assumption is incorrect; however, we have conducted no independent investigation in this regard. We are members of the Bar of the State of Georgia and the opinions set forth herein are limited to the laws of Georgia and, subject to the limitations set forth herein, the federal laws of the United States of America. With respect to the opinions set forth above in paragraph 2 as to the validity, binding effect and enforceability of the Indenture, the Collateral Agreement and the Participation Agreement, the governing law of which is expressly stated to be that of the State of New York, we have assumed with your permission that the Indenture, the Collateral Agreement, and the Participation Agreement constitute legal, valid, binding and enforceable documents or instruments under the laws of the State of New York (as to which assumption we express no opinion). Further, without limiting the generality of the foregoing, we express no opinion with respect to (i) except as set forth in paragraph 1 of this opinion with respect to the citizenship of the Indenture Trustee, the Act and the regulations promulgated thereunder, the impact of the Act upon matters set forth in this opinion or any other aviation or other laws, rules or regulations applicable to the particular nature of the equipment to be acquired by the Owner Trustee; (ii) federal securities laws, including, without limitation, the Securities Act of 1933, as amended, and the Trust Indenture Act of 1939, as amended, or state securities or blue sky laws; (iii) title to any property, real or personal, or the priority or perfection of any liens or security interests; (iv) the authority or power of the Indenture Trustee to exercise any rights or remedies set forth in the Operative Agreements or to perform any duties or obligations on its part to be performed other than those that can be performed in the State of Georgia; or (v) ERISA. This opinion is being furnished only to the parties to whom this opinion is addressed and is solely for their benefit, and no other person or entity shall be entitled to rely on this opinion without our express prior written consent. This opinion may not be used, circulated, quoted, published or otherwise referred to for any purpose without our express prior written consent. Our opinion is limited to the matters stated herein, and no opinion is implied or may be inferred beyond the opinions expressly stated herein. Very truly yours, POWELL, GOLDSTEIN, FRAZER & MURPHY SCHEDULE A Lessee Federal Express Corporation 2007 Corporate Plaza Memphis, Tennessee 38132-2140 Owner Trustee First Security Bank of Utah, National Association 79 South Main Street Salt Lake City, Utah 84111 Attention: Corporate Trust Administration Indenture Trustee NationsBank of Georgia, National Association Corporate Trust Administration GA1-006-09-11 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Pass Through Trustee NationsBank of South Carolina, National Association 1301 Gervis Street Fourth Floor Columbia, South Carolina 29201 Attention: Corporate Trust Administration Owner Participant LLG Aircraft Leasing, L.P. 1209 Orange Street Wilmington, Delaware 19801 Underwriters Goldman, Sachs & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated c/o Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 LC Bank Westdeutsche Landesbank Girozentrale, New York Branch 1211 Avenue of the Americas New York, New York 10036-8701 Exhibit N-2 Powell, Goldstein, Frazer & Murphy Letterhead Exchange Date To the Persons Listed in Schedule A Attached Hereto Re: Federal Express Corporation Trust Gentlemen: We are counsel for NationsBank of Georgia, National Association, a national banking association (the "Indenture Trustee"). In such capacity, we have advised the Indenture Trustee with respect to authorization, execution and delivery by the Indenture Trustee of the Trust Indenture and Security Agreement (Federal Express Corporation Trust ______) dated as of March 1, 1994, (the "Indenture") between First Security Bank of Utah, National Association, as Owner Trustee (the "Owner Trustee"), and the Indenture Trustee, and the Participation Agreement (Federal Express Corporation Trust ______) dated as of March 1, 1994 (the "Participation Agreement"), among Federal Express Corporation ("Federal Express"), LLG Aircraft Leasing, L.P. (the "Owner Participant"), the Owner Trustee, NationsBank of South Carolina, National Association, as Pass Through Trustee, the Indenture Trustee and Westdeutsche Landesbank Girozentrale, New York Branch. Further, we have advised the Indenture Trustee with respect to the authentication of one or more Equipment Trust Certificates (the "Certificates") referred to in the Indenture issued on the date hereof. This opinion is being delivered pursuant to Section 4.03(l)(iii) of the Participation Agreement. Unless otherwise defined herein, capitalized terms used herein shall have the meanings set forth or referred to in the Participation Agreement. In rendering this opinion, we have reviewed the Operative Agreements to which the Indenture Trustee is a party and such other documents as we have deemed to be appropriate and relevant as a basis for the opinions hereinafter set forth, including, without limitation, certified copies of the By-laws of the Indenture Trustee, a certificate of an officer of the Indenture Trustee as to certain matters, including the incumbency of the Officer of the Indenture Trustee who executed the Indenture and the Participation Agreement and who authenticated the Certificates issued in connection therewith and a certificate of the Comptroller of the Currency, Washington, D.C. dated _________, as to the Indenture Trustee's existence and authority to do business as a national banking association and to act in a fiduciary capacity. In all such examinations we have assumed the authenticity and completeness of all documents submitted to us as original documents and the conformity to original documents and completeness of all documents submitted to us as photostatic, notarial or certified copies. Based on the foregoing, it is our opinion that: 1. The Indenture Trustee is a national banking association validly existing under the laws of the United States of America holding a valid certificate to do business as a national banking association, with banking and trust powers, is a Citizen of the United States as that term is defined in the Federal Aviation Act of 1958, as amended (the "Act"), and has the corporate power and authority to execute, deliver and perform its obligations under the Indenture. 2. The Indenture Trustee, in its individual and trust capacities, has duly authorized, executed and delivered the Indenture, the Collateral Agreement and the Participation Agreement. Assuming the other parties thereto are legally bound, each of the Indenture, the Collateral Agreement and the Participation Agreement constitutes a legal, valid and binding obligation of the Indenture Trustee in its trust capacity (and, to the extent provided in each such document, in its individual capacity) enforceable against the Indenture Trustee in its trust capacity (and, to the extent provided in each such document, in its individual capacity) in accordance with its terms, except as the provisions thereof may be limited by bank- ruptcy, reorganization, insolvency, fraudulent conveyance, moratorium or other similar laws generally affecting creditors' rights from time to time in effect. 3. The execution, delivery and performance by the Indenture Trustee of the Indenture, the Collateral Agreement and the Participation Agreement are not, or were not on the date of execution, in violation of the Articles of Association or By-laws of the Indenture Trustee or any law, governmental rule or regulation of the United States or the State of Georgia governing the banking or trust powers of the Indenture Trustee or, to our knowledge, any judgment, order, 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 or its properties may be bound. 4. Neither the execution and delivery by the Indenture Trustee, in its individual or trust capacity, as the case may be, of the Indenture, the Collateral Agreement and the Participation Agreement, nor the consummation by the Indenture Trustee, in its individual or trust capacity, as the case may be, of any of the transactions contemplated in any of those documents, requires or required on the date of execution thereof consent or approval of, giving of notice to, or registration with, or taking of any other action with respect to, any federal or state governmental authority or agency having jurisdiction over the Indenture Trustee. We express no opinion as to the correctness of the foregoing assumptions but we are not aware of any fact that causes us to believe that any such assumption is incorrect; however, we have conducted no independent investigation in this regard. We are members of the Bar of the State of Georgia and the opinions set forth herein are limited to the laws of the State of Georgia and, subject to the limitations set forth herein, the federal laws of the United States of America. With respect to the opinions set forth above in paragraph 2 as to the validity, binding effect and enforceability of the Indenture, the Collateral Agreement and the Participation Agreement, the governing law of which is expressly stated to be that of the State of New York, we have assumed with your permission that the Indenture, the Collateral Agreement and the Participation Agreement constitute legal, valid, binding and enforceable documents or instruments under the laws of the State of New York (as to which assumption we express no opinion). Further, without limiting the generality of the foregoing, we express no opinion with respect to (i) except as set forth in paragraph 1 of this opinion with respect to the citizenship of the Indenture Trustee, the Act and the regulations promulgated thereunder, the impact of the Act upon matters set forth in this opinion or any other aviation or other laws, rules or regulations applicable to the particular nature of the equipment to be acquired by the Owner Trustee; (ii) federal securities laws, including, without limitation, the Securities Act of 1933, as amended, and the Trust Indenture Act of 1939, as amended, or state securities or blue sky laws; (iii) title to any property, real or personal, or the priority or perfection of any liens or security interests; (iv) the authority or power of the Indenture Trustee to exercise any rights or remedies set forth in the Operative Agreements or to perform any duties or obligations on its part to be performed other than those that can be performed in the State of Georgia; or (v) ERISA. This opinion is being furnished only to the parties to whom this opinion is addressed and is solely for their benefit, and no other person or entity shall be entitled to rely on this opinion without our express prior written consent. This opinion may not be used, circulated, quoted, published or otherwise referred to for any purpose without our express prior written consent. Our opinion is limited to the matters stated herein, and no opinion is implied or may be inferred beyond the opinions expressly stated herein. Very truly yours, POWELL, GOLDSTEIN, FRAZER & MURPHY SCHEDULE A Lessee Federal Express Corporation 2007 Corporate Plaza Memphis, Tennessee 38132-2140 Owner Trustee First Security Bank of Utah, National Association 79 South Main Street Salt Lake City, Utah 84111 Attention: Corporate Trust Administration Indenture Trustee NationsBank of Georgia, National Association Corporate Trust Administration GA1-006-09-11 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Owner Participant LLG Aircraft Leasing, L.P. 1209 Orange Street Wilmington, Delaware 19801 Exhibit O LETTERHEAD OF POWELL, GOLDSTEIN, FRAZER & MURPHY Closing Date To the Persons Listed On Schedule A Attached Hereto Re: Federal Express Corporation Pass Through Certificates Series 1994-A310-A1 and 1994-A310-A2 Ladies and Gentlemen: We are counsel for NationsBank of South Carolina, National Association, a national banking association (herein referred to as the "Association"), acting as Pass Through Trustee (the "Pass Through Trustee") with respect to the Pass Through Trust Agreement, dated as of March 1, 1994 (the "Pass Through Trust Agreement"), as supplemented by the Series Supplements dated the date hereof, designated as Series Supplement 1994-A310-A1, 1994-A310-A2 and 1994-A310-A3, respectively (the "Series Supplements"). We have advised the Association with respect to the Pass Through Trust Agreement, the Series Supplements and the Participation Agreements relating to the Pass Through Trust Agreement and each designated Series Supplement (the "Participation Agreements") among the parties listed therein. Further, we have advised the Pass Through Trustee with respect to the Pass Through Certificates (the "Pass Through Certificates") issued on the date hereof. Further, we are counsel for NationsBank of Georgia, National Association, a national banking association, an affiliate of the Association, acting as Registrar, Paying Agent and Authenticating Agent (the "Agent") with respect to the Pass Through Certificates pursuant to the Registrar, Authenticating and Paying Agency Agreement dated as of the date hereof (the "Agency Agreement") among Federal Express Corporation ("Federal Express"), the Association and the Agent. The Association has requested that we deliver this opinion to you pursuant to the Participation Agreements and the Underwriting Agreement among Federal Express and the Underwriters and we understand and agree that you may rely on the opinions expressed herein. Unless otherwise defined herein, capitalized terms used herein shall have the meanings set forth or referred to in the Participation Agreements, the Pass Through Trust Agreement or the Series Supplements, as applicable. In rendering this opinion, we have reviewed the Pass Through Trust Agreement, the Series Supplements and the Operative Agreements in existence on the date hereof and such other documents as we have deemed to be appropriate and relevant as a basis for the opinions hereinafter set forth, including, without limitation, certified copies of the By-Laws of the Association and a certificate of an officer of the Association as to certain matters, including the incumbency of the officer of the Association who, on behalf of the Pass Through Trustee executed the Participation Agreement, the Pass Through Trust Agreement, the Series Supplements and the Pass Through Certificates and certificates of the Comptroller of the Currency, Washington, D.C. dated _____ as to the Association's existence and authority to do business as a national banking association and to act in a fiduciary capacity. Additionally, as to certain facts material to the opinions expressed herein, we have relied upon representations and warranties contained in the Pass Through Trust Agreement, the Series Supplements, the Operative Agreements and upon the certificates above described, without further investigation. In all such examinations we have assumed the authenticity and completeness of all documents submitted to us as original documents and the conformity to original documents and completeness of all documents submitted to us as photostatic, facsimile, notarial or certified copies. Further, we have assumed (x) the due authorization, execution and delivery by each of the parties thereto, other than the Association and the Pass Through Trustee, of the Pass Through Trust Agreement, the Series Supplements and the Operative Agreements to which each is a party, (y) that each such other party has the power, authority and legal right to execute, deliver and perform each such document and (z) that the Operative Agreements constitute the legal, valid, binding and enforceable obligations of each such other party. Based on the foregoing and subject to the assumptions and qualifications herein contained, it is our opinion that: 1. The Association is a national banking association validly existing and holding a valid certificate to do business as a national banking association, with trust powers, is a Citizen of the United States as that term is defined in the Federal Aviation Act of 1958, as amended, and, in its individual capacity (to the extent provided therein) or as Pass Through Trustee, has full corporate power and authority to execute, deliver and carry out the terms of the Participation Agreements, the Pass Through Trust Agreement, the Series Supplements, the Pass Through Certificates and the other Operative Agreements to which it is a party. 2. The Association (in its individual capacity, to the extent provided therein), or the Pass Through Trustee, has duly authorized, executed and delivered the Participation Agreements, the Pass Through Trust Agreement and the Series Supplements, and the Participation Agreements, the Pass Through Trust Agreement and the Series Supplements constitute the legal, valid, binding and enforceable obligations of the Association (in its individual capacity, to the extent provided therein), or the Pass Through Trustee, enforceable against the Association (in its individual capacity, to the extent provided therein), or the Pass Through Trustee, in accordance with their respective terms, except as limited by bankruptcy, insolvency, moratorium, receivership, fraudulent conveyance or other similar laws affecting creditor's rights generally, and except as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law). 3. The Pass Through Certificates have been duly authorized and validly executed, issued, and delivered by the Pass Through Trustee and authenticated by the Pass Through Trustee, acting through the Agent, pursuant to the respective Pass Through Trust Agreement, the Series Supplements and the Agency Agreement, 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 Pass Through Trust Agreement and the related Series Supplements. 4. The authorization, execution, delivery and performance by the Association (in its individual capacity, to the extent provided therein), or the Pass Through Trustee, of the Participation Agreements, the Pass Through Trust Agreement, the Series Supplements and the other Operative Agreements to which it is a party and the consummation of the transactions therein contemplated and compliance with the terms thereof, and the issuance of the Pass Through Certificates thereunder do not and will not result in the violation of the provisions of the Articles of Association or By-Laws of the Association, and do not and will not conflict with, or result in a breach of any terms or provisions of, or constitute a default under, or result in the creation or the imposition of any Lien upon any property or assets of the Pass through Trustee, under any indenture, mortgage or other agreement or instrument known to us to which the Pass Through Trustee is a party or by which it or any of its property is bound, or any South Carolina or Federal law, rule or regulation governing the Association's banking or trust powers, or of any judgment, order or decree known to us to be applicable to the Association or the Pass Through Trustee, of any court, regulatory body, administrative agency, government or governmental body having jurisdiction over the Association or the Pass Through Trustee or its properties. 5. No authorization, approval, consent, license or order of, giving of notice to, registration with, or taking of any other action in respect of, any Federal or state governmental authority or agency pursuant to any Federal or South Carolina law governing the banking or trust powers of the Association, is required for the authorization, execu- tion, delivery and performance by the Association (in its individual capacity to the extent provided therein), or the Pass Through Trustee, of the Participation Agreements, the Pass Through Trust Agreement, the Series Supplements, the Pass Through Certificates and the other Operative Agreements to which it is a party or the consummation of any of the transactions by the Association or the Pass Through Trustee contemplated thereby or the issuance of the Pass Through Certificates under the Pass Through Trust Agreement and the Series Supplements (except such as shall have been duly obtained, given or taken); and such authorization, execution, delivery, performance, consummation, and issuance do not conflict with or result in a breach of the provisions of any such law. 6. There are no proceedings pending, or to the best of our knowledge, threatened, and to the best of our knowledge there is no existing basis for any such proceeding against or affecting the Association before any governmental authority which would, either in any one case or in the aggregate, if adversely determined, materially and adversely affect the Association's ability to perform its obligations under any of the Operative Agreements to which it is a party. To the best of our knowledge, the Association is not in default with respect to any order of any governmental authority which default would, either in any one case or in the aggregate, materially adversely affect the Association's ability to perform its obligations under any of the Operative Agreements to which it is a party. 7. There are no taxes, fees or other governmental charges payable under the laws of the State of South Carolina or any political subdivision thereof in connection with the execution and delivery by the Association (in its individual capacity, to the extent provided therein) or the Pass Through Trustee, of the Participation Agreements, the Pass Through Trust Agreement, the Series Supplements and the other Operative Agreements to which it is a party or in connection with the execution, issuance and delivery of the Pass Through Certificates by the Pass Through Trustee, pursuant to the Pass Through Trust Agreement and the Series Supplements. 8. None of the trusts created by the Pass Through Trust Agreement and the Series Supplements, the Pass Through Trustee or the Association, or the Affiliates, successors or assigns of any such Person, 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), fee or other governmental charge under the laws of the State of South Carolina or any political subdivision thereof (other than taxes imposed on the fees received by the Association for acting as Pass Through Trustee under the Pass Through Trust Agreement and the Series Supplements). Pass Through Certificate holders who are not residents of or otherwise subject to tax in South Carolina will not be subject to any tax (including, without limitation, net or gross income, tangible or intangible property, net worth, capital, franchise or doing business tax), fee or other governmental charge under the laws of the State of South Carolina or any political subdivision thereof as a result of purchasing, owning (including receiving payments with respect to) or selling a Pass Through Certificate. There are no applicable taxes under the laws of the State of South Carolina 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 or Agreement to Lease Operative Agreements (as defined in the Agreement to Lease), (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 Pass Through Trust Agreement, the Series Supplements and 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 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 Cer- tificates, or (g) otherwise with respect to or in connection with the transactions contemplated by the Pass Through Trust Agreement, the Series Supplements 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 and the Operative Agreements in, and had not engaged in any activities unrelated to the transactions contemplated by the Operative Agreements in, the State of South Carolina. With respect to the opinions set forth in paragraphs 7 and 8 above, with your permission we have relied upon, and this opinion is limited by, the assumptions set forth in the discussion entitled "Certain South Carolina Taxes" in the Prospectus forming part of Registration Statement No. 33-51623, as amended (the "Registration Statement") for the registration of the Pass Through Certificates with the Securities and Exchange Commission. In addition, we have assumed that each Pass Through Trust (as defined in the Registration Statements) will constitute a grantor trust under Subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986, as amended (the "Code"), and will not be classified as a corporation or as a Partnership (as defined in Section 7701 of the Code), and each Pass Through Trust does not otherwise engage in business in South Carolina. We express no opinion as to the correctness of the foregoing assumptions and we have conducted no independent investigation in this regard. The opinions set forth herein are limited to federal laws of the United States of America and laws of South Carolina governing taxation and the banking and trust powers of the Association. With respect to the opinions set forth above in paragraph 2 as to the legality, validity, binding effect and enforceability of the Participation Agreements, the Pass Through Trust Agreement and the Series Supplements, the governing law of which is expressly stated to be that of the State of New York, we have assumed with your permission that the Participation Agreements, the Pass Through Trust Agreement, and the Series Supplements constitute legal, valid, binding and enforceable documents or instruments under the laws of the State of New York (as to which assumption we express no opinion) and those opinions are expressed as if the laws of South Carolina were to govern those documents or instruments. Further, without limiting the generality of the foregoing, we express no opinion as to (i) federal or state securities laws or blue sky laws and assume that the Pass Through Certificates have been registered, issued and sold in compliance with all applicable federal and state securities and blue sky laws and that the Pass Through Trust Agreement and the Series Supplements have been duly qualified under the provisions of the Trust Indenture Act of 1939, as amended; (ii) any laws, rules or regulations applicable to the particular nature of the equipment acquired by the Owner Trustee except as set forth in paragraph 1 above with respect to the citizenship of the Pass Through Trustee; (iii) the perfection or priority of security interests or; ERISA. This opinion is being furnished only to the parties to which it is addressed and is solely for their benefit. No other Person shall be entitled to rely on this opinion without our express prior written consent. This opinion may not be used, circulated, quoted, published or otherwise referred to for any purpose without our express prior written consent. Our opinion is limited to the matters stated herein, and no opinion is implied or may be inferred beyond the opinions expressly stated herein. Very truly yours, POWELL, GOLDSTEIN, FRAZER & MURPHY SCHEDULE A Lessee Federal Express Corporation 2007 Corporate Plaza Memphis, Tennessee 38132-2140 Owner Trustee First Security Bank of Utah, National Association 79 South Main Street Salt Lake City, Utah 84111 Attention: Corporate Trust Administration Indenture Trustee NationsBank of Georgia, National Association Corporate Trust Administration GA1-006-09-11 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Pass Through Trustee NationsBank of South Carolina, National Association 1301 Gervis Street Fourth Floor Columbia, South Carolina 29201 Attention: Corporate Trust Administration Owner Participant LLG Aircraft Leasing, L.P. 1209 Orange Street Wilmington, Delaware 19801 Underwriters Goldman, Sachs & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated c/o Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 LC Bank Westdeutsche Landesbank Girozentrale, New York Branch 1211 Avenue of the Americas New York, New York 10036-8701 Exhibit P-1 Letterhead of Ray, Quinney & Nebeker Closing Date To Each of the Persons Listed on Schedule A Attached Hereto Re: Federal Express Corporation Trust Ladies and Gentlemen: We have acted as special counsel to First Security Bank of Utah, National Association, a national banking association ("First Security"), in connection with the Trust Agreement dated as of September 1, 1993, as amended and restated as of March 1, 1994 (the "Trust Agreement"), between First Security and LLG Aircraft Leasing, L.P., a Delaware limited partnership (the "Owner Participant"). This opinion is furnished pursuant to Section 4.01(k)(v) of the Participation Agreement, dated as of March 1, 1994, (the "Participation Agreement"), among Federal Express Corporation, as Lessee, the Owner Participant, First Security, not in its individual capacity except as specifically set forth therein but solely as Owner Trustee (the "Owner Trustee") under the Trust Agreement, NationsBank of Georgia, National Association, as Indenture Trustee, NationsBank of South Carolina, National Association, as Pass Through Trustee, and Westdeutsche Landesbank Girozentrale, New York Branch. Capitalized terms used herein and not otherwise defined are used as defined in or by reference in Schedule II to the Participation Agreement. We have examined executed counterparts or copies otherwise identified to our satisfaction of the Operative Agreements (other than the Lease, the Lease Supplement, the Trust Agreement Supplement covering the Aircraft and the Indenture and Security Agreement Supplement (the "Commencement Documents") the forms of which we have examined). We have also examined originals or copies of such other documents, such corporate records, certificates and other statements of governmental officials and corporate officers and other representatives of the corporations or entities referred to herein and such other instruments as we have deemed necessary or appropriate for the purposes of this opinion. Moreover, as to certain facts material to the opinions expressed herein, we have relied upon representations and warranties contained in the Operative Agreements (other than the Commencement 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 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, is a Citizen of the United States as that term is defined in the Federal Aviation Act of 1958, as amended, (the "Act"), and each of First Security and the Owner Trustee, as the case may be, has full corporate power, authority and legal right to execute, deliver and perform each of the Operative Agreements to which it is or is to be a party (other than the Certificates) and to issue, execute, deliver and perform the Certificates. 2. Each of First Security and the Owner Trustee, as the case may be, has duly authorized, executed and delivered each Operative Agreement (other than any Commencement Document) to which it is a party; each such document constitutes a legal, valid and binding obligation of the Owner Trustee (and, to the extent set forth in the respective Operative Agreement, of First Security) enforceable against the Owner Trustee (and, to the extent set forth in the respective Operative Agreement, against First Security) in accordance with its terms; and the Trust Agreement constitutes a legal, valid and binding obligation of the Owner Participant enforceable against the Owner Participant 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 constitute the 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 the Certificates are entitled to the benefits and security afforded by the Indenture in accordance with their terms and the terms of the Indenture. 3. On November 15, 1993, the Owner Trustee received from Lufthansa such title to the Aircraft as Lufthansa conveyed to the Owner Trustee, subject to the rights of (a) Lufthansa under the Sales Agreement, (b) DA under the Modification Agreement and (c) the Owner Trustee and the Lessee under the Agreement to Lease; and to our knowledge, there exist no Liens affecting the title of the Owner Trustee to the Lessor's Estate resulting from claims against First Security not related to the ownership of the Lessor's Estate or the administration of the Lessor's Estate or any other transaction pursuant to the Indenture or any document included in the Trust Indenture Estate. 4. All the properties which are part of the Trust Indenture Estate (but not including those properties which are not to be part of the Trust Indenture Estate until the Exchange Date) have been pledged and mortgaged with the Indenture Trustee as part of the Trust 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 and the Collateral Agreement, to the Lien of the Indenture in favor of the Holders of the Certificates. 5. To the extent the Uniform Commercial Code of the State of Utah (the "UCC") is applicable, except for the Indenture Trustee's taking of 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 which the Indenture by its terms purports to create in favor of the Indenture Trustee as of the Closing Date (the "Security Interest"), and (ii) to perfect in the State of Utah the 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 Secretary of State of the State of Utah 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. 6. The Trust Agreement duly creates a legal and valid trust under Utah law, the trust created by the Trust Agreement has been duly created and exists for the benefit of the Owner Participant, and the Trust Agreement creates for the benefit of the Owner Participant the interest in the Lessor's Estate which the Trust Agreement by its terms purports to create, subject, however, to the Trust Indenture Estate acting as security for the Certificates issued under the Indenture, for the use and benefit of the Holders from time to time thereof, as provided in the Indenture and the Collateral Agreement. 7. Neither the execution and delivery by the Owner Trustee or First Security, as the case may be, of the Operative Agreements, nor the issuance, execution and delivery by the Owner Trustee of the Certificates nor the consummation of any of the transactions by the Owner 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 governmental authority or agency of the State of Delaware or the United States of America governing the banking or trust powers of First Security. 8. Assuming that the trust created by the Trust Agreement is treated as a grantor trust for federal income tax purposes within the contemplation of Sections 671 through 678 of the Internal Revenue Code of 1986, there are no fees, taxes, or other charges (except taxes imposed on fees payable to the Owner Trustee) payable to the State of Utah or any political subdivision thereof in connection with the execution, delivery or performance by the Owner Trustee, the Indenture Trustee, the Lessee or the Owner Participant, as the case may be, of the Operative Agreements or in connection with the making by the Owner Participant of its investment in the Aircraft or its acquisition of the beneficial interest in the Lessor's Estate or in connection with the issuance and acquisition of the Certificates or the investment of Liquid Collateral (as defined in the Collateral Agreement) in Specified Investments (as defined in the Collateral Agreement), and neither the Owner Trustee, the Lessor's Estate nor the trustee created by the Trust Agreement will be subject to any fee, tax or other governmental charge (except taxes on fees payable to the Owner Trustee) under the laws of the State of Utah or any political subdivision thereof on, based on or measured by, directly or indirectly, the gross receipts, net income or value of the Lessor's Estate by reason of the creation or continued existence of the trust under the terms of the Trust Agreement pursuant to the laws of the State of Utah or the Owner Trustee's performance of its duties under the Trust Agreement. 9. The execution, delivery and performance by the Owner Trustee or First Security, as the case may be, of each of the Operative Agreements and the issuance, execution, delivery and performance of the Certificates by the Owner Trustee are not in violation of the Articles of Association 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, or 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. 10. There is no fee, tax or other governmental charge 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 or the beneficial interests in the Lessor's Estate, by reason of the creation of the trust under the Trust Agreement pursuant to the laws of the State of Utah or the Owner Trustee's performance of its duties under the Trust Agreement within the State of Utah, which would not have been imposed if First Security did not have its principal place of business and did not perform its obligations under the Operative Agreements in the State of Utah. 11. Neither a Utah Court nor a Federal Court applying Utah 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 in accordance with its terms or with the consent of the Indenture Trustee, so long as the Lien of the Indenture on the Trust Indenture Estate has not been released or payment of the principal of, and premium, if any, and interest on, the Certificates has not been made in full. Under the laws of the State of Utah, so long as the Trust Agreement has not been terminated in accordance with its terms or with the consent of the Indenture Trustee, 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 an insolvency proceeding has been commenced) (collectively, the "Creditors") may acquire valid claims and liens, as to the Lessor's Estate, only against the rights of such Owner Participant under the Trust Agreement or in the Lessor's Estate, and do not have, and may not through the enforcement of such Creditors' rights acquire, any greater rights than such Owner Participant with respect to the Trust Agreement or the Lessor's Estate. The foregoing opinions are subject to the following assumptions, exceptions and qualifications: A. The foregoing opinions are limited to the laws of the State of Utah and the federal laws of the United States of America governing the banking and trust powers of 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) the Federal Aviation Act of 1958, as amended (except with respect to the opinion set forth in paragraph 1 above concerning the citizenship of First Security), or (iii) state securities or blue sky laws. Insofar as the foregoing opinions relate to the validity and enforceability in Utah of the Certificates and the other Operative Agreements expressed to be governed by the laws of the State of New York, we have assumed that the Certificates and such other Operative Agreements 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 Owner Trustee, of the Operative Agreements 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. The opinion set forth in paragraph 1 above concerning the citizenship of First Security is based upon facts contained in an affidavit of First Security, made by its _____________, the facts set forth in which we have not independently verified. E. We have assumed the due authentication of the Certificates by the Indenture Trustee. F. We have assumed that all signatures 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. G. We do not purport to be experts in respect of, or express any opinion concerning, aviation law or other laws, rules or regulations applicable to the particular nature of the equipment to be acquired by the Owner Trustee. H. We have made no investigation of, and, except as expressly provided in paragraph 3 above, we express no opinion concerning, the nature of the title to any part of the Lessor's Estate or the priority of any mortgage or security interest. I. 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. J. The opinions expressed in paragraph 11 are subject to principles of equity. This opinion is rendered solely for your benefit and may not be furnished or quoted to or relied upon by any other person or entity for any purpose without our prior written consent, except that the law firm of David Polk & Wardwell may rely on this opinion in connection with the rendering of its opinion dated the date hereof in connection with the financing described herein. We rendered an opinion dated September 1, 1993 (the "Agreement to Lease Opinion"), a copy of which is attached hereto. We hereby consent and agree that the addressees hereto who were not addressees to the Agreement to Lease Opinion may rely on the Agreement to Lease Opinion as fully and with the same force and effect as if such addressees were originally named therein on the date of the Agreement to Lease Opinion. Very truly yours, SCHEDULE A Lessee Federal Express Corporation 2007 Corporate Plaza Memphis, Tennessee 38132-2140 Owner Trustee First Security Bank of Utah, National Association 79 South Main Street Salt Lake City, Utah 84111 Attention: Corporate Trust Administration Indenture Trustee NationsBank of Georgia, National Association Corporate Trust Administration GA1-006-09-11 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Pass Through Trustee NationsBank of South Carolina, National Association 1301 Gervis Street Fourth Floor Columbia, South Carolina 29201 Attention: Corporate Trust Administration Owner Participant LLG Aircraft Leasing, L.P. 1209 Orange Street Wilmington, Delaware 19801 Underwriters Goldman, Sachs & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated c/o Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 LC Bank Westdeutsche Landesbank Girozentrale, New York Branch 1211 Avenue of the Americas New York, New York 10036-8701 Exhibit P-2 Letterhead of Ray, Quinney & Nebeker Commencement Date (Exchange Date)* To Each of the Persons Listed on Schedule A Attached Hereto Re: Federal Express Corporation Trust Ladies and Gentlemen: We have acted as special counsel to First Security Bank of Utah, National Association, a national banking association ("First Security"), in connection with the Trust Agreement dated as of September 1, 1993, as amended and restated as of March 1, 1994 (the "Trust Agreement"), between First Security and LLG Aircraft Leasing, L.P., a Delaware limited partnership (the "Owner Participant"). This opinion is furnished pursuant to Section 4.02(j)(iv) and Section 4.03(l)(v) of the Participation Agreement, dated as of March 1, 1994, (the "Participation Agreement"), among Federal Express Corporation, as Lessee, the Owner Participant, First Security, not in its individual capacity except as specifically set forth therein but solely as Owner Trustee (the "Owner Trustee") under the Trust Agreement, NationsBank of Georgia, National Association, as Indenture Trustee, NationsBank of South Carolina, National Association, as Pass Through Trustee, and Westdeutsche Landesbank Girozentrale, New York Branch. Capitalized terms used herein and not otherwise defined are used as defined in or by reference in Schedule II to the Participation Agreement. We have examined executed counterparts or copies otherwise identified to our satisfaction of the Operative Agreements ((other than the Indenture and Security Agreement Supplement, the form of which we - ------------ * If the Exchange Date does not occur on the Commencement Date, a separate opinion, dated the Exchange Date, shall be provided as to all matters below, except as specifically noted. have examined))*. We have also examined originals or copies of such other documents, such corporate records, certificates and other statements of governmental officials and corporate officers and other representatives of the corporations or entities referred to herein and such other instruments as we have deemed necessary or appropriate for the purposes of this opinion. Moreover, as to certain facts material to the opinions expressed herein, we have relied upon representations and warranties contained in the Operative Agreements. 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 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, is a Citizen of the United States as that term is defined in the Federal Aviation Act of 1958, as amended, (the "Act"), and each of First Security and the Owner Trustee, 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 Operative Agreements to which it is a party (other than the Certificates) and to issue, execute, deliver and perform the Certificates. 2. Each of First Security and the Owner Trustee, as the case may be, has duly authorized, executed and delivered each Operative Agreement ((other than the - ----------- * Insert in Commencement Date opinion only if Exchange Date does not occur on the Commencement Date. Indenture and Security Agreement Supplement))* to which it is a party; each such document constitutes a legal, valid and binding obligation of the Owner Trustee (and, to the extent set forth in the respective Operative Agreement, of First Security) enforceable against the Owner Trustee (and, to the extent set forth in the respective Operative Agreement, against First Security) in accordance with its terms; and the Trust Agreement, as supplemented by the Trust Agreement Supplement covering the Aircraft, constitutes a legal, valid and binding obligation of the Owner Participant enforceable against the Owner Participant 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 constitute the 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 the Certificates are entitled to the benefits and security afforded by the Indenture in accordance with their terms and the terms of the Indenture. 3. On November 15, 1993, the Owner Trustee received from Lufthansa such title to the Aircraft as Lufthansa conveyed to the Owner Trustee, subject to the rights of (a) Lufthansa under the Sales Agreement, (b) DA under the Modification Agreement and (c) the Owner Trustee and the Lessee under the Agreement to Lease; and to our knowledge, there exist no Liens affecting the title of the Owner Trustee to the Lessor's Estate resulting from claims against First Security not related to the ownership of the Lessor's Estate or the administration of the Lessor's Estate or any other transaction pursuant to the Indenture or any document included in the Trust Indenture Estate. - -------------- * Insert in the Commencement Date opinion only if the Exchange Date does not occur on the Commencement Date. (4. All the properties which are part of the Trust Indenture Estate have been pledged and mortgaged with the Indenture Trustee as part of the Trust 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 and the Collateral Agreement, to the Lien of the Indenture in favor of the Holders of the Certificates.)* (5. To the extent the Uniform Commercial Code of the State of Utah (the "UCC") is applicable, except for the Indenture Trustee's taking of 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 which the Indenture by its terms purports to create in favor of the Indenture Trustee on or prior to the Exchange Date (the "Security Interest"), and (ii) to perfect in the State of Utah the 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 Secretary of State of the State of Utah 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.)** - ------------- * Insert if the Exchange Date occurs on the Commencement Date. If the Exchange Date does not occur on the Commencement Date, this paragraph need be provided in the Exchange Date opinion only. ** Insert if Exchange Date occurs on the Commencement Date. If the Exchange Date does not occur on the Commencement Date, this paragraph need be provided in the Exchange Date opinion only. 6. The Trust Agreement, as supplemented by the Trust Agreement Supplement covering the Aircraft, duly creates a legal and valid trust under Utah law, the trust created by the Trust Agreement, as so supplemented, has been duly created and exists for the benefit of the Owner Participant, and the Trust Agreement, as so supplemented, creates for the benefit of the Owner Participant the interest in the Lessor's Estate which the Trust Agreement, as so supplemented, by its terms purports to create, subject, however, to the Trust Indenture Estate acting as security for the Certificates issued under the Indenture, for the use and benefit of the Holders from time to time thereof, as provided in the Indenture and the Collateral Agreement. 7. Neither the execution and delivery by the Owner Trustee or First Security, as the case may be, of the Operative Agreements ((other than the Indenture and Security Agreement Supplement))*, nor the issuance, execution and delivery by the Owner Trustee of the Certificates nor the consummation of any of the transactions by the Owner Trustee or First Security, as the case may be, contemplated thereby, requires or required, as of the date of execution thereof, the consent or approval of, the giving of notice to, the registration with, or the taking of any other action in respect of, any governmental authority or agency of the State of Delaware or the United States of America governing the banking or trust powers of First Security. 8. Assuming that the trust created by the Trust Agreement, as supplemented by the Trust Agreement Supplement covering the Aircraft, is treated as a grantor trust for federal income tax purposes within the contemplation of Sections 671 through 678 of the Internal Revenue Code of 1986, there are - ------------ * Insert in Commencement Date opinion only if the Exchange Date does not occur on the Commencement Date. no fees, taxes, or other charges (except taxes imposed on fees payable to the Owner Trustee) payable to the State of Utah or any political subdivision thereof in connection with the execution, delivery or performance by the Owner Trustee, the Indenture Trustee, the Lessee or the Owner Participant, as the case may be, of the Operative Agreements ((other than the Indenture and Security Agreement Supplement))* or in connection with the making by the Owner Participant of its investment in the Aircraft or its acquisition of the beneficial interest in the Lessor's Estate or in connection with the issuance and acquisition of the Certificates or the investment of Liquid Collateral (as defined in the Collateral Agreement) in Specified Investments (as defined in the Collateral Agreement), and neither the Owner Trustee, the Lessor's Estate nor the trustee created by the Trust Agreement, as so supplemented, will be subject to any fee, tax or other governmental charge (except taxes on fees payable to the Owner Trustee) under the laws of the State of Utah or any political subdivision thereof on, based on or measured by, directly or indirectly, the gross receipts, net income or value of the Lessor's Estate by reason of the creation or continued existence of the trust under the terms of the Trust Agreement, as so supplemented, pursuant to the laws of the State of Utah or the Owner Trustee's performance of its duties under the Trust Agreement, as so supplemented. 9. The execution, delivery and performance by the Owner Trustee or First Security, as the case may be, of each of the Operative Agreements ((other than the Indenture and Security Agreement - ------------ * Insert in Commencement Date opinion only if the Exchange Date does not occur on the Commencement Date. Supplement))* and the issuance, execution, delivery and performance of the Certificates by the Owner Trustee are not or were not, on the date of execution thereof, in violation of the Articles of Association 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, or 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. 10. There is no fee, tax or other governmental charge 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 or the beneficial interests in the Lessor's Estate, by reason of the creation of the trust under the Trust Agreement, as supplemented by the Trust Agreement Supplement covering the Aircraft, pursuant to the laws of the State of Utah or the Owner Trustee's performance of its duties under the Trust Agreement, as so supplemented, within the State of Utah, which would not have been imposed if First Security did not have its principal place of business and did not perform its obligations under the Operative Agreements in the State of Utah. 11. Neither a Utah Court nor a Federal Court applying Utah law, if properly presented with the issue and after having properly considered such issue, would permit the Owner Participant to terminate the Trust Agreement, as supplemented by the Trust Agreement Supplement covering the Aircraft, - ------------ * Insert in Commencement Date opinion only if the Exchange Date does not occur on the Commencement Date. except in accordance with its terms or with the consent of the Indenture Trustee, so long as the Lien of the Indenture on the Trust Indenture Estate has not been released or payment of the principal of, and premium, if any, and interest on, the Certificates has not been made in full. Under the laws of the State of Utah, so long as the Trust Agreement, as so supplemented, has not been terminated in accordance with its terms or with the consent of the Indenture Trustee, 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 an insolvency proceeding has been commenced) (collectively, the "Creditors") may acquire valid claims and liens, as to the Lessor's Estate, only against the rights of such Owner Participant under the Trust Agreement, as so supplemented, or in the Lessor's Estate, and do not have, and may not through the enforcement of such Creditors' rights acquire, any greater rights than such Owner Participant with respect to the Trust Agreement, as so supplemented, or the Lessor's Estate. The foregoing opinions are subject to the following assumptions, exceptions and qualifications: A. The foregoing opinions are limited to the laws of the State of Utah and the federal laws of the United States of America governing the banking and trust powers of 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) the Federal Aviation Act of 1958, as amended (except with respect to the opinion set forth in paragraph 1 above concerning the citizenship of First Security), or (iii) state securities or blue sky laws. Insofar as the foregoing opinions relate to the validity and enforceability in Utah of the Certificates and the other Operative Agreements expressed to be governed by the laws of the State of New York, we have assumed that the Certificates and such other Operative Agreements 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 Owner Trustee, of the Operative Agreements 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. The opinion set forth in paragraph 1 above concerning the citizenship of First Security is based upon facts contained in an affidavit of First Security, made by its ____________, the facts set forth in which we have not independently verified. E. We have assumed the due authentication of the Certificates by the Indenture Trustee. F. We have assumed that all signatures 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. G. We do not purport to be experts in respect of, or express any opinion concerning, aviation law or other laws, rules or regulations applicable to the particular nature of the equipment to be acquired by the Owner Trustee. H. We have made no investigation of, and, except as expressly provided in paragraph 3 above, we express no opinion concerning, the nature of the title to any part of the Lessor's Estate or the priority of any mortgage or security interest. I. 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. J. The opinions expressed in paragraph 11 are subject to principles of equity. This opinion is rendered solely for your benefit and may not be furnished or quoted to or relied upon by any other person or entity for any purpose without our prior written consent, except that the law firm of David Polk & Wardwell may rely on this opinion in connection with the rendering of its opinion dated the date hereof in connection with the financing described herein. Very truly yours, SCHEDULE A Lessee Federal Express Corporation 2007 Corporate Plaza Memphis, Tennessee 38132-2140 Owner Trustee First Security Bank of Utah, National Association 79 South Main Street Salt Lake City, Utah 84111 Attention: Corporate Trust Administration Indenture Trustee NationsBank of Georgia, National Association Corporate Trust Administration GA1-006-09-11 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Owner Participant LLG Aircraft Leasing, L.P. 1209 Orange Street Wilmington, Delaware 19801 Exhibit Q-1 Letterhead of Davis Polk & Wardwell Closing Date To Each of the Parties Named on Schedule A Hereto Re: Federal Express Corporation Trust Ladies and Gentlemen: We have acted as special counsel for Federal Express Corporation, a Delaware corporation ("Federal Express"), in connection with the transaction contemplated by the Participation Agreement (Federal Express Corporation Trust ______), dated as of March 1, 1994, (the "Participation Agreement"), among Federal Express, as Lessee, LLG Aircraft Leasing, L.P., as Owner Participant, First Security Bank of Utah, National Association, as Owner Trustee, NationsBank of Georgia, National Association, as Indenture Trustee, NationsBank of South Carolina, as Pass Through Trustee, and Westdeutsche Landesbank Girozentrale, New York Branch, as LC Bank. Unless otherwise defined herein, capitalized terms used herein shall have the meanings assigned thereto in Schedule II to the Participation Agreement. References herein to "Commencement Documents" are to the Lease, any Lease Supplement, the Trust Agreement Supplement covering the Aircraft, any Indenture and Security Agreement Supplement and any other Operative Agreement not required to be executed on or prior to the Closing Date. References herein to the "Pre- Funding Documents" are to the Collateral Agreement, the Demand Notes and the Letter of Credit. This opinion is being delivered pursuant to Section 4.01(k)(vii) of the Participation Agreement. The Participation Agreement provides, among other things, for the financing of the Owner Trustee's payment of the Purchase Price, Modification Cost, Parts Cost and related expenses with respect to the Aircraft using the proceeds from the public offering of Pass Through Certificates. Three Series of Pass Through Certificates will be issued by separate Pass Through Trusts, each formed to acquire, among other securities, the Certificates bearing a particular interest rate and having a particular maturity that will be issued under the Indenture. In connection with the opinions expressed below, we have examined the Participation Agreement, the Original Trust Agreement, the form of Trust Agreement Supplement, the form of Lease and Lease Supplement, the Indenture, the form of Indenture and Security Agreement Supplement, the Collateral Agreement, the Sales Agreement, the Agreement to Lease, the Modification Agreement, the Parts and Services Agreement, the Certificates, the Pass Through Certificates, the Pass Through Agreement and each Series Supplement. 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 examination, we have assumed the genuineness of all signatures and the authenticity of all documents submitted to us as originals and the conformity with the originals of all documents submitted to us as copies. As to any facts material to our opinions expressed below, we have, with your consent, relied on the representations and warranties made in or pursuant to the Participation Agreement and the other documents referred to therein, the accuracy of which we have not independently verified. In addition, we have, when relevant facts were not independently established by us, relied, to the extent we deemed such reliance proper, upon certificates of public officials and certificates, telegrams and other written or oral statements of officers of the parties referred to herein. Based on the foregoing, it is our opinion that: 1. The execution, delivery and performance by the Owner Trustee, in its individual or trust capacity, as the case may be, of the Operative Agreements (other than the Certificates, the Commencement Documents, the Sales Agreement and the Pre-Funding Documents) to which it is a party, and the issuance, execution, delivery and performance of the Certificates by the Owner Trustee in its trust capacity do not, or did not on the date of execution thereof, violate, and fully comply, or did fully comply on the date of execution thereof, with, any laws and governmental rules and regulations of the State of New York that may be applicable to the Owner Trustee in its individual or trust capacity, as the case may be. The opinion set forth in this paragraph 1 is rendered without regard to the effect, if any, on such issuance (in the case of the Certificates), execution, delivery, performance of the taking of any other action, the conduct of any other business or the exercise of any other powers by First Security Bank of Utah, National Association in its individual or in a trust capacity in the State of New York not related to the transactions contemplated by the Operative Agreements. 2. The execution, delivery and performance of the Participation Agreement, the Pass Through Agreement and each Series Supplement by the Pass Through Trustee in its individual or trust capacity, as the case may be, and the issuance, execution, delivery and performance of the Pass Through Certificates by the Pass Through Trustee in its trust capacity do not contravene any laws and governmental rules and regulations of the State of New York that may be applicable to the Pass Through Trustee in its individual or trust capacity, as the case may be. The opinion set forth in this paragraph 2 is rendered without regard to the effect, if any, on such issuance (in the case of the Pass Through Certificates), execution, delivery or performance of the taking of any other action, the conduct of any other business or the exercise of any other powers by NationsBank of South Carolina, National Association, in its individual or in a trust capacity in the State of New York not related to the transactions contemplated by the Operative Agreements. 3. (a) Each of the Pass Through Agreement, the Series Supplements and the other Operative Agreements to which Federal Express is or is to be a party has been duly authorized by Federal Express. Each of the Pass Through Agreement, the Series Supplements and the other Operative Agreements (other than the Commencement Documents) to which Federal Express is a party has been duly executed and delivered by Federal Express. (b) The execution, delivery and performance of each of the Pass Through Agreement, the Series Supplements and the other Operative Agreements to which Federal Express is or is to be 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 3(b) is rendered without regard to the taking of any other action or the conduct of any other business by Federal Express in the State of New York not related to the transactions contemplated by the Operative Agreements. 4. Assuming (i) the due authorization, execution and delivery of the Pass Through Agreement, each Series Supplement and each other Operative Agreement by each of the parties to each such document (other than Federal Express), (ii) the due authorization, execution, issue and delivery by the Owner Trustee, and the due authentication by the Indenture Trustee, of the Certificates to be issued under the Indenture in accordance with the terms of the Indenture, (iii) the due authorization, execution, issuance, delivery and authentication by the Pass Through Trustee of the Pass Through Certificates to be issued under the Pass Through Agreement and the Series Supplement relating to such Pass Through Certificates, in each case in accordance with the terms of the Pass Through Agreement and such Series Supplement, and (iv) that the form of each such document is in compliance with all applicable laws and governmental rules and regulations (other than Federal laws and the laws of the State of New York) then: (A) each such document (other than the Commencement Documents, the Sales Agreement and the Pre-Funding Documents) 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 as of the Closing Date, except that no opinion is given with respect to perfection of such security interest on the date hereof; (C) the Certificates, when issued to and acquired by the Pass Through Trustee, will be legal, valid and binding obligations of the Owner Trustee enforceable against the Owner Trustee in accordance with their terms and the terms of the Indenture and will be entitled to the benefits of the Indenture, including the benefit of the security interest created thereby, except that no opinion is given with respect to the perfection of such security interest on the date hereof; (D) the Pass Through Certificates, when issued to and acquired by the Underwriters in accordance with the Underwriting Agreement, will be legal, valid and binding obligations of the Pass Through Trustee enforceable against the Pass Through Trustee in accordance with their terms and will be entitled to the benefits of the Pass Through Agreement and the Series Supplement relating thereto; and (E) the beneficial interest of the Owner Participant under the Trust Agreement in and to the properties which are part of the Trust Indenture Estate is subject, to the extent provided in the Indenture, to the Lien of the Indenture in favor of the Holders. 5. Federal Express's participation in the transactions contemplated by the Operative Agreements does not and will not constitute a violation of Section 7 of the Securities Exchange Act of 1934. 6. 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 under the Trust Indenture Act of 1939, as amended. 7. On the Commencement Date, the provisions of Section 1110 of the United States Bankruptcy Code will be applicable to the Aircraft for the benefit of the Lessor, as lessor under and by reason of the Lease. Upon assignment of the Lease as provided for in the Indenture upon the Exchange Date, the aforesaid rights under Section 1110 will have been assigned to the Indenture Trustee pursuant to the Indenture as part of the collateral for the Certificates. The foregoing opinions are subject to the following qualifications: (a) For purposes of the matters stated in paragraph 3(a) above and as to matters of Tennessee law, we have relied on the opinion dated the date hereof of Kenneth R. Masterson, Senior Vice President and General Counsel of the Lessee. Such Opinion is satisfactory to to us in form and scope and we believe that you and we are justified in relying thereon. (b) For the purposes of the opinion provided in paragraph 7 above, (i) we have assumed that there will be no change in any applicable law on or prior to the Commencement Date or Exchange Date as of which such opinion speaks; (ii) we have assumed that there will be no amendments or modifications to the forms of the Lease or Lease Supplement (other than the insertion of information as provided for; and (iii) as to matters of fact relevant to such opinion we have relied without independent investigation on the conclusions relating to the Aircraft expressed in the appraisal as of the date hereof by BK Associates, Inc. (c) 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 and the laws of the United States and the General Corporation Law of the State of Delaware. (d) The opinion as to enforceability contained in paragraph 4 above is subject, as to enforceability of rights and remedies, to (i) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and (ii) recognized equitable principles 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. (e) 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 or furnished to any other person, other than your successors and permitted assigns, without our prior written consent. (f) We rendered an opinion dated September 1, 1993 (the "Agreement to Lease Opinion"), a copy of which is attached hereto. We hereby consent and agree that the addressees hereto who were not addressees to the Agreement to Lease Opinion may rely on the Agreement to Lease Opinion as fully and with the same force and effect as if such addressees were originally named therein on the date of the Agreement to Lease Opinion. Very truly yours, SCHEDULE A Lessee Federal Express Corporation 2007 Corporate Plaza Memphis, Tennessee 38132-2140 Owner Trustee First Security Bank of Utah, National Association 79 South Main Street Salt Lake City, Utah 84111 Attention: Corporate Trust Administration Indenture Trustee NationsBank of Georgia, National Association Corporate Trust Administration GA1-006-09-11 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Pass Through Trustee NationsBank of South Carolina, National Association 1301 Gervis Street Fourth Floor Columbia, South Carolina 29201 Attention: Corporate Trust Administration Owner Participant LLG Aircraft Leasing, L.P. 1209 Orange Street Wilmington, Delaware 19801 Underwriters Goldman, Sachs & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated c/o Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 Exhibit Q-2 Letterhead of Davis Polk & Wardwell Commencement Date (Exchange Date)* To Each of the Parties Named on Schedule A Hereto Re: Federal Express Corporation Trust Ladies and Gentlemen: We have acted as special counsel for Federal Express Corporation, a Delaware corporation ("Federal Express"), in connection with the transaction contemplated by the Participation Agreement (Federal Express Corporation Trust ______), dated as of March 1, 1994 (the "Participation Agreement"), among Federal Express, as Lessee, LLG Aircraft Leasing, L.P., as Owner Participant, First Security Bank of Utah, National Association, as Owner Trustee, NationsBank of Georgia, National Association, as Indenture Trustee, NationsBank of South Carolina, as Pass Through Trustee, and Westdeutsche Landesbank Girozentrale, New York Branch. Unless otherwise defined herein, capitalized terms used herein shall have the meanings assigned thereto in Schedule II to the Participation Agreement. This opinion is being delivered pursuant to Section 4.02(j)(v) and Section 4.03(l)(vi) of the Participation Agreement. The Participation Agreement provides, among other things, for the financing of the Owner Trustee's payment of the Purchase Price, Modification Cost, Parts Cost and related expenses with respect to the Aircraft using the proceeds from the public offering of Pass Through Certificates. Two Series of Pass Through Certificates have been 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. - ------------ * If the Exchange Date does not occur on the Commencement Date a separate opinion, dated the Exchange Date, shall be provided as to all matters below, except as otherwise specified. In connection with the opinions expressed below, we have examined the Participation Agreement, the Original Trust Agreement, the Trust Agreement Supplement covering the Aircraft, the Lease and Lease Supplement, the Indenture, the (form of)* Indenture and Security Agreement Supplement, the Collateral Agreement, the Sales Agreement, the Agreement to Lease, the Modification Agreement, the Parts and Services Agreement, the Certificates, the Pass Through Certificates, the Pass Through Agreement and each Series Supplement. 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 examination, we have assumed the genuineness of all signatures and the authenticity of all documents submitted to us as originals and the conformity with the originals of all documents submitted to us as copies. As to any facts material to our opinions expressed below, we have, with your consent, relied on the representations and warranties made in or pursuant to the Participation Agreement and the other documents referred to therein, the accuracy of which we have not independently verified. In addition, we have, when relevant facts were not independently established by us, relied, to the extent we deemed such reliance proper, upon certificates of public officials and certificates, telegrams and other written or oral statements of officers of the parties referred to herein. Based on the foregoing, it is our opinion that: 1. With respect to that portion, if any, of the Aircraft and the other property included in the Lessor's Estate as may not be covered by the recording system established by the Federal Aviation Administration (the "FAA") pursuant to Section 503(a) of the Federal Aviation Act of 1958, as amended the "Act"), no filing or recording of any document or other action was or - ------------ * Insert in Commencement Date opinion only if Exchange Date does not occur on the Commencement Date. is necessary in order to establish the Owner Trustee's title thereto and interest therein as against Federal Express and any third parties. (2. The Lease creates a valid leasehold interest in the Aircraft, the entitlement thereof to the benefits of recordation under the Act being subject to the due and timely filing for recording of (A) the Lease(, with the Indenture (as supplemented by the Indenture and Security Agreement Supplement) attached as an exhibit, (B) the Indenture)* and ((B)/(C)) the Trust Agreement as supplemented by the Trust Agreement Supplement covering the Aircraft.)* (3. The execution, delivery and performance by the Owner Trustee, in its individual or trust capacity, as the case may be, of the Operative Agreements (other than the Certificates, the Sales Agreement and the Collateral Agreement) to which it is a party, and the issuance, execution, delivery and performance of the Certificates by the Owner Trustee in its trust capacity do not, or did not as of the date of execution thereof, violate, and fully comply, or did fully comply as of the date of execution thereof, with, any laws and governmental rules and regulations of the State of New York that may be applicable to the Owner Trustee in its individual or trust capacity, as the case may be. The opinion set forth in this paragraph 3 is rendered without regard to the effect, if any, on such issuance (in the case of the Certificates), execution, delivery, performance of the taking of any other action, the conduct of any other business or the exercise of any other powers by First Security Bank of Utah, National Association in its individual or in a trust capacity in the State of - ------------ * This paragraph shall be provided in the Commencement Date and Exchange Date opinions, except that, if the Exchange Date does not occur on the Commencement Date, the bracketed language within this paragraph may be omitted from the Commencement Date opinion. New York not related to the transactions contemplated by the Operative Agreements.)* (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 of each of the Operative Agreements to which Federal Express is a party do not, or did not on the date of execution thereof, violate, and fully comply, or did fully comply on the date of execution thereof, with, any laws and governmental rules and regulations of the State of New York that may be applicable to Federal Express. The opinion set forth in this paragraph 4(b) is rendered without regard to the taking of any other action or the conduct of any other business by Federal Express in the State of New York not related to the transactions contemplated by the Operative Agreements.)** (5. 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) the due authorization, execution, issue 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, (iii) the due authorization, execution, issuance, delivery and authentication by the Pass Through Trustee of the Pass Through Certificates issued under the Pass Through Agreement and the Series Supplement - ------------ * Insert if the Exchange Date occurs on the Commencement Date. If the Exchange Date does not occur on the Commencement Date, this paragraph need be provided in the Exchange Date opinion only. ** Insert if the Exchange Date occurs on the Commencement Date. If the Exchange Date does not occur on the Commencement Date, this paragraph need be provided in the Commencement Date opinion only. relating to such Pass Through Certificates, in each case in accordance with the terms of the Pass Through Agreement and such Series Supplement, and (iv) that the form of each such document is in compliance with all applicable laws and governmental rules and regulations (other than Federal laws and the laws of the State of New York) then: (A) each such document (other than the Collateral Agreement, the Demand Notes and the Letter of Credit (the "Pre-Funding Documents") and the Sales Agreement) constitutes a legal, valid and binding agreement of each party thereto enforceable against each such party in accordance with its terms; (B) the Indenture, as supplemented by the Indenture and Security Agreement Supplement, creates, for the benefit of the Holders, the security interest in the Trust Indenture Estate that it purports to create as of the Exchange Date; (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 as of the Exchange Date; and (D) the beneficial interest of the Owner Participant under the Trust Agreement, as supplemented by the Trust Agreement Supplement covering the Aircraft, 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 5 are subject to the due recording with the FAA of the Indenture, the Indenture and Security Agreement Supplement and the Trust Agreement Supplement covering the Aircraft.)* (6. All the properties which are part of the Trust Indenture Estate as of the Exchange Date (including all right, title and interest of the - -------------- * Insert if the Exchange Date occurs on the Commencement Date. If the Exchange Date does not occur on the Commencement Date, this paragraph need be provided in the Exchange Date opinion only. Owner Trustee pledged and mortgaged by it pursuant to the Indenture, as supplemented by the Indenture and Security Agreement Supplement, 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 (a) to the due recording or filing of those documents referred to in paragraph 2 above and the financing statements referred to in Section 4.03(f) of the Participation Agreement and (b) at the time of the recording of the Indenture and Security Agreement Supplement covering the Aircraft, to the absence of any mortgages, liens, security interests, charges or other encumbrances in or upon the property covered by the Indenture and Security Agreement Supplement).)* (7. The Indenture creates, as security for all of the Certificates duly issued and to be issued under the Indenture, the first priority security interest in the Aircraft it purports to create, the perfection and rank thereof being subject to the registration with the FAA of the Aircraft in the name of the Owner Trustee and the due and timely filing for recording in accordance with the Act of the documents referred to in paragraph 2 above. We express no opinion pursuant to this paragraph 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 (5) and (6) of Section 101 of the Aviation Act.)* 8. Federal Express's participation in the transactions contemplated by the Operative Agreements does not and will not constitute a violation of Section 7 of the Securities Exchange Act of 1934. (9. The provisions of Section 1110 of the United States Bankruptcy Code are applicable to the Aircraft for the benefit of the Lessor, as lessor under and by reason of the Lease(, and the Lease, including the aforesaid rights under Section 1110, have been assigned to the Indenture Trustee pursuant to the Indenture as part of the collateral for the Certificates).)* The foregoing opinions are subject to the following qualifications: (a) For purposes of the matters stated in paragraph 4(a) above and as to matters of Tennessee law, we have relied on the opinion dated the date hereof of Kenneth R. Masterson, Senior Vice President and General Counsel of of the Lessee. Such opinion is satisfactory to us in form and scope and we believe that you and we are justified in relying thereon. (b) As to matters of fact relevant to the opinion in paragraph (9) above, we have relied without independent investigation on the conclusions relating to the Aircraft expressed in the appraisal as of March __, 1994 by BK Associates, Inc. (c) 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 and the laws of the United States and the General Corporation Law of the State of Delaware. (d) The opinion as to enforceability contained in paragraph 5 above is subject, as to enforceability of rights and remedies, to (i) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and (ii) recognized equitable principles 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 - ------------ * This paragraph shall be provided in the Commencement Date and Exchange Date opinions, except that, if the Exchange Date does not occur on the Commencement Date, the bracketed language within this paragraph may be omitted from the Commencement Date opinion. realization of the benefits of the security intended to be provided thereby. (e) 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 or furnished to any other person, other than your successors and permitted assigns, without our prior written consent. Very truly yours, SCHEDULE A Lessee Federal Express Corporation 2007 Corporate Plaza Memphis, Tennessee 38132-2140 Owner Trustee First Security Bank of Utah, National Association 79 South Main Street Salt Lake City, Utah 84111 Attention: Corporate Trust Administration Indenture Trustee NationsBank of Georgia, National Association Corporate Trust Administration GA1-006-09-11 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Owner Participant LLG Aircraft Leasing, L.P. 1209 Orange Street Wilmington, Delaware 19801 Exhibit R (Closing Date) TO EACH OF THE PARTIES LISTED ON SCHEDULE A ATTACHED HERETO. Re: Letters of Credit Nos. (LIST ALL 13) collectively, the "Letters of Credit") Ladies and Gentlemen: We, the undersigned, are members of the Central Legal Department of Westdeutsche Landesbank Girozentrale ("WestLB") and have advised WestLB and its New York Branch (the "Branch") in connection with the Letters of Credit referenced above, each dated as of the date of this opinion. Capitalized terms herein which are undefined have the meanings assigned to them in the Letters of Credit. In connection with the opinions hereinafter given, we have examined a copy of (a) the Letters of Credit, (b) each Participation Agreement (as defined in each of the Letters of Credit, collectively, the "Participation Agreements" and (c) each Indemnification Agreement (as defined in each of the Participation Agreements, together with the Letters of Credit and Participation Agreements, the "Agreements"), and such other certificates, documents, agreements and instruments as we have deemed necessary as a basis for the opinions expressed below. In such examination, we have assumed the genuiness of all signatures, the authenticity of all agreements, certificates, instruments and documents submitted to us as originals, and the conformity to the originals of all agreements, certificates, instruments and documents submitted to us as copies. As to questions of fact material to the opinions expressed below, we have, when relevant facts were not independently established by us, examined and relied upon representations of officers of WestLB. Based upon the foregoing examination and assumptions, and subject to the qualifications set forth below, we are of the opinion that: 1) WestLB is duly organized and validly existing as a German public law banking institution under the law of the State of North Rhine- Westphalia and has full power and authority (corporate and otherwise) to execute, deliver and perform each of the Agreements. 2) Any two of Sharon M. Maharg, Carmen Rances, Donald F. Wolf, August Kumbier and Horst Fuellenkemper, if acting jointly for and on behalf of the Branch, are duly authorized by WestLB to execute and deliver the Agreements for and on behalf of the Branch. Assuming the Agreements have been duly executed and delivered for and on behalf of the Branch by any two of such aforementioned persons acting jointly, no further authorization by or any corporate action of WestLB (including the Branch) is required in connection with the execution, delivery and performance of the Agreements. 3) (i) The governing law clause of each Letter of Credit, subjecting such Letter of Credit to the Uniform Customs and Practice for Documentary Credits (revision effective January 1, 1994) International Chamber of Commerce Publication No. 500, and, as to matters not covered therein, to New York law, is valid under German law. The governing law clause of each other Agreement subjecting such Agreement to New York law, is valid under German law. (ii) Under German law, New York law will be applied to an agreement such as the Agreements, which under German law has been validly subjected to New York law, except to the extent that (a) any of the terms of such agreement or any of the provisions of New York law applicable to such agreement are obviously irreconcilable with important principles of German law, (b) there are mandatory provisions of German law which must be applied to the transaction covered by such agreement irrespective of the law which governs such agreement or (c) all elements of the transaction covered by such agreement, other than the choice of law, are connected with only one country at the time of the choice of law and there are mandatory provisions of the law of such country applicable to such transaction. (iii) (a) None of the terms of the Agreements is irreconcilable with important principles of German law, (b) there are no mandatory provisions of German law which must be applied to the transactions covered by the Agreements irrespective of the law which governs the Agreements and (c) the transactions covered by the Agreements were not connected with only one country at the time the choice of law was made. (iv) Each Agreement is enforceable against WestLB in accordance with its terms and, subject to the opinion contained in paragraph (3)(i) through (iii), the applicable provisions of the chosen law of New York. 4) No authorization, consent, approval or other action by, and no notice to or filing with, any governmental, administrative or other authority or court of Germany or of the State of North Rhine-Westphalia is required for the execution or delivery of any Agreement by WestLB through the Branch or for the performance by WestLB or by the Branch of any Agreement. 5) The execution, delivery and performance of the Agreements by WestLB or the Branch will not result in any violation by WestLB or by the Branch of any law of Germany or the State of North Rhine-Westphalia. 6) The contractual obligations incurred by virtue of the execution and delivery of the Agreements for and on behalf of the Branch are the obligations of WestLB, and WestLB has no defenses against the performance of such obligations which are based on the fact that WestLB had acted through the Branch in executing and delivering the Agreements. 7) Any final and conclusive judgment of a court of the State of New York, New York County, or of the United States District Court for the Souther District of New York for a definite sum for the recovery of the amounts due and unpaid under the Agreements will be held enforceable against WestLB in the appropriate courts of Germany without re-examination or re-litigation of the matters adjudicated, except that such judgment is not so enforceable if any of the reasons for excluding enforceability set forth in Section 328(1) of the German Code of Civil Procedure is present, in particular (i) under the law of Germany said New York or federal court does not have jurisdiction, (ii) WestLB has not been served with process in a proper and timely fashion and therefore WestLB has not been able to defend itself against the claim in the court, (iii) the judgment conflicts with a prior judgment of a court of Germany or a prior judgment of a foreign court that is to be recognized in Germany, or the litigation resulting in the judgment to be enforced conflicts with litigation previously commenced in Germany, (iv) recognition of the judgment would be contrary to basic principles of the law of Germany, in particular but not limited to the constitutional human rights, or (v) reciprocity is not insured. With respect to the condition set forth in clause (v), reciprocity exists today with respect to the recognition of final and conclusive judgments of the courts of Germany by the relevant courts of the State of New York or the United States of America located within the County of New York, State of New York, as the case may be. The foregoing opinions are subject to the following qualifications: (i) The opinion in paragraph (3)(iv) is subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws affecting creditors' rights generally, as the same may be applied in the event of a bankruptcy, insolvency, reorganization, liquidation or similar situation involving WestLB. (ii) In giving the opinions in paragraphs (3)(iv) and (6), we have assumed, with your consent, that the Agreements are legal, valid, binding and enforceable under New York law, all as set forth more fully in the opinion dated the date of this opinion of Milbank, Tweed, Hadley & McCloy, issued in connection with the Agreements. (iii) No opinion is expressed with respect to the law of any jurisdiction other than the law of Germany and the State of North Rhine-Westphalia. (iv) With respect to the condition set forth in clause 7(v) above, in giving the opinion that such reciprocity today exists, we have, with your approval, relied upon the opinion, dated the date of this opinion, of Milbank, Tweed, Hadley & McCloy, issued in connection with the Agreements. Very truly yours, ________________________ ________________________ Peter Foller Dr. Klaus Poggemann Legal Counsel Legal Counsel SCHEDULE A NationsBank of Georgia, National Association, as Indenture Trustee NationsBank of South Carolina, National Association, as Pass Through Trustee Goldman, Sachs & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated Federal Express Corporation, as Lessee Moody's Investors Service, Inc. Standard & Poor's Corporation Draft of March 16, 1994 Exhibit S (Form of Opinion of Special Counsel to the LC Bank) (CLOSING DATE) TO EACH OF THE PARTIES LISTED ON SCHEDULE A ATTACHED HERETO Ladies and Gentlemen: We have acted as special New York counsel to Westdeutsche Landesbank Girozentrale ("WestLB"), New York Branch (the "Branch"), in connection with the transactions contemplated by the Participation Agreement (Federal Express Corporation Trust ______) dated as of March 1, 1994 (the "Participation Agreement") among Federal Express Corporation, LLG Aircraft Leasing, L.P., NationsBank of South Carolina, National Association, First Security Bank of Utah, National Association, NationsBank of Georgia, National Association and WestLB. This opinion is delivered to you pursuant to Section 4.01(k) of the Participation Agreement. For convenience of reference, all capitalized terms used herein and not otherwise defined herein have the meanings attributed thereto in the Participation Agreement. In acting as special New York counsel to WestLB, we participated in the drafting and negotiation of the Letter of Credit, in the negotiation of the Participation Agreement and the Indemnification Agreement and assisted in the execution and delivery of the Letter of Credit, the Participation Agreement and the Indemnification Agreement and the related documents and instruments. In connection with the opinions hereinafter given, we have examined forms of the Letter of Credit, the Participation Agreement and the Indemnification Agreement, as well as executed originals, or copies certified to our satisfaction, of certificates and other statements of public officials, or officers and representatives of WestLB and of other persons, and such agreements, instruments and documents as we have deemed necessary as a basis for the opinions hereinafter expressed. As to questions of fact material to such opinions, we have, when relevant facts were not independently established by us, relied upon the documents we have examined or upon certificates of the Branch of its officers or of public officials or other persons. In our examination of the documents referred to above we have assumed the genuineness of all signatures, the authenticity of documents submitted to us as originals, the conformity with the originals of all documents submitted to us as copies, the authenticity of the originals of such latter documents and (except with respect to the Branch in the case of the Letter of Credit, the Participation Agreement and the Indemnification Agreement) the due execution and delivery of each such document by the parties thereto and, in the case of the Participation Agreement and the Indemnfication Agreement, that each such document is the legal, valid and binding obligation of each party thereto other than the Branch. Based on the foregoing and on review of such other matters as we consider necessary or appropriate for purposes of this opinion, and having regard to legal considerations we deem relevant and subject to the comments and qualifications set forth below, we are of the opinion that: 1. WestLB is licensed by the Superintendent of Banks of the State of New York (the "Superintendent") to maintain a branch at 1211 Avenue of the Americas, New York, New York, in accordance with the provisions of Article V of the Banking Law of the State of New York (the "Banking Law"), and the Branch has the full power, authority and legal right under the laws of the State of New York to execute, deliver and perform the Participation Agreement and the Indemnification Agreement and to issue and perform the Letter of Credit. 2. The Letter of Credit has been duly authorized by all necessary corporate action on the part of the Branch, and neither the execution and delivery thereof nor its performance of any of the terms and provisions thereof will violate any United States Federal banking law or regulation applicable to it. 3. The Letter of Credit has been duly executed and delivered by the Branch, and constitutes the legal, valid and binding obligation of WestLB, enforceable in accordance with its terms except as limited by bankruptcy, insolvency, reorganization or other similar laws and equitable principals of general application to or affecting the enforcement of creditors' rights generally from time to time in effect, as the same may be applied in the event of a bankruptcy, insolvency, reorganization, liquidation or similar situation involving WestLB. 4. If any judgment against WestLB or the Branch which is final, conclusive, enforceable in, and rendered by a court of a competent jurisdiction in the Federal Republic of Germany (a "German Judgment"), in respect of any suit, action or proceeding against WestLB for the enforcement of the Letter of Credit, such German Judgment would be recognized and enforced by the courts of the State of New York and the United States of America located within the County of New York, State of New York to the extent and in the manner set forth in, and except as limited by, Article 53 of the Civil Practice Law and Rules of the State of New York or similar common law principles. The foregoing opinions are subject to the following qualifications: (i) We express no opinion herein as to the availability of equitable remedies, including specific performance and injunctive relief, against WestLB in an action to enforce the Participation Agreement or the Letter of Credit; (ii) In connection with the matters stated in paragraph 3, we call your attention to Wysko Investment Co. v. Great American Bank, 131 Bankr. 146 (D. Ariz. 1991), which holds that a bankruptcy court may enjoin payment under a letter of credit pursuant to Section 105 of the U.S. Bankruptcy Code, 11 U.S.C. section105, in unusual circumstances. Id. at 147. In that case, the unusual circumstance was a bankruptcy court finding that the injunction was necessary for the reorganization. Id. at 148. In re Delaware River Stevedores, Inc., 129 Bankr. 28 (Bkrtcy. E.D. Pa. 1991), also suggests that "an injunction prohibiting payment on a L/C could conceivably be appropriate" if certain factors relating to issuing Section 105(a) injunctions "generally weighed in the debtor's favor". Id. at 42, citing In re Guy C. Long, Inc., 74 Bankr. 939 (Bkrtcy. E.D. Pa. 1987). To the extent that the rationale of Wysko Investment Co. or Delaware River Stevedores would support the issuance of a permanent injunction against payment under the Letter of Credit, we are of the opinion that those cases do not reflect a correct statement of the law and are not controlling precedent in any court exercising bankruptcy jurisdiction outside of Arizona or the Eastern District of Pennsylvania, as the case may be. No opinion is expressed on whether a court exercising bankruptcy jurisdiction might issue a temporary restraining order or other interim relief in order to preserve the status quo concerning the Letter of Credit pending a review of the merits of any request to enjoin payment under the Letter of Credit; and (iii) We express no opinion as to Section 16.08 of the Participation Agreement. We are members of the Bar of the State of New York and we do not herein intend to express any opinion as to matters governed by any laws other than the Federal law of the United States of America and the law of the State of New York. We are not licensed to practice or advise on the law of the Federal Republic of Germany and we do not herein intend to express any opinion as to the law of the Federal Republic of Germany. Insofar as (i) the full power, authority and legal right of the Branch, (ii) the taking of all necessary corporate action on the part of the Branch and (iii) the obligation of WestLB for the obligations of the Branch are dependent upon the law of the Federal Republic of Germany, we have relied, with your permission and without independent investigation, exclusively on the accompanying opinion of Messrs. Peter Foller and Klaus Neuper, members of the Central Legal Department of WestLB, and with respect to such matters this opinion is subject to the same assumptions, qualifications and limitations as are therein set forth as if set forth herein. This opinion is furnished to you in connection with the transactions contemplated by the Participation Agreement and may not be published or otherwise communicated by you to any other party and referred to or relied upon for any other purpose without our specific prior written approval in each instances. Very truly yours, Schedule A NationsBank of Georgia, National Association, As Indenture Trustee NationsBank of South Carolina, National Association, As Pass Through Trustee Goldman, Sachs & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated Federal Express Corporation, As Lessee Moody's Investors Service, Inc. Standard & Poor's Corporation Exhibit T Daugherty, Fowler & Peregrin Letterhead Commencement Date (Exchange Date)* To the Parties Named on Schedule A attached hereto Ladies and Gentlemen: This opinion is furnished to you pursuant to Section 4.02(j)(iii) of the Participation Agreement (Federal Express Corporation Trust ______), dated as of March 1, 1994 (the "Participation Agreement") among Federal Express Corporation, as Lessee (the "Lessee"), LLG Aircraft Leasing, L.P., as Owner Participant (the "Owner Participant"), First Security Bank of Utah, National Association, as Owner Trustee (the "Owner Trustee"), NationsBank of Georgia, National Association, as Indenture Trustee (the "Indenture Trustee"), NationsBank of South Carolina, National Association, as Pass Through Trustee (the "Pass Through Trustee") and Westdeutsche Landesbank Girozentrale, New York Branch. The capitalized terms herein shall, unless otherwise defined, have the same meanings given them in Annex I attached hereto or in the Participation Agreement. We have examined and filed on (the Commencement Date and on)** this date with the Federal Aviation Administration (the "FAA") the following described instruments at the respective times listed below: (a) Trust Agreement, dated as of September 1, 1993, as amended and restated as - ------------- * If the Exchange Date does not occur on the Commencement Date, a separate opinion, dated the Exchange Date, shall be provided as to all matters below, except as otherwise specifically noted. ** Insert in Exchange Date opinion only if the Exchange Date does not occur on the Commencement Date. of March 1, 1994 (the "Trust Agreement"), between the Owner Participant and the Owner Trustee; ((b) Trust Indenture and Security Agreement (Federal Express Corporation Trust ______) dated as of March 1, 1994 and executed on the Closing Date (the "Indenture"), between the Owner Trustee and the Indenture Trustee with the Definitions attached thereto, which Indenture with the Definitions attached was filed at __ a.m., C.S.T. on ______, 199_;)* and ((c) Lease Agreement (Federal Express Corporation Trust ______) dated as of _________ __, 199_ and executed on the Commencement Date (the "Lease"), between the Owner Trustee, as lessor, and the Lessee, as lessee, with the following attached thereto: (i) the Definitions and (ii) the Indenture, which Lease with the foregoing attachments (collectively, the "Lease Attachments") attached was filed at __ a.m., C.S.T. on _________ __, 199_.)** - ------------ * Insert if the Exchange Date occurs on the Commencement Date. If the Exchange Date does not occur on the Commencement Date, this need be provided only in the Exchange Date opinion. ** Insert if the Exchange Date occurs on the Commencement Date. If the Exchange Date does not occur on the Commencement Date, (A) this paragraph shall be given in the Commencement Date opinion, except that clause (ii) may be omitted therefrom, and (B) the following shall be given in the Exchange Date opinion: (c) Lease Agreement (Federal Express Corporation Trust _____) dated as of ______ __, 199_ and executed on the Commencement Date (the "Lease"), between the Owner Trustee, as lessor, and the Lessee, as lessee, with the Definitions attached thereto, was filed at ___ a.m., C.S.T., on _______ __, 199_, and the Indenture was filed as an additional attachment to the Lease at ___ a.m., C.S.T. on ______, 199_ (the Definitions and Indenture are collectively referred to herein as the "Lease Attachments"). References to the Trust Agreement(, the Indenture) and the Lease hereafter appearing in this opinion shall be deemed to include the Definitions attached thereto. The Confidential Omissions were intentionally omitted from the FAA filing counterpart of the Lease 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. AC Form 8050-2 Aircraft Bill of Sale date ___________ __, 199_ (the "FAA Bill of Sale") from the Lessee, as Seller, conveying title to the Airframe to the Owner Trustee, has been duly recorded by the FAA on _________ __, 199_ pursuant to and in accordance with the provisions of the Act and assigned Conveyance No. ____________. 2. the (Indenture 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 the Act; 3. the Trust Agreement is in due form for filing and has been duly filed with the FAA pursuant to and in accordance with the provisions of the Act; 4. the Trust Agreement Supplement was duly filed with the FAA on _________ __, 199_ pursuant to and in accordance with the provisions of the Act; 5. (the Indenture has been duly filed with and duly recorded by the FAA pursuant to and in accordance with the provisions of the Act;)* 6. the Lease and the Lease Attachments have been duly filed with and duly recorded by the FAA pursuant to and in accordance with the provisions of the Act; 7. the Airframe is duly registered in the name of the Owner Trustee pursuant to and in accordance with the provisions of the Act; 8. 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 Indenture and (ii))** the rights of the parties under the Lease, as supplemented by the Lease Supplement; 9. (the Indenture 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, as supplemented by the Lease - ------------ * Insert if the Exchange Date occurs on the Commencement Date. If the Exchange Date does not occur on the Commencement Date, this need be provided only in the Exchange Date opinion. ** Insert if the Exchange Date occurs on the Commencement Date. If the Exchange Date does not occur on the Commencement Date, this need be provided only in the Exchange Date opinion. Supplement (insofar as such assignment affects an interest covered by the recording system established by the FAA pursuant to Section 503(a) of the Act), 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 Section 503(a) of the Act), it being understood that no opinion is expressed as to the validity, priority or enforceability of such security interest and assignment under local law or as against third parties in respect of the Airframe and the Engines at a time when the same, or any of them, are outside the United States;)* 10. 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, (the Indenture,)* the Trust Agreement or the Trust Agreement Supplement covering the Aircraft, except for such filings as are referred to in our opinion dated ______________ __, 199_ (which have been duly effected) and the filings referred to in clauses (a), (b) and (c) above; and - ------------ * Insert if the Exchange Date occurs on the Commencement Date. If the Exchange Date does not occur on the Commencement Date, this need be provided only in the Exchange Date opinion. 11. neither the authorization, issuance and delivery of the Certificates, the execution and delivery by the parties thereto of the Trust Agreement, or the Trust Agreement Supplement covering the Aircraft, the Indenture, the Participation Agreement, the FAA Bill of Sale, the Lease and/or the performance by the parties 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, or the regis- tration with, or the taking of any other action in respect of, the FAA except for the filings, the recordations and the filings for recordation specified elsewhere in this opinion. 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 for the Aeronautical Center dated _______ and have continued to rely upon the opinion of the Assistant Chief Counsel for the Aeronautical Center dated _________ __, 199_, copies of which are attached hereto. Very truly yours, For the Firm Annex I (Federal Express Corporation Trust ______) Page 1 Certain Definitions Airframe, Engines and Aircraft One (1) Airbus A310-203 aircraft bearing manufacturer's serial number _______ and U.S. Registration No. ______ (the "Airframe") and two (2) General Electric CF6-80A3 aircraft engines bearing manufacturer's serial numbers _______, and _______ (the "Engines") (the Airframe and the Engines are referred to collectively as the "Aircraft"). Trust Agreement Trust Agreement, dated as of September 1, 1993, as amended and restated as of March 1, 1994, between the Owner Participant and the Owner Trustee. Trust Agreement Supplement Trust Agreement Supplement, dated as of _________, 199_, between the Owner Participant and the Owner Trustee, referring to the Aircraft. Indenture Trust Indenture and Security Agreement (Federal Express Corporation Trust ______) dated as of March 1, 1994 between the Owner Trustee and the Indenture Trustee, which together with the Indenture and Security Agreement Supplement attached thereto. Confidential Omissions The Lease was filed with the FAA with Basic Rent (Schedule II), (ii) the Stipulated Loss Values (Schedule III), (iii) the Termination Values (Schedule IV) and (iv) the Additional Purchase Options Schedule (Schedule V) omitted from the FAA filing counterpart thereof as containing confidential financial information. SCHEDULE A Lessee Federal Express Corporation 2007 Corporate Plaza Memphis, Tennessee 38132-2140 Owner Trustee First Security Bank of Utah, National Association 79 South Main Street Salt Lake City, Utah 84111 Attention: Corporate Trust Administration Indenture Trustee NationsBank of Georgia, National Association Corporate Trust Administration GA1-006-09-11 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Owner Participant LLG Aircraft Leasing, L.P. 1209 Orange Street Wilmington, Delaware 19801 SINGLE FILING Draft of March 16, 1994 (For the Letterhead of Daugherty, Fowler & Peregrin) ______________________, 1994 To the Parties Named on Schedule A Attached Hereto Ladies and Gentlemen: This opinion is furnished to you pursuant to Section 4.02(j)(iii) of the Participation Agreement (Federal Express Corporation Trust No. _____) dated as of March 1, 1994 (the "Participation Agreement") among Federal Express Corporation, as Lessee (the "Lessee"), LLG Aircraft Leasing, L.P., as Owner Participant (the "Owner Participant"), Westdeutsche Landesbank Girozentrale, New York Branch (the "Loan Participant"), First Security Bank of Utah, National Association, as Owner Trustee (the "Owner Trustee"), NationsBank of Georgia, National Association, as Indenture Trustee (the "Indenture Trustee"), and NationsBank of South Carolina, National Association, as Pass Through Trustee (the "Pass Through Trustee"), with respect to that portion of the Federal Aviation Act of 1958, as amended (the "Act"), relative to the recordation of instruments and the registration of aircraft under the Act. 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 Bill of Sale dated ____________, 1994 (the "FAA Bill of Sale") from ________________, as seller, conveying title to the Airframe to the Owner Trustee, which FAA Bill of Sale was filed at ____ _.m., C.S.T.; (b) AC Form 8050-1 Aircraft Registration Application dated __________, 1994 (the "Aircraft Registration Application") by the Owner Trustee as applicant, covering the Airframe, which Aircraft Registration Application was filed at __________ _.m., C.S.T.; (c) Affidavit of the Owner Trustee dated __________, 1994 (the "Owner Trustee Affidavit") pursuant to Section 47.7(c)(2)(iii) of Part 47 of the Federal Aviation Regulations, which Owner Trustee Affidavit was filed at __________ _.m., C.S.T.; (d) executed counterpart of Trust Agreement (Federal Express Corporation Trust No. _____) dated as of March 1, 1994 (the "Trust Agreement") between the Owner Participant and the Owner Trustee, with executed counterpart of Trust Agreement Supplement No. 1 dated __________, 1994 ("Trust Supplement No. 1") between the Owner Participant and the Owner Trustee attached thereto, which Trust Agreement with Trust Supplement No. 1 attached was filed at ________ _.m., C.S.T.; (e) executed counterpart of Trust Indenture and Security Agreement (Federal Express Corporation Trust No. _____) dated as of March 1, 1994 (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. _____) dated __________, 1994 (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.S.T.; and, (f) executed counterpart of Lease Agreement (Federal Express Corporation Trust No. _____) dated as of March 1, 1994 (the "Lease") between the Owner Trustee, as lessor, and the Lessee, with executed counterparts of the following attached thereto: (i) Lease Supplement No. 1 (Federal Express Corporation Trust No. _____) dated __________, 1994 (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.S.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 Bill of Sale, the Trust Indenture with the Trust Indenture Supplement attached and the Lease with the Lease Attachments attached are all 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 the Act; 2. the Aircraft Registration Application, the Owner Trustee Affidavit and the Trust Agreement with Trust Supplement No. 1 attached are in due form for filing and have been duly filed with the FAA pursuant to and in accordance with the provisions of the Act; 3. the Airframe is eligible for registration in the name of the Owner Trustee pursuant to and in accordance with the provisions of the Act and the filing with the FAA of the FAA Bill of Sale, the Aircraft Registration Application, the Owner Trustee Affidavit, and the Trust Agreement with Trust Supplement No. 1 attached will cause the FAA to register the Airframe, in due course, in the name of the Owner Trustee and pursuant thereto to issue to the Owner Trustee an AC Form 8050-3 Certificate of Aircraft Registration covering the Airframe, and the Airframe will be duly registered pursuant to and in accordance with the provisions of the Act; 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 Section 503(a) of the Act), 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 Section 503(a) of the Act), it being understood that no opinion is expressed as to the validity, priority or enforceability of such security interest and assignment under local law or as against third parties in respect of the Airframe and the Engines at a time when the same, or any of them, are 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, as supplemented by Trust Supplement No. 1, except for such filings as are referred to above; and, 8. neither the execution, and delivery by the Loan Participant of the Participation Agreement or by the Owner Participant of the Participation Agreement or the Trust Agreement, as supplemented by Trust Supplement No. 1, nor other consummation of the transactions contemplated thereby by the Loan Participant or the Owner Participant, requires the consent or approval of, or the giving of notice to, or the registration of, or the taking of any other action in respect of the FAA, except (x) the registration of the Airframe, including the submission of the Aircraft Registration Application, the Owner Trustee Affidavit, the Trust Agreement and Trust Supplement No. 1 to the FAA and (y) the filings for recordation specified elsewhere in this opinion. Since the FAA records reflect that record title to the Airframe originated with the FAA Bill of Sale, involving a foreign vendor, our opinion as to the status of its record title covers only that period of time commencing with the filing of the FAA Bill of Sale with the FAA. 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, 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 ____________, 1994, a copy of which is attached hereto. Very truly yours, Robert M. Peregrin For the Firm Annex I Certain Definitions Airframe, Engines and Aircraft One (1) Airbus A310-203 aircraft bearing manufacturer's serial number _________ and U.S. Registration No. __________ (the "Airframe") and two (2) General Electric CF6-80A3 aircraft engines bearing manufacturer's serial numbers __________ and __________ (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) the Excess Amount and 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 percentage of the purchase price under Section 4.02(a)(B) set forth in the Ancillary Agreement, 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 the Schedule of Principal Payments (Schedule I) omitted from the FAA filing counterpart thereof as containing confidential financial information. SCHEDULE A Lessee Federal Express Corporation Owner Trustee First Security Bank of Utah, National Association Indenture Trustee NationsBank of Georgia, National Association Owner Participant LLG Aircraft Leasing, L.P. Loan Participant Westdeutsche Landesbank Girozentrale, New York Branch Pass Through Trustee NationsBank of South Carolina, National Association SPLIT FILING - PHASE I Draft of March 16, 1994 (For the Letterhead of Daugherty, Fowler & Peregrin) ______________________, 1994 To the Parties Named on Schedule A Attached Hereto Ladies and Gentlemen: This opinion is furnished to you pursuant to Section 4.02(j)(iii) of the Participation Agreement (Federal Express Corporation Trust No. _____) dated as of March 1, 1994 (the "Participation Agreement") among Federal Express Corporation, as Lessee (the "Lessee"), LLG Aircraft Leasing, L.P., as Owner Participant (the "Owner Participant"), Westdeutsche Landesbank Girozentrale, New York Branch (the "Loan Participant"), First Security Bank of Utah, National Association, as Owner Trustee (the "Owner Trustee"), NationsBank of Georgia, National Association, as Indenture Trustee (the "Indenture Trustee"), and NationsBank of South Carolina, National Association, as Pass Through Trustee (the "Pass Through Trustee"), with respect to that portion of the Federal Aviation Act of 1958, as amended (the "Act"), relative to the recordation of instruments and the registration of aircraft under the Act. 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 Bill of Sale dated ____________, 1994 (the "FAA Bill of Sale") from ________________, as seller, conveying title to the Airframe to the Owner Trustee, which FAA Bill of Sale was filed at ____ _.m., C.S.T.; (b) AC Form 8050-1 Aircraft Registration Application dated __________, 1994 (the "Aircraft Registration Application") by the Owner Trustee as applicant, covering the Airframe, which Aircraft Registration Application was filed at __________ _.m., C.S.T.; (c) Affidavit of the Owner Trustee dated __________, 1994 (the "Owner Trustee Affidavit") pursuant to Section 47.7(c)(2)(iii) of Part 47 of the Federal Aviation Regulations, which Owner Trustee Affidavit was filed at __________ _.m., C.S.T.; (d) executed counterpart of Trust Agreement (Federal Express Corporation Trust No. _____) dated as of March 1, 1994 (the "Trust Agreement") between the Owner Participant and the Owner Trustee, with executed counterpart of Trust Agreement Supplement No. 1 dated __________, 1994 ("Trust Supplement No. 1") between the Owner Participant and the Owner Trustee attached thereto, which Trust Agreement with Trust Supplement No. 1 attached was filed at ________ _.m., C.S.T.; (e) executed counterpart of Lease Agreement (Federal Express Corporation Trust No. _____) dated as of March 1, 1994 (the "Lease") between the Owner Trustee, as lessor, and the Lessee, with executed counterpart of Lease Supplement No. 1 (Federal Express Corporation Trust No. _____) dated __________, 1994 (the "Lease Supplement") between the Owner Trustee, as lessor, and the Lessee, covering the Aircraft, attached hereto, which Lease with the Lease Supplement attached was filed at ________ _.m., C.S.T.; and, The Confidential Omissions were intentionally omitted from the FAA filing counterpart of the Lease 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 Bill of Sale and the Lease with the Lease Supplement 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 the Act; 2. the Aircraft Registration Application, the Owner Trustee Affidavit and the Trust Agreement with Trust Supplement No. 1 attached are in due form for filing and have been duly filed with the FAA pursuant to and in accordance with the provisions of the Act; 3. the Airframe is eligible for registration in the name of the Owner Trustee pursuant to and in accordance with the provisions of the Act and the filing with the FAA of the FAA Bill of Sale, the Aircraft Registration Application, the Owner Trustee Affidavit, and the Trust Agreement with Trust Supplement No. 1 attached will cause the FAA to register the Airframe, in due course, in the name of the Owner Trustee and pursuant thereto to issue to the Owner Trustee an AC Form 8050-3 Certificate of Aircraft Registration covering the Airframe, and the Airframe will be duly registered pursuant to and in accordance with the provisions of the Act; 4. the Owner Trustee has valid legal title to the Airframe and the Aircraft is free and clear of all Liens, except 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. 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 or the Trust Agreement, as supplemented by Trust Supplement No. 1, except for such filings as are referred to above; and, 7. neither the execution, and delivery by the Loan Participant of the Participation Agreement or by the Owner Participant of the Participation Agreement or the Trust Agreement, as supplemented by Trust Supplement No. 1, nor other consummation of the transactions contemplated thereby by the Loan Participant or the Owner Participant, requires the consent or approval of, or the giving of notice to, or the registration of, or the taking of any other action in respect of the FAA, except (x) the registration of the Airframe, including the submission of the Aircraft Registration Application, the Owner Trustee Affidavit, the Trust Agreement and Trust Supplement No. 1 to the FAA and (y) the filings for recordation specified elsewhere in this opinion. Since the FAA records reflect that record title to the Airframe originated with the FAA Bill of Sale, involving a foreign vendor, our opinion as to the status of its record title covers only that period of time commencing with the filing of the FAA Bill of Sale with the FAA. 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, 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 ____________, 1994, a copy of which is attached hereto. Very truly yours, Robert M. Peregrin For the Firm Annex I Certain Definitions Airframe, Engines and Aircraft One (1) Airbus A310-203 aircraft bearing manufacturer's serial number _________ and U.S. Registration No. __________ (the "Airframe") and two (2) General Electric CF6-80A3 aircraft engines bearing manufacturer's serial numbers __________ and __________ (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) the Excess Amount and 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 percentage of the purchase price under Section 4.02(a)(B) set forth in the Ancillary Agreement, which was not attached to the FAA filing counterpart of the Lease or otherwise filed with the FAA for recordation. SCHEDULE A Lessee Federal Express Corporation Owner Trustee First Security Bank of Utah, National Association Indenture Trustee NationsBank of Georgia, National Association Owner Participant LLG Aircraft Leasing, L.P. Loan Participant Westdeutsche Landesbank Girozentrale, New York Branch Pass Through Trustee NationsBank of South Carolina, National Association SPLIT FILING - PHASE II Draft of March 16, 1994 (For the Letterhead of Daugherty, Fowler & Peregrin) ______________________, 1994 To the Parties Named on Schedule A Attached Hereto Ladies and Gentlemen: This opinion will supplement our opinion dated __________, 1994 and is furnished to you pursuant to Section 4.02(j)(iii) of the Participation Agreement (Federal Express Corporation Trust No. _____) dated as of March 1, 1994 (the "Participation Agreement") among Federal Express Corporation, as Lessee (the "Lessee"), LLG Aircraft Leasing, L.P., as Owner Participant (the "Owner Participant"), Westdeutsche Landesbank Girozentrale, New York Branch (the "Loan Participant"), First Security Bank of Utah, National Association, as Owner Trustee (the "Owner Trustee"), NationsBank of Georgia, National Association, as Indenture Trustee (the "Indenture Trustee"), and NationsBank of South Carolina, National Association, as Pass Through Trustee (the "Pass Through Trustee"), with respect to that portion of the Federal Aviation Act of 1958, as amended (the "Act"), relative to the recordation of instruments and the registration of aircraft under the Act. The capitalized terms herein shall, unless otherwise defined, have the same meanings given them in the Participation Agreement, our opinion dated __________, 1994 or in Annex I attached hereto. We have examined and filed with the Federal Aviation Administration (the "FAA") on this date at _____ _.m., C.S.T. an executed counterpart of Trust Indenture and Security Agreement (Federal Express Corporation Trust No. _____) dated as of March 1, 1994 (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. _____) dated __________, 1994 (the "Trust Indenture Supplement") by the Owner Trustee, covering the Aircraft, attached thereto. The Confidential Omissions were intentionally omitted from the FAA filing counterpart of 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 Trust Indenture with the Trust Indenture Supplement attached is in due form for recordation by and has been duly filed for recordation with the FAA pursuant to and in accordance with the provisions of the Act; 2. the Airframe is duly registered in the name of the Owner Trustee pursuant to and in accordance with the provision of the Act; 3. the Owner Trustee has valid legal title to the Airframe and the Aircraft is free and clear of all Liens, except (i) the rights of the parties under the Lease, as supplemented by the Lease Supplement and (ii) the security interest created by the Trust Indenture, as supplemented by the Trust Indenture Supplement; 4. 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; 5. the Trust Indenture, as supplemented by the Trust Indenture Supplement, constitutes a duly perfected first priority security interest in the Aircraft subject to the rights of the parties under the Lease, as supplemented by the Lease Supplement, 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 Section 503(a) of the Act), 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 Section 503(a) of the Act), it being understood that no opinion is expressed as to the validity, priority or enforceability of such security interest and assignment under local law or as against third parties in respect of the Airframe and the Engines at a time when the same, or any of them, are outside the United States; 6. 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, as supplemented by Trust Supplement No. 1, except for such filings as are referred to above and the prior filing of the Lease, the Lease Supplement, the Trust Agreement and Trust Supplement No. 1 with the FAA; and, 7. neither the execution, and delivery by the Loan Participant of the Participation Agreement or by the Owner Participant of the Participation Agreement or the Trust Agreement, as supplemented by Trust Supplement No. 1, nor other consummation of the transactions contemplated thereby by the Loan Participant or the Owner Participant, requires the consent or approval of, or the giving of notice to, or the registration of, or the taking of any other action in respect of the FAA, except (x) the registration of the Airframe, including the submission of the Aircraft Registration Application, the Owner Trustee Affidavit, the Trust Agreement and Trust Supplement No. 1 to the FAA and (y) the filings for recordation specified elsewhere in this opinion. Since the FAA records reflect that record title to the Airframe originated with the FAA Bill of Sale, involving a foreign vendor, our opinion as to the status of its record title covers only that period of time commencing with its United States registration on __________, 1994. 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 continued to rely upon the opinion of the Assistant Chief Counsel of the Aeronautical Center dated ____________, 1994, a copy of which is attached hereto. Very truly yours, Robert M. Peregrin For the Firm Annex I Certain Definitions Airframe, Engines and Aircraft One (1) Airbus A310-203 aircraft bearing manufacturer's serial number _________ and U.S. Registration No. __________ (the "Airframe") and two (2) General Electric CF6-80A3 aircraft engines bearing manufacturer's serial numbers __________ and __________ (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) the Excess Amount and 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 percentage of the purchase price under Section 4.02(a)(B) set forth in the Ancillary Agreement, 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 the Schedule of Principal Payments (Schedule I) omitted from the FAA filing counterpart thereof as containing confidential financial information. Trust Agreement and Trust Supplement No. 1 Trust Agreement (Federal Express Corporation Trust No. ____) dated as of March 1, 1994 (the "Trust Agreement") between the Owner Participant and the Owner Trustee, with Trust Agreement Supplement No. 1 dated __________, 1994 ("Trust Supplement No. 1") between the Owner Participant and the Owner Trustee attached thereto, which Trust Agreement with Trust Supplement No. 1 attached was filed as one instrument by the Federal Aviation Administration on __________, 1994. Lease and Lease Supplement Lease Agreement (Federal Express Corporation Trust No. ____) dated as of March 1, 1994 (the "Lease") between the Owner Trustee, as lessor, and the Lessee, as supplemented by Lease Supplement No. 1 (Federal Express Corporation Trust No. ____) dated __________, 1994 (the "Lease Supplement"), which Lease with the Lease Supplement attached was recorded as one instrument by the Federal Aviation Administration on _______________ and assigned Conveyance No. ____________. SCHEDULE A Lessee Federal Express Corporation Owner Trustee First Security Bank of Utah, National Association Indenture Trustee NationsBank of Georgia, National Association Owner Participant LLG Aircraft Leasing, L.P. Loan Participant Westdeutsche Landesbank Girozentrale, New York Branch Pass Through Trustee NationsBank of South Carolina, National Association EX-4.D 7 Exhibit 4.d ____________________________________________________________ TRUST AGREEMENT dated as of September 1, 1993 Amended and Restated as of March 1, 1994 BETWEEN LLG AIRCRAFT LEASING, L.P. as Trustor, AND FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION as Owner Trustee __________________ FEDERAL EXPRESS CORPORATION Thirteen Airbus Model A310-203 Aircraft Identified on Exhibit A Hereto ____________________________________________________________ TABLE OF CONTENTS Page PARTIES . . . . . . . . . . . . . . . . . . . . 1 RECITALS . . . . . . . . . . . . . . . . . . . 1 ARTICLE 1 THE LESSOR'S ESTATE SECTION 1.01. Authorization and Director to Owner Trustee; Ratification . 2 SECTION 1.02. Declaration of Trust . . . . 3 SECTION 1.03. Events Prior to the Lease . . 3 ARTICLE 2 DISTRIBUTIONS SECTION 2.01. Rent, Etc. . . . . . . . . . 4 SECTION 2.02. Excepted Payments . . . . . . 5 SECTION 2.03. Other Receipts . . . . . . . 5 SECTION 2.04. Distributions after Default . 5 SECTION 2.05. Distributions after Release of Lien of Indenture. . . . . 6 SECTION 2.06. Manner of Making Distributions . . . . . . . . 6 ARTICLE 3 THE OWNER TRUSTEE SECTION 3.01. Acceptance of Trust and Duties 7 SECTION 3.02. Limitation on Authority of Owner Trustee . . . . . . . . . . . 8 SECTION 3.03. Notice of Default . . . . . . 8 SECTION 3.04. Action Upon Instructions . . 9 SECTION 3.05. Certain Duties and Responsibilities of Owner Trustee . . . . . . . . . . . 10 SECTION 3.06. Certain Rights of Owner Trustee 12 SECTION 3.07. No Representations of Warranties as to Certain Matters . . . . 15 SECTION 3.08. Status of Moneys Received . . 16 SECTION 3.09. Self-Dealing . . . . . . . . 16 SECTION 3.10. Definition of a Responsible Officer . . . . . . . . . . . 16 SECTION 3.11. Resignation or Removal of Owner Trustee . . . . . . . . . . . 16 SECTION 3.12. Estate and Rights of Successor Owner Trustee . . . . . . . . 17 SECTION 3.13. Merger or Consolidation of Owner Trustee . . . . . . . . . . . 18 SECTION 3.14. Co-Trustees . . . . . . . . . 18 SECTION 3.15. Interpretation of Agreements 20 SECTION 3.16. Not Acting in Individual Capacity . . . . . . . . . . 20 SECTION 3.17. Tax Returns . . . . . . . . . 20 ARTICLE 4 TERMINATION OF TRUST SECTION 4.01. Termination . . . . . . . . . 21 SECTION 4.02. Distribution of Lessor's Estate Upon Termination . . . 23 ARTICLE 5 TRANSFER OF BENEFICIAL INTEREST . . . . . . . . 23 ARTICLE 6 MISCELLANEOUS SECTION 6.01. Indemnification . . . . . . . 25 SECTION 6.02. Supplements and Amendments. . 26 SECTION 6.03. Nature of Title of Trustor. . 28 SECTION 6.04. Power of Owner Trustee to Convey. . . . . . . . . . . . 28 SECTION 6.05. Notices . . . . . . . . . . . 28 SECTION 6.06. Situs of Trust; Applicable Law; Severability . . . . . . 29 SECTION 6.07. Successors and Assigns . . . 29 SECTION 6.08. Headings and Table of Contents. . . . . . . . . . . 29 SECTION 6.09. Definitions . . . . . . . . . 29 SECTION 6.10. Counterparts . . . . . . . . 30 SECTION 6.11 Trust Agreement for Benefit of Owner Trustee, Trustor and each Indenture Trustee Only. . . . . . . . . . . . . 30 ARTICLE 7 CERTAIN LIMITATIONS SECTION 7.01 Limitations on Control. . . . 30 SECTION 7.02 Discretion and Actions of Owner Trustee . . . . . . . . 31 SECTION 7.03 Removal . . . . . . . . . . . 32 SECTION 7.04 Payments . . . . . . . . . . 32 SECTION 7.05 The Owner Trustee Acts as Trustee . . . . . . . . . . . 32 SECTION 7.06 Waiver of Claim Against the Owner Trustee . . . . . . 32 SECTION 7.07 Amendments . . . . . . . . . 32 EXHIBIT A -- Aircraft Description EXHIBIT B -- Assignment and Assumption Agreement EXHIBIT C -- OP Guarantee EXHIBIT D -- Trust Agreement Supplement SCHEDULE I -- Definitions TRUST AGREEMENT TRUST AGREEMENT dated as of September 1, 1993, as amended and restated as of March 1, 1994 (this "Agreement") between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association (in its individual capacity, "FSBU" and not in its individual capacity but solely as trustee hereunder, the "Owner Trustee"), and LLG AIRCRAFT LEASING, L.P., a limited partnership organized under the laws of Delaware (together with its successors and permitted assigns, the "Trustor"). 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 Section 6.09 hereof; WHEREAS, the Trustor and the Owner Trustee have heretofore entered into that certain Trust Agreement, dated as of September 1, 1993 (the "Original Trust Agreement"); WHEREAS, pursuant to the Original Trust Agreement, a trust was created and the Owner Trustee was authorized to (1) enter into the Original Sales Agreement with Lufthansa, pursuant to which the Owner Trustee purchased the Aircraft from Lufthansa on November 15, 1993, (2) enter into the Original Modification Agreement with Lufthansa and DA, pursuant to which each Aircraft is to be converted from passenger configuration to cargo configuration, (3) enter into the Original Parts and Services Agreement with Lufthansa, pursuant to which Lufthansa will perform described services with respect to the Aircraft, and (4) enter into the Original Agreement to Lease with Lufthansa and the Lessee, pursuant to which, subject to the terms and conditions set forth therein, the Owner Trustee is to lease to the Lessee, and the Lessee is to lease from the Owner Trustee, each Aircraft on the Commencement Date with respect to such Aircraft. WHEREAS, Section 13 of the Original Agreement to Lease permits a Nonrecourse Financing (as defined therein), subject to certain conditions, and in order to effectuate such Nonrecourse Financing the Trustor wishes to authorize the Owner Trustee to, among other things, (1) execute and deliver a separate Participation Agreement with respect to each Aircraft, (2) execute and deliver a separate Indenture and a separate Collateral Agreement with respect to each Aircraft, (3) execute and deliver, as contemplated by each related Participation Agreement, a separate Lease with respect to each Aircraft and (4) as contemplated by the Participation Agreement relating to each Aircraft, issue and sell the related Certificates and secure such Certificates pursuant to the Indenture and relating thereto; WHEREAS, in connection with the foregoing the Owner Trustee will enter into amendments to each of the Original Modification Agreement, the Original Sales Agreement and the Original Parts and Services Agreement, and the Original Agreement to Lease will be amended and restated. WHEREAS, the Trustor and the Owner Trustee wish to amend and restate the Original Trust Agreement in its entirety as provided herein. NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein, FSBU and the Trustor agree as follows: ARTICLE 1 THE LESSOR'S ESTATE SECTION 1.01. Authorization and Direction to Owner Trustee; Ratification. (a) The Trustor hereby authorizes and directs the Owner Trustee not individually but solely as the Owner Trustee hereunder: (i) to (x) execute and deliver (A) the Agreement to Lease and Amendment No. 1, dated as of the date hereof, to each of (1) the Original Sales Agreement, (2) the Original Modification Agreement and (3) the Original Parts and Services Agreement, (B) with respect to each Aircraft, the Participation Agreement, Indenture, Collateral Agreement and each other related Operative Agreement (other than those covered by clauses (A), (C) and (D) of this Section 1.01(a)(i)) to which the Owner Trustee may be a party, (C) with respect to each Aircraft, as of the related Commencement Date, the related Lease, Lease Supplement, and Trust Agreement Supplement, and (D) with respect to each Aircraft, as of the related Exchange Date, the related Indenture and Security Agreement Supplement, and (y) enter into and perform each of the actions and transactions contemplated thereby; (ii) with respect to each Aircraft, to execute and deliver from time to time any related Certificates in the manner and subject to the terms and conditions provided in the related Participation Agreement and Indenture; (iii) to execute and deliver each other document referred to in any Agreement to Lease Operative Agreement (which term, for the purposes of this Trust Agreement only, shall include the Parts and Services Agreement) or any Operative Agreement with respect to an Aircraft to which the Owner Trustee may be a party or which the Owner Trustee is required to deliver pursuant to any such Operative Agreement; (iv) subject to the terms of this Agreement, to perform the obligations and duties and, upon instruction of the Trustor, exercise the rights of the Owner Trustee under the Agreement to Lease Operative Agreements and the Operative Agreements with respect to each Aircraft; and (v) to execute and deliver all such other instruments, documents or certificates and take all such other actions in accordance with the directions of the Trustor, as the Trustor may deem necessary or advisable in connection with the transactions contemplated hereby, the taking of any such action by the Owner Trustee in the presence of the Trustor or its counsel to evidence, conclusively, the direction of the Trustor. (b) The Trustor hereby ratifies each of the actions taken by the Owner Trustee pursuant to the Original Trust Agreement prior to the date hereof. SECTION 1.02. Declaration of Trust. FSBU hereby declares and agrees that it will, and in its capacity as the Owner Trustee does, hold the Lessor's Estate with respect to each Aircraft upon the trusts herein set forth for the use and benefit of the Trustor, subject, however, to the provisions of, and the Lien created by, the related Indenture. SECTION 1.03. Events Prior to the Lease. The parties acknowledge that Lufthansa shall retain possession, on behalf of the Owner Trustee, of each Aircraft prior to the delivery of such Aircraft to DA pursuant to the Modification Agreement and that Lufthansa may, in connection with such possession, exercise its rights under the Sales Agreement in respect of such Aircraft. ARTICLE 2 DISTRIBUTIONS SECTION 2.01. Rent, Etc. The Trustor and the Owner Trustee acknowledge that (i) upon the Closing Date with respect to each Aircraft, the Collateral specified pursuant to the related Collateral Agreement will be pledged as security for the related Certificates and (ii) upon the Exchange Date with respect to any Aircraft, such Aircraft and the related Lease will be security for the Certificates issued pursuant to the related Indenture, and such Lease will provide that all moneys payable by the Lessee to the Owner Trustee under such Lease (other than related Excepted Payments) are to be paid to the related Indenture Trustee while the Lien of the related Indenture is in effect. Except as otherwise provided in Section 2.04 hereof, the Owner Trustee shall promptly apply each payment of Rent (other than Excepted Payments) pursuant to a Lease, any proceeds from the sale of the related Aircraft and any proceeds of any Collateral (as defined in the related Collateral Agreement), received by it as follows: (a) prior to the release of the Lien of the related Indenture, each such payment shall be payable directly to the related Indenture Trustee (and if any of the same are received by the Owner Trustee shall, upon receipt, be paid over to such Indenture Trustee without deduction, set off or adjustment of any kind) for distribution in accordance with the relevant provisions of such Indenture; provided, that any payments received by the Owner Trustee from (i) the Lessee with respect to the Owner Trustee's fees and disbursements under this Agreement, or (ii) the Trustor pursuant to Section 6.01 hereof shall not be paid over to any Indenture Trustee but shall be retained by the Owner Trustee and applied toward the purpose for which such payments were made; (b) any amount remaining after application in full in accordance with paragraph (a) of this Section 2.01 and which represents payments for which provision as to the application thereof is made in any other related Operative Agreement shall be applied promptly to the purpose for which such payment shall have been made in accordance with the terms of such Operative Agreement; and (c) after application in accordance with paragraphs (a) and (b) of this Section 2.01, or to the extent received from the related Indenture Trustee under the terms of the related Indenture or Collateral Agreement, the balance, if any, remaining shall be paid to the Trustor. SECTION 2.02. Excepted Payments. All Excepted Payments with respect to an Aircraft at any time received by the Owner Trustee shall be distributed promptly to the applicable Person, and such Excepted Payment shall not be deemed under any circumstances to be part of the Lessor's Estate with respect to such Aircraft. SECTION 2.03. Other Receipts. Except as otherwise provided in Section 2.04 hereof, any payment received by the Owner Trustee with respect to or in connection with any Aircraft, or as contemplated by any Operative Agreement relating thereto, other than those referred to in Sections 2.01 and 2.02 hereof and any Excepted Payment with respect to an Aircraft not referred to in Section 2.02 hereof, shall be payable prior to the release of the Lien of the Indenture with respect to the relevant Aircraft directly to the related Indenture Trustee (and if any of the same are received by the Owner Trustee shall, upon receipt, be paid over to the related Indenture Trustee without deduction, set off or adjustment of any kind) for distribution in accordance with the relevant provisions of such Indenture; and following such application or release of such Lien, any such payment for which provision as to the application thereof is made in any other related Operative Agreements shall be applied promptly to the purpose for which such payment shall have been made in accordance with the terms of such Operative Agreements, and any such payment received by the Owner Trustee for which no provision as to the application thereof is made in such Operative Agreements or in this Article 2 shall, unless the Trustor shall have otherwise instructed the Owner Trustee in writing, be distributed promptly to the Trustor. SECTION 2.04. Distributions after Default. Subject to the provisions of Section 2.02 hereof, (i) all payments received and amounts realized by the Owner Trustee with respect to or in connection with any Aircraft, or with respect to or as contemplated by any Operative Agreement relating thereto, after an Indenture Event of Default shall have occurred and shall be continuing under the related Indenture and after the related Certificates shall have become or been declared due and payable pursuant to the relevant provisions of such Indenture, or the related Lease shall have been declared in default (including, without limitation, any amounts realized by the Owner Trustee or the Trustor from the exercise of any remedies pursuant to Section 17.01 of such Lease), as well as (ii) all funds then held or thereafter received by the Owner Trustee, as part of this Trust Agreement or otherwise, with respect to or in connection with any Aircraft, or with respect to or as contemplated by any Operative Agreement relating thereto, shall be distributed to the related Indenture Trustee. SECTION 2.05. Distributions after Release of Lien of Indenture. Except as otherwise provided in Sections 2.02, 2.03 and 2.04 hereof: (a) all payments received and amounts realized by the Owner Trustee under the Lease with respect to an Aircraft or otherwise with respect to such Aircraft or any part thereof (including, without limitation, all payments received pursuant to Section 17.01 of such Lease and amounts realized upon the sale or lease of such Aircraft or any part thereof after the termination of such Lease with respect thereto), to the extent received or realized at any time after the Lien of the related Indenture shall have been released pursuant to the terms of such Indenture, and (b) moneys not included in paragraph (a) of this Section 2.05 remaining as part of the Lessor's Estate with respect to an Aircraft after payment in full of amounts described in paragraph (a), shall, to the extent required, be retained by the Owner Trustee as reimbursement for all expenses hereunder or under such Lease not theretofore reimbursed under this Agreement, such Lease or otherwise and to which the Owner Trustee is entitled to be reimbursed pursuant to the provisions thereof, and any balance remaining thereafter shall be distributed to the Trustor. SECTION 2.06. Manner of Making Distributions. The Owner Trustee shall make distributions or cause distributions to be made to (i) the Trustor pursuant to this Article 2 by transferring by wire transfer in immediately available funds the amount to be distributed to the account set forth in the related Participation Agreement or to such other account or accounts of the Trustor as it may designate from time to time by written notice to the Owner Trustee (and the Owner Trustee shall use best efforts to cause such funds to be transferred by wire transfer on the same day as received, but in any case not later than the next succeeding Business Day), and (ii) the relevant Indenture Trustee pursuant to this Article 2 by paying the amount to be distributed to such Indenture Trustee in the manner specified in the related Indenture; provided, that the Owner Trustee shall invest overnight funds payable to the Trustor, for the benefit of the Trustor, in investments that would be permitted by Article 23 of the Lease (but only to the extent funds are received on or prior to 1:00 P.M. (Eastern Time) and such investments are available and, if such investments are not available to the Owner Trustee which, after consultation with the Trustor, the Trustor shall direct) all funds not transferred by wire transfer on the same day as they were received. Notwithstanding the foregoing but subject always to the provisions of, and, for any Aircraft, the Lien created by, the related Indenture, the Owner Trustee will, if so requested by the Trustor by written notice, pay any and all amounts payable by the Owner Trustee hereunder to the Trustor either (i) by crediting, or causing the relevant Indenture Trustee to credit, such amount or amounts to an account or accounts maintained by the Trustor with the Owner Trustee in its individual capacity or with such Indenture Trustee, as the case may be, in immediately available funds, or (ii) by wire transfer of immediately available funds to such account as the Trustor may specify with sufficient information to identify the source and application of such funds. ARTICLE 3 THE OWNER TRUSTEE SECTION 3.01. Acceptance of Trust and Duties. FSBU confirms its acceptance of the trust created by the Original Trust Agreement as amended and restated hereby. FSBU, in its capacity as the Owner Trustee, agrees to perform the same, including without limitation, the actions specified in Section 1.01 hereof as herein provided. The Owner Trustee agrees to disburse all monies that it receives under the Operative Agreements with respect to any Aircraft in accordance with the terms hereof. The Owner Trustee shall not be answerable or accountable in its individual capacity except as a result of or arising from (a) the Owner Trustee's willful misconduct or gross negligence (in its individual capacity or as trustee), (b) any breach by the Owner Trustee of its representations, warranties and covenants given in its individual capacity in this Agreement, Article 5 of the Lease with respect to any Aircraft, Sections 7.01(b), 7.02(a) and (b) and 7.04 of the Participation Agreement with respect to any Aircraft or its representations, warranties and covenants given in its individual capacity in the relevant provisions of the Indenture with respect to any Aircraft, (c) the failure to use ordinary care in receiving, handling and disbursing funds, (d) Lessor's Liens with respect to any Aircraft attributable to it in its individual capacity, and (e) taxes, fees, or other charges on, based on, or measured by, any fees, commissions or compensation received by the Owner Trustee in connection with the transactions contemplated by the Lease, Indenture and Operative Agreements with respect to any Aircraft, including this Agreement. SECTION 3.02. Limitation on Authority of Owner Trustee. The Owner Trustee shall have no power, right, duty or authority to manage, control, possess, use, sell, lease, dispose of or otherwise deal with any Aircraft, any Airframe, any Engine, any Part thereof or any other property at any time constituting a part of the Lessor's Estate with respect to any Aircraft, or otherwise to take or refrain from taking any action under or in connection with the Sales Agreement, any Agreement to Lease Operative Agreement or the Operative Agreements with respect to any Aircraft, except (i) to execute and deliver the Sales Agreement, any Agreement to Lease Operative Agreement or the Operative Agreements, as the case may be, with respect to such Aircraft, (ii) to exercise and carry out or cause to be exercised or carried out the rights, duties and obligations of the Owner Trustee hereunder and under the Sales Agreement, the Agreement to Lease Operative Agreements or the Operative Agreements, as the case may be, with respect to such Aircraft, or (iii) as expressly provided in written instructions from the Trustor given pursuant to Section 3.03 or 3.04 hereof; provided, that nothing in this Section 3.02 shall limit in any manner the obligation of the Owner Trustee to perform and observe all the terms of the Sales Agreement, the Agreement to Lease Operative Agreements or the Operative Agreements, as the case may be, with respect to such Aircraft or the obligations of the Owner Trustee under Section 2 of this Agreement. SECTION 3.03. Notice of Default. In the event that a Responsible Officer in the Corporate Trust Administration of the Owner Trustee shall have actual knowledge of a Pre-Funding Event of Loss with respect to an Aircraft, a Default or an Event of Default under the Lease with respect to an Aircraft, or an Indenture Default or an Indenture Event of Default under the Indenture with respect to an Aircraft, the Owner Trustee shall give or cause to be given to the Trustor and the related Indenture Trustee prompt notice (in any event, within one Business Day of the discovery thereof) of such Pre-Funding Event of Loss, Default, Event of Default, Indenture Default or Indenture Event of Default by telegram, telex, or facsimile followed by prompt written notice thereof by first-class certified mail, postage prepaid, return receipt requested. Subject to the terms of Section 3.06(e) hereof and the rights of the Indenture Trustee, and the obligations of the Owner Trustee under the related Indenture, the Owner Trustee shall take such action with respect to such Pre-Funding Event of Loss, Default, Event of Default, Indenture Default or Indenture Event of Default as shall be specified in written instructions from the Trustor, and if the Owner Trustee shall not have received instructions from the Trustee within 20 days after giving notice of such Pre-Funding Event of Loss, Default, Event of Default, Indenture Default or Indenture Event of Default to the Trustor, the Owner Trustee may take such action, or refrain from taking such action, with respect to such Default, Event of Default, Indenture Default or Indenture Event of Default as it shall deem advisable in the best interests of the Trustor; provided, that the Owner Trustee shall be under no duty to take or refrain from taking any such action. For all purposes of this Agreement and, for any Aircraft, the related Lease, in the absence of actual knowledge of a Responsible Officer of the Owner Trustee, the Owner Trustee shall not be deemed to have knowledge of a Pre-Funding Event of Loss, Default, Event of Default, Indenture Default or Indenture Event of Default with respect to such Aircraft unless notified in writing by the Lessee, the Trustor or the related Indenture Trustee. SECTION 3.04. Action Upon Instructions. Subject in all respects to the terms of the Sales Agreement, the Agreement to Lease Operative Agreements or the Operative Agreements, as the case may be, with respect to any Aircraft and the rights of the related Indenture Trustee, the related Holders and the Lessee thereunder, and subject further to the terms of Article 2 and Sections 3.03, 3.05 and 3.06 hereof, upon the written instructions at any time and from time to time of the Trustor, the Owner Trustee will take such of the following actions as may be specified in such instructions; (a) give such notice or direction or exercise such right, remedy or power under the Sales Agreement, the Agreement to Lease Operative Agreements or the Operative Agreements, as the case may be, with respect to any Aircraft or take such other action, as shall be specified in such instructions; (b) take such action to preserve or protect the Lessor's Estate with respect to any Aircraft (including the discharge of Liens and encumbrances) as may be specified in such instructions; (c) approve as satisfactory to it all matters required by the terms of the Sales Agreement, the Agreement to Lease Operative Agreements or the Operative Agreements, as the case may be, with respect to any Aircraft to be satisfactory to the Owner Trustee (it being understood that without written instructions of the Trustor, the Owner Trustee shall not approve of any matter as satisfactory to it), except such approvals as may be required with respect to the Trustor's transfer of its Beneficial Interest pursuant to Article 5 hereof; (d) after the termination or expiration of the Term of the Lease with respect to an Aircraft, convey in accordance with such instructions, such Aircraft and all of the Owner Trustee's right, title and interest in and to such Aircraft or any part thereof for such amount, on such terms and to such purchaser or purchasers as shall be designated in such instructions, or retain, lease or otherwise dispose of such Aircraft or any part thereof as shall be specified in such instructions; (e) execute and file any financing statement (and any continuation statement with respect to any such financing statement) or any other similar document relating to the Lessor's Estate with respect to an Aircraft or the security interests and assignments created by the Operative Agreements with respect to such Aircraft, as may be specified in such instructions (which instructions shall be accompanied by an execution form of such financing statement or such continuation statement, as the case may be); and (f) any other action as specified by the Trustor. SECTION 3.05. Certain Duties and Responsibilities of Owner Trustee. (a)(i) the Owner Trustee undertakes to perform such duties and only such duties as are specifically set forth herein and in any other Agreement to Lease Operative Agreements or Operative Agreements to which it is a party, and with the degree of care specified in Section 3.01 hereof, and in accordance with instructions given by the Trustor hereunder, and no implied duties, covenants or obligations owed to the Trustor shall be read into this Agreement, any such instructions or the Sales Agreement, the Agreement to Lease Operative Agreements or the Operative Agreements, as the case may be, with respect to an Aircraft, against the Owner Trustee, and the Owner Trustee agrees that it will not manage, control, possess, use, sell, lease, dispose of or otherwise deal with any Aircraft or any part of the Lessor's Estate with respect to such Aircraft except as required by the terms of the Sales Agreement, the Agreement to Lease Operative Agreements or the related Operative Agreements, as the case may be, any such instructions and as otherwise provided herein; and (ii) in the absence of bad faith on its part, the Owner Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Owner Trustee and conforming to the requirements of this Agreement or the Sales Agreement, the Agreement to Lease Operative Agreements or the Operative Agreements, as the case may be, with respect to an Aircraft, but in the case of any such certificates or opinions which by any provisions hereof or thereof are specifically required to be furnished to the Owner Trustee, the Owner Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Trust Agreement or the Sales Agreement, the Agreement to Lease Operative Agreements or the Operative Agreements, as the case may be, with respect to such Aircraft. (b) No provision hereof shall require the Owner Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Notwithstanding the foregoing, the Owner Trustee agrees in its individual capacity that it will, at its own cost and expense, promptly take such action as may be necessary to discharge duly all Lessor's Liens with respect to any Aircraft attributable to it in its individual capacity and will claim no indemnity therefor hereunder, or under any Participation Agreement, the Sales Agreement, any Agreement to Lease Operative Agreements or Operative Agreements with respect to any Aircraft. (c) Whether or not therein expressly so provided, every provision of this Agreement relating to the conduct or affecting the liability of or affording protection to the Owner Trustee shall be subject to the provisions of this Section 3.05, except that in the event of a conflict between this Section 3.05 and Section 3.01 hereof, Section 3.01 hereof shall be controlling. (d) The Owner Trustee will furnish to the Trustor, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates, financial statements and any other instruments furnished to the Owner Trustee hereunder or under the Sales Agreement, the Agreement to Lease Operative Agreements or the Operative Agreements with respect to any Aircraft (including those furnished to the Indenture Trustee pursuant to the terms of the related Indenture) and not otherwise furnished to the Trustor. (e) Notwithstanding anything herein to the contrary, the Owner Trustee shall not be authorized and shall have no power to "vary the investment" of the Trustor within the meaning of Treasury Regulations Section 301.7701-4(c)(1), it being understood that, for any Aircraft, the Owner Trustee shall have the power and authority to fulfill its obligations under Section 2.06 hereof and Article 23 of the related Lease. SECTION 3.06. Certain Rights of Owner Trustee. Except as otherwise provided in Section 3.05 hereof: (a) in the absence of bad faith on its part, the Owner Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order or other paper or document reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request, direction or authorization by the Trustor or any other party to any other Agreement to Lease Operative Agreement, the Sales Agreement or the Operative Agreements with respect to an Aircraft shall be sufficiently evidenced by a request, direction or authorization in writing, delivered to the Owner Trustee, and signed in the name of such party by any of the Chairman of the Board, the President, any Vice President, the Treasurer or Assistant Treasurer or the Secretary or Assistant Secretary or other duly authorized officer of such party or the general partner of the Trustor if the Trustor is a partnership; and any resolution of the Board of Directors or committee thereof of such party or a certificate of the general partner of the Trustor, if the Trustor is a partnership, shall be sufficiently evidenced by a copy of such resolution or certificate certified by the Secretary or an Assistant Secretary of such party or such general partner, as the case may be, to have been duly adopted and to be in full force and effect on the date of such certification, and delivered to the Owner Trustee; (c) whenever in the administration of this Agreement the Owner Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, under the Sales Agreement or under any of the other Agreement to Lease Operative Agreements or Operative Agreements with respect to an Aircraft, the Owner Trustee (unless other evidence be herein or therein specifically prescribed), absent actual knowledge of a Responsible Officer of the Owner Trustee to the contrary, may rely in good faith upon a certificate in writing, delivered to the Owner Trustee and signed by any of the Chairman of the Board, the President, any Vice President, the Treasurer or Assistant Treasurer or the Secretary or Assistant Secretary of the Lessee, the Trustor or the general partner of the Trustor, if the Trustor is a partnership, or the relevant Indenture Trustee and notice of such need for such proof or establishment shall be delivered to the Trustor, who may advise the Owner Trustee in respect of such matter and the Owner Trustee shall act in conformity with such advice; (d) the Owner Trustee may exercise its powers and perform its duties by or through such attorneys, agents and servants as it shall appoint with due care, and it shall be entitled to rely upon the advice of counsel reasonably selected by it with due care and shall be protected by the advice of such counsel in anything done or omitted to be done in accordance with such advice; (e) the Owner Trustee shall not be under any obligation to take any action under this Agreement, the Sales Agreement or under any of the Agreement to Lease Operative Agreements or Operative Agreements with respect to an Aircraft at the request or direction of the Trustor unless the Persons making such request or direction shall have offered to the Owner Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; nor shall the Owner Trustee be required to take any action deemed to impose on the Owner Trustee any obligation to take any action, if the Owner Trustee shall have been advised by its counsel that such action is unlawful or is contrary to the terms of this Agreement, the Sales Agreement, the Agreement to Lease Operative Agreements or the Operative Agreements, as the case may be, with respect to an Aircraft; (f) The Owner Trustee shall not be bound to make any investigation into the fact or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order or other paper or document unless a Responsible Officer of the Owner Trustee has actual knowledge that the facts or matters stated therein are false or inaccurate, but the Owner Trustee in its discretion may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Owner Trustee shall determine to make such further inquiry or investigation, it shall be entitled, to the same extent permitted by the Lessor under the Lease with respect to any Aircraft, to examine the books and records of the Lessee to reasonably determine whether the Lessee is in compliance with the terms and conditions of such Lease and to examine the related Aircraft, the related Airframe, any related Engine or any related Part thereof personally or by agent or attorney; and (g) without limiting the generality of Section 3.05 hereof, except as otherwise provided in written instructions given to the Owner Trustee by the Trustor or as otherwise provided in the Participation Agreement or Indenture with respect to an Aircraft, the Owner Trustee shall not have any duty (i) to see to any recording or filing of the Lease or of this Agreement or any financing statement or other notice or document relating thereto or contemplated under the Agreement to Lease Operative Agreements or Operative Agreements relating to such Aircraft or to see to the maintenance of any such recording or filing (other than FAA reporting requirements contained in 14 C.F.R. Sections 47.45 and 47.51), (ii) to see to any insurance on any Aircraft or any part thereof or to effect or maintain any such insurance, whether or not the Lessee shall be in default with respect thereto, other than to forward to the Trustor copies of all certificates, reports and other written information which it receives from the Lessee pursuant to the Lease relating to such Aircraft, (iii) to see to the payment or discharge of any tax, assessment or other governmental charges or any Lien (except any Lessor's Lien with respect to such Aircraft attributable to it in its individual capacity) owing with respect to, or assessed or levied against any part of the Lessor's Estate relating to such Aircraft, (iv) to confirm or verify any financial statements or reports of the Lessee, or (v) to inspect such Aircraft at any time or ascertain or inquire as to the performance or observance of any of the Lessee's covenants under the Lease relating to such Aircraft. SECTION 3.07. No Representations or Warranties as to Certain Matters. NEITHER THE OWNER TRUSTEE NOR FSBU MAKES OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO (A) THE TITLE (EXCEPT, WITH RESPECT TO THE OWNER TRUSTEE, AS EXPRESSLY SET FORTH IN SECTION 7.04(a)(vii) OF THE PARTICIPATION AGREEMENT AND SECTION 7(c) OF THE AGREEMENT TO LEASE), AIRWORTHINESS (EXCEPT WITH RESPECT TO THE OWNER PARTICIPANT, AS EXPRESSLY SET FORTH IN SECTION 7.03(a)(xiii) OF THE PARTICIPATION AGREEMENT), VALUE, CONDITION, WORKMANSHIP, DESIGN, COMPLIANCE WITH SPECIFICATIONS, CONSTRUCTION, OPERATION, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OF ANY AIRCRAFT, (B) THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, (C) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, (D) THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR (E) ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO ANY AIRCRAFT OR ANY PART THEREOF, except that FSBU represents and warrants that on the date of transfer thereof to the Owner Trustee, the Owner Trustee received whatever rights, title and interests in, to and under each Aircraft were conveyed to it by Lufthansa and FSBU represents, warrants and covenants that at all times on and after such date each Aircraft shall be free of all Lessor's Liens attributable to it, and that the Owner Trustee shall comply with the last sentence of Section 3.05(b) hereof, or (b) any representation or warranty as to the validity, legality or enforceability of this Agreement, the Sales Agreement or any other Agreement to Lease Operative Agreement or Operative Agreement with respect to an Aircraft to which the Owner Trustee is a party, or any other document or instrument, or as to the correctness of any statement contained in any thereof, except to the extent that any such representation, warranty or statement is expressly made herein or therein as a representation or warranty by the Owner Trustee or FSBU and except that FSBU hereby represents and warrants that this Agreement has been, and (assuming the due authorization, execution and delivery of this Agreement by the Trustor) the Sales Agreement, the Agreement to Lease Operative Agreements and Operative Agreements with respect to each Aircraft to which the Owner Trustee is a party have been (or at the time of execution and delivery of any such instrument by the Owner Trustee hereunder or pursuant to the terms of the related Participation Agreement that such an instrument will be) duly executed and delivered by one of its officers who is or will be, as the case may be, duly authorized to execute and deliver such instruments on behalf of the Owner Trustee and that this Agreement has been duly authorized, executed and delivered by FSBU and (assuming due authorization, execution and delivery of this Trust Agreement by the Trustor) constitutes the legal, valid and binding obligation of FSBU enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity. SECTION 3.08. Status of Moneys Received. All moneys received by the Owner Trustee under or pursuant to any provision of this Agreement, the Sales Agreement or any Agreement to Lease Operative Agreement or Operative Agreement with respect to each Aircraft shall constitute trust funds for the purpose for which they were paid or are held, but need not be segregated in any manner from any other moneys except to the extent required by law and may be deposited by the Owner Trustee under such conditions as may be prescribed or permitted by law for trust funds, or may be invested in direct obligations of the United States. SECTION 3.09. Self-Dealing. The Owner Trustee in its individual capacity, or any corporation in or with which the Owner Trustee may be interested or affiliated, or any officer or director of any such corporation, may have normal commercial relations, and otherwise deal, in the ordinary course of business, with the Lessee or any other corporation having relations with the Lessee to the full extent permitted by law. SECTION 3.10. Definition of a Responsible Officer. For purposes of this Trust Agreement only, "Responsible Officer" when used with respect to the Owner Trustee means the Chairman or the Vice-Chairman of the Board of Directors, the Chairman or Vice- Chairman of the Executive Committee of the Board of Directors, the President, any Vice President (whether or not designated by a number or a word or words added before or after the title "Vice President"), the Secretary, any Assistant Secretary, or any other officer in the Corporate Trust Administration of the Owner Trustee customarily performing functions similar to those performed by any of the above designated officers. SECTION 3.11. Resignation or Removal of Owner Trustee. The Owner Trustee or any successor thereof (a) shall resign if required to do so pursuant to Section 7.02(b) of the Participation Agreement with respect to any Aircraft and (b) may resign at any time without cause by giving at least 60 days' prior written notice to the Trustor and the Indenture Trustee with respect to each Aircraft, such resignation in each case to be effective only upon the appointment of a successor trustee and the acceptance of such appointment by such successor. In addition, the Trustor may at any time remove the Owner Trustee without cause by an instrument in writing delivered to the Owner Trustee and the Indenture Trustee, such removal to be effective only upon the appointment by the Trustor of a successor Owner Trustee and the acceptance of such appointment by such successor. Upon the giving of notice of resignation or removal of the Owner Trustee, the Trustor may appoint a successor Owner Trustee by an instrument signed by the Trustor. If the Trustor shall not have so appointed a successor Owner Trustee within 30 days after such resignation or removal, the Owner Trustee, the Indenture Trustee with respect to any Aircraft or the Trustor may apply to any court of competent jurisdiction to appoint a successor Owner Trustee to act until such time, if any, as a successor or successors shall have been appointed by the Trustor as above provided. Any successor Owner Trustee so appointed by a court shall be superseded by any successor Owner Trustee subsequently appointed by the Trustor. Each successor Owner Trustee appointed as herein provided shall be a trust company or banking corporation which is a Citizen of the United States, having its principal place of business in the United States and having a combined capital and surplus of at least $100,000,000, if there be such an institution willing, able and legally qualified to perform the duties of the Owner Trustee hereunder upon reasonable or customary terms. SECTION 3.12. Estate and Rights of Successor Owner Trustee. Any successor Owner Trustee, however appointed, shall execute and deliver to the predecessor Owner Trustee, with a copy to the Trustor and the Indenture Trustee with respect to each Aircraft, an instrument accepting such appointment, and thereupon each successor Owner Trustee, without further act, shall become vested with all the estates, properties, rights, powers, duties and trust of the predecessor Owner Trustee in the trusts hereunder with like effect as if originally named as an Owner Trustee herein, but nevertheless upon the written request of such successor Owner Trustee, such predecessor Owner Trustee shall execute and deliver an instrument transferring to such successor Owner Trustee, upon the trust herein expressed, all estates, properties, rights, powers, duties, property or moneys then held by such predecessor Owner Trustee upon the trusts herein expressed. Upon any such transfer by a predecessor Owner Trustee, such predecessor Owner Trustee shall provide the successor Owner Trustee and Trustor an accounting of the Lessor's Estate with respect to any Aircraft and the trusts hereunder. Upon the appointment of any successor Owner Trustee hereunder at any time on or after the Commencement Date with respect to an Aircraft, the predecessor Owner Trustee will use its best efforts to cause registration of each such Aircraft to be transferred upon the records of the Aeronautics Authority into the name of the successor Owner Trustee. SECTION 3.13. Merger or Consolidation of Owner Trustee. Any corporation into which the Owner Trustee in its individual capacity may be merged or with which it may be consolidated, or any corporation resulting from any merger or consolidation to which the Owner Trustee shall be a party, or any corporation to which substantially all the business of the Owner Trustee in its individual capacity may be transferred, shall, subject to the last sentence of Section 3.11 hereof, be the Owner Trustee under this Agreement without further act; provided, that such corporation shall not also be the Indenture Trustee with respect to any Aircraft. SECTION 3.14. Co-Trustees. At any time, if the Owner Trustee and the Trustor shall deem it necessary or prudent or desirable in order to conform to legal requirements of any jurisdiction in which any part of the Lessor's Estate with respect to any Aircraft may at the time be locate, the Trustor and the Owner Trustee jointly shall have the power, and shall execute and deliver all instruments, to appoint one or more persons approved by the Trustor and the Owner Trustee, to act as co-trustee, or co-trustees, jointly with the Owner Trustee, or separate trustee or separate trustees (except insofar as local law makes it necessary or prudent or desirable for any such co- trustee or separate trustee to act alone), of all or any part of the Lessor's Estate with respect to such Aircraft, and to vest in such Person or Persons, in such capacity with respect to such Aircraft, such title to such Lessor's Estate or any part thereof, and such rights, powers, duties, trusts or obligations as the Trustor and the Owner Trustee may consider necessary or prudent or desirable. If the Trustor shall not have joined in such appointment within 15 days after the receipt by it of a request so to do, the Owner Trustee alone shall have the power to make such appointment. The Owner Trustee shall not be liable for any act or omission of any co-trustee or separate trustee appointed under this Section 3.14, except with respect to an appointment made pursuant to the immediately preceding sentence if the Owner Trustee shall have failed to exercise due care in making such appointment. No appointment of, or action by, any co-trustee or separate trustee appointed under this Section 3.14 will relieve the Owner Trustee of any of its obligations under any Operative Agreement with respect to any Aircraft or otherwise affect any of the terms of the Indenture with respect to such Aircraft or adversely affect the interests of the related Indenture Trustee or Holders in the related Trust Indenture Estate. Any co-trustee or separate trustee may, at any time by an instrument in writing, constitute the Owner Trustee its or his attorney-in-fact and agent with full power and authority to do all acts and things and to exercise all discretion on its or his behalf and in its or his name subject to the conditions of this Agreement. Every additional trustee hereunder shall be a Citizen of the United States and, to the extent permitted by law, be appointed and act, and the Owner Trustee and its successors shall act, subject to the following provisions and conditions: (a) all powers, duties, obligations and rights conferred upon the Owner Trustee in respect of the custody, control and management of monies, the Aircraft or documents authorized to be delivered hereunder, under the Sales Agreement, the Agreement to Lease Operative Agreements or under the Participation Agreement or any other Operative Agreements with respect to an Aircraft shall be exercised solely by the Owner Trustee; (b) all other rights, powers, duties and obligations conferred or imposed upon the Owner Trustee shall be conferred or imposed upon and exercised or performed by the Owner Trustee and such additional trustee jointly, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed (including the holding of title to the Lessor's Estate with respect to each Aircraft) the Owner Trustee shall be incompetent and unqualified to perform such act or acts, in which event such rights, powers, duties and obligations shall be exercised and performed by such additional trusts; (c) no power given to, or which is provided hereby may be exercised by, any such additional trustee, except jointly with, or with the consent in writing of, the Owner Trustee; (d) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder except as otherwise provided hereunder; and (e) the Trustor, at any time, by an instrument in writing may remove any such additional trustee. SECTION 3.15. Interpretation of Agreements. In the event that the Owner Trustee is unsure as to the application of any provision of this Agreement, the Sales Agreement, any Agreement to Lease Operative Agreement or any Operative Agreement with respect to an Aircraft, or any other agreement relating to the transaction contemplated by the Agreement to Lease Operative Agreements or the Operative Agreements with respect to such Aircraft, or such provision is ambiguous as to its application, or is, or appears to be, in conflict with any other applicable provision, or in the event that this Agreement, the Sales Agreement, any Agreement to Lease Operative Agreement or any other Operative Agreement with respect to such Aircraft, permits any determination by the Owner Trustee or is silent or incomplete as to the course of action which the Owner Trustee is required to take with respect to a particular set of facts, the Owner Trustee shall request instructions of the Trustor and, to the extent that the Owner Trustee acts in good faith in accordance with any instructions received from the Trustor, shall not be liable to any Person pursuant hereto; provided, that in the event that no response is made to the Owner Trustee by the Trustor within 25 days after such request, the Owner Trustee shall not be liable hereunder to any Person for acts taken by the Owner Trustee in good faith or for any failure to act, except to the extent provided in the last sentence of Section 3.01 hereof. SECTION 3.16. Not Acting in Individual Capacity. In carrying out the trusts hereby created, the Owner Trustee will act solely as trustee hereunder and not in its individual capacity except as expressly provided herein, in the Sales Agreement, in any Operative Agreement with respect to an Aircraft or any Agreement to Lease Operative Agreements to which it is a party; and all Persons, other than the Trustor as provided in this Agreement, having any claim against the Owner Trustee by reason of the transactions contemplated hereby shall look only to the related Lessor's Estate for payment or satisfaction thereof, except to the extent provided in the last sentence of Section 3.01 hereof. SECTION 3.17. Tax Returns. The Owner Trustee shall be responsible for the keeping of all appropriate books and records relating to the receipt and disbursement of all moneys under this Agreement, the Sales Agreement, any Agreement to Lease Operative Agreement or any Operative Agreement with respect to an Aircraft. The Trustor shall be responsible for causing to be prepared and filed all income tax returns required to be filed by the Trustor. The Owner Trustee, upon request, will furnish the Trustor with all such information as may be reasonably required from the Owner Trustee, upon request, will furnish the Trustor with all such information as may be reasonably required from the Owner Trustee in connection with any other filing or audit and related litigation obligations. The Owner Trustee shall be responsible for causing to be prepared at the request and expense of the Trustor all income tax returns required to be filed with respect to the trust created hereby and shall execute and file such returns. The Trustor, upon request, will furnish the Owner Trustee with all such information as may be reasonably required from the Trustor that is in its possession in connection with the preparation of such income tax returns. ARTICLE 4 TERMINATION OF TRUST SECTION 4.01. Termination. This Agreement and the trust created and provided for hereby shall cease and be terminated in any one of the following events, whichever shall first occur: (a) If the Trustor shall by notice in writing to the Owner Trustee revoke and terminate the trust on and as of a dated stated in such notice, which date shall not be less than ten nor more than thirty days from the date of mailing such notice, then on the date specified in such notice the trust created and provided for hereby shall cease and terminate; provided, that this trust shall not be subject to revocation or termination, in whole or in part, by the Trustor, nor shall any portion of the Lessor's Estate with respect to any Aircraft be withdrawn from the trust hereunder until the later of (i) the time all Certificates with respect to an Aircraft, and all other amounts due under the Indentures relating thereto, shall have been paid in full, and the Lien of each Indenture with respect to an Aircraft shall have been released by the related Indenture Trustee and (ii) the termination of the Lease; and provided, further, that such notice shall be accompanied by the written agreement of Trustor to assume all of the obligations of the Owner Trustee under the Sales Agreement, the Agreement to Lease Operative Agreements and the Operative Agreements with respect to each Aircraft and all other obligations of the Owner Trustee incurred by it hereunder or pursuant hereto in its role as the Owner Trustee; (b) The sale or other final disposition by the Owner Trustee of all of its interest in all property constituting or included in the Lessor's Estate with respect to any Aircraft and, if the Indenture with respect to such Aircraft shall then be in effect, the sale or other disposition by the Indenture Trustee under such Indenture of all of its interest in all property constituting or included in the related Lessor's Estate, and the final disposition by the Owner Trustee and, if the Indenture with respect to such Aircraft shall then be in effect, the Indenture Trustee under such Indenture, of all moneys or other property or proceeds constituting part of the related Lessor's Estate in accordance with the terms hereof; or (c) 110 years from the earlier execution of this Agreement by either party hereto; provided, however, that if the Trust shall be or become valid under applicable law for a period subsequent to 110 years from the earlier execution of this Agreement by either party hereto or, without limiting the generality of the foregoing, if legislation shall become effective providing for the validity or permitting the effective grant of such trust for a period, in gross, exceeding the period for which such trust is hereinabove stated to extend and be valid, then such trust shall not terminate as provided in the first part of this sentence but shall extend to and continue in effect until, but only if such non-termination and extension shall then be valid under applicable law, such time as the same shall, under applicable law, cease to be valid. In the event of a termination pursuant to this Section 4.01, if the Indenture with respect to any Aircraft is still in effect, the Trustor will promptly and duly execute and deliver to each related Indenture Trustee such documents and assurances including, without limitation, conveyances, financing statements and continuation statements with respect to financing statements and take such further action as such Indenture Trustee may from time to time reasonably request and furnish in order to protect the rights and remedies created or indented to be created in favor of such Indenture Trustee under such Indenture and to create for the benefit of the Holders a valid lien with respect to, and a first and prior perfected security interest in, the related Trust Indenture Estate. SECTION 4.02. Distribution of Lessor's Estate upon Termination. Upon any termination of this trust pursuant to the provisions of Section 4.01, the Owner Trustee shall convey the Lessor's Estate with respect to each Aircraft to such purchaser or purchasers or the Trustor, as the case may be, and for such amount and on such terms as shall be specified in written instructions from the Trustor delivered to the Owner Trustee prior to the date of termination; provided, that (i) if at the time of any termination the Lease with respect to an Aircraft remains in force and effect, then the Lessor's Estate with respect to such Aircraft shall be sold subject to such Lease, and (ii) in the event such written instructions are not delivered to the Owner Trustee on or before the date of termination, the Owner Trustee shall transfer title to Lessor's Estate with respect to such Aircraft to the Trustor. Upon making such transfer or sale and accounting for all funds which have come into its hands, the Owner Trustee shall be entitled to receipt of any sums due and owing to the Owner Trustee for expenses incurred pursuant hereto as set forth in Section 2.05. ARTICLE 5 TRANSFER OF BENEFICIAL INTERESTS The Trustor may assign, convey or otherwise transfer to all or any portion of the Beneficial Interest relating to any Aircraft provided that the Beneficial Interest with respect to any Aircraft may not be owned by more than three Persons at any time, provided further that it gives the Lessee and the Indenture Trustee with respect to each Aircraft at least 10 days' prior written notice of such assignment, conveyance other transfer, and provided further that the Trustor and the transferee enter into an Assignment and Assumption Agreement substantially in the form of Exhibit B hereto and provided that the Trustor shall remain secondarily liable for all such obligations assumed by its successor as Trustor; provided, that the Trustor need not so agree to remain and shall not be so secondarily liable if such transferee is (i) a bank, savings institution, finance company, leasing company or trust company, national banking association acting for its own account or in a fiduciary capacity as trustee or agent under any pension, retirement, profit sharing or similar trust or fund, insurance company, fraternal benefit society or corporation acting for its own account having a combined capital and surplus (or, if applicable, consolidated tangible net worth or its equivalent) of not less than $50,000,000, (ii) a subsidiary of any Person described in clause (i) where such Person provides (A) support for the obligations assumed by such transferee satisfactory to the Lessee, the Owner Trustee and the Indenture Trustee with respect to each Aircraft or (B) with respect to each Aircraft, an unconditional guaranty of such subsidiary's obligations in the form of Exhibit I to the related Participation Agreement, or (iii) an Affiliate of the original Trustor, so long as such Affiliate has a combined capital and surplus (or, if applicable, consolidated tangible net worth or its equivalent) of not less than $40,000,000. A transferee hereunder shall be a Citizen of the United States or shall have established a voting trust, voting powers or other arrangement reasonable satisfactory to the Indenture Trustee with respect to the Aircraft being transferred to permit the Owner Trustee to be the registered owner of such Aircraft under the Federal Aviation Act. The Owner Trustee shall not be on notice of or otherwise bound by any such assignment, conveyance or transfer unless and until it shall have received an executed counterpart of the instrument of such assignment, conveyance or transfer. Upon any such disposition by the Trustor to a transferee as above provided, the transferee shall be deemed a "Trustor" for all purposes hereof, and shall be deemed to have made all the payments previously made by its transferor and to have acquired the same interest in the Lessor's Estate with respect to the Aircraft being transferred as theretofore held by its transferor; and each reference herein to the "Trustor" shall thereafter be deemed a reference to such transferee (to the extent of the Beneficial Interest transferred). Notwithstanding anything to the contrary contained in this Article 5, in no event shall the Trustor transfer its interest in the Beneficial Interest with respect to an Aircraft to any entity whose business is that of a nationwide or worldwide overnight or expedited delivery small package air courier, cargo or freight deliverer or which competes with the Lessee. Notwithstanding anything to the contrary in this Article 5, prior to the commencement of the Lease with respect to any Aircraft, the Trustor's right to assign its Beneficial Interest, to the extent relating to such Aircraft, shall be subject to the provisions of Section 10(a) of the Agreement to Lease. ARTICLE 6 MISCELLANEOUS SECTION 6.01. Indemnification. The Trustor and its assigns agree to reimburse and save the Owner Trustee, in its individual capacity, harmless against any and all loss, damage, liability, claims, demands, disbursements and expenses, including taxes (excluding taxes imposed against the Owner Trustee upon or with respect to any fees for services rendered in its capacity as Owner Trustee hereunder) and reasonable counsel fees, which are not required to be indemnified by the Lessee pursuant to Section 9.01 of the Participation Agreement with respect to any Aircraft and which may be incurred by reason of its being the Owner Trustee or acting hereunder or under the Operative Agreements with respect to any Aircraft, but solely by reason thereof and arising out of or relating solely to this Agreement or the Agreement to Lease Operative Agreements, under the Sales Agreement, under any Agreement to Lease Operative Agreement or the Operative Agreements with respect to any Aircraft or any Aircraft or the Rents and other sums payable therefor, or by reason of any occurrence directly relating thereto while so acting, and to secure the payment thereof, the Owner Trustee, in its individual capacity, shall have Lien on the Lessor's Estate with respect to each Aircraft and the proceeds therefor, including income, prior to any interest therein of the Trustor and its assigns (but subject to the rights of the Lessee under the Operative Agreements with respect to each Aircraft and subject and subordinate to the Lien of each Indenture with respect to an Aircraft), except only in respect of any such loss, damage, liability, claims, demands, disbursements and expenses, including taxes and counsel fees, arising from or as a result of (A) the Owner Trustee's willful misconduct or gross negligence (in its individual capacity or as trustee), (B) any inaccuracy of any representation of the Owner Trustee or any breach by the Owner Trustee of its warranties and covenants given in its individual capacity in this Agreement, the Agreement to Lease with respect to any Aircraft, Article 5 of the Lease with respect to any Aircraft, Sections 7.01(c), 7.02(a) and (b) and 7.04 of the Participation Agreement with respect to any Aircraft and its representations and warranties in relevant provisions of the Indenture with respect to any Aircraft or elsewhere in the Operative Agreements with respect to any Aircraft, the Agreement to Lease Operative Agreements or the Sales Agreement, (C) the failure to use ordinary care in receiving, handling and disbursing funds, (D) Lessor's Liens with respect to any Aircraft attributable to it in its individual capacity, (E) taxes, fees, or other charges on, based on, or measured by, any fees, commissions or compensation received by the Owner Trustee in connection with the transactions contemplated by the Lease, Collateral Agreement and Indenture with respect to any Aircraft and this Agreement, the Agreement to Lease Operative Agreements or the Sales Agreement, (F) Taxes excluded from indemnification pursuant to Section 8.01 of the relevant Participation Agreement (disregarding for the purposes of this Section 6.01 subsections (ii) and (v) of Section 8.01(b) of any such Participation Agreement) or (G) Expenses with respect to any Aircraft excluded from indemnification pursuant to Section 9.01(b) of the related Participation Agreement (disregarding for the purposes of this Section 6.01 subsections (ii), (iv) and (viii) of Section 9.01(b) of such Participation Agreement); provided, that, before asserting any right to payment or indemnification hereunder, the Owner Trustee shall first demand (but need not exhaust its remedies with respect to) its corresponding right to payment or indemnification from the Lessee pursuant to each relevant Participation Agreement. It is further understood that the distribution by the Owner Trustee of all or any part of the Lessor's Estate with respect to any Aircraft as provided in Section 4.02 of this Agreement shall not impair the right of the Owner Trustee to indemnity, payment and reimbursement as herein provided. In the event the Owner Trustee makes any advances at any time to pay or to provide for the payment of any such loss, damage, liability, claim, demand or expense, then the Owner Trustee, in its individual capacity, shall be entitled, in addition to reimbursement for the principal of the sum so advanced, to interest on the amount of such advances at the Corporate Base Rate. The provisions of this Section shall continue in force and effect notwithstanding the termination of this trust or the resignation, inability or incapacity to act or removal of the Owner Trustee. The Owner Trustee (in its individual capacity or as Owner Trustee) agrees that it shall have no right against (except as provided in this Section 6.01) the Trustor or (subject to the provisions of each Indenture with respect to an Aircraft) the Trust Indenture Estate with respect to any Aircraft for any fee as compensation for its services hereunder. SECTION 6.02. Supplements and Amendments. (a) Subject to Section 6.02(b) hereof, at any time and from time to time, only upon the written request of the Trustor (i) FSBU and the Trustor shall execute a supplement hereto for the purpose of adding provisions to, or changing or eliminating provisions of, this Agreement as specified in such request and (ii) the Owner Trustee shall, subject to the relevant provisions of the Indenture with respect to any Aircraft, enter into or consent to such written amendment or modification of or supplement to any of the Sales Agreement, the Agreement to Lease Operative Agreements or Operative Agreements with respect to such Aircraft as the related Indenture Trustee and any other necessary parties may agree to in writing and as may be specified in such request, or execute and deliver such written waiver of the terms of any of the Sales Agreement, the Agreement to Lease Operative Agreements or Operative Agreements with respect to any Aircraft as may be agreed to in writing by the related Indenture Trustee and as may be specified in such request; provided, that (A) the Owner Trustee shall not execute any such supplement, amendment, waiver or modification without the prior written consent of the Trustor, (B) if in the reasonable opinion of the Owner Trustee any document required to be executed by it pursuant to this Section adversely affects any right or duty of, or immunity or indemnity in favor of, the Owner Trustee under this Agreement, the Sales Agreement or any other Agreement to Lease Operative Agreement or Operative Agreement with respect to an Aircraft, the Owner Trustee may in its discretion decline to execute such document and (C) any amendment or supplement to this Agreement that would adversely affect the rights of the Indenture Trustee or Holders referred to in the Indenture with respect to any Aircraft shall be subject to the prior written consent of each such Indenture Trustee. (b) No consent of the Trustor pursuant to this Section 6.02 shall be required to enable the Owner Trustee to execute and deliver any Lease, Lease Supplement, Trust Agreement Supplement or Indenture and Security Agreement Supplement pursuant to the terms of the Lease and Section 1.01 hereof. For each Aircraft, the "Trust Agreement Supplement" means the supplement to this Trust Agreement, substantially in the form of Exhibit D to this Trust Agreement and dated the Commencement Date for such Aircraft, which shall particularly describe such Aircraft. (c) It shall not be necessary that any request pursuant to this Section 6.02 specify the particular form of the proposed document to be executed pursuant to such request, but it shall be sufficient if such request shall indicate the substance thereof. Promptly after the execution by FSBU or the Owner Trustee of any document pursuant to this Section 6.02, the Owner Trustee shall mail a conformed copy thereof to the Trustor and the Indenture Trustee under each Indenture with respect to an Aircraft, but the failure of the Owner Trustee to mail such conformed copies shall not impair or affect the validity of such documents. SECTION 6.03. Nature of Title of Trustor. The Trustor shall not have any legal title to any part of the Lessor's Estate with respect to any Aircraft. No transfer, by operation of law or otherwise, of the right, title and interest of the Trustor in and to the Lessor's Estate with respect to any Aircraft or the trusts hereunder shall operate to terminate this Agreement or any such Lessor's Estate. SECTION 6.04. Power of Owner Trustee to Convey. Any assignment, sale, transfer or other conveyance by the Owner Trustee of the interest of the Owner Trustee in the Sales Agreement, the Agreement to Lease Operative Agreements or Operative Agreements with respect to any Aircraft or any part thereof pursuant to and in compliance with the terms of the Sales Agreement, this Agreement or the Agreement to Lease Operative Agreements or such Operative Agreements shall bind the Trustor and shall be effective to transfer or convey all right, title and interest of the Owner Trustee and the Trustor in and to the Sales Agreement, the Agreement to Lease Operative Agreements or such Operative Agreements or any Aircraft or such part thereof. No purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency or regularity of such assignment, sale, transfer or conveyance or as to the application of any sale or other proceeds with respect thereto by the Owner Trustee. SECTION 6.05. Notices. All notices, demands, declarations and other communications required bay this Agreement shall be in writing and shall be deemed received (a) if given by telecopier when transmitted and the appropriate telephonic confirmation received if transmitted on a Business Day and during normal business hours of the recipient, and otherwise on the next Business Day following transmission, (b) if given by certified mail, return receipt requested, postage prepaid five Business Days after being deposited in the United States mails and (c) if given by Federal Express service or other means, when received or personally delivered, addressed: If to the Owner First Security Bank of Utah, Trustee: National Association 79 South Main Street Salt City Utah, Utah 84111 Attention: Corporate Trust Administration Facsimile: (801) 246-5053 If to the Trustor: LLG Aircraft Leasing, L.P. 1209 Orange Street Wilmington, DE 19801 Salt City Utah, Utah 84111 Attention: President Facsimile: If to any Indenture Trustee: As specified in the relevant Participation Agreement. or as to any of the foregoing parties at such other address as such party may designate by notice duly given in accordance with this Section to the other parties. SECTION 6.06. Situs of Trust; Applicable Law; Severability. THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF VALIDITY, CONSTRUCTION AND PERFORMANCE. If any provision of this Agreement shall be invalid or unenforceable, the remaining provisions hereof shall continue to be fully effective; provided, that such remaining provisions do not increase the obligations or liabilities of the Owner Trustee or the Trustor. SECTION 6.07. Successors and Assigns. This agreement shall be binding upon and shall inure to the parties hereto and their respective successors and permitted assigns, including any successive holders of the Beneficial Interest, but only to the extent the Beneficial Interest has been transferred or assigned in accordance with the limitations of Article 5 of this Agreement and, if applicable, Section 10(a) of the Agreement to Lease. SECTION 6.08. Headings and Table of Contents. The headings of the Article and Sections of this Agreement and the Table of Contents are inserted for convenience only and shall not affect the meaning or construction of any of the provision hereof. SECTION 6.09. Definitions. Capitalized terms used herein, unless otherwise herein defined or the context hereof shall otherwise require, shall have the respective meanings set forth in the Agreement to Lease, except that any capitalized term used herein in relation to an Aircraft shall have the meaning set forth in Schedule II to the Participation Agreement with respect to such Aircraft. Each such Schedule is incorporated herein. SECTION 6.10. Counterparts. This instruments may be executed in any number of counterparts or upon separate signature pages bound together in several counterparts, each of which when so executed shall be deemed to be an original, and such counterparts together shall constitute and be one and the same instrument. SECTION 6.11. Trust Agreement for Benefit of Owner Trustee, Trustor and each Indenture Trustee Only. Except as expressly provided herein, nothing in this Trust Agreement, whether express or implied, shall be construed to give to any person other than the Owner Trustee, the Indenture Trustee under the related Indenture, and the Trustor any legal or equitable right, remedy or claim under or in respect of this Trust Agreement. ARTICLE 7 CERTAIN LIMITATIONS SECTION 7.01 Limitations on Control. The Trustor agrees to certain limitations on control in order to ensure the eligibility of the Aircraft for United States registration under the Federal Aviation Act. Notwithstanding any other provision of this Agreement, but subject to the other provisions of this Article 7, from and after the date of this Agreement and until termination of this Agreement pursuant to Article 4 or termination of this Article pursuant to Section 7.07 hereof, (a) the Trustor shall not have any right (i) to remove the Owner Trustee, (ii) to instruct the Owner Trustee with respect to the ownership or operation of any of the Aircraft, (iii) to give consents with respect to any lawful action of the Owner Trustee not prohibited by this Agreement relating to the ownership or operation of any of the Aircraft, and (iv) to consent to the amendment or supplement of this Agreement (collectively, the "Control Rights") and (b) the Owner Trustee shall have absolute and complete discretion in all matters as to which the Trustor would have had any Control Rights, but for the provisions of this Article 7; provided, however, the Owner Trustee agrees that it shall not, without the prior written consent of the Trustor, consent to (x) any amendment, supplement or termination of this Agreement or any Operative Agreement to which the Owner Trustee is a party or (y) the sale, lease, sublease, mortgage or other disposition of all or a portion of the Trust Estate other than as provided in this Agreement. The discretion given to the Owner Trustee in clause (b) of the immediately preceding sentence (x) is in addition to the discretion given to the Owner Trustee under the other Articles of this Agreement and (y) is expressly limited to the Control Rights that, but for the provisions of this Article 7, would be held or exercisable by the Trustor, and does not extend to any other rights, powers or privileges in respect of the Beneficial Interest of the Trustor. SECTION 7.02. Discretion and Actions of Owner Trustee. (a) The Owner Trustee, in exercising its discretion under this Article 7, shall exercise its best judgment and shall not be liable for any action taken or failed to be taken hereunder, except for its gross negligence or wilful misconduct, and shall exercise the Control Rights in connection with all matters involving the ownership and operation of the Aircraft by the Owner Trustee. The Owner Trustee shall not be required, and shall have no duty or obligation, to exercise Control Rights in respect of any other matters. (b) The Owner Trustee, in exercising any Control Rights, may act directly or through any agents or attorneys and may consult with counsel, accountants and other skilled persons to be selected and retained by it, and the Owner Trustee shall not be liable for anything done, suffered or omitted in good faith in accordance with the advice or opinion of any such counsel, accountants or other skilled persons and the Owner Trustee shall not be liable for the negligence of any such counsel, accountants or other skilled persons. (c) Notwithstanding any other provision hereof, the Owner Trustee, in exercising any Control Rights pursuant to this Article 7 in connection with all matters involving the ownership or operation of any of the Aircraft by the Owner Trustee, shall be free of any kind of control by the Trustor and shall exercise the Control Rights as it in its discretion shall deem necessary to protect the interests of the United States, notwithstanding any countervailing interests of any foreign power which, or whose citizens may, have a direct or indirect interest in the Lessor's Estate with respect to any Aircraft and any such action by the Owner Trustee shall not be considered malfeasance or in breach of any obligation which the Owner Trustee might otherwise have to the Trustor. In exercising any Control Rights pursuant to this Article 7 in connection with any matters which may arise not relating to the ownership and operation of any of the Aircraft, the Owner Trustee shall be permitted, but shall be under no duty, to seek the advice of the Trustor before exercising such Control Rights, subject, however, to the proviso in the first sentence of Section 7.01. The Owner Trustee, promptly after each exercise of any Control Rights hereunder, shall notify the Trustor of the exercise thereof. SECTION 7.03. Removal. Notwithstanding any provision of this Agreement relating to any right or power of the Trustor to remove the Owner Trustee, the Owner Trustee may be removed only for its gross negligence or willful misconduct. SECTION 7.04. Payments. Notwithstanding any other provision of this Article 7, the Trustor and not the Owner Trustee shall be entitled to receive from the Owner Trustee or otherwise all payments or insurance proceeds, and other payments of whatsoever kind and nature payable to the Trustor pursuant to this Agreement or any other Operative Agreement with respect to an Aircraft in the same manner as if the Control Rights had not been transferred to the Owner Trustee and held in trust hereunder. SECTION 7.05. The Owner Trustee Acts as Trustee. Notwithstanding any other provision of this Agreement, in exercising any Control Rights pursuant to this Article 7, the Owner Trustee acts solely as trustee and not in its individual capacity, and except as may be otherwise expressly provided in Section 7.02 hereof, all persons having any claim against First Security or the Owner Trustee by reason of the transactions contemplated by this Article 7 shall not have any recourse to First Security. SECTION 7.06. Waiver of Claim Against the Owner Trustee. To the extent permitted by law, the Trustor agrees to waive and does hereby waive any and all claims of every kind and nature which hereafter the Trustor may have against First Security, its successors and assigns, and does release the Owner Trustee, its successors and assigns, from any liability whatsoever arising out of or in connection with the exercise of its powers or the performance of its duties under this Article 7, except liability for the gross negligence or wilful misconduct of the Owner Trustee. SECTION 7.07. Amendments, Termination of Article 7. Notwithstanding Section 6.02, so long as the Aircraft shall be registered under the laws of the United States and until termination of this Agreement and the trust created hereby, this Article 7 shall not be amended, supplemented or modified unless the FAA shall have concluded that such amendment, supplement or modification would not cause any Aircraft to be ineligible for registration in the United States, provided, however, that this Article 7 shall terminate without any notice or action of the Owner Trustee on the earlier of (i) the date the Trustor shall have become a "citizen of the United States" as defined in Section 101(16) of the Federal Aviation Act, (ii) the date the Owner Trustee being a "citizen of the United States" as defined in Section 101(16) of the Federal Aviation Act is no longer required to maintain registration of any of the Aircraft with the FAA or (iii) such earlier date as the Trustor may, with the prior written consent of the Indenture Trustee and the Lessee, deliver to the Owner Trustee a written notice of its election to terminate this Article 7. The Trustor shall send written notification to the FAA, with copies thereof to the Lessee, the Owner Trustee and each Indenture Trustee with respect to an Aircraft, of any termination of this Article 7. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. IN WITNESS WHEREOF, FSBU and the Trustor have caused this Agreement to be duly executed as of March __, 1994. LLG AIRCRAFT LEASING, L.P. By LLG OF DELAWARE, INC., Its General Partner By ______________________ Title: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION By ______________________ Title: Exhibit A AIRCRAFT DESCRIPTION The Owner Trustee shall lease to Federal Express the following Aircraft: METRIC TONS OF AIR GROSS WEIGHT AT SCHEDULED AIRCRAFT CRAFT LH SCHEDULED COMMENCEMENT ENGINE TYPE MSN REGISTRATION COMMENCEMENT DATE DATE TYPE -------- ----- ------------ ----------------- ------------ -------- 1. 310-203 254 D-AICH 132 7.15.94 CF6-80A3 2. 310-203 397 D-AICR 142 8.26.94 CF6-80A3 3. 310-203 273 D-AICL 142 9.13.94 CF6-80A3 4. 310-203 400 D-AICS 142 10.19.94 CF6-80A3 5. 310-203 360 D-AICP 142 11.11.94 CF6-80A3 6. 310-203 359 D-AICN 142 1.04.95 CF6-80A3 7. 310-203 191 D-AICA 132 1.27.95 CF6-80A3 8. 310-203 201 D-AICB 132 3.10.95 CF6-80A3 9. 310-203 230 D-AICC 132 4.07.95 CF6-80A3 10. 310-203 233 D-AICD 132 5.10.95 CF6-80A3 11. 310-203 356 D-AICM 142 6.08.95 CF6-80A3 12. 310-203 237 D-AICF 132 7.07.95 CF6-80A3 13. 310-203 257 D-AICK 132 8.04.95 CF6-80A3 Exhibit B ASSIGNMENT AND ASSUMPTION AGREEMENT ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of ________ __, 199 between , a organized under the laws of (the "Assignor"), and ______________, a organized under the laws of _____________ (the "Assignee"). W I T N E S S E T H : WHEREAS, the parties hereto desire to effect (a) the transfer by the Assignor to the Assignee of the right, title and interest of the Assignor (except as reserved below) in, under and with respect to, among other things, (i) the Agreement to lease dated as of September 1, 1993, among Deutsche Lufthansa Aktiengesellschaft ("Lufthansa"), First Security Bank of Utah, National Association ("FSBU"), as Owner Trustee and Federal Express Corporation ("Federal"), (ii) the Trust Agreement dated as of September 1, 1993 (the "Trust Agreement") between FSBU and LLG Aircraft Leasing, L.P., (iii) the Lessor's Estate (as defined in the Trust Agreement) [and (iv) the Participation Agreement, dated as of ________ __, 199_, among Federal, as Lessee, the Assignor, as Owner Participant, the entities listed on Schedule I thereto, as Loan Participants(1), First Security Bank of Utah, National Association, as Owner Trustee, ____________________________, as Indenture Trustee (as amended, modified or supplemented from time to time, the "Participation Agreement"), including, without limitation, any indemnity payments payable to the Assignee directly or indirectly thereunder, (v) the Tax Indemnity Agreement identified in the Participation Agreement (the "Tax Indemnity Agreement"), (vi) the other Operative Agreements to which the Assignor is a party or by which it is bound](2), and (vii) the proceeds therefrom but, in - -------------- (1) Not if debt is publicly offered. (2) This language to be included only with respect to an Aircraft that is the subject of a transfer following the lease thereof to the Lessee. each case, only to the extent relating to the Aircraft identified in Exhibit A hereto (the "Assigned Aircraft") (such rights, title and interest described in clauses (i) through [(vii)] inclusive, except as reserved in Section 1 hereof, being hereafter collectively referred to as the "Transferred Interest") and (b) the assumption by the Assignee of the obligations of the Assignor accruing under or with respect to the Transferred Interest from and after the Effective Time (as defined in Section 12 hereof); and WHEREAS, such documents permit such transfer upon satisfaction of certain conditions heretofore or concurrently herewith being complied with; NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, the parties hereto do hereby agree as follows (capitalized terms used herein without definition having the meaning ascribed thereto in the [Agreement to Lease](3) [the Participation Agreement](4)): 1. Assignment. The Assignor has sold, assigned, conveyed, transferred and set over, and does hereby sell, assign, convey, transfer and set over, unto the Assignee as of the date hereof all of its present and future right, title and interest in, under and with respect to the Transferred Interest together with all other documents and instruments evidencing any of such right, title and interest, except such rights of the Assignor as have accrued to the Assignor prior to the Effective Time (including specifically, but without limitation, the right to receive any amounts due or accrued to the Assignor under the Trust Agreement in respect of the Assigned Aircraft prior to the Effective Time [and the right to receive any indemnity payment in respect of the Assigned Aircraft pursuant to the Participation Agreement or the Tax Indemnity Agreement with respect to events occurring prior to the Effective Time)]**. 2. Assumption. The Assignee hereby undertakes all of the duties and obligations of the - -------------- (3) This language to be used in the case of a transfer in respect of an Aircraft prior to the lease thereof to the Lessee. (4) This language to be used in the case of a transfer in respect of an Aircraft subsequent to the lease thereof to the Lessee. "Owner Participant" with respect to the Transferred Interest accruing on or subsequent to the Effective Time (for the avoidance of doubt, excluding any duties, obligations and liabilities of the Assignor required to be performed by it on or prior to the Effective Time hereof with respect to the Transferred Interest), and hereby confirms that it shall be deemed a party to each agreement referred to in the first recital hereof to which the Assignor is a party or by which it is bound and each such other contract, agreement, document and instrument referred to in such recital, and shall be bound by all the terms thereof (including the agreements and obligations of the Assignor set forth therein) as if therein named as the Owner Participant to the extent of the Transferred Interest (all such agreements, contracts, documents and instruments being hereinafter referred to as the "Assigned Documents") but, in each such case, only to the extent relating to the Assigned Aircraft. The assignment and assumption effected hereby shall release the Assignor, to the extent of the Transferred Interest, from its obligations under the Assigned Documents, except to the extent of any such obligations arising or accruing prior to the Effective Time. 3. Appointment as Attorney-in-Fact. In furtherance of the within assignment, the Assignor hereby constitutes and appoints the Assignee, and its successors and assigns, the true and lawful attorneys of the Assignor, with full power of substitution, in the name of the Assignee or in the name of the Assignor but on behalf of and for the benefit of and at the expense of the Assignee, to collect for the account of the Assignee all items sold, transferred or assigned to the Assignee pursuant hereto; to institute and prosecute, in the name of the Assignor or otherwise, but at the expense of the Assignee, all proceedings that the Assignee may deem proper in order to collect, assert or enforce any claim, right or title of any kind in or to the items sold, transferred or assigned; to defend and compromise at the expense of the Assignee any and all actions, suits or proceedings as to title to or interest in any of the Transferred Interest; and to do all such acts and things in relation thereto at the expense of the Assignee as the Assignee shall reasonably deem advisable. The Assignor hereby acknowledges that this appointment is coupled with an interest and is irrevocable by the Assignor in any manner or for any reason or by virtue of any dissolution of the Assignor. 4. Payments. The Assignor hereby covenants and agrees to pay over to the Assignee, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of the Assignor that, under Section 1 hereof, belong to the Assignee, and the Assignee hereby covenants and agrees to pay over to the Assignor, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of the Assignee that, under Section 1 hereof, belong to the Assignor. 5. Further Assurances. The Assignor shall, at any time and from time to time, upon the request of the Assignee, promptly and duly execute and deliver any and all such further instruments and documents and take such further action as the Assignee may reasonably request to obtain the full benefits of this Assignment and of the right and powers herein granted. 6. Investment Purpose. The Assignee hereby represents that it is acquiring the trust and other interests hereby assigned to it for its own account for the purpose of investment and not with a view to the distribution or resale of either thereof. 7. Representations and Warranties. The Assignee represents and warrants that: (a) it is duly organized and validly existing in good standing under the laws of its jurisdiction of organization, and has the power and authority to carry on its business as now conducted, to own or hold under lease its properties and to enter into and perform its obligations under the Assigned Documents to which it is or will be a party; (b) this Assignment and Assumption Agreement has been duly authorized by all necessary action on its part, does not require any approval not already obtained of its [stockholders](5) or any approval or consent not already obtained of any trustee or holders of any of its indebtedness or obligations, and has been duly executed and delivered by the Assignee, and neither the execution and delivery thereof, nor the - -------------- (5) This language to be used only if the Assignee is a corporation. consummation of the transactions contemplated hereby, nor compliance by the Assignee with any of the terms and provisions hereof or of any of the Assigned Documents to which it will become a party or by which it will be bound, will contravene any United States Federal or state law, judgment, governmental rule, regulation or order applicable to or binding on the Assignee (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to the particular nature of the equipment owned by the Owner Trustee, other than such laws, rules or regulations relating to lease transactions generally or to the citizenship requirements of the Assignee under the Federal Aviation Act, and assuming, with respect to ERISA, the continuing accuracy of the representations and warranties set forth in Section [6.01(k)] of the Participation Agreement and the representations, warranties and covenants set forth in Section [2.18](6) of the Trust Indenture) or contravene or result in any breach of or constitute any default under, or result in the creation of any Lien (other than Liens provided for in the Assigned Documents) upon any property of the Assignee or any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which the Assignee is a party or by which it or its properties may be bound or affected; (c) each of the Assigned Documents to which it will become a party, assuming such document is the legal, valid and binding obligation of each other party thereto, will constitute the legal, valid and binding obligation of the Assignee, enforceable 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; - -------------- (6) Appropriate cross-reference to be used to the section of the Indenture relating to the source of funds of the Loan Participants. (d) there are no pending or, to the knowledge of the Assignee, threatened actions or proceedings against the Assignee before any court or administrative agency which, if determined adversely to the Assignee, would materially adversely affect the ability of the Assignee to perform its obligations under any Assigned Document to which it will become a party; (e) upon the execution and delivery of this Assignment and Assumption Agreement, the Lessor's Estate and the Indenture Estate, if any, will be free and clear of Lessor's Liens attributable to the Assignee; (f) neither the execution and delivery by the Assignee of this Assignment and Assumption Agreement, nor the consummation by it of any of the transactions contemplated hereby, 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 of any other action in respect of, any Federal or other governmental authority or agency (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to the particular nature of the equipment owned by the Owner Trustee, other than such laws, rules or regulations relating to lease transactions generally or to the citizenship requirements of the Assignee under applicable aviation law); (g) the Assignee is not an "investment company" or a company controlled by an "investment company, required to register as such under the Investment Company Act of 1940, as amended; (h) no part of the funds to be used by it to acquire any right, title or interest in any of the Transferred Interest 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 employee benefit plan or individual retirement account subject to Section 4975 of the Code; (i) on the date hereof [it is a "citizen of the United States" within the meaning of Section 101(16) of the Federal Aviation Act and the rules and regulations of the FAA thereunder (without use of a voting trust agreement or voting powers trust agreement)] [it has entered into a voting powers or voting trust agreement which has been approved by the FAA (to the extent required by the Federal Aviation Act or the FAA) and which is in form and substance reasonably satisfactory to the Lessee and the Indenture Trustee];(7) (j) the transfer to it of the Transferred Interest will not adversely affect the continued registration of the Aircraft in the name of the Owner Trustee or violate any provision of the Federal Aviation Act or any rules or regulations promulgated thereunder, or violate any provisions of the Securities Act of 1933, as amended, or any other applicable Federal or state law; (k) [it is a "Transferee" satisfying the conditions set forth in Section 5 of the Trust Agreement] [alternatively, Guarantee in the form of Exhibit F to the Agreement to Lease to be provided]; and (l) after giving effect to this assignment, there will be no more than three Owner Participants with respect to the Aircraft. 8. Representations and Warranties of Assignor. Assignor represents and warrants that: (a) it is duly organized and validly existing in good standing under the laws of its jurisdiction of organization and has the requisite power, authority and legal right to enter into and carry out the transactions contemplated hereby; (b) this Agreement has been duly authorized, executed and delivered by it and constitutes the legal, valid and binding obligation of Assignor, enforceable against it in accordance with its terms, except as such enforceability may be limited by - -------------- (7) One of the two preceding clauses to be deleted as appropriate. bankruptcy, insolvency, moratorium, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights generally ; (c) no action or proceeding is pending, has been instituted or, to the knowledge of Assignor, is threatened, before any court or governmental agency, nor has any order, judgment or decree been issued or, to the knowledge of Assignor, is threatened, by any court or governmental agency which would materially adversely affect the ability of Assignor to complete and consummate its obligations contemplated hereby; (d) the Lessor's Estate is free of Lessor's Liens attributable to it; (e) it has fully performed all of its obligations under each Assigned Document to which it is a party or by which it is bound, which obligations by their terms are required to be satisfied or performed prior to the Effective Time or prior to the consummation of the transactions contemplated hereby; (f) neither the execution, delivery and performance by it of this Agreement, nor compliance by it with any of the provisions thereof requires or will require any approval of its stockholders, or approval or consent of any trustees or holders of any indebtedness obligations of it or contravenes or will contravene any law (assuming, with respect to ERISA, the continuing accuracy of the representations and warranties set forth in Section 6.01(k) of the Participation Agreement and the representations, warranties and covenants set forth in Section [2.18](8) of the Trust Indenture) or any order of any court or governmental authority or agency applicable to or binding on it or contravenes or will contravene the provisions of, or constitute a default under any indenture, mortgage, contract or any agreement or instrument to which it is a - -------------- (8) Appropriate cross-reference to be used to the section of the Indenture relating to the source of funds of the Loan Participants. party or by which it or any of its property may be bound or affected; and (g) the transfer to Assignee of all of the Assignor's right, title and interest as Owner Participant will not violate any provision of the Federal Aviation Act (or any rules or regulations promulgated thereunder), Securities Act of 1933, as amended (and no registration pursuant to such Act or the rules and regulations thereunder shall be required in connection with such transfer) or any other applicable law (assuming, with respect to ERISA, (x) that the Assignee's representations and warranties, as they relate to ERISA, in Section 8(h) above are true and correct and (y) the continuing accuracy of the representations and warranties set forth in Section 6.01(k) of the Participation Agreement and the representations, warranties and covenants set forth in Section [2.18]* of the Trust Indenture). 9. GOVERNING LAW. THIS ASSIGNMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO ANY PROVISION OF NEW YORK LAW THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER STATE. 10. Counterparts. This Assignment may be executed in any number of counterparts, all of which together shall constitute a single instrument. It shall not be necessary that any counterpart be signed by both parties so long as each party shall sign at least one counterpart. 11. Third Party Beneficiaries. Each party hereto agrees, for the benefit of the Owner Trustee, the Loan Participants, the Lessee and the Indenture Trustee (collectively, the "Beneficiaries"), that the representations, warranties and covenants of such party contained herein are also intended to be for the benefit of each Beneficiary, and each Beneficiary shall be deemed to be an express third party beneficiary with respect thereto, entitled to enforce directly and in its own name any rights or claims it may have against such party as such beneficiary. 12. Effectiveness. This Agreement shall be effective upon its execution and delivery by each of Assignor and Assignee, the exact time of occurrence of which (the "Effective Time") shall be agreed in writing signed by Assignor and Assignee. IN WITNESS WHEREOF, the parties hereto, through their respective officers thereunto duly authorized, have duly executed this Assignment as of the day and year first above written. [ASSIGNOR] By:_________________________ Name: Title: [ASSIGNEE] By:_________________________ Name: Title: Exhibit C OP GUARANTEE OP GUARANTEE, dated as of __________ __, ____, by __________, a __________ [corporation] (the "Guarantor"), to the Owner Trustee, the Indenture Trustee, the Pass Through Trustee and the Lessee referred to in the Participation Agreement described below (collectively, together with their successors and assigns, the "Beneficiaries" and, each individually, a "Beneficiary"). W I T N E S S E T H : WHEREAS, reference is hereby made to the Participation Agreement, dated as of March 1, 1994 (as amended, modified or supplemented from time to time, the "Participation Agreement"), among Federal Express Corporation, as Lessee, LLG Aircraft Leasing, L.P., as Owner Participant, First Security Bank of Utah, National Association, as Owner Trustee ("FSBU"), NationsBank of Georgia, National Association, as Indenture Trustee, NationsBank of South Carolina, National Association, as Pass Through Trustee, and Westdeutsche Landesbank Girozentrale, New York Branch; and [WHEREAS, this Guarantee is being delivered by the Guarantor with respect to the obligations of LLG Aircraft Leasing, L.P., (the "Obligor") as contemplated by Section 7.03(ix) of the Participation Agreement; and]* [WHEREAS, [LLG Aircraft Leasing, L.P.] [Insert name of subsequent transferor] (the "Transferor"), wishes to transfer to ___________ (the "Obligor"), inter alia, [all][a portion] of the Transferor's right, title and interest in and to the Participation Agreement, the Trust Agreement (as defined in the Participation Agreement) and each other Operative Agreement (as defined in the Participation Agreement) to which the Transferor is a party or by which it is bound pursuant to the Assignment and Assumption Agreement, dated as of ______________ __, 199_, between the Transferor and the Obligor; and]** - -------------- * Insert in the case of a guarantee by Lufthansa. ** Insert in the case of a guarantee in connection with a transfer. [WHEREAS, the terms of the Trust Agreement provide that the aforementioned transfer is conditioned upon the execution and delivery of this Guarantee by the Guarantor;]* NOW, THEREFORE, [in order that the Transferor may make the aforementioned transfer to the Obligor,]* the Guarantor hereby agrees with and for the benefit of the Beneficiaries as follows: 1. Definitions. As used in this Guarantee, terms defined in the Participation Agreement are used herein as therein defined, unless otherwise defined herein. 2. Guarantee. a. The Guarantor hereby unconditionally and irrevocably guarantees as primary obligor and not merely as a surety to the Beneficiaries and their respective successors, endorsees, transferees and assigns, the prompt and complete payment by the Obligor when due (whether at the stated due date thereof, by acceleration or otherwise) of, and the faithful performance of, and compliance with, all payment obligations of the Obligor under the Operative Agreements or any related documents owed to such Beneficiary, strictly in accordance with the terms thereof and the timely performance of all other obligations of the Obligor owed to such Beneficiary thereunder strictly in accordance with the terms thereof (such payment and other obligations, the "Obligations"), and the Guarantor further agrees to pay any and all expenses (including, without limitation, all reasonable fees and disbursements of counsel) that may be paid or incurred by the Beneficiaries in enforcing, or obtaining advice of counsel in respect of, any rights with respect to, or collecting, any or all of the Obligations and/or enforcing any rights with respect to, or collecting against, the Guarantor under this Guarantee. b. No payment or payments made by the Obligor, the Guarantor, any other guarantor or any other Person or received or collected by any Beneficiary from the Obligor, the Guarantor, any other guarantor or any other person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of the Guarantor hereunder until the Obligations are paid and performed in full. - -------------- * Insert in the case of a guarantee in connection with a transfer. c. If for any reason any Obligation to be performed or observed by the Obligor (whether affirmative or negative in character) shall not be observed or performed strictly in accordance with the terms thereof, or if any amount payable by the Obligor in connection with any Obligation shall not be paid promptly when due and payable, the Guarantor shall perform or observe or cause to be performed or observed each such Obligation or undertaking and shall pay such amount at the place and to the person or entity entitled thereto pursuant to the Operative Agreements regardless of whether or not any Beneficiary or anyone acting on behalf of any of them shall have instituted any suit, action or proceeding or exhausted its remedies or taken any steps to enforce any rights against the Obligor or any other person or entity to compel any such performance or to collect all or any part of such amount pursuant to the provisions of the Operative Agreements or at law or in equity, or otherwise, and regardless of any other condition or contingency. d. The Guarantor irrevocably waives promptness, diligence, demand, and all notices whatsoever as to the Obligations and covenants guaranteed hereby, and any other circumstances which might otherwise constitute a defense available to it, or a discharge of it (other than the defense of payment or performance) and agrees that it shall not be required to consent to or receive any notice of any amendment or modification of, or waiver, consent or extension with respect to, the Participation Agreement, the Trust Agreement or the other Operative Agreements to which the Obligor is a party that may be made or given as provided herein or otherwise. e. The Guarantor further agrees to pay all expenses (including, without limitation, all reasonable fees and disbursements of counsel) that may be paid or incurred by the beneficiaries hereof in enforcing any rights with respect to, or collecting, any or all of the Obligations and/or enforcing any rights with respect to, or collecting against, the Guarantor under this Guarantee. f. The Guarantor understands and agrees that its Obligations hereunder shall be construed as continuing, absolute and unconditional without regard to (a) the validity, regularity or enforceability of any Operative Agreement, any of the Obligations or any collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by any Beneficiary, (b) any defense, set-off or counterclaim (other than a defense of full payment or performance) that may at any time be available to or be asserted by the Obligor against any Beneficiary, or (c) any other circumstances whatsoever (with or without notice to or knowledge of the Obligor or the Guarantor) that constitutes, or might be construed to constitute, an equitable or legal discharge of the Obligor for the Obligations, or of the Guarantor under this Guarantee, in bankruptcy or in any other instance. g. The obligation of the Guarantor hereunder will not be discharged by: (a) any extension or renewal with respect to any obligation of the Obligor under the Operative Agreements; (b) any modification of, or amendment or supplement to, any such Operative Agreement; (c) any furnishing or acceptance of additional security or any release of any security; (d) any waiver, consent or other action or inaction or any exercise or non-exercise of any right, remedy or power with respect to the Obligor or any change in the structure of the Obligor; (e) any insolvency, bankruptcy, reorganization, arrangement, composition, liquidation, dissolution or similar proceedings with respect to the Obligor; (f) except as provided in Section 14 hereof, any change in ownership of the shares of capital stock of the Guarantor or the Obligor; or (g) any other occurrence whatsoever, except payment in full of all amounts payable by the Obligor under the Operative Agreements and performance in full of all Obligations of the Obligor in accordance with the terms and conditions of the Operative Agreements. 3. No Subrogation, Contribution, Reimbursement or Indemnity. Notwithstanding anything to the contrary in this Guarantee, the Guarantor hereby agrees not to assert any rights which may have arisen in connection with this Guarantee to be subrogated to any of the rights (whether contractual, under the Bankruptcy Code, including Section 509 thereof, under common law or otherwise) of any Beneficiary against the Obligor or against any Beneficiary for the payment of the Obligations until indefeasible payment or performance in full of the Obligations. The Guarantor hereby further agrees not to assert any contractual, common law, statutory or other rights of reimbursement, contribution, exoneration or indemnity (or any similar right) from or against the Obligor or any other Person which may have arisen in connection with this Guarantee if any payment under this Guarantee is outstanding at such time. So long as any payment under this Guarantee is outstanding, if any amount shall be paid by or on behalf of the Obligor to the Guarantor on account of any of the rights referred to above in this paragraph, such amount shall be held by the Guarantor in trust, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the applicable Beneficiary in the exact form received by the Guarantor (duly endorsed by the Guarantor to the applicable Beneficiary, if required). 4. Amendment with Respect to the Obligations; Waiver of Rights. The Guarantor shall remain fully obligated hereunder notwithstanding that, without any reservation of rights against the Guarantor and without notice to or further assent by the Guarantor, any demand for payment or performance of any of the Obligations made by any Beneficiary may be rescinded by such party and any of the Obligations continued, and the Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guaranty therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by any Beneficiary and any Operative Agreement and/or any collateral security document or other guaranty or document in connection therewith, may be amended, modified, supplemented or terminated, in whole or in part, in accordance with the provisions thereof from time to time, and any collateral security, guaranty or right of offset at any time held by any Beneficiary for the payment or performance of the Obligations may be sold, exchanged, waived, surrendered or released. No Beneficiary shall have any obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Obligations or for this Guarantee or any property subject thereto. When making any demand hereunder against the Guarantor, a Beneficiary may, but shall be under no obligation to, make a similar demand on the Obligor or any other guarantor, and any failure by a Beneficiary to make any such demand or to collect any payments from the Obligor or any such other guarantor or any release of the Obligor or such other guarantor shall not relieve the Guarantor of its obligations or liabilities hereunder, and shall not impair or affect the rights and remedies, express or implied, or as a matter of law, of any Beneficiary against the Guarantor. For the purposes hereof, "demand" shall include, but not be limited to, the commencement and continuance of any legal proceedings. [The Guarantor represents and warrants that it owns, directly or indirectly, 100% of the capital stock of the Obligor and that its obligations hereunder shall continue unimpaired, even if the Guarantor no longer owns, directly or indirectly, all or any portion of the capital stock of the Obligor.]* - -------------- * Insert in the case of a guarantee in connection with a transfer. 5. Guarantee Absolute and Unconditional. The Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by any Beneficiary upon this Guarantee or acceptance of this Guarantee; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon this Guarantee; and all dealings between the Obligor or the Guarantor and any Beneficiary shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guarantee. The Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Transferee or the Guarantor with respect to the Obligations. The Guarantor understands and agrees that this Guarantee shall be construed as a continuing, absolute and unconditional guaranty of payment and performance (and not merely of collectability) without regard to (a) the validity, regularity or enforceability of any Operative Agreement or any related agreement, any of the Obligations or any collateral security therefor or guaranty or right of offset with respect thereto at any time or from time to time held by any Beneficiary, (b) any defense, set-off or counterclaim (other than a defense of full payment or performance) that may at any time be available to or be asserted by the Obligor against any Beneficiary, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Obligor or the Guarantor) that constitutes, or might be construed to constitute, an equitable or legal discharge of the Obligor for the Obligations, or of the Guarantor under this Guarantee, in bankruptcy or in any other instance. When pursuing its rights and remedies hereunder against the Guarantor, any Beneficiary may, but shall be under no obligation to, pursue such rights and remedies as it may have against the Obligor or any other person or entity or against any collateral security or guaranty for the Obligations or any right of offset with respect thereto, and any failure by any Beneficiary to pursue such other rights or remedies or to collect any payments from the Obligor or any such other person or entity or to realize upon any such collateral security or guaranty or to exercise any such right of offset, or any release of the Obligor or any such other person or entity or any such collateral security, guaranty or right of offset, shall not relieve the Guarantor of any liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of any Beneficiary against the Guarantor. This Guarantee shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon the Guarantor and the successors and assigns thereof, and shall inure to the benefit of the Beneficiaries, and their respective successors, indorsees, transferees and assigns, until the earlier of (x) all of the Obligations and the obligations of the Guarantor under this Agreement shall have been satisfied by payment and performance in full, (y) the right, title and interest of the Obligor shall have been transferred to a Person meeting the requirements of Article 5 of the Trust Agreement, it being understood that this Guarantee shall remain in effect with respect to obligations of the Obligor arising prior to such transfer and (z) the Obligor obtaining a tangible net worth equalling or exceeding [$50,000,000 (Fifty Million Dollars)].* The Guarantor further agrees that, without limiting the generality of this Guarantee, if any Beneficiary (or any assignee thereof) shall be prevented by applicable law from exercising its remedies (or any of them) against the Obligor under any Operative Agreement such Beneficiary (or any assignee thereof) shall be entitled to receive hereunder from the Guarantor the sums that would have otherwise been due from the Obligor had such remedies been able to be exercised. 6. Reinstatement. This Guarantee shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by any Beneficiary upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Obligor or the Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Obligor or the Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made. The Guarantor shall not commence any "case" (as defined in Title 11 of the United States Code) against the Obligor. 7. Payments. The Guarantor hereby guarantees that payments hereunder shall be paid without set-off, counterclaim, deduction or withholding, and shall be made in U.S. Dollars. 8. Representations and Warranties. The Guarantor hereby represents and warrants that: a. the Guarantor is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the corporate power and authority and the legal right to own and operate its property, to lease the property it operates and to conduct the business in which it is currently engaged; - -------------- * $40,000,000 (Forty Million Dollars) if the Obligor is an Affiliate of, or one of the partners of, LLG Aircraft Leasing, L.P. b. the Guarantor has the corporate power and authority and the legal right to execute and deliver, and to perform its obligations under, this Guarantee, has taken all necessary corporate action to authorize its execution, delivery and performance of this Guarantee, and this Guarantee has been duly executed and delivered by the Guarantor and does not require any approval not already obtained of its stockholders or any approval or consent not already obtained of any trustee or holders of any of its indebtedness or obligations; c. this Guarantee constitutes a legal, valid and binding obligation of the Guarantor enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization, or other similar laws or equitable principals of general application to or affecting the enforcement of creditor's rights generally; d. neither the execution and delivery of this Guarantee nor compliance by the Guarantor with any of the terms and provisions hereof will contravene any United States Federal or state law, judgment, governmental rule, regulation or order applicable to or binding on the Guarantor (assuming, with respect to ERISA, the continuing accuracy of the representations and warranties set forth in Sections 6.01(k)(ix) and 7.01(b) of the Participation Agreement) or contravene or result in any breach of or constitute any default under, or result in the creation of any lien on any property of the Guarantor or, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which the Guarantor is a party or by which it or its properties may be bound or affected; e. no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or governmental authority and no consent of any other person (including, without limitation, any stockholder or creditor of the Guarantor) is required in connection with the execution, delivery, performance, validity or enforceability of this Guarantee; f. no litigation, investigation or proceeding of or before any arbitrator or governmental authority is pending or, to the knowledge of the Guarantor, threatened by or against the Guarantor or against any of its properties or revenues (i) with respect to this Guarantee or any of the transactions contemplated hereby or (ii) that could have a material adverse effect on the business, operations, property or financial or other condition of the Guarantor; g. the balance sheet of the Guarantor as at _______ and the related statement of income and retained earnings for the fiscal year then ended (copies of which have heretofore been furnished to each Beneficiary) have been prepared in accordance with generally accepted accounting principles applied consistently throughout the period involved, are complete and correct and present fairly the financial condition of the Guarantor as at such date and the results of its operations for such fiscal year; since such date there has been no material adverse change in the business, operations, property or financial or other condition of the Guarantor; the Guarantor has no material contingent obligation, contingent liability or liability for taxes, long-term lease or unusual forward or long-term commitment that is not reflected in the foregoing statements or in the notes thereto; and h. the Guarantor is a [bank or other financial institution with a combined capital, surplus and undivided profits of at least $50,000,000]* [corporation whose tangible net worth is at least $50,000,000]*, exclusive of goodwill, as of the proposed date of transfer, as determined in accordance with generally accepted accounting principles. 9. Severability. Any provision of this Guarantee that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 10. Section Headings. The Section headings used in this Guarantee are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. - -------------- * Replace with $40,000,000 if Obligor is an Affiliate of, or a partner of, LLG Aircraft Leasing, L.P. 11. No Waiver; Cumulative Remedies. No Beneficiary shall by any act (except by a written instrument pursuant to Section 13 hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any breach of any of the terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of any Beneficiary, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by a Beneficiary of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy that such Beneficiary would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law. 12. Integration. This Guarantee represents the entire agreement of the Guarantor with respect to the subject matter hereof and there are no promises or representations by any Beneficiary relative to the subject matter hereof not reflected herein. 13. Amendments and Waivers. None of the terms or provisions of this Guarantee may be waived, amended or supplemented or otherwise modified except by a written instrument executed by the Guarantor and each Beneficiary. 14. Transfer of Interest in the Obligor or of this Guarantee. The Guarantor may assign, convey or otherwise transfer (a) any of its interest in the Obligor or (b) its obligations hereunder, in either case to any other person (hereinafter referred to as the "the Subsequent Guarantor"); provided that the Subsequent Guarantor enters into an agreement substantially in the form of this Guarantee Agreement; and, provided, further, that, if the Subsequent Guarantor is not a bank or a lending institution with a combined capital, surplus and undivided profits of at least [$50,000,000]*, or is not a corporation with a net worth of at least [$50,000,000]*, the Guarantor shall enter into an agreement, substantially in the form of this Guarantee, guaranteeing the Obligations of the Obligor under the Operative Agreements or provide such a guarantee from such a bank, lending institution or corporation satisfactory to each Beneficiary, so that there will then be existing both such guaranty agreement as well as the guaranty agreement executed by the Subsequent Guarantee; in such event, the Beneficiaries shall have the right to enforce the obligations of the Guarantor under such guaranty agreement without first proceeding against the Subsequent Guarantor under its guaranty referred to above. - -------------- * Replace with $40,000,000 if the Obligor is an Affiliate of, or a partner of, LLG Aircraft Leasing, L.P. 15. Successors and Assigns. This Guarantee shall be binding upon the successors and permitted assigns of the Guarantor and shall inure to the benefit of the Beneficiaries and their respective successors and permitted assigns. 16. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO ANY PROVISION OF NEW YORK LAW THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER STATE. 17. Notices. All notices, requests and demands to or upon the Guarantor or any Beneficiary to be effective shall be in writing or by telegraph, facsimile or telex and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered by hand, or, in the case of mail, five days after deposit in the postal system, certified mail prepaid, or, in the case of telegraphic notice, when sent, answerback received, addressed to (a) in the case of the Guarantor [address, telex and fax information to be provided] and (b) in the case of any Beneficiary, the address, telex or telecopy number provided for such party in the Participation Agreement. IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be duly executed and delivered by its duly authorized officer as of the day and year first above written. [NAME OF GUARANTOR] By:________________________ Name: Title: By:_________________________ Name: Title: Exhibit D TRUST AGREEMENT SUPPLEMENT NO. __ Trust Agreement Supplement No. __, dated ______ __, 199_, between First Security Bank of Utah, National Association, a national banking association (in its individual capacity "FSBU" and not in its individual capacity, but solely as trustee hereunder, the "Owner Trustee") and LLG AIRCRAFT Leasing, L.P., a limited partnership organized under the laws of Delaware (together with its successors and permitted assigns, the "Trustor"). W I T N E S S E T H: WHEREAS, the Trustor and FSBU have heretofore entered into that certain Trust Agreement, dated as of September 1, 1993, as amended and restated as of March 1, 1994 (the "Trust Agreement"); WHEREAS, capitalized terms used herein shall have the meanings set forth in the Trust Agreement; WHEREAS, the Trust Agreement provides for the execution and delivery of supplements thereto (individually, a "Supplement" and, collectively, "Supplements") substantially in the form hereof, each of which shall particularly describe an Aircraft included in the property covered by the Trust Agreement and to be leased to the Lessee pursuant to the related Lease; WHEREAS, the Trust Agreement relates to the Airframe and Engines (together constituting the "Aircraft") described below and a counterpart of the Trust Agreement [is attached to] [has been filed with the FAA at _____]* and is made a part of this Trust Agreement Supplement; and WHEREAS, the Trustor and the Owner Trustee wish to supplement the Trust Agreement to the extent provided herein; NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the Owner Trustee and the Trustor hereby acknowledge that the Owner Trustee has purchased for value and hereby (*) Insert as appropriate. does confirm its purchase for value of the following described property: AIRFRAME 1 airframe identified as follows: FAA Registration Manufacturer's Manufacturer Model Number Serial Number - ------------ ----- -------------- --------------- Airbus A310-203 AIRCRAFT ENGINES 2 aircraft engines, each such engine having 750 or more rated takeoff horsepower or the equivalent thereof, identified as follows: Manufacturer's Manufacturer Model Serial Number - ------------ ----- -------------- General Electric CF6-80A3 whether or not such Engines shall be installed in or attached to the Aircraft or any other Aircraft. This Supplement shall be construed as supplemental to the Trust Agreement and shall form a part of it, and the Trust Agreement is hereby incorporated by reference herein and is hereby ratified, approved and confirmed. This Supplement is being delivered in the State of New York. This Supplement may be executed by the Owner Trustee in separate counterparts, each of which when so executed and delivered is an original, but all such counterparts shall together constitute but one and the same Supplement. AND FURTHER, the Owner Trustee hereby acknowledges that the Aircraft referred to above has been delivered to the Owner Trustee and is included in the property of the Owner Trustee covered by all the terms and conditions of the Trust Agreement, subject, after the related Exchange Date, to the pledge or mortgage thereof under the related Indenture. IN WITNESS WHEREOF, FSBU and the Trustor have caused this Agreement to be duly executed as of __________ __, 199_. LLG AIRCRAFT LEASING, L.P. By LLG OF DELAWARE, INC., Its General Partner By ______________________ Title: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION By ___________________________ Title: SCHEDULE I DEFINITIONS GENERAL PROVISIONS The following terms shall have the following meanings for all purposes of each Operative Agreement which specifically incorporates this Schedule, referred to below, unless otherwise defined in such 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 such Operative Agreement, the provisions of such Operative Agreement shall control the construction of such Operative Agreement. Unless the context otherwise requires, (i) references to agreements shall be deemed to mean and include such agreements as amended and supplemented from time to time, and (ii) references to parties to agreements shall be deemed to include the successors and permitted assigns of such parties. DEFINED TERMS: Act or Federal Aviation Act. The Federal Aviation Act of 1958, as amended from time to time, and the regulations promulgated pursuant thereto. Additional Insureds. As defined in Article 13 of the Lease. Aeronautics Authority or FAA. 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. Affiliate. With respect to any Person, any partner of such Person or 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 or such partner whether through the ownership or voting securities or by contract or otherwise. After-Tax Basis. A basis such that any payment received or deemed to have been received by a Person shall be supplemented by a further payment to such Person so that the sum of the two payments, after deduction of all federal, state, local and foreign income taxes resulting from the receipt or accrual of such payments, shall be equal to the payment received or deemed to have been received. In the case of amounts payable to the Lessor, the Owner Participant or any partner of the Owner Participant, or any corporate affiliate of any partner 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. Agreement to Lease. The Original Agreement to Lease, as amended and restated as of March 1, 1994, among Lufthansa, the Lessee and the Lessor. Air Carrier. Any air carrier which is a United States "domestic air carrier" as defined in Part 121 of the Federal Aviation Regulations, and any "foreign air carrier" (as defined in the Act) as to which there is in force a permit granted under Section 402 of the Act. Aircraft. The Airframe together with the two Engines whether or not any of such Engines may from time to time be installed on such Airframe or may be installed on any other airframe or on any other aircraft. Aircraft Cost. The amount specified as the Aircraft Cost for the Aircraft on Schedule I to the Agreement to Lease (as in effect on the Closing Date). Airframe. The Airbus Model A310-203 aircraft (excluding the Engines or engines from time to time installed thereon) contemplated by the Participation Agreement to be leased on the Commencement Date by the Lessor to the Lessee pursuant to the Lease, and having the manufacturer's serial number ________________ and, on and after the Commencement Date, the United States FAA Registration Number specified in the initial Lease Supplement, including all Parts. Ancillary Agreements. Any written agreement between parties to the Agreement to Lease Operative Agreements or Operative Agreements entered into on the Closing Date or at any time thereafter in connection with the transactions contemplated by the Operative Agreements, as amended from time to time, including, without limitation, Ancillary Agreement No. 1. Ancillary Agreement No. 1. The agreement, dated as of the Commencement Date, among the Lessee, the Owner Trustee and the Indenture Trustee. Appraisal. The appraisal delivered pursuant to Section 4.01(l) of the Participation Agreement. 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 with the giving of notice or lapse of time or both would constitute an Event of Default. Basic Rent. The aggregate periodic rent payable throughout the Basic Term pursuant to Section 3.01 of the Lease. Basic Term. The period commencing at the beginning of the day on the Commencement Date and ending at the end of the day on the day immediately preceding the date 15 years from the Commencement Date, or such earlier date on which the Lease shall be terminated as provided therein. Beneficial Interest. The interest of the Owner Participant under the Trust Agreement. Bills of Sale. Has the meaning set forth in Section 4.02(d)(v) of the Participation Agreement. Business Day. Any day on which commercial banks are not authorized or required to close in New York City and Memphis, Tennessee, and so long as the Lien of the Indenture is in effect, in Atlanta, Georgia, and Columbia, South Carolina, and thereafter in Salt Lake City, Utah. Certificates or Equipment Trust Certificates. The Equipment Trust Certificates (Federal Express Corporation Trust ___) issued by the Owner Trustee pursuant to the Indenture and any certificate issued in exchange therefor or replacement thereof pursuant to the Indenture. Citizen of the United States. A citizen of the United States as defined in Section 101(16) of the Act, or any analogous part of any successor or substituted legislation or regulation at the time in effect. Closing Date. The Business Day on which the sale of the Pass Through Certificates to the Underwriters occurs pursuant to the Underwriting Agreement. Closings. The closing with respect to the acquisition of the Pass Through Certificates by the Underwriters and the closing with respect to the acquisition of the Certificates by the Pass Through Trusts. Code. Except as otherwise provided, references to the Code shall mean the Internal Revenue Code of 1986, as amended from time to time. Collateral. Has the meaning set forth in the Collateral Agreement. Collateral Agreement. The Collateral Agreement (Trust ______), dated as of March 1, 1994, between the Owner Trustee and the Indenture Trustee, as amended or modified from time to time. Commencement Date. The date on which the Aircraft is leased by the Lessor to the Lessee under the Lease, which date shall also be the date of the initial Lease Supplement. Commission or SEC. The Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or if at any time after the execution and delivery of the Participation Agreement such Commission is not existing and performing the duties now assigned to it under the Exchange Act, then the body performing such duties on such date. Company. Federal Express Corporation, a Delaware corporation, and its permitted successors and assigns hereunder. Corporate Base Rate. The rate announced from time to time by The Chase Manhattan Bank, N.A. or any successors thereto at its head office at New York, New York, as its Corporate Base Rate. Corporate Trust Office. The office of the Indenture Trustee 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 Trustee and the Holders. Cut-off Date. The earlier to occur of (i) the date which is 365 days after the Scheduled Commencement Date, or any earlier Business Day (but in no event earlier than the Scheduled Commencement Date) specified as the Cut-off Date by the Owner Trustee in an irrevocable written notice (including, without limitation, in any such notice contemplated by Section 12 of the Agreement to Lease) given to the Indenture Trustee not less than 30 days prior thereto and (ii) 30 days after the date of any Pre-Funding Termination Notice in accordance with Section 3 of the Agreement to Lease. DA. Deutsche Aerospace Airbus GmbH, a German corporation, its successor and permitted assigns. Debt Portion. The amount specified as such on Schedule IV to the Participation Agreement. Debt Rate. The weighted average rate of interest applicable from time to time to the Certificates, but in no event less than 8% per annum. Deemed Event of Loss. If the Exchange Date does not occur on or prior to the Cut-off Date. 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 Notice. Notice of the Aircraft's Commencement Date, given by the Owner Participant as provided in Section 3.01 of the Participation Agreement and including any notice with respect to a postponed Commencement Date given by the Owner Participant pursuant to Section 3.02 of the Participation Agreement. Demand Note. Each of the Promissory Notes (D-_______), dated the Closing Date, from Lufthansa in the form of Exhibit E to the Participation Agreement, and in an aggregate principal amount specified under "Demand Note Principal Amount" in Schedule IV to the Participation Agreement. Demand Note Collateral. Has the meaning set forth in the Collateral Agreement. Dollars and $. The lawful currency of the United States of America. Engine. Each of the two General Electric CF6-80A3 engines, more fully described in the initial Lease Supplement (or, prior to the Commencement Date, in Exhibit A to the Agreement to Lease opposite the Airframe), whether or not from time to time installed on the Airframe or installed on any other airframe or on any other aircraft, and any Replacement Engine which may from time to time be substituted for an Engine pursuant to Sections 7.02(a)(vii), 10.03, 11.03, 11.04 or 12.02 of the Lease, together with all Parts. 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. ERISA. The Employee Retirement Income Security Act of 1974, as amended. Event of Default. Each of the events specified in Article 16 of the Lease. Event of Loss. Event of Loss means any of the following events on or after the Commencement Date 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 120 days or to the end of the Term, if less, due to theft or disappearance, or (B) for a period in excess of 60 days or to the end of the Term, if less, 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, such Event of Loss being deemed to occur on the date of any such condemnation, confiscation, seizure or requisition of title, or (2) requisition of use of such property (A) by a foreign government or instrumentality or agency thereof, or any purported government or instrumentality or agency thereof, for a period in excess of 180 days (or 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 up to six months beyond the end of the Term in the event that the Aircraft, the Airframe or Engine is requisitioned by the Government pursuant to an activation as part of the Civil Reserve Air Fleet 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 Model A310-203 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 shall have been prohibited for a period of one (1) year, unless the Lessee, prior to the expiration of such one (1) year period shall have conformed the Aircraft to the requirements of any such law, rule, regulation, order, or other action and shall have commenced regular commercial use and shall be diligently carrying forward, on a non-discriminatory basis, all steps necessary or desirable to permit the normal use of the Aircraft by the Lessee; provided, that if there is a conflict between the operation of clause (iv) above and Section 12.05 of the Lease (by reference to Section 12.04(ix) thereof), such Section 12.05 of the Lease shall control. The date of such Event of Loss shall be the date of (i) loss of such property or its use thereof for a period in excess of 120 days, or to the end of the Term, if less due to theft or disappearance, or loss for a period in excess of 60 days, or to the end of the Term, if less due to damage beyond economic repair or loss of use of the Airframe because of requisition for use for a period in excess of 180 days (or shorter period due to insurance settlement or to the end of the Term), (ii) an insurance settlement on the basis of total loss with respect to such property, (iii) condemnation, confiscation, seizure or requisition of title, or (iv) prohibition from usage for the periods described in clause (iv) above. On or after the Commencement Date, 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. Exchange Act. The Securities Exchange Act of 1934, as amended. Exchange Date. The date, on or after the Commencement Date, on which the Indenture Trustee releases the Debt Portion pursuant to Section 7(e) of the Collateral Agreement. Excepted Payments. Collectively, (i) all right, title and interest of the Owner Participant or the Owner Trustee in, to and under the Tax Indemnity Agreement and any moneys due or to become due under the Tax Indemnity Agreement and payments of Supplemental Rent or other payments by the Lessee in either case solely in respect of the Tax Indemnity Agreement, (ii) indemnity payments and interest thereon and other amounts paid or payable by the Lessee to the Owner Participant or to the Owner Trustee in its individual capacity or any of their respective Affiliates (other than the Owner Trustee in its capacity as trustee and the trust created pursuant to the Trust Agreement), successors, assigns, directors, officers, employees, agents or servants pursuant to Articles 8, 9 or 10 of the Participation Agreement or any corresponding payment of Supplemental Rent under the Lease; (iii) proceeds of public liability insurance or governmental indemnities in lieu thereof in respect of the Aircraft payable to the Owner Participant or the Owner Trustee, in its individual capacity, or any of their Affiliates (other than the Owner Trustee in its capacity as trustee and the trust created pursuant to the Trust Agreement), successors or assigns, as a result of insurance claims made, or losses suffered, by, or amounts in respect of such indemnities paid for the benefit of, the Owner Participant or the Owner Trustee in its individual capacity or any of their Affiliates (other than the Owner Trustee in its capacity as trustee and the trust created pursuant to the Trust Agreement), successors or assigns, directors, officers, employees, agents or servants, either pursuant to the Lease (which shall include proceeds of any self-insurance by the Lessee) or maintained by the Owner Trustee or the Owner Participant and not required to be maintained under the Lease; (iv) proceeds of any insurance in respect of the Aircraft (not required by Section 13 of the Lease) which is separately acquired and paid for by the Owner Participant (directly or through the Owner Trustee) or the Lessor in accordance with Section 13.05 of the Lease); (v) indemnity payments payable by the Owner Participant to the Owner Trustee in its individual capacity pursuant to Section 6.01 of the Trust Agreement; (vi) Transaction Costs or other expenses paid or payable by the Lessee to, or for the benefit of, the Indenture Trustee, First Security or the Owner Participant pursuant to Section 10.01 of the Participation Agreement; (vii) if the Lessee has assumed the obligations of the Owner Trustee pursuant to Section 7.12 of the Participation Agreement and Section 2.12 of the Indenture, the amount payable as purchase price pursuant to Section 4.02(a), (c) or (d) of the Lease; (viii) the right to enforce, and the proceeds of any such enforcement of, any right to receive the proceeds of any of the amounts referred to in clauses (i) through (vii) above, and the right to declare an Event of Default under the Lease in respect of any of the foregoing amounts, but not including the right to exercise any remedies under the Lease except for those specifically provided for in this clause (viii); and (ix) any payments in respect of interest to the extent attributable to the payments referred to in clauses (i) through (vii) above. Expense and Expenses. Have the meanings specified in Section 9.01(a) of the Participation Agreement. FAA Bill of Sale. Has the meaning set forth in Section 4.02(d)(iv) of the Participation Agreement. 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. 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. Fair Market Value shall be determined in accordance with the provisions of Section 4.03 of the Lease. Frankfurt Business Day. A day which is a Business Day and is a day (other than a Saturday or Sunday) on which commercial banks in Frankfurt, Germany are generally open for the conduct of business. Geneva Convention. The International Convention on the Recognition of Rights in Aircraft (Geneva 1948). Government. The United States of America or an agency or instrumentality thereof. Government Obligations. Direct obligations of the United States of America which are not callable, redeemable or payable prior to maturity, in whole or in part, directly or indirectly, by any Person. Holder of a Certificate; Holder. As of any particular time, the Person in whose name a Certificate shall be registered as payee with the Indenture Trustee. Indemnification Agreement. The Indemnification Agreement, dated the date of the Underwriting Agreement, among the Lessee, Lufthansa, the LC Bank and the Underwriters. Indemnitee. Each of the Owner Trustee, in its individual capacity and as Owner Trustee and Lessor, the Owner Participant, the Indenture Trustee (after the Exchange Date), in its individual capacity and as Indenture Trustee 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 (except to the extent comprised prior to the Exchange Date of the Trust Indenture Estate) and (after the Exchange Date) the Trust Indenture Estate and the officers, directors, employees, agents and servants of Lufthansa and the General Partner of the Owner Participant. Indenture. The Trust Indenture and Security Agreement (Federal Express Corporation Trust _____) dated as of March 1, 1994, between the Owner Trustee and the Indenture Trustee, as supplemented by the Indenture and Security Agreement Supplement No. 1, and any amendment or supplement thereto entered from time to time. Indenture and Security Agreement Supplement; Indenture Supplement. A supplement to the Indenture, substantially in the form of Exhibit A to the Indenture. Indenture Default. Any event which, with the giving of notice or lapse of time, or both, would be an Indenture Event of Default. Indenture Documents. The Indenture, the Collateral Agreement, the Letter of Credit, the Demand Notes, the Sales Agreement (to the extent relating to the Aircraft), the Parts and Services Agreement (to the extent relating to the Aircraft), the Bills of Sale, the Modification Agreement (to the extent relating to the Aircraft), the Lease, the Participation Agreement, the Agreement to Lease (to the extent relating to the Aircraft), the Trust Agreement (to the extent relating to the Aircraft or the Lessor's Estate) and the Certificates. Indenture Event of Default. Each of the events specified in Section 7.01 of the Indenture. Indenture Trustee. NationsBank of Georgia, National Association, a national banking association, not in its individual capacity but solely as Indenture Trustee under the Indenture and each other Person which may from time to time be acting as successor trustee under the Indenture. Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate resulting from (i) claims against the Indenture Trustee not related to the administration of the Trust Indenture Estate or any transactions pursuant to the Indenture or any Indenture Document or (ii) any act or omission of the Indenture Trustee which is not related to the transactions contemplated by the Operative Agreements or is in violation of any of the terms of the Operative Agreements. Independent Appraisal. An appraisal conducted pursuant to Section 4.03 of the Lease. Independent Investment Banker. An independent investment banking institution of national standing appointed by the Lessee that is independent in fact, does not have any direct financial interests, or any material indirect financial interest, in the Lessee or any Affiliate of the Lessee, and is not connected with the Lessee or any Affiliate of the Lessee, as an officer, employee, promoter, underwriter, trustee, partner, director or Person performing similar functions; provided, that if the Indenture Trustee shall not have received written notice of such an appointment at least 10 days prior to the Prepayment Date (or purchase date) or if an Event of Default shall have occurred and be continuing, "Independent Investment Banker" shall mean such an institution appointed by the Indenture Trustee. Interest Payment Date. Each March 23 and September 23, commencing September 23, 1994. Issuance Date. For any Pass Through Trust, the date of the issuance of the related Pass Through Certificates. LC Bank. Westdeutsche Landesbank Girozentrale, New York Branch. Lease. The Lease Agreement (Federal Express Corporation Trust _____), in the form of Exhibit B to the Participation Agreement, dated as of the Commencement Date or prior thereto, between the Lessor and the Lessee, as said Lease may from time to time be supplemented or amended, or its terms waived or modified, to the extent permitted by, and in accordance with, the terms of the Indenture, including, without limitation, supplementation by the Lease Supplement. Lease Supplement. The Lease Supplement, substantially in the form of Exhibit A to the Lease, entered into between the Lessor and the Lessee. Lessee. Federal Express Corporation, a Delaware corporation, and any successors or permitted assigns in its capacity as lessee under the Lease. Lessee Documents. Each of the Operative Agreements and Ancillary Agreements to which the Lessee is or is to be a party; provided, however, that for purposes of Section 6.01 of the Participation Agreement, Lessee Documents shall not include the Lease or any Lease Supplement prior to the Commencement Date. Lessor. First Security Bank of Utah, National Association, a national banking association, not in its individual capacity but solely as Owner Trustee under the Trust Agreement, and its successors and permitted assigns. Lessor's Estate. All estate, right, title and interest of the Owner Trustee in and to any Additional Collateral, the Aircraft, the Lease, any Lease Supplement, the Participation Agreement and the other Indenture Documents, any warranty with respect to the Airframe and the Engines, all amounts of Basic Rent and Supplemental Rent, including without limitation, insurance proceeds (other than insurance proceeds payable to or for the benefit of the Owner Trustee, for its own account or in its individual capacity, the Owner Participant or 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). Notwithstanding the foregoing, "Lessor's Estate" shall (i) include all items of property purported to be covered by the Trust Indenture Estate and (ii) not include any Excepted Payment. Lessor's Liens. Liens on the Lessor's Estate or the Trust Indenture Estate, arising as a result of (i) claims against or liabilities of 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) any act or omission of the Lessor in its individual capacity or as Owner Trustee, and, in the case of the Lessor in its individual capacity, arising from its gross negligence or willful misconduct either not related to the transactions contemplated by or expressly prohibited under the Operative Agreements and any act or omission of the Owner Participant which is not related to the transactions contemplated by the Operative Agreements or is in violation of any of the terms of the Operative Agreements, (iii) Taxes or Expenses imposed against the Lessor, in its individual capacity or as Owner Trustee, the Owner Participant, Lessor's Estate or the trust created by the Trust Agreement which are not indemnified against by the Lessee pursuant to the Tax Indemnity Agreement or the Participation Agreement, (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 or the Lessor's Estate other than a transfer of the Aircraft or the Lessor's Estate pursuant to Section 4.02(a) or Articles 10 or 11 of the Lease and other than a transfer pursuant to the exercise of the remedies set forth in Article 17 of the Lease or (v) claims against the Lessor or the Owner Participant (or any Affiliate of either) relating to the Modification Agreement, the Agreement to Lease, the Sales Agreement, the Demand Note, the Collateral Agreement, the Sub-subcontract (as defined in the Agreement to Lease) or the Parts and Services Agreement. Letter of Credit. The Irrevocable Letter of Credit, dated the Closing Date, in the form of Exhibit G to the Participation Agreement and with a Stated Amount equal to the amount specified under "Letter of Credit Stated Amount" on Schedule IV to the Participation Agreement, from the LC Bank to the Indenture Trustee. Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or security interest or other similar interest. Liquid Collateral. Has the meaning set forth in the Collateral Agreement. Lufthansa. Deutsche Lufthansa Aktiengesellschaft. Lufthansa Side Letter. The letter, dated the Closing Date, substantially in the form of Exhibit J to the Participation Agreement, among Lufthansa, the Indenture Trustee and the Pass Through Trustee. 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 Participant unless all Certificates then outstanding shall be held by the Owner Participant, (ii) the Lessee or (iii) any Affiliate of either. Make-Whole Premium. An amount determined as of the Business Day before the applicable Prepayment Date or date of purchase, as the case may be, which an Independent Investment Banker determines to be equal to the excess of (i) the present values of all remaining scheduled payments of principal on the Certificate to be prepaid or purchased and interest thereon (excluding interest accrued from the immediately preceding Payment Date to such Prepayment Date or date of purchase, as the case may be) to the Maturity of such Certificate in accordance with generally accepted financial practices assuming a 360- day year consisting of twelve 30-day months at a discount rate equal to Treasury Yield, all as determined by the Independent Investment Banker over (ii) the unpaid principal amount of such Certificate. Maturity. With respect to any Certificate, the date on which the final principal amount of such Certificate is scheduled to be due and payable. Modification Agreement. The Original Modification Agreement, as amended by Amendment No. 1 thereto, dated as of March 1, 1994, among the Lessor, the Owner Participant, Lufthansa and DA. Modification Cost. The amount set forth in the "Total" column for the Aircraft in the Rate Schedule on Exhibit E to the Modification Agreement. Moody's. Moody's Investors Service, Inc. Net Proceeds. The amount specified as such on Schedule IV to the Participation Agreement. Non-U.S. Person. Any Person other than (i) a citizen or resident of the United States, as defined in section 7701(a)(30) of the Code (for purposes of this definition, the "United States"), (ii) a corporation, partnership or other entity created or organized in or under the laws of the United States or any political subdivision thereof or therein, or (iii) any estate or trust that is subject to United States federal income taxation regardless of the source of its income. Obsolete Parts. Parts which the Lessee in good faith determines to be obsolete or no longer suitable or appropriate for use on the Airframe or any Engine. OP Guarantee. The Guarantee, if any, by Lufthansa in the form of Exhibit I to the Participation Agreement. Operative Agreements. The Modification Agreement, the Agreement to Lease, the Participation Agreement, the Trust Agreement, the Trust Agreement Supplement, the Bills of Sale, the Lease, any Lease Supplement, any Ancillary Agreement which by its terms is an Operative Agreement, the Certificates outstanding at the time of reference, the Indenture, any Indenture and Security Agreement Supplement, the Collateral Agreement, the Demand Note, the Parts and Services Agreement, the Indemnification Agreement, the Pass Through Agreement and the Series Supplements, the Pass Through Certificates outstanding at the time of reference, the Sales Agreement, the OP Guarantee (if any) and the Tax Indemnity Agreement, each as amended from time to time. Options Agreement. The letter agreement dated September 1, 1993 between DA and the Lessee relating, inter alia, to the sale by DA to the Lessee of certain cargo conversion kits and the acknowledgement and agreement by DA of certain rights of the Lessee under the Modification Agreement. 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. Original Agreement to Lease. The Agreement to Lease, dated as of September 1, 1993 among Lufthansa, the Lessee and the Lessor. Original Agreements. The Original Agreement to Lease, the Original Modification Agreement, the Original Parts and Services Agreement, the Original Sales Agreement and the Original Trust Agreement. Original Modification Agreement. The Aircraft Modification and Maintenance Agreement, dated as of September 1, 1993, among the Lessor, Lufthansa and DA. Original Parts and Services Agreement. The Parts and Services Agreement, dated as of September 1, 1993, between the Owner Trustee and Lufthansa. Original Sales Agreement. The Sales Agreement for Aircraft, dated as of September 1, 1993, between the Owner Trustee and Lufthansa. Original Trust Agreement. The Trust Agreement, dated as of September 1, 1993, between the Owner Participant and the Owner Trustee in its individual capacity. Owner Participant. The trustor originally named in the Trust Agreement and any successor thereto, and any Person to which Owner Participant transfers, in accordance with the Trust Agreement and the Participation Agreement, its right, title and interest in and to the Operative Agreements and the Lessor's Estate. Owner Trustee. First Security Bank of Utah, National Association, a national banking association, not in its individual capacity except as otherwise expressly stated, but solely as Owner Trustee under the Trust Agreement, and its successors and permitted assigns. Participation Agreement. The Participation Agreement (Federal Express Corporation Trust _____), dated as of March 1, 1994, among the Lessee, the Owner Trustee, not in its individual capacity except as otherwise expressly stated therein, but solely as, Owner Trustee, the Owner Participant, the Pass Through Trustee, not in its individual capacity except as otherwise expressly stated therein, but solely as Pass Through Trustee, the Indenture Trustee, not in its individual capacity except as otherwise expressly stated therein but solely as Indenture Trustee and the LC Bank, as amended, modified or supplemented, or the terms thereof waived. Parts. All appliances, parts, components, instruments, appurtenances, accessories, furnishings and other equipment of whatever nature (other than complete Engines or engines) which may from time to time be incorporated or installed in or attached to the Airframe or any Engine or, so long as title thereto shall be vested in the Lessor, prior to replacement thereof in accordance with the Lease, which may be removed therefrom. Parts and Services Agreement. The Original Parts and Services Agreement, as amended by Amendment No. 1 thereto, dated as of March 1, 1994, between the Owner Trustee and Lufthansa. Parts Cost. The cost of the parts and services with respect to the Aircraft pursuant to Article 4 of the Parts and Services Agreement. Pass Through Agreement. The Pass Through Trust Agreement dated as of March 1, 1994 between the Lessee and the Pass Through Trustee, as such Pass Through Agreement may be modified, supplemented or amended from time to time in accordance with the provisions thereof. Pass Through Certificates. Any of the 1994 Pass Through Certificates, Series A310-A1, 1994 Pass Through Certificates, Series A310-A2, or 1994 Pass Through Certificates, Series A310-A3, 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 Excess Amount. The excess of the principal amount of the Certificates issued on the Closing Date over the Net Proceeds. Pass Through Trust. The Federal Express Pass Through Trust, 1994-A310-A1, Federal Express Pass Through Trust, 1994-A310-A2 or Federal Express Pass Through Trust, 1994-A310-A3, 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. NationsBank of South Carolina, National Association, a national banking association, in its capacity as Pass Through Trustee under the Pass Through Agreement and each Pass Through Trust, and its successors and permitted assigns as Pass Through Trustee thereunder. 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 2.5% 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, 2.5% plus the interest rate applicable to such Certificate and (ii) in the case of any other such amount, 2.5% plus the weighted average rate of interest from time to time payable with respect to the Certificates (or if no Certificates are then outstanding, such weighted average rate at the time immediately preceding the final payment with respect thereto). Paying Agent. Has the meaning set forth in Section 3.04 of the Indenture. Payment Date. Any Interest Payment Date or Sinking Fund Redemption Date. 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). Pre-Funding Event of Loss. Any of the following events prior to the Exchange Date 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 120 days or to the Cut-off Date, if less, due to theft or disappearance, or (B) for a period in excess of 60 days or to the Cut-off Date, if less, due to the destruction, damage beyond economic repair or rendition of such property permanently unfit for normal use by Lessee for any reason whatsoever (provided, however, that failure to properly complete any work contemplated by the Modification Agreement shall not constitute the basis for a Pre-Funding Event of Loss); (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, such Pre-Funding Event of Loss being deemed to occur on the date of any such condemnation, confiscation, seizure or requisition of title, or (2) requisition of use of such property (A) by a foreign government or instrumentality or agency thereof, or any purported government or instrumentality or agency thereof, for a period in excess of 180 days (or such shorter period ending on the earlier of the Cut-off Date 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 Cut-off Date; 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 Model A310-203 aircraft equipped with engines of the same make and model as the Engines for a period ending on or after the Cut- off Date. The date of such Pre-Funding Event of Loss shall be the date of (i) loss of such property or its use thereof for a period in excess of 120 days, or to the Cut-off Date, if less, due to theft or disappearance; or loss for a period in excess of 60 days, or to the Cut-off Date, if less, due to damage beyond economic repair; or loss of use of the Airframe because of requisition for use for a period in excess of 180 days (or shorter period due to insurance settlement or as otherwise contemplated by clause (iii)(2)(A) above), (ii) an insurance settlement on the basis of total loss with respect to such property, (iii) condemnation, confiscation, seizure or requisition of title, or (iv) prohibition from usage for the periods described in clause (iv) above. A Pre-Funding Event of Loss with respect to the Aircraft shall be deemed to have occurred if any Pre-Funding Event of Loss occurs with respect to the Airframe. Pre-Funding Prepayment Date. Has the meaning as set forth in Section 6(c) of the Collateral Agreement. Pre-Funding Termination Notice. Has the meaning set forth in Section 3 of the Agreement to Lease. 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. Proposed Termination Date. The proposed date of termination of the Lease as specified by the Lessee in its notice given pursuant to Section 10.01 thereof. Purchase Price. The amount set forth in the "Purchase Price in U.S. Dollars" column for the Aircraft on Exhibit B to the Sales Agreement. Record Date. With respect to any payment under the Indenture means the 15th calendar day prior to the date such payment is due. Recourse Amount. Has the meaning specified in Section 16.10 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. Remaining Weighted Average Life. For any Certificate, as of any determination date, the number of years obtained by dividing (a) the sum of the products obtained by multiplying (i) the amount of each then remaining mandatory sinking fund redemption payment of principal, including the payment due on the Maturity of such Certificate, by (ii) the number of years (calculated to the nearest one-twelfth) which will elapse between such determination date, and the date on which such payment is scheduled to be made, by (b) 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 term of two years 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 March 23 and September 23, commencing on the first such date after the Commencement Date, and continuing thereafter during the Term. Replacement Engine. A General Electric CF6-80A3 engine of the same or of equal or greater value and utility as the Engine being replaced, together with all Parts relating to such engine; provided, however, that such Engine shall be of the same model as other Engines then subject to the Lease. Responsible Officer. With respect to the Owner Trustee (except for purposes of the Trust Agreement) or the Indenture Trustee, any officer in its Corporate Trust Administration Department designated by such Person to perform obligations under the Operative Agreements, and with respect to any other party, any corporate officer or other employee of a party who, in the normal performance of his 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. Sales Agreement. The Original Sales Agreement as amended by Amendment No. 1 thereto, dated as of March 1, 1994, between the Owner Trustee and Lufthansa. Scheduled Commencement Date. ______________, 199_. Securities Act. The Securities Act of 1933, as amended. Secured Obligations. Has the meaning set forth in the Granting Clause of the Indenture. Series Supplement. The Series Supplement 1994-A310-A1 to be executed and delivered by the Lessee and the Pass Through Trustee, the Series Supplement 1994-A310-A2 to be executed and delivered by the Lessee and the Pass Through Trustee or the Series Supplement 1994-A310-A3 to be executed and delivered by the Lessee and the Pass Through Trustee, in each case as such Series Supplement may be modified, supplemented or amended from time to time in accordance with the provisions thereof and "Series Supplements" means all of such Series Supplements. 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. Daugherty, Fowler & Peregrin. S&P. Standard & Poor's Corporation. Stipulated Loss Value. As of any Stipulated Loss Value Determination Date during the Basic Term, the greater of (i) the amount determined by multiplying the Aircraft Cost by the percentage set forth in Schedule III to the Lease under the heading "Stipulated Loss Value Factor" opposite such date, and (ii) an amount at least sufficient to pay in full, as of the date of payment thereof, the aggregate unpaid principal amount of the Certificates outstanding on such date of payment, together with the accrued and unpaid interest thereon; and during any Renewal Term, the amount determined pursuant to Section 4.01(b) of the Lease. Stipulated Loss Value Determination Date. Each date set forth on Schedule III of the Lease under the heading "Stipulated Loss Value Factors". Supplemental Rent. All amounts, liabilities and obligations which the Lessee assumes or agrees to perform or pay under the Lease or under the Participation Agreement or Tax Indemnity Agreement or an Ancillary Agreement to the Lessor or others, including, without limitation, payment of any Make- Whole Premium payable by the Lessor under the Indenture that is required to be paid by the Lessee pursuant to Section 3.02 of the Lease, payments of Stipulated Loss Value and amounts calculated by reference to Termination Value and all amounts required to be paid by the Lessee under the agreements, covenants and indemnities contained in the Lease or in the Participation Agreement or the Tax Indemnity Agreement or other Ancillary Agreement, but excluding (i) Basic Rent and (ii) any such amounts, liabilities and obligations to the extent such amounts, liabilities or obligations arise out of or relate to the period prior to execution of the Lease Supplement with respect to the Aircraft. Tax. Has the meaning set forth in Section 8.01(a) of the Participation Agreement. Tax Attribute Period. The period commencing on the first day of the taxable year of the Owner Participant in which the Commencement Date occurs and ending on the last day of the seventh succeeding taxable year of the Owner Participant; provided, however, that if the Lessee breaches its representation set forth in Section 4(a) of the Tax Indemnity Agreement and as a result it is required to pay an indemnity pursuant to said Agreement the Tax Attribute Period shall be the period over which the Owner Participant is required to depreciate the Aircraft for purposes of calculating the indemnity payable pursuant to Section 5 of the Tax Indemnity Agreement. Tax Indemnity Agreement. The Tax Indemnity Agreement, dated as of the Commencement Date, among the Lessee, and the Owner Participant and the partners listed on the Schedule A thereto, as from time to time modified, amended or supplemented pursuant to its applicable provisions. Term. The Basic Term and, if renewed pursuant to Section 4.01 of the Lease, the Renewal Term, or the period commencing on the Commencement Date and ending on 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 the end of the Tax Attribute Period in the case of Article 10 of the Lease and in the case of Section 4.02 of the Lease, the date specified in the notice from the Lessee given pursuant to such Section. Termination Value. As of any Termination Date, the greater of (i) the amount determined by multiplying the Aircraft Cost by the percentage set forth in Schedule IV to the Lease under the heading "Termination Value Factor" opposite such Termination Date, and (ii) an amount at least sufficient to pay in full, as of the date of payment thereof, the aggregate unpaid principal amount of the Certificates outstanding on such date of payment, together with the accrued and unpaid interest thereon. Transaction Costs. Those costs and expenses set forth in Section 10.01(a) of the Participation Agreement. Treasury Yield. (i) In the case of a Certificate having a Maturity within one year after the Prepayment Date or purchase date, as the case may be, the average yield to maturity on a government bond equivalent basis of the applicable United States Treasury Bill due the week of Maturity of such Certificate, and (ii) in the case of a Certificate having a Maturity one year or more after the Prepayment Date or purchase date, as the case may be, the average yield of the most actively traded United States Treasury Note (as reported by Cantor Fitzgerald Securities Corp. on page 5 of Telerate Systems, Inc., a financial news service, or if such report is not available, a source deemed comparable by the Independent Investment Banker selected to determine the Make-Whole Premium and reasonably acceptable to the Lessee) corresponding in maturity to the Remaining Weighted Average Life of such Certificate (or, if there is no corresponding maturity, an interpolation of maturities by the Independent Investment Banker), in each case determined by the Independent Investment Banker selected to determine the Make-Whole Premium based on the average of the yields to stated maturity determined from the bid prices as of 10:00 a.m. and 2:00 p.m. New York time, on the second Business Day preceding the Prepayment Date or purchase date, as the case may be. Trust Agreement. The Original Trust Agreement, as amended and restated as of March 1, 1994, and as amended or supplemented pursuant to its applicable provisions and in accordance with the other Operative Agreements (including, without limitation, as supplemented by any Trust Agreement Supplement). Trust Agreement Supplement. The Trust Agreement Supplement (as defined in the Trust Agreement) relating to the Aircraft. Trust Indenture Act. The Trust Indenture Act of 1939, as amended. Trust Indenture Estate; Indenture Estate. The property, rights and privileges described in the Granting Clause of the Indenture, other than (A) Excepted Payments, including, without limitation all right, title and interest of the Owner Participant in, to and under the Tax Indemnity Agreement and any moneys due and to become due under the Tax Indemnity Agreement, all as provided in the Indenture, and (B) rights granted to the Owner Trustee or the Owner Participant under the Indenture, including without limitation under Section 2.05, 7.02, 8.01, 8.02, 8.03, 13.01 and 13.02 thereof, and the Letter of Credit and any rights thereunder. Underwriters. The several Underwriters named in the Underwriting Agreement. Underwriting Agreement. The Underwriting Agreement dated March 16, 1994 among the Lessee, Lufthansa, the Owner Participant, Goldman, Sachs & Co. and Merrill Lynch, Pierce, Fenner & Smith. United States or US. The United States of America. U.S. Air Carrier. Any United States air carrier as to which there is in force a certificate issued pursuant to Section 401 or Section 418 of the Federal Aviation Act, and as to which there is in force an air carrier operating certificate issued pursuant to Part 121 of the regulations under such Act, or which may operate as an air carrier by certification or otherwise under any successor or substitute provision thereof or in absence thereof. EX-4.E 8 Exhibit 4.e ===================================================================== LEASE AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST ____________) Dated as of _______ 1, 199_ between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, Not in its Individual Capacity, but Solely as Owner Trustee, AS LESSOR and FEDERAL EXPRESS CORPORATION, AS LESSEE COVERING ONE AIRBUS MODEL A310-203 AIRCRAFT, SERIAL NO. ____, CERTAIN OF THE RIGHT, TITLE AND INTEREST IN AND TO THIS LEASE AGREEMENT OF FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, AS OWNER TRUSTEE, HAS BEEN ASSIGNED TO AND IS SUBJECT TO A LIEN AND SECURITY INTEREST IN FAVOR OF NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE UNDER A TRUST INDENTURE AND SECURITY AGREEMENT FOR THE BENEFIT OF THE HOLDERS OF THE CERTIFICATES REFERRED TO IN SUCH TRUST INDENTURE AND SECURITY AGREEMENT. ===================================================================== TABLE OF CONTENTS Page ---- Initial Recitals. . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE 1 DEFINITIONS ARTICLE 2 ACCEPTANCE UNDER THE LEASE Section 2.01. Lease of the Aircraft . . . . . . . . . . . . 1 ARTICLE 3 RENT AND RENT ADJUSTMENT Section 3.01. Basic Rent . . . . . . . . . . . . . . . . . . 2 Section 3.02. Supplemental Rent . . . . . . . . . . . . . . 2 Section 3.03. Payment to Indenture Trustee . . . . . . . . . 3 Section 3.04. Costs and Expenses . . . . . . . . . . . . . . 3 ARTICLE 4 RENEWAL OPTIONS AND PURCHASE OPTIONS Section 4.01. Renewal Options . . . . . . . . . . . . . . . 4 Section 4.02. Purchase Option . . . . . . . . . . . . . . . 4 Section 4.03. Appraisal Procedures . . . . . . . . . . . . . 6 ARTICLE 5 REPRESENTATIONS AND WARRANTIES Section 5.01. Disclaimer of Representations and Warranties . . . . . . . . . . . . . . . . 7 Section 5.02. No Modification of Other Warranties. . . . . . 9 Section 5.03. Certain Agreements of the Lessee . . . . . . . 9 ARTICLE 6 LIENS Section 6.01. Liens . . . . . . . . . . . . .. . . . . . . . 9 ARTICLE 7 AIRCRAFT REGISTRATION, MAINTENANCE AND OPERATION Section 7.01. Registration, Maintenance and Operation . . . . . . . . . . . . . . . . . . . 11 Section 7.02. Possession and Permitted Transfer and Sublease . . . . . . . . . . . . . . . . . 14 Section 7.03. Insignia . . . . . . . . . . . . . . . . . . . 20 ARTICLE 8 REPLACEMENT AND POOLING OF PARTS Section 8.01. Replacement of Parts . . . . . . . . . . . . . 20 Section 8.02. Pooling of Parts . . . . . . . . . . . . . . . 21 ARTICLE 9 ALTERATIONS, MODIFICATIONS AND ADDITIONS Section 9.01. Required Alterations and Modifications . . . . . . . . . . . . . . . . . 22 Section 9.02. Other Alterations and Modifications . . . . . . . . . . . . . . . . . 23 ARTICLE 10 VOLUNTARY TERMINATION Section 10.01. Right of Termination Upon Obsolescence or Surplus . . . . . . . . . . . 24 Section 10.02. Retention of the Aircraft by the Lessor . . . . . . . . . . . . . . . . . . . . 27 Section 10.03. Voluntary Termination as to Engines . . . . . . . . . . . . . . . . . . 29 ARTICLE 11 LOSS, DESTRUCTION, REQUISITION Section 11.01. Lessee's Notification Responsibility . . . . . . . . . . . . . . . . 29 Section 11.02. Payment of Stipulated Loss Value . . . . . . 29 Section 11.03. Intentionally Omitted . . . . . . . . . . . . 30 Section 11.04. Event of Loss with Respect to an Engine . . . . . . . . . . . . . . . . . . . . 30 Section 11.05. Application of Payments from the Government or Others . . . . . . . . . . . . . 33 Section 11.06. Requisition of the Airframe and the Installed Engines for Use by Government . . . . . . . . . . . . . . . . . . 34 Section 11.07. Requisition for Use by Government of an Engine Not Installed on the Airframe . . . . . . . . . . . . . . . 35 Section 11.08. Application of Payments During Existence of Certain Defaults . . . . . . . . 35 ARTICLE 12 RETURN OF THE AIRCRAFT Section 12.01. Return of the Aircraft . . . . . . . . . . . 35 Section 12.02. Return of the Engines . . . . . . . . . . . . 36 Section 12.03. Return of Manuals . . . . . . . . . . . . . . 37 Section 12.04. Condition of Aircraft . . . . . . . . . . . . 37 Section 12.05. Delayed Return of Aircraft . . . . . . . . . 39 Section 12.06. Storage . . . . . . . . . . . . . . . . . . . 40 Section 12.07. Special Markings . . . . . . . . . . . . . . 41 Section 12.08. Lessor's Option to Purchase Parts . . . . . . 41 ARTICLE 13 INSURANCE Section 13.01. Public Liability and Property Damage Liability Insurance . . . . . . . . . . 41 Section 13.02. Insurance Against Loss or Damage to the Aircraft and Engines . . . . . . . . . . . 44 Section 13.03. Application of Insurance Proceeds . . . . . . 47 Section 13.04. Reports . . . . . . . . . . . . . . . . . . . 48 Section 13.05. Lessor's Insurance . . . . . . . . . . . . . 49 Section 13.06. Self-Insurance . . . . . . . . . . . . . . . 49 ARTICLE 14 INSPECTION Section 14.01. Right of Inspection . . . . . . . . . . . . . 49 Section 14.02. No Obligation to Inspect . . . . . . . . . . 50 ARTICLE 15 ASSIGNMENT Section 15.01. Lessee's Right to Assign . . . . . . . . . . 50 Section 15.02. Citizenship . . . . . . . . . . . . . . . . . 51 ARTICLE 16 EVENTS OF DEFAULT Section 16.01. Events of Default . . . . . . . . . . . . . . 51 ARTICLE 17 REMEDIES Section 17.01. Remedies Upon Lessee's Default . . . . . . . 54 Section 17.02. Cumulative Remedies . . . . . . . . . . . . . 57 Section 17.03. Waiver . . . . . . . . . . . . . . . . . . . 58 Section 17.04. Lessor's Right to Perform for Lessee . . . . . . . . . . . . . . . . . . . . 58 ARTICLE 18 COVENANT OF QUIET ENJOYMENT Section 18.01. Quiet Enjoyment . . . . . . . . . . . . . . . 58 ARTICLE 19 FURTHER ASSURANCES; FINANCIAL INFORMATION Section 19.01. Further Assurances . . . . . . . . . . . . . 59 ARTICLE 20 NET LEASE Section 20.01. Nature of Lease . . . . . . . . . . . . . . . 59 ARTICLE 21 SUCCESSOR LESSOR Section 21.01. Successor Lessor . . . . . . . . . . . . . . 61 ARTICLE 22 SECURITY FOR LESSOR'S OBLIGATIONS Section 22.01. Security for Lessor's Obligations to Holders . . . . . . . . . . . . . . . . . . 61 Section 22.02. Lease Subject to Indenture . . . . . . . . . 61 Section 22.03. Consent of Lessee to Assignment of Lease as Security . . . . . . . . . . . . . 62 ARTICLE 23 SECURITY FUNDS Section 23.01. Investment of Security Funds . . . . . . . . 62 ARTICLE 24 CONCERNING THE LESSOR Section 24.01. Lessor's Entry Into Lease . . . . . . . . . . 64 ARTICLE 25 NOTICES Section 25.01. Notices . . . . . . . . . . . . . . . . . . . 65 ARTICLE 26 MISCELLANEOUS Section 26.01. Section Headings and Captions . . . . . . . . 66 Section 26.02. References . . . . . . . . . . . . . . . . . 66 Section 26.03. Applicable Law . . . . . . . . . . . . . . . 66 Section 26.04. Severability . . . . . . . . . . . . . . . . 66 Section 26.05. No Oral Modification . . . . . . . . . . . . 67 Section 26.06. Agreement as Chattel Paper . . . . . . . . . 67 Section 26.07. Counterparts and Effective Date . . . . . . . 67 Section 26.08. Incorporation by Reference . . . . . . . . . 67 ARTICLE 27 TRUE LEASE Section 27.01. Intent of the Parties . . . . . . . . . . . . 68 Section 27.02. Section 1110 Compliance . . . . . . . . . . . 68 Schedule I -- Definitions Schedule II -- Basic Rent Schedule III -- Stipulated Loss Values Schedule IV -- Termination Values Schedule V -- Purchase Option Exhibit A -- Form of Lease Supplement Exhibit B -- Aircraft Description LEASE AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST ______) Lease Agreement (Federal Express Corporation Trust _______) (this "Lease") dated as of __________ 1, 199_ between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association, not in its individual capacity but solely as Owner Trustee under the Trust Agreement (as defined in Article 1 below) (the "Lessor"), and FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Lessee"). W I T N E S S E T H : WHEREAS, subject to the terms and conditions set forth in the Participation Agreement (as hereinafter defined), the Lessee desires to lease from the Lessor and the Lessor is willing to lease to the Lessee the Aircraft (as hereinafter defined) in accordance with the terms and conditions set forth in this Lease; NOW, THEREFORE, in consideration of the mutual promises herein, and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged by the parties, the Lessor and the Lessee agree as follows: ARTICLE 1 DEFINITIONS Unless the context otherwise requires, the capitalized terms herein shall have the meanings given in Schedule II to the Participation Agreement, a copy of which schedule is annexed hereto as Schedule I, for all purposes of this Lease and shall be equally applicable to both the singular and the plural forms of the terms defined. ARTICLE 2 ACCEPTANCE UNDER THE LEASE Section 2.01. Lease of Aircraft. The Lessor, subject to satisfaction or waiver of the conditions set forth in this Lease, the Agreement to Lease (to the extent relating to the Aircraft) and in the Participation Agreement, hereby agrees to lease the Aircraft to the Lessee, and the Lessee hereby agrees to lease the Aircraft from the Lessor. Execution by the Lessee of the Lease Supplement with respect to the Aircraft shall be conclusive evidence that such conditions have been satisfied or waived. The Lease shall last for the Term, at all times during which full legal title to the Aircraft shall remain vested in the Lessor to the exclusion of the Lessee, notwithstanding the possession and use thereof by the Lessee or any other party. ARTICLE 3 RENT Section 3.01. Basic Rent. The Lessee agrees to pay to the Lessor in immediately available funds denominated in United States Dollars on each Rent Payment Date during the Basic Term, Basic Rent in the amount set forth for such Rent Payment Date on Schedule II hereto. Each payment of Basic Rent shall be payable in arrears and shall be accrued over the six month period ending on and including the day immediately preceding the Rent Payment Date on which such arrears payment of Basic Rent is scheduled to be made. Anything contained in this Lease to the contrary notwithstanding, on each Rent Payment Date after the Exchange Date (other than the first Rent Payment Date after the Commencement Date, at which time Basic Rent will be prorated as provided in Schedule II hereto) the Lessee shall pay as Basic Rent that amount which shall be, under any circumstances and in any event, at least sufficient to pay in full, any installment of principal of and interest on the Certificates required to be paid pursuant to the Certificates (other than amounts becoming due on account of the exercise of remedies pursuant to Section 17 hereof) on such Rent Payment Date. Section 3.02. Supplemental Rent. The Lessee agrees to pay or cause to be paid to the Lessor, or to whomever shall be entitled to it, any and all Supplemental Rent promptly as the same shall become due. If the Lessee fails to pay any Supplemental Rent when due, the Lessor shall have all rights, powers and remedies provided for in this Lease, or by law or equity or otherwise in the case of nonpayment of Basic Rent. The Lessee will also pay to the person entitled thereto, on demand, as Supplemental Rent, to the extent permitted by applicable law, an amount equal to interest at the Past Due Rate on any part of any installment of Basic Rent not paid when due, for any period until the same shall be paid and on any payment of Supplemental Rent not paid when due, for the period until the same shall be paid. In addition, in the case of (i) any prepayment of the Certificates pursuant to Section 6.02(a)(ii), 6.02(a) (iii) (if clause (A) of Section 8.02(a) of the Indenture is applicable), or 6.02(a)(iv) of the Indenture or (ii) any purchase of the Certificates pursuant to clause (A) of the first sentence of Section 8.02(a) of the Indenture, unless any such prepayment or purchase arises out of an Indenture Event of Default that occurs at a time when no Event of Default is continuing, the Lessee will pay to the Lessor, as Supplemental Rent, on the date of such prepayment or purchase, an amount equal to the aggregate amount of the Make-Whole Premium payable upon such prepayment or purchase pursuant to the Indenture. The expiration or other termination of the Lessee's obligation to pay Basic Rent shall not limit or otherwise modify the obligations of the Lessee with respect to the payment of Supplemental Rent. Section 3.03. Payment to Indenture Trustee. All Rent payable by the Lessee to the Lessor shall be paid to the Lessor at its principal office at 79 South Main Street, Salt Lake City, Utah, 84111, or as the Lessor may otherwise direct, by wire transfer of immediately available funds in U.S. Dollars with sufficient information to identify sources and applications of such funds no later than 11:00 a.m., Central Time on the due date of such payment; provided, however, that on and after the Exchange Date and so long thereafter as the Indenture shall not have been discharged, the Lessor hereby directs, and the Lessee agrees, that all Rent (other than Excepted Payments) and all amounts referred to in Section 3.01 hereof, shall be paid directly to the Indenture Trustee at its principal office no later than 11:00 a.m., Central Time, on the due date of such payment. In any case where a scheduled Rent Payment Date shall not be a Business Day, such Rent Payment Date shall be adjourned to the next succeeding Business Day. Section 3.04. Costs and Expenses. As between the Lessor and the Lessee, all obligations under this Lease shall be done, performed and complied with at the Lessee's cost and expense, whether or not so expressed, unless otherwise expressly stated to the contrary. ARTICLE 4 RENEWAL OPTIONS AND PURCHASE OPTIONS Section 4.01. Renewal Options. (a) Election to Renew. The Lessee shall provide the Lessor with irrevocable written notice (the "Preliminary Notice") not less than 1 year prior to the end of the Basic Term, whether it will exercise its options either to renew this Lease pursuant to this Section 4.01 or to purchase the Aircraft pursuant to Section 4.02(a)(A). Provided that, (i) no Payment Default or Event of Default shall have occurred and be continuing at the time of renewal, (ii) this Lease has not otherwise expired or terminated, and (iii) the Lessee shall have delivered the Preliminary Notice, the Lessee may, by irrevocable written notice delivered to the Lessor not less than 180 days prior to the end of the Basic Term, elect to extend the Term for a Renewal Term commencing on the expiration of the Basic Term and ending on the second annual anniversary of such expiration of the Basic Term. The rent payable with respect to any such Renewal Term shall be equal to the then-current Fair Market Rental of the Aircraft. (b) Terms and Conditions. Any such renewal shall be on the same terms and conditions as provided herein, except that during any Renewal Term, the Stipulated Loss Value as of any Stipulated Loss Value Determination Date during the Renewal Term be equal to the greater of Stipulated Loss Value on the last day of the Basic Term and the Fair Market Value of the Aircraft as of the commencement of such Renewal Term. Section 4.02. Purchase Option. (a) Election to Purchase. Provided that (i) this Lease has not otherwise expired or terminated, and (ii) the Lessee shall have previously given the Preliminary Notice under Section 4.01(a) hereof in the case of paragraph (A) below or the applicable notice for each other paragraph below, as the case may be, the Lessee may: (A) by irrevocable written notice delivered to the Lessor and the Owner Participant not less than 180 days prior to the end of the Basic Term, elect to purchase the Aircraft on the last day of the Basic Term (provided that the Indenture has been discharged or will be discharged concurrently with such purchase) for an amount equal to the Fair Market Value thereof; or (B) by irrevocable written notice delivered to the Lessor and the Owner Participant not less than 365 days prior to the end of the Renewal Term, if any, elect to terminate the Lease and purchase the Aircraft on the first day following such Renewal Term at a price equal to the Fair Market Value of the Aircraft on such day; or (C) exercise the purchase option in this Section 4.02(a)(C) which is more particularly described in Schedule V hereto by reference to this Section 4.02(a)(C) and which option shall be in an amount not less than Fair Market Value; or (D) exercise the purchase option in this Section 4.02(a)(D) which is more particularly described in Schedule V hereto by reference to this Section 4.02(a)(D) and which option shall be in an amount not less than Fair Market Value. The Lessee shall give the Lessor, the Owner Participant and the Indenture Trustee not less than 120 days' prior written notice of its election to purchase pursuant to Section 4.02(a)(C) or 4.02(a)(D) hereof. Such notice shall either direct the Lessor to prepay the Certificates in full on such Termination Date pursuant to the applicable provisions of the Indenture or state that the Lessee shall exercise its option to assume all of the Certificates pursuant to Section 7.12 of the Participation Agreement as of such Termination Date; provided, however, that in no event may the Lessee assume the Certificates pursuant to such Section 7.12 prior to the Exchange Date. The Lessee's notice pursuant to Section 4.02(a)(C) or 4.02(a)(D) hereof shall become irrevocable 10 days prior to the applicable Termination Date designated in such notice. (b) Terms and Conditions. If the Lessee elects to purchase the Aircraft pursuant to Section 4.02(a), the Lessee shall pay to the Lessor on the applicable Termination Date by wire transfer of immediately available funds the applicable purchase price together with any amounts past due hereunder and all other Supplemental Rent due under this Lease, the Participation Agreement, the Tax Indemnity Agreement or any Ancillary Agreement whereupon the Lessor will transfer to the Lessee, without recourse or warranty (except as to the absence of Lessor's Liens) and subject to the disclaimers set forth in Section 5.01 hereof, all of the Lessor's right, title and interest in and to the Aircraft on an "as-is, where is" basis. In connection with such transfer, the Lessee shall prepare and the Lessor shall execute or arrange for the execution of a bill of sale evidencing such transfer and any other document reasonably deemed by the parties to be necessary to convey such right, title and interest to the Lessee and, if applicable, will deliver to the Lessee such instrument as the Lessor shall have received from the Indenture Trustee releasing the Aircraft from the Lien of the Indenture. In connection with any termination or proposed termination of the Lease, the Lessee shall pay, at the time of the applicable Termination Date, all related reasonable costs and expenses of the Owner Participant, the Lessor and the Indenture Trustee. Section 4.03. Appraisal Procedures. (a) Generally. Whenever Fair Market Rental or Fair Market Value is required to be determined under this Lease (unless otherwise provided herein), it shall be determined by the mutual agreement of the Lessor and the Lessee in accordance with the definitions of such terms in Article 1. If the Lessee and the Lessor cannot agree within twenty (20) days after the Lessee's notice of election to purchase the Aircraft or notice to extend the Term, as the case may be, such amount shall be determined by independent appraisal conducted by appraisers selected pursuant to Section 4.03(b). At any time prior to final determination of such amount pursuant to Section 4.03(b), the Lessee and the Lessor shall be entitled to submit to the appraisers (and shall submit to each other any bids submitted to the appraisers) any bids from unrelated third parties, and such bids shall be accorded the weight such appraisers deem appropriate. The Lessor and the Lessee shall each have an opportunity to comment on any such bids after receiving a copy thereof. (b) Selection. If an independent appraisal is required pursuant to this Lease, the Lessor and the Lessee shall consult for the purpose of appointing a mutually acceptable, qualified aircraft appraiser. If they are unable to agree on a single appraiser within ten (10) Business Days, then the independent appraisal shall be arrived at by mutual agreement of two nationally recognized, independent aircraft appraisers, one chosen by the Lessor and one chosen by the Lessee, or, if such appraisers cannot agree on the amount of such appraisal, their appraisals shall be treated in the manner described in Section 4.03(c) hereof with an appraisal arrived at by a third nationally recognized, independent aircraft appraiser chosen by the mutual consent of such two appraisers; provided, however, that if either party shall fail to appoint an appraiser within fifteen (15) Business Days after a written request to do so by the other party, or if such two appraisers cannot agree on the amount of such appraisal and fail to appoint a third appraiser within twenty (20) Business Days after the date of the appointment of the second of such appraisers, then either party may initiate an arbitration proceeding with the American Arbitration Association for purposes of appointing a nationally recognized, independent aircraft appraiser. (c) Valuation. If one appraiser is chosen, the value determined by such appraiser shall be final and binding upon the Lessor and the Lessee. If two appraisers are chosen, one appraiser by the Lessor and one by the Lessee, and such appraisers agree on the value, such value shall be final and binding upon the Lessor and the Lessee. If three appraisers shall be appointed and the difference between the determination which is farther from the middle determination is more than 125% of the difference between the middle determination and the third determination, then such farther determination shall be excluded, the remaining two determinations shall be averaged, and such average shall be final and binding upon the Owner Participant and the Lessee. Otherwise, the average of all three determinations shall be final and binding upon the Owner Participant and the Lessee. (d) Rules of Appraisal. Any appraisal pursuant to this Section 4.03 shall be conducted in accordance with the commercial rules of the American Arbitration Association as then in effect, as modified by this Section 4.03 and the definitions of Fair Market Value and Fair Market Rental. All expenses of any independent appraisal shall be borne by the Lessee, except that each of the Lessee and the Owner Participant (in the case of the Lessor) shall bear any fees, costs and expenses of its respective attorneys in connection with such appraisal except that in the case of an Event of Default or in the case of a revocation by the Lessee of its election to terminate the Lease pursuant to Section 4.02 or Article 10 hereof, such expenses shall be borne by the Lessee. ARTICLE 5 REPRESENTATIONS AND WARRANTIES Section 5.01. Disclaimer of Representations and Warranties. THE LESSEE ACKNOWLEDGES AND AGREES THAT (i) THE AIRFRAME AND EACH ENGINE IS OF A SIZE, DESIGN, AND CAPACITY AND MANUFACTURE SELECTED BY AND ACCEPTABLE TO THE LESSEE, (ii) THE LESSEE IS SATISFIED THAT THE AIRFRAME AND THE ENGINE IS SUITABLE FOR ITS PURPOSES, (iii) NEITHER THE OWNER PARTICIPANT NOR THE LESSOR IS A MANUFACTURER OR A DEALER IN PROPERTY OF SUCH KIND AND (iv) THE AIRFRAME AND EACH ENGINE IS LEASED HEREUNDER SUBJECT TO ALL APPLICABLE LAWS AND GOVERNMENTAL REGULATIONS, NOW IN EFFECT OR HEREAFTER ADOPTED, WITHOUT REPRESENTATION OR WARRANTY OF ANY KIND BY THE LESSOR, THE INDENTURE TRUSTEE OR THE OWNER PARTICIPANT. WITHOUT DEROGATION OF THE LESSEE'S RIGHTS UNDER THE MODIFICATION AGREEMENT, THE OPTIONS AGREEMENT OR SECTION 2 OF THE AGREEMENT TO LEASE AND EXCEPT AS PROVIDED IN SECTION 2 OF THE AGREEMENT TO LEASE, THE LESSOR LEASES TO LESSEE THE AIRFRAME AND EACH ENGINE, AS-IS, WHERE-IS, AND NEITHER THE LESSOR, THE INDENTURE TRUSTEE NOR THE OWNER PARTICIPANT MAKES, HAS MADE OR SHALL BE DEEMED TO HAVE MADE, AND HAS AND WILL HAVE BEEN DEEMED TO HAVE EXPRESSLY DISCLAIMED, ANY WARRANTY OR REPRESENTATION EITHER EXPRESS OR IMPLIED, AS TO (A) THE TITLE (EXCEPT, WITH RESPECT TO THE OWNER TRUSTEE, AS EXPRESSLY SET FORTH IN SECTION 7.04(a)(vii) OF THE PARTICIPATION AGREEMENT AND SECTION 7(c) OF THE AGREEMENT TO LEASE), AIRWORTHINESS (EXCEPT WITH RESPECT TO THE OWNER PARTICIPANT, AS EXPRESSLY SET FORTH IN SECTION 7.03(a)(xiii) OF THE PARTICIPATION AGREEMENT, WORKMANSHIP, CONDITION, VALUE, FITNESS FOR ANY PARTICULAR USE OR PURPOSE, DESIGN, OPERATION OR MERCHANTABILITY OF THE AIRFRAME, ANY ENGINE OR ANY PART THEREOF, (B) THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, (C) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, (D) THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR (E) ANY OTHER MATTER WHATSOEVER. IT IS AGREED THAT ALL RISKS INCIDENT TO THE MATTERS DISCLAIMED IN THE PRECEDING SENTENCE, AS AMONG THE LESSOR, THE OWNER PARTICIPANT AND THE INDENTURE TRUSTEE, ON THE ONE HAND, AND THE LESSEE ON THE OTHER, ARE TO BE BORNE BY THE LESSEE. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THE FOREGOING, IT IS HEREBY AGREED AND UNDERSTOOD BETWEEN THE PARTIES HERETO THAT, EXCEPT AS PROVIDED IN THE AGREEMENT TO LEASE, THE LESSOR SHALL BEAR THE SOLE RESPONSIBILITY FOR ALL RISKS, COSTS, EXPENSES AND LIABILITIES ARISING OUT OF THE OWNERSHIP, USE, OPERATION, MAINTENANCE OR LEASE OF THE AIRCRAFT DURING THE PERIOD PRIOR TO THE EXECUTION OF THE LEASE SUPPLEMENT ON THE COMMENCEMENT DATE BY THE LESSEE AND THAT THE LESSEE SHALL NOT BE RESPONSIBLE FOR ANY SUCH RISKS, COSTS, EXPENSES AND LIABILITIES. FOR THE AVOIDANCE OF DOUBT, IT IS FURTHER AGREED BETWEEN THE PARTIES THAT THE LESSOR SHALL BE RESPONSIBLE FOR ANY SUCH RISKS, COSTS, EXPENSES AND LIABILITIES WHICH ARISE SUBSEQUENT TO THE EXECUTION OF SUCH LEASE SUPPLEMENT BY THE LESSEE TO THE EXTENT THEY ARISE OUT OF OR RELATE TO ANY ACT OR OMISSION PRIOR TO SUCH EXECUTION BY THE LESSEE. The provisions of this Section 5.01 have been negotiated by the Lessor and the Lessee and, except as provided in Section 7.04 of the Participation Agreement or in Section 7(c) of the Agreement to Lease, are intended to be a complete exclusion and negation of any representations or warranties of the Lessor, express or implied, with respect to the Airframe and each Engine that may arise pursuant to any law now or hereafter in effect, or otherwise. Section 5.02. No Modification of Other Warranties. None of the provisions of this Article 5 or any other provision of this Lease shall be deemed to amend, modify or otherwise affect the representations, warranties or other obligations (express or implied) of the Lessee. So long as an Event of Default shall not have occurred and be continuing under this Lease and to the extent permitted under the applicable warranty, patent indemnity, or service-life policy, (i) the Lessor shall assign or otherwise make available to the Lessee such rights as the Lessor may have under any warranty, patent indemnity, or service-life policy made or given by the Aircraft manufacturer, Engine manufacturer, DA or any other subcontractor performing work on the Aircraft pursuant to the Modification Agreement or any of their respective subcontractors or suppliers, and any other claims against the Aircraft manufacturer and Engine manufacturer or any such subcontractor or supplier with respect to the Aircraft, including all rights to demand, accept and retain all rights in and to property (other than the Aircraft), data and services of any kind which the Aircraft manufacturer and Engine manufacturer are obligated to provide; and (ii) all payments pursuant to any manufacturer's or subcontractor's warranty, patent indemnity, or service-life policy obligation shall be paid to the Lessee and the Lessee shall apply such payments to the cost of repair or correction of any condition of the Aircraft which gave rise to such payments, and the excess (if any) shall be paid to the Lessor. Section 5.03. Certain Agreements of the Lessee. The Lessee agrees with the Lessor for the benefit of the Owner Participant and the Indenture Trustee that the Lessee shall perform the agreements, covenants and indemnities of the Lessee set forth in the Participation Agreement to the extent the same are applicable to the Owner Participant, or the Indenture Trustee, as the case may be, as fully and to the same extent and with the same force and effect as if set forth in full in this Article 5. ARTICLE 6 LIENS Section 6.01. Liens. The Lessee will not directly or indirectly create, incur, assume or suffer to exist, and will promptly, at its own cost and expense, take such action as may be necessary to discharge, any Lien on or with respect to the Lessor's Estate or this Lease or the Aircraft, the Airframe or any Engine or any Part or title thereto or any interest therein except: (a) the respective rights of the Lessor and the Lessee as provided in this Lease, the security interest and Lien of the Indenture and the rights of the Owner Participant, the Lessor and the Indenture Trustee under the Trust Agreement, the Indenture and the Participation Agreement; (b) the rights of any sublessee or transferee under a sublease or a transfer expressly permitted by the terms of this Lease; (c) Lessor's Liens and Indenture Trustee's Liens, to the extent required to be discharged by the Owner Participant, the Lessor or the Indenture Trustee, as the case may be, in accordance with Sections 7.03(b), 7.04(b) or 7.05(b) of the Participation Agreement; (d) Liens for taxes imposed against the Lessor, the Owner Trustee, in its individual capacity, the Owner Participant, or the Indenture Trustee, against which the Lessee has not indemnified (and is not obligated to indemnify) the Lessor, the Owner Trustee, in its individual capacity, the Owner Participant or the Indenture Trustee; (e) Liens for taxes imposed against the Lessee either not yet due or being contested in good faith by appropriate proceedings so long as such Liens or proceedings do not involve any danger of the sale, forfeiture or loss of the Lessor's Estate, the Aircraft, the Airframe or any Engine or any interest therein; (f) materialmen's, mechanics', workmen's, repairmen's, employees' or other like Liens arising against the Lessee in the ordinary course of the Lessee's business for amounts the payment of which is either not yet due or is being contested in good faith by appropriate proceedings so long as such Liens or proceedings do not involve any danger of the sale, forfeiture or loss of the Lessor's Estate, the Aircraft, the Airframe or any Engine or any interest therein; (g) Liens arising from judgment or awards against the Lessee with respect to which (i) at the time an appeal or proceeding for review is being prosecuted in good faith and with respect to which there shall have been secured a stay of execution pending such appeal or proceeding for review and then only for the period of such stay and (ii) there is not, and such proceedings do not involve, any danger of the sale, forfeiture or loss of the Lessor's Estate, the Aircraft, the Airframe, any Engine or any interest therein, and so long as the Lessee shall have provided a bond or other security reasonably acceptable to the Lessor in order to protect the Lessor against the risks arising from such Lien; and (h) Liens with respect to Collateral. ARTICLE 7 AIRCRAFT REGISTRATION, MAINTENANCE AND OPERATION Section 7.01. Registration, Maintenance and Operation. The Lessee, at its own cost and expense, shall: (a) upon delivery of the Aircraft to the Lessee hereunder, cause the Aircraft to be duly registered in the name of the Lessor as owner, pursuant to the Act, subject to the proviso to Section 6.02(b) of the Participation Agreement, and at all times in accordance with the rules and regulations of the Aeronautics Authority or the applicable laws, rules and regulations of any other jurisdiction in which the Aircraft may then be registered in accordance with Section 6.02(b) of the Participation Agreement; (b) maintain, inspect, service, repair, test and overhaul the Aircraft (or cause the same to be done) so as to keep the Aircraft (and any engine which is not an Engine but is installed on the Airframe) in as good operating condition as when delivered, ordinary wear and tear excepted, and in any event (i) in accordance with the applicable regulations of the Aeronautics Authority, or of the regulatory agency or body of any other jurisdiction in which the Aircraft may then be registered, and with the Lessee's maintenance program approved by the Aeronautics Authority or such agency or body, (ii) in the same manner as with other Airbus A310 aircraft and with the same care used by the Lessee with respect to other Airbus widebody aircraft and in the same manner and with the same care used by the Lessee with respect to similar engines installed on Airbus A310 aircraft, (or other engines permitted by the terms of this Lease to be used on the Airframe) owned or operated by the Lessee, to the extent that the same regulations, and the Lessee's FAA-approved maintenance program shall apply to any such aircraft and related engines, owned or leased by the Lessee, and utilized in similar circumstances, and without discriminating against the Aircraft, with respect to its use, operation or maintenance in contemplation of the expiration or termination of this Lease as it relates to the Aircraft other than withdrawal of the Aircraft from use and operation as is necessary to prepare the Aircraft for return to the Lessor upon such expiration or termination, (iii) so as to keep the Aircraft in such condition as may be necessary to enable its airworthiness certification to be maintained in good standing at all times under the Act or any applicable rule or regulation of the applicable regulatory agency or body of any other jurisdiction in which the Aircraft may then be registered and, provided, however, the Lessee shall not be in default of its obligation in this Section 7.01(b)(iii) to maintain the Aircraft's airworthiness certification in good standing if the Aircraft loses its airworthiness certification, such loss is curable and the Lessee undertakes such cure promptly, diligently, and continuously, using its best efforts but, provided, further, that in the event such loss is not a loss of the character described in clause (iv) of the definition of Event of Loss and is not curable or, if curable, has not been cured within twelve (12) months of the date the airworthiness certification was lost, unless the Lessor elects to retain the Aircraft in accordance with the procedure described in Article 10 hereof, the Aircraft shall be sold within 90 days after the earlier of (1) the date it is determined that the loss of the airworthiness certificate is not curable, (2) the date twelve (12) months after the airworthiness certificate is lost, or (3) 90 days prior to the end of the Term, in each case, in accordance with the procedure set forth in Section 10.01(b) hereof (except that the Lessee shall have no right to rescind such termination procedure (unless the loss of airworthiness certification shall have been cured) and the Lessee shall accept the highest bid thereunder without regard to whether such bid is less than Termination Value) and the Lessee shall make the payments set forth in Section 10.01(c) hereof, and on the date of such sale this Lease shall (subject to the conditions specified in Article 10 hereof) terminate; and provided, that this Lease shall continue in full force and effect until the Aircraft is sold according to such procedures and nothing in this Section 7.01(b) shall or shall be deemed to limit in any respect the Lessee's obligations under Article 12 hereof or under any other Operative Agreement; (c) maintain, or cause to be maintained, all records, logs and other materials in respect of the Aircraft required by the Aeronautics Authority, or the applicable regulatory agency or body of any other jurisdiction in which the Aircraft may then be registered, all such records and logs to be maintained in the English language, to the extent required by the Federal Aviation Act (which records, logs and other materials shall, as between the Lessor and the Lessee and all parties claiming through the Lessee, be the property of the Lessor but shall become the property of the Lessee upon purchase by the Lessee of the Aircraft pursuant to the terms of this Lease or upon the occurrence of an Event of Loss and the Lessee's compliance with Section 11.02 hereof); (d) promptly furnish to the Lessor such information within the Lessee's possession as may be required to enable the Lessor to file any reports to be filed by the Lessor with any governmental authority because of the Lessor's ownership of or the Owner Participant's or the Indenture Trustee's interest in the Aircraft; (e) not maintain, use or operate the Aircraft or any Engine in violation of any airworthiness certificate or registration relating thereto, or in violation of any law or any license, rule, regulation or order of or by any government or governmental authority having jurisdiction over the Lessee or the Aircraft or any Engine or any manufacturer's operation manual or instruction or service bulletin relating to the Airframe or any Engine or for any purpose for which the Aircraft is not designed; provided, however, that the Lessee may in good faith (after having delivered to the Lessor a certificate signed by an authorized officer of the Lessee stating the relevant facts) contest the validity or application of any such law, license, rule, regulation or order in any manner that does not in the Lessor's opinion, involve any risk of liabilities or civil penalties or criminal penalties being imposed on or against the Owner Participant, the Indenture Trustee or the Lessor, that does not involve any material risk of loss or forfeiture of the Aircraft or any Engine and that does not materially adversely affect the Lessor, its title or interest in such Aircraft or any Engine, or the interests of the Indenture Trustee or the Owner Participant; and if any such law, license, rule, regulation or order requires alteration of the Aircraft or any Engine, the Lessee will conform therewith at its expense and will maintain the Aircraft and the Engines in proper operating condition under such law, license, rule, regulation or order; and (f) not operate or locate the Aircraft or any Engine, or suffer the Aircraft or any Engine to be operated or located, (i) in any area excluded from coverage by an insurance policy in effect with respect to the Aircraft and each Engine required by the terms of Article 13 hereof, except in the case of a requisition for use by the Government where the Lessee has obtained (and furnished the Lessor with satisfactory evidence of its having obtained) prior to the operation or location of the Airframe or any Engine in such area, indemnification or insurance in lieu of such indemnification from the Government against the risks and in the amounts required by, and otherwise in compliance with, Article 13 hereof covering such operation or location in such area, or (ii) in areas that are war zones or recognized, or, in the Lessee's reasonable judgment, threatened areas of hostilities (including any area of the United States of America which becomes such an area), unless fully covered by international war-risk and allied perils insurance coverage including hijacking (air piracy) and non-Government confiscation and expropriation insurance) or unless the Aircraft is operated or used under contract with the Government under which contract the Government assumes liability for any damage, loss, destruction or failure to return possession of the Aircraft at the end of the term of the contract and for injury to persons or damage to properties of others, in either case in the amounts required by Article 13 hereof, and the Lessee shall have furnished the Lessor with satisfactory evidence thereof. Section 7.02. Possession and Permitted Transfer and Sublease. (a) Conditions. The Lessee will not, without the prior written consent of the Lessor, sublease or otherwise in any manner deliver, transfer or relinquish possession of the Aircraft, the Airframe or any Engine or install any Engine, or permit any Engine to be installed, on any airframe other than the Airframe; provided, that, so long as (i) no Event of Default shall have occurred and be continuing, and (ii) the Lessee shall comply with the provisions of Article 13 hereof, the Lessee may without the prior written consent of the Lessor and the Owner Participant: (i) at any time, so long as the sublessee is generally meeting its obligations as they come due and is not subject to a proceeding or final order under applicable bankruptcy, insolvency or reorganization laws on the date the sublease is entered into, and no Payment Default or Bankruptcy Default shall exist at the inception of the sublease (A) sublease the Aircraft or any Engine to a U.S. Air Carrier, (B) after the Tax Attribute Period, sublease the Aircraft to an Air Carrier which is principally based in and domiciled in one of the countries listed on Schedule III of the Participation Agreement, or (C) after the Tax Attribute Period, sublease the Aircraft to any other Air Carrier not described in this Section which shall be acceptable to the Lessor as evidenced by its prior written consent; provided, that, (i) with respect to clauses (B) and (C) above, at the time of any such sublease the United States of America maintains normal and full diplomatic relations with the country in which such Air Carrier is principally based and domiciled and (ii) any such Air Carrier to which the Aircraft is proposed to be subleased shall operate the Aircraft under a maintenance program where standards are at least equal to those specified for similar aircraft with similar engines by one of the Federal Aviation Administration, the Directoire Generale de l'Aviation Civile of the French Republic, the Luftfahrt Bundesamt of the Federal Republic of Germany or the Civil Aviation Authority of the United Kingdom. In the case of any sublease (x) such sublease shall include the provisions required by Section 7.02(b) hereof and expressly require the sublessee to operate and maintain the Aircraft in compliance with the applicable provisions of this Lease, (y) such sublease shall provide that such sublessee will not transfer possession of, or any other rights to, the subleased Airframe or any Engine to any other person without the prior written consent of the Lessor (except as permitted by subparagraphs (ii) through (viii) below) and (z) such sublease shall expire not later than 180 days prior to the expiration of the Basic Term or the Renewal Term, if any. In addition, prior to entering into any such sublease under clause (C) of this Section 7.02(a)(i), the Lessee will provide opinions of counsel (such counsel and the form of such opinions to be reasonably satisfactory to the Lessor and the Indenture Trustee) to the effect that (1) the Operative Agreements and the sublease will constitute legal, valid and enforceable obligations of the parties thereto under the laws of such country (including without limitation the provisions thereof required by Section 7.02(b) below), (2) it is not necessary for the Owner Participant, the Lessor or the Indenture Trustee to register or qualify to do business in such country as a result of the proposed sublease or in order for the Owner Participant, the Lessor or the Indenture Trustee to enforce the terms and conditions of the Operative Agreements, (3) the laws of such country require fair compensation by the government of such country payable in a currency freely convertible into U.S. Dollars for the loss of the use of or title to the Airframe or any Engine in the event of a requisition of use or title by such government, (4) the Lessor's title to the subleased equipment will be recognized, (5) there is no tort liability of the owner of an aircraft not in possession thereof or of persons lending money to such an owner for the purchase of an aircraft, under the laws of such jurisdiction other than tort liability which might have been imposed on such owner or persons under the laws of the United States or any state thereof (it being understood that, in the event that such latter opinion cannot be given in a form satisfactory to the Lessor, such opinion shall be waived if insurance reasonably satisfactory to the Lessor is available to cover such risk and is provided at or before the execution of such a sublease, at the Lessee's cost and expense), (6) the required agreement of such foreign air carrier that its rights under the sublease are subject and subordinate to all the terms of this Lease is enforceable against such foreign air carrier under applicable law (subject only to customary exceptions to enforceability), (7) the remedies provisions of this Lease are enforceable against the Lessee notwithstanding such sublease or any bankruptcy proceedings involving the sublessee and (8) none of the Owner Participant, the Lessor, or the Indenture Trustee will suffer any unindemnified adverse tax consequences as a result of such sublease; (ii) subject the Airframe or permit the Airframe to be subjected to normal interchange agreements or subject the Engines or permit any Engine to be subjected to normal interchange or pooling agreements or arrangements, in each case customary in the airline industry, entered into by the Lessee in the ordinary course of its business with a vendor domiciled in the United States or in a country with which the United States maintains "normal" diplomatic relations (other than in the case of Taiwan, in which case relations as in effect on the Commencement Date shall be acceptable), or; (x) any United States Air Carrier certificated under Section 401 of the Act or any successor provision or (y) any "foreign air carrier" (as such term is defined in the Act) which is (I) organized in a country listed on Schedule III to the Participation Agreement, (II) organized in a country with which the United States then maintains "normal" diplomatic relations (other than in the case of Taiwan, in which case relations as in effect on the Commencement Date shall be acceptable), (III) is a party to the Geneva Convention or (IV) otherwise provides equivalent protection to owners, lessors and mortgagees of aircraft; provided that no transfer of the registration of the Airframe or any Engine shall be effected and that throughout the period that the Airframe or any Engine is subjected to such interchange or pooling agreement or arrangement the terms of this Lease shall be observed; and provided, further, that no such agreement or arrangement contemplates or requires the transfer of title to or registration of the Airframe or any Engine, and if the Lessor's title to any Engine shall nonetheless be divested under any such agreement or arrangement, such divestiture shall be deemed to be an Event of Loss occurring on the date of such divestiture with respect to such Engine and the Lessee shall comply with Section 11.04 of this Lease in respect of such Engine; (iii) deliver or permit the delivery of possession of the Airframe or any Engine to their respective manufacturers or certified maintenance providers for testing, service, repair, maintenance or overhaul work or for alterations or modifications in or additions to the Airframe or Engine to the extent required or permitted by the terms of Article 9 hereof; (iv) transfer or permit the transfer of possession of the Airframe or any Engine pursuant to a contract or agreement with the Government or pursuant to the Civil Reserve Air Fleet Program ("CRAF Program") administered pursuant to Executive Order No. 20999, as amended, or any similar or substitute programs, so long as the Lessee (or any permitted sublessee or transferee pursuant to this Section) shall promptly notify the Lessor upon such transfer of possession and provide the Indenture Trustee with the name and address of the Contracting Officer or representative of the Military Aircraft Command of the United States Air Force to whom notices must be given in respect of the Aircraft, provided, that if such transfer of possession continues beyond the end of the Basic Term or the Renewal Term, the Basic Term or the Renewal Term, as applicable, shall be automatically extended (including the obligation to pay Rent per diem during such extension at a rate equal to the Fair Market Rental) for up to six (6) months after the end of the Term; (v) install or permit the installation of an Engine on an airframe which is owned by the Lessee or any permitted sublessee free and clear of all Liens, except (A) Liens of the type permitted under Section 6.01 hereof, (B) Liens which apply only to the engines (other than an Engine), appliances, parts, instruments, appurtenances, accessories, furnishings and other equipment (other than Parts) installed on such airframe and which do not apply to substantially all of such airframe and (C) the rights of an Air Carrier under normal interchange or pooling agreements which are customary in the airline industry and do not contemplate or require the transfer of title to such airframe or the engines installed on it; (vi) install or permit the installation of an Engine on an airframe leased to the Lessee or any permitted sublessee or transferee or purchased by the Lessee subject to a conditional sale or other security agreement, provided that (A) such lease, conditional sale or other security agreement does not cover the Engine so installed and the Lessor and the Indenture Trustee shall have received from the lessor, conditional vendor or secured party of such airframe an agreement (which may be the lease or conditional sale or other security agreement covering such airframe), whereby such lessor, conditional vendor or secured party expressly agrees that neither it nor its successors or assigns will acquire or claim any right, title or interest in any Engine by reason of such Engine being installed on such airframe at any time, and (B) such airframe is and remains free and clear of all Liens except the rights of the parties to the lease or conditional sale or other security agreement covering such airframe and Liens of the type permitted by subparagraph (v) of this Section 7.02(a); (vii) install or permit the installation of an Engine on an airframe owned by the Lessee, leased to the Lessee or purchased by the Lessee subject to a conditional sale or other security agreement under circumstances where neither subparagraph (v) nor subparagraph (vi) of this Section 7.02(a) is applicable, provided that such installation shall be deemed an Event of Loss with respect to such Engine and the Lessee shall comply with Section 11.04 hereof in respect of such Engine, the Lessor not intending to waive any right, title or interest it may have to or in such Engine under applicable law until compliance by the Lessee with such Section 11.04; and (viii) enter into a wet lease under which the Lessee has effective control of the Aircraft in the ordinary course of the Lessee's business which shall not be considered a transfer of possession hereunder, provided that the Lessee's obligations under this Lease shall continue in full force and effect notwithstanding any such wet lease. (b) Rights of Transferee. Notwithstanding the provisions of Section 7.02(a) hereof, the rights of any transferee who takes possession of the Aircraft, the Airframe or any Engine by reason of a transfer permitted by Section 7.02(a) hereof shall be subject and subordinate to, and any sublease or wet lease permitted by Section 7.02(a) hereof shall be made expressly subject and subordinate to, all the terms of this Lease, including, without limitation, the Lessor's right to repossession pursuant to Article 17 hereof and to avoid such sublease upon such repossession, and the Lessee shall remain primarily liable for the performance of all the terms of this Lease to the same extent as if such sublease or transfer had not occurred. Any such sublease shall include appropriate provisions for the maintenance, inspection (as required by Section 14.01 hereof) and insurance of the Aircraft, the Airframe and each Engine in accordance with the provisions of this Lease and shall provide assurances reasonably satisfactory to the Lessor that the sublessee may not further sublease any of such equipment. The Lessee shall notify the Lessor, the Owner Participant and the Indenture Trustee of any sublease of the Airframe at least 15 days before the execution and delivery thereof. The Lessee shall provide the Lessor, the Owner Participant and the Indenture Trustee within 15 days after execution and delivery thereof a copy of any sublease which has a term in excess of six (6) months and shall deliver a copy of any other sublease promptly after a request therefor from any such party and, prior to execution and delivery of any sublease deliver to Lessor all other documents required hereunder relating to such sublease or transfer of possession. (c) No Release of Lessee/Costs of Subleasing. No sublease, interchange or pooling agreement or other relinquishment of possession permitted under this Article 7 of the Aircraft, the Airframe or any Engine shall in any way discharge or diminish any of the Lessee's obligations to the Lessor, the Owner Participant or the Indenture Trustee under this Lease, the Participation Agreement or the Tax Indemnity Agreement, or constitute a waiver of any of the Lessor's rights and remedies hereunder or thereunder or extend beyond the end of the Term (except as provided in Section 7.02(a)(iv) hereof). Subject to the terms and conditions of this Lease, the Lessee will retain the right to cure any default by any sublessee permitted pursuant to this Section 7.02 and to terminate such sublease upon such default. The Lessee shall pay all costs of the Lessor, the Owner Participant and the Indenture Trustee incurred in connection with any subleasing or proposed subleasing. Section 7.03. Insignia. (a) Nameplate. On or prior to the Commencement Date of the Aircraft or as soon thereafter as possible, the Lessee agrees to affix to and maintain in the cockpit of the Airframe, in a clearly visible location, and on each Engine, a clearly visible metal nameplate bearing the inscription "FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, AS OWNER TRUSTEE, OWNER AND LESSOR," and, so long as the Airframe or any Engine shall be subject to the Lien of the Indenture the additional inscription "NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE, MORTGAGEE." (b) Lessee's Marks. Except as provided in clause (a) above, the Lessee will not allow the name of any Person to be placed on the Airframe or on any Engine as a designation that might be interpreted as a claim of ownership; provided, that during the Term, the Lessee may cause such Aircraft to be lettered "Federal Express Corporation" or may letter, paint or mark it in some other appropriate manner for convenience of identification of the Lessee's interest or the interest of any permitted sublessee (including but not limited to the Lessee's or any permitted sublessee's customary colors and insignia) and to bear insignia plates or other markings identifying the supplier or manufacturer of the Airframe or the Engines or any Parts of either. ARTICLE 8 REPLACEMENT AND POOLING OF PARTS Section 8.01. Replacement of Parts. (a) Generally. The Lessee, at its own cost and expense, will replace or cause to be replaced as promptly as practicable all Parts which may from time to time be incorporated or installed in or attached to the Airframe or any Engine and which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use for any reason, except as otherwise provided in Section 9.01 or 9.02 hereof. In addition, the Lessee may, at its own cost and expense, remove or cause to be removed in the ordinary course of maintenance, service, repair, overhaul or testing, any Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use, provided that the Lessee, except as otherwise provided in Sections 9.01 or 9.02 hereof, will, at its own cost and expense, replace such Parts as promptly as practicable. All replacement Parts shall be free and clear of Liens (except for pooling arrangements to the extent permitted by Section 8.02 hereof and Liens permitted under Section 6.01(a),(b),(c),(d) and (f) hereof) and shall be in at least as good operating condition as, and shall have a value and utility at least equal to, the Parts replaced, and in any event not less than the condition and repair required to be maintained by the provisions of this Lease. (b) Title. All Parts at any time removed from the Airframe or any Engine shall remain the property of the Lessor until such Parts shall be replaced by Parts which have been incorporated or installed in or attached to the Airframe or such Engine and which meet the requirements for replacement Parts specified in Section 8.01(a) hereof. Immediately upon any replacement Part (other than, to the extent permitted by Section 8.02 hereof, a replacement Part subject to a pooling arrangement) becoming incorporated or installed in or attached to the Airframe or any Engine, and without further act: (i) title to the replaced Part shall vest in the Lessee, free and clear of all rights of the Lessor, and such replaced Part shall no longer be deemed a Part under this Lease; (ii) title to such replacement Part shall vest in the Lessor free and clear of all Liens except for Liens permitted by Section 6.01(a), (b), (c), (d) and (f) hereof; and (iii) such replacement Part shall become subject to this Lease and to the Lien of the Indenture and shall be deemed part of the Airframe or such Engine for all purposes to the same extent as the Parts originally incorporated or installed in or attached to the Airframe or such Engine. Section 8.02. Pooling of Parts. Any Part removed from the Airframe or any Engine as permitted in Section 8.01(a) hereof may be subjected by the Lessee to any normal pooling arrangement customary in the airline industry and entered into with vendors and other Air Carriers in the ordinary course of the Lessee's business, provided that the Part replacing such removed Part shall be incorporated or installed in or attached to the Airframe or such Engine in accordance with Section 8 hereof, as promptly as practicable after the removal of such removed Part. In addition, any replacement Part when incorporated or installed in or attached to the Airframe or any Engine in accordance with Section 8.01(a) hereof may be owned by another Air Carrier subject to such normal pooling arrangement, provided that the Lessee, at its own cost and expense and as promptly as possible, either: (a) causes title to such replacement Part to vest in the Lessor in accordance with Section 8.01(b) hereof by the Lessee acquiring title to such replacement Part for the benefit of, and transferring such title to, the Lessor free and clear of all Liens (other than Liens permitted under Section 6.01(a), (b), (c), (d) and (f) hereof); or (b) replaces such replacement Part by incorporating or installing in or attaching to the Airframe or such Engine a further replacement Part owned by the Lessee free and clear of all Liens (other than Liens permitted under Section 6.01(a), (b), (c), (d) and (f) hereof) and by causing title to such further replacement Part to vest in the Lessor in accordance with Section 8.01(b) hereof. All such replacement Parts and further replacement Parts shall meet the standards set forth in the last sentence of Section 8.01(a) hereof. ARTICLE 9 ALTERATIONS, MODIFICATIONS AND ADDITIONS Section 9.01. Required Alterations and Modifications. The Lessee, at its own cost and expense, shall make or cause to be made such alterations and modifications in and additions to the Airframe and each Engine as may be required from time to time to meet the applicable requirements of the Aeronautics Authority or any other governmental authority with jurisdiction over the Lessee's operations and aircraft; provided, however, that the Lessee may in good faith (after having delivered to the Lessor a certificate signed by an authorized officer of the Lessee stating the relevant facts) contest the validity or application of any such requirement in any manner that does not, in the Lessor's opinion, involve any risk of liabilities or civil penalties or criminal penalties being imposed on or against the Owner Participant, the Indenture Trustee or the Lessor, that does not involve any material risk of loss or forfeiture of the Aircraft or any Engine and that does not materially adversely affect the Lessor, its title or interest in such Aircraft or any Engine, or the interests of the Indenture Trustee or the Owner Participant; and if any such requirement requires alteration of the Aircraft or any Engine, the Lessee will conform therewith at its expense and will maintain the Aircraft and the Engines in proper operating condition under such requirement. All such alterations, modifications or additions required to be made under this Section 9.01 shall be made on or before the date mandated therefor, taking into account postponements resulting from a contest or otherwise and shall be made at such time and in such a manner so as not to discriminate against the Aircraft whether by reason of its leased status or otherwise. Title to all alterations, modifications and additions made pursuant to this Section 9.01 shall without further act vest in the Lessor and become subject to this Lease. Section 9.02. Other Alterations and Modifications. (a) Generally. The Lessee, at its own cost and expense, may from time to time make such alterations and modifications in and additions to the Airframe or any Engine as the Lessee may deem desirable in the proper conduct of its business, including, without limitation, removal of Obsolete Parts, provided that no such alteration, modification, addition or removal, individually or in the aggregate, shall create any adverse tax consequences for the Owner Participant not otherwise indemnified for, diminish the value, useful life, or utility of the Airframe or the value and utility of any Engine or impair its condition or airworthiness below its value, useful life (in the case of the Airframe only), utility, condition and airworthiness immediately prior to such alteration, modification, addition or removal, assuming that the Airframe or such Engine was then in the condition and airworthiness required to be maintained by the terms of this Lease, or cause the Airframe or any Engine to become "limited use property" within the meaning of Revenue Procedure 76-30, 1976-2 C.B. 647. (b) Title to Installed Parts. Title to each Part incorporated or installed in or attached or added to the Airframe or any Engine as the result of any alteration, modification, removal or addition made pursuant to Section 9.02(a) hereof shall without further act vest in the Lessor and become subject to this Lease; provided, however, that the Lessee may remove any such Part at any time during the Term if: (i) such Part is in addition to, and not in replacement of or substitution for, any Part originally incorporated or installed in or attached or added to the Airframe or such Engine on the Commencement Date or any Part in replacement of, or substitution for, any such Part; (ii) such Part is not required to be incorporated or installed in or attached or added to the Airframe or such Engine pursuant to the terms of Article 7 hereof or the first sentence of Section 9.01 hereof; (iii) such Part can be removed from the Airframe or such Engine without (A) causing material damage to the Airframe or such Engine (it being understood that the Lessee shall repair any damage caused by a permitted removal) or diminishing or impairing the value, utility, condition or airworthiness required to be maintained by the terms of this Lease or (B) diminishing the value, utility or remaining useful life (in the case of the Airframe) or the value and utility (in the case of such Engine) which the Airframe or such Engine would have had at such time had such alteration, modification, removal or addition not occurred, assuming the Airframe or such Engine was then in the condition required to be maintained by the terms of this Lease; and (iv) the cost of such Part was not paid by the Lessor. (c) Title to Removed Parts. Upon the removal by the Lessee of any such Part as provided in subsection (b) above, title thereto shall, without further act, vest in the Lessee and such Part shall no longer be deemed a Part. Any Part not removed by the Lessee as above provided prior to the return of the applicable Aircraft to the Lessor hereunder shall remain the property of the Lessor and subject to this Lease. ARTICLE 10 VOLUNTARY TERMINATION Section 10.01. Right of Termination Upon Obsolescence or Surplus. (a) Option to Terminate. So long as no Event of Default or Payment Default shall have occurred and be continuing, the Lessee shall have the right, at its option, on any Termination Date, on at least 180 days' prior written notice (which notice shall state the Proposed Termination Date) to the Lessor, the Indenture Trustee and the Owner Participant (or, in the circumstances described in Section 7.01(b) hereof, the Lessee shall have the obligation on not more than 90 days' prior written notice) to terminate this Lease as of a Termination Date (or within such 90-day period) if the Aircraft shall have become obsolete or surplus to the operations of the Lessee; provided that the Lessee shall have furnished to the Lessor, the Indenture Trustee and the Owner Participant a certificate of the Lessee's President, Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Treasurer or Assistant Treasurer stating the determination of Lessee that the Aircraft is obsolete or surplus to its needs or that the Lessee has given such notice pursuant to Section 7.01(b) hereof. Unless the Lessor has elected to retain the Aircraft as herein provided or the Lessee has given such notice pursuant to Section 7.01(b) hereof, the Lessee shall have one right to revoke its notice of termination not less than ten (10) Business Days prior to the Proposed Termination Date whereupon this Lease shall continue in full force and effect; provided that the Lessee may not deliver another notice of termination within one year after revocation of the prior notice, and provided further that the Lessee may not revoke its notice if a cash bid which is for an amount greater than or equal to Termination Value has been submitted for the purchase of the Aircraft. (b) Sale Procedure. During the period from the giving of notice pursuant to Section 10.01(a) until the Proposed Termination Date, the Lessee, as non-exclusive agent for the Lessor, shall use its reasonable efforts to obtain bids for the cash purchase on the Proposed Termination Date (or such earlier date as shall be consented to in writing by the Lessor) of such Aircraft. On the Termination Date, the Engines shall be installed on the Airframe (provided that the Airframe may be sold with engines meeting the requirements set forth herein for Replacement Engines in lieu of the Engines so long as the aggregate number of Engines and Replacement Engines being sold with the Airframe equals two). The Lessor may, if it desires to do so, seek to obtain such bids. The Owner Participant shall not inspect any bids received by the Lessee, unless the Owner Participant has given to the Lessee binding and irrevocable notice that neither the Owner Participant nor any of its Affiliates nor any Person acting for the Owner Participant or such Affiliate will submit a bid for the purchase of the Aircraft and if such notice has been given, the Lessee will provide the Lessor with copies of bids received by the Lessee. No bid may be submitted by the Lessee or any Person, firm or corporation affiliated with the Lessee (or with whom or which there is any arrangement or understanding as to the subsequent use of the Aircraft by the Lessee or any of its Affiliates) or any agent or person acting on behalf of the Lessee. The Lessee may reject any bid which is less than the applicable Termination Value unless the sale is being made pursuant to a notice given in accordance with Section 7.01(b) hereof. Subject to the provisions of Section 10.02 hereof, on the Proposed Termination Date or such earlier date of sale as shall be consented to in writing by the Lessor, the Lessee shall deliver the Airframe which shall have the Engines installed on it (provided that the Airframe may be delivered with installed engines meeting the requirements set forth herein for Replacement Engines in lieu of the Engines so long as the aggregate number of Engines and Replacement Engines being delivered with the Airframe equals two and the Lessee shall comply with the provisions of Section 11.04 hereof as if an Event of Loss occurred with regard to the Engines) to the bidder which shall have submitted the highest cash bid (whether certified to the Lessor by the Lessee or directly received by the Lessor and certified to the Lessee, it being understood, however, that all bidders shall be required to make payments directly to the Lessor) in the same manner as if delivery were made to the Lessor pursuant to Article 12 hereof, at a location specified by such bidder, and shall duly transfer to the Lessor title to any such engines not owned by the Lessor, and the Lessor shall, upon payment in full of the bid price and all amounts due and owing pursuant to Section 10.01(c) hereof by wire transfer of immediately available funds, sell the Airframe and Engines or engines to such bidder without recourse or warranty (except as to the absence of Lessor's Liens). (c) Payments to the Lessor. The total selling price realized at a sale of the Aircraft pursuant to Section 10.01(b) hereof net of all expenses of the sale (including commissions and any sales or transfer taxes) (the "Net Sales Price") shall be retained by the Lessor (or the Indenture Trustee, as long as the Indenture is in force) and, in addition, on or before the Proposed Termination Date (or any earlier date of sale), the Lessee shall pay to the Lessor (or the Indenture Trustee, as long as the Indenture is in force), by wire transfer of immediately available funds, the sum of: (i) the excess, if any, of the Termination Value for the Aircraft computed as of the Termination Date over the Net Sales Price therefor; plus (ii) all other amounts then due and payable by the Lessee under this Lease or any other Operative Agreement (including any Make-Whole Premium payable pursuant to the Indenture). (d) Transfer of Uninstalled Engines. Upon payment of the amounts described in Section 10.01(c) hereof and upon transfer to the Lessor of title to engines which have been returned in lieu of Engines as provided in Section 10.01(b) hereof, and upon payment of all other amounts then due under this Lease, the Lessor will transfer to the Lessee, without recourse or warranty (except as to the absence of Lessor's Liens), all of the Lessor's right, title and interest in and to any Engines which were replaced with engines pursuant to Section 10.01(b) hereof, and shall deliver to the Lessee, at the Lessee's cost, such instrument as the Lessor shall have received from the Indenture Trustee, releasing such Engines from the Lien of the Indenture. (e) Limitation on the Lessor's Duties. The Lessor shall be under no duty to solicit bids, to inquire into the efforts of the Lessee to obtain bids or otherwise to take any action in connection with any such sale other than to transfer to the purchaser named in the highest cash bid as referred to above (or to such purchaser and to the Lessee, as the case may be), without recourse or warranty (except as to the absence of Lessor's Liens), all of the Lessor's right, title and interest in and to the Aircraft, against receipt by the Lessor of the payments provided for. (f) Termination of the Lessee's Obligations. Upon the sale of the Aircraft pursuant to this Section 10.01 and upon compliance by the Lessee with the further provisions of this Article 10, the obligation of the Lessee to pay Basic Rent shall cease for any Rent Payment Date occurring after the Termination Date and the Term shall end effective as of the Termination Date. If no sale shall have occurred on or before the Proposed Termination Date, this Lease shall continue in full force and effect and, for purposes of Section 10.01(a) hereof, it shall be deemed that the Lessee has rescinded its notice of termination, and the Lessee shall pay the expenses incurred by the Lessor, the Owner Participant and the Indenture Trustee in connection with the proposed sale. Section 10.02. Retention of the Aircraft by the Lessor. (a) Generally. Notwithstanding Section 10.01, the Lessor may, subject to Section 10.02(b) hereof, elect to retain the Aircraft after receipt of the Lessee's notice of termination given in accordance with Section 10.01(a), by giving the Lessee and the Indenture Trustee written irrevocable notice of such election not less than thirty (30) days prior to the Proposed Termination Date. If the Lessor so elects, the Lessee shall pay to the Lessor on the Proposed Termination Date, by wire transfer of immediately available funds all amounts then due and payable by the Lessee under this Lease and any other Operative Agreement on or prior to the Termination Date (including any Make-Whole Premium payable pursuant to the Indenture). (b) Payment of the Certificates. It shall be an absolute condition precedent to the Lessor's right to retain the Aircraft and to the termination of the Term pursuant to this Section 10.02 that the Lessor (or the Lessee to the extent set forth in Section 10.02(a)) shall have paid to the Holders of the Certificates and such Holders shall have received the entire outstanding principal amount of and accrued interest on the Certificates on the Termination Date and all other sums due and owing to the Indenture Trustee and the Holders of the Certificates (including any Make-Whole Premium payable pursuant to the Indenture) on or prior to the Termination Date under this Lease, the Indenture or any other Operative Agreement. If the condition precedent set forth in this Section 10.02(b) is not satisfied on any Termination Date, the Lease shall continue in full force and effect with respect to the Aircraft (and the Lessee's notice of termination referred to in Section 10.02(a) hereof shall be deemed revoked). (c) Delivery of Aircraft to Lessor; Title to Engines. If the Lessor elects to retain such Aircraft pursuant to this Section 10.02, the Lessee shall deliver the Airframe and the Engines (provided that the Airframe may be delivered with engines meeting the requirements set forth herein for Replacement Engines in lieu of the Engines so long as the aggregate number of Engines and engines being delivered with the Airframe equals two and provided that the other requirements of Section 11.04 hereof are met as if an Event of Loss has occurred with regard to the Engines) to the Lessor in the same manner as if delivery were made to the Lessor pursuant to Article 12 hereof, and shall duly transfer to the Lessor right, title and interest to any such engines not owned by the Lessor, all in accordance with Article 12 hereof. Upon such delivery of the Airframe and the Engines or engines to the Lessor and payment by the Lessee of any amounts required to be paid by the Lessee pursuant to Section 10.02(a) hereof, the Lessor will transfer to the Lessee, without recourse or warranty (except as to the absence of Lessor's Liens), all of the Lessor's right, title and interest in and to any Engines which were replaced by engines pursuant to this Section 10.02(c), and shall deliver to the Lessee such instrument as the Lessor shall have received from the Indenture Trustee releasing such Engines from the Lien of the Indenture. (d) Termination of the Lessee's Obligations. Upon compliance by the Lessor and the Lessee with the provisions of this Section 10.02 and upon compliance by the Lessee with the further provisions of this Article 10, the obligation of the Lessee to pay Basic Rent shall cease for any Rent Payment Date occurring on or after the Termination Date and the Term shall end effective as of the Termination Date. Section 10.03. Voluntary Termination as to Engines. So long as no Event of Default shall have occurred and be continuing, the Lessee shall have the right at its option and at any time, on at least sixty (60) days' prior written notice to the Lessor, to terminate this Lease with respect to any Engine not then installed or held for use on the Airframe, provided that prior to the date of such termination, the Lessee shall comply with the terms of Section 11.04 hereof to the same extent as if an Event of Loss had occurred with respect to such Engine. ARTICLE 11 LOSS, DESTRUCTION, REQUISITION Section 11.01. Lessee's Notification Responsibility. The Lessee shall notify the Lessor, the Owner Participant and the Indenture Trustee as soon as practicable but in no event more than five (5) Business Days following the occurrence of an event which constitutes or might constitute an Event of Loss with respect to the Airframe or with respect to the Airframe and the Engines or engines then installed on the Airframe. Section 11.02. Payment of Stipulated Loss Value. (a) If an Event of Loss has occurred, the Lessee shall pay to the Lessor, by wire transfer of immediately available funds on the earlier of (i) the fifth Business Day following receipt in full of insurance proceeds or requisition proceeds, described in Section 11.05 hereof, in connection with such Event of Loss and (ii) the 90th day after the occurrence of such Event of Loss (the earlier of such dates being referred to herein as the "Loss Payment Date"), the sum of (A) the Stipulated Loss Value, determined as of the Stipulated Loss Value Determination Date next preceding the Loss Payment Date (or, if the Loss Payment Date occurs on a Stipulated Loss Value Determination Date, determined as of such Stipulated Loss Value Determination Date), together with interest on such amount at the Debt Rate from such Stipulated Loss Value Determination Date to the Loss Payment Date, plus (B) any and all Basic Rent due and payable on or prior to the relevant Stipulated Loss Value Determination Date and unpaid, plus (C) any and all Supplemental Rent due and payable on or prior to such Loss Payment Date and all other amounts owing by the Lessor to the Indenture Trustee or to the Holders under the Indenture and the other Operative Agreements plus (D) any reasonable out-of-pocket expenses incurred in connection with such Event of Loss and the related prepayment of the Certificates by the Lessor, the Owner Participant and the Indenture Trustee. (b) Termination of Lease; Title Transfer. Upon payment in full of the amounts due pursuant to Section 11.02(a) hereof, the obligation of the Lessee to pay Basic Rent on any Rent Payment Date occurring subsequent to the payment of such amounts shall terminate and the Term shall end. Further, upon such payment, the Lessor will transfer to the Lessee, without recourse or warranty (except as to the absence of Lessor's Liens) and subject to the disclaimers set forth in Section 5.01 hereof, all of the Lessor's right, title and interest, in and to the Airframe, Engines and engines, if any, with respect to which such Event of Loss occurred, as well as all of the Lessor's right, title and interest in and to any Engines constituting part of the Aircraft but not installed on the Airframe when such Event of Loss occurred. In connection with such transfer, the Lessee shall prepare and the Lessor shall execute or arrange for the execution of a bill of sale evidencing such transfer and any other document reasonably deemed by the parties to be necessary to convey such right, title and interest to the Lessee and, if applicable, the Lessor will deliver to the Lessee such instrument as the Lessor shall have received from the Indenture Trustee releasing the Aircraft from the Lien of the Indenture. Section 11.03. [Intentionally Omitted] Section 11.04. Event of Loss with Respect to an Engine. (a) Generally. Upon the occurrence of an Event of Loss with respect to an Engine under circumstances in which there has not occurred an Event of Loss with respect to the Airframe, the Lessee shall give the Lessor and the Indenture Trustee prompt written notice thereof and shall, as soon as practicable but in any event within sixty (60) days after the occurrence of such Event of Loss, duly convey or cause to be conveyed to the Lessor, a replacement for the Engine with respect to which such Event of Loss occurred, good and marketable title to a Replacement Engine, free and clear of all Liens not excepted in Section 6.01(a), (b), (c), (d) and (f) hereof and having a value and utility at least equal to, and being in as good operating condition as, the Engine with respect to which such Event of Loss occurred, assuming such Engine was of the value and utility and in the condition and repair required by the terms of this Lease immediately prior to the occurrence of such Event of Loss, provided that after any replacement both Engines shall be of identical make and model. The standards set forth in this Section with respect to Replacement Engines shall apply upon any replacement or substitution of an Engine with a Replacement Engine pursuant to any other provision of this Lease. (b) Conditions Precedent. Prior to or at the time of any conveyance of an Engine pursuant to Section 11.04(a) hereof, the Lessee, at its own cost and expense will: (i) furnish the Lessor with an original of, and the Indenture Trustee with a copy of, a full warranty bill of sale, in form and substance satisfactory to the Lessor, the Owner Participant and the Indenture Trustee with respect to such Replacement Engine together with an assignment in form and substance satisfactory to the Lessor and the Indenture Trustee of any and all manufacturer's warranties applicable thereto and a consent reasonably satisfactory to the Lessor and the Indenture Trustee from such manufacturer to such assignment; (ii) cause a Lease Supplement covering such Replacement Engine to be duly executed by the Lessee and filed for recordation pursuant to the Act, or the applicable laws, rules and regulations of any other jurisdiction in which the Aircraft may then be registered as permitted by Section 6.02(b) of the Participation Agreement and, if the Engine being replaced was registered under the jurisdiction in which the Aircraft is then registered, the Replacement Engine shall be registered in the same fashion; (iii) furnish the Lessor and the Indenture Trustee with a certificate of the Lessee certifying that such Replacement Engine has a value and utility at least equal to, and is in as good operating condition as, the Engine replaced, assuming such Engine was in at least the condition and repair required by the terms of this Lease immediately prior to the occurrence of such Event of Loss; (iv) furnish the Lessor with such evidence of compliance with the insurance provisions of Article 13 hereof with respect to such Replacement Engine as the Lessor or the Indenture Trustee may reasonably request; (v) provide the Owner Participant and the Lessor with (A) an opinion of counsel selected by the Owner Participant and reasonably acceptable to the Lessee (which opinion shall be reasonably satisfactory in form and substance to the Owner Participant and the Lessor) that it will suffer no adverse tax consequences not otherwise indemnified for as of the Commencement Date as a result of such substitution or (B) an indemnity reasonably acceptable to the Lessor against such consequences; (vi) comply with the provisions of the Indenture relating to the replacement of Engines upon the occurrence of an Event of Loss; (vii) cause an Indenture Supplement with respect to such Replacement Engine to be duly executed by the Lessor and the Indenture Trustee and recorded pursuant to the Act, or the applicable laws, rules and regulations of any other jurisdiction in which the Aircraft may be registered as permitted by Section 6.02(b) of the Participation Agreement in order that the Indenture shall constitute a first and prior and perfected Lien and security interest on and in respect of such Replacement Engine; (viii) take such other action, including the filing with the Secretary of State of Utah of UCC financing statements naming the Indenture Trustee as Secured Party and with the Secretary of State of Tennessee only a notice filing, as the Lessor or the Indenture Trustee may reasonably request in order that such Replacement Engine be duly and properly titled in the Lessor, leased under this Lease and subjected to the Lien of the Indenture to the same extent as the replaced Engine; (ix) furnish the Lessor, the Owner Participant and the Indenture Trustee with an opinion (reasonably satisfactory in form and substance to the Lessor, the Owner Participant and the Indenture Trustee) of counsel to the Lessee (which may be the Lessee's General Counsel) addressed to the Indenture Trustee to the effect that (A) the Lessor has good title to such Replacement Engine, and (B) such Replacement Engine has been validly subjected to the Lien of the Indenture (with the effect and result that the Indenture constitutes a first and prior perfected security interest and Lien on such Replacement Engine); and (x) take such other action as the Indenture Trustee may reasonably request in order that such Replacement Engine be duly and properly subjected to the Lien of the Indenture to the same extent as the replaced Engine. (c) Title Transfer. Upon compliance by the Lessee with the terms of Sections 11.04(a) and (b) hereof, the Lessor will transfer to the Lessee (subject to any insurer's salvage rights), without recourse or warranty (except as to the absence of Lessor's Liens) and subject to the disclaimers set forth in Section 5.01 hereof, all of the Lessor's right, title and interest, if any, in and to the Engine with respect to which such Event of Loss occurred. In connection with such transfer, the Lessee shall prepare and the Lessor shall execute or forward to the Indenture Trustee for execution, as the case may be, all in recordable form, a bill of sale evidencing such transfer, a release from the Indenture of the Engine with respect to which such Event of Loss occurred, such instrument, if any, as the Lessor shall have received from the Indenture Trustee releasing such Engine from the Lien of the Indenture and any other document reasonably deemed by the parties to be necessary to convey such right, title and interest to the Lessee and to effect such release, all at the Lessee's sole cost and expense. Each Replacement Engine shall, after such conveyance, be deemed part of the property leased under this Lease. An Event of Loss covered by this Section 11.04 shall not result in any change in Basic Rent, Stipulated Loss Values or Termination Values with respect to the corresponding Aircraft, but may result in payments to be made pursuant to the Tax Indemnity Agreement and the Participation Agreement. Section 11.05. Application of Payments from the Government or Others. (a) Generally. Any payments (other than insurance proceeds the application of which is provided for in Section 13.03 hereof) received at any time by the Lessor or by the Lessee from any governmental authority or any other party, foreign or domestic, with respect to an Event of Loss resulting from the condemnation, confiscation, theft or seizure of, or requisition of title to or use of, the Airframe or any Engine will be applied, as appropriate, in accordance with Section 11.05(b) or Section 11.05(c) hereof. (b) Payments of Stipulated Loss Value. If the payments described in Section 11.05(a) hereof are received with respect to the Airframe or with respect to the Airframe and Engines or engines then installed on such Airframe, so much of such payments as shall not exceed the amount required to be paid by the Lessee pursuant to Section 11.02 hereof shall be paid to the Lessor in reduction of the Lessee's obligations under Section 11.02 hereof if not already paid by the Lessee, or, if such obligations have already been discharged in full by the Lessee, such payments shall be applied to reimburse the Lessee for its payment of such Stipulated Loss Value and, if and to the extent specifically included in such payment, to pay to the Lessee interest on such amount of Stipulated Loss Value at the rate included in such payment if any, or otherwise at the applicable Debt Rate, for the period from the date of payment by the Lessee of the Stipulated Loss Value to the date of reimbursement of the Lessee under this Section 11.05(b). The excess, if any, remaining after such application shall be divided between the Lessor and the Lessee as their respective interests may appear. (c) Payment upon Engine Replacement. If the payments described in Section 11.05(a) hereof are received with respect to an Engine not then installed on the Airframe under the circumstances contemplated by Section 11.04 hereof, all such payments shall, subject to Section 11.08 hereof, be paid over to or retained by the Lessee, provided that the Lessee shall have fully performed its obligations pursuant to Section 11.04 hereof with respect to the Event of Loss for which such payments are made. Section 11.06. Requisition of the Airframe and the Installed Engines for Use by Government. In the event of the requisition for use by the Government or any other government of registry of the Aircraft, or any agency or instrumentality of either (a "Requisitioning Government") of the Airframe and the Engines or engines then installed on the Airframe during the Term, which requisition does not constitute an Event of Loss, the Lessee shall promptly notify the Lessor, the Indenture Trustee, and the Owner Participant of such requisition and all of the Lessee's obligations under this Lease shall continue to the same extent as if such requisition had not occurred except to the extent that any failure or delay in the performance or observance of such obligations (other than obligations for the payment of Rent) by the Lessee shall have been caused by such requisition. All payments received by the Lessor, the Lessee or any permitted sublessee or transferee from the Requisitioning Government for such use of the Airframe and Engines or engines during the Term (other than any such requisition which constitutes an Event of Loss, as to which the provisions of Section 11.05 hereof shall govern) shall, subject to Section 11.08 hereof, be paid over to, or retained by the Lessee or such permitted sublessee or transferee. All payments received by the Lessor, the Lessee or any such permitted sublessee or transferee from the Requisitioning Government for the use of the Airframe and Engines or engines after the Term shall be paid over to, or retained by, the Lessor (or the Lessee if it shall have purchased the Lessor's interest therein in accordance with the provisions hereof). In the event of any such requisition for use, the Lessee agrees to use reasonable efforts to obtain reimbursement from the Requisitioning Government to the Lessor for damages suffered by the Lessor or the Owner Participant, with respect to which the Lessee is not obligated to indemnify under the Operative Agreements, as a result of such requisition for use. The Lessee will endeavor to keep the Lessor informed as to any negotiations between the Lessee and/or any permitted sublessee or transferee and a Requisitioning Government with respect to any such requisition and will consult with the Lessor regarding methods or procedures that are appropriate to effect recovery from such Requisitioning Government for such damages. Section 11.07. Requisition for Use by Government of an Engine Not Installed on the Airframe. In the event of the requisition for use by a Requisitioning Government of registry of the Aircraft or any agency or instrumentality thereof of any Engine not then installed on the Airframe, the Lessee shall replace such Engine by complying with the terms of Section 11.04 hereof to the same extent as if an Event of Loss had occurred with respect to such Engine as of the date of such requisition, and any payments received by the Lessor or the Lessee from the Requisitioning Government with respect to such requisition shall, subject to Section 11.08 hereof, be paid over to or retained by the Lessee, provided that the Lessee shall have fully performed its obligations under Section 11.04 hereof. Section 11.08. Application of Payments During Existence of Certain Defaults. Any amount referred to in Section 11.05, 11.06 or 11.07 hereof which is payable to the Lessee shall not be paid to the Lessee, or, if it has been previously paid directly to the Lessee, shall not be retained by the Lessee, if at the time of such payment a Payment Default, Bankruptcy Default or an Event of Default shall have occurred and be continuing, but shall be paid to and held by the Lessor (or the Indenture Trustee so long as the Lien of the Indenture is in effect) as provided in Article 23 hereof as security for the obligations of the Lessee under this Agreement, and at such time as there shall not be continuing any such Payment Default, Bankruptcy Default or Event of Default, such amount shall be paid to the Lessee. ARTICLE 12 RETURN OF AIRCRAFT Section 12.01. Return of Aircraft. Unless such Aircraft is purchased by the Lessee as provided in Section 4.02 hereof, at the end of the Term, or upon the termination of this Lease pursuant to Article 7, Article 10 or Article 17 hereof or otherwise (including termination as a result of a rejection hereof pursuant to any provision of the Bankruptcy Code), the Lessee, at its own cost and expense, will return the Aircraft by delivering it to the Lessor on the last day of the Term (including the date specified in any court order authorizing such a rejection) or on the Termination Date, as the case may be, at the Lessee's principal maintenance facility in Memphis, Tennessee or such other location within the continental United States (on the Lessee's route structure as in effect on the return date) as determined by the Lessee or such other location mutually agreed upon by the Lessee and the Lessor, and the Airframe shall be fully equipped with two Engines of the same or an improved make and model as were delivered on the Commencement Date (or Replacement Engines), free and clear of all Liens (other than Lessor's Liens), including any rights of third parties under pooling, interchange, overhaul, repair or similar agreement or arrangements, it being understood that both such Engines and Replacement Engines so returned shall be of identical make and model and that any Replacement Engine shall be in at least as good operating condition and have at least the same value and utility as the Engines being replaced, assuming such Engines were in the condition required hereunder. The Lessee will give the Lessor at least thirty (30) (or ten (10) in the case of a return pursuant to Article 17 or in connection with such a rejection) days prior written notice of the place of such return; provided, however, that if the Lessor shall have made the request for storage pursuant to Section 12.06 hereof, the Lessee shall return the Aircraft to the Lessor at the site of the storage. Section 12.02. Return of Engines. If either engine not owned by the Lessor shall be delivered with the Airframe as set forth in Section 12.01 hereof, the Lessee, concurrently with such delivery, will, at its own cost and expense furnish the Lessor with (i) a full warranty bill of sale, in form and substance reasonably satisfactory to the Lessor, with respect to such engine, (ii) an opinion of the Lessee's counsel to the effect that, upon such return, the Lessor will acquire full right, title and interest to such engine free and clear of all Liens (other than Lessor's Liens) and (iii) a certificate as described in Section 11.04(b)(iii) hereof. The Lessee shall take such other action as the Lessor may reasonably request in order that such Replacement Engine shall be duly and properly titled in the Lessor free and clear of all Liens (other than Lessor's Liens), and the Lessor will then transfer to the Lessee, without recourse or warranty (except as to the absence of Lessor's Liens) and subject to the disclaimers set forth in Section 5.01 hereof, all the Lessor's right, title and interest in and to any Engine in lieu of which a Replacement Engine has been delivered pursuant to Section 12.01 hereof, "as is, where is". In connection with such transfer, the Lessee shall prepare and the Lessor shall execute or arrange for the execution of a bill of sale evidencing such transfer and any other document reasonably deemed by the parties to be necessary to convey such right, title and interest to the Lessee and, if applicable, the Lessor will deliver to the Lessee such instrument as the Lessor shall have received from the Indenture Trustee releasing the Aircraft from the Lien of the Indenture. Section 12.03. Return of Manuals. Upon the return of the Aircraft, the Lessee shall deliver to the Lessor (updated to reflect the actual configuration of the Aircraft at the time of return) all logs, manuals, certificates and data (to be in the English language if necessary to permit the registration of the Aircraft or as required by the FAA), and inspection, modification and overhaul records pertaining to the Airframe, Engines or engines, which are then in the Lessee's possession and reasonably required for the further sale or lease by the Lessor of the Aircraft, Engines or engines or which are required to be maintained with respect thereto under applicable rules and regulations of the Aeronautics Authority and under the rules of any other government of registry. Section 12.04. Condition of the Aircraft. (a) Required Condition. The Aircraft when returned to the Lessor shall, at the Lessee's own cost and expense, meet the following requirements: (i) it shall be duly registered in the name of the Lessor or its designee pursuant to the Act unless, at least sixty (60) days prior to the date scheduled for the return of the Aircraft, the Lessor otherwise requests the Lessee to retain the then-existing registration of the Aircraft; (ii) it shall be clean by airline and cargo handling operating standards; (iii) the Airframe shall be returned with the Engines, or any replacements thereto as herein authorized, provided that the Airframe shall have an aggregate of two Engines or engines (as herein authorized under Section 12.02 hereof), all of the same make and model, installed thereon, together with the equipment, accessories or parts installed thereon on the Commencement Date or replacements therefor (as herein authorized) and alterations, modifications and additions thereto made in accordance with the provisions of this Lease; (iv) it shall be in the condition required by Section 7.01(b) hereof, and otherwise be in as good condition as when delivered to the Lessee, ordinary wear and tear excepted; (v) it shall have a currently effective airworthiness certificate issued by the Aeronautics Authority; (vi) it shall comply with any then applicable rules and regulations imposed by the Aeronautics Authority and, without limitation of the foregoing, terminate all airworthiness directives of, and mandatory modifications required by, the Aeronautics Authority (or any government or governmental authority, domestic or foreign, having jurisdiction over the Aircraft) required to be terminated before the end of the Term and each Engine (including any Replacement Engine) shall be serviceable in accordance with the Lessee's Aeronautics Authority approved maintenance program; (vii) it shall be free and clear of all Liens and rights of others (other than the Lessor's Liens) including, without limitation, rights of third parties under pooling, interchange, overhaul, repair and other similar agreements or arrangements referred to in Section 7.02(a) hereof; (viii) each Engine (including any Replacement Engine) shall be serviceable and shall have been continuously maintained in accordance with the Lessee's FAA-approved maintenance program or the maintenance program of the Lessee approved by the aeronautical authority of the country of registry of the Aircraft; (ix) it shall be in a standard cargo configuration; and (x) it shall not be subject to a use prohibition of the character described in clause (iv) of the definition of "Event of Loss"; provided, however, that so long as no Event of Default, Payment Default or Bankruptcy Default exists if such a use prohibition shall have occurred and be continuing and shall be curable by action by the Lessee and the Lessee shall be undertaking such cure promptly, diligently and continuously, using its best efforts, then the Lessee shall have a period of eighteen (18) months from the date of such prohibition to effect such cure and the provisions of Section 12.05 hereof shall apply throughout such period. (b) Remaining Time. On return, (i) the Airframe shall have been maintained under the Lessee's continuous maintenance program approved by the FAA. With respect to maintenance under the Lessee's FAA- approved maintenance program, or the maintenance program of the Lessee approved by the aeronautical authority of the country of registry of the Aircraft, the Lessee shall have treated the Aircraft in a non-discriminatory manner with other A310 aircraft in the Lessee's fleet, and the Aircraft shall be free and clear of all Liens and rights of others other than the Lessor's Liens and shall be in compliance in every material respect with the Lessee's maintenance program as if the Term were not ending. Any and all defects or discrepancies revealed by any of the inspection procedures outlined in Article 14 hereof shall be corrected by Lessee at Lessee's expense prior to the return of the Aircraft to Lessor. Section 12.05. Delayed Return of Aircraft. (a) If the return of the Aircraft to the Lessor in compliance with the terms of this Lease shall be delayed beyond the scheduled end of the Term because of the occurrence of an event described in clause (iii)(B) of the definition of Event of Loss or pursuant to Section 12.04(a)(x), this Lease shall not terminate but shall continue in full force and effect until the earlier to occur of the return of the Aircraft hereunder or the expiration of the six-month period (or such shorter period referred to in said clause (iii)(B) or, in the event that Section 12.04(a)(x) shall be applicable, the expiration of the 18-month period referred to therein) after the scheduled end of the Term, provided that (i) Stipulated Loss Value during such extension shall be an amount determined in accordance with Section 4.01(b) hereof, (ii) the Lessee shall pay on demand, as Basic Rent for each day of such delay and this Lease shall continue, an amount equal to the average per diem of the Basic Rent paid during the Basic Term and the Renewal Rent paid during any Renewal Term or such higher compensation being paid by the Government pursuant to the Civil Reserve Airfleet Program and (iii) neither the Lessee nor any other Person shall use or operate the Aircraft in any manner, except pursuant to the activation of such Civil Reserve Airfleet Program. (b) If, in the case of a delay in return pursuant to paragraph (a) above, at the expiration of the six-month period following the scheduled end of the Term the Aircraft has not been returned to the Lessor, an Event of Loss shall be deemed to have occurred on the date of expiration of such six-month period (or such shorter period referred to in paragraph (a) above) or 18-month period if Section 12.04(a)(x) shall be applicable and on such date (or at such earlier date as an Event of Loss pursuant to clause (iv) of the definition of Event of Loss shall have occurred) the Lessee shall pay to the Lessor all amounts then due hereunder together with the Stipulated Loss Value for the Aircraft determined as of such date; provided, however, that the Lessor shall have the right to waive payment of such Stipulated Loss Value and accept the Aircraft on such date, "as is, where is" (including the Aircraft's being subject to any use prohibition of the character described in clause (iv) of the definition of Event of Loss). (c) In any other situation in which the Aircraft is not returned to the Lessor upon the expiration of the Term (other than due to a purchase of the Aircraft by the Lessee pursuant to this Lease or by a purchaser under Article 10), the Lessee shall pay on demand as Rent for each day of such delay and this Lease shall continue, an amount equal to the higher of (x) the per diem Fair Market Rental for up to six (6) months after the end of the Term and (y) the per diem average of the Basic Rent payable during the Basic Term, or the Renewal Rent payable during any Renewal Term; provided, however, that nothing in this paragraph shall be deemed (i) to relieve the Lessee in any respect from any Default or Event of Default arising from the failure to return the Aircraft at the time or in the condition required by the Operative Agreements or (ii) to permit the Lessee or any sublessee to operate or use the Aircraft otherwise than in connection with effecting such return. For the avoidance of doubt, it is expressly agreed and understood that, except with respect to the 18-month period referred to in Section 12.04(a)(x), no period of delayed return pursuant to this Article 12 shall exceed six (6) months. Section 12.06. Storage. Upon any expiration or termination of this Lease, at the written request of the Lessor given at least 15 days prior to such expiration or termination, the Lessee will arrange, or will cause to be arranged, at no charge to the Lessor (subject, however, to the last sentence of this Section 12.06), storage at a ramp storage facility for the Aircraft at the Lessee's principal maintenance facilities in Memphis, Tennessee or one of the Lessee's other maintenance facilities or at a location selected by the Lessee used as a location for the parking or storage of aircraft for a period of up to 30 days. At the end of such 30 day period, if the Lessor so requests within 10 days before the end of such period, the Lessee will continue to provide such ramp storage facility at such facility or location for an additional 30 days at the Lessor's expense. If the Lessee is required to move the Aircraft from one storage facility to another, such move shall be at the risk and expense of the Lessee during the initial thirty-day storage period, otherwise the maintenance and risk of loss of, and responsibility for obtaining insurance on, the Aircraft shall be the responsibility of the Lessor during any period of storage; provided, however, that the Lessee will, upon written request of the Lessor and at the Lessor's expense, not to exceed the Lessee's incremental cost of such service, obtain insurance for the Aircraft (including, if possible, coverage through its fleet policy). Notwithstanding other provisions of this Section 12.06, in the event of an Event of Default all storage, maintenance, insurance costs and risk of loss for the Aircraft shall be for the account of the Lessee. Section 12.07. Special Markings. The Lessee shall, at the Lessee's cost, completely strip from the interior and the exterior of the Aircraft all insignias and other distinctive markings of the Lessee or any sublessee and repaint the stripped down areas in a workmanlike manner in matching exterior colors. Section 12.08. Lessor's Option to Purchase Parts. At any time after the Lessee has advised the Lessor that it has determined not to renew this Lease or purchase the Aircraft, or the Aircraft is otherwise to be returned to the Lessor, the Lessee shall advise the Lessor of any Part which the Lessee intends, and is permitted, to remove as provided in Section 9.02(b) above, and the Lessor may, at its option, upon 30 days notice to the Lessee, purchase any or all of such Parts from the Lessee upon the expiration of the Term at their then Fair Market Value determined in accordance with the provisions of Section 4.03 hereof. Upon any return of the Aircraft pursuant to this Article 12, if the Lessor does not elect to exercise its option under this Section 12.08, the Lessee will, at its own cost and expense, remove such Parts described in subparagraph (i), (ii), or (iii) to Section 9.02(b) as the Lessor may request. ARTICLE 13 INSURANCE Section 13.01. Public Liability and Property Damage Liability Insurance. (a) Public Liability and Property Damage Liability Insurance. The Lessee, at its own cost and expense, will maintain or cause to be maintained, comprehensive aircraft liability insurance including, without limitation, passenger legal liability and property damage liability insurance and cargo legal liability in such amounts, against such risks (including, without limitation, contractual liability and war risk and allied perils liability), with such retentions as the Lessee customarily maintains with respect to similar aircraft and engines which comprise the fleet of the Lessee (subject to the limitations set forth in Section 13.06) hereof, and with such insurers (which shall be insurers of recognized responsibility), and such insurance against such other risks as is usually carried by similar corporations engaged in the same or similar business and similarly situated as the Lessee and owning or operating aircraft and engines similar to the Aircraft and Engines; provided that such insurance shall not be in amounts less than the amount per occurrence as shall have been agreed to on the Closing Date by the Owner Participant, the Lessee and the Indenture Trustee, unless and only so long as the Aircraft is not operated and appropriate insurance for the Aircraft on the ground is maintained; provided that in no event shall the limits of liability for all public liability insurance be less than the amount, per occurrence, as shall have been agreed to on the Closing Date by the Owner Participant, the Lessee and the Indenture Trustee, unless and only so long as the Aircraft is not operated and appropriate insurance for the Aircraft on the ground is maintained. (b) Government Indemnification. Notwithstanding Section 13.01(a) hereof, in the event of the requisition for use by the Government of the Airframe or the Airframe and the Engines or engines then installed on the Airframe, the Lessee shall maintain throughout the period of such requisition such insurance as would otherwise be required under this Section 13.01; provided that the Lessor shall accept, in lieu of such insurance coverage, written indemnification or insurance from the Government which is substantially the same as otherwise required under this Article 13. (c) Policy Terms. Any policy of insurance carried and maintained in accordance with this Section 13.01, and any policy taken out in substitution or replacement for any such policy subject to the terms, conditions and limitations thereof, shall: (i) name or be amended to name the Lessor in its individual capacity and as owner of the Aircraft, the Owner Participant and the Indenture Trustee, in its capacity as such, and each of their respective Affiliates, successors, permitted assigns and the respective officers, directors, employees, servants and agents of the foregoing in their respective capacities as such as additional insureds (hereinafter in this paragraph (c) sometimes referred to as "Additional Insured"); (ii) provide that, in respect of the interest of any Additional Insured in such policies, the insurance shall not be invalidated by any action or inaction of the Lessee or any Additional Insured as defined under the policy of insurance required under this Section 13.01 (other than such Additional Insured) and shall insure each Additional Insured regardless of any breach or violation of any warranty, declaration or condition contained in such policies by the Lessee or any other Additional Insured as defined under the policy of insurance required under this Section 13.01 (other than such Additional Insured); (iii) provide that if such insurance is canceled for any reason, or any substantial change is made in the policies which adversely affect the scope of the coverage required herein, or if such insurance is allowed to lapse for nonpayment of premium, such cancellation, change or lapse shall not be effective as to any Additional Insured for thirty (30) days (except in the case of war risk coverage in which event the applicable period shall be seven (7) days or such other period as may be customary) after receipt by each such Additional Insured of written notice from such insurers of such cancellation, change or lapse; (iv) provide that no Additional Insured shall have any obligation or liability for premiums or other payments, if any, in connection with such insurance; (v) provide that the insurers shall waive any rights to be subrogated to the rights of each Additional Insured, to the extent that the Lessee has waived its rights under this Lease or the other Operative Agreements; provided that the exercise by insurers of rights of subrogation derived from rights retained by the Lessee shall not, in any way, delay payment of any claim that would otherwise be payable by such insurers but for the existence of rights of subrogation derived from rights retained by the Lessee; (vi) provide that such insurer shall waive the right of such insurer to any set-off or counterclaim or any other deduction, whether by attachment or otherwise, in respect of any liability of any Additional Insured; (vii) provide that all of the provisions of such policy shall operate in the same manner as if there were a separate policy covering each Additional Insured; provided, that such policies shall not operate to increase any insurer's limit of liability; and (viii) be primary, without right of contribution from any other insurance which is carried by any Additional Insured with respect to its interest in the Aircraft. Section 13.02. Insurance Against Loss or Damage to Aircraft and Engines. (a) Hull Insurance. The Lessee, at its own cost and expense, shall maintain or cause to be maintained in effect, with insurers of recognized responsibility, all-risk ground and flight aircraft hull insurance covering the Aircraft and all-risk coverage with respect to any Engines and Parts while temporarily removed from the Aircraft and not replaced by similar Engines or Parts, including in each case war-risk and allied perils, hijacking (air piracy) and governmental confiscation and expropriation insurance (except, with respect to governmental confiscation and expropriation, in the country of registry with such retentions (subject to the limitations set forth in Section 13.06 hereof) and in such form and amounts as the Lessee customarily maintains with respect to the aircraft in the Lessee's fleet of the same type and model and operated on the same routes as the Aircraft (except that the Lessee shall be required to maintain war-risk, hijacking (air piracy) and governmental confiscation and expropriation insurance (except, with respect to governmental confiscation and expropriation, in the country of registry if the Aircraft is operated on routes where the custom is for major international Air Carriers flying comparable routes to carry such insurance), provided that such insurance shall at all times while the Aircraft is subject to this Lease and the Lien of the Indenture be for an amount not less than an amount equal to the Stipulated Loss Value for the Aircraft from time to time. (b) Policy Terms. Any policies carried and maintained in accordance with this Section 13.02 and any policies taken out in substitution or replacement for any such policies subject to the terms, conditions and limitations thereof shall: (i) name or be amended to name the Lessor in its individual capacity and as owner of the Aircraft, the Owner Participant and the Indenture Trustee and each of their respective Affiliates, successors, permitted assigns and the respective officers, directors, employees, servants and agents of the foregoing, in their respective capacities as such, as additional insureds (hereinafter in this paragraph (b) sometimes referred to as "Additional Insured"), and the Lessor (or, so long as the Indenture as it relates to the Aircraft shall not have been discharged, the Indenture Trustee) as sole loss payee (hereinafter in this paragraph (b) sometimes referred to as "Loss Payee"); (ii) provide with respect to coverage provided under this Section 13.02, that (i) in the event of a loss involving proceeds in excess of $5,000,000 (or in the case of a loss while the Aircraft is in the possession of a permitted sublessee or transferee, $2,500,000), the proceeds in respect of such loss up to an amount equal to the Stipulated Loss Value for the Aircraft shall be payable to the Lessor (or, so long as the Indenture shall not have been discharged, the Indenture Trustee), it being understood and agreed that in the case of any payment to the Lessor (or the Indenture Trustee) otherwise than in respect of an Event of Loss, the Lessor (or the Indenture Trustee) shall, unless a Payment Default or an Event of Default shall have occurred and be continuing, upon receipt of evidence satisfactory to it that the damage giving rise to such payment shall have been repaired or that such payment shall then be required to pay for repairs then being made, pay the amount of such payment to the Lessee or its order, and (ii) the entire amount of any loss involving proceeds in the aggregate of $5,000,000 (or in the case of a loss while the Aircraft is in the possession of a permitted sublessee or transferee, $2,500,000) or less or the amount of any proceeds of any loss in excess of the Stipulated Loss Value for the Aircraft shall be paid to the Lessee or its order unless a Payment Default or an Event of Default shall have occurred and be continuing and the insurers have been notified thereof by the Lessor or the Indenture Trustee (and if the insurers have notice of a Payment Default or Event of Default, such payment shall be made to the Indenture Trustee); (iii) provide that if such insurance is canceled for any reason or any substantial change is made in the policies which adversely affects the scope of the coverage required herein, or if such insurance is allowed to lapse for nonpayment of premium, such cancellation, change or lapse shall not be effective as to any Additional Insured or the Loss Payee for thirty (30) days (except in the case of war-risk coverage in which event the applicable period shall be seven (7) days or such other period as may be customary) after receipt by each such Additional Insured or Loss Payee of written notice from such Insurer of such cancellation, change or lapse; (iv) provide that, in respect of the interest of the Lessor (in its individual capacity and as the Owner Trustee), the Owner Participant or the Indenture Trustee in their respective capacities as such in such policies the insurance shall not be invalidated by any action or inaction of the Lessee, any Additional Insured or the Loss Payee (other than any action or inaction of such Additional Insured or the Loss Payee) and shall insure the Lessor (in its individual capacity and as Owner Trustee), the Owner Participant or the Indenture Trustee, regardless of any breach or violation of any warranty, declaration or condition in such policies by the Lessee or any other Insured as defined under the policy of insurance required under this Section 13.02; (v) provide that the insurers shall waive any rights of subrogation against the Lessor (in its individual capacity and as Owner Trustee), the Owner Participant or the Indenture Trustee, to the extent that the Lessee has waived its rights under this Lease; provided that the exercise by insurers of rights of subrogation derived from rights retained by the Lessee shall not, in any way, delay payment of any claim that would otherwise be payable by such insurers but for the existence of rights of subrogation derived from rights retained by the Lessee; (vi) provide that such insurer shall waive any right of such insurer to any set-off or counterclaim or any other deduction, whether by attachment or otherwise, in respect of any liability of any Additional Insured or Loss Payee; (vii) be primary and without rights of contribution from any other insurance which is carried by any Additional Insured or Loss Payee with respect to its interest in the Aircraft; and (viii) provide that no Additional Insured or Loss Payee shall have any obligation or liability for premiums or other payments, if any, in connection with such insurance. Section 13.03. Application of Insurance Proceeds. (a) Generally. All insurance proceeds (other than proceeds from policies carried by the Lessor, the Owner Participant or the Indenture Trustee) received under policies described in Section 13.02 hereof as the result of the occurrence of an Event of Loss with respect to the Airframe or an Engine will be applied as follows: (i) if such proceeds are received with respect to the Airframe or with respect to the Airframe and the Engines or engines then installed on the Airframe, so much of such proceeds as shall not exceed the amounts required to be paid by the Lessee pursuant to said Section 11.02 hereof shall be applied in reduction of the Lessee's obligation to pay such amounts if not already paid by the Lessee, or if already paid by the Lessee, shall be applied to reimburse the Lessee for its payment of such amounts, provided that no Payment Default or Event of Default shall have occurred and be continuing, and the balance, if any, of such proceeds remaining will be paid to the order of the Lessee; if and so long as the foregoing proviso is not satisfied, such proceeds shall be held pursuant to Section 23.01 hereof as security for the Lessee's obligations hereunder and under the Participation Agreement; or (ii) if such proceeds are received with respect to an Engine not then installed on the Airframe and not replaced by an Engine or engine under the circumstances contemplated by Section 11.04 hereof, all such proceeds shall be paid to the Indenture Trustee (unless the Indenture has been discharged in which case paid to the Lessor) for disbursement to the order of the Lessee, after the Lessee shall have fully performed the terms of Section 11.04 hereof with respect to the Event of Loss for which such proceeds are paid, provided that no Payment Default or Event of Default shall have occurred and be continuing; if and so long as the foregoing proviso is not satisfied, such proceeds shall be held pursuant to Section 23.01 hereof as security for the Lessee's obligations hereunder and under the Participation Agreement. (b) Payment if no Event of Loss. The insurance proceeds of any property damage loss not constituting an Event of Loss with respect to the Aircraft, the Airframe or an Engine will be applied in payment (or to reimburse the Lessee) for repairs or for replacement property in accordance with Articles 7 and 8 hereof, if not already paid for by the Lessee, and any balance remaining after compliance with said Articles 7 and 8 hereof with respect to such loss shall be paid to the order of the Lessee, provided that no Payment Default or Event of Default shall have occurred and be continuing; if and so long as the foregoing proviso is not satisfied, such proceeds shall be held pursuant to Section 23.01 hereof as security for the Lessee's obligations hereunder and under the Participation Agreement. (c) Information. If any Additional Insured becomes subject to any claim covered by any insurance policy maintained pursuant to this Article 13, the Lessee shall make available any information required by such Additional Insured in connection with such claim. Section 13.04. Reports. On or before the Commencement Date and thereafter annually on or before the scheduled expiration date for such policy during the Term (the "Expiration Date"), an aviation insurance broker will furnish to the Lessor and the Indenture Trustee a signed report, stating the types of coverage and limits carried and maintained on the Aircraft and certifying that such insurance complies with the terms and conditions of this Lease. The Lessee will cause its aviation insurance broker to advise the Lessor, the Owner Participant and the Indenture Trustee in writing promptly of any default in the payment of any premium and of any other act or omission on the part of the Lessee of which it has knowledge and which might invalidate, cause cancellation of or render unenforceable all or any part of any insurance carried by the Lessee with respect to the Aircraft. The Lessee will cause such insurance broker to agree to advise the Lessor, the Owner Participant and the Indenture Trustee in writing if and when it becomes evident to such broker that any insurance policy carried and maintained on the Aircraft pursuant to this Article 13 will not be renewed at the Expiration Date. The Lessee will also cause such insurance broker to deliver to the Lessor, the Owner Participant and the Indenture Trustee on or prior to the date of expiration of any insurance policy referenced in a previously delivered certificate of insurance, a new certificate of insurance, confirming to such parties that such insurance as certified on the Commencement Date continues in full force and effect. If the Lessee shall fail to maintain insurance as required, the Lessor may, at its option, provide such insurance, and in such event, the Lessee shall, upon demand, reimburse the Lessor, as Supplemental Rent, for the cost of such insurance; provided, however, that no exercise of said option shall affect the provisions of this Lease, including the provisions that failure by the Lessee to maintain the prescribed insurance shall constitute an Event of Default or otherwise constitute a waiver of any other rights the Lessor may have against the Lessee. Section 13.05. Lessor's Insurance. The Lessor may insure the Airframe or any Engine at its own cost and expense, including insuring the Aircraft for amounts in excess of the Stipulated Loss Value of the Aircraft, provided that any insurance so maintained by the Lessor shall not result in a reduction of coverage or amounts payable under insurance required or permitted to be maintained by the Lessee under this Article 13 or increase the cost to the Lessee of maintaining such insurance; provided further, that any insurance policies of the Lessor insuring the Airframe or any Engine shall provide for a release to the Lessee of any and all salvage rights in and to the Airframe or any Engine. Section 13.06. Self-Insurance. The Lessee may self-insure the risks required to be insured against by Sections 13.01 and 13.02 hereof in such reasonable amounts as are then applicable to other aircraft or engines of the Lessee of value comparable to the Aircraft, but in no case shall such self-insurance with respect to all aircraft in the Lessee's fleet in aggregate exceed for any 12-month year an amount equal to the lesser of (i) 50% of the highest insured value of any single aircraft in the Lessee's fleet and (ii) 1.5% of the average aggregate insured value from time to time of the Lessee's entire aircraft fleet provided that a standard deductible per occurrence per aircraft not in excess of the amount customarily allowed as a deductible in the industry shall be permitted in addition to the above-mentioned self-insurance. The foregoing shall not permit Lessee to discriminate as between insurance coverage on the Aircraft and insurance which Lessee maintains with respect to similar aircraft owned or operated by the Lessee operating on similar routes in similar locations. ARTICLE 14 INSPECTION Section 14.01. Right of Inspection. At all times following the Commencement Date, the Lessor, the Indenture Trustee (if the Indenture is still in effect), and the Owner Participant or their respective authorized representatives, at such party's expense may at any reasonable times and upon reasonable prior notice, inspect the Aircraft, the books and records of the Lessee relating to the maintenance of the Aircraft, and such other information as they may reasonably request, and may make copies of those parts of such books, records and other information as are not deemed to be confidential by the Lessee. Within 365 days before the end of the Term, the Lessee shall upon a request from the Lessor (i) advise the Lessor, the Owner Participant and the Indenture Trustee (if the Indenture is still in effect) of any major maintenance visits scheduled during such 365-day period and shall permit the Lessor, the Indenture Trustee (if the Indenture is still in effect) and the Owner Participant or their respective authorized representatives to observe such major maintenance visit and (ii) cooperate with the Lessor generally in making the Aircraft available for inspection by the Lessor's prospective purchasers or lessees, in all such cases, so long as such observation or inspection does not interfere with the Lessee's operation and maintenance of the Aircraft. Section 14.02. No Obligation to Inspect. Neither the Lessor, the Indenture Trustee, nor the Owner Participant shall have any duty to make any inspection of the Aircraft and no such party shall incur any liability or obligation by reason of not making any such inspection. ARTICLE 15 ASSIGNMENT Section 15.01. Lessee's Right to Assign. The Lessee shall not, and shall have no authority or power to assign, convey or sublease any of its rights under this Lease without the prior written consent of the Lessor except (i) as expressly provided in Section 7.02 hereof, or in the case of any requisition by the Government referred to in Section 7.01 of this Lease, or (ii) to a wholly-owned subsidiary of the Lessee which shall be a certificated Air Carrier. Any such assignment, conveyance or sublease shall in no way relieve the Lessee from any obligation under any or any other Operative Agreement or any written agreement of the Lessee entered into in connection with the transactions contemplated by the Operative Agreements, which shall be and remain obligations of the Lessee. The Lessor agrees that it will not assign or convey its right, title and interest in and to this Lease or the Aircraft except as contemplated by or provided in this Lease, the Trust Agreement, the Indenture, the Agreement to Lease or the Participation Agreement. The terms and provisions of this Lease shall be binding upon and inure to the benefit of the Lessor and the Lessee and their respective successors and assigns, and shall inure, to the extent expressly provided herein, to the direct benefit of, and in accordance with the provisions of the Indenture and the Participation Agreement shall be enforceable by the Indenture Trustee, the Lessor and their respective successors and assigns. Section 15.02. Citizenship. The Lessee will at all times be a duly certificated Air Carrier under the Act. ARTICLE 16 EVENTS OF DEFAULT Section 16.01. Events of Default. Each of the following events shall constitute an Event of Default, whether any such event shall be voluntary or involuntary or come about or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body: (a) the Lessee shall fail to make any payment of Basic Rent, Renewal Rent, Stipulated Loss Value or Termination Value, as the case may be, within five (5) Business Days after receipt of written notice from the Lessor stating that such payment is overdue; or (b) the Lessee shall fail to make any payment of Supplemental Rent (other than amounts described in clause (a) above) within ten (10) days after the Lessee has received written notice from the Person entitled to receive such payment stating that such payment is due (except that with respect to any failure to pay Excepted Payments for such period, such failure shall constitute an Event of Default at the discretion of the Owner Participant); or (c) (i) the Lessee shall fail to procure, carry and maintain insurance on or in respect of the Aircraft at any time in accordance with the provisions of Article 13 hereof or the provisions of any Ancillary Agreement to which the Lessee is a party or such insurance lapses or is canceled, provided that no such lapse or cancellation shall constitute an Event of Default until the earlier of 30 days (seven days or such shorter time as may be standard in the industry with respect to war risk coverage) after receipt by the Lessor of written notice of such lapse or cancellation or the date that such lapse or cancellation is effective as to the Lessor and provided further, that such failure for a period of not more than 30 days shall not constitute an Event of Default as long as the Aircraft is insured as required by Section 13.02 and by any Ancillary Agreement to which the Lessee is a party while on the ground and not operated or (ii) the Aircraft shall be operated at any time when public liability insurance required under Section 13.01 hereof shall not be in effect (it being understood that the Lessee is not required to maintain such insurance under Section 13.01 hereof while the indemnification or insurance referred to in the proviso to Section 13.01(b) hereof is in effect); or (d) the Lessee shall fail to perform or observe any other covenant, condition or agreement to be performed or observed by it under any Operative Agreement (excluding any covenant in the Tax Indemnity Agreement which could give rise to an obligation on the part of the Lessee to indemnify thereunder (regardless of Section 26.08 hereof), but subject to Section 16.01(b) hereof) or any other written agreement of the Lessee entered into in connection with the transactions contemplated by the Operative Agreements and such failure shall continue unremedied for a period of thirty (30) days from the date on which the Lessee has knowledge of the failure or the Lessee shall have received written notice from the Lessor, the Indenture Trustee or the Owner Participant of such failure, provided, that in the event such failure is curable and so long as (but for no longer than 150 days after such 30-day period) the Lessee shall have promptly undertaken such cure after the earlier of such knowledge or notice thereof which undertaking shall be diligently and continuously pursued using the Lessee's best efforts, such failure shall not constitute an Event of Default; provided, further, that failure of the Lessee to maintain the registration of the Aircraft under the Act pursuant to the Lessee's covenants and agreement in Section 6.02(b) of the Participation Agreement and in Section 7.01(a) of this Lease, when the lapse of such registration is solely because the Owner Participant or the Lessor has ceased to be a Citizen of the United States, or when the lapse of such registration is solely because the Owner Participant has revoked control rights pursuant to clause (iii) of Section 7.07 of the Trust Agreement or other similar arrangements designed to permit such registration, shall not constitute a Default or an Event of Default; or (e) an order for relief shall be entered in respect of the Lessee by a court having jurisdiction in the premises in an involuntary case under the federal bankruptcy laws as now or hereafter in effect; or the Lessee shall consent to the appointment of a custodian, receiver, trustee or liquidator of itself or of a substantial part of its property; or the Lessee is not paying, or shall admit in writing its inability to pay, its debts generally as they come due or shall make a general assignment for the benefit of creditors; or the Lessee shall file, or the Board of Directors of the Lessee shall authorize the filing of, or grant one or more persons authority (at their discretion) to make a filing for, a voluntary petition in bankruptcy or a voluntary petition or an answer seeking reorganization in a proceeding under any bankruptcy, insolvency or similar laws (as now or hereafter in effect) or an answer admitting the material allegations of a petition filed against the Lessee in any such proceeding; or the Lessee shall file, or the Board of Directors of the Lessee shall authorize the Lessee to, or grant one or more persons authority (at their discretion) to, seek relief by voluntary petition, answer or consent, under the provisions of any other or future bankruptcy or other similar law providing for the reorganization or winding-up of corporations, or providing for an agreement, composition, extension or adjustment with its creditors; or (f) an order, judgment or decree shall be entered by any court of competent jurisdiction appointing, without the consent of the Lessee, a custodian, receiver, trustee, or liquidator of the Lessee or of any substantial part of its property, or sequestering any substantial part of the property of the Lessee, or granting any other relief in respect of the Lessee under the federal bankruptcy laws or other insolvency laws, and any such order, judgment or decree of appointment or sequestration shall remain in force undismissed or unvacated for a period of sixty (60) days after the date of its entry; or (g) a petition against the Lessee in a proceeding under the federal bankruptcy law or other insolvency laws (as now or hereafter in effect) shall be filed and shall not be withdrawn or dismissed within sixty (60) days, or under the provisions of any law providing for reorganization or winding-up of corporations which may apply to the Lessee, any court of competent jurisdiction shall assume jurisdiction, custody or control of the Lessee or of any substantial part of its property and such jurisdiction, custody or control shall remain in force unrelinquished or unterminated for a period of sixty (60) days; or (h) any representation or warranty made by the Lessee in this Lease or in the Participation Agreement or in any document or certificate furnished by the Lessee in connection with or pursuant to this Lease or the Participation Agreement (except for the Tax Indemnity Agreement (regardless of Section 26.08 hereof)) shall at any time prove to have been incorrect at the time made in any respect material to the transactions contemplated by this Lease and, if originally made by the Lessee in good faith, shall remain material and unremedied for a period of thirty (30) days after a Responsible Officer of the Lessee shall have actual knowledge or the Lessee shall have received written notice of such misstatement. ARTICLE 17 REMEDIES Section 17.01. Remedies Upon Lessee's Default. (a) Remedies Generally. Upon the occurrence of any Event of Default and at any time after such occurrence so long as the same shall be continuing, the Lessor may, at its option, declare this Lease to be in default (except that no such declaration shall be required in the case of an Event of Default pursuant to paragraphs (e), (f) or (g) of Section 16.01 hereof), and at any time thereafter the Lessor may do, and the Lessee shall comply with, one or more of the following, as the Lessor in its sole discretion shall elect, to the extent permitted by, and subject to compliance with, any mandatory requirements of applicable law then in effect: (i) Demand in writing that the Lessee shall, and upon such written demand the Lessee shall, at the Lessee's own cost and expense, return promptly to the Lessor the Airframe and Engines as the Lessor may demand in the manner and condition required by, and otherwise in accordance with all of the provisions of, Article 12 (provided that, unless the Lessor shall require otherwise, the Aircraft shall be returned within the continental United States), or the Lessor, at its option, may enter upon the premises where the Airframe or any Engine is located or believed to be located and take immediate possession of and remove the Airframe or any Engine (together with any engine which is not an Engine but is installed on the Airframe, subject to all of the rights of the owner, lessor, lien holder or secured party of such engine) without the necessity for first instituting proceedings, or by summary proceedings or otherwise, all without liability of the Lessor to the Lessee for or by reason of such entry or taking of possession, whether for the restoration of damage to property caused by such action or otherwise; (ii) With or without taking possession thereof, sell or otherwise dispose of the Airframe and Engines, at public or private sale and with or without advertisement or notice to the Lessee, as the Lessor may determine, and the Lessor may hold the Lessee liable for any installment of Basic Rent and Renewal Rent due on or before the date of such sale of the Aircraft (and, if such Basic Rent or Renewal Rent is payable in arrears, the pro rata portion of the installment of such Basic Rent or Renewal Rent due on the next succeeding Rent Payment Date in respect of any period commencing on the immediately preceding Rent Payment Date to the date of such sale), or hold, use, operate, lease to others or keep idle all or any part of the Airframe or any Engine as the Lessor, in its sole discretion, may determine, in any such case free and clear of any rights of the Lessee except as otherwise set forth in this Article 17, and without any duty to account to the Lessee with respect to such action or inaction or for any proceeds except to the extent required by Section 17.01(a)(iv) hereof; in the event the Lessor elects to exercise its rights under said Section, and in connection with any sale of the Aircraft or any part thereof pursuant to this Article 17, the Lessor, the Owner Participant or the Indenture Trustee, may bid for and purchase such property; (iii) Whether or not the Lessor shall have exercised or shall later at any time exercise any of its rights under Section 17.01(a)(i) or 17.01(a)(ii) hereof, the Lessor, by written notice to the Lessee specifying a payment date not earlier than 10 days from the date of such notice, may demand that the Lessee pay to the Lessor, and the Lessee shall pay to the Lessor on the payment date specified in such notice, as liquidated damages for loss of a bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent due on Rent Payment Dates occurring after the payment date specified in such notice), any installment of Basic Rent or Renewal Rent due on or before, and any Supplemental Rent due on or before such payment date, plus an amount equal to the excess, if any, of the Stipulated Loss Value for the Aircraft, computed as of the Stipulated Loss Value Determination Date on or next preceding the payment date specified in such notice over the Fair Market Value of the Aircraft, computed as of the Stipulated Loss Value Determination Date on or next preceding the payment date specified in such notice on an "as- is, where-is" basis and assuming a sale on a liquidation basis (and calculated assuming that the Aircraft will be in storage for a period of twelve months unless the Lessor has arranged for a sale or a new lease of the Aircraft scheduled to be completed or to commence within such twelve month period, in which case such sale or new lease shall be taken into account in determining such Fair Market Value) together with interest, to the extent permitted by applicable law, at the Past Due Rate on the amount of such Stipulated Loss Value, from the applicable Stipulated Loss Value Determination Date to the date of actual payment of such amount; provided, however, that if (and in any event prior to the time for payment hereunder) the Lessor is unable within a reasonable period of time to recover possession of the Aircraft, or any portion thereof, pursuant to clause (i) above unencumbered by this Lease and free and clear of all Liens (other than Lessor's Liens), Fair Market Value of the Aircraft or such portion shall, at the option of the Lessor to the extent legally enforceable, be zero and after payment in full by the Lessee of the amount specified above and all other amounts due from the Lessee under this Lease and the other Operative Agreements, the Lessor shall promptly transfer (without recourse or warranty other than as to the absence of the Lessor's Liens and subject to the disclaimers set forth in Section 5.01 hereof) all of its right, title and interest in the Aircraft or such portion, to the Lessee and the Lessee shall, as promptly as practicable thereafter sell the Aircraft and remit to the Lessor the excess, if any, of the net sales proceeds (after deducting costs of sale incurred by the Lessee) over such Stipulated Loss Value; (iv) In the event the Lessor, pursuant to Section 17.01(a)(ii) hereof, shall have sold the Airframe and/or any Engine, the Lessor, in lieu of exercising its rights under Section 17.01(a)(iii) hereof, may, if it shall so elect, demand that the Lessee pay the Lessor, and the Lessee shall pay to the Lessor, on the date of such sale, as liquidated damages for loss of a bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent due after the date on which such sale occurs) any unpaid Basic Rent or Renewal Rent due on or before the date on which such sale occurs, and any Supplemental Rent due on or before the date on which such sale occurs, plus an amount equal to the excess, if any, of (A) the Stipulated Loss Value for the Aircraft, computed as of the Stipulated Loss Value Determination Date on or next preceding the sale date, over (B) the net proceeds of such sale (after deduction of all of the Lessor's costs and expenses of such sale, including, without limitation, sales or transfer taxes, costs of storage, overhaul, maintenance, preparation and transportation of the Aircraft and brokers' and attorneys' fees) together with interest, to the extent permitted by applicable law, at the Past Due Rate, on the amount of such excess from the date of such sale to the date of actual payment by the Lessee; (v) Proceed by appropriate court action to enforce the terms of this Lease or to recover damages for its breach; (vi) Terminate or rescind this Lease as to the Airframe or any or all of the Engines; or (vii) Exercise any other right or remedy which may be available to the Lessor under applicable law. (b) Cost of Exercise of Remedies. In addition, the Lessee shall be liable, except as otherwise provided above, for any and all unpaid Rent due before, after or during the exercise of any of the Lessor's remedies, for all amounts payable by the Lessee under the Participation Agreement before or after any termination hereof, and for all reasonable legal fees and other costs and expenses incurred by the Lessor by reason of the occurrence of any Event of Default or the exercise of the Lessor's remedies, including, without limitation, all costs and expenses incurred in connection with the return of the Airframe or any Engine in accordance with the terms of Article 12 or in placing the Airframe or Engines in the condition and airworthiness required by such Article or in connection with any use, operation, maintenance, storage, or leasing carried out as part of such exercise. Section 17.02. Cumulative Remedies. Except as otherwise provided, no remedy referred to in this Article 17 is intended to be exclusive, but each shall be cumulative and in addition to any other remedy referred to above or otherwise available to the Lessor at law or in equity; and the exercise or beginning of exercise by the Lessor of any one or more of such remedies shall not preclude the simultaneous or later exercise by the Lessor of any or all of such other remedies. Section 17.03. Waiver. No express or implied waiver by the Lessor of any Event of Default shall in any way be, or be construed to be, a waiver of any future or subsequent Event of Default. To the extent permitted by applicable law, the Lessee waives any rights now or in the future conferred by statute or otherwise which may require the Lessor to sell, lease or otherwise use the Airframe or either Engine in mitigation of the Lessor's damages or which may otherwise limit or modify any of the Lessor's rights or remedies under this Article 17. The Lessor's access to the Aircraft is of the essence and shall not be impaired. Section 17.04. Lessor's Right to Perform for Lessee. If the Lessee fails to make any required payment of Rent or fails to perform or comply with any of its agreements contained in this Lease, whether or not such failure shall constitute an Event of Default hereunder, the Lessor may (but shall not be obligated to) make such payments or perform or comply with such agreement, and the amount of such payment and the amount of the reasonable costs and expenses of the Lessor incurred in connection with such payment or the performance of or compliance with such agreement, together with interest (to the extent permitted by applicable law) at the Past Due Rate from the date of the making of such payment or the incurring of such costs and expenses by the Lessor to the date of payment of such Rent or other amount by the Lessee, shall be deemed Supplemental Rent payable by the Lessee upon demand. No such payment or performance by the Lessor shall be deemed to waive any Default or Event of Default or relieve the Lessee of its obligations hereunder. ARTICLE 18 COVENANT OF QUIET ENJOYMENT Section 18.01. Quiet Enjoyment. So long as no Event of Default shall have occurred and be continuing, each of the parties hereto covenants that neither it nor any other person lawfully claiming through it (other than the holder of a Lien which the Lessee is obligated to discharge pursuant to Article 6 hereof) shall interfere with the Lessee's right to quietly enjoy the Aircraft without hindrance or disturbance by it or any such other Person. ARTICLE 19 FURTHER ASSURANCES; FINANCIAL INFORMATION Section 19.01. Further Assurances. The Lessee will cause each of this Lease, the Trust Agreement and the Indenture, and upon the execution and delivery of each Lease Supplement and Indenture Supplement will cause each of them, to be duly filed for recordation in accordance with the Act and will maintain the recordation of the Indenture until the Lien of the Indenture shall have been discharged pursuant to the terms of the Indenture. In addition, the Lessee will, at the Lessee's own cost and expense, promptly and duly execute and deliver to the Lessor, the Owner Participant and the Indenture Trustee such further documents and assurances to carry out the intent and purpose of this Lease and the Indenture and to establish and protect the rights and remedies created or intended to be created in favor of the Lessor under this Lease, and of the Owner Participant under the Trust Agreement and of the Indenture Trustee under the Indenture, including, without limitation, the execution and filing of Uniform Commercial Code financing and continuation statements, the execution and delivery of supplements and amendments to this Lease and to the Indenture, in recordable form, subjecting to this Lease and the Indenture, and any Replacement Engine delivered by the Lessee pursuant to Section 11.04 and the recording and filing of counterparts of this Lease and the Indenture in accordance with the laws of such jurisdictions as the Lessor or the Indenture Trustee may from time to time deem advisable. The foregoing does not impose upon the Lessor any additional liabilities not otherwise contemplated by this Lease. ARTICLE 20 NET LEASE Section 20.01. Nature of Lease. (a) This Lease is a net lease, it being the intention of the parties hereto with respect to the Aircraft that the obligations of the Lessee to pay all costs and expenses of every character, whether foreseen or unforeseen or ordinary or extraordinary, in connection with the use, operation, maintenance, repair and reconstruction of the Airframe and each Engine by the Lessee, including, without limitation, the costs and expenses particularly set forth in this Lease, shall be absolute and unconditional, shall be separate and independent covenants and agreements, and shall continue unaffected unless and until the covenants have been terminated pursuant to an express provision of this Lease. Without limiting any other rights of the Lessee hereunder or under the other Operative Agreements, the obligation to pay Rent and all amounts payable by the Lessee under this Lease or the Participation Agreement shall be absolute and unconditional and (except as otherwise expressly provided with respect to Supplemental Rent) shall be paid without notice or demand and such obligation shall not be affected by any circumstance, including, without limitation: (i) any setoff, counterclaim, recoupment, defense or other right which the Lessee may have against the Lessor, the Owner Participant, any Holder, the Indenture Trustee or anyone else for any reason (including, without limitation, any breach by the Lessor, the Owner Participant, the Indenture Trustee or any Holder of their respective representations, warranties, agreements or covenants contained in any of the Operative Agreements); (ii) any defect in the title, airworthiness, registration, eligibility for registration under the Act (and the regulations thereunder) or under any of the laws or regulations of any other country of registry of the Aircraft, condition, design, operation, merchantability or fitness for use of, suitability for a particular purpose of, or any damage to or loss or destruction of, the Aircraft or any portion thereof, or any interruption or cessation in the use or possession of the Aircraft by the Lessee or any sublessee for any reason including, without limitation, by reason of governmental action; (iii) any insolvency, bankruptcy, reorganization or similar case or proceedings by or against the Lessor, the Lessee, the Indenture Trustee or the Owner Participant or any other Person; or (iv) any other circumstance, happening or event whatsoever, whether or not unforeseen, or similar to any of the foregoing. (b) To the extent permitted by applicable law, the Lessee waives any and all rights which it may now have or which at any time it may have conferred upon it, by statute or otherwise, to terminate, cancel, quit, rescind or surrender this Lease, the Airframe, or any Engine or part hereof, other than in accordance with the terms hereof. (c) Except as expressly provided herein, each payment of Rent made by the Lessee shall be final as to the Lessor and the Lessee, and the Lessee will not seek to return nor to recover, abate, suspend, defer or reduce all or any part of any such payment of Rent from the Lessor or from the Indenture Trustee for any reason. ARTICLE 21 SUCCESSOR LESSOR Section 21.01. Successor Lessor. The Lessee agrees that in the case of the appointment of any successor trustee for the Lessor pursuant to the terms of the Participation Agreement, such successor trustee shall, upon written notice by such successor to the Lessee, succeed to all the rights, powers and title of the Lessor under this Lease and shall be deemed to be the Lessor and the owner of the Aircraft for all purposes of this Lease without the necessity of any consent or approval by the Lessee and without in any way altering the terms of this Lease or the Lessee's obligations. One such appointment and designation of a successor trustee shall not exhaust the right to appoint and designate further successor trustee pursuant to the Participation Agreement, but such right may be exercised repeatedly so long as this Lease shall be in effect. ARTICLE 22 SECURITY FOR LESSOR'S OBLIGATIONS Section 22.01. Security for Lessor's Obligations to Holders. In order to secure the indebtedness evidenced by the Certificates the Indenture provides, among other things, for the assignment by the Lessor to the Indenture Trustee of this Lease and the Lease Supplement and for the creation of a first mortgage and security interest in favor of the Indenture Trustee on the Aircraft. The Lessee consents to and acknowledges such assignment (subject to the reservations and conditions therein set forth) and the receipt of a copy of the Indenture. Section 22.02. Lease Subject to Indenture. On and after the Exchange Date, this Lease shall be subordinate to the Lien of the Indenture. Notwithstanding the exercise by the Indenture Trustee of any rights or remedies under or in respect of the Indenture, the Lessee shall not be relieved of the obligation to perform all the terms and provisions to be performed by the Lessee under this Lease, and this Lease shall not terminate or be otherwise affected by reason of any such exercise of any such rights and remedies unless after an Event of Default shall have occurred and be continuing this Lease is terminated in respect of the Aircraft upon the election of the Indenture Trustee in connection with the exercise of its rights and remedies under the Indenture in respect of the Aircraft, evidenced by and as stated in written notice of such termination from the Indenture Trustee to the Lessee. Section 22.03. Consent of Lessee to Assignment of Lease as Security. The Lessee hereby accepts and consents, pursuant to the terms of the Indenture, to the Indenture Trustee's rights to receive payments (other than Excepted Payments) due under this Lease, the right to transfer or assign title to the Aircraft subject to this Lease, to make all waivers and agreements except as otherwise provided in the Indenture, to give all notices, consents and releases and to take all action upon the happening of a Default or Event of Default under this Lease (except as otherwise specifically provided in the Indenture), or to do any and all other things whatsoever which the Lessor is or may become entitled to do under this Lease (except as otherwise provided in the Indenture); all or any of which rights, obligations, benefits and interests may, pursuant to the terms of the Indenture, be reassigned or retransferred by the Indenture Trustee at any time and from time to time (except as otherwise provided in the Indenture); provided, however, that the Lessor, except to the extent, and for such time as, it is unable to do so by virtue of the Indenture, shall remain liable for the performance of all the terms, conditions, covenants and provisions for which it is obligated under this Lease notwithstanding such assignment. The Lessee agrees to furnish the Indenture Trustee with copies of all notices and other communications required to be made to the Lessor hereunder contemporaneously with the giving of the same to the Lessor. ARTICLE 23 SECURITY FUNDS Section 23.01. Investment of Security Funds. (a) Any amounts otherwise payable to the Lessee shall be held by the Lessor as security for, and may be applied by the Lessor against, the obligations of the Lessee under this Lease during such time as there shall have occurred and be continuing a Default or Event of Default, and, at such times as there shall not be continuing a Default or Event of Default, such amounts, net of any amounts which have been applied by the Lessor against the Lessee's obligations hereunder, shall be paid to the Lessee. Any amounts which are held by the Lessor pending payment to the Lessee shall, until paid to the Lessee or applied against the Lessee's obligations hereunder, be invested by the Lessor, as directed from time to time, in writing (and in the absence of a written direction by the Lessee or at any time an Event of Default shall have occurred and be continuing, the Lessor shall invest such monies in direct obligations of the United States of America), by the Lessee and at the expense and risk of the Lessee, in the following securities (which in the case of securities referred to in subparagraphs (i) through (iv) of this Section 23.01(a) hereof shall mature within ninety (90) days of the date of purchase): (i) direct obligations of the United States of America; or (ii) obligations fully guaranteed by the United States of America; or (iii) certificates of deposit issued by, or bankers' acceptances of, or time deposits or a deposit account with, any bank, trust company or national banking association incorporated or doing business under the laws of the United States of America or one of its States, having a combined capital and surplus of at least $500,000,000 and having a rating of "B" or better from the Thomson BankWatch or IBCA Ltd.; or (iv) commercial paper rated A-1/P-1 by Standard & Poor's Corporation and Moody's Investors Service, Inc., respectively (or if neither such organization shall rate such commercial paper at any time, by any nationally recognized statistical rating organization in the United States of America) equal to the highest rating assigned by such rating organization. (b) At any time any invested funds are distributed to the Lessee, there shall be promptly remitted to the Lessee any gain (including interest received) realized as the result of any investment pursuant to Section 23.01(a) hereof (net of any fees, commissions and other costs and expenses, if any, incurred by the Lessor in connection with such investment), unless a Default or Event of Default shall have occurred and be continuing in which case such funds shall be applied in the same manner as the principal so invested. The Lessee shall be responsible for and will promptly pay to the Indenture Trustee or the Lessor, as the case may be, on demand, the amount of any loss realized as the result of any such investment (together with any fees, commissions and other costs and expenses, if any, incurred by the Lessor or the Indenture Trustee, in connection with such investment), such amount to be disposed of in accordance with the terms of the Lease or the Indenture, as the case may be. ARTICLE 24 CONCERNING THE LESSOR Section 24.01. Lessor's Entry Into Lease. Except as expressly provided herein, the Lessor and the Lessee agree that this Lease is executed by First Security Bank of Utah, National Association not individually but solely as Owner Trustee under the Trust Agreement in the exercise of the power and authority conferred and vested in it as such Owner Trustee, that each and all of the representations, undertakings and agreements by First Security Bank of Utah, National Association, or for the purpose or with the intention of binding First Security Bank of Utah, National Association individually, are made and intended for the purpose of binding only the Lessor's Estate, and that in no case whatsoever shall First Security Bank of Utah, National Association be personally liable for any loss in respect of such representations, undertakings and agreements, that actions to be taken by the Lessor pursuant to its obligation hereunder may, in certain instances, be taken by the Lessor only upon specific authority of the Owner Participant, except as otherwise provided in the Trust Agreement, that nothing herein contained shall be construed as creating any liability on First Security Bank of Utah, National Association, individually or personally, to perform any covenant, either express or implied, herein, all such liability, if any, being expressly waived by the Lessee and by each and every person now or hereafter claiming by, through or under the Lessee except with respect to the gross negligence or willful misconduct or First Security Bank of Utah, National Association, and that so far as First Security Bank of Utah, National Association, individually or personally is concerned, the Lessee and any Person claiming by, through or under the Lessee shall look solely to the Lessor's Estate for the performance of any obligation under this Lease; provided, that nothing in this Section 24.01 shall be construed to limit in scope or substance those representations and warranties of First Security Bank of Utah, National Association in its individual capacity set forth in the Participation Agreement. The term the "Lessor" as used in this Lease shall include any trustee succeeding First Security Bank of Utah, National Association as Owner Trustee under the Trust Agreement. Any obligation of the Lessor hereunder may be performed by the Owner Participant, and any such performance shall not be construed as revocation of the trust created by the Trust Agreement. Nothing contained in this Lease shall restrict the operation of the provisions of the Trust Agreement with respect to its revocation of the resignation or removal of the Owner Trustee hereunder. ARTICLE 25 NOTICES Section 25.01. Notices. All notices, demands, declarations and other communications required by this Agreement shall be in writing and shall be deemed received (i) if given by telecopier when transmitted and the appropriate telephonic confirmation received if transmitted on a Business Day or during normal business hours of the recipient, and otherwise on the next Business Day following transmission, provided that in such case, such notice by telecopy shall be confirmed by international certified or registered air mail promptly thereafter, (ii) if given by certified international air mail or registered international air mail, by the addressee receipt, (iii) if given by telex, upon receipt by the party transmitting the telex of such party's callback code at the end of such telex (receipt of confirmation in writing not being necessary to the effectiveness of any telex), provided that in such case, such notice by telex shall be confirmed by international certified or registered air mail promptly thereafter and (iv) if given by Federal Express courier or other means, when received or personally delivered, addressed: (a) If to the Lessee, to its office at 2007 Corporate Plaza, Memphis, Tennessee 38132, Attention: Vice President and Treasurer with a copy to Senior Vice President and General Counsel; telephone (901) 395-3388, facsimile (901) 395-4758; or at such other address as the Lessee shall from time to time designate in writing to the Lessor, the Owner Participant and the Indenture Trustee; (b) If to the Lessor or Owner Trustee, to its office at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department; telephone: (801) 246-5630, telecopier (801) 246-5053; 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 at the Owner Participant's address as provided in subsection (c) below and with a copy to the Indenture Trustee at the Indenture Trustee's address as provided in subsection (d) below; (c) If to the Owner Participant, in accordance with the Participation Agreement; and (d) If to the Indenture Trustee, to such address as the Indenture Trustee shall from time to time designate in writing to the Lessor, the Lessee and the Owner Participant. If any such notice is received on a day which is not a Business Day at the place of delivery, such notice shall be deemed to have been received on the immediately following Business Day at the place of delivery; provided, that if tender of any notice is refused by the addressee thereof, such notice shall be deemed to have been delivered upon such tender. ARTICLE 26 MISCELLANEOUS Section 26.01. Section Heading and Captions. All article and section headings and captions used in this Lease are purely for convenience and shall not affect the interpretation of this Lease. Section 26.02. References. Any reference to a specific article or section number shall be interpreted as a reference to that article or section of this Lease unless otherwise expressly provided. Section 26.03. APPLICABLE LAW. THIS LEASE SHALL IN ALL RESPECTS BE GOVERNED BY, AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE BUT WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS, AND IS BEING DELIVERED IN NEW YORK. Section 26.04. Severability. Any provision of this Lease which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Section 26.05. No Oral Modification. The terms and provisions of this Lease may not be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. Any such change, waiver, discharge or termination is also subject to the applicable provisions of the Indenture. Section 26.06. Agreement as Chattel Paper. To the extent that this Lease constitutes chattel paper (as such term is defined in the Uniform Commercial Code as in effect in any applicable jurisdiction), no security interest in this Lease may be created through the transfer or possession of any counterpart other than the original counterpart, which shall be the counterpart containing the receipt executed by the Indenture on its signature page. Section 26.07. Counterparts and Effective Date. This Lease may be executed in any number of counterparts, each of which shall be an original (except that only the counterpart bearing the receipt executed by the Indenture shall be the original for purposes of perfecting a security interest therein as chattel paper under the Uniform Commercial Code), but all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Lease by signing any such counterpart. Section 26.08. Incorporation by Reference. The provisions of Articles 8 and 9 of the Participation Agreement and the provisions of the Tax Indemnity Agreement are incorporated herein by reference (but, in the case of the provisions of the Tax Indemnity Agreements, solely for the benefit of the Owner Participant) with the same effect as if set forth herein in their entirety. The Lessee agrees that, in addition to its obligations under this Lease, it will comply with the provisions of Ancillary Agreement No. 1. ARTICLE 27 TRUE LEASE Section 27.01. Intent of the Parties. It is the intent of the Lessor and the Lessee (but the Lessee makes no representation to such effect) that for all purposes this Lease will be a true lease, that the Owner Participant (through its interest in the Lessor) shall at all times be considered to be the owner of the Aircraft for tax purposes and that this Lease conveys to the Lessee no right, title or interest in the Aircraft except as a lessee. Section 27.02. Section 1110 Compliance. Notwithstanding any provision herein or elsewhere contained to the contrary, it is understood and agreed among the parties hereto that the transactions contemplated by this Agreement and the other Operative Agreements are expressly intended to be, shall be and should be construed so as to be, entitled to the full benefits of Section 1110 of the Bankruptcy Code and any successor provision thereof. IN WITNESS WHEREOF, the Lessor and the Lessee have each caused this Lease to be duly executed and this Lease shall be effective this __ day of _____________ 199__. LESSOR: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee By _________________________ Title: LESSEE: FEDERAL EXPRESS CORPORATION By _________________________ Title: Receipt of this original counterpart of the Lease is hereby acknowledged on this __ day of ________ 199_. Indenture Trustee: NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Indenture Trustee By_____________________________ Title: SCHEDULE I DEFINITIONS GENERAL PROVISIONS The following terms shall have the following meanings for all purposes of each Operative Agreement which specifically incorporates this Schedule, referred to below, unless otherwise defined in such 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 such Operative Agreement, the provisions of such Operative Agreement shall control the construction of such Operative Agreement. Unless the context otherwise requires, (i) references to agreements shall be deemed to mean and include such agreements as amended and supplemented from time to time, and (ii) references to parties to agreements shall be deemed to include the successors and permitted assigns of such parties. DEFINED TERMS: Act or Federal Aviation Act. The Federal Aviation Act of 1958, as amended from time to time, and the regulations promulgated pursuant thereto. Additional Insureds. As defined in Article 13 of the Lease. Aeronautics Authority or FAA. 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. Affiliate. With respect to any Person, any partner of such Person or 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 or such partner whether through the ownership or voting securities or by contract or otherwise. After-Tax Basis. A basis such that any payment received or deemed to have been received by a Person shall be supplemented by a further payment to such Person so that the sum of the two payments, after deduction of all federal, state, local and foreign income taxes resulting from the receipt or accrual of such payments, shall be equal to the payment received or deemed to have been received. In the case of amounts payable to the Lessor, the Owner Participant or any partner of the Owner Participant, or any corporate affiliate of any partner 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. Agreement to Lease. The Original Agreement to Lease, as amended and restated as of March 1, 1994, among Lufthansa, the Lessee and the Lessor. Air Carrier. Any air carrier which is a United States "domestic air carrier" as defined in Part 121 of the Federal Aviation Regulations, and any "foreign air carrier" (as defined in the Act) as to which there is in force a permit granted under Section 402 of the Act. Aircraft. The Airframe together with the two Engines whether or not any of such Engines may from time to time be installed on such Airframe or may be installed on any other airframe or on any other aircraft. Aircraft Cost. The amount specified as the Aircraft Cost for the Aircraft on Schedule I to the Agreement to Lease (as in effect on the Closing Date). Airframe. The Airbus Model A310-203 aircraft (excluding the Engines or engines from time to time installed thereon) contemplated by the Participation Agreement to be leased on the Commencement Date by the Lessor to the Lessee pursuant to the Lease, and having the manufacturer's serial number ________________ and, on and after the Commencement Date, the United States FAA Registration Number specified in the initial Lease Supplement, including all Parts. Ancillary Agreements. Any written agreement between parties to the Agreement to Lease Operative Agreements or Operative Agreements entered into on the Closing Date or at any time thereafter in connection with the transactions contemplated by the Operative Agreements, as amended from time to time, including, without limitation, Ancillary Agreement No. 1. Ancillary Agreement No. 1. The agreement, dated as of the Commencement Date, among the Lessee, the Owner Trustee and the Indenture Trustee. Appraisal. The appraisal delivered pursuant to Section 4.01(l) of the Participation Agreement. 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 with the giving of notice or lapse of time or both would constitute an Event of Default. Basic Rent. The aggregate periodic rent payable throughout the Basic Term pursuant to Section 3.01 of the Lease. Basic Term. The period commencing at the beginning of the day on the Commencement Date and ending at the end of the day on the day immediately preceding the date 15 years from the Commencement Date, or such earlier date on which the Lease shall be terminated as provided therein. Beneficial Interest. The interest of the Owner Participant under the Trust Agreement. Bills of Sale. Has the meaning set forth in Section 4.02(d)(v) of the Participation Agreement. Business Day. Any day on which commercial banks are not authorized or required to close in New York City and Memphis, Tennessee, and so long as the Lien of the Indenture is in effect, in Atlanta, Georgia, and Columbia, South Carolina, and thereafter in Salt Lake City, Utah. Certificates or Equipment Trust Certificates. The Equipment Trust Certificates (Federal Express Corporation Trust ___) issued by the Owner Trustee pursuant to the Indenture and any certificate issued in exchange therefor or replacement thereof pursuant to the Indenture. Citizen of the United States. A citizen of the United States as defined in Section 101(16) of the Act, or any analogous part of any successor or substituted legislation or regulation at the time in effect. Closing Date. The Business Day on which the sale of the Pass Through Certificates to the Underwriters occurs pursuant to the Underwriting Agreement. Closings. The closing with respect to the acquisition of the Pass Through Certificates by the Underwriters and the closing with respect to the acquisition of the Certificates by the Pass Through Trusts. Code. Except as otherwise provided, references to the Code shall mean the Internal Revenue Code of 1986, as amended from time to time. Collateral. Has the meaning set forth in the Collateral Agreement. Collateral Agreement. The Collateral Agreement (Trust ______), dated as of March 1, 1994, between the Owner Trustee and the Indenture Trustee, as amended or modified from time to time. Commencement Date. The date on which the Aircraft is leased by the Lessor to the Lessee under the Lease, which date shall also be the date of the initial Lease Supplement. Commission or SEC. The Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or if at any time after the execution and delivery of the Participation Agreement such Commission is not existing and performing the duties now assigned to it under the Exchange Act, then the body performing such duties on such date. Company. Federal Express Corporation, a Delaware corporation, and its permitted successors and assigns hereunder. Corporate Base Rate. The rate announced from time to time by The Chase Manhattan Bank, N.A. or any successors thereto at its head office at New York, New York, as its Corporate Base Rate. Corporate Trust Office. The office of the Indenture Trustee 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 Trustee and the Holders. Cut-off Date. The earlier to occur of (i) the date which is 365 days after the Scheduled Commencement Date, or any earlier Business Day (but in no event earlier than the Scheduled Commencement Date) specified as the Cut-off Date by the Owner Trustee in an irrevocable written notice (including, without limitation, in any such notice contemplated by Section 12 of the Agreement to Lease) given to the Indenture Trustee not less than 30 days prior thereto and (ii) 30 days after the date of any Pre-Funding Termination Notice in accordance with Section 3 of the Agreement to Lease. DA. Deutsche Aerospace Airbus GmbH, a German corporation, its successor and permitted assigns. Debt Portion. The amount specified as such on Schedule IV to the Participation Agreement. Debt Rate. The weighted average rate of interest applicable from time to time to the Certificates, but in no event less than 8% per annum. Deemed Event of Loss. If the Exchange Date does not occur on or prior to the Cut-off Date. 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 Notice. Notice of the Aircraft's Commencement Date, given by the Owner Participant as provided in Section 3.01 of the Participation Agreement and including any notice with respect to a postponed Commencement Date given by the Owner Participant pursuant to Section 3.02 of the Participation Agreement. Demand Note. Each of the Promissory Notes (D-_______), dated the Closing Date, from Lufthansa in the form of Exhibit E to the Participation Agreement, and in an aggregate principal amount specified under "Demand Note Principal Amount" in Schedule IV to the Participation Agreement. Demand Note Collateral. Has the meaning set forth in the Collateral Agreement. Dollars and $. The lawful currency of the United States of America. Engine. Each of the two General Electric CF6-80A3 engines, more fully described in the initial Lease Supplement (or, prior to the Commencement Date, in Exhibit A to the Agreement to Lease opposite the Airframe), whether or not from time to time installed on the Airframe or installed on any other airframe or on any other aircraft, and any Replacement Engine which may from time to time be substituted for an Engine pursuant to Sections 7.02(a)(vii), 10.03, 11.03, 11.04 or 12.02 of the Lease, together with all Parts. 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. ERISA. The Employee Retirement Income Security Act of 1974, as amended. Event of Default. Each of the events specified in Article 16 of the Lease. Event of Loss. Event of Loss means any of the following events on or after the Commencement Date 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 120 days or to the end of the Term, if less, due to theft or disappearance, or (B) for a period in excess of 60 days or to the end of the Term, if less, 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, such Event of Loss being deemed to occur on the date of any such condemnation, confiscation, seizure or requisition of title, or (2) requisition of use of such property (A) by a foreign government or instrumentality or agency thereof, or any purported government or instrumentality or agency thereof, for a period in excess of 180 days (or 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 up to six months beyond the end of the Term in the event that the Aircraft, the Airframe or Engine is requisitioned by the Government pursuant to an activation as part of the Civil Reserve Air Fleet 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 Model A310-203 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 shall have been prohibited for a period of one (1) year, unless the Lessee, prior to the expiration of such one (1) year period shall have conformed the Aircraft to the requirements of any such law, rule, regulation, order, or other action and shall have commenced regular commercial use and shall be diligently carrying forward, on a non-discriminatory basis, all steps necessary or desirable to permit the normal use of the Aircraft by the Lessee; provided, that if there is a conflict between the operation of clause (iv) above and Section 12.05 of the Lease (by reference to Section 12.04(ix) thereof), such Section 12.05 of the Lease shall control. The date of such Event of Loss shall be the date of (i) loss of such property or its use thereof for a period in excess of 120 days, or to the end of the Term, if less due to theft or disappearance, or loss for a period in excess of 60 days, or to the end of the Term, if less due to damage beyond economic repair or loss of use of the Airframe because of requisition for use for a period in excess of 180 days (or shorter period due to insurance settlement or to the end of the Term), (ii) an insurance settlement on the basis of total loss with respect to such property, (iii) condemnation, confiscation, seizure or requisition of title, or (iv) prohibition from usage for the periods described in clause (iv) above. On or after the Commencement Date, 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. Exchange Act. The Securities Exchange Act of 1934, as amended. Exchange Date. The date, on or after the Commencement Date, on which the Indenture Trustee releases the Debt Portion pursuant to Section 7(e) of the Collateral Agreement. Excepted Payments. Collectively, (i) all right, title and interest of the Owner Participant or the Owner Trustee in, to and under the Tax Indemnity Agreement and any moneys due or to become due under the Tax Indemnity Agreement and payments of Supplemental Rent or other payments by the Lessee in either case solely in respect of the Tax Indemnity Agreement, (ii) indemnity payments and interest thereon and other amounts paid or payable by the Lessee to the Owner Participant or to the Owner Trustee in its individual capacity or any of their respective Affiliates (other than the Owner Trustee in its capacity as trustee and the trust created pursuant to the Trust Agreement), successors, assigns, directors, officers, employees, agents or servants pursuant to Articles 8, 9 or 10 of the Participation Agreement or any corresponding payment of Supplemental Rent under the Lease; (iii) proceeds of public liability insurance or governmental indemnities in lieu thereof in respect of the Aircraft payable to the Owner Participant or the Owner Trustee, in its individual capacity, or any of their Affiliates (other than the Owner Trustee in its capacity as trustee and the trust created pursuant to the Trust Agreement), successors or assigns, as a result of insurance claims made, or losses suffered, by, or amounts in respect of such indemnities paid for the benefit of, the Owner Participant or the Owner Trustee in its individual capacity or any of their Affiliates (other than the Owner Trustee in its capacity as trustee and the trust created pursuant to the Trust Agreement), successors or assigns, directors, officers, employees, agents or servants, either pursuant to the Lease (which shall include proceeds of any self-insurance by the Lessee) or maintained by the Owner Trustee or the Owner Participant and not required to be maintained under the Lease; (iv) proceeds of any insurance in respect of the Aircraft (not required by Section 13 of the Lease) which is separately acquired and paid for by the Owner Participant (directly or through the Owner Trustee) or the Lessor in accordance with Section 13.05 of the Lease); (v) indemnity payments payable by the Owner Participant to the Owner Trustee in its individual capacity pursuant to Section 6.01 of the Trust Agreement; (vi) Transaction Costs or other expenses paid or payable by the Lessee to, or for the benefit of, the Indenture Trustee, First Security or the Owner Participant pursuant to Section 10.01 of the Participation Agreement; (vii) if the Lessee has assumed the obligations of the Owner Trustee pursuant to Section 7.12 of the Participation Agreement and Section 2.12 of the Indenture, the amount payable as purchase price pursuant to Section 4.02(a), (c) or (d) of the Lease; (viii) the right to enforce, and the proceeds of any such enforcement of, any right to receive the proceeds of any of the amounts referred to in clauses (i) through (vii) above, and the right to declare an Event of Default under the Lease in respect of any of the foregoing amounts, but not including the right to exercise any remedies under the Lease except for those specifically provided for in this clause (viii); and (ix) any payments in respect of interest to the extent attributable to the payments referred to in clauses (i) through (vii) above. Expense and Expenses. Have the meanings specified in Section 9.01(a) of the Participation Agreement. FAA Bill of Sale. Has the meaning set forth in Section 4.02(d)(iv) of the Participation Agreement. 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. 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. Fair Market Value shall be determined in accordance with the provisions of Section 4.03 of the Lease. Frankfurt Business Day. A day which is a Business Day and is a day (other than a Saturday or Sunday) on which commercial banks in Frankfurt, Germany are generally open for the conduct of business. Geneva Convention. The International Convention on the Recognition of Rights in Aircraft (Geneva 1948). Government. The United States of America or an agency or instrumentality thereof. Government Obligations. Direct obligations of the United States of America which are not callable, redeemable or payable prior to maturity, in whole or in part, directly or indirectly, by any Person. Holder of a Certificate; Holder. As of any particular time, the Person in whose name a Certificate shall be registered as payee with the Indenture Trustee. Indemnification Agreement. The Indemnification Agreement, dated the date of the Underwriting Agreement, among the Lessee, Lufthansa, the LC Bank and the Underwriters. Indemnitee. Each of the Owner Trustee, in its individual capacity and as Owner Trustee and Lessor, the Owner Participant, the Indenture Trustee (after the Exchange Date), in its individual capacity and as Indenture Trustee 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 (except to the extent comprised prior to the Exchange Date of the Trust Indenture Estate) and (after the Exchange Date) the Trust Indenture Estate and the officers, directors, employees, agents and servants of Lufthansa and the General Partner of the Owner Participant. Indenture. The Trust Indenture and Security Agreement (Federal Express Corporation Trust _____) dated as of March 1, 1994, between the Owner Trustee and the Indenture Trustee, as supplemented by the Indenture and Security Agreement Supplement No. 1, and any amendment or supplement thereto entered from time to time. Indenture and Security Agreement Supplement; Indenture Supplement. A supplement to the Indenture, substantially in the form of Exhibit A to the Indenture. Indenture Default. Any event which, with the giving of notice or lapse of time, or both, would be an Indenture Event of Default. Indenture Documents. The Indenture, the Collateral Agreement, the Letter of Credit, the Demand Notes, the Sales Agreement (to the extent relating to the Aircraft), the Parts and Services Agreement (to the extent relating to the Aircraft), the Bills of Sale, the Modification Agreement (to the extent relating to the Aircraft), the Lease, the Participation Agreement, the Agreement to Lease (to the extent relating to the Aircraft), the Trust Agreement (to the extent relating to the Aircraft or the Lessor's Estate) and the Certificates. Indenture Event of Default. Each of the events specified in Section 7.01 of the Indenture. Indenture Trustee. NationsBank of Georgia, National Association, a national banking association, not in its individual capacity but solely as Indenture Trustee under the Indenture and each other Person which may from time to time be acting as successor trustee under the Indenture. Indenture Trustee's Liens. Any Lien on the Trust Indenture Estate resulting from (i) claims against the Indenture Trustee not related to the administration of the Trust Indenture Estate or any transactions pursuant to the Indenture or any Indenture Document or (ii) any act or omission of the Indenture Trustee which is not related to the transactions contemplated by the Operative Agreements or is in violation of any of the terms of the Operative Agreements. Independent Appraisal. An appraisal conducted pursuant to Section 4.03 of the Lease. Independent Investment Banker. An independent investment banking institution of national standing appointed by the Lessee that is independent in fact, does not have any direct financial interests, or any material indirect financial interest, in the Lessee or any Affiliate of the Lessee, and is not connected with the Lessee or any Affiliate of the Lessee, as an officer, employee, promoter, underwriter, trustee, partner, director or Person performing similar functions; provided, that if the Indenture Trustee shall not have received written notice of such an appointment at least 10 days prior to the Prepayment Date (or purchase date) or if an Event of Default shall have occurred and be continuing, "Independent Investment Banker" shall mean such an institution appointed by the Indenture Trustee. Interest Payment Date. Each March 23 and September 23, commencing September 23, 1994. Issuance Date. For any Pass Through Trust, the date of the issuance of the related Pass Through Certificates. LC Bank. Westdeutsche Landesbank Girozentrale, New York Branch. Lease. The Lease Agreement (Federal Express Corporation Trust _____), in the form of Exhibit B to the Participation Agreement, dated as of the Commencement Date or prior thereto, between the Lessor and the Lessee, as said Lease may from time to time be supplemented or amended, or its terms waived or modified, to the extent permitted by, and in accordance with, the terms of the Indenture, including, without limitation, supplementation by the Lease Supplement. Lease Supplement. The Lease Supplement, substantially in the form of Exhibit A to the Lease, entered into between the Lessor and the Lessee. Lessee. Federal Express Corporation, a Delaware corporation, and any successors or permitted assigns in its capacity as lessee under the Lease. Lessee Documents. Each of the Operative Agreements and Ancillary Agreements to which the Lessee is or is to be a party; provided, however, that for purposes of Section 6.01 of the Participation Agreement, Lessee Documents shall not include the Lease or any Lease Supplement prior to the Commencement Date. Lessor. First Security Bank of Utah, National Association, a national banking association, not in its individual capacity but solely as Owner Trustee under the Trust Agreement, and its successors and permitted assigns. Lessor's Estate. All estate, right, title and interest of the Owner Trustee in and to any Additional Collateral, the Aircraft, the Lease, any Lease Supplement, the Participation Agreement and the other Indenture Documents, any warranty with respect to the Airframe and the Engines, all amounts of Basic Rent and Supplemental Rent, including without limitation, insurance proceeds (other than insurance proceeds payable to or for the benefit of the Owner Trustee, for its own account or in its individual capacity, the Owner Participant or 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). Notwithstanding the foregoing, "Lessor's Estate" shall (i) include all items of property purported to be covered by the Trust Indenture Estate and (ii) not include any Excepted Payment. Lessor's Liens. Liens on the Lessor's Estate or the Trust Indenture Estate, arising as a result of (i) claims against or liabilities of 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) any act or omission of the Lessor in its individual capacity or as Owner Trustee, and, in the case of the Lessor in its individual capacity, arising from its gross negligence or willful misconduct either not related to the transactions contemplated by or expressly prohibited under the Operative Agreements and any act or omission of the Owner Participant which is not related to the transactions contemplated by the Operative Agreements or is in violation of any of the terms of the Operative Agreements, (iii) Taxes or Expenses imposed against the Lessor, in its individual capacity or as Owner Trustee, the Owner Participant, Lessor's Estate or the trust created by the Trust Agreement which are not indemnified against by the Lessee pursuant to the Tax Indemnity Agreement or the Participation Agreement, (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 or the Lessor's Estate other than a transfer of the Aircraft or the Lessor's Estate pursuant to Section 4.02(a) or Articles 10 or 11 of the Lease and other than a transfer pursuant to the exercise of the remedies set forth in Article 17 of the Lease or (v) claims against the Lessor or the Owner Participant (or any Affiliate of either) relating to the Modification Agreement, the Agreement to Lease, the Sales Agreement, the Demand Note, the Collateral Agreement, the Sub-subcontract (as defined in the Agreement to Lease) or the Parts and Services Agreement. Letter of Credit. The Irrevocable Letter of Credit, dated the Closing Date, in the form of Exhibit G to the Participation Agreement and with a Stated Amount equal to the amount specified under "Letter of Credit Stated Amount" on Schedule IV to the Participation Agreement, from the LC Bank to the Indenture Trustee. Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or security interest or other similar interest. Liquid Collateral. Has the meaning set forth in the Collateral Agreement. Lufthansa. Deutsche Lufthansa Aktiengesellschaft. Lufthansa Side Letter. The letter, dated the Closing Date, substantially in the form of Exhibit J to the Participation Agreement, among Lufthansa, the Indenture Trustee and the Pass Through Trustee. 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 Participant unless all Certificates then outstanding shall be held by the Owner Participant, (ii) the Lessee or (iii) any Affiliate of either. Make-Whole Premium. An amount determined as of the Business Day before the applicable Prepayment Date or date of purchase, as the case may be, which an Independent Investment Banker determines to be equal to the excess of (i) the present values of all remaining scheduled payments of principal on the Certificate to be prepaid or purchased and interest thereon (excluding interest accrued from the immediately preceding Payment Date to such Prepayment Date or date of purchase, as the case may be) to the Maturity of such Certificate in accordance with generally accepted financial practices assuming a 360- day year consisting of twelve 30-day months at a discount rate equal to Treasury Yield, all as determined by the Independent Investment Banker over (ii) the unpaid principal amount of such Certificate. Maturity. With respect to any Certificate, the date on which the final principal amount of such Certificate is scheduled to be due and payable. Modification Agreement. The Original Modification Agreement, as amended by Amendment No. 1 thereto, dated as of March 1, 1994, among the Lessor, the Owner Participant, Lufthansa and DA. Modification Cost. The amount set forth in the "Total" column for the Aircraft in the Rate Schedule on Exhibit E to the Modification Agreement. Moody's. Moody's Investors Service, Inc. Net Proceeds. The amount specified as such on Schedule IV to the Participation Agreement. Non-U.S. Person. Any Person other than (i) a citizen or resident of the United States, as defined in section 7701(a)(30) of the Code (for purposes of this definition, the "United States"), (ii) a corporation, partnership or other entity created or organized in or under the laws of the United States or any political subdivision thereof or therein, or (iii) any estate or trust that is subject to United States federal income taxation regardless of the source of its income. Obsolete Parts. Parts which the Lessee in good faith determines to be obsolete or no longer suitable or appropriate for use on the Airframe or any Engine. OP Guarantee. The Guarantee, if any, by Lufthansa in the form of Exhibit I to the Participation Agreement. Operative Agreements. The Modification Agreement, the Agreement to Lease, the Participation Agreement, the Trust Agreement, the Trust Agreement Supplement, the Bills of Sale, the Lease, any Lease Supplement, any Ancillary Agreement which by its terms is an Operative Agreement, the Certificates outstanding at the time of reference, the Indenture, any Indenture and Security Agreement Supplement, the Collateral Agreement, the Demand Note, the Parts and Services Agreement, the Indemnification Agreement, the Pass Through Agreement and the Series Supplements, the Pass Through Certificates outstanding at the time of reference, the Sales Agreement, the OP Guarantee (if any) and the Tax Indemnity Agreement, each as amended from time to time. Options Agreement. The letter agreement dated September 1, 1993 between DA and the Lessee relating, inter alia, to the sale by DA to the Lessee of certain cargo conversion kits and the acknowledgement and agreement by DA of certain rights of the Lessee under the Modification Agreement. 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. Original Agreement to Lease. The Agreement to Lease, dated as of September 1, 1993 among Lufthansa, the Lessee and the Lessor. Original Agreements. The Original Agreement to Lease, the Original Modification Agreement, the Original Parts and Services Agreement, the Original Sales Agreement and the Original Trust Agreement. Original Modification Agreement. The Aircraft Modification and Maintenance Agreement, dated as of September 1, 1993, among the Lessor, Lufthansa and DA. Original Parts and Services Agreement. The Parts and Services Agreement, dated as of September 1, 1993, between the Owner Trustee and Lufthansa. Original Sales Agreement. The Sales Agreement for Aircraft, dated as of September 1, 1993, between the Owner Trustee and Lufthansa. Original Trust Agreement. The Trust Agreement, dated as of September 1, 1993, between the Owner Participant and the Owner Trustee in its individual capacity. Owner Participant. The trustor originally named in the Trust Agreement and any successor thereto, and any Person to which Owner Participant transfers, in accordance with the Trust Agreement and the Participation Agreement, its right, title and interest in and to the Operative Agreements and the Lessor's Estate. Owner Trustee. First Security Bank of Utah, National Association, a national banking association, not in its individual capacity except as otherwise expressly stated, but solely as Owner Trustee under the Trust Agreement, and its successors and permitted assigns. Participation Agreement. The Participation Agreement (Federal Express Corporation Trust _____), dated as of March 1, 1994, among the Lessee, the Owner Trustee, not in its individual capacity except as otherwise expressly stated therein, but solely as, Owner Trustee, the Owner Participant, the Pass Through Trustee, not in its individual capacity except as otherwise expressly stated therein, but solely as Pass Through Trustee, the Indenture Trustee, not in its individual capacity except as otherwise expressly stated therein but solely as Indenture Trustee and the LC Bank, as amended, modified or supplemented, or the terms thereof waived. Parts. All appliances, parts, components, instruments, appurtenances, accessories, furnishings and other equipment of whatever nature (other than complete Engines or engines) which may from time to time be incorporated or installed in or attached to the Airframe or any Engine or, so long as title thereto shall be vested in the Lessor, prior to replacement thereof in accordance with the Lease, which may be removed therefrom. Parts and Services Agreement. The Original Parts and Services Agreement, as amended by Amendment No. 1 thereto, dated as of March 1, 1994, between the Owner Trustee and Lufthansa. Parts Cost. The cost of the parts and services with respect to the Aircraft pursuant to Article 4 of the Parts and Services Agreement. Pass Through Agreement. The Pass Through Trust Agreement dated as of March 1, 1994 between the Lessee and the Pass Through Trustee, as such Pass Through Agreement may be modified, supplemented or amended from time to time in accordance with the provisions thereof. Pass Through Certificates. Any of the 1994 Pass Through Certificates, Series A310-A1, 1994 Pass Through Certificates, Series A310-A2, or 1994 Pass Through Certificates, Series A310-A3, 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 Excess Amount. The excess of the principal amount of the Certificates issued on the Closing Date over the Net Proceeds. Pass Through Trust. The Federal Express Pass Through Trust, 1994-A310-A1, Federal Express Pass Through Trust, 1994-A310-A2 or Federal Express Pass Through Trust, 1994-A310-A3, 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. NationsBank of South Carolina, National Association, a national banking association, in its capacity as Pass Through Trustee under the Pass Through Agreement and each Pass Through Trust, and its successors and permitted assigns as Pass Through Trustee thereunder. 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 2.5% 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, 2.5% plus the interest rate applicable to such Certificate and (ii) in the case of any other such amount, 2.5% plus the weighted average rate of interest from time to time payable with respect to the Certificates (or if no Certificates are then outstanding, such weighted average rate at the time immediately preceding the final payment with respect thereto). Paying Agent. Has the meaning set forth in Section 3.04 of the Indenture. Payment Date. Any Interest Payment Date or Sinking Fund Redemption Date. 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). Pre-Funding Event of Loss. Any of the following events prior to the Exchange Date 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 120 days or to the Cut-off Date, if less, due to theft or disappearance, or (B) for a period in excess of 60 days or to the Cut-off Date, if less, due to the destruction, damage beyond economic repair or rendition of such property permanently unfit for normal use by Lessee for any reason whatsoever (provided, however, that failure to properly complete any work contemplated by the Modification Agreement shall not constitute the basis for a Pre-Funding Event of Loss); (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, such Pre-Funding Event of Loss being deemed to occur on the date of any such condemnation, confiscation, seizure or requisition of title, or (2) requisition of use of such property (A) by a foreign government or instrumentality or agency thereof, or any purported government or instrumentality or agency thereof, for a period in excess of 180 days (or such shorter period ending on the earlier of the Cut-off Date 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 Cut-off Date; 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 Model A310-203 aircraft equipped with engines of the same make and model as the Engines for a period ending on or after the Cut- off Date. The date of such Pre-Funding Event of Loss shall be the date of (i) loss of such property or its use thereof for a period in excess of 120 days, or to the Cut-off Date, if less, due to theft or disappearance; or loss for a period in excess of 60 days, or to the Cut-off Date, if less, due to damage beyond economic repair; or loss of use of the Airframe because of requisition for use for a period in excess of 180 days (or shorter period due to insurance settlement or as otherwise contemplated by clause (iii)(2)(A) above), (ii) an insurance settlement on the basis of total loss with respect to such property, (iii) condemnation, confiscation, seizure or requisition of title, or (iv) prohibition from usage for the periods described in clause (iv) above. A Pre-Funding Event of Loss with respect to the Aircraft shall be deemed to have occurred if any Pre-Funding Event of Loss occurs with respect to the Airframe. Pre-Funding Prepayment Date. Has the meaning as set forth in Section 6(c) of the Collateral Agreement. Pre-Funding Termination Notice. Has the meaning set forth in Section 3 of the Agreement to Lease. 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. Proposed Termination Date. The proposed date of termination of the Lease as specified by the Lessee in its notice given pursuant to Section 10.01 thereof. Purchase Price. The amount set forth in the "Purchase Price in U.S. Dollars" column for the Aircraft on Exhibit B to the Sales Agreement. Record Date. With respect to any payment under the Indenture means the 15th calendar day prior to the date such payment is due. Recourse Amount. Has the meaning specified in Section 16.10 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. Remaining Weighted Average Life. For any Certificate, as of any determination date, the number of years obtained by dividing (a) the sum of the products obtained by multiplying (i) the amount of each then remaining mandatory sinking fund redemption payment of principal, including the payment due on the Maturity of such Certificate, by (ii) the number of years (calculated to the nearest one-twelfth) which will elapse between such determination date, and the date on which such payment is scheduled to be made, by (b) 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 term of two years 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 March 23 and September 23, commencing on the first such date after the Commencement Date, and continuing thereafter during the Term. Replacement Engine. A General Electric CF6-80A3 engine of the same or of equal or greater value and utility as the Engine being replaced, together with all Parts relating to such engine; provided, however, that such Engine shall be of the same model as other Engines then subject to the Lease. Responsible Officer. With respect to the Owner Trustee (except for purposes of the Trust Agreement) or the Indenture Trustee, any officer in its Corporate Trust Administration Department designated by such Person to perform obligations under the Operative Agreements, and with respect to any other party, any corporate officer or other employee of a party who, in the normal performance of his 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. Sales Agreement. The Original Sales Agreement as amended by Amendment No. 1 thereto, dated as of March 1, 1994, between the Owner Trustee and Lufthansa. Scheduled Commencement Date. ______________, 199_. Securities Act. The Securities Act of 1933, as amended. Secured Obligations. Has the meaning set forth in the Granting Clause of the Indenture. Series Supplement. The Series Supplement 1994-A310-A1 to be executed and delivered by the Lessee and the Pass Through Trustee, the Series Supplement 1994-A310-A2 to be executed and delivered by the Lessee and the Pass Through Trustee or the Series Supplement 1994-A310-A3 to be executed and delivered by the Lessee and the Pass Through Trustee, in each case as such Series Supplement may be modified, supplemented or amended from time to time in accordance with the provisions thereof and "Series Supplements" means all of such Series Supplements. 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. Daugherty, Fowler & Peregrin. S&P. Standard & Poor's Corporation. Stipulated Loss Value. As of any Stipulated Loss Value Determination Date during the Basic Term, the greater of (i) the amount determined by multiplying the Aircraft Cost by the percentage set forth in Schedule III to the Lease under the heading "Stipulated Loss Value Factor" opposite such date, and (ii) an amount at least sufficient to pay in full, as of the date of payment thereof, the aggregate unpaid principal amount of the Certificates outstanding on such date of payment, together with the accrued and unpaid interest thereon; and during any Renewal Term, the amount determined pursuant to Section 4.01(b) of the Lease. Stipulated Loss Value Determination Date. Each date set forth on Schedule III of the Lease under the heading "Stipulated Loss Value Factors". Supplemental Rent. All amounts, liabilities and obligations which the Lessee assumes or agrees to perform or pay under the Lease or under the Participation Agreement or Tax Indemnity Agreement or an Ancillary Agreement to the Lessor or others, including, without limitation, payment of any Make- Whole Premium payable by the Lessor under the Indenture that is required to be paid by the Lessee pursuant to Section 3.02 of the Lease, payments of Stipulated Loss Value and amounts calculated by reference to Termination Value and all amounts required to be paid by the Lessee under the agreements, covenants and indemnities contained in the Lease or in the Participation Agreement or the Tax Indemnity Agreement or other Ancillary Agreement, but excluding (i) Basic Rent and (ii) any such amounts, liabilities and obligations to the extent such amounts, liabilities or obligations arise out of or relate to the period prior to execution of the Lease Supplement with respect to the Aircraft. Tax. Has the meaning set forth in Section 8.01(a) of the Participation Agreement. Tax Attribute Period. The period commencing on the first day of the taxable year of the Owner Participant in which the Commencement Date occurs and ending on the last day of the seventh succeeding taxable year of the Owner Participant; provided, however, that if the Lessee breaches its representation set forth in Section 4(a) of the Tax Indemnity Agreement and as a result it is required to pay an indemnity pursuant to said Agreement the Tax Attribute Period shall be the period over which the Owner Participant is required to depreciate the Aircraft for purposes of calculating the indemnity payable pursuant to Section 5 of the Tax Indemnity Agreement. Tax Indemnity Agreement. The Tax Indemnity Agreement, dated as of the Commencement Date, among the Lessee, and the Owner Participant and the partners listed on the Schedule A thereto, as from time to time modified, amended or supplemented pursuant to its applicable provisions. Term. The Basic Term and, if renewed pursuant to Section 4.01 of the Lease, the Renewal Term, or the period commencing on the Commencement Date and ending on 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 the end of the Tax Attribute Period in the case of Article 10 of the Lease and in the case of Section 4.02 of the Lease, the date specified in the notice from the Lessee given pursuant to such Section. Termination Value. As of any Termination Date, the greater of (i) the amount determined by multiplying the Aircraft Cost by the percentage set forth in Schedule IV to the Lease under the heading "Termination Value Factor" opposite such Termination Date, and (ii) an amount at least sufficient to pay in full, as of the date of payment thereof, the aggregate unpaid principal amount of the Certificates outstanding on such date of payment, together with the accrued and unpaid interest thereon. Transaction Costs. Those costs and expenses set forth in Section 10.01(a) of the Participation Agreement. Treasury Yield. (i) In the case of a Certificate having a Maturity within one year after the Prepayment Date or purchase date, as the case may be, the average yield to maturity on a government bond equivalent basis of the applicable United States Treasury Bill due the week of Maturity of such Certificate, and (ii) in the case of a Certificate having a Maturity one year or more after the Prepayment Date or purchase date, as the case may be, the average yield of the most actively traded United States Treasury Note (as reported by Cantor Fitzgerald Securities Corp. on page 5 of Telerate Systems, Inc., a financial news service, or if such report is not available, a source deemed comparable by the Independent Investment Banker selected to determine the Make-Whole Premium and reasonably acceptable to the Lessee) corresponding in maturity to the Remaining Weighted Average Life of such Certificate (or, if there is no corresponding maturity, an interpolation of maturities by the Independent Investment Banker), in each case determined by the Independent Investment Banker selected to determine the Make-Whole Premium based on the average of the yields to stated maturity determined from the bid prices as of 10:00 a.m. and 2:00 p.m. New York time, on the second Business Day preceding the Prepayment Date or purchase date, as the case may be. Trust Agreement. The Original Trust Agreement, as amended and restated as of March 1, 1994, and as amended or supplemented pursuant to its applicable provisions and in accordance with the other Operative Agreements (including, without limitation, as supplemented by any Trust Agreement Supplement). Trust Agreement Supplement. The Trust Agreement Supplement (as defined in the Trust Agreement) relating to the Aircraft. Trust Indenture Act. The Trust Indenture Act of 1939, as amended. Trust Indenture Estate; Indenture Estate. The property, rights and privileges described in the Granting Clause of the Indenture, other than (A) Excepted Payments, including, without limitation all right, title and interest of the Owner Participant in, to and under the Tax Indemnity Agreement and any moneys due and to become due under the Tax Indemnity Agreement, all as provided in the Indenture, and (B) rights granted to the Owner Trustee or the Owner Participant under the Indenture, including without limitation under Section 2.05, 7.02, 8.01, 8.02, 8.03, 13.01 and 13.02 thereof, and the Letter of Credit and any rights thereunder. Underwriters. The several Underwriters named in the Underwriting Agreement. Underwriting Agreement. The Underwriting Agreement dated March 16, 1994 among the Lessee, Lufthansa, the Owner Participant, Goldman, Sachs & Co. and Merrill Lynch, Pierce, Fenner & Smith. United States or US. The United States of America. U.S. Air Carrier. Any United States air carrier as to which there is in force a certificate issued pursuant to Section 401 or Section 418 of the Federal Aviation Act, and as to which there is in force an air carrier operating certificate issued pursuant to Part 121 of the regulations under such Act, or which may operate as an air carrier by certification or otherwise under any successor or substitute provision thereof or in absence thereof. SCHEDULE II BASIC RENT Rent Payment Date Advance Arrears ---- ------- ------- [On each Rent Payment Date, Lessee will pay as Basic Rent an amount that will be at least sufficient to pay in full, as of such Payment Date, the aggregate unpaid principal amount of due and unpaid installments on the Certificates outstanding on such Rent Payment Date, together with the accrued and unpaid interest thereon, except that on the first Rent Payment Date after the Exchange Date, the difference between the Basic Rent due on such Rent Payment Date by the Lessee and such principal and interest due on such Rent Payment Date, will be payable from the amount available in the Collateral Account and funds available under the Letter of Credit.] SCHEDULE III STIPULATED LOSS VALUES Stipulated Loss Date Value Factor ---- --------------- [Stipulated Loss Value will be an amount at least sufficient to pay in full, as of the date of payment thereof, the aggregate unpaid principal amount of the Certificates outstanding on such date of payment, together with the accrued and unpaid interest thereon.] SCHEDULE IV TERMINATION VALUES Termination Termination Date Value Factor ----------- ------------ [Termination Value will be an amount at least sufficient to pay in full, as of the date of payment thereof, the aggregate unpaid principal amount of the Certificates outstanding on such date of payment, together with the accrued and unpaid interest thereon.] SCHEDULE V PURCHASE OPTION SCHEDULE (C) The Purchase Option Referred to in Section 4.02(a)(C) of the Lease. If any Significant Expenditure (as defined below) with respect to the Aircraft is required at any time on or after the Tax Attribute Period, the Lessee may elect to terminate the Lease and purchase the Aircraft on any Rent Payment Date occurring after the Tax Attribute Period, at the Lessee's option, by either (1) payment to the Lessor in immediately available funds of an amount equal to the greater of (x) the Fair Market Value of the Aircraft or (y) the Termination Value for the Aircraft, determined in each case as of such Rent Payment Date or (2) the assumption by the Lessee pursuant to Section 7.12 of the Participation Agreement of all of the obligations of the Lessor under the Indenture, the Certificates and Section 7.04 of the Participation Agreement and the payment to the Lessor in immediately available funds of an amount equal to the excess of (A) the greater of (I) the Termination Value for the Aircraft, or (II) the Fair Market Value of the Aircraft, both computed as of such Rent Payment Date, over (B) the unpaid principal amount of the Certificates outstanding as of such Rent Payment Date; it being understood that Fair Market Value for this purpose shall be determined without regard to any Significant Expenditure. For purposes of this paragraph (C) the term "Significant Expenditure" means expenditures in respect of non-severable improvements (i.e. improvements which cannot by the terms of Section 9.02(b) of the Lease be removed from the Aircraft) which in the Lessee's reasonable judgment would exceed $10,000,000 and which the Owner Participant will not permit to be financed on similar terms and conditions then available for similar transactions or through additional equity investments of the Owner Participant or both (it being understood that Section 4.02(a)(C) shall not impose any obligation on the Owner Participant to provide or permit such financing); or (D) The Purchase Option Referred to in Section 4.02 (a)(D) of the Lease. In the event that a Burdensome Indemnity Payment shall occur that is not deliberately caused by Lessee at any time on or after the Tax Attribute Period, the Lessee may, elect to terminate the Lease and purchase the Aircraft on the first Rent Payment Date (the "Burdensome Indemnity Payment Date") following the date that the Owner Participant provides the Lessee with a written notice of any Loss (as defined in Section 5 of the Tax Indemnity Agreement) that is a Burdensome Indemnity Payment, at the Lessee's option, by either (1) payment to the Lessor in immediately available funds of an amount equal to the greater of (x) the Fair Market Value of the Aircraft or (y) the Termination Value for the Aircraft, determined in each case as of such Burdensome Indemnity Payment Date, or (2) the assumption by the Lessee, pursuant to Section 7.12 of the Participation Agreement, of all of the obligations of the Lessor under the Indenture, the Certificates and Section 7.04 of the Participation Agreement and the payment to the Lessor in immediately available funds of an amount equal to the excess of (A) the greater of (I) the Termination Value for the Aircraft, or (II) the Fair Market Value of the Aircraft, both computed as of the Burdensome Indemnity Payment Date, over (B) the unpaid principal amount of the Certificates outstanding as of such Date. For purposes of this paragraph (D), the term "Burdensome Indemnity Payment" means a Loss, as defined in the Tax Indemnity Agreement, which causes the aggregate net present value as of the determination date discounted at the Debt Rate, of all Losses which can be avoided through a purchase by the Lessee of the Aircraft, to exceed 2.5% of the Aircraft Cost. EXHIBIT A FORM OF LEASE SUPPLEMENT THE INTEREST OF LESSOR UNDER THIS LEASE SUPPLEMENT NO. 1 IS SUBJECT TO A SECURITY INTEREST LEASE SUPPLEMENT NO. 1 LEASE SUPPLEMENT NO. 1, dated ________, 199_, between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association, not in its individual capacity, but solely as Owner Trustee under the Trust Agreement dated as of _________ 1, 199_ (the "Lessor"), and FEDERAL EXPRESS CORPORATION, a Delaware corporation (the "Lessee"). W I T N E S S E T H : WHEREAS, the Lessor and the Lessee have entered into that certain Lease Agreement dated as of ______ 1, 199_ (the "Lease", the defined terms in the Lease being used in this Lease Supplement with the same meaning as in the Lease), which provides for the execution and delivery of a Lease Supplement, substantially in the form of this Lease Supplement No. 1, for the purpose of leasing under the Lease the aircraft and engines described below (the "Aircraft") as and when delivered by the Lessor to the Lessee in accordance with the terms of the Lease; WHEREAS, the Lease relates to the Aircraft; WHEREAS, a counterpart of the Lease is attached to and made a part of this Lease Supplement, and this Lease Supplement, together with such attachment, is being filed for recordation on this date with the FAA as one document. NOW, THEREFORE, for and in consideration of the premises and other good and sufficient consideration, the Lessor and the Lessee agree as follows: Section 1. Aircraft. The Lessor hereby delivers and leases to the Lessee under the Lease, and the Lessee hereby accepts and leases from the Lessor under the Lease, the following described Airbus Model 310-203 Aircraft, which Aircraft as of the date of this Lease Supplement consists of the following: (a) Airbus Model 310-203 Airframe; U.S. Registration Number ______; Manufacturer's Serial No. _____; and (b) Two (2) General Electric CF6-80A3 Engines bearing, respectively, Manufacturer's Serial Nos. ______ and ______ (both engines have 750 or more rated takeoff horsepower or the equivalent of such horsepower). Section 2. Commencement Date. The Commencement Date of the Aircraft is the date of this Lease Supplement. Section 3. Term. The Term for the Aircraft shall commence on the Commencement Date, and shall terminate on _______ __, ____, unless earlier terminated or extended pursuant to the terms of the Lease. Section 4. Rent. The Lessee hereby agrees to pay the Lessor Rent for the Aircraft throughout the Term thereof in accordance with the terms and provisions of the Lease. Section 5. Lessee's Acceptance of Aircraft. The Lessee hereby confirms to the Lessor that the Aircraft has been duly marked in accordance with Section 7.03 of the Lease and that the Lessee has accepted the Aircraft for all purposes hereof and of the Lease, as being free and clear of all Liens except Lessor's Liens. Such acceptance by the Lessee shall be without prejudice to any rights of the Lessor or the Lessee against the Manufacturer or any vendor of equipment included in the Aircraft. Section 6. Incorporation of Lease By Reference. All the provisions of the Lease are hereby incorporated by reference in this Lease Supplement to the same extent as if fully set forth in this Lease Supplement. Section 7. Governing Law. THIS LEASE SUPPLEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE BUT WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS, AND IS BEING DELIVERED IN THE STATE OF NEW YORK. Section 8. Counterparts. This Lease Supplement may be executed in any number of counterparts, each of which shall be an original (except that only the counterpart bearing the receipt executed by Indenture Trustee shall be the original for purposes of perfecting a security interest therein as chattel paper under the Uniform Commercial Code), but all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Lease Supplement by signing any such counterpart. IN WITNESS WHEREOF, the Lessor and the Lessee have caused this Lease Supplement to be duly executed as of the day and year first above written. LESSOR: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, except as expressly provided herein, not in its individual capacity, but solely as Owner Trustee By_________________________________ Title: LESSEE: FEDERAL EXPRESS CORPORATION By_________________________________ Title: Receipt of this original counterpart of the Lease Supplement is hereby acknowledged on this __ day of ________ 199_. Indenture Trustee: NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Indenture Trustee By_____________________________ Title: EXHIBIT B AIRCRAFT DESCRIPTION
The Owner Trustee shall lease to Federal Express the following Aircraft: METRIC TONS OF AIR GROSS WEIGHT AT SCHEDULED AIRCRAFT CRAFT LH SCHEDULED COMMENCEMENT ENGINE TYPE MSN REGISTRATION COMMENCEMENT DATE DATE TYPE -------- ----- ------------ ----------------- ------------ -------- 1. 310-203 254 D-AICH 132 7.15.94 CF6-80A3 2. 310-203 397 D-AICR 142 8.26.94 CF6-80A3 3. 310-203 273 D-AICL 142 9.13.94 CF6-80A3 4. 310-203 400 D-AICS 142 10.19.94 CF6-80A3 5. 310-203 360 D-AICP 142 11.11.94 CF6-80A3 6. 310-203 359 D-AICN 142 1.04.95 CF6-80A3 7. 310-203 191 D-AICA 132 1.27.95 CF6-80A3 8. 310-203 201 D-AICB 132 3.10.95 CF6-80A3 9. 310-203 230 D-AICC 132 4.07.95 CF6-80A3 10. 310-203 233 D-AICD 132 5.10.95 CF6-80A3 11. 310-203 356 D-AICM 142 6.08.95 CF6-80A3 12. 310-203 237 D-AICF 132 7.07.95 CF6-80A3 13. 310-203 257 D-AICK 132 8.04.95 CF6-80A3
EX-4.F 9 Exhibit 4.f [FORM OF LETTER OF CREDIT] [Date ETC's are issued] Irrevocable Letter of Credit No. ____ Expiry Date: Not later than _____, 199_ TO: NationsBank of Georgia, National Association, not individually, but solely as Indenture Trustee under the Trust Indenture referred to below 600 Peachtree Street, N.E. GA1-006-09-11 Atlanta, Georgia 30308 1. We hereby establish in your favor as trustee for the benefit of certain certificate holders (in such capacity, and together with any successors in such capacity under the Indenture referred to below, "you" or the "Indenture Trustee") under the Trust Indenture and Security Agreement (Federal Express Corporation Trust __) (the "Indenture") dated as of March 1, 1994 between the Indenture Trustee and First Security Bank of Utah, National Association (the "Owner Trustee" or the "Lessor"), this Irrevocable Letter of Credit ("Letter of Credit") for an aggregate amount up to but not to exceed ________________ United States dollars ($_______________) (the "Stated Amount") available from time to time in the amounts and subject to the conditions hereinafter provided. This Letter of Credit is issued in connection with the Participation Agreement (Federal Express Corporation Trust __) dated as of March 1, 1994 (as in effect on the date hereof, the "Participation Agreement") among Federal Express Corporation (the "Lessee"), the Owner Trustee, LLG Aircraft Leasing, L.P., NationsBank of South Carolina, National Association, as Pass Through Trustee, the Indenture Trustee and Westdeutsche Landesbank Girozentrale, New York Branch, as LC Bank, covering one Airbus model A310-203 aircraft, equipped with two General Electric CF6-80A3 engines. Capitalized terms used in this Letter of Credit shall have the respective meanings as provided in Schedule I hereto. 2. We hereby irrevocably authorize you to draw on us, in accordance with the terms hereinafter set forth, an amount on the relevant Settlement Date equal to (i) in the case of a Partial Draw, the Partial Draw Amount applicable to such Settlement Date and (ii) in the case of a Final Draw, the Final Draw Amount applicable to such Settlement Date. You may effect multiple Partial Draws pursuant to paragraph 3(a)(ii)(A) hereof but only one Partial Draw pursuant to paragraph 3(a)(ii)(B) hereof and only one Final Draw pursuant to paragraph 3(b) hereof, provided that no drawing hereunder may exceed the Available Amount hereof on the date of such drawing. Only one drawing may be paid on any Settlement Date. The Available Amount shall automatically be reduced to zero on the Termination Date (after giving effect to any drawings permitted on such date). Each Partial Draw shall pro tanto automatically reduce the Stated Amount of this Letter of Credit and no reinstatement shall occur. 3. Funds under this Letter of Credit are available to you from time to time from the date hereof to the Termination Date against presentation (by the time indicated below) of: (a) if the relevant drawing is a Partial Draw, (i) your draft in the form of Exhibit 1 hereto and (ii) a completed certificate signed in your name by any two persons purporting to be your Vice Presidents and/or Senior Vice Presidents in the form of (A) in the case of a Partial Draw pursuant to Section 6(b) of the Collateral Agreement, Exhibit 2 hereto, and (B) in the case of a Partial Draw pursuant to Section 6(d) of the Collateral Agreement, Exhibit 3 hereto; and (b) if the relevant drawing is a Final Draw, (i) your draft in the form of Exhibit 1 hereto and (ii) a completed certificate signed in your name by any two persons purporting to be your Vice Presidents and/or Senior Vice Presidents in the form of Exhibit 4 hereto. 4. Each draft and certificate shall be dated the date of presentation (which shall be a Business Day) and shall be presented at our office located at 1211 Avenue of the Americas, 24th Floor, New York, New York 10036 (or at any other office in New York, New York which may be designated by us by written notice delivered to you). If we receive any such draft and certificate at our above- specified office, all in conformity with the terms and conditions of this Letter of Credit, prior to 10:00 a.m. (New York City time) on any Business Day, we will honor the draft by 2:00 p.m. (New York City time) on the relevant Settlement Date. If we receive any such draft and certificate at such office on or after 10:00 a.m. (New York City time) on any Business Day, for all purposes hereof such draft and certificate shall be deemed presented on the next succeeding Business Day. Payment under this Letter of Credit will be made by wire transfer in Federal Funds to your account at ___________________ or such other account in New York, New York; Atlanta, Georgia; or _____________ that you may designate to us in writing. Following receipt of a draft and certificate which are not in conformity with this Letter of Credit, we will promptly notify you of such nonconformity and the reason therefor. By accepting this Letter of Credit, you agree (i) to deliver to us a certificate in the form of Exhibit 5 hereto promptly after the occurrence of (a) the first Payment Date occurring after the Exchange Date, if no drawing hereunder is made pursuant to paragraph 3(a)(ii)(B) hereof or (b) the date 30 days after the Cut- off Date, if a Deemed Event of Loss has occurred but no drawing hereunder has been made pursuant to paragraph 3(b) hereof, and upon receipt of such certificate (but after giving effect to any Partial Draw theretofore made hereunder) the amount of this Letter of Credit shall be reduced to zero and (ii) to return the original hereof to us promptly after the Termination Date. 5. The "Termination Date" shall be the earliest of 5:00 p.m., New York time, (a) on the Settlement Date of any Final Draw, (b) on the Settlement Date of any Partial Draw pursuant to paragraph 3(a)(ii)(B) hereof, (c) on the date the Available Amount hereof is otherwise fully drawn or reduced to zero and (d) [THE DATE WHICH IS 365 DAYS FROM SCHEDULED COMMENCEMENT DATE AND THE NUMBER OF DAYS UNTIL THE FIRST SPECIAL DISTRIBUTION DATE AT LEAST 20 DAYS AFTER SUCH 365TH DAY] (or if such date is not a Business Day, on the next succeeding Business Day). 6. Any notice referred to herein that is to be given by us to you shall be given by facsimile transmission addressed to you at NationsBank of Georgia, National Association, 600 Peachtree Street, N.E. GA1-006- 09-11, Atlanta, Georgia 30308, telecopier: (404) 607-6534, Attention: Corporate Trust Administration (or to such other address or facsimile number designated by you by written notice delivered to us) and shall be effective upon receipt of the appropriate answerback or confirmation by you of your receipt of the facsimile transmission. We will also forward a copy of any notice sent by us to you by overnight (or earlier) delivery service to the address set forth above. All drawings and communications to us with respect to this Letter of Credit shall be in writing and shall be addressed to us at 1211 Avenue of the Americas, 24th floor, New York, New York 10036, Attention: Trade Services Group, and shall specifically refer to the number of this Letter of Credit. 7. Except as set forth below, this Letter of Credit shall be governed by the Uniform Customs and Practice for Documentary Credits (revision effective January 1, 1994) International Chamber of Commerce Publication No. 500, and, as to matters not covered therein, be governed by the law of the State of New York, including without limitation the Uniform Commercial Code as in effect in such State. 8. This Letter of Credit is not transferrable and the benefit hereof may not be assigned except to a successor trustee to the Indenture Trustee. 9. This Letter of Credit sets forth in full our undertaking, and such undertaking shall not in any way be modified, amended, amplified or limited by reference to any document, instrument or agreement referred to herein, except as provided in Schedule I and Exhibits 1 through 5 hereto and the notices referred to herein; and any such reference shall not be deemed to incorporate herein by reference any document, instrument or agreement except as set forth above. Very truly yours, WESTDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH By________________________________ Name: Title: By________________________________ Name: Title: SCHEDULE I to Letter of Credit Unless otherwise defined in this Schedule or the Letter of Credit, capitalized terms used herein or therein shall have the meanings assigned thereto in Schedule II to the Participation Agreement. Reference herein to any agreement shall mean such agreement (other than the Lease and Lease Supplement) as in effect on the date of the Letter of Credit. "Agreement to Lease" shall mean the Original Agreement to Lease, as amended and restated as of March 1, 1994, among Lufthansa, the Lessee and the Lessor, as such agreement is in effect on the date hereof. "Airframe" shall mean the Airbus Model A310-203 aircraft (excluding the Engines or engines from time to time installed thereon) contemplated by the Participation Agreement to be leased on the Commencement Date by the Lessor to the Lessee pursuant to the Lease, and having the manufacturer's serial number __________ and, on and after the Commencement Date, the United States FAA Registration Number specified in the initial Lease Supplement, including all Parts. "Available Amount" shall mean, subject to the second to last sentence of paragraph 2 of the Letter of Credit, as of any Settlement Date the difference between (i) the Stated Amount and (ii) the aggregate amount paid out pursuant to prior drawings under the Letter of Credit. "Basic Rent" shall mean the aggregate periodic rent payable throughout the Basic Term pursuant to Section 3.01 of the Lease. "Business Day" shall mean any day on which commercial banks are not authorized or required to close in New York City and Memphis, Tennessee, and so long as the Lien of the Indenture is in effect, in Atlanta, Georgia, and Columbia, South Carolina, and thereafter in Salt Lake City, Utah. "Certificates" shall mean the Equipment Trust Certificates (Federal Express Corporation Trust ___) issued by the Owner Trustee pursuant to the Indenture and any certificate issued in exchange therefor or replacement thereof pursuant to the Indenture. "Collateral Agreement" shall mean the Collateral Agreement (Trust __), dated as of March 1, 1994, between the Owner Trustee and the Indenture Trustee, as such agreement is in effect on the date hereof. "Commencement Date" shall mean the date on which the Aircraft is leased by the Lessor to the Lessee under the Lease, which date shall also be the date of the initial Lease Supplement. "Cut-off Date" shall mean the earlier to occur of (i) the date which is 365 days after the Scheduled Commencement Date, or any earlier Business Day (but in no event earlier than the Scheduled Commencement Date) specified as the Cut-off Date by the Owner Trustee in an irrevocable written notice (including, without limitation, in any such notice contemplated by Section 12 of the Agreement to Lease) given to the Indenture Trustee not less than 30 days prior thereto and (ii) 30 days after the date of any Pre-Lease Termination Notice in accordance with Section 3 of the Agreement to Lease. "Debt Portion" shall mean the amount specified as such on Schedule IV to the Participation Agreement. "Exchange Date" shall mean the date on which the Indenture Trustee releases the Debt Portion pursuant to Section 7(e) of the Collateral Agreement. "Final Draw" shall mean any draw under the Letter of Credit contemplated by Section 6(c) of the Collateral Agreement. "Final Draw Amount" shall mean the amount drawn or to be drawn pursuant to a Final Draw. "Frankfurt Business Day" shall mean a day which is a Business Day and is a day (other than a Saturday or Sunday) on which commercial banks in Frankfurt, Germany are generally open for the conduct of business. "Interest Payment Date" shall mean each ________ and _________, commencing _________, 1994 "Lease" shall mean the Lease Agreement (Federal Express Corporation Trust __), in the form of Exhibit B to the Participation Agreement, dated as of the Commencement Date or prior thereto, between the Lessor and the Lessee, as said Lease may from time to time be supplemented or amended, or its terms waived or modified, to the extent permitted by, and in accordance with, the terms of the Indenture, including, without limitation, supplementation by the Lease Supplement. "Lease Supplement" shall mean the Lease Supplement, substantially in the form of Exhibit A to the Lease, entered into between the Lessor and the Lessee. "Lufthansa" shall mean Deutsche Lufthansa Aktiengesellschaft. "Partial Draw" shall mean any draw under the Letter of Credit contemplated by Section 6(b) or 6(d) of the Collateral Agreement. "Partial Draw Amount" shall mean the amount drawn or be drawn pursuant to any Partial Draw. "Payment Date" shall mean any Interest Payment Date or Sinking Fund Redemption Date. "Pre-Funding Prepayment Date" shall mean the date of any prepayment of the Certificates required pursuant to Section 6.02(a)(vi) of the Indenture. "Pre-Funding Termination Notice" shall mean the Pre-Funding Termination Notice provided pursuant to Section 3 of the Agreement to Lease. "Prepayment Price" shall mean the aggregate amount required to be paid pursuant to the last sentence of Section 6.02(b) of the Indenture which amount shall be the sum of the aggregate principal amount of the Certificates, accrued interest on the Certificates to the date of prepayment and all other aggregate sums due to any Holder or the Indenture Trustee under the Indenture, the Participation Agreement or the Lease. "Scheduled Commencement Date" shall mean ____________. "Settlement Date" shall mean, with respect to any Partial Draw or Final Draw, the first Business Day to fall on or after the fourth Frankfurt Business Day to occur following the day of presentation pursuant to (and determined in accordance with the provisions of) paragraph 4 of the Letter of Credit and otherwise in conformity with all of the terms of the Letter of Credit. "Sinking Fund Redemption Date" shall mean the dates specified as such in Section 6.06 of the Indenture. "Sinking Fund Redemption Price" shall have the meaning set forth in Section 6.06 of the Indenture. "Specified Investments" shall have the meaning assigned thereto in the Collateral Agreement. "Stated Amount" shall have the meaning assigned thereto in paragraph 1 of the Letter of Credit. "Termination Date" shall have the meaning assigned thereto in paragraph 5 of the Letter of Credit. EXHIBIT 1 to Letter of Credit [Place] [Date], 199_ On [Settlement Date] PAY TO U.S. $[not to exceed relevant [Indenture Trustee] Partial Draw Amount or Final Draw Amount] DOLLARS, [Insert wire instructions] FOR VALUE RECEIVED AND CHARGE TO ACCOUNT OF LETTER OF CREDIT NO. _______________ To: Westdeutsche Landesbank Girozentrale New York Branch 1211 Avenue of the Americas, 24th floor New York, New York 10036 [Indenture Trustee] By ___________________________ [Name and Title of Authorized Representative of Indenture Trustee] EXHIBIT 2 to Letter of Credit CERTIFICATE FOR A PARTIAL DRAW (Letter of Credit Paragraph 3(a)(ii)(A)) To: Westdeutsche Landesbank Girozentrale New York Branch 1211 Avenue of the Americas, 24th Floor New York, New York 10036 Attn: Trade Services Group The undersigned, duly authorized representatives of [Indenture Trustee], beneficiary under that certain Irrevocable Letter of Credit No. __________ dated __________ (the "Letter of Credit") issued by Westdeutsche Landesbank Girozentrale, New York Branch, hereby certify as follows: 1. The Exchange Date has not occurred prior to the date hereof and the Payment Date to which this Partial Draw relates is ____________, 199_. 2. The Partial Draw Amount for such Payment Date is calculated as follows: (a) The amount of cash expected to $_________ be in the Collateral Account on such Payment Date (giving effect to any income from or proceeds of any Specified Investments scheduled to mature on or prior to such Payment Date) (b) The Debt Portion $_________ (c) The excess of (a) over (b) $_________ (d) The aggregate amount of interest $_________ and any Sinking Fund Redemption Price due with respect to the Certificates as of such Payment Date (e) The excess of (d) over (c) $_________ (f) The Available Amount of the $_________ Letter of Credit (g) The Partial Draw Amount (i.e., the $_________ lesser of (e) and (f)) 3. The amount of the accompanying draft for the Partial Draw does not exceed the Available Amount under the Letter of Credit as of the date for payment thereof (but without giving effect to such payment). 4. The date hereof is a Business Day. Capitalized terms used herein and not otherwise defined herein shall have the meanings given to them in the Letter of Credit (including Schedule I thereto). IN WITNESS WHEREOF, the undersigned have executed this Certificate as of ____________________, 19__. [Indenture Trustee] By________________________ [Name and Title of Authorized Representative of Indenture Trustee] By_______________________ [Name and Title of Authorized Representative of Indenture Trustee] EXHIBIT 3 to Letter of Credit CERTIFICATE FOR A PARTIAL DRAW (Letter of Credit Paragraph 3(a)(ii)(B)) To: Westdeutsche Landesbank Girozentrale New York Branch 1211 Avenue of the Americas, 24th Floor New York, New York 10036 Attn: Trade Services Group The undersigned, duly authorized representatives of [Indenture Trustee], beneficiary under that certain Irrevocable Letter of Credit No. __________ dated __________ (the "Letter of Credit") issued by Westdeutsche Landesbank Girozentrale, New York Branch, hereby certify as follows: 1. The Exchange Date occurred on _________ and the first Payment Date thereafter is ______________. 2. The Partial Draw Amount for such Payment Date is as follows: (a) The amount of cash expected to be in the $____________ Collateral Account on such Payment Date (giving effect to income from or proceeds of Specified Investments scheduled to mature on or prior to such Payment Date) (b) The excess of (i) the amount of any $____________ interest and any Sinking Fund Redemption Price due with respect to the Certificates as of such Payment Date over (ii) the amount of Basic Rent due on such Payment Date pursuant to the Lease (c) The excess of (b) over (a) $_________ (d) The Available Amount of the $_________ Letter of Credit (e) The Partial Draw Amount (i.e., the $_________ lesser of (c) and (d)) 3. The amount of the accompanying draft for the Partial Draw does not exceed the Available Amount under the Letter of Credit as of the date for payment thereof (but without giving effect to such payment). 4. The date hereof is a Business Day. Capitalized terms used herein and not otherwise defined herein shall have the meanings given to them in the Letter of Credit (including Schedule I thereto). IN WITNESS WHEREOF, the undersigned have executed this Certificate as of ____________________, 19__. [Indenture Trustee] By________________________________ [Name and Title of Authorized Representative of Indenture Trustee] By________________________________ [Name and Title of Authorized Representative of Indenture Trustee] EXHIBIT 4 to Letter of Credit CERTIFICATE FOR A FINAL DRAW (Letter of Credit Paragraph 3(b)) To: Westdeutsche Landesbank Girozentrale New York Branch 1211 Avenue of the Americas, 24th Floor New York, New York 10036 Attn: Trade Services Group The undersigned, duly authorized representative of [Indenture Trustee], beneficiary under that certain Irrevocable Letter of Credit No. __________ dated __________ (the "Letter of Credit") issued by Westdeutsche Landesbank Girozentrale, New York Branch, hereby certify as follows: 1. The Indenture Trustee has received notice of prepayment of the Certificates pursuant to Section 6.02(a)(vi) of the Indenture and the Pre- Funding Prepayment Date is to be ___________ __, 199_. 2. The Final Draw Amount is calculated as follows: (a) The amount of cash expected $_____________ to be in the Collateral Account on such Pre-Funding Prepayment Date (giving effect to any income from or proceeds of any Specified Investment scheduled to mature on or prior to such Pre-Funding Prepayment Date) (b) The aggregate Prepayment Price $_____________ due with respect to the Certificates as of such Pre- Funding Prepayment Date (c) The excess of (b) over (a) $_____________ (d) The Available Amount of the $_____________ Letter of Credit (e) The Final Draw Amount (i.e., the $_____________ lesser of (c) and (d)) 3. The amount of the accompanying draft for the Final Draw does not exceed the Available Amount as of the date for payment thereof (but without giving effect to such payment). 4. The date hereof is a Business Day. Capitalized terms used herein and not otherwise defined herein shall have the meanings given to them in the Letter of Credit (including Schedule I thereto). IN WITNESS WHEREOF, the undersigned have executed this Certificate as of ____________________, 19__. [Indenture Trustee] By________________________________ [Name and Title of Authorized Representative of Indenture Trustee] By________________________________ [Name and Title of Authorized Representative of Indenture Trustee] EXHIBIT 5 to Letter of Credit REDUCTION CERTIFICATE (Letter of Credit Paragraph 4) To: Westdeutsche Landesbank Girozentrale New York Branch 1211 Avenue of the Americas, 24th Floor New York, New York 10036 Attn: Trade Services Group The undersigned, duly authorized representative of [Indenture Trustee], beneficiary under that certain Irrevocable Letter of Credit No. __________ dated __________ (the "Letter of Credit") issued by Westdeutsche Landesbank Girozentrale, New York Branch, hereby certify as follows: 1. [The first Payment Date after the Exchange Date has occurred.] [The date 30 days after the Cut- off Date has occurred.]* 2. The Stated Amount is reduced to zero and the Letter of Credit is returned herewith to Westdeutsche Landesbank Girozentrale, New York Branch. Capitalized terms used herein and not otherwise defined herein shall have the meanings given to them in the Letter of Credit (including Schedule I thereto). IN WITNESS WHEREOF, the undersigned have executed this Certificate as of ____________________, 19__. [Indenture Trustee] By________________________________ [Name and Title of Authorized Representative of Indenture Trustee] By________________________________ [Name and Title of Authorized Representative of Indenture Trustee] * Insert appropriate language. EX-4.G 10 Exhibit 4.g COLLATERAL AGREEMENT (Trust _____) THIS COLLATERAL AGREEMENT (Trust ____), dated as of March 1, 1994 (this "Agreement"), between First Security Bank of Utah, National Association, not individually but solely as Owner Trustee (the "Owner Trustee") and NationsBank of Georgia, National Association, as Indenture Trustee. Capitalized terms used but not defined herein shall have the respective meanings set forth in or pursuant to Section 1 hereof. WHEREAS, pursuant to the Sales Agreement, the Owner Trustee has purchased the Aircraft at the Purchase Price, with the Purchase Price being payable on the Commencement Date by the Owner Trustee. WHEREAS, pursuant to the Modification Agreement, the Owner Trustee has contracted for modification of the Aircraft at the Modification Cost, with the Modification Cost being payable by the Owner Trustee on the Commencement Date. WHEREAS, pursuant to the Parts and Services Agreement, the Owner Trustee has contracted for certain parts and services relating to the Aircraft at the Parts Cost, with the Parts Cost being payable on the Commencement Date. WHEREAS, pursuant to the Agreement to Lease, on the Commencement Date for the Aircraft, the Aircraft is to be leased by the Owner Trustee to Federal Express Corporation (the "Lessee") under the Lease. WHEREAS, pursuant to the Participation Agreement, on the Closing Date the Owner Trustee intends to issue and deliver to the Indenture Trustee for authentication, and the Indenture Trustee intends to authenticate and deliver to the Pass Through Trustee, one or more Certificates, the aggregate proceeds of which are to be used, among other things, to finance a portion of the aggregate amount of the Purchase Price, the Modification Cost and the Parts Cost. NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and in order to provide additional collateral for the Secured Obligations, the parties hereto agree as follows: SECTION 1. Definitions. The following terms shall have the meanings set forth for such terms below. Capitalized terms used but not defined herein shall have the respective meaning set forth in Schedule II hereto. Collateral. All Liquid Collateral and Demand Note Collateral. Collateral Account. The deposit account established and maintained pursuant to Section 3 hereof. Demand Note Collateral. The Demand Notes together with proceeds thereof. Demand Note Collateral Account. Any separate account established pursuant to Section 4(b) hereof. Eligible Deposit Account. Either (a) a segregated account with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a depository institution with corporate trust powers organized under the laws of the United States or any state thereof, or the District of Columbia, and whose deposits are insured by the Federal Deposit Insurance Corporation, provided that such institution also must have a combined capital and surplus of at least $100,000,000 and a rating of A or better from the Thomson Bank Watch. Eligible Institution. A depository institution organized under the laws of the United States or any one of the states thereof, or the District of Columbia, or any domestic branch of a foreign bank, which in any such case at all times (a) has either (x) a long-term unsecured debt rating of at least Aa2 by Moody's or (y) a short-term certificate of deposit rating of P-1 by Moody's, (b) has either (x) a long-term unsecured debt rating of a least AA by S&P or (y) a short-term certificate of deposit rating of A-1+ by S&P and (c) is a member of the Federal Deposit Insurance Corporation. Extended Pre-Funding Period. The period from the Scheduled Commencement Date to (and including) the earlier of the Exchange Date and any Pre-Funding Prepayment Date. Liquid Collateral. All amounts deposited from time to time in the Collateral Account and all the products 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. Partial Draw. Any draw under the Letter of Credit contemplated by Section 6(b) or 6(d) hereof. Partial Draw Amount. The amount drawn pursuant to any Partial Draw. Scheduled Pre-Funding Period. The period from the Closing Date to (and including) the Scheduled Commencement Date. Specified Investments. Any of the following: (a) direct obligations of the United States of America, and (b) obligations fully guaranteed by the United States of America. SECTION 2. [Intentionally Omitted] SECTION 3. Collateral Account. (a) Establishment of the Collateral Account. The Indenture Trustee shall establish, or cause to be established, with itself or its designee, in its name as secured party hereunder an Eligible Deposit Account entitled "NationsBank of Georgia, National Association, as secured party under the Trust Indenture and Security Agreement (Federal Express Corporation Trust ______) dated as of March 1, 1994, with the Owner Trustee referred to therein". (b) Maintenance of the Collateral Account. If at any time the Collateral Account ceases to be an Eligible Deposit Account, the Indenture Trustee shall within 10 Frankfurt Business Days, establish a new Collateral Account meeting the conditions specified in the definition of Eligible Deposit Account, and shall transfer any cash or any investments in the Collateral Account to such new Collateral Account. (c) Control of Collateral Account. The Indenture Trustee shall have exclusive dominion and control of the Collateral Account and all funds therein, and shall make withdrawals from the Collateral Account only in accordance with this Agreement. SECTION 4. Deposits and Delivery of Collateral. (a) Liquid Collateral. On the Closing Date, the Owner Trustee shall deposit, or shall cause the deposit of, the Net Proceeds into the Collateral Account, and the Indenture Trustee shall notify the Owner Trustee upon receipt thereof. (b) Demand Note Collateral. On the Closing Date, the Owner Trustee shall deliver to the Indenture Trustee the Demand Notes, in suitable form for transfer by delivery, endorsed and assigned serially by each holder thereof to the Indenture Trustee, or accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance satisfactory to the Indenture Trustee. Any funds constituting Demand Note Collateral, including any amounts paid pursuant to demands contemplated by Section 6 hereof, shall be deposited into an Eligible Deposit Account entitled "Demand Note Collateral Account, NationsBank of Georgia, National Association, as secured party under the Trust Indenture and Security Agreement (Federal Express Corporation Trust _____) dated as of March 1, 1994, with the Owner Trustee referred to therein", to be opened by the Indenture Trustee at the first time of its receipt of any such funds. The Indenture Trustee shall have exclusive dominion and control of any such Demand Note Collateral Account and funds therein, and shall make withdrawals from such Demand Note Collateral Account only in accordance with this Agreement. SECTION 5. Investment of Funds on Deposit in the Collateral Account. (a) Specified Investments. Funds deposited in the Collateral Account shall be invested and reinvested by the Indenture Trustee, at the risk of the Owner Trustee, in Specified Investments selected by the Indenture Trustee in accordance with Section 5(b) below; provided, however, that if Specified Investments meeting the requirements of Section 5(b) below are not available on any day on which funds are to be invested as contemplated by the preceding provisions of this Section 5(a), the Indenture Trustee may leave such funds overnight in the Collateral Account. The Indenture Trustee shall maintain possession of the negotiable instruments or securities, if any, evidencing such Specified Investments and, in the case of any Specified Investments in book-entry form, such Specified Investments shall be credited to an account of the Indenture Trustee or its designee with the applicable clearing agency designated by the Indenture Trustee. All proceeds of and any income, interest and other payments and distributions on or with respect to any Specified Investments shall be deposited in or credited to the Collateral Account and thereafter shall be held, invested and applied by the Indenture Trustee in accordance with this Agreement. The Indenture Trustee shall notify the Owner Trustee of any losses incurred on Specified Investments in the Collateral Account. (b) Maturity of Specified Investments. On the Business Day immediately following the Closing Date, the Indenture Trustee shall invest the amount deposited in the Collateral Account pursuant to Section 4(a) hereof in the Specified Investments set forth in Schedule I hereto; provided, however, that if any amount remains on deposit after investment in the Specified Investments set forth in Schedule I hereto, such remaining amount shall be invested in other Specified Investments which mature on or prior to the first Payment Date after the Closing Date. Such Specified Investments shall be held through maturity, which Specified Investments shall mature on or prior to the Scheduled Commencement Date. Any Specified Investments made after the Closing Date but during the Scheduled Pre-Funding Period shall mature on or prior to the earliest of the next subsequent Payment Date, any Pre-Funding Prepayment Date and the Scheduled Commencement Date. Any Specified Investments made on or after the Scheduled Commencement Date but during any Extended Pre-Funding Period shall mature on or prior to (i) if a Commencement Date has been proposed pursuant to a Delivery Notice under Section 3.01 of the Participation Agreement, such proposed Commencement Date (or if such Commencement Date is postponed pursuant to a Delivery Notice under Section 3.02 of the Participation Agreement, the rescheduled Commencement Date specified therein), or (ii) if no such Delivery Notice has been given, the earliest of the next subsequent Payment Date, any Pre- Funding Prepayment Date and the Cut-off Date. Any Specified Investments made on or after the Exchange Date shall mature on or prior to the next subsequent Payment Date. SECTION 6. Calculations, Letter of Credit Draws and Demand Note Collections. (a) Scheduled Pre-Funding Period Debt Service. No later than 9:00 A.M., New York time, four Frankfurt Business Days prior to each Payment Date during the Scheduled Pre- Funding Period (except for any such Payment Date on a Pre-Funding Prepayment Date, in which case Section 6(c) hereof shall apply), the Indenture Trustee shall determine the lower of (x) the amount of cash expected to be in the Collateral Account on such Payment Date (giving effect to any income from or proceeds of any then-existing Specified Investments scheduled to mature prior to such Payment Date) and (y) the excess of the amount of cash expected to be in the Collateral Account on such Payment Date (giving effect to (1) any income from or proceeds of any then-existing Specified Investments scheduled to mature on or prior to the Scheduled Commencement Date and (2) any payment to be made on any other Payment Date prior to the Scheduled Commencement Date) over the Debt Portion. The Indenture Trustee shall, at or prior to such time of determination, notify the Owner Trustee of (i) such lower amount of (x) and (y) above and (ii) the aggregate amount of interest due with respect to the Certificates as of such Payment Date. If the amount of clause (ii) above exceeds the amount of clause (i) above, the Indenture Trustee shall demand the amount of such excess pursuant to the Demand Notes. (b) Extended Pre-Funding Period Debt Service. No later than 9:00 A.M., New York time, four Frankfurt Business Days prior to each Payment Date during any Extended Pre-Funding Period (except for any such Payment Date on a Pre-Funding Prepayment Date, in which case Section 6(c) hereof shall apply), the Indenture Trustee shall determine the excess of the amount of cash expected to be in the Collateral Account on such Payment Date (giving effect to any income from or proceeds of any then-existing Specified Investments scheduled to mature on or prior to such Payment Date) over the Debt Portion. The Indenture Trustee shall, at such time of determination, notify the Owner Trustee of (i) such excess of the expected amount over the Debt Portion and (ii) the aggregate amount of interest and any Sinking Fund Redemption Price due with respect to the Certificates as of such Payment Date. If the amount of clause (ii) above exceeds the amount of clause (i) above (any such excess, the "Debt Service Shortfall"), the Indenture Trustee shall draw the amount of the Debt Service Shortfall pursuant to the Letter of Credit. If the Debt Service Shortfall exceeds the amount then available under the Letter of Credit, the Indenture Trustee shall demand, pursuant to the Demand Notes, the amount of such excess. For the purposes of the first sentence of this Section 6(b), a Payment Date shall be considered to be "during any Extended Pre- Funding Period" if (x) it is to occur after the Scheduled Commencement Date but before the Cut-off Date and (y) the Exchange Date has not occurred prior to the date that the determination referred to in such sentence would otherwise be required. (c) Pre-Funding Period Prepayments. No later than 9:00 A.M., New York time, four Frankfurt Business Days prior to the date of any prepayment of the Certificates required pursuant to Section 6.02(a)(vi) of the Indenture (a "Pre-Funding Prepayment Date"), the Indenture Trustee shall determine the amount of cash expected to be in the Collateral Account on such Pre-Funding Prepayment Date (giving effect to any income from or proceeds of any then-existing Specified Investments scheduled to mature on or prior to such Pre-Funding Prepayment Date). The Indenture Trustee shall, at or prior to such time of determination, notify the Owner Trustee of (i) such expected amount and (ii) the aggregate Prepayment Price due with respect to the Certificates as of such Pre-Funding Prepayment Date. If the amount of clause (ii) above exceeds the amount of clause (i) above (any such excess, the "Prepayment Shortfall"), the Indenture Trustee shall draw the amount of the Prepayment Shortfall pursuant to the Letter of Credit. If the Prepayment Shortfall exceeds the amount then available under the Letter of Credit, the Indenture Trustee shall demand, pursuant to the Demand Notes, the amount of such excess. (d) Debt Service on the First Payment Date after the Exchange Date. No later than 9:00 A.M., New York time, four Frankfurt Business Days prior to the first Payment Date occurring after the Exchange Date (unless Section 6(b) hereof shall be applicable to such Payment Date), the Indenture Trustee shall determine the amount of cash expected to be in the Collateral Account on such Payment Date (giving effect to any income from or proceeds of any then-existing Specified Investments scheduled to mature on or prior to such Payment Date). The Indenture Trustee shall, at or prior to such time of determination, notify the Owner Trustee of (i) such expected amount of cash and (ii) the excess of (A) the sum of the interest and any Sinking Fund Redemption Price due with respect to the Certificates as of such Payment Date over (B) the amount of Basic Rent due from the Lessee on such Payment Date pursuant to the Lease. If the amount of clause (ii) above exceeds the amount of clause (i) above (any such excess, the "Accrued Shortfall"), the Indenture Trustee shall draw the amount of the Accrued Shortfall pursuant to the Letter of Credit. SECTION 7. Withdrawals and Certificate Payments; Release of Debt Portion. (a) Scheduled Pre-Funding Period Debt Service. No later than 11:00 A.M., New York time, on each Payment Date as to which Section 6(a) hereof shall be applicable, the Indenture Trustee shall withdraw from the Demand Note Collateral Account (to the extent of any demand made pursuant to the last sentence of Section 6(a) hereof) and then from the Collateral Account, and shall pay to the Holders in accordance with Section 5.01(b) of the Indenture, an amount equal to the aggregate amount of interest then due with respect to the Certificates. (b) Extended Pre-Funding Period Debt Service. No later than 11:00 A.M., New York time, on each Payment Date as to which Section 6(b) hereof shall be applicable, the Indenture Trustee (i) shall pay to the Holders in accordance with Section 5.01(b) of the Indenture any Partial Draw Amount received by the Indenture Trustee pursuant to a Partial Draw under Section 6(b) hereof relating to such Payment Date and (ii) shall withdraw from the Demand Note Collateral Account (to the extent of any demand made pursuant to the penultimate sentence of Section 6(b) hereof) and then from the Collateral Account, and shall pay to the Holders in accordance with Section 5.01(b) of the Indenture, an amount equal to the excess of (A) the aggregate amount of interest and any Sinking Fund Redemption Price then due with respect to the Certificates over (B) such Partial Draw Amount. (c) Pre-Funding Period Prepayments. No later than 11:00 A.M., New York time, on any Pre- Funding Prepayment Date, the Indenture Trustee (i) shall pay to the Holders in accordance with the last sentence of Section 5.02(a) of the Indenture any amount received by the Indenture Trustee pursuant to a draw under the Letter of Credit pursuant to Section 6(c) hereof and (ii) shall withdraw from the Demand Note Collateral Account (to the extent of any demand made pursuant to the last sentence of Section 6(c) hereof) and then from the Collateral Account, and shall pay to the Holders in accordance with the last sentence of Section 5.02(a) of the Indenture, an amount equal to the excess of (A) the aggregate Prepayment Price then due with respect to the Certificates over (B) such amount received pursuant to such draw under the Letter of Credit. (d) Payments after the Exchange Date. No later than 11:00 A.M., New York time, on any Payment Date as to which Section 6(d) hereof shall be applicable, the Indenture Trustee (i) shall pay to the Holders in accordance with Section 5.01(b) of the Indenture, any Partial Draw Amount pursuant to a Partial Draw under Section 6(d) hereof and (ii) shall withdraw from the Demand Note Collateral Account (to the extent of any demand made pursuant to the last sentence of Section 6(d) hereof) and then from the Collateral Account, and shall pay to the Holders in accordance with Section 5.01(b) of the Indenture, an amount equal to the excess of (i) the aggregate amount of interest and any Sinking Fund Redemption Price then due with respect to the Certificates over (ii) any Basic Rent then due from the Lessee pursuant to the Lease and such Partial Draw Amount. (e) Release of Debt Portion on Exchange Date. Subject to the satisfaction or waiver of the conditions precedent to commencement of the Lease or to the Indenture Trustee's obligations set forth in Section 4 of the Agreement to Lease and Sections 4.02 and 4.03, as the case may be, of the Participation Agreement (such satisfaction or waiver to be confirmed by a certificate of the Owner Participant), on the Exchange Date the Indenture Trustee shall release from the Collateral Account (i) any Demand Note Collateral then held by the Indenture Trustee and (ii) an amount of Liquid Collateral equal to the lesser of (A) the Debt Portion and (B) the amount actually in the Collateral Account on the Exchange Date. Such amount so released pursuant to clause (ii) above shall be used to finance a portion of the Purchase Price, the Modification Cost (or such greater amount as is then payable by the Owner Trustee with respect to the Aircraft pursuant to the Modification Agreement) and the Parts Cost payable by the Owner Trustee as contemplated by Section 3.03(ii) of the Participation Agreement. SECTION 8. Representations, Warranties and Agreements of the Owner Trustee. (a) Representations and Warranties. The Owner Trustee represents and warrants that: (i) except for the interests granted hereby, the Owner Trustee is the owner and holder of the Collateral free from any claim, security interest, encumbrance, lien, charge, or other right, title or interest of any person; the Owner Trustee has full power and lawful authority to enter into this Agreement and to grant, transfer, pledge and assign the Collateral to the Indenture Trustee and to grant to the Indenture Trustee a first and prior security interest therein as herein provided, all of which have been duly authorized by all necessary action; and (ii) the Owner Trustee has not heretofore pledged or signed any financing statement or security agreement (other than the Indenture) which covers any of the Collateral. (b) Further Assurances. The Owner Trustee shall, at its own expense, take such actions and execute such other writings as may be necessary or as reasonably requested by the Indenture Trustee to establish or perfect the security interest created or purported to be created by the Indenture in the Collateral and to assist the Indenture Trustee's realization thereon. In the event of any default in any execution by the Owner Trustee pursuant hereto, the Indenture Trustee is authorized to execute any writings as the Owner Trustee's agent and attorney-in- fact. The Owner Trustee will not enter into or execute any security agreement or any financing statement covering the Collateral, other than those in favor of the Indenture Trustee under the Indenture. (c) Expenses. In the event the Indenture Trustee shall incur or pay any taxes, assessments, interests, costs, penalties or expenses incident to or in connection with the holding, collection or protection of the Collateral, or with the enforcement of any obligation of the Owner Trustee hereunder, the Owner Trustee shall pay to the Indenture Trustee the full amount thereof upon demand, and so long as the Indenture Trustee shall be entitled to any such payment, this Agreement shall operate as security therefor. SECTION 9. Rights and Remedies of the Indenture Trustee Upon Default. If an Indenture Event of Default shall have occurred and shall be continuing, or if the Owner Trustee shall have defaulted in its obligation to pay any outstanding Secured Obligation, the Indenture Trustee may exercise any of the rights or remedies with respect to the Collateral set forth in the Indenture. SECTION 10. Standard of Care. The Indenture Trustee may execute any of its duties hereunder by or through agents or employees and shall be entitled to retain or rely upon experts and to act in reliance upon the advice of such experts concerning all matters pertaining to the agencies hereby created and its duties hereunder, and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such experts. The Indenture Trustee shall not be liable to the Owner Trustee for any error of judgment or for any action taken or omitted to be taken by it hereunder, or in connection herewith, except for its own gross negligence or willful misconduct; nor shall the Indenture Trustee be responsible for the Specified Investments (or any part thereof) or the performance thereof, except for its own gross negligence or willful misconduct. The Indenture Trustee shall be entitled to rely on any communication, instrument, paper or other document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons. The Indenture Trustee shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral if the Collateral is accorded treatment substantially equal to that which the Indenture Trustee accords its own property. SECTION 11. Termination. This Agreement and the security interests created with respect to the Collateral under the Indenture shall terminate upon the earlier of (i) the payment in full of all Secured Obligations and (ii) the Frankfurt Business Day after the first Payment Date after the Exchange Date, at which time the Indenture Trustee shall execute and deliver to the Owner Trustee all documents which the Owner Trustee shall reasonably request to evidence termination of such security interest and shall return physical possession of any Collateral then held by the Indenture Trustee to the Owner Trustee. SECTION 12. Miscellaneous. (a) Capacity in Which Acting. Each of First Security Bank of Utah, National Association (or its permitted successors or assigns) and the Indenture Trustee acts hereunder not in its individual capacity but solely as trustee except as expressly provided herein and in the other Operative Documents. (b) Notices. Unless otherwise expressly specified or permitted by the terms hereof, all notices, requests, demands, authorizations, directions, consents, waivers or documents provided or permitted by this Agreement to be made, given, furnished or filed shall be in writing and sent as required pursuant to the Indenture, and shall be effective as of the time specified therein. (c) 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 hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. (d) No Oral Modifications or Continuing Waivers. No terms or provisions of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party or other person against whom enforcement of the change, waiver, discharge or termination is sought and by any other party required to consent thereto pursuant to Section 8.01 of the Indenture; and any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given. (e) Successors and Assigns. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, each of the parties hereto and the successors and permitted assigns of each, all as herein provided. This Agreement and the Collateral shall not be affected by any amendment or supplement to the Trust Agreement or by any other action taken under or in respect of the Trust Agreement, except that each reference in this Agreement to the Trust Agreement shall mean the Trust Agreement as amended and supplemented from time to time to the extent permitted thereby and by the Indenture. (f) Headings. The headings of the various Articles and Sections herein are for the convenience of reference only and shall not define or limit any of the terms or provisions hereof. (g) Governing Law; Counterpart Form. THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed this ___ day of March, 1994 by their respective officers thereunto duly authorized and acknowledge that this Indenture has been made and delivered in the City of New York, and this Agreement shall be effective only upon such execution and delivery. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as otherwise expressly provided herein, but solely as Owner Trustee By: ______________________________ Title: NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, not in its individual capacity, except as otherwise expressly provided herein, but solely as Indenture Trustee By: ______________________________ Title: SCHEDULE I [Specified Investments on the Closing Date] EX-23.C 11 Exhibit 23.c CONSENT I hereby consent to the reference to me under the heading "Legal Matters" in the Preliminary Prospectus Supplement dated February 23, 1994 and the Prospectus Supplement dated March 16, 1994 relating to $377,112,000 of Federal Express Corporation Pass Through Certificates, Series A310-A1, A310-A2 and A310-A3. In giving such consent, I do not concede that I am in the category of persons whose consent is required under Section 7 of the Securities Act. FEDERAL EXPRESS CORPORATION /s/ KENNETH R. MASTERSON -------------------------- Kenneth R. Masterson Senior Vice President General Counsel Dated: March 16, 1994 -----END PRIVACY-ENHANCED MESSAGE-----